-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G1PQBry2bzSPTt0Z/3LAedxxbnalAAZCpd+fng0I8Q/8I36TXXBV4LBqpGAieuld Zd2A+g3x+R265c84icXPCw== 0000101063-95-000037.txt : 19960328 0000101063-95-000037.hdr.sgml : 19960328 ACCESSION NUMBER: 0000101063-95-000037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01550 FILM NUMBER: 95591779 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848011 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended Commission File September 30, 1995 Number 1-1550 CHIQUITA BRANDS INTERNATIONAL, INC. Incorporated under the IRS Employer I.D. Laws of New Jersey No. 04-1923360 250 East Fifth Street, Cincinnati, Ohio 45202 (513) 784-8011 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of November 1, 1995, there were 54,208,647 shares of Common Stock outstanding. Page 1 of 12 Pages CHIQUITA BRANDS INTERNATIONAL, INC. TABLE OF CONTENTS Page PART I - Financial Information Consolidated Statement of Income for the quarters and nine months ended September 30, 1995 and 1994 . . . . . 3 Consolidated Balance Sheet as of September 30, 1995, December 31, 1994 and September 30, 1994 . . . . . . . 4 Consolidated Statement of Cash Flow for the nine months ended September 30, 1995 and 1994 . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . 6 Management's Analysis of Operations and Financial Condition . . . . . . . . . . . . . . . . . . 7 - 8 PART II - Other Information Item 1 - Legal Proceedings . . . . . . . . . . . . . . . 9 Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . 9 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Part I - Financial Information CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) (In thousands, except per share amounts)
Quarter Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Net sales $ 950,527 $ 900,941 $ 3,064,962 $ 2,964,309 -------- -------- ---------- --------- Operating expenses Cost of sales 796,285 810,487 2,494,521 2,444,960 Selling, general and administrative 103,858 106,169 314,140 325,385 Depreciation 27,205 28,459 80,249 85,652 -------- -------- ---------- --------- 927,348 945,115 2,888,910 2,855,997 -------- -------- ---------- --------- Operating income (loss) 23,179 (44,174) 176,052 108,312 Interest income 7,345 4,740 22,694 15,481 Interest expense (41,567) (41,612) (125,101) (127,239) Other income, net 52 394 1,022 2,773 -------- -------- ---------- --------- Income (loss) before income taxes and extraordinary item (10,991) (80,652) 74,667 (673) Income taxes -- -- (13,900) (13,500) -------- -------- ---------- --------- Income (loss) before extraordinary item (10,991) (80,652) 60,767 (14,173) Extraordinary loss from debt refinancing -- -- (4,713) (22,840) -------- -------- ---------- --------- Net income (loss) $ (10,991) $ (80,652) $ 56,054 $ (37,013) ======== ======== ========== ========= Weighted average number of common shares outstanding (see Exhibit 11) 53,368 52,054 53,585 51,939 ======== ======== ========== ========= Earnings (loss) per common share: Primary - Income (loss) before extraordinary item $ (.24) $ (1.59) $ 1.02 $ (.37) - Extraordinary item -- -- (.09) (.44) -------- -------- ---------- --------- - Net income (loss) $ (.24) $ (1.59) $ .93 $ (.81) ======== ======== ========== ========= Fully diluted - Income (loss) before extraordinary item $ (.24) $ (1.59) $ .99 $ (.37) - Extraordinary item -- -- (.08) (.44) -------- -------- ---------- --------- - Net income (loss) $ (.24) $ (1.59) $ .91 $ (.81) ======== ======== ========== ========= Dividends per common share $ .05 $ .05 $ .15 $ .15 ======== ======== ========== =========
See Notes to Consolidated Financial Statements. CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands, except share amounts)
September 30, December 31, September 30, 1995 1994 1994 ASSETS Current assets Cash and equivalents $ 223,675 $ 178,855 $ 151,292 Trade receivables (less allowances of $14,189, $14,149 and $14,288) 278,505 257,777 284,880 Other receivables, net 92,006 95,948 95,983 Inventories 366,311 351,730 373,585 Other current assets 34,568 33,932 33,728 -------- -------- -------- Total current assets 995,065 918,242 939,468 Restricted cash 69,530 75,030 69,592 Property, plant and equipment, net 1,323,872 1,433,858 1,482,766 Investments and other assets 335,286 309,721 301,399 Intangibles, net 160,641 165,170 164,050 Total assets $ 2,884,394 $ 2,902,021 $ 2,957,275 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes and loans payable $ 133,596 $ 130,163 $ 123,024 Long-term debt due within one year 66,460 91,032 89,201 Accounts payable 262,217 270,033 258,693 Accrued liabilities 171,959 162,589 155,292 -------- -------- -------- Total current liabilities 634,232 653,817 626,210 Long-term debt of parent company 840,783 840,377 840,251 Long-term debt of subsidiaries 479,523 524,500 554,010 Accrued pension and other employee benefits 119,334 120,325 125,894 Other liabilities 116,153 118,193 134,171 Total liabilities 2,190,025 2,257,212 2,280,536 -------- -------- -------- Shareholders' equity Preferred and preference stock 138,369 190,639 190,639 Capital stock, $.33 par value (53,807,078, 49,300,881 and 48,893,012 shares) 17,936 16,434 16,298 Capital surplus 567,005 505,800 500,553 Retained deficit (13,817) (52,940) (12,822) Minimum pension liability adjustment (15,124) (15,124) (17,929) Total shareholders' equity 694,369 644,809 676,739 -------- -------- -------- Total liabilities and shareholders' equity $ 2,884,394 $ 2,902,021 $ 2,957,275 ======== ======== ========
See Notes to Consolidated Financial Statements. CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (In thousands)
Nine Months Ended September 30, 1995 1994 Cash provided (used) by: Operations Income (loss) before extraordinary item $ 60,767 $ (14,173) Depreciation and amortization 84,780 90,559 Write-downs of farms and cultivations -- 24,600 Changes in current assets and liabilities (54,980) (55,308) Other (13,577) (1,078) -------- -------- Cash flow from operations 76,990 44,600 -------- -------- Investing Capital expenditures (57,353) (124,632) Sales of fresh fruit shipping and distribution assets 102,708 -- Sale of meat operations -- 52,700 Restricted cash deposits 5,500 (18,572) Other (2,252) (7,248) -------- -------- Cash flow from investing 48,603 (97,752) -------- -------- Financing Debt transactions Issuances of long-term debt 202,115 263,731 Repayments of long-term debt (281,216) (326,208) Increase (decrease) in notes and loans payable 9,967 (13,988) Stock transactions Issuance of preferred stock -- 138,369 Issuances of capital stock 2,093 3,242 Dividends (13,732) (11,928) -------- -------- Cash flow from financing (80,773) 53,218 -------- -------- Increase in cash and equivalents 44,820 66 Balance at beginning of period 178,855 151,226 -------- -------- Balance at end of period $ 223,675 $ 151,292 ======== ========
See Notes to Consolidated Financial Statements. CHIQUITA BRANDS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. See Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 for additional information relating to the Company's financial statements. Inventories consist of the following (in thousands):
September 30, December 31, September 30, 1995 1994 1994 Bananas and other fresh produce $ 41,638 $ 47,592 $ 44,498 Meat 44,115 35,165 45,201 Other food products 77,672 63,565 74,167 Growing crops 116,046 115,177 115,208 Materials and supplies 72,602 76,078 81,249 Other 14,238 14,153 13,262 -------- -------- -------- $ 366,311 $ 351,730 $ 373,585 ======== ======== ========
During the second quarter of 1995, the Company replaced $153 million of ship loans with loans having longer maturities totaling $187 million resulting in an extraordinary loss of $4.7 million. The Company also negotiated an extension of the maturities on another $23 million ship loan. In the first quarter of 1994, the Company completed the sale of $175 million principal amount of 9-1/8% Senior Notes due 2004 and 2,875,000 shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A. Most of the net proceeds from the offerings were used to prepay higher rate subordinated debentures. These refinancings resulted in an extraordinary loss of $22.8 million. In accordance with its long-standing policy to periodically hedge transactions denominated in foreign currencies, at September 30, 1995, the Company had foreign exchange forward contracts to ensure conversion of approximately $95 million of foreign sales commitments for the remainder of 1995 at an average exchange rate of 1.51 Deutsche marks per dollar. The fair value of these contracts, based on quoted market prices, was approximately $5 million. The Company also had option contracts which ensure conversion through 1996 of approximately $95 million of foreign sales at a rate not higher than 1.44 Deutsche marks per dollar and approximately $175 million of foreign sales at a rate not higher than 1.45 Deutsche marks per dollar or lower than 1.33 Deutsche marks per dollar. The carrying value of the option contracts, and the fair value based on quoted market prices, were not significant. On September 7, 1995, $52.3 million of Series C Mandatorily Exchangeable Cumulative Preference Stock converted back into 3,241,546 shares of Chiquita's capital stock in accordance with the terms of the Series C Preference shares. CHIQUITA BRANDS INTERNATIONAL, INC. MANAGEMENT'S ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION OPERATIONS Net sales for the quarter ended September 30, 1995 increased 5.5% from the same quarter last year primarily as a result of increased sales for the Company's Meat Division held for sale. Operating income for the third quarter was $23.2 million in 1995 compared to an operating loss of $44.2 million in 1994. Operating income included the following: - in 1995, a net gain of $5.8 million resulting principally from the sale of older ships; and, - in 1994, charges and losses of $57.2 million resulting primarily from farm closings and write-downs of banana cultivations in Honduras, and the substantial reduction of the Company's Japanese "green" banana trading operations. In addition to the above, operating income for the 1995 third quarter reflects earnings improvements from the sale of bananas and other food products within the Chiquita operations segment. Net sales for the nine-month period increased 3.4% from the prior year level primarily as a result of higher fresh fruit prices. Nine-month operating income improved to $176.1 million in 1995 compared to $108.3 million in 1994, reflecting the effects of the items described above, higher banana prices in markets outside the European Union ("EU") since early in the second quarter, and earnings improvements from other food products within the Chiquita operations segment. These favorable effects on operating income were partially offset by higher banana operating costs, including the impact of implementation of the banana Framework Agreement between the EU, Colombia and Costa Rica, and higher paper costs. Following higher pricing in the first half of 1995, banana pricing in the EU has been lower during the 1995 third quarter and fourth quarter to date primarily as a result of the recent overissuance of quarterly import licenses to European-based banana companies as relief for hurricane damage sustained in the Caribbean. Third quarter and nine-month results for the Company's Meat Division held for sale were not significant in either 1995 or 1994. Net interest expense for the quarter and nine months decreased from the prior year as a result of a higher average yield earned on invested cash balances during 1995 and debt refinancing and reduction activities since the beginning of 1994. The Company's effective tax rate is affected by the level and mix of income between various domestic and foreign jurisdictions in which the Company operates. FINANCIAL CONDITION The $45 million increase in cash and equivalents during the nine months ended September 30, 1995 resulted primarily from cash flow from operations. Proceeds received from the sale of older ships and container equipment during this period have been used primarily to prepay related long-term debt. As a result of these prepayments, as well as the refinancings completed during the second quarter of 1995, current maturities of long-term debt have been reduced to $66 million, including $33 million for shipping-related financings. OTHER As previously announced, on October 6, 1995, Chiquita entered into a letter of intent with Smithfield Foods, Inc. ("Smithfield") relating to the sale of the Meat Division. The letter of intent calls for a sale price of $58 million, consisting of $25 million in cash and $33 million of Smithfield common stock. The transaction, which is expected to close around the end of the year, is subject to negotiation and execution of a definitive agreement and receipt of all necessary governmental regulatory approvals. Reference is made to Part I, Item 1 - "Business-Risks of International Operations" in the Company's 1994 Form 10-K and "Management's Analysis of Operations and Financial Condition" in the Company's 1994 Annual Report to Shareholders and the discussion of the EU quota, the Framework Agreement and the Section 301 petition to the Office of the U.S. Trade Representative ("USTR") under Section 301 of the U.S. Trade Act of 1974 ("Section 301"). On September 28, 1995, based on information obtained in the USTR's investigation under Section 301, the United States, joined by Guatemala, Honduras and Mexico, commenced a new international trade challenge against the EU regime using the procedures of the new World Trade Organization ("WTO"). Also on that date, the USTR announced it was continuing related Section 301 investigations of the banana export practices of Colombia and Costa Rica, which have implemented their Framework Agreement with the EU. Both the WTO and Section 301 authorize retaliatory measures, such as tariffs or withdrawal of trade concessions, against the offending countries. However, there can be no assurance as to the results of the WTO and Section 301 proceedings, the nature and extent of actions that may be taken by the United States or other adversely affected countries, or the impact on the EU quota regime or the Framework Agreement. Part II - Other Information Item 1 - Legal Proceedings Reference is made to Part I, Item 3 - "Legal Proceedings" in the Company's 1994 Form 10-K and Part II, Item 1 - "Legal Proceedings" in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and the discussion of the cases pending in various state and federal courts alleging injuries as a result of exposure to DBCP, an agricultural chemical. In October 1995, several of the cases pending in federal court in Texas, involving approximately 80% of all plaintiffs, were dismissed on the grounds that courts in the plaintiffs' home countries (limited to Costa Rica, Panama and the Philippines in cases involving the Company) were more appropriate forums for pursuing their claims. The two remaining cases, involving approximately 4,500 plaintiffs, including approximately 600 who claim injuries for which they allege the Company is liable, were remanded to Texas state courts, where procedural matters are currently being addressed, including changing venue and adding third party defendants. A new suit was filed in August 1995 in a state court in Louisiana by approximately 4,000 plaintiffs, most of whom are foreign citizens alleging similar injuries. This case was removed to U.S. District Court where defendants' motion to dismiss in favor of more appropriate forums and plaintiffs' motion to remand to state court are pending. The Company continues to vigorously defend itself in these cases. The Company believes it has a number of meritorious defenses in these cases, including that at all times during which it used DBCP commercially, the product was registered for use by the United States Environmental Protection Agency. In addition, the Company ceased using the product on a commercial basis in 1977, promptly after learning that health hazards might exist. Reference is also made to Part I, Item 1 - "Business-Meat Division Held for Sale-Regulation" in the Company's 1994 Form 10-K and the discussion of the investigation by the United States Environmental Protection Agency and Department of Justice ("DOJ") of deficiencies relating to the wastewater treatment facility at the John Morrell & Co. ("Morrell") Sioux Falls plant. Morrell and DOJ have now entered into a partial civil consent decree, subject to certain procedural approvals, pursuant to which Morrell neither admits nor denies any liability. The amount of civil penalties, if any, to be imposed will be resolved later. The consent decree requires Morrell to continue to comply with its wastewater permit conditions, to undertake certain monitoring, maintenance and reporting requirements for a one-year period from August 1995 to August 1996, and to make certain capital improvements at the facility, none of which is expected to have a material financial impact. Item 6 - Exhibits and Reports on Form 8-K Page Numbers (a) Exhibit 11 - Computation of Earnings Per Common Share . . . . . . . . . . . . . . . . . . 11-12 Exhibit 27 - Financial Data Schedule . . . . . . ** ** Copy omitted from this Quarterly Report on Form 10-Q. Copy included in report filed electronically with the Securities and Exchange Commission. (b) There were no reports on Form 8-K filed by the Company during the quarter ended September 30, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ William A. Tsacalis William A. Tsacalis Vice President and Controller (Chief Accounting Officer) November 14, 1995 EX-11 2 Exhibit 11 CHIQUITA BRANDS INTERNATIONAL, INC. COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited) (In thousands, except per share amounts)
Quarter Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 A. Primary earnings (loss) per common share Income (loss) used to calculate primary earnings (loss) per common share: Income (loss) before extraordinary item $ (10,991) $ (80,652) $ 60,767 $ (14,173) Dividends on Series A Preferred Stock (2,066) (2,066) (6,199) (5,166) -------- -------- -------- -------- Income (loss) attributable to common shares before extraordinary item (13,057) (82,718) 54,568 (19,339) Extraordinary loss from debt refinancing -- -- (4,713) (22,840) -------- -------- -------- -------- Net income (loss) attributable to common shares $ (13,057) $ (82,718) $ 49,855 $ (42,179) ======== ======== ======== ======== Shares used to calculate primary earnings (loss) per common share: Weighted average common and equivalent Series C preference shares outstanding 53,732 52,054 53,429 51,939 Less restricted common shares (364) -- (391) -- Dilutive effect of assumed exercise of stock options and warrants -- -- 547 -- -------- -------- -------- -------- 53,368 52,054 53,585 51,939 ======== ======== ======== ======== Primary earnings (loss) per common share: Income (loss) before extraordinary item $ (.24) $ (1.59) $ 1.02 $ (.37) Extraordinary item -- -- (.09) (.44) -------- -------- -------- -------- Net income (loss) $ (.24) $ (1.59) $ .93 $ (.81) ======== ======== ======== ======== /TABLE Exhibit 11 (continued) CHIQUITA BRANDS INTERNATIONAL, INC. COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited) (In thousands, except per share amounts)
Quarter Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 B. Fully diluted earnings (loss) per common share Income (loss) used to calculate fully diluted earnings (loss) per common share: Income (loss) before extraordinary item $ (10,991) $ (80,652) $ 60,767 $ (14,173) Dividends on Series A Preferred Stock (2,066) (2,066) -- (5,166) -------- -------- -------- -------- Income (loss) attributable to common shares before extraordinary item (13,057) (82,718) 60,767 (19,339) Extraordinary loss from debt refinancing -- -- (4,713) (22,840) -------- -------- -------- -------- Net income (loss) attributable to common shares $ (13,057) $ (82,718) $ 56,054 $ (42,179) ======= ======== ======= ======== Shares used to calculate fully diluted earnings (loss) per common share: Weighted average common and equivalent Series C preference shares outstanding 53,732 52,054 53,429 51,939 Less restricted common shares (364) -- (358) -- Dilutive effect of assumed exercise of stock options and warrants -- -- 626 -- Dilutive effect of assumed conversion of Series A Preferred Stock -- -- 7,566 -- 53,368 52,054 61,263 51,939 Fully diluted earnings (loss) per common share: Income (loss) before extraordinary item $ (.24) $ (1.59) $ .99 $ (.37) Extraordinary item -- -- (.08) (.44) Net income (loss) $ (.24) $ (1.59) $ .91 $ (.81) /TABLE EX-27 3
5 The schedule contains summary financial information extracted from the Chiquita Brands International, Inc. Form 10-Q for the quarterly period ended September 30, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1995 SEP-30-1995 223,675 0 292,694 14,189 366,311 995,065 2,009,073 685,201 2,884,394 634,232 1,320,306 17,936 0 138,369 538,064 2,884,394 3,064,962 3,064,962 2,494,521 2,494,521 80,249 0 125,101 74,667 13,900 60,767 0 (4,713) 0 56,054 .93 .91 Amounts include an extraordinary loss of $.09 per share ($.08 per share fully diluted) from debt refinancing in the second quarter.
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