-----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, PVtZfsKge3s2PBjsnvAitoJnszOw6W0uqxWMbBmVV6WgKpvlpXK7/cmIoifrQMe3 n3lzN54r0I/5BvE7c5STFA== 0000101063-97-000039.txt : 19971111 0000101063-97-000039.hdr.sgml : 19971111 ACCESSION NUMBER: 0000101063-97-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01550 FILM NUMBER: 97711969 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, 1997 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) 784-8000 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 October 31, 1997, there were 59,387,082 shares of Common Stock outstanding. Page 1 of 13 Pages CHIQUITA BRANDS INTERNATIONAL, INC. TABLE OF CONTENTS Page(s) PART I - Financial Information Consolidated Statement of Income for the quarters and nine months ended September 30, 1997 and 1996 . . . 3 Consolidated Balance Sheet as of September 30, 1997, December 31, 1996 and September 30, 1996 . . . . . 4 Consolidated Statement of Cash Flow for the nine months ended September 30, 1997 and 1996 . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . 6-7 Management's Analysis of Operations and Financial Condition . . . . . . . . . . . . . . . . 8-9 PART II - Other Information Item 1 - Legal Proceedings . . . . . . . . . . . . . 9 Item 2 - Changes in Securities . . . . . . . . . . . 10 Item 6 - Exhibits and Reports on Form 8-K . . . . . . 10 Signature . . . . . . . . . . . . . . . . . . . . . . 11 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, 1997 1996 1997 1996 Net sales $ 556,261 $ 541,581 $ 1,833,904 $ 1,880,085 ---------- ---------- ---------- ---------- Operating expenses Cost of sales 463,993 431,385 1,412,100 1,437,975 Selling, general and administrative 76,267 72,266 223,479 226,820 Depreciation 21,377 22,069 64,418 66,448 ---------- ---------- ---------- ---------- 561,637 525,720 1,699,997 1,731,243 ---------- ---------- ---------- ---------- Operating income (loss) (5,376) 15,861 133,907 148,842 Interest income 3,848 6,965 12,481 21,976 Interest expense (26,704) (30,626) (82,482) (100,742) Other income, net 217 215 656 656 ---------- ---------- ---------- ---------- Income (loss) before income taxes (28,015) (7,585) 64,562 70,732 Income taxes -- -- (8,200) (11,000) ---------- ---------- ---------- ---------- Income (loss) before extraordinary item (28,015) (7,585) 56,362 59,732 Extraordinary loss from debt refinancing -- (17,282) -- (22,838) ---------- ---------- ---------- ---------- Net income (loss) $ (28,015) $ (24,867) $ 56,362 $ 36,894 ========== ========== ========== ========== Shares used to calculate earnings per common share: Primary 56,388 55,319 56,869 55,741 ========== ========== ========== ========== Fully diluted 56,388 55,319 56,979 55,856 ========== ========== ========== ========== Earnings per common share (primary and fully diluted): - Income (loss) before extraordinary item $ (.57) $ (.20) $ .77 $ .93 - Extraordinary item -- (.31) -- (.41) ---------- ---------- ---------- ---------- - Net income (loss) $ (.57) $ (.51) $ .77 $ .52 ========== ========== ========== ========== 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, 1997 1996 1996 ASSETS Current assets Cash and equivalents $ 172,330 $ 285,558 $ 246,835 Marketable securities -- -- 39,780 Trade receivables (less allowances of $10,235, $9,832 and $11,164) 203,788 162,566 186,106 Other receivables, net 65,726 91,126 90,050 Inventories 321,616 275,177 283,310 Other current assets 39,595 29,884 32,947 ---------- ---------- ---------- Total current assets 803,055 844,311 879,028 Property, plant and equipment, net 1,143,005 1,139,677 1,156,620 Investments and other assets 312,574 319,149 343,864 Intangibles, net 156,564 163,797 164,929 ---------- ---------- ---------- Total assets $ 2,415,198 $ 2,466,934 $ 2,544,441 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes and loans payable $ 36,395 $ 78,107 $ 94,488 Long-term debt due within one year 90,430 56,982 51,179 Accounts payable 208,307 193,875 206,337 Accrued liabilities 108,691 135,370 101,036 ---------- ---------- ---------- Total current liabilities 443,823 464,334 453,040 Long-term debt of parent company 696,731 704,763 709,478 Long-term debt of subsidiaries 284,615 374,488 368,165 Accrued pension and other employee benefits 87,107 83,797 87,111 Other liabilities 90,246 115,299 110,602 ---------- ---------- ---------- Total liabilities 1,602,522 1,742,681 1,728,396 ---------- ---------- ---------- Shareholders' equity Preferred and preference stock 253,239 249,256 249,256 Capital stock, $.33 par value (59,356,568, 55,841,384 and 55,655,675 shares) 19,786 18,614 18,552 Capital surplus 642,881 594,885 592,277 Accumulated deficit (103,230) (138,502) (44,040) ---------- ---------- ---------- Total shareholders' equity 812,676 724,253 816,045 ---------- ---------- ---------- Total liabilities and shareholders' equity $ 2,415,198 $ 2,466,934 $ 2,544,441 ========== ========== ==========
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (In thousands) Nine Months Ended September 30, 1997 1996 Cash provided (used) by: Operations Income before extraordinary item $ 56,362 $ 59,732 Depreciation and amortization 68,496 71,718 Write-down of Costa Rican banana producing assets -- 8,900 Changes in current assets and liabilities Receivables (22,262) 231 Inventories (8,757) 10,069 Accounts payable 6,022 44 Other current assets and liabilities (29,716) (25,387) Other 7,097 7,079 ---------- ---------- Cash flow from operations 77,242 132,386 ---------- ---------- Investing Capital expenditures (52,096) (57,637) Refundable deposits for container equipment (10,351) -- Investment in Japanese joint venture (6,474) -- Restricted cash deposits -- 39,520 Proceeds from disposal of non-core assets -- 41,331 Purchases of marketable securities -- (39,235) Other 1,724 5,379 ---------- ---------- Cash flow from investing (67,197) (10,642) ---------- ---------- Financing Debt transactions Issuances of long-term debt 2,148 168,472 Repayments of long-term debt (68,293) (357,539) Net repayments of notes and loans payable (41,018) (22,789) Stock transactions Issuances of capital stock 4,980 4,882 Issuance of preferred stock -- 110,887 Dividends (21,090) (15,497) ---------- ---------- Cash flow from financing (123,273) (111,584) ---------- ---------- Increase (decrease) in cash and equivalents (113,228) 10,160 Balance at beginning of period 285,558 236,675 ---------- ---------- Balance at end of period $ 172,330 $ 246,835 ========== ==========
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, 1996 for additional information relating to the Company's financial statements. Acquisitions On September 24, 1997, Chiquita acquired four privately-held companies (collectively, the "Owatonna Companies") engaged primarily in the vegetable canning business in a transaction recorded under the purchase method of accounting. The total purchase price of approximately $50 million, which is subject to final adjustment, consisted of (i) approximately 3.3 million shares of Chiquita capital stock, par value $.33 per share ("Chiquita Common Stock"), valued at approximately $46 million and (ii) approximately 87,000 shares of a new series of Chiquita $2.50 Convertible Preference Stock, Series C, having a value of approximately $4 million. The assets of the Owatonna Companies consisted primarily of $38 million of inventory and $15 million of property, plant and equipment. On September 15, 1997, Chiquita entered into an agreement to acquire American Fine Foods, Inc., a privately-held vegetable canning company, for approximately $27 million of Chiquita Common Stock. The acquisition is subject to satisfaction of certain conditions. On September 17, 1997, Chiquita entered into an agreement to acquire Stokely USA, Inc. ("Stokely"), a publicly-traded vegetable canning company, for approximately $11 million of Chiquita Common Stock. As part of the acquisition, approximately $32 million of Stokely's long-term debt is to be retired in exchange for Chiquita Common Stock having a value equal to the principal amount of such debt. In addition to the debt to be retired, at September 30, 1997, Stokely had long-term debt of approximately $13 million and outstanding borrowings on its revolving line of credit of approximately $50 million. The acquisition is subject to Stokely shareholder approval and other conditions. Inventories Inventories consist of the following (in thousands):
September 30, December 31, September 30, 1997 1996 1996 Bananas and other fresh produce $ 33,409 $ 34,557 $ 34,547 Canned vegetables 109,250 57,652 61,853 Other food products 8,805 9,277 8,535 Growing crops 113,371 114,425 120,020 Materials and supplies 49,442 49,699 47,512 Other 7,339 9,567 10,843 ---------- ---------- ---------- $ 321,616 $ 275,177 $ 283,310 ========== ========== ==========
Other The Company has a long-standing policy of periodically entering into foreign exchange forward contracts and currency option contracts to hedge transactions denominated in foreign currencies. These forward contracts and options are specifically designated as hedges and offset the losses or gains from currency risk associated with the hedged transactions. The Company does not enter into forward contracts or options for speculative purposes. Amounts paid for options and any gains realized thereon, as well as any gains or losses realized on forward contracts used to hedge firm commitments, are deferred until the hedged transaction occurs. Gains and losses on forward contracts used to hedge transactions where a firm commitment does not exist are included in income on a current basis. At September 30, 1997, the Company had option contracts which ensure conversion of approximately $100 million of foreign sales through the end of 1997 at rates not higher than 1.59 Deutsche marks per dollar or lower than 1.56 Deutsche marks per dollar and approximately $375 million of foreign sales in 1998 at rates not higher than 1.72 Deutsche marks per dollar or lower than 1.57 Deutsche marks per dollar. At September 30, 1997, the carrying value of these option contracts was approximately $7 million and their fair value based on quoted market prices was approximately $23 million. During 1997, the Financial Accounting Standards Board issued the following Statements of Financial Accounting Standards ("SFAS"):
SFAS # Subject of Standard Period to be Implemented 128 Earnings per Share 4th quarter of 1997 129 Capital Structure 4th quarter of 1997 130 Comprehensive Income 1st quarter of 1998 131 Segment Information 4th quarter of 1998
SFAS #128 and #129 will not have a material effect on the Company's financial position or results of operations. SFAS #130 and #131 are still under study and are not expected to have a material effect on the Company's financial position or results of operations. CHIQUITA BRANDS INTERNATIONAL, INC. MANAGEMENT'S ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION Operations Operating income for the third quarter ended September 30, 1997, which decreased by $21 million from the prior year, was adversely affected by (1) a stronger dollar, mitigated in part by the Company's foreign currency hedging program, and (2) increased banana production costs arising primarily from weather-related effects on current productivity. The adverse impact of these items was partially offset by the benefit of higher local currency pricing for bananas in Europe. For the nine month period, 1997 operating income declined by $27 million (as compared to 1996 operating income before first quarter write-downs and costs of $12 million resulting from flood damage in Costa Rica). This decline was principally the net result of the foreign exchange, banana productivity and local pricing factors which affected third quarter operating results. In addition, net sales for the 1997 nine month period were reduced by the deconsolidation in January 1997 of Japanese banana operations (which are now operated through a joint venture and accounted for under the equity method) and lower volume in low- margin produce distribution operations. Net interest expense for the third quarter and nine months ended September 30, 1997 decreased by $1 million and $9 million from the prior year levels as a result of the Company's debt reduction and refinancing activities. The Company's effective tax rate is affected by the level and mix of income among various domestic and foreign jurisdictions in which the Company operates. Financial Condition Cash decreased by $113 million during the nine months ended September 30, 1997. With the availability in late 1996 of its new $125 million revolving credit facility, the Company has used excess cash to prepay debt. Through the nine months ended September 30, 1997, the Company has repaid $109 million of debt. Cash flow from operations of $77 million was sufficient to fund the Company's requirements for investing activities, including $16 million for capital expenditures to rehabilitate assets damaged by storms in 1996. Other Reference is made to the discussion of the European Union ( EU ) banana quota and licensing regime, the Framework Agreement and the World Trade Organization ( WTO ) proceeding relating to this regime contained in Part I, Item 1 - Business-Risks of International Operations in the Company s 1996 Form 10-K and in Management s Analysis of Operations and Financial Condition in the Company s 1996 Annual Report to Shareholders and June 30, 1997 Form 10-Q. In September 1997, the WTO Appellate Body affirmed the panel report that had been issued in May 1997, which found that the EU licensing and quota regime and Framework Agreement violate numerous international trade obligations to the detriment of Latin American banana supplying countries and non-EU marketing firms such as Chiquita. The full WTO body has adopted the panel and Appellate Body reports, which now require the EU to bring its import regime for bananas into conformity with these reports. In October 1997, the EU notified the WTO that it will honor its international obligations. The EU has a reasonable period of time (not to exceed 15 months) to implement the report s recommendations. If the EU fails to comply within a reasonable period of time, the injured governments may engage in retaliatory trade measures against the EU. There can be no assurance as to the ultimate outcome of the WTO proceedings, the actions that may be taken by the EU or other 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 1996 Form 10-K and the discussion of the lawsuits pending in various jurisdictions alleging injuries as a result of exposure to DBCP, an agricultural chemical. The DBCP manufacturer defendants, Shell Oil Company, Dow Chemical Company and Occidental Chemical Corporation, have reportedly entered into agreements providing for settlements with substantially all of the plaintiffs in the cases pending in Texas, Louisiana, Costa Rica, Panama and the Philippines. The Company and the other banana producer defendants are not parties to these agreements. Two additional class-action suits have been filed recently in Hawaii state court. These suits, filed in October 1997, assert claims similar to those asserted in the Texas and Louisiana cases and name the same manufacturer and banana producer defendants. The size and composition of the classes alleged in these suits have not yet been determined. The Company continues to believe it has meritorious defenses in all the DBCP cases. These defenses include the fact that at all times when the Company used DBCP commercially, the product was registered for use by the United States Environmental Protection Agency and that the Company ceased using the product on a commercial basis in 1977, promptly after learning that health hazards might exist. In addition, the Company believes that the responsibility for any injuries to the plaintiffs alleging claims against the Company should be borne by the manufacturer defendants that supplied DBCP to the Company. Although the DBCP cases remain in a preliminary stage, based on information currently available to it and advice of counsel, management does not believe that these cases will have a material adverse effect on the financial statements of the Company. Item 2 - Changes in Securities In payment for the acquisition of the Owatonna Companies, on September 24, 1997 the Company issued 3,020,587 shares of Chiquita Common Stock and 79,659 shares of $2.50 Convertible Preference Stock, Series C ("Series C Stock"), to the former shareholders of the Owatonna Companies. The transaction was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D thereunder. These shares represent 92% of the $50 million purchase price and were valued at $50 per share for the Series C Stock and $13.91 per share for the Chiquita Common Stock, which was based on market value of Chiquita Common Stock preceding March 17, 1997, the date of the letter of intent relating to the merger. The purchase price and number of shares issued are subject to adjustment upon completion of a post-closing audit. Each share of Series C Stock has a liquidation value of $50.00; is entitled to receive preferred annual dividends of $2.50; is convertible into 2.922 shares of Chiquita Common Stock at the option of the holder; and, after June 30, 2000, is convertible at the option of the Company into shares of Chiquita Common Stock having a total market value of $51.50 (decreasing to $50.00 per share in 2002 and thereafter). The Series C Stock is not redeemable for cash, whether by sinking fund or otherwise. As to dividends and upon liquidation, the Series C Stock ranks prior to the Chiquita Common Stock and pari passu with the Company's other outstanding preferred stock. The holders of Series C Stock are entitled to one vote per share, voting with the Chiquita Common Stock. In addition, if the Company is in arrears for six or more quarterly dividends on the Series C Stock, holders of Series C Stock will be entitled, voting as a separate class together with the holders of other preferred or preference shares with similar rights, to elect two additional directors to continue in office until the dividend arrearage is eliminated. Item 6 - Exhibits and Reports on Form 8-K Page Numbers (a) Exhibit 11 - Computation of Earnings Per Common Share . . . . . . . . . . . . . . . . . . . . 12-13 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) The following report on Form 8-K was filed by the Company during the quarter ended September 30, 1997: September 15, 1997 - to report the acquisition of the Owatonna Companies and the signing of agreements for the acquisitions of Stokely USA, Inc. and American Fine Foods, Inc. 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 10, 1997 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, 1997 1996 1997 1996 ---------- ---------- --------- ---------- A. Primary earnings (loss) per common share ---------------------------------------- Income (loss) before extraordinary item $ (28,015) $ (7,585) $ 56,362 $ 59,732 Dividends on preferred and preference stock (4,227) (3,599) (12,672) (7,732) ---------- ---------- ---------- ---------- Income (loss) before extraordinary item attributable to common shares (32,242) (11,184) 43,690 52,000 Extraordinary loss from debt refinancing -- (17,282) -- (22,838) ---------- ---------- ---------- ---------- Net income (loss) attributable to common shares $ (32,242) $ (28,466) $ 43,690 $ 29,162 ========== ========== ========== ========== Shares used in calculation of per share data: Weighted average common shares outstanding 56,547 55,607 56,280 55,368 Less restricted common shares (159) (288) (178) (292) Dilutive effect of assumed exercise of stock options -- -- 767 665 ---------- ---------- ---------- ---------- 56,388 55,319 56,869 55,741 ========== ========== ========== ========== Primary earnings (loss) per common share: Income (loss) before extraordinary item $ (.57) $ (.20) $ .77 $ .93 Extraordinary item -- (.31) -- (.41) ---------- ---------- ---------- ---------- Net income (loss) $ (.57) $ (.51) $ .77 $ .52 ========== ========== ========== ========== /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, 1997 1996 1997 1996 ---------- --------- --------- --------- B. Fully diluted earnings (loss) per common share ---------------------------------------------- Income (loss) before extraordinary item $ (28,015) $ (7,585) $ 56,362 $ 59,732 Dividends on preferred and preference stock (4,227) (3,599) (12,672) (7,732) ---------- ---------- ---------- ---------- Income (loss) before extraordinary item attributable to common shares (32,242) (11,184) 43,690 52,000 Extraordinary loss from debt refinancing -- (17,282) -- (22,838) ---------- ---------- ---------- ---------- Net income (loss) attributable to common shares $ (32,242) $ (28,466) $ 43,690 $ 29,162 ========== ========== ========== ========== Shares used in calculation of per share data: Weighted average common shares outstanding 56,547 55,607 56,280 55,368 Less restricted common shares (159) (288) (174) (285) Dilutive effect of assumed exercise of stock options -- -- 873 773 ---------- ---------- ---------- ---------- 56,388 55,319 56,979 55,856 ========== ========== ========== ========== Fully diluted earnings (loss) per common share: Income (loss) before extraordinary item $ (.57) $ (.20) $ .77 $ .93 Extraordinary item -- (.31) -- (.41) ---------- ---------- ---------- ---------- Net income (loss) $ (.57) $ (.51) $ .77 $ .52 ========== ========== ========== ========== /TABLE EX-27 3
5 This schedule contains summary financial information extracted from the Chiquita Brands International, Inc. Form 10-Q for the nine months ended September 30, 1997 and is qualified in its entirety by reference to such financial information. 9-MOS DEC-31-1997 SEP-30-1997 172,330 0 214,023 10,235 321,616 803,055 1,777,345 634,340 2,415,198 443,823 981,346 0 253,239 19,786 539,651 2,415,198 1,833,904 1,833,904 1,412,100 1,412,100 64,418 0 82,482 64,562 8,200 56,362 0 0 0 56,362 .77 .77
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