-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, g8qE+4UvfsnzX2AL/U8fgsAXljEcTg6gw0EkjbhM8wlll5RKY6+xVA0rVAi81vY3 ceNs4ODCQ1vrQs+01b/rUg== 0000950152-94-000059.txt : 19940202 0000950152-94-000059.hdr.sgml : 19940202 ACCESSION NUMBER: 0000950152-94-000059 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940201 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: 424B2 SEC ACT: 33 SEC FILE NUMBER: 033-51995 FILM NUMBER: 94503932 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 424B2 1 CHIQUITA 424B2 SUPPLEMENT TO PROSPECTUS 1 Rule 424(b)(2) Registration Statement No. 33-51995 ****************************************************************************** * * * Subject to Completion, dated January 31, 1994 * * * * INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A * * REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH * * THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD * * NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION * * STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER * * TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE * * OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE * * WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE * * SECURITIES LAWS OF ANY SUCH STATE. * * * ****************************************************************************** PROSPECTUS SUPPLEMENT (To Prospectus dated January 28, 1994) $125,000,000 [LOGO] CHIQUITA BRANDS INTERNATIONAL, INC. % SENIOR NOTES DUE 2004 --------------------------- Interest Payable and --------------------------- Chiquita Brands International, Inc. (the "Company") is offering (the "Offering") $125 million aggregate principal amount of % Senior Notes due 2004 (the "Senior Notes"). Interest on the Senior Notes is payable semi-annually on and each year commencing , 1994. The Senior Notes may not be redeemed by the Company prior to maturity and do not provide for any sinking fund. Each holder of Senior Notes may require the Company to repurchase such holder's Senior Notes in the event of a Change of Control Triggering Event (as defined) at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness (as defined). The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled approximately $748 million at September 30, 1993. Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Preferred Stock Offering") of 2,000,000 shares of convertible preferred stock with a liquidation preference of $50 per share (the "Preferred Stock"). The Offering is not contingent upon the consummation of the Preferred Stock Offering and there can be no assurance that the Preferred Stock Offering will be successfully completed. See "Use of Proceeds." SEE "INVESTMENT CONSIDERATIONS" IN THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SENIOR NOTES. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- Price to Underwriting Proceeds to Public(1) Discounts(2) Company(1)(3) - --------------------------------------------------------------------------------------------------- Per Senior Note.................... % % % - --------------------------------------------------------------------------------------------------- Total.............................. $ $ $ - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- (1) Plus accrued interest, if any, from , 1994. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3) Before deducting expenses payable by the Company estimated at $ .
--------------------------- The Senior Notes offered by this Prospectus Supplement are offered by the Underwriters subject to prior sale, withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the Underwriters and to certain further conditions. It is expected that delivery of the Senior Notes will be made at the offices of Lehman Brothers Inc., New York, New York, on or about , 1994. --------------------------- LEHMAN BROTHERS KIDDER, PEABODY & CO. INCORPORATED SMITH BARNEY SHEARSON INC. , 1994 2 PROSPECTUS SUPPLEMENT SUMMARY The following summary is qualified in its entirety by the detailed information and the financial statements appearing elsewhere in this Prospectus Supplement or incorporated by reference in the accompanying Prospectus. THE COMPANY Chiquita Brands International, Inc. ("Chiquita" or the "Company") is a leading international marketer, processor and producer of quality fresh and processed food products. Chiquita produces and markets an extensive line of fresh fruits and vegetables sold under the Chiquita([ )and other brand names. These products include tropical fruit, such as bananas, pineapples, mangos, papaya, kiwi and citrus, and a wide variety of other fresh produce. The core of the Company's operations is the marketing, distribution and sourcing of bananas. The Company's operations also include brand extensions, such as fruit and vegetable juices and banana puree, and other processed fruits and vegetables marketed worldwide under the Chiquita and other brand names; wet and dry salads sold under various brand names; and consumer packaged foods marketed in Latin America under various brand names. During the fourth quarter of 1992, the Company adopted a plan of disposal for its Meat Division and classified it as a discontinued operation. The Meat Division encompasses a wide range of value-added fresh meats and processed meat products sold in the United States nationally under the John Morrell and Mosey's brand names and under a number of regional brand names. See "Recent Developments - -- Discontinued Operations." American Financial Corporation ("AFC") owns, either directly or through its subsidiaries, approximately 47% of Chiquita's outstanding shares of Common Stock and 31% of Chiquita's $1.32 Depositary Shares. All of the outstanding common stock of AFC is owned by Carl H. Lindner and members of his family. Chiquita is a New Jersey corporation. The address of its principal executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its telephone number is (513) 784-8011. Unless the context indicates otherwise, the term "Chiquita" or the "Company" also includes the subsidiaries of the Company. IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 THE OFFERING Securities Offered...................... $125,000,000 aggregate principal amount of % Senior Notes due 2004 (the "Senior Notes"). Maturity................................ , 2004. Interest Payment Dates.................. and , commencing , 1994. Ranking................................. The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness. The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries. Optional Redemption..................... The Senior Notes may not be redeemed by the Company prior to maturity. Certain Restrictions.................... The Indenture relating to the Senior Notes restricts, among other things, the ability of the Company and its subsidiaries, subject to certain exceptions, to (i) incur additional Indebtedness, (ii) create certain Liens, (iii) engage in sale and leaseback transactions, (iv) make Restricted Payments, (v) engage in transactions with Related Persons and (vi) merge or consolidate with or transfer all or substantially all of its assets to another entity. Change of Control....................... If a Change of Control Triggering Event (as defined) occurs at any time, each holder of Senior Notes will have the right to require the Company to repurchase such holder's Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. See "Description of Senior Notes." Concurrent Offering..................... Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Preferred Stock Offering") of 2,000,000 shares of convertible preferred stock with a liquidation preference of $50 per share. The Offering is not contingent upon the consummation of the Preferred Stock Offering and there can be no assurance that the Preferred Stock Offering will be successfully completed. Use of Proceeds......................... The net proceeds from the sale of the Senior Notes offered hereby, expected to be approximately $ , will be used to repay the Company's 11 7/8% Subordinated Debentures due May 1, 2003. The net proceeds from the Preferred Stock Offering, expected to be approximately $ , will be used to repay outstanding subordinated debt of the Company and/or to repay outstanding debt of the Company's subsidiaries. Pending application of the net proceeds from such offerings as described herein, such net proceeds may be invested in short-term investments or used for general corpo- rate purposes. See "Use of Proceeds."
S-3 4 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data set forth below for the years ended December 31, 1988 through 1992 were derived from the Company's audited consolidated financial statements. Information presented below for interim periods was derived from the Company's unaudited consolidated financial statements and in the opinion of management includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the interim periods. This information should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto and "Management's Analysis of Operations and Financial Condition" included or incorporated by reference in the Company's Reports on Forms 10-K and 10-Q for such periods. Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1993 1992 1992 1991 1990 1989 1988 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) INCOME STATEMENT DATA: Net sales............................ $1,965,790 $2,102,289 $2,723,250 $2,604,128 $2,186,452 $1,892,657 $1,679,429 Operating expenses Cost of sales...................... 1,520,718 1,736,968 2,309,425 2,027,669 1,698,557 1,497,306 1,333,688 Selling, general and administrative expenses......................... 246,122 279,966 368,675 324,240 284,299 205,780 205,712 Depreciation....................... 75,484 56,645 80,438 54,401 37,416 31,825 25,797 Restructuring and reorganization... -- -- 61,300 -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1,842,324 2,073,579 2,819,838 2,406,310 2,020,272 1,734,911 1,565,197 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Operating income (loss)............ 123,466 28,710 (96,588) 197,818 166,180 157,746 114,232 Interest income...................... 17,512 32,830 43,301 47,319 31,461 28,169 25,376 Interest expense..................... (126,612) (111,829) (155,036) (88,406) (55,361) (53,952) (38,923) Other income (expense), net.......... 5,969 (8,979) (8,385) 3,278 11,251 3,077 3,731 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations before income taxes... 20,335 (59,268) (216,708) 160,009 153,531 135,040 104,416 Income taxes......................... (11,000) (10,000) (5,000) (49,100) (57,700) (51,200) (47,200) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations....................... 9,335 (69,268) (221,708) 110,909 95,831 83,840 57,216 Discontinued operations(1)......... -- (21,355) (62,332) 17,586 (1,913) (16,073) 3,147 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss).................... $ 9,335 $ (90,623) $ (284,040) $ 128,495 $ 93,918 $ 67,767 $ 60,363 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fully diluted earnings (loss) per common share: Continuing operations.............. $ .18 $ (1.33) $ (4.28) $ 2.19 $ 2.24 $ 2.05 $ 1.38 Discontinued operations(1)......... -- (.41) (1.20) .33 (.04) (.38) .07 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss).................. $ .18 $ (1.74) $ (5.48) $ 2.52 $ 2.20 $ 1.67 $ 1.45 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of earnings to fixed charges(2)......................... 1.08 --(2) --(2) 1.73 2.13 2.20 2.18 Ratio of earnings to combined fixed charges and preferred stock dividends(2)....................... 1.06 --(2) --(2) 1.73 2.13 2.20 2.18 BALANCE SHEET DATA: Cash and marketable securities..... $ 194,820 $ 491,206 $ 413,181 $ 825,447 $ 318,246 $ 287,658 $ 188,619 Working capital.................... 301,966 648,775 482,338 960,093 433,424 394,640 345,784 Total assets(1).................... 2,821,898 3,034,410 2,880,624 2,937,344 1,913,674 1,373,480 1,230,946 Short-term debt.................... 189,966 196,198 229,286 187,821 106,698 58,540 18,236 Long-term debt (other than subordinated debt)............... 805,607 717,656 778,784 571,493 221,884 85,398 69,950 Subordinated debt.................. 633,530 632,226 632,535 631,346 272,298 299,852 297,764 Shareholders' equity............... 663,000 874,252 674,887 967,925 687,709 463,954 400,792 OTHER DATA: Operating income (loss) plus depreciation and amortization.... $ 204,351 $ 90,390 $ (9,079) $ 258,076 $ 208,963 $ 194,919 $ 144,482 Capital expenditures(3)............ 174,185 381,578 472,273 395,641 312,698 117,425 63,621 Dividends declared per common share............................ .39 .49 .66 .55 .35 .20 .20 - --------------- (1) Includes net operating results (and, in 1992, provision for loss on disposal) of the Company's Meat Division operations, which have been classified as discontinued operations. See "Recent Developments -- Discontinued Operations" and Note 3 to the Company's Consolidated Financial Statements for the year ended December 31, 1992, included in the Company's Annual Report on Form 10-K for the year ended December 31, 1992. All other Income Statement Data presented above have been restated to exclude amounts relating to the Meat Division. The Company's net investment in discontinued operations, which is included in "Total assets", aggregated approximately $42 million at September 30, 1993. The net assets of discontinued operations consist principally of property, plant and equipment and trademarks, and at September 30, 1993 include a seasonally high $53 million of short-term borrowings under an $80 million credit facility secured by Meat Division working capital. These net assets also include net liabilities recorded for Meat Division defined benefit pension plans of approximately $40 million at September 30, 1993. (2) For purposes of calculating the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings are calculated as the sum of the income (loss) from continuing operations before income taxes, fixed charges (other than capitalized interest) and amortization of capitalized interest, less undistributed earnings of less-than-fifty-percent-owned investees. Fixed charges consist of interest on indebtedness (including amortization of debt discount and capitalized interest) and a portion (one-third) of rent considered to represent interest cost. Preferred dividends are dividends on shares of Chiquita's Mandatorily Exchangeable Cumulative Preference Stock, Series C, which have been outstanding since October 1992. Fixed charges and combined fixed charges and preferred stock dividends both exceeded earnings by approximately $80 million for the nine months ended September 30, 1992, and approximately $239 million for the year ended December 31, 1992. (3) Includes capital expenditures in connection with the acquisition of ships and containers of approximately $120 million during the nine months ended September 30, 1993, $225 million during the nine months ended September 30, 1992, $280 million in 1992, $180 million in 1991, $200 million in 1990 and $20 million in 1989.
S-4 5 RECENT DEVELOPMENTS EUROPEAN COMMUNITY BANANA REGULATION On July 1, 1993, the European Community ("EC") implemented a new quota effectively restricting the volume of Latin American bananas imported into the EC to approximately 80% of prior levels. The quota is administered through a licensing system. Challenges to the quota and many matters regarding implementation and administration of the quota remain to be resolved. In May 1993, the principles underlying the new regulation that discriminate against Latin American banana exporting countries in favor of certain African, Caribbean and Pacific countries were ruled illegal under the General Agreement on Tariffs and Trade ("GATT") by a GATT dispute settlement panel. In December 1993, EC representatives discussed a tentative, even more discriminatory proposal with a few Latin American banana producing countries. The tentative proposal was rejected by an overwhelming majority of the Latin American countries. As widely reported in the press, in January 1994 a GATT dispute settlement panel ruled on a second lawsuit against the current EC regulation in favor of the Latin American countries. GATT rulings in favor of the Latin American countries could result in an increase in the total volume of Latin American bananas, including banana volume of the Company, which could be imported under the quota. However, there can be no assurance that the EC will comply, or the manner in which it would comply, with such rulings. (See "Results of Operations" below for discussion of the impact of the EC quota on current operations.) RESULTS OF OPERATIONS Net sales for the third quarter of 1993 of $552 million and first nine months of 1993 of $1.966 billion declined from the comparable prior year amounts of $612 million and $2.102 billion primarily as a result of lower banana volumes and prices. Nevertheless, for the third quarter of 1993, the Company reported a reduced net loss of $25.9 million, or $.50 per share, compared to a 1992 third quarter net loss of $79.4 million, or $1.55 per share (including a loss on discontinued operations of $7.5 million, or $.15 per share). For the nine months ended September 30, 1993, the Company reported net income of $9.3 million, or $.18 per share, as compared to a net loss of $90.6 million, or $1.74 per share, in the same period of 1992 (which included a loss on discontinued operations of $21.4 million, or $.41 per share). This improvement is attributable to the continuing benefits of Chiquita's multi-year investment spending program and the ongoing impact of its restructuring and cost reduction efforts. These programs address all aspects of the banana business including a decreased reliance on high-cost purchased fruit, enhanced production practices, shipping fleet realignment, reorganization and consolidation of marketing organizations, and overhead reductions. Since imposition of the new EC quota regime on July 1, 1993, prices within the EC have increased to a higher level than the levels in prior years. Banana prices in other worldwide markets have been lower than in previous years, as displaced EC volume has entered those markets. The favorable cost comparisons achieved during the first nine months of 1993 as a result of the Company's investment spending and cost reduction programs have continued throughout the fourth quarter. Fourth quarter banana price levels in the EC remained higher than pre-quota price levels of the 1992 fourth quarter. However, EC prices weakened during the fourth quarter from earlier post-quota levels partially as a result of the EC's late issuance of fourth quarter import licenses and its announcement of an expiration date for these licenses that was earlier than marketplace expectations. The Company expects to report a fourth quarter 1993 net loss in the range of approximately $52 to $67 million, or $1.00 to $1.30 per share, compared to a net loss of $193 million, or $3.77 per share (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $41 million, or $.80 per share) for the same period last year. For the year ended December 31, 1993, the Company expects to report a net loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to a net loss of $284 million, or $5.48 per share (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $62 million, or $1.20 per share), reported in 1992. Based on the expected range of results above, earnings before interest, income tax, depreciation and amortization ("EBITDA") for 1993 are estimated to be in the range of $214 to $229 million. For 1992, EBITDA excluding restructuring and reorganization charges and discontinued operations was $44 million. S-5 6 Chiquita also expects that the improved cost trend will continue into 1994. In addition, the EC quota impact could cause first half 1994 banana prices in the EC to exceed pre-quota first half 1993 levels as they have since implementation of the quota. First half 1994 prices outside the EC could continue at levels lower than in previous years as they have since implementation of the quota, although the continuing growth in per capita consumption of bananas outside the EC could mitigate any such decline. DISCONTINUED OPERATIONS During the fourth quarter of 1992, after evaluation of reorganization plans announced earlier that year and completion of other preparatory actions, the Company adopted a plan of disposal for all remaining Meat Division operations. Accordingly, these operations were classified as discontinued operations and were deconsolidated. (See Note 3 to the Company's Consolidated Financial Statements for the year ended December 31, 1992, included in the Company's 1992 10-K.) Pursuant to the plan, the Company immediately completed the sale of a major fresh pork processing facility in December 1992. During 1993, the Company engaged in extensive activity with respect to execution of the balance of its disposal plan. Numerous proposals for the purchase of individual components of the Meat Division were received from a larger number of buyers than originally expected. Although progress under the plan has been slower than anticipated, partially as a result of the Company evaluating all these proposals in the interest of maximizing shareholder value, the Company has made significant progress in the implementation of its disposal plan. This progress includes: - successful ongoing cost reduction efforts that have contributed to the improvement in Meat Division operating results to approximately breakeven levels for 1993. - progress toward obtaining further substantial cost reductions for 1994 and beyond relating to retiree medical costs. In June 1993, the Company received a favorable court ruling on its previously filed litigation that confirms its right to unilaterally reduce medical benefits of retired hourly employees. This ruling is being appealed by the union and a hearing on the appeal is scheduled for February 1994. - receiving subsidies and concessions from the State of South Dakota and the City of Sioux Falls that will enhance the operating profitability of the Sioux Falls plant. These incentives were offered in September 1993 by newly installed state and city administration officials who took office in April 1993 after their predecessors, including the Governor of South Dakota, were killed in a plane crash on their return from a meeting to discuss incentives with Company and Meat Division representatives. - obtaining financial incentives and concessions in November 1993 from the City of Sioux City, Iowa and the local labor union to enhance the salability of the Sioux City pork processing plant as an operating facility. - signing a letter of intent in December 1993 for the sale of the entire Specialty Meat Group. The Company is presently negotiating with this buyer and expects to complete the sale of this group in the first half of 1994. - obtaining a new stand-alone revolving credit facility in June 1993 to fund the Meat Division's working capital needs. The Company also continues to be engaged in vigorous marketing efforts with respect to the remaining Meat Division operations that now reflect improved prospects as a result of the favorable developments described above. It expects to complete the divestitures of these operations by the end of 1994. The Company has reevaluated its provision for loss on discontinued operations recorded in 1992 and believes it is adequate to provide for any losses on disposition. The developments during 1993 regarding the Company's Meat Division have not had and are not expected to have a material adverse effect on the Company's liquidity, financial condition or results of operations. Net sales from discontinued operations for the nine months ended September 30, 1993 were approximately $1.2 billion. S-6 7 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Senior Notes offered hereby will be approximately $ , which proceeds will be used to repay the Company's 11 7/8% Subordinated Debentures due May 1, 2003. The net proceeds to be received by the Company from the Preferred Stock Offering (if such offering is consummated) will be approximately $ , which proceeds will be used to repay outstanding subordinated debt of the Company and/or to repay outstanding debt of the Company's subsidiaries. The Company will determine which debt to repay with the net proceeds from the Preferred Stock Offering based on factors including, without limitation, prevailing market interest rates, redemption prices and other terms of the debt. The Company expects that the application of such net proceeds will be completed within one year. Pending application of the net proceeds from such offerings as described herein, such net proceeds may be invested in short-term investments or used for general corporate purposes. S-7 8 CAPITALIZATION The following table sets forth the unaudited consolidated capitalization of the Company at September 30, 1993 and as adjusted to give effect to the application of the aggregate proceeds from the sale of the Senior Notes offered hereby and the issuance of the Preferred Stock (assuming no exercise of the over-allotment option provided for therein) as described in "Use of Proceeds." The table excludes the effect of any loss which might result from early retirement of any of the Company's existing debt, fees or expenses associated with the offerings of the Senior Notes and the Preferred Stock. Such loss, fees or expenses would not be material to the Company's total shareholders' equity. The table should be read in conjunction with "Selected Consolidated Financial Data" appearing elsewhere in this Prospectus Supplement and the Company's Consolidated Financial Statements and notes thereto. The amounts below do not include debt of the Company's discontinued operations (see Note 1 to "Selected Consolidated Financial Data").
SEPTEMBER 30, 1993 ------------------------- AS ACTUAL ADJUSTED ---------- ---------- (DOLLARS IN THOUSANDS) Short-term debt: Notes and loans payable.................................... $ 114,298 $ 114,298 Long-term debt due within one year......................... 75,668 75,668 ---------- ---------- Total short-term debt................................. $ 189,966 $ 189,966 ---------- ---------- ---------- ---------- Long-term debt: Long-term debt of parent company Senior debt........................................... $ 247,154 $ 247,154 Senior Notes offered hereby........................... -- 125,000 Subordinated debt..................................... 633,530 (a) Other notes and loans................................. 53 53 Long-term debt of subsidiaries(b).......................... 558,400 (a) ---------- ---------- Total long-term debt.................................. 1,439,137 1,339,137 ---------- ---------- Shareholders' equity(c): Preferred and preference stock (648,310 shares outstanding)............................................. 52,270 52,270 Preferred Stock offered in the Preferred Stock Offering (2,000,000 shares, liquidation preference of $50 per share)................................................... -- 100,000 Capital stock, $.33 par value per share (48,242,090 shares outstanding)............................................. 16,081 16,081 Capital surplus............................................ 491,433 491,433 Retained earnings.......................................... 103,216 103,216 ---------- ---------- Total shareholders' equity............................ 663,000 763,000 ---------- ---------- Total long-term capitalization........................ $2,102,137 $2,102,137 ---------- ---------- ---------- ---------- - --------------- (a) See "Use of Proceeds." (b) For discussion of aggregate amounts to be financed relating to capital commitments for ships, see "Management's Analysis of Operations and Financial Condition -- Financial Condition" included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. See also Note 12 to the Company's Consolidated Financial Statements for the year ended December 31, 1992 for discussion of operating lease commitments for ships and other facilities. (c) Excludes approximately 9.0 million shares of Common Stock reserved at September 30, 1993 for issuance in connection with warrants and options and 3.9 million shares reserved at September 30, 1993 for purchase or Company contributions under other employee benefit plans. See Notes 10 and 11 to the Company's Consolidated Financial Statements for the year ended December 31, 1992. Also excludes approximately 3.2 million shares reserved for issuance upon conversion of the Company's 7% Convertible Subordinated Debentures due 2001 and up to 20.0 million shares to be reserved for issuance upon conversion of the Preferred Stock. Also excludes approximately 6.0 million shares reserved for issuance in connection with dividends on and conversion of the Company's $1.32 Depositary Shares. As of September 30, 1993, the Company had $194.8 million of cash and equivalents.
S-8 9 DESCRIPTION OF SENIOR NOTES The following description of the particular terms of the Senior Notes offered hereby (referred to in the Prospectus as "Senior Debt Securities") supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of Senior Debt Securities set forth in the Prospectus, to which description reference is hereby made. The % Senior Notes due , 2004 (the "Senior Notes") are to be issued as a series of Senior Debt Securities under the Indenture, dated as of , between the Company and The Fifth Third Bank, as Trustee (the "Trustee"), which is also described in the accompanying Prospectus. The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness. The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled $748 million at September 30, 1993. The Senior Notes will be limited to $125,000,000 aggregate principal amount and will mature on , 2004. The Senior Notes will bear interest at the rate per annum shown on the cover of this Prospectus Supplement from or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually on and of each year, commencing , 1994, to the person in whose name a Senior Note (or any predecessor Senior Note) is registered at the close of business on or , as the case may be, next preceding such Interest Payment Date. The Senior Notes are not deemed to have been issued with "original issue discount" within the meaning of the Internal Revenue Code of 1986, as amended. The Senior Notes may not be redeemed by the Company prior to maturity and do not provide for any sinking fund. The Senior Notes will be issued only in fully registered form in denominations of $1,000 and integral multiples thereof. Principal and interest will be payable, and the Senior Notes will be exchangeable and transferable, at the office or agency of the Company maintained or designated for such purposes (which initially will be Securities Transfer Company located in Cincinnati, Ohio); provided that payment of interest may be made at the option of the Company by check mailed to the registered holders of the Senior Notes. CERTAIN DEFINITIONS Set forth below is a summary of certain defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms and for the definitions of other defined terms used in this Prospectus Supplement and not defined below. "Acquired Indebtedness" means Indebtedness of a Person (i) existing at the time such Person becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets of such Person. "Adjusted Consolidated Assets" on any date means the amount of (i) all assets of the Company and the Subsidiaries on a consolidated basis less (ii) all Indebtedness of Subsidiaries on a consolidated basis, in each case as determined as of the last day of the immediately preceding fiscal quarter in accordance with GAAP. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Change of Control Triggering Event" means an event or series of events by which (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than Permitted Lindner Holders is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 30% of the total voting power of all classes of capital stock then outstanding of the Company S-9 10 normally entitled to vote in elections of directors ("Voting Shares"), provided that the Permitted Lindner Holders "beneficially own" (as so defined) a lesser percentage of the Voting Shares than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company; (ii) the Company consolidates with or merges into another corporation or conveys, transfers or leases all or substantially all of its assets to any person, or any corporation consolidates with or merges into the Company, in either event pursuant to a transaction in which the outstanding Voting Shares of the Company are changed into or exchanged for cash, securities or other property, other than any such transaction between the Company and a wholly-owned Subsidiary; (iii) the Company or any Subsidiary purchases or otherwise acquires, directly or indirectly, beneficial ownership of 30% or more of the Company's capital stock within any 12-month period; (iv) on any date, the individuals who at the beginning of the two-year period immediately preceding such date constituted the Company's Board of Directors (together with any new directors whose election by the Company's Board of Directors, or whose nomination for election by the Company's shareholders, was approved by a vote of at least 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) on any day (a "Calculation Date") the Company makes any distribution or distributions of cash, property or securities (other than regular quarterly dividends, Common Stock, preferred stock which is substantially equivalent to Common Stock or rights to acquire such stock) to holders of capital stock of the Company or purchases or otherwise acquires capital stock (other than upon the conversion of a security convertible into capital stock) of the Company and the sum of the Fair Market Value of such distribution or purchase, plus the Fair Market Value of all other such distributions and purchases which have occurred during the prior year, exceeds 30% of the Fair Market Value of the Company's outstanding Common Stock. This percentage is calculated on each Calculation Date by determining the percentage of the Fair Market Value of the Company's outstanding Common Stock as of such Calculation Date which is represented by the Fair Market Value of the distributions and purchases which have occurred on such date and adding to that percentage all of the percentages which have been similarly calculated on the dates of all such distributions and purchases during the prior year. "Consolidated Interest Expense" means for any period the sum of (i) the aggregate of the interest expense on Indebtedness of the Company and its Subsidiaries for such period, on a consolidated basis, plus (ii) without duplication, that portion of capital lease rentals of the Company and its Subsidiaries representative of the interest factor for such period, in each case as determined in accordance with GAAP. "Consolidated Net Income" means for any period the net income or loss of the Company and its Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP adjusted by excluding the after-tax effect of (i) net gains or losses in respect of dispositions of assets other than in the ordinary course of business, (ii) any gains or losses from currency exchange transactions not in the ordinary course of business consistent with past practice, (iii) the net income of any Subsidiary to the extent that dividends or distributions by such Subsidiary in the amount of such net income are restricted or prohibited and (iv) any gains or losses attributable to write-ups or write-downs of assets or liabilities other than in the ordinary course of business. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person and its Subsidiaries, as determined in accordance with GAAP. "Consolidated Tax Expense" of the Company means for any period the aggregate of the federal, state, local and foreign income tax expense of the Company and its consolidated Subsidiaries for such period, determined in accordance with GAAP. "Fixed Charge Coverage Ratio" means for any period the ratio of (i) the sum of Consolidated Net Income, Consolidated Interest Expense and Consolidated Tax Expense, plus all depreciation and, without duplication, all amortization, in each case, for such period, of the Company and its Subsidiaries on a consolidated basis, all as determined in accordance with GAAP, to (ii) Consolidated Interest Expense for such period; provided, however, that in making such computation, the Consolidated Interest Expense attributable to interest on any Indebtedness computed on a pro forma basis and bearing a floating interest rate S-10 11 shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period. "GAAP" means generally accepted accounting principles as in effect and as implemented by the Company on the date of the Indenture. "Indebtedness" means (i) any liability of any Person (A) for borrowed money, or under any reimbursement obligation relating to a letter of credit (other than letters of credit obtained in the ordinary course of business), or (B) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind or with services incurred in connection with capital expenditures (other than accounts payable or other Indebtedness to trade creditors arising in the ordinary course of business), or (C) for the payment of money relating to a Capitalized Lease Obligation; (ii) any liability of others described in the preceding clause (i) that the Person has guaranteed or that is otherwise its legal liability; and (iii) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) and (ii) above. "Intercompany Debt Obligations" means any Indebtedness of the Company or any Subsidiary which, in the case of the Company, is owing to any Subsidiary and which, in the case of any Subsidiary, is owing to the Company or any other Subsidiary. "Lien" means any mortgage, lien, pledge, security interest, conditional sale or other title retention agreement, charge or other security interest or encumbrance of any kind. "Permitted Indebtedness" means (i) Indebtedness of the Company or any Subsidiary outstanding on the date of the Indenture; (ii) the Senior Notes; (iii) Indebtedness of the Company not in excess of $250 million in principal amount outstanding at any time under revolving credit or similar bank facilities and any refinancings, replacements, renewals, extensions, substitutions, refundings, deferrals, restructurings, amendments, supplements or modifications of such Indebtedness; provided, however, that the proceeds of such Indebtedness referred to in this clause (iii) shall be invested in, or used in connection with, food-related businesses (other than the fresh or processed meat business); (iv) Indebtedness of a Subsidiary (including Acquired Indebtedness), which is non-recourse to the Company, the proceeds of which are or have been used for working capital purposes or for capital expenditures in food-related businesses (other than the fresh or processed meat business); (v) Indebtedness of (A) a Subsidiary borrowed from a lender located in any country producing tropical fruit and denominated in or measured by the currency of such country other than U.S. dollars, which Indebtedness is incurred for hedging purposes in the ordinary course of business consistent with past practice or (B) the Company or any other Subsidiary (other than for borrowed money) incurred in connection with Indebtedness of a Subsidiary referred to in clause (A) above which is (y) a guarantee of such Subsidiary Indebtedness, or (z) a reimbursement obligation relating to a letter of credit supporting such Subsidiary Indebtedness; (vi) Intercompany Debt Obligations; provided, however, that the obligations of the Company with respect to such Indebtedness shall be evidenced by an intercompany note and shall be subordinated in right of payment from and after such time as all Senior Notes issued and outstanding shall become due and payable (whether at Stated Maturity, by acceleration or otherwise) to the payment and performance of the Company's obligations under the Senior Notes; (vii) additional Indebtedness of the Company (including Acquired Indebtedness) the aggregate principal amount of which outstanding at any time does not exceed 5% of Adjusted Consolidated Assets. "Permitted Liens" means (i) Liens existing on the date of the Indenture on assets of the Company or any Subsidiary; (ii) Liens on assets acquired after the date of the Indenture or Liens to secure the purchase price of assets to be acquired; (iii) Liens on properties of any Subsidiary securing Indebtedness the proceeds of which are or have been used for working capital or capital expenditures relating to food-related businesses (other than the fresh or processed meat business); (iv) Liens securing Indebtedness of (A) any Subsidiary borrowed from a lender located in any country producing tropical fruit and denominated in or measured by the currency of such country other than U.S. dollars, which Indebtedness is incurred for hedging purposes in the ordinary course of business consistent with past practice and (B) the Company or any other Subsidiary, to the extent permitted under clause (v)(B) of Permitted Indebtedness; (v) Liens of a Person existing at the time such Person becomes a Subsidiary or assumed in connection with the acquisition of assets of such Person; (vi) S-11 12 Liens on working capital assets; (vii) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of the foregoing; (viii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business and with respect to amounts not overdue for a period of more than 90 days or being contested in good faith by appropriate proceedings; (ix) judgment Liens and other similar Liens arising in the ordinary course of business; provided, however, that the execution or other enforcement thereof is being effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (x) Liens securing Intercompany Debt Obligations; (xi) Liens for taxes not yet due or payable under law or being contested in good faith; (xii) Liens upon property of a foreign Subsidiary to secure Indebtedness of that foreign Subsidiary; (xiii) Liens in accordance with customary banking practice to secure Indebtedness in connection with foreign trade; (xiv) easements, rights-of-way, restrictions and other similar encumbrances to the extent incurred in the ordinary course of business; (xv) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; and (xvi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds, interest rate, foreign exchange and commodity hedging transactions and other obligations of a like nature incurred in the ordinary course of business. "Permitted Lindner Holders" means, collectively, Carl H. Lindner, Robert D. Lindner, Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner, the respective estates, spouses, heirs, ancestors, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee of any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof, or any entity of which any of the foregoing, individually or collectively, beneficially own more than 50% of the Voting Shares. "Refinancing Indebtedness" means any renewals, extensions, substitutions, refundings, refinancings, replacements, deferrals, restructurings, amendments, supplements or modifications of any Indebtedness (each, a "Refinancing") of the Company or any of its Subsidiaries outstanding on the date of the Indenture or other Indebtedness permitted to be incurred by the Company or any of its Subsidiaries pursuant to the terms of the Indenture (other than Indebtedness referred to in clauses (iii), (iv), (v), (vi) or (vii) of the definition of Permitted Indebtedness), but only to the extent that (i)the aggregate amount of Indebtedness represented thereby is not increased by such Refinancing, (ii) the Indebtedness incurred in such Refinancing is not incurred by a Subsidiary if the Company initially incurred the Indebtedness being renewed, extended, substituted, refunded, refinanced, replaced, deferred, restructured, amended, supplemented or modified and (iii) the Indebtedness incurred in such Refinancing is not incurred by the Company if a Subsidiary initially incurred the Indebtedness being renewed, extended, substituted, refunded, refinanced, replaced, deferred, restructured, amended, supplemented or modified, and such Indebtedness was non-recourse to the Company. "Related Person" means (i) any Affiliate of the Company, (ii) any individual or entity who directly or indirectly holds 10% or more of any class of capital stock of the Company, (iii) any relative of such individual by blood, marriage or adoption not more remote than first cousin and (iv) any officer or director of the Company. PAYMENT AND PAYING AGENTS The payment of principal of (and premium, if any) and interest on the Senior Notes will be made (i) by check mailed or delivered to the address of the Person entitled thereto or (ii) by wire transfer to an account (with a bank located inside the United States) maintained by the Person entitled thereto. Payment of an installment of interest on any Senior Note will be made to the Person in whose name the Senior Note is registered at the close of business on the Regular Record Date for such interest payment. All money paid by the Company to the Trustee or a Paying Agent or held in trust by the Company for the payment of principal of (and premium, if any) and interest, on any Senior Note which remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company and the holder of the Senior Note will thereafter look only to the Company for payment thereof. S-12 13 DEFEASANCE OF CERTAIN OBLIGATIONS The terms of the Senior Notes provide that the Company may omit to comply with the restrictive covenants in the terms of the Senior Notes relating to Consolidation, Merger and Sale of Assets; Limitation on Liens; Limitation on Sale and Leaseback Transactions; Limitation on Indebtedness; Limitation on Restricted Payments; Transactions with Related Persons; Purchase of Senior Notes upon Change of Control; and any such omission with respect to such covenants shall not be an Event of Default with respect to the Senior Notes, if (a) the Company deposits or causes to be deposited with the Trustee for the Senior Notes in trust an amount of cash or U.S. government securities sufficient to pay and discharge when due the entire indebtedness on all such Outstanding Senior Notes for unpaid principal (and premium, if any) and interest to the Stated Maturity or any Redemption Date, as the case may be and (b) certain other conditions are met. The obligations of the Company under the Indenture with respect to the Senior Notes, other than with respect to the covenants referred to above, shall remain in full force and effect. CONSOLIDATION, MERGER AND SALE OF ASSETS The Company may not consolidate with or merge into any other entity or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to any entity, unless: (1) either (a) the Company shall be the continuing corporation or (b) the entity (if other than the Company) formed by such consolidation or into which the Company is merged or the entity that acquires, by sale, assignment, conveyance, transfer, lease or disposition, all or substantially all of the properties and assets of the Company as an entirety shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, and shall expressly assume by a supplemental indenture, the due and punctual payment of the principal of (and premium, if any) and interest on all the Debt Securities and the performance and observance of every covenant of the Indenture on the part of the Company to be performed or observed; (2) immediately thereafter, no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing; (3) after giving effect to such transaction, the Company or such entity could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant of the Indenture entitled "Limitation on Indebtedness"; (4) immediately thereafter, the Company or such entity shall have a Consolidated Net Worth equal to or greater than the lesser of (A) the Consolidated Net Worth of the Company immediately prior to such transaction or (B) 80% of the Consolidated Net Worth of the Company immediately prior to such transaction provided that such amount shall not be less than $500 million; (5) immediately thereafter, on a pro forma basis, the Fixed Charge Coverage Ratio of the Company or of such entity shall be at least 2.0 to 1; provided, however, that if the Fixed Charge Coverage Ratio of the Company immediately prior to such transaction is within the range set forth in column (A) below, then the Fixed Charge Coverage Ratio of the Company or of such entity shall be at least equal to the lesser of the ratio determined by multiplying the percentage set forth in column (B) below by the Fixed Charge Coverage Ratio of the Company or the ratio set forth in column (C) below:
A B C - ---------------------------------------------------------------- ---------- ---------- 2.2222:1 to 2.9999:1 ........................................... 90% 2.4:1 3.00:1 to 3.9999:1 ............................................. 80% 2.8:1 4:00:1 to greater .............................................. 70% 3.0:1
and provided, further, that, if immediately after giving effect to such transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the Company or the surviving entity, as the case may be, is 3.0 to 1 or more, the calculation in the preceding proviso shall be inapplicable and such transaction shall be deemed to have complied with the requirements of such provision; and (6) the Company or such entity shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the Indenture and that all conditions precedent therein relating to such transaction have been satisfied. In the event of any transaction (other than a lease) described in and complying with the conditions listed in the preceding paragraph in which the Company is not the continuing corporation, the successor entity S-13 14 formed or remaining would be substituted for the Company and the Company would be discharged from all obligations and covenants under the Indenture and the Senior Notes. CERTAIN COVENANTS OF THE COMPANY The Indenture contains, among others, the covenants summarized below, which will be applicable (unless waived or amended) so long as any of the Senior Notes are outstanding. Limitation on Indebtedness. The Company will not, and will not permit any Subsidiary to, create, incur, assume or guarantee the payment of any Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness or Refinancing Indebtedness, unless at the time of such event and after giving effect thereto on a pro forma basis the Company's Fixed Charge Coverage Ratio for the four full fiscal quarters immediately preceding such event, taken as one period, is not less than 2.0 to 1. For the purposes of determining any particular amount of Indebtedness, there shall not be included the amount of any guarantees of (or obligations with respect to letters of credit supporting, or joint or joint and several obligations in respect of) Indebtedness, the amount of which is otherwise included. For purposes of determining compliance with this covenant, (i) in the event that an item of Indebtedness meets the criteria of more than one of the clauses of Permitted Indebtedness or Refinancing Indebtedness, the Company, in its sole discretion, shall classify such item of Indebtedness and shall be required to include the amount and type of such Indebtedness in only one of such clauses and (ii) the amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. Limitation on Liens. The Company will not, and will not permit any Subsidiary to, create, assume, incur or suffer to be created, assumed or incurred any Lien upon any of their respective assets without making effective provision whereby all the Senior Notes shall be directly secured equally and ratably with the Indebtedness or other obligations secured by such Lien, except for (i) Permitted Liens and (ii) Liens securing an aggregate amount of Indebtedness, which together with the aggregate "value" of sale and leaseback transactions referred to below (other than such transactions in which debt has been retired in accordance with the following paragraph), does not at the time exceed 5% of Adjusted Consolidated Assets. Limitation on Sale and Leaseback Transactions. The Company may not enter into any sale and leaseback transaction, or series of related such transactions, of assets with an aggregate fair market value of $10 million or more relating to the sourcing, processing, transportation, shipping or distribution of the Company's fresh food products, including ships, land, facilities, equipment and related infrastructure, unless an amount equal to the greater of the proceeds of sale or the fair value of the property is applied (a) to build or purchase capital assets used in the Company's business or (b) to retire long-term Indebtedness for money borrowed (including the Senior Notes) of the Company, except that the Company may enter into (i) intercompany sale and leaseback transactions, (ii) temporary sale and leaseback transactions with a term not to exceed three years and (iii) sale and leaseback transactions with respect to which the "value" thereof plus the other secured Indebtedness referred to in clause (ii) of the previous paragraph does not at the time exceed 5% of Adjusted Consolidated Assets. Limitation on Restricted Payments. The Company will not, directly or indirectly, (i) declare or pay any dividend on, or make any distribution in respect of, or purchase, redeem or retire for value, or permit any of its Subsidiaries, directly or indirectly, to so purchase, redeem or retire for value, any capital stock of the Company, other than through the issuance solely of the Company's own capital stock, or rights thereto, (ii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, prior to rescheduled principal payment or maturity, Indebtedness of the Company (excluding Indebtedness of Subsidiaries) which is expressly subordinate in right of payment to the Senior Notes or permit any of its Subsidiaries, directly or indirectly, to do so or (iii) make any loan to, incur, create, assume or suffer to exist any guarantee of Indebtedness of, or make advancement to, or other investment in, or permit any of its Subsidiaries to make any loan, incur, create, assume or suffer to exist any guarantee of Indebtedness of, or make advancement to, or other investment in, any Related Person of the Company (other than a Subsidiary of the Company) except for any transaction with an officer or director of the Company entered into in the ordinary course of business (including compensation or employee benefit arrangements with any officer or director of the Company) (such payments or any other actions described in (i), (ii) and (iii), collectively, S-14 15 "Restricted Payments") unless (a) at the time of and after giving effect to the proposed Restricted Payment no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing, and (b) at the time of and after giving effect to the proposed Restricted Payment (the value of any such payment, if other than cash, as determined by the Board of Directors, whose determination shall be conclusive and evidenced by a board resolution), the aggregate amount of all Restricted Payments declared or made after December 31, 1993 shall not exceed the sum of (A) 50% of the aggregate cumulative Consolidated Net Income of the Company accrued on a cumulative basis during the period beginning on January 1, 1994 and ending on the last day of the Company's last fiscal quarter ending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) plus (B) the aggregate proceeds received by the Company as capital contributions to the Company after December 31, 1993, or from the issuance and sale (other than to a Subsidiary) after December 31, 1993 of capital stock of the Company (excluding the issuance or sale of preferred stock that is mandatorily redeemable, or redeemable at the option of the holder of such preferred stock, in either case, prior to the stated maturity of the Senior Notes (collectively, the "Disqualified Stock")) and any Indebtedness or other securities of the Company convertible into or exercisable for capital stock (other than Disqualified Stock) of the Company which has been so converted or exercised, as the case may be, plus (C) $65 million; provided, however, that the foregoing provisions will not prevent the payment of any dividend, within 60 days after the date of its declaration, if at the date of declaration such payment would be permitted by such provisions. For the purposes of the foregoing provisions, the term "Restricted Payment" shall not include the making of any principal payment on, or redemption, repurchase, defeasance or other acquisition or retirement for value, prior to scheduled principal payment or maturity, of (1) any of the Company's subordinated Indebtedness existing at the date of the Indenture as long as no such acquisition or retirement is made with the proceeds of Indebtedness which has a maturity date earlier than the existing subordinated Indebtedness being acquired or retired or (2) any subordinated Indebtedness of the Company incurred after the date of the Indenture, if such acquisition or retirement is made with the proceeds of subordinated Indebtedness which has a maturity date no earlier than the latest maturity date of any then Outstanding Senior Notes. Notwithstanding the foregoing, securities, property or other assets of any existing or future business of the Company engaged in the processing or marketing of fresh or processed meat, poultry or seafood products shall be valued at their net book value as determined in accordance with GAAP, and up to $100 million in net book value (as so determined) of any dividend or distribution of such securities, property or other assets to holders of capital stock of the Company shall be permitted without regard to the foregoing provision and shall be excluded from any calculation pursuant to the foregoing provisions. Transactions with Related Persons. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Related Person (other than a Subsidiary) unless (i) such transaction or series of transactions is on terms that are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in a comparable transaction with an unrelated third party and (ii)(A) with respect to a transaction or series of transactions involving aggregate payments in excess of $10 million but less than $20 million, the Company delivers an officer's certificate to the Trustee certifying that such transaction complies with the clause (i) above and (B) with respect to a transaction or series of transactions involving aggregate payments equal to or greater than $20 million, such transaction or series of related transactions is approved by a majority of the Board of Directors of the Company including the approval of a majority of the disinterested directors. Notwithstanding the foregoing, this provision will not apply to (i) any transaction with an officer or director of the Company entered into in the ordinary course of business (including compensation or employee benefit arrangements with any officer or director of the Company) and (ii) any transaction entered into in the ordinary course of business with a Subsidiary. Purchase of Debt Securities upon Change of Control. If a "Change of Control Triggering Event" shall occur at any time then each holder shall have the right to require that the Company repurchase such holder's Senior Notes in whole or in part in integral multiples of $1,000, at a purchase price in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, which shall be 90 days from the date the Company notifies the holders of the occurrence of a Change of Control S-15 16 Triggering Event. The source of funds for any such repurchase will be the Company's available cash or cash generated from operations or other sources, including borrowings, sales of assets or sales of equity. However, there can be no assurance that sufficient funds will be available at the time of any Change of Control Triggering Event to make any required repurchases. The Company agrees that it will comply with all applicable tender offer rules, including Rule 14e-1 under the Exchange Act, if the repurchase option is triggered upon a Change of Control Triggering Event. The Company is obligated to give notice to holders of the Senior Notes and the Trustee within fifteen days following a Change of Control Triggering Event specifying the purchase date, the place at which the Senior Notes shall be presented and surrendered for purchase, that interest accrued to the purchase date will be paid upon such presentation and surrender and that interest will cease to accrue on the Senior Notes surrendered for purchase as of such purchase date. In order for a holder of the Senior Notes properly to put its Senior Notes to the Company for purchase, the holder must give notice and present and surrender the Senior Notes to the Company at the place specified in the Company's aforementioned notice at least fifteen days prior to the purchase date. Any such tender by a holder of the Senior Notes shall be irrevocable. The Company is not obligated to notify holders of or to purchase the Senior Notes with respect to more than one Change of Control Triggering Event. UNDERWRITING The Underwriters named below, acting through their Representatives, Lehman Brothers Inc., Kidder, Peabody & Co. Incorporated, and Smith Barney Shearson Inc. (the "Representatives"), have severally agreed, subject to the terms and conditions of the Underwriting Agreement and the related Terms Agreement referred to therein (the "Underwriting Agreement"), to purchase from the Company the principal amount of Senior Notes set forth opposite their respective names below:
PRINCIPAL AMOUNT OF UNDERWRITERS SENIOR NOTES - ---------------------------------------------------------------- --------------- Lehman Brothers Inc. ........................................... $ Kidder, Peabody & Co. Incorporated.............................. Smith Barney Shearson Inc. ..................................... --------------- Total...................................................... $ 125,000,000 --------------- ---------------
The Underwriting Agreement provides that the obligations of the Underwriters to purchase the Senior Notes are subject to certain conditions and that if any of the foregoing Senior Notes are purchased by the Underwriters pursuant to the Underwriting Agreement all the Senior Notes agreed to be purchased by the Underwriters must be so purchased. The Underwriters propose to offer the Senior Notes directly to the public initially at the public offering price set forth on the cover page of this Prospectus Supplement and to certain selected dealers (who may include Underwriters) at such public offering price less a selling concession not to exceed % of the principal amount of the Senior Notes. The selected dealers may reallow a selling concession to certain other dealers not to exceed % of the principal amount of the Senior Notes. After the initial public offering of the Senior Notes, the public offering price and such concessions may be changed by the Representatives. The Company has been advised by the Underwriters that they intend to make a market in the Senior Notes; however, they are not obligated to do so, and market making with respect to the Senior Notes may be discontinued at any time without notice. There can be no assurance that an active public market for the Senior Notes will develop. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the Underwriters may be required to make in respect of such liabilities. Certain of the Underwriters have provided from time to time, and expect to provide in the future, financial advisory and investment banking services to the Company and its affiliates, for which such Underwriters have received and will receive customary fees and commissions. S-16 17 PROSPECTUS $400,000,000 CHIQUITA BRANDS INTERNATIONAL, INC. DEBT SECURITIES PREFERRED STOCK COMMON STOCK ------------------ Chiquita Brands International, Inc. ("Chiquita" or the "Company") may offer from time to time (i) in one or more series unsecured debt securities, which may be either senior or subordinated debt securities (together, the "Debt Securities"), consisting of debentures, notes and/or other evidences of indebtedness; (ii) in one or more series shares of Non-Voting Cumulative Preferred Stock, par value $1.00 per share ("Preferred Stock"), and (iii) shares of its Capital Stock, par value $0.33 per share ("Common Stock") (the Debt Securities, Preferred Stock and Common Stock being collectively referred to as the "Securities"), or any combination of the foregoing, at an aggregate initial offering price not to exceed $400,000,000, at prices and on terms to be determined at or prior to the time of sale. Specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement ("Prospectus Supplement"), together with the terms of the offering of the Securities and the initial price and the net proceeds to Chiquita from the sale thereof. The Prospectus Supplement will set forth with regard to the particular Securities, without limitation, the following: (i) in the case of Debt Securities, the specific designation, aggregate principal amount, ranking as senior debt or subordinated debt, authorized denominations, maturity, rate (or method of calculation thereof) of interest and dates (or method of determination thereof) for payment thereof, and any exchangeability, conversion, redemption, prepayment or sinking fund provisions, (ii) in the case of Preferred Stock, the designation, number of shares, liquidation preference per share, initial public offering price, dividend rate (or method of calculation thereof), dates on which dividends shall be payable and dates from which dividends shall accrue, any redemption or sinking fund provisions, any conversion or exchange rights and any special voting or other special rights and (iii) in the case of Common Stock, the number of shares of Common Stock and the terms of the offering and sale thereof. The Prospectus Supplement will also contain information, where applicable, about certain Federal income tax considerations relating to, and any listing on a securities exchange of, the Securities covered by the Prospectus Supplement. The Securities may be offered for sale directly, through agents, to or through underwriters or dealers designated from time to time or through a combination of such methods. If agents of Chiquita or any underwriters or dealers are involved in the sale of the Securities the names of such agents, underwriters or dealers and any applicable commission or discounts will be set forth in the Prospectus Supplement. See "Plan of Distribution." SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ THE DATE OF THIS PROSPECTUS IS JANUARY 28, 1994. 18 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT, UNDERWRITER OR DEALER. THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. AVAILABLE INFORMATION Chiquita is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "Commission"). Chiquita has filed with the Commission a Registration Statement on Form S-3 (together with all amendments and exhibits, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Securities offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement and exhibits thereto, or amendments thereto, to which reference is hereby made. Such reports, proxy and information statements, Registration Statement and exhibits and other information filed by Chiquita may be inspected and, upon payment of the Commission's customary charges, copied at the public reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the Commission at Suite 1300, 7 World Trade Center, New York, New York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock Exchanges. Reports, proxy and information statements and other information concerning Chiquita may be inspected and copied at the Library of the New York Stock Exchange at 20 Broad Street, New York, New York; at the Secretary's Office of the Boston Stock Exchange at 1 Boston Place, Boston, Massachusetts; and at the Listing Department of the Pacific Stock Exchange at 301 Pine Street, San Francisco, California. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Chiquita will furnish, without charge, to any person to whom this Prospectus is delivered, upon such person's written or oral request, a copy of any and all of the information that has been incorporated by reference in the Registration Statement of which this Prospectus is a part (not including exhibits to such information unless such exhibits are specifically incorporated by reference into such information). Any such request should be directed to the Vice President, Corporate Affairs of Chiquita, 250 East Fifth Street, Cincinnati, Ohio 45202; telephone: (513) 784-6366. The Annual Report on Form 10-K for the year ended December 31, 1992 (which incorporates by reference certain information contained in the Company's 1992 Annual Report to Shareholders) (the "1992 10-K"), the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993 (the "1993 Third Quarter 10-Q" and, collectively, the "1993 10-Q's") and the Current Reports on Form 8-K dated January 13, 1993, March 4, 1993 and January 21, 1994 filed by Chiquita with the Commission (Commission file number 1-1550) are incorporated herein by reference and made a part hereof. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so 2 19 modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THE COMPANY Chiquita Brands International, Inc. is a leading international marketer, processor and producer of quality fresh and processed food products. Chiquita produces and markets an extensive line of fresh fruits and vegetables sold under the Chiquita(R) and other brand names. These products include tropical fruit, such as bananas, pineapples, mangos, papaya, kiwi and citrus, and a wide variety of other fresh produce. The core of the Company's operations is the marketing, distribution and sourcing of bananas. The Company's operations also include brand extensions, such as fruit and vegetable juices and banana puree, and other processed fruits and vegetables marketed worldwide under the Chiquita and other brand names; wet and dry salads sold under various brand names; and consumer packaged foods marketed in Latin America under various brand names. During the fourth quarter of 1992, the Company adopted a plan of disposal for its Meat Division and classified it as a discontinued operation. The Meat Division encompasses a wide range of value-added fresh meats and processed meat products sold in the United States nationally under the John Morrell and Mosey's brand names and under a number of regional brand names. See "Recent Developments -- Discontinued Operations." American Financial Corporation ("AFC") owns, either directly or through its subsidiaries, approximately 47% of Chiquita's outstanding shares of Common Stock and 31% of Chiquita's $1.32 Depositary Shares. All of the outstanding common stock of AFC is owned by Carl H. Lindner and members of his family. Chiquita is a New Jersey corporation. The address of its principal executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its telephone number is (513) 784-8011. Unless the context indicates otherwise, the term "Chiquita" also includes the subsidiaries of the Company. INVESTMENT CONSIDERATIONS In addition to the other information set forth in this Prospectus, prospective investors should carefully consider the following before making an investment in the Securities. SUBSIDIARIES Substantially all of the operations of the Company are conducted through its subsidiaries and the Company is therefore dependent on the cash flow of its subsidiaries to meet its obligations. Because the assets of the Company are held by its subsidiaries (some of which are highly leveraged and others of which are unleveraged), the claims of holders of the Securities will be structurally subordinated to any existing and future obligations (whether or not for borrowed money) of such subsidiaries. As of September 30, 1993, the total debt of the Company's subsidiaries aggregated $748 million, of which $381 million represented non-recourse long-term debt of the Company's shipping subsidiaries secured by ships and related equipment and $114 million represented short-term notes and loans payable. RECENT LOSSES From 1984 to 1991, Chiquita reported a continuous record of growth in annual earnings. In 1992, however, Chiquita experienced unprecedented challenges, including a decline in product quality resulting from an extraordinary outbreak of banana plant disease and unusual weather patterns in Latin America. These factors contributed to a loss of $146 million ($2.91 per share) from continuing operations before taxes and non-recurring charges for the year ended December 31, 1992. Chiquita's management addressed these challenges by implementing control measures to address the quality issues and commenced an aggressive program to adjust the Company's fresh fruit volume and cost structure to reduce significantly production, distribution and overhead costs. This program included consolidation of operations, asset disposals and workforce reductions. As a result of the adoption of this program, restructuring and reorganization charges of 3 20 $61 million ($1.18 per share) were recorded in the fourth quarter of 1992. In addition, during the fourth quarter of 1992, the Company adopted a plan of disposal for its Meat Division and classified it as a discontinued operation. The net loss for the year, including non-recurring charges and losses from discontinued operations, was $284 million ($5.48 per share). Fixed charges exceeded earnings by approximately $239 million for the year. See "Recent Developments -- Results of Operations" below and "Management's Analysis of Operations and Financial Condition" in the Company's 1992 10-K. For the nine months ended September 30, 1993, the Company reported net income of $9.3 million, compared to a net loss of $90.6 million (including a loss on discontinued operations of $21.4 million) for the same period in 1992. However, the Company expects to report a fourth quarter 1993 net loss in the range of approximately $52 to $67 million, or $1.00 to $1.30 per share, compared to a net loss of $193 million, or $3.77 per share (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $41 million, or $.80 per share) for the same period last year. For the year ended December 31, 1993, the Company expects to report a net loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to a net loss of $284 million, or $5.48 per share, (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $62 million, or $1.20 per share) reported in 1992. See "Recent Developments -- Results of Operations." LEVERAGE As of September 30, 1993, the Company had short-term notes and loans payable of $114.3 million and long-term debt (including current maturities) of approximately $1.5 billion. As of September 30, 1993, the Company had total long-term debt maturities and sinking fund requirements for the remainder of 1993 of $16 million, and for the years 1994 through 1997 amounts ranging from $81 million to $96 million. The percentage of total debt to total capitalization for the Company was 71.1% at September 30, 1993. COMPETITION AND PRICING Approximately 60% of the Company's consolidated net sales comes from the sale of bananas. Banana marketing is highly competitive. In order to compete successfully, Chiquita must be able to source bananas of uniformly high quality and distribute them in worldwide markets on a timely basis. A limited number of competitors account for most of the banana imports throughout the world. While smaller companies, including growers' cooperatives, have also become a competitive factor, Chiquita's principal competitors continue to be a limited number of international companies. In addition, competition in the sale of bananas also comes from other fresh fruit. Chiquita has been able to obtain a premium price for its bananas due to its reputation for quality and its innovative marketing techniques. The effect of competition with respect to the majority of the Company's products is intensified by their perishable nature. Bananas are highly perishable and must be brought to market and sold generally within 60 days after harvest. Therefore, selling prices which importers receive for bananas are significantly affected by fluctuations in the available supplies of bananas and other fresh fruit in each market and by the relative quality and wholesaler and retailer acceptance of bananas offered by competing importers. Excess supplies may result in increased price competition. Although production of bananas tends to be relatively stable throughout the year, competition in the sale of bananas from other fresh fruit may be seasonal in nature. The resulting seasonal variations in demand cause banana pricing to be seasonal, with the first six months of the calendar year being the strongest. ADVERSE WEATHER CONDITIONS AND CROP DISEASE Bananas are also vulnerable to adverse local weather conditions, which are quite common but difficult to predict, and to crop disease, the control of which entails significant expense. These factors may restrict worldwide supplies and result in increased prices for bananas. However, competitors may be affected differently, depending upon their ability to obtain adequate supplies from sources in other geographic areas. During 1993, approximately 30% of all bananas sold by Chiquita were sourced from Panama. Bananas sourced from other countries, including Colombia, Costa Rica, Guatemala, Honduras, Mexico and the Philippines, comprised from 6% to 17% (depending on the country) of bananas sold by Chiquita during 1993. See the Company's 1992 10-K. 4 21 EUROPEAN COMMUNITY BANANA REGULATION On July 1, 1993, the European Community ("EC") implemented a new quota restricting the volume of Latin American bananas imported into the EC. Most of the Company's bananas are produced in Latin America and subject to the quota. The quota is administered through a licensing system. Since imposition of the new EC quota regime on July 1, 1993, prices within the EC have increased to a higher level than for prior years. Banana prices in other worldwide markets, however, have been lower than in previous years, as the displaced EC volume has entered those markets. Challenges to the quota and many matters regarding implementation and administration of the quota remain to be resolved. Therefore, there can be no assurance that EC banana regulation will not change further. See "Recent Developments -- European Community Banana Regulation" and "-- Results of Operations" for further discussion of the EC quota and its impact on current operations. OTHER RISKS OF INTERNATIONAL OPERATIONS A significant portion of the Company's operations are conducted in foreign countries, and are subject to risks that are inherent in operating in such foreign countries, including government regulation, currency restrictions and other restraints, risks of expropriation and burdensome taxes. There is also a risk that legal or regulatory requirements will be changed or that administration and enforcement policies will change. Certain of the Company's operations are dependent upon leases and other agreements with the governments of these countries. Although the Company's operations are a significant factor in the economies of many of the countries where the Company produces and purchases bananas and other agricultural and consumer products, the Company's overall risk from these factors, as well as from political changes, is reduced by the large number and geographic diversity of its sources of bananas, which exceed that of any competitor. The Company's operations worldwide and the products it sells are subject to numerous governmental regulations and inspections by environmental, food safety and health authorities. Although the Company believes it is substantially in compliance with such regulations, changes in legislation or regulations and actions by regulators, including changes in administration and enforcement policies, may from time to time require operational improvements or modifications at various locations or the payment of fines and penalties, or both. The Company is also subject to a variety of governmental regulations in certain countries where it markets its products, including import quotas and tariffs, currency exchange controls and taxes. The Company's operations involve transactions in a variety of currencies. Results of its operations may be significantly affected by fluctuations of currency exchange rates. Such fluctuations are significant to the Company's banana operations because many of its costs are incurred in currencies different from those that are received from the sale of bananas in foreign markets, and there is normally a time lag between the incurrence of such costs and collection of the related sales proceeds. The Company's policy is to exchange local currencies for dollars immediately upon receipt, thus reducing exchange risk. The Company also engages from time to time in various hedging activities to minimize potential losses on cash flows originating in foreign currencies. See Note 1 to the Company's Consolidated Financial Statements and "Management's Analysis of Operations and Financial Condition" included in the Company's 1992 10-K for information with respect to foreign exchange. SHARES AVAILABLE FOR FUTURE SALE No prediction can be made as to the effect, if any, that future sales of shares of Common Stock, or the availability of such shares for future sales, will have on the market price of Common Stock, or any then outstanding preferred stock, prevailing from time to time. Sales of substantial amounts of Common Stock, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Stock or, in certain instances, the Preferred Stock. At January 17, 1994, the Company had outstanding 48,511,853 shares of Common Stock, including 22,868,805 shares held, directly or indirectly, by AFC, and 648,310 shares of Cumulative Preference Stock, including 200,000 shares held, directly or indirectly, by AFC. In addition to the Securities offered from time to time hereby, the Company has filed a Registration Statement on Form S-3 registering 1,616,480 shares of Common Stock pursuant to the Securities Act on behalf of certain former stockholders of Friday Canning Corporation. These shares were issued to such holders 5 22 in connection with the merger of Friday Canning Corporation into the Company during the first quarter of 1992. Such Registration Statement was declared effective on January 26, 1994. ABSENCE OF PUBLIC MARKET FOR SECURITIES (OTHER THAN COMMON STOCK) Since the Debt Securities and the Preferred Stock will be newly issued, there is no current market for such Securities. The Company may, but has no obligation to, apply for listing of such Securities on the New York Stock Exchange or another stock exchange, and there can be no assurance that the applicable listing requirements of any such exchange will be met. There can be no assurance that there will be an active trading market for such Securities. RECENT DEVELOPMENTS EUROPEAN COMMUNITY BANANA REGULATION On July 1, 1993, the EC implemented a new quota effectively restricting the volume of Latin American bananas imported into the EC to approximately 80% of prior levels. The quota is administered through a licensing system. Challenges to the quota and many matters regarding implementation and administration of the quota remain to be resolved. In May 1993, the principles underlying the new regulation that discriminate against Latin American banana exporting countries in favor of certain African, Caribbean and Pacific countries were ruled illegal under the General Agreement on Tariffs and Trade ("GATT") by a GATT dispute settlement panel. In December 1993, EC representatives discussed a tentative, even more discriminatory proposal with a few Latin American banana producing countries. The tentative proposal was rejected by an overwhelming majority of the Latin American countries. As widely reported in the press, in January 1994 a GATT dispute settlement panel ruled on a second lawsuit against the current EC regulation in favor of the Latin American countries. GATT rulings in favor of the Latin American countries could result in an increase in the total volume of Latin American bananas, including banana volume of the Company, which could be imported under the quota. However, there can be no assurance that the EC will comply, or the manner in which it would comply, with such rulings. (See "Results of Operations" below for discussion of the impact of the EC quota on current operations.) RESULTS OF OPERATIONS Net sales for the third quarter of 1993 of $552 million and first nine months of 1993 of $1.966 billion declined from the comparable prior year amounts of $612 million and $2.102 billion primarily as a result of lower banana volumes and prices. Nevertheless, for the third quarter of 1993, the Company reported a reduced net loss of $25.9 million, or $.50 per share, compared to a 1992 third quarter net loss of $79.4 million, or $1.55 per share (including a loss on discontinued operations of $7.5 million, or $.15 per share). For the nine months ended September 30, 1993, the Company reported net income of $9.3 million, or $.18 per share, as compared to a net loss of $90.6 million, or $1.74 per share, in the same period of 1992 (which included a loss on discontinued operations of $21.4 million, or $.41 per share). This improvement is attributable to the continuing benefits of Chiquita's multi-year investment spending program and the ongoing impact of its restructuring and cost reduction efforts. These programs address all aspects of the banana business including a decreased reliance on high-cost purchased fruit, enhanced production practices, shipping fleet realignment, reorganization and consolidation of marketing organizations, and overhead reductions. Since imposition of the new EC quota regime on July 1, 1993, prices within the EC have increased to a higher level than the levels in prior years. Banana prices in other worldwide markets have been lower than in previous years, as displaced EC volume has entered those markets. The favorable cost comparisons achieved during the first nine months of 1993 as a result of the Company's investment spending and cost reduction programs have continued throughout the fourth quarter. Fourth quarter banana price levels in the EC remained higher than pre-quota price levels of the 1992 fourth quarter. However, EC prices weakened during the fourth quarter from earlier post-quota levels partially as a result of the EC's late issuance of fourth quarter import licenses and its announcement of an expiration date for these licenses that was earlier than marketplace expectations. The Company expects to report a fourth 6 23 quarter 1993 net loss in the range of approximately $52 to $67 million, or $1.00 to $1.30 per share, compared to a net loss of $193 million, or $3.77 per share (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $41 million, or $.80 per share) for the same period last year. For the year ended December 31, 1993, the Company expects to report a net loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to a net loss of $284 million, or $5.48 per share (including restructuring and reorganization charges of $61 million, or $1.18 per share, and a loss from discontinued operations of $62 million, or $1.20 per share), reported in 1992. Based on the expected range of results above, earnings before interest, income tax, depreciation and amortization ("EBITDA") for 1993 are estimated to be in the range of $214 to $229 million. For 1992, EBITDA excluding restructuring and reorganization charges and discontinued operations was $44 million. Chiquita also expects that the improved cost trend will continue into 1994. In addition, the EC quota impact could cause first half 1994 banana prices in the EC to exceed pre-quota first half 1993 levels as they have since implementation of the quota. First half 1994 prices outside the EC could continue at levels lower than in previous years as they have since implementation of the quota, although the continuing growth in per capita consumption of bananas outside the EC could mitigate any such decline. DISCONTINUED OPERATIONS During the fourth quarter of 1992, after evaluation of reorganization plans announced earlier that year and completion of other preparatory actions, the Company adopted a plan of disposal for all remaining Meat Division operations. Accordingly, these operations were classified as discontinued operations and were deconsolidated. (See Note 3 to the Company's Consolidated Financial Statements for the year ended December 31, 1992, included in the Company's 1992 10-K.) Pursuant to the plan, the Company immediately completed the sale of a major fresh pork processing facility in December 1992. During 1993, the Company engaged in extensive activity with respect to execution of the balance of its disposal plan. Numerous proposals for the purchase of individual components of the Meat Division were received from a larger number of buyers than originally expected. Although progress under the plan has been slower than anticipated, partially as a result of the Company evaluating all these proposals in the interest of maximizing shareholder value, the Company has made significant progress in the implementation of its disposal plan. This progress includes: - successful ongoing cost reduction efforts that have contributed to the improvement in Meat Division operating results to approximately breakeven levels for 1993. - progress toward obtaining further substantial cost reductions for 1994 and beyond relating to retiree medical costs. In June 1993, the Company received a favorable court ruling on its previously filed litigation that confirms its right to unilaterally reduce medical benefits of retired hourly employees. This ruling is being appealed by the union and a hearing on the appeal is scheduled for February 1994. - receiving subsidies and concessions from the State of South Dakota and the City of Sioux Falls that will enhance the operating profitability of the Sioux Falls plant. These incentives were offered in September 1993 by newly installed state and city administration officials who took office in April 1993 after their predecessors, including the Governor of South Dakota, were killed in a plane crash on their return from a meeting to discuss incentives with Company and Meat Division representatives. - obtaining financial incentives and concessions in November 1993 from the City of Sioux City, Iowa and the local labor union to enhance the salability of the Sioux City pork processing plant as an operating facility. - signing a letter of intent in December 1993 for the sale of the entire Specialty Meat Group. The Company is presently negotiating with this buyer and expects to complete the sale of this group in the first half of 1994. 7 24 - obtaining a new stand-alone revolving credit facility in June 1993 to fund the Meat Division's working capital needs. The Company also continues to be engaged in vigorous marketing efforts with respect to the remaining Meat Division operations that now reflect improved prospects as a result of the favorable developments described above. It expects to complete the divestitures of these operations by the end of 1994. The Company has reevaluated its provision for loss on discontinued operations recorded in 1992 and believes it is adequate to provide for any losses on disposition. The developments during 1993 regarding the Company's Meat Division have not had and are not expected to have a material adverse effect on the Company's liquidity, financial condition or results of operations. Net sales from discontinued operations for the nine months ended September 30, 1993 were approximately $1.2 billion. USE OF PROCEEDS Unless otherwise indicated in the Prospectus Supplement, the net proceeds to be received by the Company from the sale of the Securities will be used to repay outstanding debt of the Company and its subsidiaries and for general corporate purposes. 8 25 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data set forth below for the years ended December 31, 1988 through 1992 were derived from the Company's audited consolidated financial statements. Information presented below for interim periods was derived from the Company's unaudited consolidated financial statements and in the opinion of management includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the interim periods. This information should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto and "Management's Analysis of Operations and Financial Condition" included or incorporated by reference in the Company's Reports on Forms 10-K and 10-Q for such periods. Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1993 1992 1992 1991 1990 1989 1988 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) INCOME STATEMENT DATA: Net sales............................ $1,965,790 $2,102,289 $2,723,250 $2,604,128 $2,186,452 $1,892,657 $1,679,429 Operating expenses Cost of sales...................... 1,520,718 1,736,968 2,309,425 2,027,669 1,698,557 1,497,306 1,333,688 Selling, general and administrative expenses......................... 246,122 279,966 368,675 324,240 284,299 205,780 205,712 Depreciation....................... 75,484 56,645 80,438 54,401 37,416 31,825 25,797 Restructuring and reorganization... -- -- 61,300 -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1,842,324 2,073,579 2,819,838 2,406,310 2,020,272 1,734,911 1,565,197 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Operating income (loss)............ 123,466 28,710 (96,588) 197,818 166,180 157,746 114,232 Interest income...................... 17,512 32,830 43,301 47,319 31,461 28,169 25,376 Interest expense..................... (126,612) (111,829) (155,036) (88,406) (55,361) (53,952) (38,923) Other income (expense), net.......... 5,969 (8,979) (8,385) 3,278 11,251 3,077 3,731 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations before income taxes... 20,335 (59,268) (216,708) 160,009 153,531 135,040 104,416 Income taxes......................... (11,000) (10,000) (5,000) (49,100) (57,700) (51,200) (47,200) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations....................... 9,335 (69,268) (221,708) 110,909 95,831 83,840 57,216 Discontinued operations(1)......... -- (21,355) (62,332) 17,586 (1,913) (16,073) 3,147 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss).................... $ 9,335 $ (90,623) $ (284,040) $ 128,495 $ 93,918 $ 67,767 $ 60,363 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fully diluted earnings (loss) per common share: Continuing operations.............. $ .18 $ (1.33) $ (4.28) $ 2.19 $ 2.24 $ 2.05 $ 1.38 Discontinued operations(1)......... -- (.41) (1.20) .33 (.04) (.38) .07 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss).................. $ .18 $ (1.74) $ (5.48) $ 2.52 $ 2.20 $ 1.67 $ 1.45 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of earnings to fixed charges(2)......................... 1.08 --(2) --(2) 1.73 2.13 2.20 2.18 Ratio of earnings to combined fixed charges and preferred stock dividends(2)....................... 1.06 --(2) --(2) 1.73 2.13 2.20 2.18 BALANCE SHEET DATA: Cash and marketable securities..... $ 194,820 $ 491,206 $ 413,181 $ 825,447 $ 318,246 $ 287,658 $ 188,619 Working capital.................... 301,966 648,775 482,338 960,093 433,424 394,640 345,784 Total assets(1).................... 2,821,898 3,034,410 2,880,624 2,937,344 1,913,674 1,373,480 1,230,946 Short-term debt.................... 189,966 196,198 229,286 187,821 106,698 58,540 18,236 Long-term debt (other than subordinated debt)............... 805,607 717,656 778,784 571,493 221,884 85,398 69,950 Subordinated debt.................. 633,530 632,226 632,535 631,346 272,298 299,852 297,764 Shareholders' equity............... 663,000 874,252 674,887 967,925 687,709 463,954 400,792 OTHER DATA: Operating income (loss) plus depreciation and amortization.... $ 204,351 $ 90,390 $ (9,079) $ 258,076 $ 208,963 $ 194,919 $ 144,482 Capital expenditures(3)............ 174,185 381,578 472,273 395,641 312,698 117,425 63,621 Dividends declared per common share............................ .39 .49 .66 .55 .35 .20 .20 - --------------- (1) Includes net operating results (and, in 1992, provision for loss on disposal) of the Company's Meat Division operations, which have been classified as discontinued operations. See "Recent Developments -- Discontinued Operations" and Note 3 to the Company's Consolidated Financial Statements for the year ended December 31, 1992, included in the Company's 1992 10-K. All other Income Statement Data presented above have been restated to exclude amounts relating to the Meat Division. The Company's net investment in discontinued operations, which is included in "Total assets", aggregated approximately $42 million at September 30, 1993. The net assets of discontinued operations consist principally of property, plant and equipment and trademarks, and at September 30, 1993 include a seasonally high $53 million of short-term borrowings under an $80 million credit facility secured by Meat Division working capital. These net assets also include net liabilities recorded for Meat Division defined benefit pension plans of approximately $40 million at September 30, 1993. (2) For purposes of calculating the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings are calculated as the sum of the income (loss) from continuing operations before income taxes, fixed charges (other than capitalized interest) and amortization of capitalized interest, less undistributed earnings of less-than-fifty-percent-owned investees. Fixed charges consist of interest on indebtedness (including amortization of debt discount and capitalized interest) and a portion (one-third) of rent considered to represent interest cost. Preferred dividends are dividends on shares of Chiquita's Mandatorily Exchangeable Cumulative Preference Stock, Series C, which have been outstanding since October 1992. Fixed charges and combined fixed charges and preferred stock dividends both exceeded earnings by approximately $80 million for the nine months ended September 30, 1992, and approximately $239 million for the year ended December 31, 1992. (3) Includes capital expenditures in connection with the acquisition of ships and containers of approximately $120 million during the nine months ended September 30, 1993, $225 million during the nine months ended September 30, 1992, $280 million in 1992, $180 million in 1991, $200 million in 1990 and $20 million in 1989.
9 26 DESCRIPTION OF THE DEBT SECURITIES The following description of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement and the extent, if any, to which such general provisions do not apply to those Debt Securities will be described in the Prospectus Supplement relating to such Debt Securities. The Debt Securities will be general unsecured obligations of the Company and will constitute either senior debt securities or subordinated debt securities. In the case of Debt Securities that will be senior debt securities ("Senior Debt Securities"), the Debt Securities will be issued under an Indenture (the "Senior Indenture") to be executed between the Company and The Fifth Third Bank, Cincinnati, Ohio, as trustee (the "Senior Debt Trustee"), under the Senior Indenture. In the case of Debt Securities that will be subordinated debt securities ("Subordinated Debt Securities"), the Debt Securities will be issued under an Indenture (the "Subordinated Indenture") to be executed by the Company and Star Bank, N.A., Cincinnati, Ohio, as trustee (the "Subordinated Debt Trustee"), under the Subordinated Indenture. The Senior Indenture and the Subordinated Indenture are sometimes referred to herein individually as an "Indenture" and collectively as the "Indentures." The Senior Debt Trustee and the Subordinated Debt Trustee are sometimes referred to herein individually as the "Trustee" or collectively as the "Trustees." The statements made under this caption relating to the Debt Securities and the Indentures are summaries only, do not purport to be complete and are qualified in their entirety by reference to the forms of Indentures or the Indentures which have been filed with the Commission in connection with the issuance of any series of Debt Securities. Such summaries make use of terms defined in the Indentures. Wherever such terms are used herein, such terms are incorporated by reference from the Indentures as part of the statements made herein. Summaries of certain terms used herein will be included in the Prospectus Supplement relating to the issuance of any particular series of Debt Securities. PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES GENERAL. Except as may be set forth in the terms of the Debt Securities and described in the Prospectus Supplement relating to such Debt Securities, neither of the Indentures limits the amount of Debt Securities which can be issued thereunder and each provides that additional Debt Securities may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by the Company's Board of Directors. Reference is made to the Prospectus Supplement for the following terms of the particular series of Debt Securities being offered thereby: (i) the designation, aggregate principal amount and authorized denominations of the series; (ii) the price at which the series will be issued; (iii) the date or dates on which the series will mature (or manner of determining the same); (iv) the rate or rates per annum, if any, at which the series will bear interest (or the manner of calculation thereof) and the date or dates from which such interest will accrue; (v) certain covenants which will be applicable to that series of Debt Securities; (vi) the times at which any interest will be payable (or manner of determining the same) and the Regular Record Dates for Interest Payment Dates; (vii) the place or places where the principal of (and premium, if any) and interest, if any, on the series will be payable and each office or agency, as described below under "Denominations, Registration and Transfer," where the Debt Securities may be presented for transfer or exchange; (viii) any mandatory or optional sinking fund or analogous provisions; (ix) the date, if any, after which, and the price at which, such Debt Securities are payable pursuant to any optional or mandatory redemption provisions; (x) the terms and conditions upon which the Debt Securities of such series may be repayable prior to maturity at the option of the holder thereof and the price at which such Debt Securities are so repayable; (xi) any provisions regarding exchangeability or conversion of the Debt Securities; (xii) information with respect to book-entry procedures, if any; (xiii) any provisions of the Indenture which will not be applicable to that series of Debt Securities; (xiv) whether the Debt Securities are Senior Debt Securities or Subordinated Debt Securities; and (xv) any other additional provisions or specific terms which may be applicable to that series of Debt Securities. Some of the Debt Securities may be issued as Discounted Securities (bearing no interest or interest at a rate which at the time of issuance is below market rates) to be sold at a substantial discount below their stated principal amount. Federal income tax consequences and other special considerations applicable to any Discounted Securities will be described in the Prospectus Supplement relating thereto. 10 27 DENOMINATIONS, REGISTRATION AND TRANSFER. The Debt Securities of a series will be issuable only in fully registered form. Unless otherwise provided in an applicable Prospectus Supplement with respect to a series of Debt Securities, Debt Securities will be issued only in denominations of $1,000 or any integral multiple thereof. Debt Securities of any series will be exchangeable for other Debt Securities of the same series and of a like aggregate principal amount and tenor of different authorized denominations. Debt Securities may be presented for exchange or for registration of transfer (with the form of transfer duly executed) at the office of a transfer agent designated by the Company for such purpose with respect to any series of Debt Securities. If a Prospectus Supplement refers to any transfer agent initially designated by the Company with respect to any series of Debt Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for such series. The Company is not required to issue, register the transfer of or exchange Debt Securities of any series for the 15-day period prior to the mailing of a notice of redemption and, with respect to any Debt Securities called for redemption in whole or in part (except for the unredeemed portion of any Debt Securities being redeemed in part), following such mailing. PAYMENT AND PAYING AGENTS. Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and interest, if any, on Debt Securities will be made (i) by check mailed or delivered to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer to an account (with a bank located inside the United States) maintained by the Person entitled thereto. Unless otherwise indicated in an applicable Prospectus Supplement, payment of any installment of interest on any Debt Security will be made to the Person in whose name such Debt Security is registered at the close of business on the Regular Record Date for such interest payment. All moneys paid by the Company to the Trustee or a Paying Agent for the payment of principal of (and premium, if any) and interest, if any, on any Debt Security which remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company and the holder of such Debt Security will thereafter look only to the Company for payment thereof. CONSOLIDATION, MERGER AND SALE OF ASSETS. Under each of the Indentures, the Company may not consolidate with or merge into any other entity or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to any entity, unless: (1) either (a) the Company shall be the continuing corporation or (b) the entity (if other than the Company) formed by such consolidation or into which the Company is merged or the entity that acquires, by sale, assignment, conveyance, transfer, lease or disposition, all or substantially all of the properties and assets of the Company as an entirety shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, and shall expressly assume by a supplemental indenture, the due and punctual payment of the principal of and premium, if any, and interest on all the Debt Securities and the performance and observance of every covenant of the Indenture on the part of the Company to be performed or observed; (2) immediately thereafter, no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing; and (3) certain other conditions, if any, are met, as are described in the Prospectus Supplement relating to the Debt Securities being offered thereby. In the event of any transaction (other than a lease) described in and complying with the conditions listed in the immediately preceding paragraphs in which the Company is not the continuing corporation, the successor entity formed or remaining would be substituted for the Company and the Company would be discharged from all obligations and covenants under the Indenture and the Debt Securities. EVENTS OF DEFAULT. The following events are defined in each of the Indentures as "Events of Default" with respect to a series of Debt Securities: (i) default in the payment of any installment of interest on any Debt Securities in such series for 30 days after becoming due; (ii) default in the payment of the principal of (or premium, if any, on) any Debt Securities in such series when due; (iii) default in the performance of any 11 28 other covenant applicable to such series contained in the Debt Securities or the Indenture for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of 25% in aggregate principal amount of such series of Debt Securities then Outstanding; (iv) default shall have occurred under any other series of Debt Securities or any agreements, indentures or instruments under which the Company then has outstanding Indebtedness in excess of $10 million in the aggregate and, if not already matured in accordance with its terms, such Indebtedness shall have been accelerated and such acceleration shall not have been rescinded or annulled within ten days after notice thereof shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of such series of Debt Securities then Outstanding, provided, that if, prior to the entry of judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by the Company, or waived by the holders of such Indebtedness, then the Event of Default under such Indenture shall be deemed likewise to have been remedied, cured or waived and provided, further, that if such default results from an action of the United States government or a foreign government which prevents the Company from performing its obligations under such agreement, indenture or instrument, the occurrence of such default will not be an Event of Default under such Indenture; (v) one or more judgments, orders or decrees for the payment of money in excess of $10 million, either individually or in the aggregate, shall be entered against the Company and shall not be discharged, there shall have been a period of 60 days during which a stay of enforcement of such judgment or order, by reason of an appeal or otherwise, shall not be in effect and there shall have been given written notice of the default to the Company by the Trustee or to the Company and the Trustee by the holders of 25% in aggregate principal amount of such series of Debt Securities then Outstanding; or (vi) certain events of bankruptcy, insolvency or reorganization with respect to the Company shall have occurred. If an Event of Default shall occur and be continuing with respect to a series of Debt Securities, either the Trustee or the holders of at least 25% in principal amount of the Outstanding Debt Securities of such series may declare the entire principal amount, or, in the case of Discounted Securities, such lesser amount as may be provided for in such Discounted Securities, of all the Debt Securities of such series to be immediately due and payable. Under each of the Indentures, the Company is required to furnish the Trustee annually a statement by certain officers of the Company to the effect that to the best of their knowledge the Company is not in default in the fulfillment of any of its obligations under the Indenture or, if there has been a default in the fulfillment of any such obligation, specifying each such default. Each of the Indentures provides that the Trustee shall, within 90 days after the occurrence of a default with respect to a particular series of Debt Securities, give the holders of the Debt Securities of such series notice of such default known to it (the term default to mean the events specified above without grace periods); provided that, except in the case of a default in the payment of principal of (or premium, if any) or interest, if any, on any of the Debt Securities of such series, the Trustee shall be protected in withholding such notice if it in good faith determines the withholding of such notice is in the interest of the holders of the Debt Securities of such series. The holders of a majority in principal amount of a particular series of Debt Securities Outstanding have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such series or exercising any trust or power conferred on the Trustee, and to waive certain defaults. Each of the Indentures provides that in case an Event of Default shall occur and be continuing, the Trustee shall exercise such of its rights and powers under the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of the Debt Securities unless they shall have offered to the Debt Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request. SATISFACTION AND DISCHARGE. Except as may otherwise be set forth in the Prospectus Supplement relating to a series of Debt Securities, each of the Indentures provides that the Company shall be discharged from its 12 29 obligations under the Debt Securities of such series (with certain exceptions) at any time prior to the Stated Maturity or redemption thereof when (a) the Company has deposited with the Trustee, in trust, sufficient funds to pay the principal of (and premium, if any) and interest, if any, to Stated Maturity (or redemption) on, the Debt Securities of such series, (b) the Company has paid all other sums payable with respect to the Debt Securities of such series and (c) certain other conditions are met. Upon such discharge, the holders of the Debt Securities of such series shall no longer be entitled to the benefits of the Indenture, except for certain rights, including registration of transfer and exchange of the Debt Securities of such series and replacement of mutilated, destroyed, lost or stolen Debt Securities, and shall look only to such deposited funds. Such discharge may be treated as a taxable exchange of the related Debt Securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, holders of such Debt Securities would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Debt Securities. Such holders thereafter might be required to include in income a different amount than would be includable in the absence of discharge. Prospective investors are urged to consult their own tax advisors as to the specific consequences of discharge. MODIFICATION AND WAIVER. Certain modifications and amendments (which, generally, either benefit or do not affect the holders of Outstanding Debt Securities) of each of the Indentures may be made by the Company and the Trustee without the consent of holders of the Debt Securities. Other modifications and amendments of each Indenture require the consent of the holders of more than 50% in principal amount of the Outstanding Debt Securities of each series issued under the Indenture affected by the modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holder of each Outstanding Debt Security affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest, if any, on any Debt Security, (b) reduce the principal amount of (or premium, if any) or interest, if any, on any Debt Security, (c) reduce the amount of principal of a Discounted Security payable upon acceleration of the Maturity thereof, (d) change the Place of Payment, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date) or (f) reduce the percentage in principal amount of Outstanding Debt Securities of any series, the consent of the holders of which is required for modification or amendment of such Indenture or for waiver of compliance with certain provisions of such Indenture or for waiver of certain defaults. The holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the holders of all Debt Securities of that series waive, insofar as that series is concerned, compliance by the Company with certain restrictive provisions of the Indenture. The holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the holders of all Debt Securities of that series waive any past default under the Indenture with respect to that series, except a default in the payment of the principal of (or premium, if any) and interest, if any, on any Debt Security of that series or in respect of a provision which under the Indenture cannot be modified or amended without the consent of the holder of each Outstanding Debt Security of that series affected. NOTICES. Notices to holders of Debt Securities will be given by mail to the addresses of such holders as they appear in the Security Register. GOVERNING LAW. The Indentures and the Debt Securities are to be governed by and construed in accordance with the laws of the State of New York. PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES Senior Debt Securities will be issued under the Senior Indenture and will rank pari passu with all other unsecured and unsubordinated debt of the Company. 13 30 PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES GENERAL. Subordinated Debt Securities will be issued under the Subordinated Indenture and will rank pari passu with certain other subordinated debt of the Company that may be outstanding from time to time and will rank junior to all senior indebtedness of the Company (including any Senior Debt Securities) that may be outstanding from time to time. SUBORDINATION. The Indebtedness represented by the Subordinated Debt Securities is subordinated in right of payment to the prior payment in full of all Senior Indebtedness. No payment or distribution shall be made on account of the principal of or premium, if any, or interest on, or the purchase, redemption or other acquisition of, the Subordinated Debt Securities in the event and during the continuation of any default in the payment of any Senior Indebtedness beyond any applicable grace period. Payments of principal, premium, if any, and interest on, or redemption or other acquisition by the Company of, the Subordinated Debt Securities may also be blocked in the event of other defaults which allow acceleration of the maturity of any Senior Indebtedness. The Subordinated Indenture will provide that in the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or its assets, or any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshalling of assets or liabilities of the Company, all Senior Indebtedness must be paid in full, or provision made for such payment, before any payment or distribution (excluding certain permitted equity or subordinated securities) is made on account of the principal of or premium, if any, or interest on the Subordinated Debt Securities. By reason of such subordination, in the event of liquidation or insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the holders of the Subordinated Debt Securities. By reason of such subordination, in the event of liquidation or insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the holders of the Subordinated Debt Securities. For purposes of the foregoing, Senior Indebtedness will be defined to mean all Indebtedness of the Company and any accrued but unpaid interest on such Indebtedness, unless in each case by the terms of the instrument creating or evidencing such Indebtedness it is provided that such Indebtedness is not senior in right of payment to the Subordinated Debt Securities or that such Indebtedness is pari passu with or subordinate in right of payment to the Subordinated Debt Securities; provided that Senior Indebtedness does not include (i) the Company's 9 1/8% Subordinated Debentures due February 1, 1998, 10 1/4% Subordinated Debentures due August 1, 2005, 10 1/2% Subordinated Debentures due August 1, 2004, 11 1/2% Subordinated Notes due June 1, 2001, 11 7/8% Subordinated Debentures due May 1, 2003 and 7% Convertible Subordinated Debentures due March 28, 2001, (ii) any obligations of the Company to any of its subsidiaries, or (iii) any obligations of the Company arising from redeemable stock. CONCERNING THE TRUSTEES. The Senior Debt Trustee, The Fifth Third Bank, Cincinnati, Ohio, is a state banking association organized under the laws of the State of Ohio. The Bank is a regional commercial bank offering a wide range of banking services to individual and business customers. The Subordinated Debt Trustee, Star Bank, National Association, Cincinnati, Ohio, is a national banking association organized under the laws of the United States of America. DESCRIPTION OF EQUITY SECURITIES Chiquita has 100,000,000 authorized shares of Capital Stock, par value $.33 per share (the "Common Stock"), of which 48,511,853 shares were outstanding on January 17, 1994. Chiquita has authorized 10,000,000 shares of Non-Voting Cumulative Preferred Stock, $1.00 par value per share (the "Preferred Stock"); 46,028 shares of voting $3.00 Cumulative Preferred Stock, without par value (the "$3.00 Preferred"); and 4,000,000 shares of Cumulative Preference Stock, without par value (the "Cumulative Preference Stock"), of which 2,568,096 shares have been designated $1.20 Cumulative Convertible Preference Stock, Series A, none of which is currently outstanding, 75,813 shares have been designated $3.20 14 31 Cumulative Convertible Preference Stock, Series B, none of which is currently outstanding, and 1,000,000 shares have been designated Mandatorily Exchangeable Cumulative Preference Stock, Series C, 648,310 shares of which are currently outstanding. Each of the Preferred Stock and the Cumulative Preference Stock may be issued in one or more series having such designated preferences and rights, qualifications and limitations as the Board of Directors may from time to time determine without requiring any vote of the shareholders; however, the terms of the designated series of Cumulative Preference Stock and of the $3.00 Preferred are fixed and, should they be reissued, would have such terms unless the Company's shareholders amend the Restated Certificate of Incorporation to delete such terms and designations. The issuance of preferred or preference stock by the Board of Directors could be utilized, under certain circumstances, as a method of preventing a takeover of Chiquita. There are no other provisions in the Company's Restated Certificate of Incorporation or By-Laws that would have an effect of delaying, deferring or preventing a change in control of Chiquita. Various debt instruments of the Company restrict, among other things, dividends and other distributions on, and repurchases or redemptions of, the Company's capital stock. At September 30, 1993, these restrictions would have allowed the payment of approximately $90 million for dividends and other corporate distributions, redemptions or repurchases. The ability of the Company to pay dividends when, as and if declared by the Board of Directors, may be subject to restrictions contained in any future debt agreements and to limitations contained in future series or classes of preferred or preference shares and is subject to the legal availability of funds. DESCRIPTION OF COMMON STOCK Chiquita has 100,000,000 authorized shares of Common Stock, of which 48,511,853 were outstanding on January 17, 1994. Holders of Common Stock are entitled to one vote per share on the election of directors and all other matters submitted to a vote of shareholders. Shares of Common Stock do not have cumulative voting rights. Holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor; provided, however, that all dividends on any preferred stock and preference stock which may be issued in the future must be fully paid or declared and set apart before any dividends can be paid or declared and set apart with respect to the Common Stock. Upon liquidation, dissolution or winding-up of Chiquita, the holders of the Common Stock are entitled to share ratably in the assets of Chiquita remaining after the payment of its obligations and liabilities and after payment due the holders of Chiquita's preferred stock and preference stock. Holders of Common Stock have no preemptive or other rights to subscribe for or purchase additional securities of Chiquita. All outstanding shares of Common Stock are fully paid and nonassessable. DESCRIPTION OF PREFERRED STOCK The Board of Directors of the Company may provide for the issuance of up to 10,000,000 shares of Preferred Stock in one or more series. The rights, preferences, privileges and restrictions, including dividend rights, conversion rights, terms of redemption and liquidation preferences, of the Preferred Stock of each series will be fixed or designated by the Board of Directors without any further vote or action by the Company's shareholders. Upon issuance after full payment of the purchase price therefor, shares of Preferred Stock offered hereby will be fully paid and nonassessable. The description of the terms of a particular series of Preferred Stock which will be set forth in a Prospectus Supplement does not purport to be complete and is qualified in its entirety by reference to the Restated Certificate of Incorporation of the Company and the Certificate of Amendment thereto which will be filed with the Secretary of State of New Jersey to set forth the terms and designations of the particular series of Preferred Stock. The specific terms of a particular series of Preferred Stock offered hereby will be described in a Prospectus Supplement relating to such series and will include, without limitation, the following: (i) The maximum number of shares to constitute the series and the distinctive designation thereof; 15 32 (ii) The annual dividend rate, if any, on shares of the series, whether such rate is fixed or variable or both, the date or dates from which dividends will begin to accrue or accumulate and whether dividends will be cumulative; (iii) Whether the shares of the series will be redeemable and, if so, the price at and the terms and conditions on which the shares of the series may be redeemed, including the time during which shares of the series may be redeemed and any accumulated dividends thereon that the holders of shares of the series shall be entitled to receive upon the redemption thereof; (iv) The liquidation preference, if any, applicable to shares of the series; (v) Whether the shares of the series will be subject to operation of a retirement or sinking fund and, if so, the extent and manner in which any such fund shall be applied to the purchase or redemption of the shares of the series for retirement or for other corporate purposes, and the terms and provisions relating to the operation of such fund; (vi) The terms and conditions, if any, on which the shares of the series shall be convertible into, or exchangeable for, any other debt or equity securities; (vii) Special voting rights, if any, of any series; and (viii) Any other preferences and relative, participating, optional or other special rights or qualifications, limitations or restrictions thereof. PLAN OF DISTRIBUTION The Company may sell the Securities (i) through underwriters or dealers; (ii) through agents; (iii) directly to one or more institutional purchasers; or (iv) through a combination of any such methods of sale. The Prospectus Supplement with respect to the Securities offered thereby will set forth the terms of the offering of such Securities, including the name or names of any underwriters, dealers or agents, the purchase price of such Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting compensation to underwriters, dealers or agents, any initial public offering price, any discounts or concessions allowed or reallowed or paid by underwriters or dealers to other dealers and any securities exchanges on which such Securities may be listed. Only underwriters so named in the Prospectus Supplement are deemed to be underwriters in connection with the Securities offered thereby. If underwriters or dealers are used in the sale, the Securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more of such firms. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase such Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of the Securities offered by the Prospectus Supplement if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offering and sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent (or the method by which such commissions can be determined) will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the Prospectus Supplement, the Company will authorize underwriters, dealers or other persons acting as the Company's agents to solicit offers by certain specified institutions to purchase Securities from the Company at the public offering price set forth in the Prospectus Supplement pursuant to contracts providing for payment and delivery on a specified date in the future. Institutional investors to which such offers may be made, when authorized, include commercial and savings banks, insurance companies, pension funds, 16 33 investment companies, educational and charitable institutions and such other institutions as may be approved by the Company. The obligations of any such purchasers pursuant to such delayed delivery and payment arrangements will not be subject to any conditions except that such purchase shall not at the time of delivery be prohibited under the laws of any jurisdiction to which such purchaser is subject. The Prospectus Supplement will set forth the commission payable for solicitation of such contracts. The underwriters and other persons soliciting such contracts will have no responsibility for the validity or performance of any such contracts. Underwriters, dealers and agents may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution by the Company with respect to payments they may be required to make in respect thereof. Underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. Securities other than the Company's Common Stock may or may not be listed on a national securities exchange. No assurances can be given that there will be a market for such Securities. LEGAL MATTERS The legality of the Securities and certain other legal matters in connection with the offering will be passed upon for Chiquita by Charles R. Morgan, Vice President, General Counsel and Secretary of the Company. Certain legal matters will be passed upon for any underwriter or agent by Simpson Thacher & Bartlett (a partnership which includes professional corporations), New York, New York. Charles R. Morgan presently holds shares of Chiquita's Common Stock in the Company's Savings and Investment (401(k)) Plan as well as employee stock options to purchase additional shares of Chiquita's Common Stock. EXPERTS The Consolidated Financial Statements incorporated by reference in this Prospectus and the Prospectus Supplement (other than those for interim periods) have been audited by Ernst & Young, independent auditors, as stated in their opinion (which is incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1992), and have been so included in reliance upon such opinion given upon the authority of that firm as experts in accounting and auditing. 17 34 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ No dealer, salesperson or any other person has been authorized to give any information or to make any representations not contained in this Prospectus Supplement and the accompanying Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company, by the Underwriters or by any other person. This Prospectus Supplement and the accompanying Prospectus do not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person or by anyone in any state in which such offer or solicitation may not lawfully be made. Neither the delivery of this Prospectus Supplement and the accompanying Prospectus, nor any sale made hereunder, shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date hereof. --------------------------- TABLE OF CONTENTS
Page ------ Prospectus Supplement Prospectus Supplement Summary........... S-2 Selected Consolidated Financial Data.... S-4 Recent Developments..................... S-5 Use of Proceeds......................... S-7 Capitalization.......................... S-8 Description of Senior Notes............. S-9 Underwriting............................ S-16 Prospectus Available Information................... 2 Incorporation of Certain Documents by Reference............................. 2 The Company............................. 3 Investment Considerations............... 3 Recent Developments..................... 6 Use of Proceeds......................... 8 Selected Consolidated Financial Data.... 9 Description of Debt Securities.......... 10 Description of Equity Securities........ 14 Plan of Distribution.................... 16 Legal Matters........................... 17 Experts................................. 17
- ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ $125,000,000 [LOGO] CHIQUITA BRANDS INTERNATIONAL % SENIOR NOTES DUE 2004 --------------------------- PROSPECTUS SUPPLEMENT , 1994 --------------------------- LEHMAN BROTHERS KIDDER, PEABODY & CO. INCORPORATED SMITH BARNEY SHEARSON INC. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 35 APPENDIX Graphics and Image Material Front Cover and Outside Back Cover Pages of Prospectus Supplement - The Company's logo is a vertically aligned solid blue oval with a yellow inside border and a design containing the word "Chiquita"(R) in white and a yellow outline sketch of the upper torso of a woman bearing a basket of fruit on her head. -----END PRIVACY-ENHANCED MESSAGE-----