-----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, ZUzoZTRBm20EsoLi/Qy+pdG0KRKlX4c6z/hm4nXCnx1w/3HWyC7Rr+imkGxBDx0r vg5WpzQOrwMQKdYCEGEjSw== 0000950152-94-000060.txt : 19940202 0000950152-94-000060.hdr.sgml : 19940202 ACCESSION NUMBER: 0000950152-94-000060 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: 94503937 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 CHIQQUITA 424B2 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) 2,000,000 SHARES [LOGO] CHIQUITA BRANDS INTERNATIONAL, INC. $ NON-VOTING CUMULATIVE PREFERRED STOCK, SERIES A (LIQUIDATION PREFERENCE OF $50.00 PER SHARE) --------------------------- Chiquita Brands International, Inc. (the "Company") is offering (the "Offering") 2,000,000 shares of $ Non-Voting Cumulative Preferred Stock, Series A, par value $1.00 per share (the "Series A Preferred Stock"). Dividends on the Series A Preferred Stock will accrue at an annual rate of $ per share, will be cumulative from the date of , and will be payable quarterly in arrears, commencing , 1994. The shares of Series A Preferred Stock have a liquidation preference of $50.00 per share plus accrued and unpaid dividends. The Series A Preferred Stock is not convertible at the option of the Company prior to , 1997. On and after , 1997 until , 2001, the Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company, for such number of shares of the Company's Capital Stock, par value $.33 per share (the "Common Stock"), as are issuable at a conversion rate of shares of Common Stock for each share of Series A Preferred Stock, subject to adjustment in certain circumstances. The Company may exercise this option only if for 20 trading days within any period of 30 consecutive trading days, including the last trading day of such 30 trading day period, the closing price of the Common Stock on the New York Stock Exchange (the "NYSE") exceeds $ , subject to adjustment in certain circumstances. On and after , 2001, the Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company, into that number of shares of Common Stock which shall have a current market price (calculated by averaging the closing prices of the Common Stock on the NYSE for the five trading days immediately preceding the conversion date) equal to $50.00 per share of Series A Preferred Stock. However, in no event shall the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible exceed 10, subject to adjustment in certain circumstances. Each share of Series A Preferred Stock will be convertible, at any time after the 60th day following the final closing of the Offering, at the holder's option, into shares of Common Stock, subject to adjustment in certain circumstances. On January 28, 1994, the closing price of the Common Stock on the NYSE was $15.375 per share. The Series A Preferred Stock is not redeemable, and there is no redemption or sinking fund obligation with respect to the Series A Preferred Stock. Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Senior Note Offering") of $125 million principal amount of % Senior Notes due 2004 (the "Senior Notes"). The Offering is not contingent upon the consummation of the Senior Note Offering and there can be no assurance that the Senior Note Offering will be successfully completed. See "Use of Proceeds." Application will be made to list the Series A Preferred Stock on the NYSE. SEE "INVESTMENT CONSIDERATIONS" IN THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SERIES A PREFERRED STOCK. --------------------------- 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. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Underwriting Price to Discounts Proceeds to Public(1) and Commissions(2) Company(1)(3) - ----------------------------------- Per Share.......................... $50.00 $ $ - ----------------------------------- Total(4)........................... $100,000,000 $ $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Plus accrued dividends, 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 of the Company estimated at $ . (4) The Company has granted the Underwriters a 30-day option to purchase up to an aggregate of 300,000 additional shares solely to cover over-allotments. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company, before deducting expenses, will be $ , $ , and $ , respectively. See "Underwriting." ---------------------------
The shares of Series A Preferred Stock 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 shares of Series A Preferred Stock will be made at the offices of Lehman Brothers Inc., New York, New York, on or about , 1994. --------------------------- LEHMAN BROTHERS 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 SERIES A PREFERRED STOCK OFFERED HEREBY OR THE COMMON STOCK AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 THE OFFERING Securities Offered............ 2,000,000 shares of $ Non-Voting Cumulative Preferred Stock, Series A, par value $1.00 per share (the "Series A Preferred Stock"); 2,300,000 shares if the Underwriters' over-allotment option is exercised in full. Dividends..................... Cumulative at an annual rate of $ per share, payable in cash quarterly in arrears, commencing , 1994, when, as and if declared by the Board of Directors of the Company. See "Description of Series A Preferred Stock -- Dividends." Liquidation Preference........ $50.00 per share, plus accrued and unpaid dividends. See "Description of Series A Preferred Stock -- Liquidation Preference." Conversion at the Option of the Company................. The Series A Preferred Stock is not convertible at the option of the Company prior to , 1997. On and after , 1997 until , 2001, the shares of Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company at a conversion rate of shares of Common Stock for each share of Series A Preferred Stock, subject to adjustment in certain circumstances. The Company may exercise this option only if for 20 trading days within any period of 30 consecutive trading days, including the last trading day of such 30 trading day period, the closing price of the Common Stock on the NYSE exceeds $ , subject to adjustment in certain circumstances. On and after , 2001, the Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company, into that number of shares of Common Stock which shall have a current market price (calculated by averaging the closing prices of the Common Stock on the NYSE for the five trading days immediately preceding the conversion date) equal to $50.00 per share of Series A Preferred Stock. However, in no event shall the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible exceed 10, subject to adjustment in certain circumstances. See "Description of Series A Preferred Stock -- Conversion -- At the Option of the Company." Conversion at the Option of the Holder.................. Each share of Series A Preferred Stock is convertible, at any time after the 60th day following the final closing of the Offering through the business day preceding a Company conversion, at the holder's option, into shares of Common Stock, subject to adjustment in certain circumstances. See "Description of Series A Preferred Stock -- Conversion -- At the Option of the Holder." Voting Rights................. If dividends are in arrears for six or more full quarterly dividend periods, whether or not consecutive, the number of directors of the Company shall be increased by two and holders of the Series A Preferred Stock, voting separately as a class with any other holders of preferred stock having similar rights, at any annual or special meeting called for such purpose, will be entitled to elect two additional directors to serve until such dividend arrearage is eliminated. In addition, a two-thirds vote of all outstanding shares of Series A Preferred Stock, voting as a class with all other affected series of Non-Voting Cumulative Preferred Stock having similar voting rights, is required to authorize the creation of any class or series of stock having a preference as to dividends or upon liquidation senior to or on a parity with the Series A Preferred Stock
S-3 4 (other than new series of Non-Voting Cumulative Preferred Stock and Cumulative Preference Stock established by the Board of Directors), or to amend, alter or repeal the Company's Restated Certificate of Incorporation, as amended ("Certificate of Incorporation"), in a manner that would materially adversely affect the terms of the Series A Preferred Stock. In all other respects, the holders of the Series A Preferred Stock will have no voting rights. Certain provisions of the Certificate of Incorporation permit the Company to issue one or more series of preferred stock ranking senior to or on a parity with the Series A Preferred Stock as to dividends or upon liquidation without the consent of any holder of Series A Preferred Stock. See "Description of Series A Preferred Stock -- Voting Rights." Redemption.................... The Series A Preferred Stock is not redeemable, and there is no redemption or sinking fund obligation with regard to the Series A Preferred Stock. Ranking....................... The Series A Preferred Stock will rank senior to the Common Stock with respect to dividends and liquidating distributions and pari passu with the Company's Mandatorily Exchangeable Cumulative Preference Stock, Series C, of which 648,310 shares are currently outstanding (but will convert into Common Stock not later than September 7, 1995). See "Description of Series A Preferred Stock -- Ranking." Concurrent Offering........... Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Senior Note Offering") of $125,000,000 aggregate principal amount of % Senior Notes due 2004 (the "Senior Notes"). The Offering is not contingent upon the consummation of the Senior Note Offering and there can be no assurance that the Senior Note Offering will be successfully completed. Use of Proceeds............... The net proceeds from the issuance of Series A Preferred Stock offered hereby, expected to be $ , will be used to repay outstanding subordinated debt of the Company and/or to repay outstanding debt of the Company's subsidiaries. The net proceeds from the Senior Note Offering will be used to repay the Company's 11 7/8% Subordinated Debentures due May 1, 2003. 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. See "Use of Proceeds." Application for Listing....... Application will be made to list the Series A Preferred Stock on the NYSE, which listing is subject to the NYSE's listing requirements.
S-4 5 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-5 6 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-6 7 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-7 8 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Series A Preferred Stock offered hereby, assuming no exercise of the over-allotment option, will be approximately $ , which net proceeds will be used to repay outstanding subordinated debt of the Company and/or to repay outstanding debt of the Company's subsidiaries. The net proceeds to be received by the Company from the Senior Note Offering (if such offering is consummated), will be approximately $ , which net proceeds will be used to repay the Company's 11 7/8% Subordinated Debentures due May 1, 2003. The Company will determine which debt to repay with the net proceeds from the Preferred Stock Offering based on certain 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-8 9 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 net proceeds from the sale of Series A Preferred Stock offered hereby, assuming no exercise of the over-allotment option, and the offering of the Senior Notes 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 Series A Preferred Stock and the Senior Notes. Such loss, fees or expenses would not be material to the Company's total shareholders' equity. This 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 in the Senior Note Offering...... -- 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 Series A Preferred Stock offered hereby (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 shares to be reserved for issuance upon conversion of the Series A 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-9 10 PRICE RANGE OF COMMON STOCK Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock Exchanges (symbol: CQB). The following table lists for the periods indicated the high and low closing prices of the Common Stock as reported on the New York Stock Exchange Composite Tape.
1994(A) 1993 1992 ----------------- ----------------- ----------------- CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW - ------------------------------ ------ ------ ------ ------ ------ ------ First Quarter................. $15.50 $11.25 $17.50 $13.25 $40.13 $29.13 Second Quarter................ 15.63 10.50 29.13 16.63 Third Quarter................. 14.00 10.25 18.50 15.75 Fourth Quarter................ 11.88 10.13 18.00 15.75 - --------------- (a) First Quarter data through January 28, 1994.
As of January 28, 1994 there were approximately 7,800 record holders of Chiquita's Common Stock. DIVIDENDS In August 1993, Chiquita decreased the annual dividend rate on its Common Stock to $.20 from $.68 per share commencing with a quarterly dividend of $.05 per share paid September 7, 1993. Chiquita had previously paid quarterly dividends of $.17 per share on its Common Stock since the second quarter of 1992. DESCRIPTION OF SERIES A PREFERRED STOCK GENERAL Under the Company's Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), the Board of Directors of the Company is authorized without further shareholder action to provide for the issuance of up to 10,000,000 shares of Non-Voting Cumulative Preferred Stock, par value $1.00 per share, in one or more series, with such designated preferences, rights, qualifications and limitations as shall be set forth in resolutions providing for the issuance thereof adopted by the Board of Directors. The Company has authorized the Series A Preferred Stock offered hereby. The Series A Preferred Stock will, when issued, be fully paid and nonassessable. The Series A Preferred Stock is not redeemable, and there is no redemption or sinking fund obligation with respect to the Series A Preferred Stock. The Series A Preferred Stock may be converted at the option of the Company as described under "Conversion -- At the Option of the Company" below. The holders of shares of Series A Preferred Stock have no preemptive rights with respect to any securities of the Company. The transfer agent, registrar, dividend disbursing agent and conversion agent for shares of the Series A Preferred Stock will be Securities Transfer Company (the "Transfer Agent"). Securities Transfer Company is an affiliate of the Company and of AFC. The following statements are summaries of certain provisions that will be contained in the Certificate of Amendment to the Certificate of Incorporation authorizing the issuance of the Series A Preferred Stock and setting forth the preferences, rights, qualifications and limitations of the Series A Preferred Stock. These statements do not purport to be complete and are qualified in their entirety by reference to such Certificate of Amendment, copies of which have been filed as an exhibit to the Company's Current Report on Form 8-K dated , 1994 which is incorporated by reference in the accompanying Prospectus and the Certificate of Incorporation, copies of which have been filed as exhibits to the Registration Statement of which the accompanying Prospectus is a part. The Certificate of Amendment will be filed with the Secretary of State of New Jersey prior to the issuance of the Series A Preferred Stock. S-10 11 DIVIDENDS Holders of shares of the Series A Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors of the Company out of assets of the Company legally available therefor, an annual cash dividend of $ per share. Dividends on the Series A Preferred Stock will be payable quarterly in arrears on , , and , commencing , 1994, except that if any such date is not a business day, then such dividend will be payable on the next succeeding business day. Dividends on the Series A Preferred Stock will accrue and be cumulative from the date of initial issuance. Dividends will be payable to holders of record as they appear on the stock transfer books of the Company on such record dates, not exceeding 60 days preceding the payment dates thereof, as shall be fixed by the Board of Directors. Dividends payable on the Series A Preferred Stock for any period greater or less than a full dividend period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable on the Series A Preferred Stock for each full dividend period shall be computed by dividing the annual dividend rate by four. Holders of shares of the Series A Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or securities, in excess of full cumulative dividends on the Series A Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments which may be in arrears. Dividends paid on shares of Series A Preferred Stock in an amount less than the total amount of dividends in arrears at the time accumulated and payable on such shares shall be allocated pro rata among all such shares at the time outstanding except as set forth in the following paragraph. On and after , 2001, if the Company is in arrears in the payment of dividends, at the time of a conversion (whether at the option of the Company, at the option of the holder or pursuant to a mandatory conversion), the Company has the option to pay dividends in arrears and accrued and unpaid dividends in cash or in shares of Common Stock. If there shall be outstanding shares of any other series of preferred stock of the Company ranking junior to or on a parity with the Series A Preferred Stock as to dividends, no full dividends shall be declared or paid or set apart for payment on any such other series for any period unless full cumulative dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment, on the Series A Preferred Stock for all dividend payment periods terminating on or prior to the date of the payment of such full cumulative dividends. If dividends are not paid in full or declared in full, and sums set apart for the payment thereof, upon the Series A Preferred Stock and any other preferred stock ranking on a parity as to dividends with the Series A Preferred Stock, all dividends upon shares of Series A Preferred Stock and such other parity preferred stock will be declared pro rata so that in all cases the amount of dividends declared and paid per share on the Series A Preferred Stock and such other parity preferred stock will bear to each other the same ratio that accumulated dividends per share on the shares of Series A Preferred Stock and such other preferred stock bear to each other. Except as set forth above, unless full cumulative dividends on the Series A Preferred Stock have been paid, or declared and sums set aside for the payment thereof, dividends (other than in Common Stock or any other stock of the Company ranking junior to the Series A Preferred Stock as to dividends and upon liquidation) may not be paid, or declared and set aside for payment, and other distributions may not be made upon the Common Stock or on any other stock of the Company ranking junior to or on a parity with the Series A Stock as to dividends; and neither Common Stock nor any other stock of the Company ranking junior to the Series A Preferred Stock as to dividends may be redeemed, purchased or otherwise acquired for any consideration by the Company. The Company may, however, convert or exchange such junior stock for stock of the Company ranking junior to the Series A Preferred Stock as to dividends and upon liquidation. 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 on the Series A Preferred Stock when, as and if declared by the Board of Directors may also 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. S-11 12 LIQUIDATION PREFERENCE In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Stock are entitled to receive a liquidation preference of $50.00 per share, plus an amount equal to any accrued and unpaid dividends to the date of payment before any distribution of assets is made to holders of Common Stock or any other stock that ranks junior to the Series A Stock upon liquidation. The holders of Series A Preferred Stock, the Series C Preference Stock (as defined herein) and all series or classes of the Company's capital stock hereafter issued that rank on a parity upon liquidation with the Series A Preferred Stock are entitled to share ratably, in accordance with the respective preferential amounts payable on such stock, in any distribution which is not sufficient to pay in full the aggregate of the amounts payable thereon. After payment in full of the liquidation preference of the shares of the Series A Preferred Stock, the holders of such shares will not be entitled to any further participation in any distribution of assets by the Company. Neither a consolidation or merger of the Company with or into another corporation or other entity nor a sale, transfer or lease of all or part of the Company's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Company. CONVERSION At the Option of the Company. Shares of Series A Preferred Stock will not be convertible at the option of the Company prior to , 1997. On and after , 1997 and until , 2001, the shares of Series A Preferred Stock will be convertible at the option of the Company, in whole or in part, at a conversion rate of shares of Common Stock for each share of Series A Preferred Stock (the "Conversion Rate"), subject to adjustment in certain circumstances. The Company may exercise this option only if for 20 trading days within any period of 30 consecutive trading days, including the last trading day (the "Measuring Date") of such 30 trading day period, the closing price of the Common Stock on the NYSE exceeds $ , subject to adjustment in certain circumstances. If the Company elects to exercise its option to convert, it must, within five business days after the Measuring Date, mail a notice of conversion to the holders of the Series A Preferred Stock to be converted, which notice shall specify a conversion date that is not less than 15 nor more than 60 days after the date of such notice. On and after , 2001, the Series A Preferred Stock will be convertible at the option of the Company, in whole or in part, on not less than 15 nor more than 60 days notice, into that number of shares of Common Stock which shall have a current market price (calculated by averaging the closing prices of the Common Stock on the NYSE for the five trading days immediately preceding the conversion date) equal to $50.00 per share of Series A Preferred Stock, plus a payment equal to dividends in arrears, if any, and (except where the conversion date follows a dividend payment record date and precedes the next succeeding dividend payment date) a payment equal to dividends accrued since the last dividend payment date. Notwithstanding the foregoing, in no event shall the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible exceed 10 (the "Maximum Conversion Rate"), subject to adjustment in certain circumstances. Therefore, holders of Series A Preferred Stock converted at the option of the Company on any date on which the current market price (as determined in the manner set forth above) of the Common Stock is less than $5.00 per share will receive shares of Common Stock with an aggregate current market price of less than $50.00 per share of Series A Preferred Stock converted. If fewer than all shares of Series A Preferred Stock are to be converted, the shares to be converted shall be selected by lot, pro rata or by another method as reasonably determined by the Board of Directors to be appropriate and fair to the holders of Series A Preferred Stock. In the event that full cumulative dividends on the Series A Preferred Stock and any parity stock have not been paid or declared and set apart for payment, the Series A Preferred Stock may not be converted at the option of the Company in part and the Company may not purchase or acquire shares of Series A Preferred Stock otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Series A Preferred Stock. Mandatory. If a consolidation or merger of the Company shall occur as a result of which holders of Common Stock shall be entitled to receive cash, securities or other assets with respect to or in exchange for Common Stock, then all outstanding shares of Series A Preferred Stock shall be converted into the maximum number of shares of Common Stock into which such shares shall then be convertible (at the option of the S-12 13 holder or the Company) on the effective date of and immediately prior to such merger or consolidation. However, such conversion will not occur in the event of a consolidation or merger in which the Series A Preferred Stock will otherwise remain outstanding, if the holders of Series A Preferred Stock will be entitled to receive the same amount of cash, securities or other assets with respect to their Series A Preferred Stock that they would have received with respect to the maximum number of shares of Common Stock into which such shares shall then be convertible (at the option of the holder or the Company) had a conversion occurred immediately prior to such consolidation or merger (other than with respect to dividends in arrears). Upon any such conversion, each holder of Series A Preferred Stock will be entitled to receive all dividends in arrears. Depending upon the terms of such merger or consolidation, the aggregate amount of cash, securities or other assets which holders of Series A Preferred Stock may receive could be more or less than the liquidation preference with respect to the Series A Preferred Stock. At the Option of the Holder. Each share of Series A Preferred Stock will be convertible at the option of the holder into shares of Common Stock of the Company, plus dividends in arrears, at any time after the 60th day following the final closing of the Offering in accordance with, and subject to adjustments to, the Conversion Rate. Conversion of the Series A Preferred Stock may be effected by delivering shares being converted to the Transfer Agent, or such other office or agency to be maintained by the Company for that purpose. Series A Preferred Stock surrendered for conversion at the option of the holder after the close of business on a record date for payment of dividends and before the opening of business on the next succeeding dividend payment date must be accompanied by payment of an amount equal to the dividend thereon which is to be paid on such dividend payment date. CERTAIN EFFECTS OF CONVERSION On the conversion date, the Company must pay any dividends in arrears for any dividend period ending on or prior to the conversion date. In the case of a conversion date falling after a dividend payment record date and prior to the related dividend payment date, the holders of the Series A Preferred Stock on such record date will be entitled to receive the dividend payable on such shares on the corresponding dividend payment date, notwithstanding the conversion of such shares following such dividend payment record date. As set forth above, holders whose shares of Series A Preferred Stock are converted at the option of the Company will, under certain circumstances, receive payment equal to dividends accrued since the last dividend payment date. Except as provided in the preceding sentences, no payment or allowance will be made for accrued dividends on any shares of Series A Preferred Stock converted into Common Stock or on the shares of Common Stock issuable upon such conversion. On and after , 2001, if the Company is in arrears in the payment of dividends at the time of a conversion (whether at the option of the Company, at the option of the holder or pursuant to a mandatory conversion) the Company has the option to pay dividends in arrears and accrued and unpaid dividends in cash or in shares of Common Stock. On and after any date fixed for conversion, provided that the Company has made available at the office of the Transfer Agent a sufficient number of shares of Common Stock and, if applicable, a sufficient amount of cash to effect the conversion, dividends will cease to accrue on the Series A Preferred Stock to be converted, such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares as holders of Series A Preferred Stock shall cease, except the right to receive any shares of Common Stock issuable and any cash payable upon such conversion, without interest from the date of such conversion. No holder of a certificate which immediately prior to the conversion date represented shares of Series A Preferred Stock shall be, or have any rights as, a holder of the Common Stock issuable in connection with such conversion, including without limitation voting rights or the right to receive any dividend or other distribution from the Company with respect to any Common Stock, until surrender of such holder's certificate which represented Series A Preferred Stock for a certificate representing such Common Stock. Upon such surrender, there shall be paid to the holder the amount of any dividend or other distribution (without interest) which became payable on or after the conversion date, but which was not paid by reason of any failure to deliver certificates that represented Series A Preferred Stock, with respect to the number of whole shares of S-13 14 Common Stock issued upon such surrender. No interest will be payable with respect to any consideration to be received in connection with a conversion or any such dividends. Fractional shares of Common Stock will not be issued upon conversion of the Series A Preferred Stock, but, in lieu thereof, the Company will pay a cash adjustment based on the current market price of the Common Stock (as determined by averaging the closing prices of the Common Stock on the NYSE for the five trading days preceding the conversion date). If fewer than all the shares represented by any certificate are to be converted, a new certificate will be issued representing the unconverted shares. ADJUSTMENTS TO CONVERSION RATE The Conversion Rate is subject to adjustment upon certain events, including (i) the issuance of Common Stock as a dividend or distribution on the Common Stock; (ii) a combination, subdivision or reclassification of Common Stock; (iii) the issuance to all holders of Common Stock of rights or warrants entitling them to subscribe for or purchase Common Stock at less than the then current market price; and (iv) the distribution to all holders of Common Stock of capital stock (other than Common Stock), evidences of indebtedness of the Company, and/or assets (excluding regular periodic cash dividends), other than any distribution which was also made on a pro rata basis to holders of Series A Preferred Stock. No such adjustment of less than 1% of the Conversion Rate will be required; however, any such adjustment not made due to this limitation will be carried forward and taken into account in any subsequent adjustment. No adjustment to the Conversion Rate will be made with respect to rights or warrants issued pursuant to certain employee benefit plans. In addition to the foregoing adjustments, the Company will be permitted to make such upward adjustments in the Conversion Rate as it determines to be advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights made by the Company to its shareholders will not be taxable to the recipients of such dividends. Except as stated above, the Conversion Rate will not be adjusted for the issuance of Common Stock, or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. The Maximum Conversion Rate will be proportionately adjusted if, as and when the Conversion Rate is adjusted as described above. If at any time the Company makes a distribution of property to its shareholders which would be taxable to such shareholders as a dividend for Federal income tax purposes (e.g., distributions of evidences of indebtedness or assets of the Company, but generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the antidilution provisions described above, the Conversion Rate of the Series A Preferred Stock is increased, such increase may be deemed to be the receipt of taxable income by holders of the Series A Preferred Stock. VOTING RIGHTS The holders of the Series A Preferred Stock will have no voting rights except as described below or as required by law. In exercising any such vote, each outstanding share of Series A Preferred Stock will be entitled to a number of votes equal to the maximum number of shares of Common Stock into which such shares would be convertible at the option of the Company or the holder on the applicable record date (assuming that the shares were converted on that date). Shares held by the Company or any entity controlled by the Company will have no voting rights. Whenever dividends on the Series A Preferred Stock have not been paid in an aggregate amount equal to at least six quarterly dividends on such shares (whether or not consecutive), the number of directors of the Company will be increased by two, and the holders of the Series A Preferred Stock (voting separately as a class with the holders of any outstanding shares of stock on a parity as to dividends with the Series A Preferred Stock ("parity dividend stock") upon which like voting rights have been conferred and are exercisable) will be entitled to elect such two additional directors to the Board of Directors at any meeting of shareholders of the Company at which directors are to be elected to serve until all such dividend arrearage is eliminated and S-14 15 dividends have been paid in full or set apart for payment in full. The term of office of all directors so elected will terminate immediately upon such payment or setting apart for payment. In addition, a two-thirds vote of all outstanding shares of Series A Preferred Stock, voting as a class with all other affected series of Non-Voting Cumulative Preferred Stock having similar voting rights, is required to authorize the creation of any class or series of stock having a preference as to dividends or upon liquidation senior to or on a parity with the Series A Preferred Stock, or to amend, alter or repeal the Company's Certificate of Incorporation in a manner which would materially adversely affect the terms of the Series A Preferred Stock. Certain provisions of the Certificate of Incorporation permit the Company to issue one or more new series of Non-Voting Cumulative Preferred Stock or Cumulative Preference Stock having rights or preferences senior or on a parity to those of the Series A Preferred Stock without the consent of any holder of Series A Preferred Stock. RANKING The Series A Preferred Stock will rank, as to dividends and upon liquidation, prior to the Company's Common Stock and pari passu with the Company's $1.32 Mandatorily Exchangeable Cumulative Preference Stock, Series C ("Series C Preference Stock") (which will convert into Common Stock not later than September 1995). As of the date of this Prospectus Supplement, the Company has authorized 1,000,000 shares of Series C Preference Stock, of which 648,310 shares are outstanding. UNDERWRITING The Underwriters named below, acting through their Representatives, Lehman Brothers Inc. 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 following number of shares of the Series A Preferred Stock:
NUMBER OF UNDERWRITERS SHARES - ---------------------------------------------------------------- --------------- Lehman Brothers Inc. ........................................... Smith Barney Shearson Inc. ..................................... --------------- Total...................................................... 2,000,000 --------------- ---------------
The Underwriting Agreement provides that the obligations of the Underwriters to purchase shares of Series A Preferred Stock are subject to certain conditions and that if any of the foregoing shares of Series A Preferred Stock are purchased by the Underwriters pursuant to the Underwriting Agreement all the shares of Series A Preferred Stock agreed to be purchased by the Underwriters must be so purchased. The Underwriters propose to offer the Series A Preferred Stock 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 concession not to exceed $ per share. The selected dealers may reallow a concession to other dealers not to exceed $ per share. After the initial offering to the public, the public offering price, the concession to selected dealers and the reallowance to other dealers may be changed by the Representatives. The Company has granted to the Underwriters an option to purchase up to an aggregate of 300,000 additional shares of Series A Preferred Stock, exercisable solely to cover over-allotments, at the offering price to the public less the underwriting discounts and commissions shown on the cover page of this Prospectus Supplement. Such option may be exercised at any time until 30 days after the date of the Underwriting Agreement. To the extent that the option is exercised, each Underwriter will be committed, subject to certain conditions, to purchase a number of the additional shares of Series A Preferred Stock proportionate to such Underwriter's initial commitment, as indicated in the preceding table. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments that the Underwriters may be required to make in respect thereof. S-15 16 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. Subject to certain exceptions, AFC and the Company have agreed that they will not sell or otherwise dispose of any shares of Common Stock or preferred stock of the Company for a period of 90 days from the date of Prospectus Supplement without the prior written consent of Lehman Brothers Inc. 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
Prospectus Supplement Page ---- Prospectus Supplement Summary........... S-2 Selected Consolidated Financial Data.... S-5 Recent Developments..................... S-6 Use of Proceeds......................... S-8 Capitalization.......................... S-9 Price Range of Common Stock............. S-10 Dividends............................... S-10 Description of Series A Preferred Stock................................. S-10 Underwriting............................ S-15 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
- ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ 2,000,000 SHARES [LOGO] CHIQUITA BRANDS INTERNATIONAL $ NON-VOTING CUMULATIVE PREFERRED STOCK, SERIES A (LIQUIDATION PREFERENCE OF $50.00 PER SHARE) ------------------------ PROSPECTUS SUPPLEMENT , 1994 ------------------------ LEHMAN BROTHERS 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-----