10-Q 1 d10q.txt FORM 10-Q -------------------------------------------------------------------------------- FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended Commission File June 30, 2001 Number 1-1550 CHIQUITA BRANDS INTERNATIONAL, INC. Incorporated under the IRS Employer I.D. Laws of New Jersey No. 04-1923360 250 East Fifth Street, Cincinnati, Ohio 45202 (513) 784-8000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ ----- As of July 31, 2001, there were 73,701,536 shares of Common Stock outstanding. Page 1 of 16 Pages -------------------------------------------------------------------------------- CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- TABLE OF CONTENTS -----------------
Page ----- PART I - Financial Information ------ Item 1 - Financial Statements Consolidated Statement of Income for the quarters and six months ended June 30, 2001 and 2000............................................. 3 Consolidated Balance Sheet as of June 30, 2001, December 31, 2000 and June 30, 2000................................................. 4 Consolidated Statement of Cash Flow for the six months ended June 30, 2001 and 2000........................................................ 5 Notes to Consolidated Financial Statements.............................................. 6 Item 2 - Management's Analysis of Operations and Financial Condition........................ 11 Item 3 - Quantitative and Qualitative Disclosures About Market Risk......................... 13 PART II - Other Information ------- Item 3 - Defaults Upon Senior Securities.................................................... 13 Item 5 - Other Information.................................................................. 14 Item 6 - Exhibits and Reports on Form 8-K................................................... 15 Signature........................................................................................ 16
Part I - Financial Information ------------------------------ Item 1 - Financial Statements ----------------------------- CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- CONSOLIDATED STATEMENT OF INCOME (Unaudited) -------------------------------------------- (In thousands, except per share amounts)
Quarter Ended June 30, Six Months Ended June 30, ------------------------------ ---------------------------- 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales $ 595,410 $ 601,465 $ 1,172,659 $ 1,259,518 ------------- ------------- ------------- ------------- Operating expenses Cost of sales 488,449 462,283 950,833 960,288 Selling, general and administrative 61,774 72,133 117,566 141,833 Depreciation 20,838 23,004 41,632 45,564 ------------- ------------- ------------- ------------- 571,061 557,420 1,110,031 1,147,685 ------------- ------------- ------------- ------------- Operating income 24,349 44,045 62,628 111,833 Interest income 2,104 2,824 5,155 5,929 Interest expense (32,037) (31,997) (64,731) (63,963) Other income (expense), net (1,904) 50 (2,912) 113 ------------- ------------- ------------- ------------- Income (loss) before income taxes and extraordinary item (7,488) 14,922 140 53,912 Income taxes (3,500) (4,000) (7,000) (8,000) ------------- ------------- ------------- ------------- Income (loss) before extraordinary item (10,988) 10,922 (6,860) 45,912 Extraordinary gain from debt prepayment -- 1,832 -- 1,832 ------------- ------------- ------------- ------------- Net income (loss) $ (10,988) $ 12,754 $ (6,860) $ 47,744 ============= ============= ============= ============= Earnings per common share: Basic - Income (loss) before extraordinary item $ (.19) $ .10 $ (.19) $ .56 - Extraordinary item -- .03 -- .03 ------------- ------------- ------------- ------------- - Net income (loss) $ (.19) $ .13 $ (.19) $ .59 ============= ============= ============= ============= Diluted - Income (loss) before extraordinary item $ (.19) $ .10 $ (.19) $ .56 - Extraordinary item -- .03 -- .02 ------------- ------------- ------------- ------------- - Net income (loss) $ (.19) $ .13 $ (.19) $ .58 ============= ============= ============= ============= Dividends per common share $ -- $ -- $ -- $ -- ============= ============= ============= =============
See Notes to Consolidated Financial Statements. 3 CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- CONSOLIDATED BALANCE SHEET (Unaudited) -------------------------------------- (In thousands, except share amounts)
June 30, December 31, June 30, 2001 2000 2000 ------------ ------------ ------------ ASSETS ------ Current assets Cash and equivalents $ 127,775 $ 96,924 $ 94,413 Trade receivables (less allowances of $12,068, $10,685 and $12,047) 216,269 191,476 192,366 Other receivables, net 91,114 105,018 143,040 Inventories 342,234 428,260 340,196 Other current assets 33,999 24,835 36,842 ------------ ------------ ------------ Total current assets 811,391 846,513 806,857 Property, plant and equipment, net 1,038,332 1,071,341 1,115,982 Investments and other assets 323,009 334,573 353,593 Intangibles, net 160,792 164,363 169,116 ------------ ------------ ------------ Total assets $ 2,333,524 $ 2,416,790 $ 2,445,548 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities Notes and loans payable $ 46,268 $ 109,274 $ 35,756 Long-term debt due within one year Parent company 858,579 86,930 90,930 Subsidiaries 45,605 93,685 94,743 Accounts payable 175,512 194,367 199,338 Accrued liabilities 142,318 128,614 99,913 ------------ ------------ ------------ Total current liabilities 1,268,282 612,870 520,680 Long-term debt of parent company -- 772,380 772,086 Long-term debt of subsidiaries 338,512 287,695 260,597 Other liabilities 154,698 161,302 147,214 ------------ ------------ ------------ Total liabilities 1,761,492 1,834,247 1,700,577 ------------ ------------ ------------ Shareholders' equity Preferred and preference stock 171,885 253,475 253,475 Common stock, $.01 par value (73,525,270, 66,705,622 and 66,532,262 shares) 735 667 665 Capital surplus 849,083 766,217 765,582 Accumulated deficit (418,160) (411,300) (264,414) Accumulated other comprehensive loss (31,511) (26,516) (10,337) ------------ ------------ ------------ Total shareholders' equity 572,032 582,543 744,971 ------------ ------------ ------------ Total liabilities and shareholders' equity $ 2,333,524 $ 2,416,790 $ 2,445,548 ============ ============ ============
See Notes to Consolidated Financial Statements. 4 CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) ----------------------------------------------- (In thousands)
Six Months Ended June 30, ------------------------- 2001 2000 ---------- ---------- Cash provided (used) by: Operations Income (loss) before extraordinary item $ (6,860) $ 45,912 Depreciation and amortization 44,708 48,874 Collection of tax refund 9,456 -- Parent company interest expense not paid 40,710 -- Changes in current assets and liabilities 26,163 2,802 Other (886) (12,155) ---------- ---------- Cash flow from operations 113,291 85,433 ---------- ---------- Investing Capital expenditures (15,530) (33,772) Hurricane Mitch insurance proceeds 6,320 32,500 Proceeds from sale of business -- 16,228 Long-term investments (4,296) (2,684) Proceeds from sales of property, plant and equipment 3,756 863 Other (510) 225 ---------- ---------- Cash flow from investing (10,260) 13,360 ---------- ---------- Financing Debt transactions Issuances of long-term debt 71,402 -- Repayments of long-term debt (80,828) (41,588) Decrease in notes and loans payable (62,754) (52,104) Preferred and preference stock dividends -- (8,551) ---------- ---------- Cash flow from financing (72,180) (102,243) ---------- ---------- Increase (decrease) in cash and equivalents 30,851 (3,450) Balance at beginning of period 96,924 97,863 ---------- ---------- Balance at end of period $ 127,775 $ 94,413 ========== ==========
See Notes to Consolidated Financial Statements. 5 CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ------------------------------------------------------ Interim results for Chiquita Brands International, Inc. and subsidiaries (the "Company") are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. See Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 for additional information relating to the Company's financial statements. Earnings Per Share ------------------ Basic and diluted earnings per common share ("EPS") are calculated as follows (in thousands, except per share amounts):
Quarter Ended Six Months Ended June 30, June 30, ------------------------ ------------------------ 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Income (loss) before extraordinary item $ (10,988) $ 10,922 $ (6,860) $ 45,912 Extraordinary gain from debt prepayment -- 1,832 -- 1,832 ----------- ----------- ----------- ----------- Net income (loss) (10,988) 12,754 (6,860) 47,744 Dividends paid or payable on preferred and preference stock (2,885) (4,275) (6,565) (8,551) ----------- ----------- ----------- ----------- Net income (loss) attributed to common shares for basic EPS (13,873) 8,479 (13,425) 39,193 Add back dividends paid or payable on preferred and preference stock -- -- -- 8,551 ----------- ----------- ----------- ----------- Net income (loss) attributed to common shares for diluted EPS $ (13,873) $ 8,479 $ (13,425) $ 47,744 =========== =========== =========== =========== Weighted average common shares outstanding (shares used to calculate basic EPS) 73,301 66,486 71,070 66,376 Convertible preferred and preference stock -- -- -- 15,479 Stock options and other stock awards -- 11 -- 62 ----------- ----------- ----------- ----------- Shares used to calculate diluted EPS 73,301 66,497 71,070 81,917 =========== =========== =========== =========== Earnings per common share: Basic - Before extraordinary item $ (.19) $ .10 $ (.19) $ .56 - Extraordinary item -- .03 -- .03 ----------- ----------- ----------- ----------- - Net income (loss) $ (.19) $ .13 $ (.19) $ .59 =========== =========== =========== =========== Diluted - Before extraordinary item $ (.19) $ .10 $ (.19) $ .56 - Extraordinary item -- .03 -- .02 ----------- ----------- ----------- ----------- - Net income (loss) $ (.19) $ .13 $ (.19) $ .58 =========== =========== =========== ===========
6 The assumed conversions to common stock of the Company's 7% convertible subordinated debentures, preferred and preference stock, stock options and other stock awards are excluded from the diluted EPS computations for periods in which these items, on an individual basis, have an anti-dilutive effect on diluted EPS. Although the Company did not pay any cash dividends on its preferred and preference stock during the quarter and six months ended June 30, 2001, these dividends are deducted from net income to calculate earnings per share. Segment Information (in thousands) ---------------------------------- Financial information for the Company's business segments is as follows:
Quarter Ended Six Months Ended June 30, June 30, ----------------------------- ---------------------------- 2001 2000 2001 2000 ------------- -------------- ------------- ------------- Net sales Fresh Produce $ 493,826 $ 487,160 $ 962,782 $ 1,011,723 Processed Foods 101,584 114,305 209,877 247,795 ------------- ------------- -------------- ------------- $ 595,410 $ 601,465 $ 1,172,659 $ 1,259,518 ============= ============== ============= ============= Operating income (loss) Fresh Produce $ 24,838 $ 37,130 $ 63,045 $ 99,917 Processed Foods (489) 6,915 (417) 11,916 ------------- -------------- ------------- ------------- $ 24,349 $ 44,045 $ 62,628 $ 111,833 ============= ============== ============= =============
Segment operating income for the second quarter of 2000 excludes charges and write-offs relating primarily to banana production assets, including the curtailment announced in June 2000 of additional Hurricane Mitch farm rehabilitation. These second quarter charges were offset by a $15 million gain on the sale of California Day-Fresh Foods, Inc., a processor and distributor of natural fresh fruit and vegetable juices. Inventories (in thousands) --------------------------
June 30, December 31, June 30, 2001 2000 2000 --------------- --------------- --------------- Fresh produce $ 28,843 $ 31,199 $ 31,467 Processed food products 158,628 241,787 144,456 Growing crops 98,346 97,620 98,721 Materials, supplies and other 56,417 57,654 65,552 --------------- --------------- --------------- $ 342,234 $ 428,260 $ 340,196 =============== =============== ===============
7 Long-term Debt and Shareholders' Equity --------------------------------------- In January 2001, the Company announced its intention to restructure the $861 million principal amount of publicly-held senior notes and subordinated debentures of Chiquita Brands International, Inc. ("CBII"), which is a parent holding company without business operations of its own. As part of this restructuring initiative, the Company has discontinued all interest and principal payments on its parent company public debt. As a result, all public debt of the Company is subject to acceleration and has been classified as current liabilities at June 30, 2001. The Company does not believe this restructuring would impact its day-to-day operations with regard to employees, customers, suppliers, distributors and general business, or affect payments of liabilities by the Company's operating subsidiaries, which would continue to be serviced by cash flow from the Fresh Produce and Processed Foods business segments. Interest payments for the second quarter were $12 million in 2001 and $28 million in 2000. For the six months ended June 30, 2001, interest payments were $24 million compared to $65 million for the same period of 2000. In the quarter and six months ended June 30, 2001, interest payments were made solely on subsidiary debt. Interest on the parent company public debt continues to be fully accrued in the income statement even though the Company has discontinued interest payments on such debt. During the six months ended June 30, 2001, approximately 0.9 million shares of Non-Voting Cumulative Preferred Stock, Series A, and 0.8 million shares of Convertible Preferred Stock, Series B, were converted into 6.8 million shares of common stock by holders of such preferred shares. In addition, during the first quarter of 2001, approximately $1 million principal amount of 7% Convertible Subordinated Debentures due 2001 were converted to shares of common stock at $43 per share. After March 28, 2001, these debentures are no longer convertible. The Company has suspended payment of dividends on its preferred and preference stock. At June 30, 2001, dividends on the Company's preferred and preference stock were unpaid for three quarters, which totaled approximately $9 million. Under the terms of these shares, the Company is not permitted to pay dividends (other than stock dividends) to common shareholders or to redeem, repurchase or otherwise acquire any of its outstanding common stock until preferred and preference dividends in arrears have been fully paid. Accounting Pronouncements ------------------------- In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business Combinations," and Statement of Financial Accounting Standards No. 142 ("SFAS No. 142"), "Goodwill and Other Intangible Assets." SFAS No. 141 requires use of the purchase method for all future business combinations, and it changes the criteria for separate recognition of intangible assets acquired in a business combination. Under SFAS No. 142, which must be implemented for the Company's 2002 fiscal year, goodwill and other intangible assets with an indefinite life are no longer amortized but are reviewed annually for impairment. The Company is commencing its evaluation of the effect of these new standards on its consolidated financial statements. 8 Hedging ------- Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities," as amended, was implemented by the Company on January 1, 2001. This standard requires the recognition of all derivatives on the balance sheet at fair value, and recognition of the resulting gains or losses as adjustments to net income or other comprehensive income. The effect of adopting SFAS No. 133 on the Company's net income was not material. The Company is exposed to various market risks, including currency exchange risk on foreign sales and market fluctuation of fuel oil prices. The Company reduces these exposures by purchasing foreign currency option contracts (principally euro contracts) and fuel oil swap contracts. Both the currency options and fuel oil swaps qualify for hedge accounting as cash flow hedges. To the extent that these hedges are effective, gains and losses are deferred in other comprehensive income ("OCI") until the underlying transaction is recognized in net income. For the ineffective portion of the hedge, gains or losses are charged to net income in the current period. The earnings impact of the currency option contracts and fuel oil swap contracts is recorded in net sales and cost of sales, respectively. The Company does not hold or issue derivative financial instruments for speculative purposes. At June 30, 2001, the Company had euro-denominated option contracts which ensure conversion of approximately (euro)130 million of sales in 2001 at average rates not lower than 0.89 dollars per euro and approximately (euro)100 million of sales in 2002 at average rates not lower than 0.86 dollars per euro. The fair value of these option contracts at June 30, 2001 was approximately $10 million and was included in other current assets. The Company's fuel oil swap contracts at June 30, 2001 fix the purchase price on approximately 70,000 metric tons of fuel oil in 2001. The estimated cost at June 30, 2001 to terminate the fuel oil swap contracts was approximately $1 million and was included in accrued liabilities. The unrealized gains or losses deferred in OCI at the end of the quarter, substantially all of which are expected to be reclassified to net income in the next twelve months, are not material. During the second quarter of 2001, the change in the fair value of these contracts relating to hedge ineffectiveness was not material. During the second quarter of 2001, the Company did not terminate any option contracts or fuel oil swap contracts prior to their original expiration date. Comprehensive Income (Loss) ---------------------------
Quarter Ended Six Months Ended June 30, June 30, --------------------------- ------------------------------ 2001 2000 2001 2000 ------------- ------------ ------------- -------------- Net income (loss) $ (10,988) $ 12,754 $ (6,860) $ 47,744 Unrealized foreign currency translation gains (losses) (1,550) 584 (4,284) (4,017) Changes in fair value of derivatives 433 -- 5,299 -- (Income) losses reclassified from OCI into net loss (266) -- 965 -- ------------- ------------ ------------- -------------- Comprehensive income (loss) before cumulative effect of adopting SFAS No. 133 (12,371) 13,338 (4,880) 43,727 Cumulative effect of adopting SFAS No. 133 -- -- (6,975) -- ------------- ------------ ------------- -------------- Comprehensive income (loss) $ (12,371) $ 13,338 $ (11,855) $ 43,727 ============= ============ ============= ==============
9 Acquisitions and Divestitures ----------------------------- In June 2000, the Company's Australian fresh produce subsidiary, Chiquita Brands South Pacific Limited, issued additional shares in conjunction with two business acquisitions. As a result, the Company's voting interest is below 50% and the investment is accounted for under the equity method. Also in June 2000, the Company sold California Day-Fresh Foods, Inc., which produced and marketed natural fresh fruit and vegetable juices in the United States. Proceeds consisted of $16 million in cash and $9 million in short-term notes which were collected in October 2000. 10 Item 2 ------ CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- MANAGEMENT'S ANALYSIS OF ------------------------ OPERATIONS AND FINANCIAL CONDITION ---------------------------------- Operations ---------- Operating income for the second quarter of 2001 was $24 million compared to 2000 second quarter operating income of $44 million. For the six months ended June 30, 2001, operating income was $63 million compared to $112 million in the first half of 2000. Fresh Produce earnings in the second quarter and first half of 2001 compared to the prior year periods were negatively affected by weak European currencies in relation to the U.S. dollar. In addition, Chiquita incurred higher production and related logistics costs in the second quarter caused by weather-related declines in short-term productivity. These effects were partially offset by higher local currency pricing and volume in core European markets. Processed Foods operating results also declined during the first half of 2001 primarily due to lower pricing of canned vegetables. The lower pricing was consistent with the objective of reducing inventory levels of canned vegetables. Net sales for the second quarter, excluding the effects of prior year divestitures, increased slightly compared to the prior year. First half sales, excluding divestitures, were comparable to the prior year. The prior year divestitures include the deconsolidation of the Company's Australian operations and the sale of California Day-Fresh Foods, Inc. in the second quarter of 2000. Interest expense was comparable to last year. Interest on the parent company public debt continues to be fully accrued in the income statement even though the Company has discontinued interest payments on such debt. See "Financial Condition" below. Other income (expense) for the second quarter and first half of 2001 includes costs incurred in connection with the proposed parent company debt restructuring of approximately $2 million and $3 million, respectively. The Company's effective tax rate is affected by the level and mix of income among various domestic and foreign jurisdictions in which the Company operates. Financial Condition ------------------- In January 2001, the Company announced its intention to restructure the $861 million principal amount of publicly-held senior notes and subordinated debentures of Chiquita Brands International, Inc. ("CBII"), which is a parent holding company without business operations of its own. As part of this restructuring initiative, the Company has discontinued all interest and principal payments on its parent company public debt. As a result, all public debt of the Company is subject to acceleration and has been classified as current liabilities at June 30, 2001. The Company does not believe this restructuring would impact its day-to-day operations with regard to employees, customers, suppliers, distributors and general business, or affect payments of liabilities by the Company's operating subsidiaries, which would continue to be serviced by cash flow from the Fresh Produce and Processed Foods business segments. 11 Certain holders of substantial amounts of the CBII senior notes and subordinated debentures have formed ad hoc committees and engaged advisors for the purpose of considering the proposed restructuring. The Company and its advisors have been engaged in discussions with these committees and their representatives regarding the terms of a potential restructuring plan, including the conversion of a significant portion of CBII's debt into common equity. Such a restructuring would adversely affect the existing holders of CBII preferred, preference and common stock. If an agreement on such a plan is reached, the Company would present the plan for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns. The Company is not currently in a position to predict the outcome of these discussions. The Company has suspended payment of dividends on its preferred and preference stock. At June 30, 2001, dividends on the Company's preferred and preference stock were unpaid for three quarters, which totaled approximately $9 million. Under the terms of these shares, the Company is not permitted to pay dividends (other than stock dividends) to common shareholders or to redeem, repurchase or otherwise acquire any of its outstanding common stock until preferred and preference dividends in arrears have been fully paid. In March 2001, the Company's operating subsidiary, Chiquita Brands, Inc. ("CBI"), obtained a three-year secured bank credit facility for up to $120 million to replace CBII's expiring bank revolving credit agreement. This facility consists of a term loan of $75 million and a revolving credit facility of $45 million. A portion of the proceeds of the term loan was used to repay $50 million of bank loans of certain Costa Rican farm subsidiaries. Under the revolving credit facility, $35 million is available for seasonal working capital needs and other corporate purposes, and the remaining $10 million is available with the lenders' consent. At July 31, 2001, the full $75 million of the term loan was outstanding and approximately $4 million of the availability under the revolving credit facility had been used to issue letters of credit. At July 31, 2001, approximately $75 million of additional borrowings were available to subsidiaries for working capital purposes under other committed lines of credit. Other ----- Reference is made to "Management's Analysis of Operations and Financial Condition - European Union Regulatory Developments" in the Company's 2000 Annual Report to Shareholders (included in Exhibit 13 to the Company's Annual Report on Form 10-K) and Part I, Item 2 "Management's Analysis of Operations and Financial Condition - International" in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 and the discussion therein of the April 2001 settlement of the long-standing dispute over the European Union ("EU") banana import regime. Regulations implementing the tariff rate quota system contemplated by the settlement went into effect on July 1, 2001. The Company's Armuelles division in western Panama has been involved in discussions since the beginning of the year with the local labor union, representing approximately 3,000 workers, to negotiate a new contract. The union recently announced its intention to go on strike, as early as late August. In 2000, fruit from this division represented approximately 7% of the bananas marketed by Chiquita. 12 Item 3 - Quantitative and Qualitative Disclosures About Market Risk ------------------------------------------------------------------- Reference is made to the discussion under "Management's Analysis of Operations and Financial Condition - Market Risk Management" in the Company's 2000 Annual Report to Shareholders. As of June 30, 2001, there were no material changes to the information presented. * * * * * This quarterly report contains certain statements that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of assumptions, risks and uncertainties, including the implementation of the announced U.S.-EU agreement regarding the EU's banana import regime, the Company's ability to reach agreement with holders of its parent company's debt regarding a restructuring of such debt, the terms of any such restructuring, prices at which Chiquita can sell its products, the costs at which it can purchase or grow (and availability of) fresh produce and other raw materials, currency exchange rate fluctuations, natural disasters and unusual weather conditions, operating efficiencies, labor relations, actions of governmental bodies, and other market and competitive conditions, many of which are beyond the control of Chiquita. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the Company undertakes no obligation to update any such statements. Part II - Other Information --------------------------- Item 3 - Defaults Upon Senior Securities ---------------------------------------- As part of the restructuring initiative described in "Management's Analysis of Operations and Financial Condition," beginning in the first quarter of 2001 the Company discontinued all interest and principal payments on its parent company public debt. The following table lists the affected series of debt securities, sets forth the scheduled debt payments that were not made during the second quarter of 2001 and shows the payment arrearage at August 13, 2001:
Debt Series and Aggregate Principal Type(s) and Date(s) Amount Unpaid Total Arrearage Amount Outstanding of Defaulted Payment(s) in Second Quarter at August 13, 2001 ------------------------- ------------------------- ----------------- ------------------ 9-5/8% Senior Notes Interest, January 16, 2001 -- $24 million due 2004 ($250 million) and July 16, 2001 9-1/8% Senior Notes Interest, March 1, 2001 -- $8 million due 2004 ($175 million) 10-1/4% Senior Notes Interest, May 1, 2001 $8 million $8 million due 2006 ($150 million) 10% Senior Notes Interest, June 15, 2001 $10 million $10 million due 2009 ($200 million) 7% Convertible Principal and interest, -- $92 million Subordinated Debentures March 28, 2001 due 2001 ($86 million)
13 As a result of these defaults, holders of all series of debt have the right to demand acceleration of that debt. In the fourth quarter of 2000, the Company suspended payment of dividends on its preferred and preference stock. However, for holders converting their shares to common stock, accumulated dividends have been paid with common shares in accordance with the terms of the preferred and preference stock. The following table sets forth the preferred and preference dividends which were not paid during the second quarter of 2001 and the accumulated dividend arrearage at August 13, 2001:
Amount Unpaid Total Arrearage at Series of Preferred or Preference Stock in Second Quarter* August 13, 2001** --------------------------------------------- ------------------- ------------------ $2.875 Non-Voting Cumulative Preferred $1.4 million $4.3 million Stock, Series A $3.75 Convertible Preferred Stock, $1.4 million $4.1 million Series B $2.50 Convertible Preference Stock, $0.1 million $0.2 million Series C
* Based on shares outstanding on the June 7, 2001 dividend payment date. ** Based on shares outstanding on July 31, 2001. Item 5 - Other Information -------------------------- On January 16, 2001, the Company announced a proposed restructuring of the parent company's publicly held debt which is described in Part I, Item 2, "Management's Analysis of Operations and Financial Condition" above. Because the restructuring process was expected to continue beyond the customary mid-May date for the Annual Meeting of Shareholders, the Company's Board of Directors fixed September 12, 2001 as the date for the Company's 2001 Annual Meeting. The Company now expects the restructuring process to extend beyond September 12, 2001. Accordingly, the Board of Directors has further postponed the 2001 Annual Meeting to a date to be specified at a future time. 14 Item 6 - Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibit 10 - $120,000,000 Credit Agreement dated as of March 7, 2001 among Chiquita Brands, Inc., as Borrower, the Lenders designated therein, and Foothill Capital Corporation, as Arranger and Administrative Agent, conformed to incorporate changes made in First Amendment to Credit Agreement, dated as of June 11, 2001. (b) There were no reports on Form 8-K filed by the Company during the quarter ended June 30, 2001. 15 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ William A. Tsacalis ------------------------------ William A. Tsacalis Vice President and Controller (Chief Accounting Officer) August 13, 2001 16