Quarterly Report

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PfyTaE8UqQA37LiMfhkIFrYveLHe+l5zeAlIQxPypGSRVoZcelltRc/kyEi0GkGu +Z2Z0BKYu4cj7RqFmLTddw== 0001193125-04-187139.txt : 20041105 0001193125-04-187139.hdr.sgml : 20041105 20041105090225 ACCESSION NUMBER: 0001193125-04-187139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041105 DATE AS OF CHANGE: 20041105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01550 FILM NUMBER: 041121178 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848880 MAIL ADDRESS: STREET 1: CHIQUITA BRANDS INTERNATIONAL, INC. STREET 2: 250 EAST FIFTH STREET CITY: CINCINNATI STATE: OH ZIP: 45202 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 10-Q 1 d10q.htm QUARTERLY REPORT Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1550

CHIQUITA BRANDS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

New Jersey

04-1923360

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

250 East Fifth Street

Cincinnati, Ohio 45202

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x. No ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x. No ¨.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x. No ¨.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of October 31, 2004, there were 40,857,949 shares of Common Stock outstanding.

CHIQUITA BRANDS INTERNATIONAL, INC.

TABLE OF CONTENTS



		Page
PART I - Financial Information

Item 1 - Financial Statements

Consolidated Statement of Income for the quarters and nine months ended September 30, 2004 and 2003		3

Consolidated Balance Sheet as of September 30, 2004, December 31, 2003 and September 30, 2003		4

Consolidated Statement of Cash Flow for the nine months ended September 30, 2004 and 2003		5

Notes to Consolidated Financial Statements		6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3 - Quantitative and Qualitative Disclosures About Market Risk		25

Item 4 - Controls and Procedures		25

PART II - Other Information

Item 1 - Legal Proceedings		26

Item 6 - Exhibits and Reports on Form 8-K		27

Signature		29

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 Sept. 30,						Nine Months Ended Sept. 30,
	2004			2003			2004			2003
Net sales	$	661,610		$	627,511		$	2,303,164		$	1,928,013

Operating expenses
Cost of sales		572,336			546,034			1,963,777			1,643,561
Selling, general and administrative		68,986			61,327			219,989			167,642
Depreciation		10,235			9,495			31,742			25,928
Loss on sale of Colombian division		—			—			9,289			—
Gain on sale of Armuelles division		—			—			—			(20,658	)
Gain on sale of equity method investments		—			(12,038	)		—			(9,754	)

		651,557			604,818			2,224,797			1,806,719

Operating income		10,053			22,693			78,367			121,294

Interest income		2,347			943			3,710			1,980
Interest expense		(9,823	)		(11,191	)		(29,850	)		(32,312	)
Other income (expense), net		(19,706	)		—			(19,706	)		—

Income (loss) from continuing operations before income taxes		(17,129	)		12,445			32,521			90,962
Income taxes		(2,700	)		(1,800	)		(2,200	)		(5,300	)

Income (loss) from continuing operations		(19,829	)		10,645			30,321			85,662
Discontinued operations
Loss from operations		—			(107	)		—			(5,497	)
Gain (loss) on disposal of discontinued operations		—			(653	)		—			11,156

Net income (loss)	$	(19,829	)	$	9,885		$	30,321		$	91,321

Basic earnings per common share:
- Continuing operations	$	(0.49	)	$	0.27		$	0.74		$	2.14
- Discontinued operations		—			(0.02	)		—			0.14

- Net income (loss)	$	(0.49	)	$	0.25		$	0.74		$	2.28

Diluted earnings per common share:
- Continuing operations	$	(0.49	)	$	0.27		$	0.72		$	2.14
- Discontinued operations		—			(0.02	)		—			0.14

- Net income (loss)	$	(0.49	)	$	0.25		$	0.72		$	2.28

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands, except share amounts)


	September 30, 2004		December 31, 2003		September 30, 2003
ASSETS
Current assets
Cash and equivalents	$	229,617	$	134,296	$	158,255
Trade receivables (less allowances of $11,020, $13,066, and $14,464)		267,548		292,522		250,519
Other receivables, net		74,983		84,289		79,092
Inventories		163,819		193,968		180,154
Prepaid expenses		16,220		17,528		18,780
Other current assets		25,156		15,347		12,103

Total current assets		777,343		737,950		698,903
Property, plant and equipment, net		402,360		440,978		420,443
Investments and other assets, net		145,337		93,377		117,096
Trademark		387,585		387,585		387,585
Goodwill		42,501		43,219		42,384
Assets of discontinued operations		—		3,610		15,082

Total assets	$	1,755,126	$	1,706,719	$	1,681,493

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	12,620	$	9,195	$	11,318
Long-term debt of parent company due within one year		40,917		—		—
Long-term debt of subsidiaries due within one year		23,448		38,875		74,140
Accounts payable		260,932		264,373		233,444
Accrued liabilities		104,943		144,230		106,705

Total current liabilities		442,860		456,673		425,607
Long-term debt of parent company		250,000		250,000		250,000
Long-term debt of subsidiaries		80,850		96,490		100,207
Accrued pension and other employee benefits		73,394		81,899		79,596
Other liabilities		84,313		62,414		67,095
Liabilities of discontinued operations		—		1,897		9,195

Total liabilities		931,417		949,373		931,700

Shareholders’ equity
Common stock, $.01 par value (40,858,263, 40,037,281 and 39,942,652 shares outstanding, respectively)		409		400		399
Capital surplus		650,709		630,868		626,567
Retained earnings		142,722		112,401		104,516
Accumulated other comprehensive income		29,869		13,677		18,311

Total shareholders’ equity		823,709		757,346		749,793

Total liabilities and shareholders’ equity	$	1,755,126	$	1,706,719	$	1,681,493

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

(In thousands)


	Nine Months Ended Sept. 30,
	2004			2003
Cash provided (used) by:
Operations
Income from continuing operations	$	30,321		$	85,662
Depreciation		31,742			25,928
Loss on extinguishment of debt		22,015			—
Loss on sale of Colombian division		3,589			—
Gain on sale of Armuelles division		—			(20,658	)
Gain on sale of equity method investements		—			(9,754	)
Severance payments for Armuelles division		—			(16,713	)
Changes in current assets and liabilities and other		2,395			11,825

Cash flow from operations		90,062			76,290

Investing
Capital expenditures		(27,588	)		(36,801	)
Proceeds from sale of:
Colombian division		28,500			—
Armuelles division		860			14,802
Equity method investments		—			18,692
Other property, plant and equipment		8,066			2,909
Consolidation of variable interest entity		—			7,579
Other		(1,867	)		3,808

Cash flow from investing		7,971			10,989

Financing
Issuances of long-term debt		259,460			79,333
Repayments of long-term debt		(277,985	)		(183,659	)
CBL credit facility amendment and other fees		(640	)		(4,326	)
Increase in notes and loans payable		3,425			2,829
Proceeds from exercise of stock options/warrants		11,106			—

Cash flow from financing		(4,634	)		(105,823	)

Discontinued operations		1,922			123,914

Increase in cash and equivalents		95,321			105,370
Balance at beginning of period		134,296			52,885

Balance at end of period	$	229,617		$	158,255

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Interim results for Chiquita Brands International, Inc. (“CBII”) and subsidiaries (collectively, with CBII, the “Company”) are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. The Company’s results during the third and fourth quarters are generally weaker than in the first half of the year due to increased availability of competing fruits and resulting lower prices. 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 2003 Annual Report on Form 10-K for additional information relating to the Company’s financial statements.

Note 1 - Earnings Per Share

Basic and diluted earnings per common share (“EPS”) are calculated as follows (in thousands, except per share amounts):


	Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
	2004			2003			2004		2003
Income (loss) from continuing operations	$	(19,829	)	$	10,645		$	30,321	$	85,662
Discontinued operations		—			(760	)		—		5,659

Net income (loss)	$	(19,829	)	$	9,885		$	30,321	$	91,321

Weighted average common shares outstanding (used to calculate basic EPS)		40,846			39,968			40,704		39,972
Warrants, stock options and other stock awards		—			152			1,188		80

Shares used to calculate diluted EPS		40,846			40,120			41,892		40,052

Basic earnings per common share:
- Continuing operations	$	(0.49	)	$	0.27		$	0.74	$	2.14
- Discontinued operations		—			(0.02	)		—		0.14

- Net income (loss)	$	(0.49	)	$	0.25		$	0.74	$	2.28

Diluted earnings per common share:
- Continuing operations	$	(0.49	)	$	0.27		$	0.72	$	2.14
- Discontinued operations		—			(0.02	)		—		0.14

- Net income (loss)	$	(0.49	)	$	0.25		$	0.72	$	2.28

The assumed conversions to common stock of the Company’s outstanding warrants, 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. For the quarter ended September 30, 2004, the shares used to calculate diluted EPS would have been 41,467 if the Company had generated net income.

Note 2 - Sale of Colombian Division

In June 2004, the Company sold its banana-producing and port operations in Colombia to Invesmar Ltd. (“Invesmar”), the holding company of C.I. Banacol S.A. Banacol is a Colombian-based producer and exporter of bananas and other fruit products.

In exchange for these operations, the Company received, subject to certain post-closing adjustments, $28.5 million in cash; $15 million face amount of notes and deferred payments; and the assumption by the buyer of approximately $7 million of pension liabilities.

In connection with the sale, Chiquita entered into eight-year agreements to purchase bananas and pineapples from affiliates of the buyer. Under the banana purchase agreement, Chiquita will purchase approximately 11 million boxes of Colombian bananas per year at above-market prices. This resulted in a liability of $33 million at the sale date, which represents the estimated net present value of the above-market premium to be paid for the purchase of bananas over the term of the contract. Substantially all of this liability is included in “Other liabilities” in the Consolidated Balance Sheet. Under the pineapple purchase agreement, Chiquita will purchase approximately 2 million boxes of Costa Rican golden pineapples during the first year of the contract and 2.5 million boxes per year thereafter at below-market prices. This resulted in a receivable of $25 million at the sale date, which represents the estimated net present value of the discount to be received for the purchase of pineapples over the term of the contract. Substantially all of this receivable is included in “Investments and other assets, net” in the Consolidated Balance Sheet.

Also in connection with the sale, Chiquita agreed that, in the event that it becomes unable to perform its obligations under the banana purchase agreement due to a conflict with U.S. law, Chiquita will indemnify Invesmar primarily for the lost premium on the banana purchases or, alternatively, rescind the sale transaction and allow Invesmar to retain certain port assets in Colombia which had a carrying value of approximately $7 million at the sale date.

The net book value of the assets and liabilities transferred in the transaction was $36 million, primarily comprised of $25 million of property, plant and equipment; $19 million of growing crop inventory; $5 million of materials and supplies inventory; $6 million of deferred tax liabilities; and $7 million of pension liabilities. The Company recognized a before-tax loss of $9 million and an after-tax loss of $4 million on the transaction, which takes into account the net $8 million loss from the two long-term fruit purchase agreements.

Note 3 - Contingencies

In April 2003, the Company’s management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice (“Justice Department”) that the Company’s banana-producing subsidiary in Colombia, which was sold in June 2004, had been forced to make “protection” payments to certain groups in that country which have been designated under United States law as foreign terrorist organizations. CBII’s sole reason for allowing its subsidiary to submit to these payment demands had been to protect its employees from the risks to their safety if the payments were not made. The voluntary disclosure to the Justice Department was made because the Company’s management became aware that these groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to support such an organization. The Company requested the Justice Department’s guidance. Following the voluntary disclosure, the Justice Department undertook an investigation. The Company has cooperated with that investigation. In late March 2004, the Justice Department advised that, as part of the investigation, it would be evaluating the role and conduct of the Company and some of its officers in the matter. The Company intends to continue its cooperation with this investigation, but it cannot predict the outcome of the investigation or any possible adverse effect on the Company, which could include the imposition of fines.

In October 2004, the Company’s Italian subsidiary received a notice of assessment from Customs authorities in Trento, Italy stating that this subsidiary and two individuals, including the subsidiary’s former managing director, are jointly and severally liable for approximately 4.2 million euro. This amount represents additional duties on the import of certain bananas into the European Union in 1999 and 2000, plus related taxes and interest. The notice states that these amounts are due because these bananas were imported with licenses that were subsequently determined to have been forged. The Company intends to appeal the assessment, through appropriate proceedings, on the basis of its good faith belief at the time the import licenses were obtained and used that they were valid. Accordingly, the Consolidated Balance Sheet at September 30, 2004 does not reflect a liability for this contingency.

For a discussion of risks the Company encounters in its international operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risks of International Operations.”

Note 4 - Sale of Armuelles Division

On June 30, 2003, the Company sold the assets of its Armuelles, Panama banana production division for $20 million to a worker cooperative. In connection with this transaction, the cooperative signed a 10-year contract to supply Chiquita with bananas at market prices. Sales proceeds included $15 million in cash financed by a Panamanian bank and $5 million from a loan provided by Chiquita. This loan is being repaid to the Company through an agreed-upon discount to the price per box during the initial years of the banana purchase contract. As part of the transaction, Chiquita paid $20 million in workers’ severance and certain other liabilities of the Armuelles division, which had been previously accrued. The Company recognized a gain of $21 million in the 2003 second quarter on the sale of Armuelles assets and settlement of its severance liabilities.

Note 5 - Sale of Equity Method Investments

The Company recorded a net gain on the sale of equity method investments of $12 million in the third quarter of 2003 and $10 million for the nine months ended September 30, 2003 as a result of the following items:

•

Reduction of the Company’s ownership of Chiquita Brands South Pacific (“CBSP”), an Australian fresh produce distributor, to approximately 10% from approximately 28%. The Company received $14 million in cash from the sale of the shares and realized a $10 million gain on the sale in the third quarter 2003;

•

Sale of its minority interest in a small German fruit distributor in exchange for a ship and $1 million in cash, which resulted in a $3 million gain in the third quarter 2003;

•

Incurrence of an impairment charge of $1 million in the third quarter 2003 associated with its minority interest in a fruit distributor in Ireland, which was subsequently sold in October 2003; and

•

Sale of its joint venture interest in a Florida citrus producer and packer for $3 million in cash. The Company recognized a $2 million loss in the 2003 second quarter associated with this sale.

Because of the reduction in ownership of CBSP, the Company no longer has significant influence over the operating and financial policies of CBSP. As such, the Company no longer uses the equity method of accounting for this investment. Rather, these publicly-traded CBSP shares are considered “available-for-

sale” securities under Statement of Financial Accounting Standards (“SFAS”) No. 115. Such securities are reported at fair value, with unrealized gains or losses excluded from net income and included in other comprehensive income.

Note 6 - Acquisition of German Distributor

On March 27, 2003, the Company acquired the remaining equity interests in Scipio GmbH & Co., a German limited partnership that owns Atlanta AG and its subsidiaries (collectively, “Atlanta”). Atlanta is the primary distributor of Chiquita products in Germany and Austria and had been the Company’s largest customer in Europe for many years. Prior to the acquisition, Atlanta was an investment accounted for under the equity method. Starting with the second quarter of 2003, Atlanta’s operating results were fully consolidated in Chiquita’s financial statements. The acquisition resulted in higher 2004 first quarter sales of $283 million, cost of sales of $262 million, and selling, general and administrative costs of $15 million, all compared to the first quarter 2003.

Note 7 - Discontinued Operations

The results of Chiquita Processed Foods (“CPF”), several former Atlanta subsidiaries and Progressive Produce Corporation (“Progressive”), all of which have been sold, are included as discontinued operations in the Consolidated Financial Statements for all periods presented in which they were owned.

In May 2003, the Company sold CPF to Seneca Foods Corporation for $110 million in cash and approximately 968,000 shares of Seneca preferred stock convertible into an equal number of shares of Seneca Common Stock Class A, which was recorded at its estimated fair value of $13 million on the sale date. Seneca also assumed CPF debt, which was $61 million on the sale date. The Company recognized a $9 million gain on the transaction.

In April 2003, the Company sold a port operation of Atlanta for approximately $10 million in cash, resulting in a gain of $3 million. Also in 2003, the Company sold or agreed to sell certain other Atlanta operations, including fresh produce operations in Italy and France, for losses totaling $4 million. Goodwill write-offs included in these amounts were $5 million.

In January 2003, the Company sold Progressive, a California-based distributor of potatoes and onions, for approximately $7 million in cash. A $2 million gain on this sale was recognized in the 2003 first quarter.

Beginning with the 2003 third quarter, the Company revised its business segments. The financial information of CPF was previously included in the old Processed Foods business segment, and the Atlanta operations and Progressive were previously included in the old Fresh Produce business segment.

The income (loss) from discontinued operations presented below includes interest expense of $2 million, none of which was incurred during the third quarter, on debt assumed by the buyers for the nine months ended September 30, 2003.

In the financial information presented below, each of the discontinued operations is included through the date of its sale (in thousands):


	Quarter Ended Sept. 30,					Nine Months Ended Sept. 30,
	2004		2003			2004		2003
Net sales	$	—	$	9,055		$	—	$	167,018

Loss from operations	$	—	$	(107	)	$	—	$	(5,497	)
Gain (loss) on sale		—		(653	)		—		11,156

Income (loss) from discontinued operations	$	—	$	(760	)	$	—	$	5,659


	September 30, 2004		December 31, 2003		September 30, 2003
Assets of discontinued operations:
Current assets	$	—	$	2,696	$	13,541
Property, plant and equipment		—		868		551
Investments and other long-term assets		—		46		990

	$	—	$	3,610	$	15,082

Liabilities of discontinued operations:
Current liabilities	$	—	$	1,897	$	9,195

Note 8 - Pension and Severance Benefits

Net pension expense from the Company’s defined benefit and severance plans, primarily comprised of the Company’s severance plans covering Central and South American employees, consists of the following (in thousands):


	Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
	2004			2003			2004			2003
Service cost	$	1,181		$	1,804		$	3,629		$	3,641
Interest on projected benefit obligation		1,924			2,862			5,069			5,904
Expected return on plan assets		(326	)		(794	)		(1,518	)		(1,802	)
Recognized actuarial (gain) loss		250			(586	)		504			(859	)
Amortization of prior service cost		231			194			505			313

		3,260			3,480			8,189			7,197
Curtailment gain from Armuelles sale		—			—			—			(4,943	)
Settlement gain from Armuelles sale		—			—			—			(2,456	)

	$	3,260		$	3,480		$	8,189		$	(202	)

Note 9 - Inventories (in thousands)


	September 30, 2004		December 31, 2003		September 30, 2003
Bananas	$	37,610	$	41,635	$	38,093
Other fresh produce		7,554		10,135		5,010
Processed food products		7,256		7,592		7,087
Growing crops		76,094		91,456		88,258
Materials, supplies and other		35,305		43,150		41,706

	$	163,819	$	193,968	$	180,154

Note 10 -Segment Information

The Company’s Banana segment includes the sourcing (production and purchase), transportation, marketing and distribution of bananas, including those marketed by Atlanta. The Company’s Other Fresh Produce segment includes the sourcing, marketing and distribution of fresh fruits and vegetables other than bananas. In almost all cases, Chiquita does not grow the other fresh produce sold, but rather sources it from independent growers. Chiquita’s Other Fresh Produce business increased substantially with the March 2003 acquisition of Atlanta, which has annual sales of approximately $900 million in non-banana fresh produce. The Other Fresh Produce segment also includes Chiquita’s new fresh-cut fruit business. Remaining operations, which are reported in “Other,” consist of processed fruit ingredient products, which are produced in Latin America and sold in other parts of the world, and other consumer packaged goods. The Company evaluates the performance of its business segments based on operating income. Intercompany transactions between segments are eliminated.

Financial information for each segment follows (in thousands):


	Quarter Ended Sept. 30,					Nine Months Ended Sept. 30,
	2004			2003		2004			2003
Net sales
Bananas	$	380,332		$	348,080	$	1,258,254		$	1,180,878
Other Fresh Produce		266,519			265,465		999,097			704,924
Other		14,759			13,966		45,813			42,211

	$	661,610		$	627,511	$	2,303,164		$	1,928,013

Operating income (loss)
Bananas	$	13,695		$	14,820	$	78,621		$	110,835
Other Fresh Produce		(4,345	)		6,390		(2,539	)		5,529
Other		703			1,483		2,285			4,930

	$	10,053		$	22,693	$	78,367		$	121,294

Note 11 - Debt

amount of notes to holders who validly tendered their notes and delivered their consents to certain changes in the terms of the 10.56% Senior Notes prior to September 28, 2004. Approximately $209 million principal amount of 10.56% Senior Notes were validly tendered by the September 28 deadline, leaving $41 million still outstanding at September 30, 2004. An additional $2 million principal amount was tendered prior to the October 12, 2004 tender offer deadline. On November 3, 2004, the Company gave notice of redemption of the remaining $39 million of 10.56% Senior Notes. The redemption date will be December 3, 2004. As a result of the premiums associated with the repurchase of the entire $250 million of notes, the Company recognized a $22 million loss in the 2004 third quarter, which is included in “Other income (expense)” on the Consolidated Statement of Income.

As a result of the consents delivered by 84% of the holders of outstanding 10.56% Senior Notes (more than the requisite majority), on September 28, 2004, the Company entered into a supplemental indenture amending the terms of the 10.56% Senior Notes remaining outstanding. The Supplemental Indenture eliminates substantially all of the restrictive covenants that previously applied to the 10.56% Senior Notes.

The indenture for the 7¹/2% Senior Notes contains restrictions that, at September 30, 2004, limited the aggregate amount of restricted payments, including dividends and share/warrant repurchases, that could be paid to $110 million. The indenture has additional restrictions related to asset sales, incurrence of additional indebtedness, granting of liens, sale-leaseback transactions, investments and acquisitions, business activities and related-party transactions. The 7¹/2% Senior Notes are callable on or after November 1, 2009 at 103.75% of face value declining to face value in 2012. In addition, before November 1, 2007, the Company may redeem up to 35% of the notes at a redemption price of 107.5% of their principal amount plus accrued interest, using proceeds from sales of certain kinds of Company stock.

The Company allowed the bank credit facility of Chiquita Brands, Inc., now known as Chiquita Brands L.L.C. (“CBL”), to expire in June 2004. There had been no outstanding borrowings under the revolving credit line since May 2003, and all term loans under the facility had been repaid in full in March 2004. The Company expects to replace the expired facility with a new multi-year revolving credit facility in early 2005.

Upon expiration of the CBL credit facility, the Company entered into an agreement with Wells Fargo Bank to provide up to $15 million of letters of credit. At September 30, 2004, letters of credit for $8 million were outstanding.

In June 2004, the Company refinanced the debt of its Chiquita Chile subsidiary in the amount of $13 million. Interest is variable based on LIBOR, and principal is due in installments over five years. Under the terms of the agreement, which is secured by liens on certain of Chiquita Chile’s assets, the subsidiary is subject to financial covenants, including minimum tangible net worth and limitations on liabilities.

In June 2004, a subsidiary of the Company entered into a 17 million euro committed credit line for bank guarantees to be used primarily to guarantee the Company’s payments for licenses used to import bananas into European Union countries. This line is in addition to the Company’s existing 25 million euro uncommitted credit line for bank guarantees.

Note 12 - Comprehensive Income (Loss) (in thousands)


	Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
	2004			2003			2004			2003
Net income (loss)	$	(19,829	)	$	9,885		$	30,321		$	91,321
Other comprehensive income (loss)
Unrealized foreign currency translation gains (losses)		761			1,045			(3,275	)		17,539
Sale of equity method investment		—			(3,008	)		—			(3,008	)
Change in minimum pension liability		—			—			1,077			4,383
Change in fair value of cost investment		989			6,601			(2,191	)		6,601
Changes in fair value of currency and fuel hedges		(5,938	)		(2,586	)		(2,183	)		(18,150	)
Losses reclassified from OCI into net income		3,736			7,289			22,764			20,839

Comprehensive income (loss)	$	(20,281	)	$	19,226		$	46,513		$	119,525

Note 13 - Hedging

The Company enters into contracts to hedge its risks associated with euro exchange rate movements, primarily to reduce the negative earnings impact that any significant decline in the value of the euro would have on the conversion of euro-based revenue into U.S. dollars. The Company primarily purchases put options to hedge this risk. Purchased put options, which require an upfront premium payment, can reduce the negative earnings impact on the Company of a future significant decline in the value of the euro, without limiting the benefit received from a stronger euro. The Company also enters into hedge contracts for fuel oil for its shipping operations, which permit it to lock in fuel purchase prices for up to two years and thereby minimize the volatility that changes in fuel prices could have on its operating results.

Currency hedging costs charged to the Consolidated Statement of Income were $5 million and $23 million for the quarter and nine months ended September 30, 2004, compared to $7 million and $29 million for the quarter and nine months ended September 30, 2003. These costs reduced the favorable impact of the exchange rate on U.S. dollar realizations of euro-denominated sales. At September 30, 2004, unrealized losses of $11 million on the Company’s option, forward and zero-cost collar contracts were included in “Accumulated other comprehensive income.” Approximately $8 million of this amount is expected to be reclassified to net income during the next 12 months.

At September 30, 2004, the Company had euro-denominated put options which allow for conversion of approximately €65 million of sales in 2004 at rates ranging from $1.10 per euro to $1.20 per euro, approximately €305 million of sales in the first nine months of 2005 at rates ranging from $1.15 per euro to $1.23 per euro, and approximately €320 million of sales in 2006 at rates ranging from $1.17 per euro to $1.21 per euro. Additionally, the Company had zero-cost collar contracts which ensure conversion of approximately €20 million of sales in 2004 at average rates between $1.10 and $1.14 per euro, and euro-denominated forward contracts requiring the conversion of approximately €30 million of sales in 2004 at an average rate of $1.23 per euro. The Company had 3.5% Rotterdam barge fuel oil forward contracts at September 30, 2004 that require conversion of approximately 60,000 metric tons of fuel oil in 2004, 140,000 metric tons in 2005 and 75,000 metric tons in 2006 at prices ranging from $130 to $170 per metric ton, and a combination of Singapore and New York Harbor fuel oil forward contracts that require conversion of approximately 10,000 metric tons of fuel oil in 2004, 30,000 metric tons in 2005 and 15,000 metric tons in 2006 at prices ranging from $145 to $195 per metric ton. At September 30, 2004,

the fair value of the foreign currency option and fuel oil forward contracts was $22 million, $9 million of which was included in “Other current assets” and $13 million in “Investments and other assets, net.” The fair value of the foreign currency zero-cost collar contracts at September 30, 2004 was a loss of approximately $2 million, which was included in “Accrued liabilities.” During the quarter and nine months ended September 30, 2004, the change in the fair value of these contracts relating to hedge ineffectiveness was not significant.

Note 14 - Income Taxes

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. For the nine months ended September 30, 2004, income tax expense reflects a $5.7 million benefit from the sale of the Company’s Colombian banana production division. A deferred tax liability of $5.7 million related to Colombia growing crops had been previously recorded; this tax liability was released to income in the 2004 second quarter upon sale of the Colombian division.

Note 15 - Stock-Based Compensation

Effective January 1, 2003, the Company began using the fair value method to recognize stock option expense in its results of operations for new stock options granted after December 31, 2002. Prior to January 1, 2003, the Company accounted for stock options in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”

The table below illustrates the effect of stock compensation expense on the periods presented as if the Company had always applied the fair value method under SFAS No. 123, “Accounting for Stock-Based Compensation.”


	Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
(in thousands, except per share amounts)	2004			2003			2004			2003
Income (loss) before stock compensation expense	$	(18,400	)	$	10,262		$	39,332		$	92,187
Stock compensation expense included in net income (loss)*		(1,429	)		(377	)		(9,011	)		(866	)

Net income (loss)		(19,829	)		9,885			30,321			91,321
Pro forma stock compensation expense**		(1,636	)		(1,864	)		(5,086	)		(5,592	)

Pro forma net income (loss)	$	(21,465	)	$	8,021		$	25,235		$	85,729

Basic earnings per common share:
Income (loss) before stock compensation expense	$	(0.45	)	$	0.26		$	0.96		$	2.30
Stock compensation expense included in net income (loss)*		(0.04	)		(0.01	)		(0.22	)		(0.02	)

Net income (loss)		(0.49	)		0.25			0.74			2.28
Pro forma stock compensation expense**		(0.04	)		(0.05	)		(0.12	)		(0.14	)

Pro forma net income (loss)	$	(0.53	)	$	0.20		$	0.62		$	2.14

Diluted earnings per common share:
Income (loss) before stock compensation expense	$	(0.45	)	$	0.26		$	0.94		$	2.30
Stock compensation expense included in net income (loss)*		(0.04	)		(0.01	)		(0.22	)		(0.02	)

Net income (loss)		(0.49	)		0.25			0.72			2.28
Pro forma stock compensation expense**		(0.04	)		(0.05	)		(0.12	)		(0.14	)

Pro forma net income (loss)	$	(0.53	)	$	0.20		$	0.60		$	2.14

Represents expense from stock options and restricted stock awards. Expense for the nine months ended September 30, 2004 includes a charge of $3.6 million for awards granted to the Company’s former chairman and chief executive officer that vested upon his retirement as chairman on May 25, 2004. The charge was recorded in the 2004 first quarter.

**	Represents the additional amount of stock compensation expense that would have been included in net income had the Company applied the fair value method under SFAS No. 123 for awards issued prior to 2003, when the Company first began expensing options.

Options for 335,000 shares were granted during the first quarter of 2004, and no options were granted during the second and third quarters. During the 2003 first, second and third quarters, options were granted for 260,000, 95,000 and 19,000 shares, respectively. The estimated weighted average fair value per option share granted was $12.47 during the first quarter of 2004, $6.58 during the first quarter of 2003, $6.70 during the second quarter of 2003 and $9.19 during the third quarter of 2003 using a Black-Scholes option pricing model based on market prices and the following assumptions at the dates of option grant: weighted average risk-free interest rate of 3.0% in the first quarter of 2004, 2.8% in the first and second quarters of 2003 and 3.4% in the third quarter of 2003; dividend yield of 0%; volatility factor for the Company’s common stock price of 60%; and a weighted average expected life of five years for options not forfeited. Approximately 665,000 options were exercised during the first nine months of 2004, resulting in a cash inflow of $11 million.

Restricted stock awards for approximately 10,000 shares and 592,000 shares were granted to employees and directors during the quarter and nine months ended September 30, 2004. These awards generally vest over 1-4 years, and the fair value of the awards at the grant date is expensed over the vesting periods. The shares are issued at the end of the applicable vesting period.

Item 2

CHIQUITA BRANDS INTERNATIONAL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Comparisons of the Company’s third quarter 2004 operating income to the prior year were affected by $12 million of gains from the sale of equity method investments in last year’s third quarter, primarily representing a $10 million gain from a reduction in the Company’s ownership of Chiquita Brands South Pacific (“CBSP”), an Australian fresh produce distributor.

Apart from this, the benefits received in the third quarter of 2004 from favorable European currency exchange rates and improved local banana prices in Europe were offset by lower local banana prices in North America and Asia and by increases in costs in the third quarter of 2004 compared to 2003, in part due to rising fuel, paper, ship charter and purchased fruit costs.

On a year-to-date basis, the acquisition of Atlanta, a fresh produce distributor, in late March 2003 resulted in significant increases to the Company’s sales, cost of sales and selling, general and administrative costs in the first quarter of 2004 compared to 2003.

Operations

Net sales

Net sales for the third quarter of 2004 were $662 million, an increase of $34 million from last year’s third quarter. The increase resulted from favorable European currency exchange rates, improved banana pricing in Europe and higher banana volume in North America.

Net sales for the nine months ended September 30, 2004 were $2.3 billion, compared to $1.9 billion in 2003. The acquisition of Atlanta accounted for $283 million of the $375 million increase. The remaining increase resulted from favorable exchange rates and higher other fresh produce sales.

Operating income – Third Quarter

Operating income for the third quarter of 2004 was $10 million, compared to $23 million in the third quarter of 2003.

Banana Segment. In the Company’s Banana segment, operating income was $14 million, compared to $15 million last year.

Banana segment operating results were favorably affected by:

•

$20 million European currency and pricing benefit, comprised of a $15 million net increase from currency exchange rates and $5 million from improved local European pricing; and

•

the absence of charges related to farm closures, compared to $3 million of such charges in the 2003 third quarter.

These items were offset by:

•

$10 million of cost increases, primarily due to rising fuel, paper, ship charter, and purchased fruit costs;

•

$6 million adverse effect of banana pricing in North America and Asia;

•

$3 million of higher costs due to the timing of advertising expenses in Europe (these costs will become a favorable comparison in the fourth quarter);

•

$2 million increase in selling, general and administrative expenses associated with investment spending, primarily for banana innovation;

•

The absence of a $2 million gain recorded on the sale of equity method investments in the 2003 third quarter; and

•

$1 million increase in legal and other costs associated with the U.S. Department of Justice investigation of the Company’s recently sold Colombian operations. These costs are included in selling, general and administrative expenses.

The following table shows the Company’s banana prices (percentage change 2004 compared to 2003):


	Q3		YTD
North America	-2	%	-3	%
European Core Markets ¹
U.S. Dollar basis	12	%	8	%
Local Currency	4	%	-2	%
Trading Markets ²
U.S. Dollar basis	13	%	13	%
Local Currency	4	%	2	%
Asia
U.S. Dollar basis	-8	%	3	%
Local Currency	-11	%	-2	%

The Company’s banana sales volumes of 40-pound boxes were as follows:


(In millions, except percentages)	Q3 2004	Q3 2003	% Change		YTD 2004	YTD 2003	% Change
European Core Markets ¹	12.1	12.3	(1.6	)%	40.8	42.3	(3.5	)%
Trading Markets ²	1.7	1.7	0.0	%	3.9	5.0	(22.0	)%
North America	14.7	13.6	8.1	%	43.0	41.0	4.9	%

Total	28.5	27.6	3.3	%	87.7	88.3	(0.7	)%

¹	The 25 member countries of the European Union, plus non-E.U. states Norway, Iceland and Switzerland.

²	Other European and Mediterranean countries.

The Company owns 50% of a joint venture serving the Far East and Middle East, which had banana sales volume of 4.1 million and 3.7 million boxes during the third quarters of 2004 and 2003, respectively. For the nine months ended September 30, 2004 and 2003, this joint venture had volume of 12.0 million and 10.2 million boxes, respectively. The Company’s share of the net income or loss associated with this equity method investment is included in cost of sales.

Foreign currency hedging costs charged to the Consolidated Statement of Income were $5 million in the 2004 third quarter, compared to $7 million in the third quarter of 2003. These costs relate primarily to hedging the Company’s net cash flow exposure to fluctuations in the U.S. dollar value of its euro-denominated sales. At September 30, 2004, unrealized losses of $11 million on the Company’s option, forward and zero-cost collar contracts were included in “Accumulated other comprehensive income,” approximately $8 million of which is expected to be reclassified to net income during the next 12 months. The Company primarily purchases put options, which require an upfront premium payment. These put options can reduce the negative earnings impact on the Company of a significant future decline in the value of the euro, without limiting the benefit the Company would receive from a stronger euro. Between June and August 2004, the Company purchased put options to hedge a majority of its anticipated 2006 euro net cash receipts.

Other Fresh Produce Segment. For the Other Fresh Produce segment, the operating loss in the 2004 third quarter was $4 million, compared to operating income of $6 million in the 2003 third quarter. The decline in operating results was primarily due to $1 million of incremental losses associated with the start-up of Chiquita Fresh Cut Fruit ($2 million of losses in the 2004 third quarter vs. $1 million of losses last year), and a $10 million gain in the prior year quarter on the sale of a portion of the Company’s investment in CBSP.

Operating income – Year-to-Date

Operating income for the nine months ended September 30, 2004 was $78 million, compared to $121 million for the nine months ended September 30, 2003.

Banana Segment. In the Company’s Banana segment, operating income was $79 million year-to-date, compared to $111 million last year.

Banana segment operating results were favorably affected by:

•

$38 million net European currency and pricing benefit, comprised of a $50 million net increase from currency exchange rates, partially offset by $12 million in lower local European pricing; and

•

$7 million decline in charges related to severance, the closure of farms and Atlanta restructuring ($3 million of charges in 2004 compared to $10 million of such charges a year ago).

These items were offset by:

•

$32 million adverse effect from asset sales year-over-year, primarily comprised of a before-tax loss of $9 million on the sale of the Colombian banana production division in the second quarter of 2004 and a $21 million gain on the sale of the Armuelles, Panama division in the 2003 second quarter;

•

$12 million of selling, general and administrative expenses associated with investment spending, including banana innovation costs and a $7 million increase in marketing expenses, primarily to build brand equity in several European countries, including new E.U. member states in Central and Eastern Europe;

•

$11 million adverse effect of North American banana pricing;

•

$9 million from lower banana volume in Europe;

•

$6 million increase in legal and other costs associated with the U.S. Department of Justice investigation of the Company’s recently sold Colombian operations. These costs are included in selling, general and administrative expenses;

•

$4 million charge in selling, general and administrative expenses related to stock options and restricted stock that had been previously granted to the Company’s former chairman and chief executive officer and vested upon his retirement in May 2004; and

•

$3 million of higher costs due to the timing of advertising expenses in Europe (these costs will become a favorable comparison in the fourth quarter).

Information on the Company’s banana pricing and volume is included in the Operating Income – Third Quarter section above.

Foreign currency hedging costs charged to the Consolidated Statement of Income were $23 million for the nine months ended September 30, 2004, compared to $29 million for the same period in 2003.

Other Fresh Produce Segment. For the Other Fresh Produce segment, the operating loss for the nine months ended September 30, 2004 was $3 million, compared to operating income of $6 million a year ago. The segment benefited from a $6 million decline in charges related to the Atlanta restructuring ($3 million in 2004, compared to $9 million a year ago). This benefit was more than offset by $8 million of incremental losses associated with the start-up of Chiquita Fresh Cut Fruit, which began operating in the fourth quarter of 2003 ($10 million of losses in 2004 vs. $2 million of losses last year), and $8 million of gains in 2003 associated with the sale of shares of CBSP and other equity method investments.

Interim results for the Company are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. The Company’s results during the third and fourth quarters are generally weaker than in the first half of the year due to increased availability of competing fruits and resulting lower prices.

Interest, Other Income (Expense) and Taxes

Interest income in the 2004 third quarter was $2 million, compared to $1 million in the year-ago quarter. The increase is due to interest earned on higher cash balances and on the receivable that resulted from the pineapple purchase agreement that the Company entered into in connection with the sale of its Colombian division. This agreement is described in “Sale of Colombian Division” below.

Interest expense in the 2004 third quarter was $10 million, compared to $11 million in the year-ago quarter. Interest expense declined $2 million due to the significant reduction in debt during the past year, but that was partially offset by $1 million of interest expense in the 2004 third quarter on the liability that resulted from the banana purchase agreement that the Company entered into in connection with the sale of its Colombian division. This agreement is described in “Sale of Colombian Division” below.

Other income (expense) reflects a loss of $20 million in the 2004 third quarter, which includes a loss of $22 million from the premium associated with the extinguishment of the $250 million principal amount of 10.56% Senior Notes, partially offset by a $2 million gain relating to proceeds received as a result of the demutualization of a company with which Chiquita held pension annuity contracts.

Discontinued Operations

For all periods presented in which they were owned, discontinued operations include the operating results of Progressive Produce Corporation (“Progressive”), a California-based distributor of potatoes and onions sold in January 2003; certain operations owned by Atlanta, including a port operation sold in April 2003; and Chiquita Processed Foods (“CPF”), the Company’s vegetable canning business sold in May 2003. Discontinued operations also include any gains or losses from disposition of these businesses, including a $2 million gain from the sale of Progressive and a $9 million gain from the sale of CPF.

Sale of Colombian Division

In June 2004, the Company sold its banana-producing and port operations in Colombia to Invesmar Ltd., (“Invesmar”) the holding company of C.I. Banacol S.A., a Colombian-based producer and exporter of bananas and other fruit products.

The net book value of the assets and liabilities transferred in the transaction was $36 million. The Company recognized a before-tax loss of $9 million and an after-tax loss of $4 million on the transaction, which takes into account the net $8 million loss from the two long-term fruit purchase agreements.

Financial Condition – Liquidity and Capital Resources

The Company’s cash balance has increased to $230 million at September 30, 2004, compared to $134 million at December 31, 2003 and $158 million at September 30, 2003.

Operating cash flow was $90 million for the nine months ended September 30, 2004, compared to $76 million for the same period in 2003. Operating cash flow in the 2003 second quarter reflects $17 million in severance payments made upon completion of the sale of the Company’s Armuelles, Panama division in June 2003.

Capital expenditures were $28 million year-to-date 2004 and $37 million during the comparable period in 2003. Capital expenditures in 2003 included $14 million to purchase a ship that previously had been under operating lease to the Company.

In September 2004, the Company issued $250 million principal amount of 7¹/2% Senior Notes due 2014 for net proceeds of $246 million. The proceeds from the new offering, together with available cash, were used to fund the Company’s tender offer and consent solicitation for its $250 million aggregate principal amount of 10.56% Senior Notes due 2009. The purchase price was $1,069.56 for each $1,000 principal amount of notes validly tendered and accepted for payment, plus accrued and unpaid interest up to but excluding the settlement date. Furthermore, the Company paid $20 for each $1,000 principal amount of notes to holders who validly tendered their notes and delivered their consents to certain changes in the terms of the 10.56% Senior Notes prior to September 28, 2004. Approximately $209 million principal amount of 10.56% Senior Notes were validly tendered by the September 28 deadline, leaving $41 million still outstanding at September 30, 2004. An additional $2 million principal amount was tendered prior to the October 12, 2004 tender offer deadline. On November 3, 2004, the Company gave notice of redemption of the remaining $39 million of 10.56% Senior Notes. The redemption date will be December 3, 2004. As a result of the premiums associated with the repurchase of the entire $250 million of notes, the Company recognized a $22 million loss in the 2004 third quarter, which is included in “Other income (expense)” on the Consolidated Statement of Income.

The Company allowed the CBL bank credit facility to expire in June 2004. There had been no outstanding borrowings under the revolving credit line since May 2003, and all term loans under the facility had been repaid in full in March 2004. The Company expects to replace the expired facility with a new multi-year revolving credit facility in early 2005.

In June 2004, the Company refinanced the debt of its Chiquita Chile subsidiary in the amount of $13 million. Interest is variable based on LIBOR, and principal is due in installments over five years. Under the terms of the new agreement, which is secured by liens on certain of Chiquita Chile’s assets, the subsidiary is subject to financial covenants, including minimum tangible net worth and limitations on liabilities.

Chiquita sold CPF to Seneca Foods Corporation in May 2003. The sale of CPF resulted in the receipt of $110 million of cash and approximately 968,000 shares of Seneca preferred stock convertible into an equal number of shares of Seneca Common Stock Class A, which was recorded at its estimated fair value on the sale date of $13 million. Seneca also assumed CPF’s debt, which was $61 million at the sale date.

Total debt at September 30, 2004 was $408 million versus $395 million at December 31, 2003. The increase in debt resulted primarily from the $41 million of 10.56% Senior Notes that had not been tendered as of September 30, 2004. This increase was partially offset by the repayment of the CBL credit facility and normal ship loan maturities. The change is illustrated in the following table:


(in millions)	September 30, 2004		December 31, 2003		September 30, 2003
Parent Company
7¹/2% Senior Notes	$	250.0	$	—	$	—
10.56% Senior Notes		40.9		250.0		250.0

Subsidiaries
CBL credit facility (allowed to expire June 2004)
Revolver		—		—		—
Term loan		—		—		6.0
Term loan for Atlanta		—		9.8		40.0

Shipping		86.4		108.4		111.0
Chiquita-Chile		13.3		16.1		16.3
Other		17.2		10.3		12.4

Total debt	$	407.8	$	394.6	$	435.7

Chiquita has recently authorized a common stock and warrant repurchase program. Under the program, expected to be completed by the end of 2005, the Company may purchase up to $20 million of its shares of common stock and warrants to subscribe for common stock. The securities may be purchased on the open market or in privately negotiated transactions. The amounts and times of purchases will be based on prevailing market conditions.

The Company believes that its current cash level, cash flow generated by operating subsidiaries and borrowing capacity provide sufficient cash reserves and liquidity to fund the Company’s working capital needs, capital expenditures and debt service requirements, as well as the stock and warrant repurchase program.

Risks of International Operations

The Company conducts operations in many foreign countries. The Company’s foreign operations are subject to a variety of risks inherent in doing business abroad.

In 2001, the European Commission agreed to amend the quota and licensing regime for the importation of bananas into the European Union (“EU”). The agreement led to a partial redistribution of licenses for the import of Latin American bananas under a tariff rate quota system for historical operators. As a result, the Company has not needed to purchase as many import licenses as had been required prior to the 2001 agreement in order to meet its customer demand.

On May 1, 2004, ten Central and Eastern European countries joined the EU. The European Commission specified the size of the increase in the banana quota for the remainder of 2004 that will result from this EU enlargement. The amount of the increase was lower than historical imports into those countries. The Commission also established rules for allocating additional import licenses for the increased quota volume, which are in most respects consistent with the 2001 agreement. As those rules are now being applied, Chiquita is receiving a significant share of the new licenses.

Under the 2001 agreement, the EU banana tariff rate quota system is scheduled to be followed by a tariff-only system no later than 2006. In order to remain consistent with World Trade Organization (“WTO”) principles, any new EU banana tariff is required under a 2001 WTO decision to “at least maintain total market access” for Latin American suppliers. That decision establishes consultation and arbitration procedures for determining whether Latin American market access would be maintained and requires that those procedures be completed before any new EU tariff-only system takes effect. On October 27, 2004, the European Commission announced that it would propose a tariff on Latin American bananas of 230 euro per metric ton. This would represent a substantial increase over the 75 euro per metric ton tariff now applicable to Latin American bananas entering within the EU’s current tariff rate quota system. The Latin American supplying countries have announced their opposition to any tariff above 75 euro on the basis that it would be inconsistent with the WTO standard. There can be no assurance that a tariff-only system will be installed by 2006, that the tariff level finally established for Latin American bananas will not be greater than 75 euro per metric ton or that the final tariff will not be materially adverse to marketers of Latin American bananas such as the Company.

The Company has international operations in many foreign countries, including those in Central and South America, the Philippines and the Ivory Coast. The Company’s activities are subject to risks inherent in operating in these countries, including government regulation, currency restrictions and other restraints, burdensome taxes, risks of expropriation, threats to employees, political instability, terrorist activities, including extortion, and risks of U.S. and foreign governmental action in relation to the Company. Should such circumstances occur, the Company might need to curtail, cease or alter its activities in a particular region or country. Chiquita’s ability to deal with these issues may be affected by applicable U.S. laws and, in particular, potential conflicts between the requirements of U.S. law and the need to protect the Company’s employees and assets.

The Company is currently dealing with one such issue involving payments that its Colombian banana producing subsidiary (sold in June 2004) had been forced to make to certain local groups which have been designated under United States law as foreign terrorist organizations. The Company’s management and its audit committee, in consultation with the board of directors, voluntarily disclosed this issue to the U.S. Department of Justice in April 2003 and requested its guidance. In late March 2004, the Department of Justice advised that, as part of its investigation, it would be evaluating the role and conduct of the Company and some of its officers in the matter. While the Company intends to continue its cooperation with this investigation, the Company cannot predict the outcome or any possible adverse effect on the Company, which could include the imposition of fines.

In early September 2004, the Company voluntarily disclosed to the U.S. Securities and Exchange Commission (“SEC”) and the Department of Justice that in 2003 its Greek subsidiary made a payment of approximately €14,700 that may not comply with the U.S. Foreign Corrupt Practices Act. The payment, which was made in connection with the settlement of a local tax audit, was made in contravention of Company policies. These agencies have requested certain additional information and the Company has complied with that request and will cooperate with any further inquiry or investigation. While the Company is taking corrective and disciplinary action, it cannot predict the outcome of this matter,

including whether these agencies would view it as involving a violation of the 2001 order discussed below and/or seek to impose fines. Under a settlement reached with the SEC in 2001, the Company paid a $100,000 fine and consented to a finding that, as a result of similar payments by its former Colombian subsidiary in 1996-97, the Company had violated the books and records and internal controls provisions of the Securities Exchange Act of 1934. The Company also consented to an order that it cease and desist from committing or causing any future violations of these provisions.

* * * * *

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, many of which are beyond the control of Chiquita, including: the impact of changes in the E.U. banana import regime as a result of the anticipated conversion to a tariff-only regime not later than 2006; natural disasters and unusual weather conditions; currency exchange rate fluctuations; prices for Chiquita products; availability and costs of products and raw materials; operating efficiencies; the Company’s ability to realize its announced cost-reduction goals; risks inherent in operating in foreign countries, including government regulation, currency restrictions and other restraints, burdensome taxes, expropriation, threats to employees, political instability and terrorist activities, including extortion, and risks of U.S. and foreign governmental action in relation to the Company; the outcome of the Department of Justice investigation related to the Company’s recently sold Colombian subsidiary; labor relations; actions of governmental bodies; the continuing availability of financing; and other market and competitive conditions.

The forward-looking statements speak as of the date made and are not guarantees of future performance. 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.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Reference is made to the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Management” in the Company’s 2003 Annual Report on Form 10-K. As of September 30, 2004, there were no material changes to the information presented.

Item 4 - Controls and Procedures

Chiquita maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its periodic filings with the SEC is (a) accumulated and communicated to the Company’s management in a timely manner and (b) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based on an evaluation, as of September 30, 2004, of the Company’s disclosure controls and procedures, the Company’s chief executive officer and chief financial officer concluded that the design and operation of these controls and procedures are effective. Chiquita also maintains a system of internal accounting controls that are designed to provide reasonable assurance that its books and records accurately reflect its transactions and that its policies and procedures are followed. During the quarter ended September 30, 2004, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - Other Information

Item 1 - Legal Proceedings

In early September 2004, the Company voluntarily disclosed to the SEC and the Department of Justice that in 2003 its Greek subsidiary made a payment of approximately €14,700 that may not comply with the U.S. Foreign Corrupt Practices Act. The payment, which was made in connection with the settlement of a local tax audit, was made in contravention of Company policies. These agencies have requested certain additional information and the Company has complied with that request and will cooperate with any further inquiry or investigation. While the Company is taking corrective and disciplinary action, it cannot predict the outcome of this matter, including whether these agencies would view it as involving a violation of the 2001 order discussed below and/or seek to impose fines. Under a settlement reached with the SEC in 2001, the Company paid a $100,000 fine and consented to a finding that, as a result of similar payments by its former Colombian subsidiary in 1996-97, the Company had violated the books and records and internal controls provisions of the Securities Exchange Act of 1934. The Company also consented to an order that it cease and desist from committing or causing any future violations of these provisions.

In October 2004, a lawsuit was filed in Superior Court of California, Los Angeles County against two manufacturers of an agricultural chemical called DBCP, as well as three banana producing companies, including the Company, that used DBCP. The plaintiffs claim to have been workers on banana farms in Costa Rica owned or managed by the defendant banana companies and allege sterility and other injuries as a result of exposure to DBCP. The suit does not identify how many of the approximately 2,600 named plaintiffs purport to have claims against the Company, as opposed to other banana company defendants. Nor have the plaintiffs’ alleged damages yet been quantified. The lawsuit has been removed by other defendants in the case to the U.S. District Court for Southern California. The Company has not yet been served in this suit. Although the Company has little information with which to evaluate this lawsuit, it believes it has meritorious defenses, including the fact that the Company used DBCP commercially only from 1973 to 1977 while it was registered for use by the U.S. Environmental Protection Agency. The EPA did not revoke DBCP’s registration for use until 1979.

In 1998, the Company settled, for $4.7 million, virtually all of the then pending DBCP cases against it, which had been brought in U.S. and foreign courts on behalf of approximately 4,000 claimants in Panama, the Philippines and Costa Rica. (A purported DBCP class action in Hawaii state court that had identified 11 claimants against the three banana producing companies and alleged an indeterminate number of other claimants was not settled and remains pending). At that time, the Company believed that these settlements covered the great preponderance of workers who could have had claims against the Company arising in these three countries. To the Company’s knowledge, the Company did not use DBCP in other countries.

In October 2004, the Company’s Italian subsidiary received a notice of assessment from Customs authorities in Trento, Italy stating that this subsidiary and two individuals, including the subsidiary’s former managing director, are jointly and severally liable for approximately 4.2 million euro. This amount represents additional duties on the import of certain bananas into the European Union from 1998 to 2000, plus related taxes and interest. The notice states that these amounts are due because these bananas were imported with licenses that were subsequently determined to have been forged. The Company intends to appeal the assessment, through appropriate proceedings, on the basis of its good faith belief at the time the import licenses were obtained and used that they were valid.

Item 6 - Exhibits and Reports on Form 8-K

(a)

Exhibit 10.1 - Separation Agreement and Release dated August 20, 2004 between Chiquita Brands International, Inc. and James B. Riley, the Company’s former Senior Vice President and Chief Financial Officer

Exhibit 10.2 - Separation Agreement and Release dated September 17, 2004 between Chiquita Brands International, Inc. and Jill M. Albrinck, the Company’s former Senior Vice President, Fresh Cut Fruit, which became effective September 24, 2004

Exhibit 10.3 - Provision relating to the Company’s obligation to pay severance to John W. Braukman III, the Company’s new Senior Vice President and Chief Financial Officer, from offer letter, which became effective August 11, 2004, upon its approval by the Compensation Committee of the Board of Directors

Exhibit 10.4 - Provision relating to the Company’s obligation to pay severance to Tanios Viviani, the Company’s new Vice President, Fresh Cut Fruit, from offer letter, which became effective September 28, 2004, upon its approval by the Compensation Committee of the Board of Directors

Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

Exhibit 32 - Section 1350 Certifications

(b)

The Company has filed the following Current Reports on Form 8-K since the beginning of the 2004 third quarter:

August 5, 2004 (filed August 5, 2004), reporting under Item 12 - to furnish second quarter 2004 results and related matters

September 14, 2004 (filed September 14, 2004), reporting under Items 8.01 and 9.01 - to announce tender offer and consent solicitation for any or all of its 10.56% Senior Notes due 2009

September 14, 2004 (filed September 14, 2004), reporting under Items 8.01 and 9.01 - to announce plan to offer $250 million aggregate principal amount of Senior Notes due 2014 in a private offering, subject to market and other customary conditions

September 22, 2004 (filed September 22, 2004), reporting under Items 8.01 and 9.01 - to announce pricing of offer of $250 million aggregate principal amount of Senior Notes due 2014

September 24, 2004 (filed September 30, 2004), reporting under Items 1.01, 2.03, 3.03 and 9.01 - to provide information about:

•

New material agreements (indenture, registration rights agreement and supplemental indenture), separation agreement with a former executive officer, and modification of the Company’s form of restricted share agreement

•

Creation of a direct financial obligation in connection with the Company’s issuance of $250 million principal amount of 7¹/2% Senior Notes due 2014

•

Material modifications to rights of security holders as a result of amendments made in Supplemental Indenture, dated as of September 28, 2004, modifying the terms of the Company’s 10.56% Senior Notes due 2009

September 28, 2004 (filed September 28, 2004), reporting under Items 8.01 and 9.01 - to announce completion of sale of $250 million aggregate principal amount of 7¹/2% Senior Notes due 2014

September 28, 2004 (filed October 4, 2004), reporting under Item 1.01 - to provide information about an agreement with an executive officer

November 4, 2004 (filed November 4, 2004), reporting under Items 2.02 and 9.01 - to furnish third quarter 2004 results and related matters

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, Controller and
		Chief Accounting Officer

November 5, 2004

EX-10.1 2 dex101.htm SEPARATION AGREEMENT AND RELEASE DATED AUGUST 20, 2004--JAMES B. RILEY Separation Agreement and Release dated August 20, 2004--James B. Riley

EXHIBIT 10.1

SEPARATION AGREEMENT AND RELEASE

The following is an agreement between James B. Riley (“Mr. Riley”) and Chiquita Brands International, Inc. (the “Company”) regarding Mr. Riley’s cessation of employment with the Company.

In consideration of the mutual promises contained in this Agreement, the Company and Mr. Riley agree as follows:

1. Mr. Riley’s last day of employment with the Company will be August 31, 2004. (the “Separation Date”).

2. The Company will pay Mr. Riley all salary due through his Separation Date and will also pay him a lump sum payment of earned and accrued, banked and/or carryover vacation pay due under the Company’s vacation policy, payable at the rate of Mr. Riley’s current base salary, less appropriate tax withholdings and deductions. At August 6, 2004, the amount of such vacation pay was $76,673 which represents 52.5 days.

3. Separation Benefits. Provided Mr. Riley fulfills his obligations hereunder, the Company will provide the following Separation benefits to Mr. Riley:

(a) Separation Pay. The Company will pay Mr. Riley a lump sum payment of $700,000 (“Separation Pay”) which represents fifty-two (52) weeks (the “Separation Payment Period”) of Mr. Riley’s current base salary, plus an amount equal to his 2003 bonus target, less appropriate tax withholdings and deductions. In addition, the Company will pay Mr. Riley an additional payment equal to 25% of the base salary received by Mr. Riley from January 1, 2004 through the Separation Date. All payments will be made on the first payday of the payroll processing cycle immediately following either Mr. Riley’s Separation Date or the effective date of this Agreement after Mr. Riley’s acceptance of it, whichever is later.

(b) Medical Benefits. Mr. Riley will retain any medical and/or dental coverage in which he is enrolled through the last day of the month in which the Separation Date occurs. Mr. Riley may extend the ChiquitaFlex medical and dental benefits in which he is enrolled as of the Separation Date by electing coverage under COBRA. The Company will pay the full premium for up to 24 months of COBRA coverage. For the balance of the COBRA period, Mr. Riley will be responsible for paying the full premium for COBRA coverage. All other benefits in which Mr. Riley is enrolled or eligible as of the Separation Date will cease as of the Separation Date except as noted in 3C.

(c) Life Insurance. The company will provide $700,000 of life insurance coverage through a third party provider for up to two years.

(d) Outplacement Service. The Company will provide Mr. Riley with twelve (12) months of Senior Executive outplacement service through Right Management Consultants or Drake Beam and Morin. The outplacement service will be forfeited by Mr. Riley if he does not initiate outplacement services within 6 months following his Separation Date.

(e) Stock Options. Mr. Riley currently has options to purchase 225,000 shares of Company stock, 50% of which are vested. The Company will accelerate the vesting of an additional 25%, or 56,250 shares, as of the Separation Date. Mr. Riley will have 12 months after the Separation Date in which to exercise all vested stock options.

(f) Long Term Incentive Plan. In view of Mr. Riley’s having been employed for more than six months of 2004 and his strong and dedicated performance during 2004, the Company will vest as of the Separation date that portion of the 9,636 restricted shares granted under the Long Term Incentive Plan on February 20, 2004 equal to 9,636 multiplied by a fraction in which the numerator is the number of months or partial months that Mr. Riley worked in 2004 and the denominator is 12. Such shares will be delivered within thirty days of the Separation date.

(g) Computer. Mr. Riley will be entitled to retain the Dell laptop computer as his own personal property.

4. Indemnification. The Company shall indemnify and defend Mr. Riley from and against all claims and causes of action which arose prior to the Separation Date asserted against Mr. Riley by third parties by reason of his actions or omissions as an Executive Officer of the Company to the extent permitted by law, the Company’s Certificate of Incorporation or Bylaws. The Company affirms that it will not cancel any coverage for Mr. Riley that exists under any director and officer liability insurance policy maintained by the Company and will not discriminate against Mr. Riley vis-à-vis other officers and former officers in any purchase or renewal of any such policy or any purchase of an extended reporting period under a policy that is not renewed..

5. Mr. Riley’s Post-Separation Obligations. In consideration of the payments and benefits provided in Section 3 above, Mr. Riley will:

(a) transfer his responsibilities in an appropriate manner and take such actions as are necessary to assure a smooth transition;

(b) not represent or bind the Company or enter into any agreement on behalf of the Company at any time after the Separation Date;

(d) return to the Company not later than five (5) days after the Separation Date, all other Company property and materials, including but not limited to all files, books, documents, records and memoranda, and repay all outstanding cash advances. Mr. Riley will also file a final expense report within a reasonable period of time after the Separation Date, if he has any unreimbursed expenses;

(e) not use or disclose, directly or indirectly, to anyone not connected with the Company any confidential, commercial or financial information, or trade or business secrets obtained during the term of employment, or make copies of any memoranda, books, records, customer lists, price lists or other documents (whether on computer or not) for use outside the Company, except as specifically authorized in writing by an officer of the Company, or as may be required by applicable law;

(f) fully cooperate and assist the Company with any litigation matters or agency proceedings for which his testimony or cooperation is requested, provided that he is compensated for any reasonable and necessary expenses incurred or actual income lost as a result of his cooperation and assistance;

(g) sign all necessary resignations from the Boards of Directors and/or officer positions of the Company and its subsidiaries;

(h) for a period extending until twelve (12) months after the Separation Date, not directly or indirectly solicit or attempt to solicit any officer or management-level employee to leave the employ of the Company;

(i) not directly or indirectly interfere with or disrupt any relationship, contractual or otherwise, between the Company and its customers, suppliers, distributors or other similar parties or contact any customer for the purpose of influencing the directing or transferring of any business or patronage away from the Company.

(j) not directly or indirectly engage or hold an interest in any company listed in Exhibit A or any subsidiary or affiliate of such business (the “Competing Businesses”), or directly or indirectly have any interest in, own, manage, operate, control, be connected with as a stockholder (other than as a stockholder of less than five percent (5%) ), joint venturer, officer, director, partner, employee or consultant, or otherwise engage or invest or participate in, any business conducted by a Competing Business, for a period of twenty-four (24) months following the Separation Date.

6. Attorneys’ Fees. The Company will reimburse Mr. Riley for up to $7,500 of legal fees incurred by him in the negotiation and preparation of this Agreement.

7. Remedies. Mr. Riley expressly acknowledges that the restrictive covenants set forth in this Agreement, including, without limitation, the duration, the business scope and the geographic scope of such covenants, are necessary in order to protect and maintain the proprietary interests and other legitimate business interests of the Company. Mr. Riley further acknowledges that the remedy at law for any breach or threatened breach of this Agreement will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including, without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive or any other appropriate form of equitable relief.

8. Confidentiality. Mr. Riley understands that the Company intends to file this Agreement as an exhibit to a periodic filing with the Securities and Exchange Commission and to disclose it in its annual meeting proxy statement. Until such filing or disclosure is made, Mr. Riley will hold in confidence, and will not disclose to anyone,

any of the terms of separation other than immediate family members and advisors, except as required by law. Mr. Riley shall not make any public derogatory remarks concerning the Company or any of its officers, directors, employees or shareholders, and shall not initiate any contact with the press or any other media.

9. General Release. In exchange for the payments and benefits identified in the Agreement, which Mr. Riley acknowledges are in addition to anything of value to which he is already entitled, Mr. Riley hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Mr. Riley ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Mr. Riley’s employment with the Company and the termination of that employment, pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights of 1991, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Worker Adjustment and Retraining Notification Act (“WARN”), the Fair Labor Standards Act of 1938, as well as all federal, state and local laws, except that this release shall not affect any rights of Mr. Riley for benefits payable under any Social Security, Worker’s Compensation or Unemployment laws or rights arising out of any breach of this Agreement by the Company.

10. Waiver and Release Under ADEA and OWBPA. Mr. Riley further expressly and specifically waives any and all rights or claims under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the “Act”). Mr. Riley acknowledges and agrees that this waiver of any right or claim under the Act (the “Waiver”) is knowing and voluntary, and specifically agrees as follows: (a) that this Agreement and this Waiver is written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Agreement; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is hereby advised in writing to consult with an attorney prior to executing this Agreement.

11. It is understood and agreed that for purposes of this Agreement, the term “Company” as used herein, shall include not only Chiquita Brands International, Inc., but also all of its direct or indirect subsidiaries or affiliated companies, and all officers, directors, and employees of any of the foregoing.

12. This Agreement shall bind the Mr. Riley’s heirs, executors, administrators, personal representatives, spouse, dependents, successors and assigns.

13. This Agreement shall not be construed as an admission by the Company of any wrongdoing or any violation of any federal, state or local law, regulation or ordinance, and the Company specifically disclaims any wrongdoing whatsoever against Mr. Riley on the part of itself, its employees, representatives or agents.

14. Neither this Agreement, nor any right or interest hereunder, shall be assignable by Mr. Riley, his beneficiaries or legal representatives, without the prior written consent of an officer of the Company.

15. This Agreement sets forth the entire agreement between the parties and supersedes any and all prior agreements or understandings between the parties. The terms of this Agreement may not be modified other than in a writing signed by the parties.

16. This Agreement shall in all respects be interpreted, enforced and governed by the laws of the State of Ohio. The parties agree that any action relating in any manner to this Agreement or to Mr. Riley’s relationship with the Company must be pursued in federal or state court located in Hamilton County, Ohio, and the parties specifically consent and submit to the jurisdiction of the courts in Hamilton County, Ohio.

17. If any provision of this Agreement is determined to be unenforceable by any court, then such provision will be modified or omitted to the extent necessary to make the remaining provisions of this Agreement enforceable.

18. Mr. Riley acknowledges that he understands that he has twenty-one (21) days after receipt of this Agreement to decide whether to accept it and that he may revoke any acceptance of this Agreement within (7) days of such acceptance. This Agreement shall not become effective until the seven (7) day revocation period has expired.

TAKE THIS AGREEMENT HOME, READ IT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT. IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.

IN WITNESS WHEREOF, the Company hereby offers this Agreement to Mr. Riley on this 10^th day of August, 2004.


CHIQUITA BRANDS INTERNATIONAL, INC.

By:		/s/ Barry Morris
		Barry Morris Vice President Human Resources

ACCEPTANCE

I hereby agree to the terms of this Agreement and acknowledge my acceptance of it this 20^th day of August, 2004.

WITNESS:


/s/ Kimberly Krumpack		/s/ James B. Riley
		James B. Riley

/s/ Eva H. Anderson

EX-10.2 3 dex102.htm SEPARATION AGREEMENT AND RELEASE DATED SEPTEMBER 17, 2004--JILL M. ALBRINCK Separation Agreement and Release dated September 17, 2004--Jill M. Albrinck

EXHIBIT 10.2

SEPARATION AGREEMENT AND RELEASE

The following is an agreement between Jill M. Albrinck (“Ms. Albrinck”) and Chiquita Brands International, Inc. (the “Company”) regarding Ms. Albrinck’s cessation of employment with the Company.

In consideration of the mutual promises contained in this Agreement, the Company and Ms. Albrinck agree as follows:

1. Ms. Albrinck’s last day of employment with the Company will be August 31, 2004 (the “Separation Date”).

2. The Company will pay Ms. Albrinck all salary due through her Separation Date and will also pay her a lump sum payment of earned and accrued, banked and/or carryover vacation pay due under the Company’s vacation policy, payable at the rate of Ms. Albrinck’s current base salary, less appropriate tax withholdings and deductions. At August 31, 2004, the gross amount of such vacation pay was $40,961.55, which represents 35.5 days.

3. Separation Benefits. Provided Ms. Albrinck fulfills her obligations hereunder, the Company will provide the following separation benefits to Ms. Albrinck:

(a) Separation Pay. The Company will pay Ms. Albrinck a lump sum payment of $300,000 (“Separation Pay”) which represents fifty-two (52) weeks (the “Separation Payment Period”) of Ms. Albrinck’s current base salary, less appropriate tax withholdings and deductions. Payment will be made on the first payday of the payroll processing cycle immediately following either Ms. Albrinck’s Separation Date or the effective date of this Agreement after Ms. Albrinck’s acceptance of it, whichever is later.

(b) Medical Benefits. Ms. Albrinck will retain any medical and/or dental coverage in which she is enrolled through the last day of the month in which the Separation Date occurs. Ms. Albrinck may extend the ChiquitaFlex medical and dental benefits in which she is enrolled as of the Separation Date by electing coverage under COBRA for up to eighteen (18) months. The Company will pay the full premium for up to twelve (12) months of COBRA coverage. For the balance of the COBRA period, Ms. Albrinck will be responsible for paying the full premium for COBRA coverage. All other benefits in which Ms. Albrinck is enrolled or eligible as of the Separation Date will cease as of the Separation Date.

(c) Outplacement Service. The Company will provide Ms. Albrinck with twelve (12) months of Senior Executive outplacement service through either Right Management Consultants or Drake Beam and Morin. The outplacement service will be forfeited by Ms. Albrinck if she does not initiate outplacement services within three (3) months following her Separation Date or the effective date of this Agreement, whichever is later.

(d) Stock Options. Ms. Albrinck currently has options to purchase 150,000 shares of Company stock, 50% of which are vested as of the Separation Date. The Company

will accelerate the vesting of an additional 25%, or 37,500 shares, as of the Separation Date. Ms. Albrinck will have twelve (12) months after the Separation Date in which to exercise all vested stock options.

(e) Long Term Incentive Plan. The Company will vest as of the Separation Date that portion of the 7,846 restricted shares granted under the Long Term Incentive Plan on February 20, 2004 equal to 7,846 multiplied by a fraction in which the numerator is the number of months or partial months that Ms. Albrinck worked in 2004 and the denominator is 12. Such shares will be delivered within thirty (30) days of the Separation Date.

(f) Attorney Fees. Ms. Albrinck will be entitled to attorney fees up to a maximum of $5,000.

(g) Computer. Ms. Albrinck will be entitled to retain the Dell laptop computer as her personal property with all company licensed programs removed from the computer.

4. Indemnification. The Company shall indemnify and defend Ms. Albrinck from and against all claims and causes of action which arose prior to the Separation Date asserted against Ms. Albrinck by third parties by reason of her actions or omissions as an Executive Officer of the Company to the extent permitted by law, the Company’s Certificate of Incorporation or Bylaws. The Company affirms that it will not cancel any coverage for Ms. Albrinck that exists under any director and officer liability insurance policy maintained by the Company and will not discriminate against Ms. Albrinck vis-à-vis other officers and former officers in any purchase or renewal of any such policy or any purchase of an extended reporting period under a policy that is not renewed.

5. Ms. Albrinck’s Post-Separation Obligations. In consideration of the payments and benefits provided in Section 3 above, Ms. Albrinck will:

(a) transfer her responsibilities in an appropriate manner and take such actions as are necessary to assure a smooth transition;

(b) not represent or bind the Company or enter into any agreement on behalf of the Company at any time after the Separation Date;

(c) return to the Company on her Separation Date Company credit card(s), Blackberry, cell phone, identification card and office keys;

(d) return to the Company not later than five (5) days after the Separation Date all other Company property and materials, including but not limited to all files, books, documents, records and memoranda, and repay all outstanding cash advances. Ms. Albrinck will also file a final expense report within a reasonable period of time after the Separation Date, if she has any unreimbursed expenses;

(f) fully cooperate and assist the Company with any litigation matters or agency proceedings for which her testimony or cooperation is requested, provided that she is compensated for any reasonable and necessary expenses incurred or actual income lost as a result of her cooperation and assistance;

(g) sign all necessary resignations from the Boards of Directors and/or officer positions of the Company and its subsidiaries;

6. Remedies. Ms. Albrinck expressly acknowledges that the restrictive covenants set forth in this Agreement, including, without limitation, the duration, the business scope and the geographic scope of such covenants, are necessary in order to protect and maintain the proprietary interests and other legitimate business interests of the Company. Ms. Albrinck further acknowledges that the remedy at law for any breach or threatened breach of this Agreement will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including, without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive or any other appropriate form of equitable relief.

7. Confidentiality. Ms. Albrinck understands that the Company intends to file this Agreement as an exhibit to a periodic filing with the Securities and Exchange Commission and to disclose it in its annual meeting proxy statement. Until such filing or disclosure is made, Ms. Albrinck will hold in confidence, and will not disclose to anyone, any of the terms of separation

other than immediate family members and advisors, except as required by law. Ms. Albrinck shall not make any direct or indirect public derogatory remarks concerning the Company or any of its officers, directors, employees or shareholders, and the Company, its directors and officers and its employees shall not make any direct or indirect public derogatory remarks concerning Ms. Albrinck. Neither party shall initiate any contact with the press or any other media.

8. General Release. In exchange for the payments and benefits identified in this Agreement, which Ms. Albrinck acknowledges are in addition to anything of value to which she is already entitled, Ms. Albrinck hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Ms. Albrinck ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Ms. Albrinck’s employment with the Company and the termination of that employment, pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights of 1991, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Worker Adjustment and Retraining Notification Act (“WARN”), the Fair Labor Standards Act of 1938, as well as all federal, state and local laws, except that this release shall not affect any rights of Ms. Albrinck for benefits payable under any Social Security, Worker’s Compensation or Unemployment laws or rights arising out of any breach of this Agreement by the Company.

9. Waiver and Release Under ADEA and OWBPA. Ms. Albrinck further expressly and specifically waives any and all rights or claims under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the “Act”). Ms. Albrinck acknowledges and agrees that this waiver of any right or claim under the Act (the “Waiver”) is knowing and voluntary, and specifically agrees as follows: (a) that this Agreement and this Waiver is written in a manner which she understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that she does not waive any rights or claims under the Act that may arise after the date of execution of this Agreement; (d) that she waives rights or claims under the Act in exchange for consideration in addition to anything of value to which she is already entitled; and (e) that she is hereby advised in writing to consult with an attorney prior to executing this Agreement.

10. It is understood and agreed that for purposes of this Agreement the term “Company” as used herein shall include not only Chiquita Brands International, Inc., but also all of its direct or indirect subsidiaries or affiliated companies, and all officers, directors, and employees of any of the foregoing.

11. This Agreement shall bind Ms. Albrinck’s heirs, executors, administrators, personal representatives, spouse, dependents, successors and assigns.

12. This Agreement shall not be construed as an admission by the Company of any wrongdoing or any violation of any federal, state or local law, regulation or ordinance, and the Company specifically disclaims any wrongdoing whatsoever against Ms. Albrinck on the part of itself, its employees, representatives or agents.

13. Neither this Agreement, nor any right or interest hereunder, shall be assignable by Ms. Albrinck, her beneficiaries or legal representatives, without the prior written consent of an officer of the Company.

14. This Agreement sets forth the entire agreement between the parties and supersedes any and all prior agreements or understandings between the parties. The terms of this Agreement may not be modified other than in a writing signed by the parties.

15. This Agreement shall in all respects be interpreted, enforced and governed by the laws of the State of Ohio. The parties agree that any action relating in any manner to this Agreement or to Ms. Albrinck’s relationship with the Company must be pursued in federal or state court located in Hamilton County, Ohio, and the parties specifically consent and submit to the jurisdiction of the courts in Hamilton County, Ohio.

16. If any provision of this Agreement is determined to be unenforceable by any court, then such provision will be modified or omitted to the extent necessary to make the remaining provisions of this Agreement enforceable.

17. Ms. Albrinck acknowledges that she understands that she has twenty-one (21) days after receipt of this Agreement to decide whether to accept it and that she may revoke any acceptance of this Agreement within seven (7) days of such acceptance. This Agreement shall not become effective until the seven (7) day revocation period has expired.

TAKE THIS AGREEMENT HOME, READ IT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT. IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.

IN WITNESS HEREOF, the Company hereby offers this Agreement to Ms. Albrinck on this 31 day of August, 2004.


CHIQUITA BRANDS INTERNATIONAL, INC.

By:		/s/ Barry Morris
		Barry Morris
		Vice President
		Human Resources

ACCEPTANCE

I hereby agree to the terms of this Agreement and acknowledge my acceptance of it this 17^th day of September, 2004.

WITNESS:


/s/ K. Krumpack		/s/ Jill M. Albrinck
		Jill M. Albrinck

EX-10.3 4 dex103.htm PROVISION TO THE COMPANY'S OBLIGATON FOR SEVERANCE--JOHN W. BRAUKAMAN III Provision to the Company's obligaton for severance--John W. Braukaman III

EXHIBIT 10.3

Provision relating to the Company’s obligation to pay severance to John W. Braukman, III,

Senior Vice President and Chief Financial Officer, from offer letter to him, which became

effective August 11, 2004, upon its approval by the Compensation Committee

of the Board of Directors

EX-10.4 5 dex104.htm PROVISION TO THE COMPANY'S OBLIGATON FOR SEVERANCE--TANIOS VIVIANI Provision to the Company's obligaton for severance--Tanios Viviani

EXHIBIT 10.4

Provision relating to the Company’s obligation to pay severance to Tanios Viviani,

Vice President, Fresh Cut Fruit, from offer letter to him, which became effective

September 28, 2004, upon its approval by the Compensation Committee of the Board of Directors

Severance: Should your employment be involuntarily terminated by the Company for reasons other than “cause” (as defined in the Company’s Stock Option and Incentive Plan) after the first anniversary of your date of hire, you would be entitled to severance pay equal to one year’s base salary. In addition, the Company will pay the monthly premium cost of COBRA continuation of your health care coverage for a period of one year following your termination, subject to your eligibility for COBRA continuation. (COBRA eligibility ends when you become covered by another plan). No severance or COBRA premiums would be paid in the event of termination for “cause.”

EX-31.1 6 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

Certification of Chief Executive Officer

I, Fernando Aguirre, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chiquita Brands International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2004


		/s/ Fernando Aguirre
Title:		Chief Executive Officer

EX-31.2 7 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

Certification Of Chief Financial Officer

I, John W. Braukman III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chiquita Brands International, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2004


		/s/ John W. Braukman III
Title:		Chief Financial Officer

EX-32 8 dex32.htm SECTION 906 CEO AND CFO CERTIFICATION Section 906 CEO and CFO Certification

Exhibit 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Chiquita Brands International, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 5, 2004


		/s/ Fernando Aguirre
Name:		Fernando Aguirre
Title:		Chief Executive Officer

Dated: November 5, 2004


		/s/ John W. Braukman III
Name:		John W. Braukman III
Title:		Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents