<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended
Commission File
March 31, 1994 Number
1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the IRS
Employer I.D.
Laws of New Jersey No. 04-
1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8011
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
As of May 2, 1994, there were 48,696,239 shares of Common Stock
outstanding.
Page 1 of 13 Pages
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
PART I - Financial Information
Consolidated Statement of Income for the quarters
ended March 31, 1994 and 1993 . . . . . . . . . . . . . 3
Consolidated Balance Sheet as of
March 31, 1994, December 31, 1993 and
March 31, 1993. . . . . . . . . . . . . . . . . . . . . 4-5
Consolidated Statement of Cash Flow for the quarters
ended March 31, 1994 and 1993 . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . 7
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . . . . 8-9
PART II - Other Information
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . 9
Item 2 - Changes in Securities . . . . . . . . . . . . . . 10
Item 6 - Exhibits and Reports on Form 8-K. . . . . . . . . 10
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
Part I - Financial Information
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1994 1993
<S> <C> <C>
Net sales $669,168 $731,109
Operating expenses
Cost of sales 485,095 547,061
Selling, general and administrative expenses 76,479
90,312
Depreciation 26,411 23,394
587,985 660,767
Operating income 81,183 70,342
Interest income 5,161 6,400
Interest expense (43,458) (42,379)
Other income, net 648 467
Income from continuing operations before income taxes
43,534 34,830
Income taxes (8,000) (7,300)
Income from continuing operations 35,534 27,530
Discontinued operations -- --
Income before extraordinary item 35,534 27,530
Extraordinary loss from prepayment of debt (22,840)--
Net income $12,694 $27,530
Weighted average number of common shares
outstanding (see Exhibit 11) 53,176 51,908
Earnings (loss) per common share:
Primary - Continuing operations $ .65 $ .53
- Extraordinary loss (.43) --
- Net income $ .22 $ .53
Fully diluted - Continuing
operations $ .62 $ .53
- Extraordinary loss (.40) --
- Net income $ .22 $ .53
Cash dividends declared per common share $ .05 $ .17
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, December
31, March 31,
1994 1993
1993
<S> <C> <C> <C>
Current assets
Cash and equivalents $211,618 $151,226 $276,965
Marketable securities -- -- 23,885
Trade receivables, less
allowances of $11,058, $11,051
and $9,502, respectively 237,755 187,936 282,473
Other receivables, net 87,196 85,170 81,878
Inventories 299,072 307,073 333,530
Other current assets 39,137 39,054 35,332
Total current assets 874,778
770,459 1,034,063
Restricted cash 51,020 51,020 39,520
Net assets of discontinued operations 38,410 42,410
25,675
Property, plant and equipment, net 1,447,464 1,427,191
1,429,875
Investments and other assets 299,919 282,914 228,530
Intangibles, net 165,535 166,759 181,939
$ 2,877,126 $2,740,753
$ 2,939,602
</TABLE>
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (continued)
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December
31, March 31,
1994 1993
1993
<S> <C> <C> <C>
Current liabilities
Notes and loans payable $117,354 $112,796 $135,449
Long-term debt due within one year 84,940 79,411
72,389
Accounts payable 222,132 202,923 239,613
Accrued liabilities 96,527 108,536 139,119
Total current liabilities
520,953 503,666 586,570
Long-term debt of parent company 840,006 881,124
882,020
Long-term debt of subsidiaries 566,129 557,254
572,285
Accrued pension and other employee
benefits 74,167 74,588 75,134
Other liabilities 124,519 122,123 130,823
Total liabilities 2,125,774
2,138,755 2,246,832
Shareholders' equity
Preferred stock, Series A
(2,875,000 shares outstanding)
138,369 -- --
Preference stock, Series C
(648,310 shares outstanding) 52,270 52,270
52,270
Capital stock, $.33 par value
(48,641,321, 48,510,353
and 48,137,480 shares
outstanding, respectively)
16,214 16,170 16,046
Capital surplus 495,985 494,240 490,306
Retained earnings 48,514 39,318 134,148
Total shareholders' equity
751,352 601,998 692,770
$ 2,877,126 $2,740,753$2,939,602
</TABLE>
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1994 1993
<S> <C> <C>
Cash provided (used) by:
Operations
Income before extraordinary item $35,534 $27,530
Depreciation and amortization 28,185 25,165
Changes in current assets and liabilities
Receivables (56,048) (90,598)
Inventories 7,853 17,048
Accounts payable and accrued liabilities 6,613
19,633
Other current assets and liabilities (96) (761)
Other (3,028) (1,083)
Cash flow from operations 19,013 (3,066)
Investing
Capital expenditures (46,758) (102,523)
Restricted cash deposits -- (39,520)
Proceeds from sale of ships and equipment --
22,000
Other (3,949) (1,439)
Cash flow from investing (50,707) (121,482)
Financing
Debt transactions
Issuances of long-term debt 206,822 71,411
Repayments of long-term debt (261,184) (46,904)
Increase (decrease) in notes and loans payable 5,788
(1,316)
Stock transactions
Issuance of preferred stock 138,369 --
Dividends (2,432) (9,253)
Net issuances (repurchases) of capital stock 723
(394)
Cash flow from financing 88,086 13,544
Discontinued operations 4,000 --
Increase (decrease) in cash and equivalents 60,392
(111,004)
Balance at beginning of period 151,226 387,969
Balance at end of period $211,618 $276,965
</TABLE>
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Interim results are subject to significant seasonal variations
and are not necessarily indicative of the results of operations for
a full fiscal year. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary for a
fair statement of the results of the interim periods shown have
been made. See Notes to Consolidated Financial Statements included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 for additional information relating to the
Company's financial statements.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
<S> <C> <C> <C>
Bananas and other fresh produce $ 48,791$ 42,918$
45,721
Other food products 38,067 56,043 65,995
Growing crops 119,685 117,839 116,978
Materials and supplies 78,030 75,206 88,339
Other 14,499 15,067
16,497
$299,072 $307,073 $333,530
</TABLE>
In February 1994, the Company completed the sale of $175 million
principal amount of 9-1/8% Senior Notes due 2004 and 2,875,000
shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A.
The net proceeds from the offerings totaled approximately $310
million. In March, most of these proceeds were used to prepay all
of the outstanding principal amount of the Company's 11-7/8%
Subordinated Debentures ($125 million), 10-1/4% Subordinated
Debentures ($42 million), 9-1/8% Subordinated Debentures ($18
million) and a portion ($45 million principal amount) of its
10-1/2% Subordinated Debentures. These prepayments resulted in an
extraordinary loss of $22.8 million, consisting primarily of write-
offs of unamortized discounts and $5 million of call premiums.
In accordance with its long-standing policy to periodically
hedge transactions denominated in foreign currencies, at March 31,
1994, the Company had approximately $250 million of foreign
exchange forward contracts to ensure conversion rates on a like
amount of foreign sales commitments. The fair value of these
contracts, based on quoted market prices, was not significant.
CHIQUITA BRANDS INTERNATIONAL, INC.
MANAGEMENT'S ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
OPERATIONS
Net sales decreased to $669 million for the quarter ended March
31, 1994 from $731 million for the same quarter last year primarily
as a result of reductions in banana volume caused by the European
Union's ("EU") imposition of quota restrictions in July 1993. The
increase in operating income for the quarter was generated by the
Company's banana operations. Worldwide banana prices were on
average higher, which more than offset the impact of lower volume
on operating income.
Total operating expenses for the quarter reflect reductions
associated with lower banana volumes. However, depreciation costs
are higher as a result of ship deliveries during 1993 and early
1994 which replaced rented capacity. Although interest expense
increased slightly during the quarter, financing costs will be
reduced in future periods as a result of the Company's recent
refinancing activities (see "Notes to Consolidated Financial
Statements").
The effective tax rate is affected by the level and mix of
income between various domestic and foreign jurisdictions in which
the Company operates.
FINANCIAL CONDITION
Cash provided by operations improved by $22 million during the
first quarter as compared to the same period of 1993 as a result of
improved earnings and lower working capital levels. Overall, cash
increased by $60 million during the quarter due primarily to an
excess of proceeds from new financings over amounts used to retire
existing higher cost debt and capital expenditures of $47 million.
First quarter 1994 capital expenditures include $38 million for
delivery of a new ship and related equipment ordered in prior
years, of which $31 million was financed. The Company has a
remaining commitment of approximately $30 million at March 31, 1994
to purchase one remaining ship under its multi-year investment
spending program. Chiquita has secured financing for approximately
three-fourths of this commitment.
DISCONTINUED OPERATIONS
In February 1994, the Company's Meat Division sold its specialty
meat operations for approximately $50 million in cash. The sale
proceeds were used primarily to reduce short-term borrowings under
the Meat Division's credit facility. In March 1994, the Meat
Division made a scheduled payment of $4 million on its secured debt
held by Chiquita. During the first quarter of 1994, the Meat
Division continued to produce improved operating profits (which are
not included in Chiquita's consolidated results of operations) on
approximately $390 million in net sales. The Company is continuing
its marketing efforts and expects to complete the divestiture of
the remaining Meat Division operations by the end of 1994.
<PAGE>
OTHER
On July 1, 1993, the EU implemented a new quota effectively
restricting the volume of Latin American bananas imported into the
EU to approximately 80% of prior levels. The quota is administered
through a licensing system and grants preferred status to producers
and importers within the EU and its former colonies, while imposing
new quotas and tariffs on bananas imported from other sources,
including Latin America, the Company's primary source of fruit.
Prior to its implementation, the principles underlying the new
regulation were ruled illegal under the General Agreement on
Tariffs and Trade ("GATT") by a GATT dispute settlement panel. In
early 1994, a second GATT dispute settlement panel ruled against
the current EU regulation in favor of certain Latin American
countries.
The GATT rulings in favor of the Latin American countries could
result in an increase in the total volume of Latin American
bananas, including banana volume of the Company, which could be
imported under the quota. However, there can be no assurance that
the EU will comply, or the manner in which it would comply, with
such rulings. In late March, an administrative arm of the EU
announced that it had agreed with some, but not all, of the Latin
American banana producing countries to slightly increase the import
quota, lower import tariffs and establish an export quota and
licensing system for those countries, granting them
disproportionately higher levels of banana exports to Europe. In
return, these countries agreed to drop their GATT challenges to the
existing quota regime. The agreement is opposed by numerous EU
member states as well as the Latin American countries not covered
by the agreement. Legal challenges may also be forthcoming.
Therefore, it is not certain whether this agreement will be
implemented or, if it is, the form, timing and impact of any
implementation.
Part II - Other Information
Item 1 - Legal Proceedings
Reference is made to Part I, Item 3 - "Legal Proceedings" in
the Company's 1993 Form 10-K and the discussion of the suits
filed in Texas against manufacturers and banana industry users
of DBCP. In April 1994, all five cases pending in state court
were removed to federal court. The suits are now pending as
follows: Franklin Rodriguez Delgado, et al., v. Shell Oil
Company, et al., Del Monte Fresh Produce, N.A. v. Dead Sea
Bromine Co. Ltd., et al., Civil Action No. H-94-1337 (U.S.
District Court, Southern District of Texas, Houston Division);
Jorge Colindres Carcamo, et al. (formerly Armando Ramos
Bermudez, et al.), Individually and on Behalf of all others
similarly situated v. Shell Oil Company, et al., The Dow
Chemical Company v. Dead Sea Bromine Co. Ltd., et al., Civil
Action No. H-94-1359 (U.S. District Court, Southern District of
Texas, Houston Division); Narcisco Borja, et al. v. Shell Oil
Company, et al., The Dow Chemical Company, et al. v. Dead Sea
Bromine Co. Ltd., et al., Civil Action 94-CV-689D (U.S. District
Court, Northern District of Texas, Dallas Division); Juan Ramon
Valdez, et al. v. Shell Oil Company, et al., The Dow Chemical
Company v. Dead Sea Bromine Co. Ltd., et al., Civil Action 2-94-
CV-69 (U.S. District Court, Eastern District of Texas, Marshall
Division); and Ramon Rodriguez Rodriguez, et al. v. Shell Oil
Company, et al., Shell Oil Company, et al. v. Dead Sea Bromine
Co. Ltd., et al., Civil Action No. L-94-49 (U.S. District Court,
Southern District of Texas, Laredo Division).
Item 2 - Changes in Securities
(b)On February 15, 1994, the Company issued 2,875,000 shares of
$2.875 Non-Voting
Cumulative Preferred Stock, Series A (the "Series A Shares").
The Series A Shares are non-voting; have a liquidation
preference of $50.00 per share; pay preferred annual dividends
of $2.875 per share; and are convertible into shares of the
Company's Capital Stock, par value $.33 per share (the "Common
Stock"), at specified conversion rates at the option of the
holder and, after February 15, 1997, at the option of the
Company. The Series A Shares are not redeemable and there is no
redemption or sinking fund obligation with respect to the Series
A Shares.
The preferred dividend and liquidation preference provide
holders of Series A Shares a priority over holders of Common
Stock. In addition, if the Company fails to pay six or more
quarterly dividends on the Series A Shares, holders of Series A
Shares have the right to elect two directors separate from the
regularly elected directors. The Series A Shares rank pari
passu as to dividends and upon liquidation with the Company's
shares of Mandatorily Exchangeable Cumulative Preference Stock,
Series C (the "Series C Shares"), which are represented by the
Company's $1.32 Depositary Shares. The Series C Shares have
comparable voting rights to the Series A Shares in the event of
a dividend arrearage.
On February 15, 1994, the Company also issued $175,000,000
of its 9-1/8% Senior Notes due 2004 (the "Senior Notes"). The
Senior Notes are general unsecured obligations of the Company
and rank pari passu with the Company's existing and future
senior unsecured indebtedness and senior to the Company's
existing and future subordinated indebtedness. The Company
currently has outstanding approximately $66 million principal
amount of 10-1/2% Subordinated Debentures due August 1, 2004,
which are registered pursuant to Section 12(b) of the Securities
Exchange Act of 1934, and an aggregate of $358 million of other
obligations, all of which are subordinate to the Senior Notes.
Item 6 - Exhibits and Reports on Form 8-K Page
Numbers
(a)
Exhibit 11 - Computation of Earnings Per Common Share 12 - 13
(b) The following reports on Form 8-K were filed for the
quarter ended March 31, 1994:
January 21, 1994 - to report statements, included in a shelf
Registration Statement on Form S-3 No. 33-51995, concerning EU
banana regulation, results of operations and discontinued Meat
Division operations.
January 28, 1994 - to report statements, included in Pre-
Effective Amendment No. 1 to Registration Statement on Form S-3
No. 33-51995, concerning expected 1993 fourth quarter and year
end results of operations.
February 8, 1994 - to report that the Company had entered into
Terms Agreements relating to its Senior Notes and Series A
Shares, and including as exhibits documents setting forth the
terms of such securities and offerings.
February 28, 1994 - to report the Company's announcement of 1993
results of operations and the sale by the Company's John Morrell
& Co. subsidiary of its Specialty Meat Group.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A.
Tsacalis
William A. Tsacalis
Vice President and Controller
(Chief Accounting Officer)
May 16, 1994
Exhibit 11
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1994 1993
A. Primary earnings (loss) per common share
<S> <C> <C>
Income from continuing operations $35,534 $27,530
Dividends on Series A Preferred Stock (1,033) --
Income from continuing operations
available to common shares 34,501 27,530
Discontinued operations -- --
Income before extraordinary item 34,501 27,530
Extraordinary loss from prepayment of debt(22,840) --
Net income used to calculate primary earnings
per share $11,661 $27,530
Shares used in calculation of per share data:
Weighted average common and equivalent Series C
preference shares outstanding 51,806 51,395
Dilutive effect of assumed exercise of certain
stock options and warrants 1,370 513
Weighted average common shares used to
calculate primary earnings (loss) per share 53,176
51,908
Primary earnings (loss) per common share:
- Continuing operations $ .65 $ .53
- Discontinued operations -- --
- Extraordinary loss (.43) --
- Net income $ .22 $ .53
</TABLE>
<PAGE>
Exhibit 11 (continued)
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1994 1993
B. Fully diluted earnings (loss) per common share
<S> <C> <C>
Income from continuing operations available
to common shares $34,501 $27,530
Add back dividends as a result of assumed
conversion of Series A Preferred Stock 1,033 --
Additional income as a result of assumed
conversion of convertible debentures -- --
Income from continuing operations used to
calculate fully diluted earnings per share 35,534
27,530
Discontinued operations -- --
Income before extraordinary item 35,534 27,530
Extraordinary loss from prepayment of debt
(22,840) --
Net income used to calculate fully diluted
earnings per share $12,694 $27,530
Shares used in calculation of per share data:
Weighted average common shares used to
calculate primary earnings (loss) per share 53,176
51,908
Additional shares resulting from assumed exercise of
options and assumed conversions of Series A Preferred
Stock and convertible subordinated debentures 4,125--
Weighted average common shares used to calculate
fully diluted earnings (loss) per share 57,301
51,908
Fully diluted earnings (loss) per common share:
- Continuing operations
$ .62 $ .53
- Discontinued
operations -- --
- Extraordinary loss
(.40) --
- Net income $ .22
$ .53
</TABLE>
