<PAGE> 1
Rule 424(b)(2)
Registration Statement No. 33-51995
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 28, 1994)
$175,000,000
[LOGO] CHIQUITA BRANDS INTERNATIONAL, INC.
9 1/8% SENIOR NOTES DUE 2004
---------------------------
Interest Payable March 1 and September 1
---------------------------
Chiquita Brands International, Inc. (the "Company") is offering (the
"Offering") $175 million aggregate principal amount of 9 1/8% Senior Notes due
2004 (the "Senior Notes"). Interest on the Senior Notes is payable semi-annually
on March 1 and September 1 each year commencing September 1, 1994. The Senior
Notes may not be redeemed by the Company prior to maturity and do not provide
for any sinking fund. Each holder of Senior Notes may require the Company to
repurchase such holder's Senior Notes in the event of a Change of Control
Triggering Event (as defined) at 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of repurchase.
The Senior Notes will be general unsecured obligations of the Company and
will rank pari passu with the Company's existing and future senior unsecured
Indebtedness (as defined). The Senior Notes are structurally subordinated to all
existing and future Indebtedness of the Company's subsidiaries, which
Indebtedness totalled approximately $748 million at September 30, 1993.
Concurrently with the Offering, the Company is making a public offering
through a separate prospectus supplement (the "Preferred Stock Offering") of
2,500,000 shares of convertible preferred stock with a liquidation preference of
$50 per share (the "Preferred Stock"). The Offering is not contingent upon the
consummation of the Preferred Stock Offering. See "Use of Proceeds."
SEE "INVESTMENT CONSIDERATIONS" IN THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SENIOR NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discounts(2) Company(1)(3)
- -----------------------------------
<S> <C> <C> <C>
Per Senior Note.................... 100.00% 2.75% 97.25%
- -----------------------------------
Total.............................. $175,000,000 $4,812,500 $170,187,500
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from February 15, 1994.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $400,000.
---------------------------
The Senior Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of the Senior Notes
will be made at the offices of Lehman Brothers Inc., New York, New York, on or
about February 15, 1994.
---------------------------
LEHMAN BROTHERS
KIDDER, PEABODY & CO.
INCORPORATED
SMITH BARNEY SHEARSON INC.
February 8, 1994
<PAGE> 2
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the detailed
information and the financial statements appearing elsewhere in this Prospectus
Supplement or incorporated by reference in the accompanying Prospectus.
THE COMPANY
Chiquita Brands International, Inc. ("Chiquita" or the "Company") is a
leading international marketer, processor and producer of quality fresh and
processed food products. Chiquita produces and markets an extensive line of
fresh fruits and vegetables sold under the Chiquita([ )and other brand names.
These products include tropical fruit, such as bananas, pineapples, mangos,
papaya, kiwi and citrus, and a wide variety of other fresh produce. The core of
the Company's operations is the marketing, distribution and sourcing of bananas.
The Company's operations also include brand extensions, such as fruit and
vegetable juices and banana puree, and other processed fruits and vegetables
marketed worldwide under the Chiquita and other brand names; wet and dry salads
sold under various brand names; and consumer packaged foods marketed in Latin
America under various brand names.
During the fourth quarter of 1992, the Company adopted a plan of disposal
for its Meat Division and classified it as a discontinued operation. The Meat
Division encompasses a wide range of value-added fresh meats and processed meat
products sold in the United States nationally under the John Morrell and Mosey's
brand names and under a number of regional brand names. See "Recent Developments
- -- Discontinued Operations."
American Financial Corporation ("AFC") owns, either directly or through its
subsidiaries, approximately 47% of Chiquita's outstanding shares of Common Stock
and 31% of Chiquita's $1.32 Depositary Shares. All of the outstanding common
stock of AFC is owned by Carl H. Lindner and members of his family.
Chiquita is a New Jersey corporation. The address of its principal
executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 784-8011. Unless the context indicates otherwise, the
term "Chiquita" or the "Company" also includes the subsidiaries of the Company.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
THE OFFERING
<TABLE>
<S> <C>
Securities Offered...................... $175,000,000 aggregate principal amount of 9 1/8%
Senior Notes due 2004 (the "Senior Notes").
Maturity................................ March 1, 2004.
Interest Payment Dates.................. March 1 and September 1, commencing September 1,
1994.
Ranking................................. The Senior Notes will be general unsecured
obligations of the Company and will rank pari passu
with the Company's existing and future senior
unsecured Indebtedness. The Senior Notes are
structurally subordinated to all existing and
future Indebtedness of the Company's subsidiaries.
Optional Redemption..................... The Senior Notes may not be redeemed by the Company
prior to maturity.
Certain Restrictions.................... The Indenture relating to the Senior Notes
restricts, among other things, the ability of the
Company and its subsidiaries, subject to certain
exceptions, to (i) incur additional Indebtedness,
(ii) create certain Liens, (iii) engage in sale and
leaseback transactions, (iv) make Restricted
Payments, (v) engage in transactions with Related
Persons and (vi) merge or consolidate with or
transfer all or substantially all of its assets to
another entity.
Change of Control....................... If a Change of Control Triggering Event (as
defined) occurs at any time, each holder of Senior
Notes will have the right to require the Company to
repurchase such holder's Senior Notes at 101% of
the principal amount thereof, plus accrued and
unpaid interest to the date of repurchase. See
"Description of Senior Notes."
Concurrent Offering..................... Concurrently with the Offering, the Company is
making a public offering through a separate
prospectus supplement (the "Preferred Stock
Offering") of 2,500,000 shares of convertible
preferred stock with a liquidation preference of
$50 per share. The Offering is not contingent upon
the consummation of the Preferred Stock Offering.
Use of Proceeds......................... The net proceeds from the sale of the Senior Notes
offered hereby, expected to be approximately
$169,787,500, will be used to repay the Company's
11 7/8% Subordinated Debentures due May 1, 2003 and
other outstanding subordinated debt of the Company.
The net proceeds from the Preferred Stock Offering,
expected to be approximately $120,275,000, will be
used to repay other outstanding subordinated debt
of the Company and/or to repay outstanding debt of
the Company's subsidiaries. Pending application of
the net proceeds from such offerings as described
herein, such net proceeds may be invested in
short-term investments or used for general
corporate purposes. See "Use of Proceeds."
</TABLE>
S-3
<PAGE> 4
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below for the years
ended December 31, 1988 through 1992 were derived from the Company's audited
consolidated financial statements. Information presented below for interim
periods was derived from the Company's unaudited consolidated financial
statements and in the opinion of management includes all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
results of operations for the interim periods. This information should be read
in conjunction with the Company's Consolidated Financial Statements and notes
thereto and "Management's Analysis of Operations and Financial Condition"
included or incorporated by reference in the Company's Reports on Forms 10-K and
10-Q for such periods. Interim results are subject to significant seasonal
variations and are not necessarily indicative of the results of operations for a
full fiscal year.
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................ $1,965,790 $2,102,289 $2,723,250 $2,604,128 $2,186,452 $1,892,657 $1,679,429
Operating expenses
Cost of sales...................... 1,520,718 1,736,968 2,309,425 2,027,669 1,698,557 1,497,306 1,333,688
Selling, general and administrative
expenses......................... 246,122 279,966 368,675 324,240 284,299 205,780 205,712
Depreciation....................... 75,484 56,645 80,438 54,401 37,416 31,825 25,797
Restructuring and reorganization... -- -- 61,300 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
1,842,324 2,073,579 2,819,838 2,406,310 2,020,272 1,734,911 1,565,197
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)............ 123,466 28,710 (96,588) 197,818 166,180 157,746 114,232
Interest income...................... 17,512 32,830 43,301 47,319 31,461 28,169 25,376
Interest expense..................... (126,612) (111,829) (155,036) (88,406) (55,361) (53,952) (38,923)
Other income (expense), net.......... 5,969 (8,979) (8,385) 3,278 11,251 3,077 3,731
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations before income taxes... 20,335 (59,268) (216,708) 160,009 153,531 135,040 104,416
Income taxes......................... (11,000) (10,000) (5,000) (49,100) (57,700) (51,200) (47,200)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations....................... 9,335 (69,268) (221,708) 110,909 95,831 83,840 57,216
Discontinued operations(1)......... -- (21,355) (62,332) 17,586 (1,913) (16,073) 3,147
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................... $ 9,335 $ (90,623) $ (284,040) $ 128,495 $ 93,918 $ 67,767 $ 60,363
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Fully diluted earnings (loss) per
common share:
Continuing operations.............. $ .18 $ (1.33) $ (4.28) $ 2.19 $ 2.24 $ 2.05 $ 1.38
Discontinued operations(1)......... -- (.41) (1.20) .33 (.04) (.38) .07
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ .18 $ (1.74) $ (5.48) $ 2.52 $ 2.20 $ 1.67 $ 1.45
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed
charges(2)......................... 1.08 --(2) --(2) 1.73 2.13 2.20 2.18
Ratio of earnings to combined fixed
charges and preferred stock
dividends(2)....................... 1.06 --(2) --(2) 1.73 2.13 2.20 2.18
BALANCE SHEET DATA:
Cash and marketable securities..... $ 194,820 $ 491,206 $ 413,181 $ 825,447 $ 318,246 $ 287,658 $ 188,619
Working capital.................... 301,966 648,775 482,338 960,093 433,424 394,640 345,784
Total assets(1).................... 2,821,898 3,034,410 2,880,624 2,937,344 1,913,674 1,373,480 1,230,946
Short-term debt.................... 189,966 196,198 229,286 187,821 106,698 58,540 18,236
Long-term debt (other than
subordinated debt)............... 805,607 717,656 778,784 571,493 221,884 85,398 69,950
Subordinated debt.................. 633,530 632,226 632,535 631,346 272,298 299,852 297,764
Shareholders' equity............... 663,000 874,252 674,887 967,925 687,709 463,954 400,792
OTHER DATA:
Operating income (loss) plus
depreciation and amortization.... $ 204,351 $ 90,390 $ (9,079) $ 258,076 $ 208,963 $ 194,919 $ 144,482
Capital expenditures(3)............ 174,185 381,578 472,273 395,641 312,698 117,425 63,621
Dividends declared per common
share............................ .39 .49 .66 .55 .35 .20 .20
<FN>
- ---------------
(1) Includes net operating results (and, in 1992, provision for loss on
disposal) of the Company's Meat Division operations, which have been classified
as discontinued operations. See "Recent Developments -- Discontinued Operations"
and Note 3 to the Company's Consolidated Financial Statements for the year ended
December 31, 1992, included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1992. All other Income Statement Data presented above
have been restated to exclude amounts relating to the Meat Division. The
Company's net investment in discontinued operations, which is included in "Total
assets", aggregated approximately $42 million at September 30, 1993. The net
assets of discontinued operations consist principally of property, plant and
equipment and trademarks, and at September 30, 1993 include a seasonally high
$53 million of short-term borrowings under an $80 million credit facility
secured by Meat Division working capital. These net assets also include net
liabilities recorded for Meat Division defined benefit pension plans of
approximately $40 million at September 30, 1993.
(2) For purposes of calculating the ratios of earnings to fixed charges and
of earnings to combined fixed charges and preferred stock dividends, earnings
are calculated as the sum of the income (loss) from continuing operations before
income taxes, fixed charges (other than capitalized interest) and amortization
of capitalized interest, less undistributed earnings of
less-than-fifty-percent-owned investees. Fixed charges consist of interest on
indebtedness (including amortization of debt discount and capitalized interest)
and a portion (one-third) of rent considered to represent interest cost.
Preferred dividends are dividends on shares of Chiquita's Mandatorily
Exchangeable Cumulative Preference Stock, Series C, which have been outstanding
since October 1992. Fixed charges and combined fixed charges and preferred stock
dividends both exceeded earnings by approximately $80 million for the nine
months ended September 30, 1992, and approximately $239 million for the year
ended December 31, 1992.
(3) Includes capital expenditures in connection with the acquisition of
ships and containers of approximately $120 million during the nine months ended
September 30, 1993, $225 million during the nine months ended September 30,
1992, $280 million in 1992, $180 million in 1991, $200 million in 1990 and $20
million in 1989.
</TABLE>
S-4
<PAGE> 5
RECENT DEVELOPMENTS
EUROPEAN COMMUNITY BANANA REGULATION
On July 1, 1993, the European Community ("EC") implemented a new quota
effectively restricting the volume of Latin American bananas imported into the
EC to approximately 80% of prior levels. The quota is administered through a
licensing system. Challenges to the quota and many matters regarding
implementation and administration of the quota remain to be resolved. In May
1993, the principles underlying the new regulation that discriminate against
Latin American banana exporting countries in favor of certain African, Caribbean
and Pacific countries were ruled illegal under the General Agreement on Tariffs
and Trade ("GATT") by a GATT dispute settlement panel. In December 1993, EC
representatives discussed a tentative, even more discriminatory proposal with a
few Latin American banana producing countries. The tentative proposal was
rejected by an overwhelming majority of the Latin American countries. As widely
reported in the press, in January 1994 a GATT dispute settlement panel ruled on
a second lawsuit against the current EC regulation in favor of the Latin
American countries. GATT rulings in favor of the Latin American countries could
result in an increase in the total volume of Latin American bananas, including
banana volume of the Company, which could be imported under the quota. However,
there can be no assurance that the EC will comply, or the manner in which it
would comply, with such rulings. (See "Results of Operations" below for
discussion of the impact of the EC quota on current operations.)
RESULTS OF OPERATIONS
Net sales for the third quarter of 1993 of $552 million and first nine
months of 1993 of $1.966 billion declined from the comparable prior year amounts
of $612 million and $2.102 billion primarily as a result of lower banana volumes
and prices. Nevertheless, for the third quarter of 1993, the Company reported a
reduced net loss of $25.9 million, or $.50 per share, compared to a 1992 third
quarter net loss of $79.4 million, or $1.55 per share (including a loss on
discontinued operations of $7.5 million, or $.15 per share). For the nine months
ended September 30, 1993, the Company reported net income of $9.3 million, or
$.18 per share, as compared to a net loss of $90.6 million, or $1.74 per share,
in the same period of 1992 (which included a loss on discontinued operations of
$21.4 million, or $.41 per share). This improvement is attributable to the
continuing benefits of Chiquita's multi-year investment spending program and the
ongoing impact of its restructuring and cost reduction efforts. These programs
address all aspects of the banana business including a decreased reliance on
high-cost purchased fruit, enhanced production practices, shipping fleet
realignment, reorganization and consolidation of marketing organizations, and
overhead reductions.
Since imposition of the new EC quota regime on July 1, 1993, prices within
the EC have increased to a higher level than the levels in prior years. Banana
prices in other worldwide markets have been lower than in previous years, as
displaced EC volume has entered those markets.
The favorable cost comparisons achieved during the first nine months of
1993 as a result of the Company's investment spending and cost reduction
programs have continued throughout the fourth quarter. Fourth quarter banana
price levels in the EC remained higher than pre-quota price levels of the 1992
fourth quarter. However, EC prices weakened during the fourth quarter from
earlier post-quota levels partially as a result of the EC's late issuance of
fourth quarter import licenses and its announcement of an expiration date for
these licenses that was earlier than marketplace expectations. The Company
expects to report a fourth quarter 1993 net loss in the range of approximately
$52 to $67 million, or $1.00 to $1.30 per share, compared to a net loss of $193
million, or $3.77 per share (including restructuring and reorganization charges
of $61 million, or $1.18 per share, and a loss from discontinued operations of
$41 million, or $.80 per share) for the same period last year.
For the year ended December 31, 1993, the Company expects to report a net
loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to
a net loss of $284 million, or $5.48 per share (including restructuring and
reorganization charges of $61 million, or $1.18 per share, and a loss from
discontinued operations of $62 million, or $1.20 per share), reported in 1992.
Based on the expected range of results above, earnings before interest, income
tax, depreciation and amortization ("EBITDA") for 1993 are estimated to be in
the range of $214 to $229 million. For 1992, EBITDA excluding restructuring and
reorganization charges and discontinued operations was $44 million.
S-5
<PAGE> 6
Chiquita also expects that the improved cost trend will continue into 1994.
In addition, the EC quota impact could cause first half 1994 banana prices in
the EC to exceed pre-quota first half 1993 levels as they have since
implementation of the quota. First half 1994 prices outside the EC could
continue at levels lower than in previous years as they have since
implementation of the quota, although the continuing growth in per capita
consumption of bananas outside the EC could mitigate any such decline.
DISCONTINUED OPERATIONS
During the fourth quarter of 1992, after evaluation of reorganization plans
announced earlier that year and completion of other preparatory actions, the
Company adopted a plan of disposal for all remaining Meat Division operations.
Accordingly, these operations were classified as discontinued operations and
were deconsolidated. (See Note 3 to the Company's Consolidated Financial
Statements for the year ended December 31, 1992, included in the Company's 1992
10-K.)
Pursuant to the plan, the Company immediately completed the sale of a major
fresh pork processing facility in December 1992.
During 1993, the Company engaged in extensive activity with respect to
execution of the balance of its disposal plan. Numerous proposals for the
purchase of individual components of the Meat Division were received from a
larger number of buyers than originally expected. Although progress under the
plan has been slower than anticipated, partially as a result of the Company
evaluating all these proposals in the interest of maximizing shareholder value,
the Company has made significant progress in the implementation of its disposal
plan. This progress includes:
- successful ongoing cost reduction efforts that have contributed to the
improvement in Meat Division operating results to approximately breakeven
levels for 1993.
- progress toward obtaining further substantial cost reductions for 1994
and beyond relating to retiree medical costs. In June 1993, the Company
received a favorable court ruling on its previously filed litigation that
confirms its right to unilaterally reduce medical benefits of retired
hourly employees. This ruling is being appealed by the union and a
hearing on the appeal is scheduled for February 1994.
- receiving subsidies and concessions from the State of South Dakota and
the City of Sioux Falls that will enhance the operating profitability of
the Sioux Falls plant. These incentives were offered in September 1993 by
newly installed state and city administration officials who took office
in April 1993 after their predecessors, including the Governor of South
Dakota, were killed in a plane crash on their return from a meeting to
discuss incentives with Company and Meat Division representatives.
- obtaining financial incentives and concessions in November 1993 from the
City of Sioux City, Iowa and the local labor union to enhance the
salability of the Sioux City pork processing plant as an operating
facility.
- signing a letter of intent in December 1993 for the sale of the entire
Specialty Meat Group. The Company is presently negotiating with this
buyer and expects to complete the sale of this group in the first half of
1994.
- obtaining a new stand-alone revolving credit facility in June 1993 to
fund the Meat Division's working capital needs.
The Company also continues to be engaged in vigorous marketing efforts with
respect to the remaining Meat Division operations that now reflect improved
prospects as a result of the favorable developments described above. It expects
to complete the divestitures of these operations by the end of 1994.
The Company has reevaluated its provision for loss on discontinued
operations recorded in 1992 and believes it is adequate to provide for any
losses on disposition. The developments during 1993 regarding the Company's Meat
Division have not had and are not expected to have a material adverse effect on
the Company's liquidity, financial condition or results of operations.
Net sales from discontinued operations for the nine months ended September
30, 1993 were approximately $1.2 billion.
S-6
<PAGE> 7
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Senior
Notes offered hereby will be approximately $169,787,500, which proceeds will be
used to repay the Company's 11 7/8% Subordinated Debentures due May 1, 2003 and
other outstanding subordinated debt of the Company. The net proceeds to be
received by the Company from the Preferred Stock Offering (if such offering is
consummated) will be approximately $120,275,000, which proceeds will be used to
repay other outstanding subordinated debt of the Company and/or to repay
outstanding debt of the Company's subsidiaries. The Company will determine which
debt to repay with the remaining net proceeds from the Offering and with the net
proceeds from the Preferred Stock Offering based on factors including, without
limitation, prevailing market interest rates, redemption prices and other terms
of the debt. The Company expects that the application of such net proceeds will
be completed within one year. Pending application of the net proceeds from such
offerings as described herein, such net proceeds may be invested in short-term
investments or used for general corporate purposes.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company at September 30, 1993 and as adjusted to give effect to the
application of the aggregate proceeds from the sale of the Senior Notes offered
hereby and the issuance of the Preferred Stock (assuming no exercise of the
over-allotment option provided for therein) as described in "Use of Proceeds."
The table excludes (a) the effect of any loss which might result from early
retirement of any of the Company's existing debt and (b) fees and expenses
associated with the offerings of the Senior Notes and the Preferred Stock. Such
loss, fees or expenses would not be material to the Company's total
shareholders' equity. The table should be read in conjunction with "Selected
Consolidated Financial Data" appearing elsewhere in this Prospectus Supplement
and the Company's Consolidated Financial Statements and notes thereto. The
amounts below do not include debt of the Company's discontinued operations (see
Note 1 to "Selected Consolidated Financial Data").
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
-------------------------
AS
ACTUAL ADJUSTED
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Notes and loans payable.................................... $ 114,298 $ 114,298
Long-term debt due within one year......................... 75,668 75,668
---------- ----------
Total short-term debt................................. $ 189,966 $ 189,966
---------- ----------
---------- ----------
Long-term debt:
Long-term debt of parent company
Senior debt........................................... $ 247,154 $ 247,154
Senior Notes offered hereby........................... -- 175,000
Subordinated debt..................................... 633,530 (a)
Other notes and loans................................. 53 53
Long-term debt of subsidiaries(b).......................... 558,400 (a)
---------- ----------
Total long-term debt.................................. 1,439,137 1,314,137
---------- ----------
Shareholders' equity(c):
Preferred and preference stock (648,310 shares
outstanding)............................................. 52,270 52,270
Preferred Stock offered in the Preferred Stock Offering
(2,500,000 shares)....................................... -- 125,000
Capital stock, $.33 par value per share (48,242,090 shares
outstanding)............................................. 16,081 16,081
Capital surplus............................................ 491,433 491,433
Retained earnings.......................................... 103,216 103,216
---------- ----------
Total shareholders' equity............................ 663,000 788,000
---------- ----------
Total long-term capitalization........................ $2,102,137 $2,102,137
---------- ----------
---------- ----------
</TABLE>
- ---------------
(a) See "Use of Proceeds."
(b) For discussion of aggregate amounts to be financed relating to capital
commitments for ships, see "Management's Analysis of Operations and Financial
Condition -- Financial Condition" included in the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993. See also Note 12 to the
Company's Consolidated Financial Statements for the year ended December 31, 1992
for discussion of operating lease commitments for ships and other facilities.
(c) Excludes approximately 9.0 million shares of Common Stock reserved at
September 30, 1993 for issuance in connection with warrants and options and 3.9
million shares reserved at September 30, 1993 for purchase or Company
contributions under other employee benefit plans. See Notes 10 and 11 to the
Company's Consolidated Financial Statements for the year ended December 31,
1992. Also excludes approximately 3.2 million shares reserved for issuance upon
conversion of the Company's 7% Convertible Subordinated Debentures due 2001 and
up to 25.0 million shares to be reserved for issuance upon conversion of the
Preferred Stock (assuming no exercise of the over-allotment option). Also
excludes approximately 6.0 million shares reserved for issuance in connection
with dividends on and conversion of the Company's $1.32 Depositary Shares.
As of September 30, 1993, the Company had $194.8 million of cash and
equivalents.
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<PAGE> 9
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the Senior Notes
offered hereby (referred to in the Prospectus as "Senior Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of Senior Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
The 9 1/8% Senior Notes due March 1, 2004 (the "Senior Notes") are to be
issued as a series of Senior Debt Securities under the Indenture, dated as of
February 15, 1994, between the Company and The Fifth Third Bank, as Trustee (the
"Trustee"), which is also described in the accompanying Prospectus.
The Senior Notes will be general unsecured obligations of the Company and
will rank pari passu with the Company's existing and future senior unsecured
Indebtedness. The Senior Notes are structurally subordinated to all existing and
future Indebtedness of the Company's subsidiaries, which Indebtedness totalled
$748 million at September 30, 1993.
The Senior Notes will be limited to $175,000,000 aggregate principal amount
and will mature on March 1, 2004. The Senior Notes will bear interest at the
rate per annum shown on the cover of this Prospectus Supplement from February
15, 1994 or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on March 1 and September 1 of
each year, commencing September 1, 1994, to the person in whose name a Senior
Note (or any predecessor Senior Note) is registered at the close of business on
February 15 or August 15, as the case may be, next preceding such Interest
Payment Date. The Senior Notes are not deemed to have been issued with "original
issue discount" within the meaning of the Internal Revenue Code of 1986, as
amended.
The Senior Notes may not be redeemed by the Company prior to maturity and
do not provide for any sinking fund.
The Senior Notes will be issued only in fully registered form in
denominations of $1,000 and integral multiples thereof. Principal and interest
will be payable, and the Senior Notes will be exchangeable and transferable, at
the office or agency of the Company maintained or designated for such purposes
(which initially will be Securities Transfer Company located in Cincinnati,
Ohio); provided that payment of interest may be made at the option of the
Company by check mailed to the registered holders of the Senior Notes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms and for the definitions of other defined terms used in this
Prospectus Supplement and not defined below.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets of such Person.
"Adjusted Consolidated Assets" on any date means the amount of (i) all
assets of the Company and the Subsidiaries on a consolidated basis less (ii) all
Indebtedness of Subsidiaries on a consolidated basis, in each case as determined
as of the last day of the immediately preceding fiscal quarter in accordance
with GAAP.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Change of Control Triggering Event" means an event or series of events by
which (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than Permitted Lindner Holders is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 30% of the total voting power of all classes of capital stock then
outstanding of the Company
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<PAGE> 10
normally entitled to vote in elections of directors ("Voting Shares"), provided
that the Permitted Lindner Holders "beneficially own" (as so defined) a lesser
percentage of the Voting Shares than such other person and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company; (ii) the Company
consolidates with or merges into another corporation or conveys, transfers or
leases all or substantially all of its assets to any person, or any corporation
consolidates with or merges into the Company, in either event pursuant to a
transaction in which the outstanding Voting Shares of the Company are changed
into or exchanged for cash, securities or other property, other than any such
transaction between the Company and a wholly-owned Subsidiary; (iii) the Company
or any Subsidiary purchases or otherwise acquires, directly or indirectly,
beneficial ownership of 30% or more of the Company's capital stock within any
12-month period; (iv) on any date, the individuals who at the beginning of the
two-year period immediately preceding such date constituted the Company's Board
of Directors (together with any new directors whose election by the Company's
Board of Directors, or whose nomination for election by the Company's
shareholders, was approved by a vote of at least 66 2/3% of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors then in office; or (v) on
any day (a "Calculation Date") the Company makes any distribution or
distributions of cash, property or securities (other than regular quarterly
dividends, Common Stock, preferred stock which is substantially equivalent to
Common Stock or rights to acquire such stock) to holders of capital stock of the
Company or purchases or otherwise acquires capital stock (other than upon the
conversion of a security convertible into capital stock) of the Company and the
sum of the Fair Market Value of such distribution or purchase, plus the Fair
Market Value of all other such distributions and purchases which have occurred
during the prior year, exceeds 30% of the Fair Market Value of the Company's
outstanding Common Stock. This percentage is calculated on each Calculation Date
by determining the percentage of the Fair Market Value of the Company's
outstanding Common Stock as of such Calculation Date which is represented by the
Fair Market Value of the distributions and purchases which have occurred on such
date and adding to that percentage all of the percentages which have been
similarly calculated on the dates of all such distributions and purchases during
the prior year.
"Consolidated Interest Expense" means for any period the sum of (i) the
aggregate of the interest expense on Indebtedness of the Company and its
Subsidiaries for such period, on a consolidated basis, plus (ii) without
duplication, that portion of capital lease rentals of the Company and its
Subsidiaries representative of the interest factor for such period, in each case
as determined in accordance with GAAP.
"Consolidated Net Income" means for any period the net income or loss of
the Company and its Subsidiaries for such period on a consolidated basis as
determined in accordance with GAAP adjusted by excluding the after-tax effect of
(i) net gains or losses in respect of dispositions of assets other than in the
ordinary course of business, (ii) any gains or losses from currency exchange
transactions not in the ordinary course of business consistent with past
practice, (iii) the net income of any Subsidiary to the extent that dividends or
distributions by such Subsidiary in the amount of such net income are restricted
or prohibited and (iv) any gains or losses attributable to write-ups or
write-downs of assets or liabilities other than in the ordinary course of
business.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person and its Subsidiaries, as determined in accordance with
GAAP.
"Consolidated Tax Expense" of the Company means for any period the
aggregate of the federal, state, local and foreign income tax expense of the
Company and its consolidated Subsidiaries for such period, determined in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means for any period the ratio of (i) the sum
of Consolidated Net Income, Consolidated Interest Expense and Consolidated Tax
Expense, plus all depreciation and, without duplication, all amortization, in
each case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all as determined in accordance with GAAP, to (ii)
Consolidated Interest Expense for such period; provided, however, that in making
such computation, the Consolidated Interest Expense attributable to interest on
any Indebtedness computed on a pro forma basis and bearing a floating interest
rate
S-10
<PAGE> 11
shall be computed as if the rate in effect on the date of computation had been
the applicable rate for the entire period.
"GAAP" means generally accepted accounting principles as in effect and as
implemented by the Company on the date of the Indenture.
"Indebtedness" means (i) any liability of any Person (A) for borrowed
money, or under any reimbursement obligation relating to a letter of credit
(other than letters of credit obtained in the ordinary course of business), or
(B) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than accounts payable or other
Indebtedness to trade creditors arising in the ordinary course of business), or
(C) for the payment of money relating to a Capitalized Lease Obligation; (ii)
any liability of others described in the preceding clause (i) that the Person
has guaranteed or that is otherwise its legal liability; and (iii) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (i) and (ii) above.
"Intercompany Debt Obligations" means any Indebtedness of the Company or
any Subsidiary which, in the case of the Company, is owing to any Subsidiary and
which, in the case of any Subsidiary, is owing to the Company or any other
Subsidiary.
"Lien" means any mortgage, lien, pledge, security interest, conditional
sale or other title retention agreement, charge or other security interest or
encumbrance of any kind.
"Permitted Indebtedness" means (i) Indebtedness of the Company or any
Subsidiary outstanding on the date of the Indenture; (ii) the Senior Notes;
(iii) Indebtedness of the Company not in excess of $250 million in principal
amount outstanding at any time under revolving credit or similar bank facilities
and any refinancings, replacements, renewals, extensions, substitutions,
refundings, deferrals, restructurings, amendments, supplements or modifications
of such Indebtedness; provided, however, that the proceeds of such Indebtedness
referred to in this clause (iii) shall be invested in, or used in connection
with, food-related businesses (other than the fresh or processed meat business);
(iv) Indebtedness of a Subsidiary (including Acquired Indebtedness), which is
non-recourse to the Company, the proceeds of which are or have been used for
working capital purposes or for capital expenditures in food-related businesses
(other than the fresh or processed meat business); (v) Indebtedness of (A) a
Subsidiary borrowed from a lender located in any country producing tropical
fruit and denominated in or measured by the currency of such country other than
U.S. dollars, which Indebtedness is incurred for hedging purposes in the
ordinary course of business consistent with past practice or (B) the Company or
any other Subsidiary (in either case, other than for borrowed money) incurred in
connection with Indebtedness of a Subsidiary referred to in clause (A) above
which is (y) a guarantee of such Subsidiary Indebtedness, or (z) a reimbursement
obligation relating to a letter of credit supporting such Subsidiary
Indebtedness; (vi) Intercompany Debt Obligations; provided, however, that the
obligations of the Company with respect to such Indebtedness shall be evidenced
by an intercompany note and shall be subordinated in right of payment from and
after such time as all Senior Notes issued and outstanding shall become due and
payable (whether at Stated Maturity, by acceleration or otherwise) to the
payment and performance of the Company's obligations under the Senior Notes; and
(vii) additional Indebtedness of the Company (including Acquired Indebtedness)
the aggregate principal amount of which outstanding at any time does not exceed
5% of Adjusted Consolidated Assets.
"Permitted Liens" means (i) Liens existing on the date of the Indenture on
assets of the Company or any Subsidiary; (ii) Liens on assets acquired after the
date of the Indenture or Liens to secure the purchase price of assets to be
acquired; (iii) Liens on properties of any Subsidiary securing Indebtedness the
proceeds of which are or have been used for working capital or capital
expenditures relating to food-related businesses (other than the fresh or
processed meat business); (iv) Liens securing Indebtedness of (A) any Subsidiary
borrowed from a lender located in any country producing tropical fruit and
denominated in or measured by the currency of such country other than U.S.
dollars, which Indebtedness is incurred for hedging purposes in the ordinary
course of business consistent with past practice and (B) the Company or any
other Subsidiary, to the extent permitted under clause (v)(B) of Permitted
Indebtedness; (v) Liens of a Person existing at the time such Person becomes a
Subsidiary or assumed in connection with the acquisition of assets of such
Person; (vi)
S-11
<PAGE> 12
Liens on working capital assets; (vii) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of the
foregoing; (viii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
with respect to amounts not overdue for a period of more than 90 days or being
contested in good faith by appropriate proceedings; (ix) judgment Liens and
other similar Liens arising in the ordinary course of business; provided,
however, that the execution or other enforcement thereof is being effectively
stayed and the claims secured thereby are being actively contested in good faith
and by appropriate proceedings; (x) Liens securing Intercompany Debt
Obligations; (xi) Liens for taxes not yet due or payable under law or being
contested in good faith; (xii) Liens upon property of a foreign Subsidiary to
secure Indebtedness of that foreign Subsidiary; (xiii) Liens in accordance with
customary banking practice to secure Indebtedness in connection with foreign
trade; (xiv) easements, rights-of-way, restrictions and other similar
encumbrances to the extent incurred in the ordinary course of business; (xv)
pledges or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation; and (xvi) deposits to secure
the performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds,
interest rate, foreign exchange and commodity hedging transactions and other
obligations of a like nature incurred in the ordinary course of business.
"Permitted Lindner Holders" means, collectively, Carl H. Lindner, Robert D.
Lindner, Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner, the
respective estates, spouses, heirs, ancestors, lineal descendants, legatees and
legal representatives of any of the foregoing and the trustee of any bona fide
trust of which one or more of the foregoing are the sole beneficiaries or the
grantors thereof, or any entity of which any of the foregoing, individually or
collectively, beneficially own more than 50% of the Voting Shares.
"Refinancing Indebtedness" means any renewals, extensions, substitutions,
refundings, refinancings, replacements, deferrals, restructurings, amendments,
supplements or modifications of any Indebtedness (each, a "Refinancing") of the
Company or any of its Subsidiaries outstanding on the date of the Indenture or
other Indebtedness permitted to be incurred by the Company or any of its
Subsidiaries pursuant to the terms of the Indenture (other than Indebtedness
referred to in clauses (iii), (iv), (v), (vi) or (vii) of the definition of
Permitted Indebtedness), but only to the extent that (i)the aggregate amount of
Indebtedness represented thereby is not increased by such Refinancing, (ii) the
Indebtedness incurred in such Refinancing is not incurred by a Subsidiary if the
Company initially incurred the Indebtedness being renewed, extended,
substituted, refunded, refinanced, replaced, deferred, restructured, amended,
supplemented or modified and (iii) the Indebtedness incurred in such Refinancing
is not incurred by the Company if a Subsidiary initially incurred the
Indebtedness being renewed, extended, substituted, refunded, refinanced,
replaced, deferred, restructured, amended, supplemented or modified, and such
Indebtedness was non-recourse to the Company.
"Related Person" means (i) any Affiliate of the Company, (ii) any
individual or entity who directly or indirectly holds 10% or more of any class
of capital stock of the Company, (iii) any relative of such individual by blood,
marriage or adoption not more remote than first cousin and (iv) any officer or
director of the Company.
PAYMENT AND PAYING AGENTS
The payment of principal of (and premium, if any) and interest on the
Senior Notes will be made (i) by check mailed or delivered to the address of the
Person entitled thereto or (ii) by wire transfer to an account (with a bank
located inside the United States) maintained by the Person entitled thereto.
Payment of an installment of interest on any Senior Note will be made to the
Person in whose name the Senior Note is registered at the close of business on
the Regular Record Date for such interest payment.
All money paid by the Company to the Trustee or a Paying Agent or held in
trust by the Company for the payment of principal of (and premium, if any) and
interest, on any Senior Note which remains unclaimed at the end of two years
after such principal, premium or interest shall have become due and payable will
be repaid to the Company and the holder of the Senior Note will thereafter look
only to the Company for payment thereof.
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<PAGE> 13
DEFEASANCE OF CERTAIN OBLIGATIONS
The terms of the Senior Notes provide that the Company may omit to comply
with the restrictive covenants in the terms of the Senior Notes relating to
Consolidation, Merger and Sale of Assets; Limitation on Liens; Limitation on
Sale and Leaseback Transactions; Limitation on Indebtedness; Limitation on
Restricted Payments; Transactions with Related Persons; Purchase of Senior Notes
upon Change of Control; and any such omission with respect to such covenants
shall not be an Event of Default with respect to the Senior Notes, if (a) the
Company deposits or causes to be deposited with the Trustee for the Senior Notes
in trust an amount of cash, U.S. government securities or a combination of cash
and U.S. government securities sufficient to pay and discharge when due the
entire indebtedness on all such Outstanding Senior Notes for unpaid principal
(and premium, if any) and interest to the Stated Maturity or any Redemption
Date, as the case may be and (b) certain other conditions are met. The
obligations of the Company under the Indenture with respect to the Senior Notes,
other than with respect to the covenants referred to above, shall remain in full
force and effect. This defeasance is in addition to the defeasance described
under "Satisfaction and Discharge" in the accompanying Prospectus.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other entity or
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to any entity,
unless: (1) either (a) the Company shall be the continuing corporation or (b)
the entity (if other than the Company) formed by such consolidation or into
which the Company is merged or the entity that acquires, by sale, assignment,
conveyance, transfer, lease or disposition, all or substantially all of the
properties and assets of the Company as an entirety shall be a corporation,
partnership or trust organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume, by a supplemental indenture, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Senior Notes and the
performance and observance of every covenant of the Indenture on the part of the
Company to be performed or observed; (2) immediately thereafter, no Event of
Default (and no event that, after notice or lapse of time, or both, would become
an Event of Default) shall have occurred and be continuing; (3) after giving
effect to such transaction, the Company or such entity could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness or
Refinancing Indebtedness) pursuant to the covenant of the Indenture entitled
"Limitation on Indebtedness"; (4) immediately thereafter, the Company or such
entity shall have a Consolidated Net Worth equal to or greater than the lesser
of (A) the Consolidated Net Worth of the Company immediately prior to such
transaction or (B) 80% of the Consolidated Net Worth of the Company immediately
prior to such transaction provided that such amount shall not be less than $500
million; (5) immediately thereafter, on a pro forma basis, the Fixed Charge
Coverage Ratio of the Company or of such entity shall be at least 2.0 to 1;
provided, however, that if the Fixed Charge Coverage Ratio of the Company
immediately prior to such transaction is within the range set forth in column
(A) below, then the Fixed Charge Coverage Ratio of the Company or of such entity
shall be at least equal to the lesser of the ratio determined by multiplying the
percentage set forth in column (B) below by the Fixed Charge Coverage Ratio of
the Company or the ratio set forth in column (C) below:
<TABLE>
<CAPTION>
A B C
- ---------------------------------------------------------------- ---------- ----------
<S> <C> <C>
2.2222:1 to 2.9999:1 ........................................... 90% 2.4:1
3.00:1 to 3.9999:1 ............................................. 80% 2.8:1
4:00:1 or greater .............................................. 70% 3.0:1
</TABLE>
and provided, further, that, if immediately after giving effect to such
transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the Company
or the surviving entity, as the case may be, is 3.0 to 1 or more, the
calculation in the preceding proviso shall be inapplicable and such transaction
shall be deemed to have complied with the requirements of such provision; and
(6) the Company or such entity shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, conveyance, transfer, lease or disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with the Indenture and that all conditions
precedent therein relating to such transaction have been satisfied.
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<PAGE> 14
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the preceding paragraph in which the
Company is not the continuing corporation, the successor entity formed or
remaining would be substituted for the Company and the Company would be
discharged from all obligations and covenants under the Indenture and the Senior
Notes.
CERTAIN COVENANTS OF THE COMPANY
The Indenture contains, among others, the covenants summarized below, which
will be applicable (unless waived or amended) so long as any of the Senior Notes
are outstanding.
Limitation on Indebtedness. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or guarantee the payment of any
Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness
or Refinancing Indebtedness, unless at the time of such event and after giving
effect thereto on a pro forma basis the Company's Fixed Charge Coverage Ratio
for the four full fiscal quarters immediately preceding such event, taken as one
period, is not less than 2.0 to 1. For the purposes of determining any
particular amount of Indebtedness, there shall not be included the amount of any
guarantees of (or obligations with respect to letters of credit supporting, or
joint or joint and several obligations in respect of) Indebtedness, the amount
of which is otherwise included. For purposes of determining compliance with this
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the clauses of Permitted Indebtedness or Refinancing
Indebtedness, the Company, in its sole discretion, shall classify such item of
Indebtedness and shall be required to include the amount and type of such
Indebtedness in only one of such clauses and (ii) the amount of Indebtedness
issued at a price which is less than the principal amount thereof shall be equal
to the amount of the liability in respect thereof determined in accordance with
GAAP.
Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, create, assume, incur or suffer to be created, assumed or
incurred any Lien upon any of their respective assets without making effective
provision whereby all the Senior Notes shall be directly secured equally and
ratably with the Indebtedness or other obligations secured by such Lien, except
for (i) Permitted Liens and (ii) Liens securing an aggregate amount of
Indebtedness, which together with the aggregate "value" of sale and leaseback
transactions referred to below (other than such transactions in which debt has
been retired in accordance with the following paragraph), does not at the time
exceed 5% of Adjusted Consolidated Assets.
Limitation on Sale and Leaseback Transactions. The Company may not enter
into any sale and leaseback transaction, or series of related such transactions,
of assets with an aggregate fair market value of $10 million or more relating to
the sourcing, processing, transportation, shipping or distribution of the
Company's fresh food products, including ships, land, facilities, equipment and
related infrastructure, unless an amount equal to the greater of the proceeds of
sale or the fair value of the property is applied (a) to build or purchase
capital assets used in the Company's business or (b) to retire long-term
Indebtedness for money borrowed (including the Senior Notes) of the Company,
except that the Company may enter into (i) intercompany sale and leaseback
transactions, (ii) temporary sale and leaseback transactions with a term not to
exceed three years and (iii) sale and leaseback transactions with respect to
which the "value" thereof plus the other secured Indebtedness referred to in
clause (ii) of the previous paragraph does not at the time exceed 5% of Adjusted
Consolidated Assets.
Limitation on Restricted Payments. The Company will not, directly or
indirectly, (i) declare or pay any dividend on, or make any distribution in
respect of, or purchase, redeem or retire for value, or permit any of its
Subsidiaries, directly or indirectly, to so purchase, redeem or retire for
value, any capital stock of the Company, other than through the issuance solely
of the Company's own capital stock, or rights thereto, (ii) make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value, prior to scheduled principal payment or maturity, Indebtedness of the
Company (excluding Indebtedness of Subsidiaries) which is expressly subordinate
in right of payment to the Senior Notes or permit any of its Subsidiaries,
directly or indirectly, to do so or (iii) make any loan to, incur, create,
assume or suffer to exist any guarantee of Indebtedness of, or make advancement
to, or other investment in, or permit any of its Subsidiaries to make any loan,
incur, create, assume or suffer to exist any guarantee of Indebtedness of, or
make advancement to, or other investment in, any Related Person of the Company
(other than a Subsidiary of the Company) except for any transaction with an
officer or director of the Company entered into in the
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<PAGE> 15
ordinary course of business (including compensation or employee benefit
arrangements with any officer or director of the Company) (such payments or any
other actions described in (i), (ii) and (iii), collectively, "Restricted
Payments") unless (a) at the time of and after giving effect to the proposed
Restricted Payment no Event of Default (and no event that, after notice or lapse
of time, or both, would become an Event of Default) shall have occurred and be
continuing, and (b) at the time of and after giving effect to the proposed
Restricted Payment (the value of any such payment, if other than cash, as
determined by the Board of Directors, whose determination shall be conclusive
and evidenced by a board resolution), the aggregate amount of all Restricted
Payments declared or made after December 31, 1993 shall not exceed the sum of
(A) 50% of the aggregate cumulative Consolidated Net Income of the Company
accrued on a cumulative basis during the period beginning on January 1, 1994 and
ending on the last day of the Company's last fiscal quarter ending prior to the
date of such proposed Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) plus (B) the
aggregate proceeds received by the Company as capital contributions to the
Company after December 31, 1993, or from the issuance and sale (other than to a
Subsidiary) after December 31, 1993 of capital stock of the Company (excluding
the issuance or sale of preferred stock that is mandatorily redeemable, or
redeemable at the option of the holder of such preferred stock, in either case,
prior to the Stated Maturity of the Senior Notes (collectively, the
"Disqualified Stock")) and any Indebtedness or other securities of the Company
convertible into or exercisable for capital stock (other than Disqualified
Stock) of the Company which has been so converted or exercised, as the case may
be, plus (C) $65 million; provided, however, that the foregoing provisions will
not prevent the payment of any dividend, within 60 days after the date of its
declaration, if at the date of declaration such payment would be permitted by
such provisions. For the purposes of the foregoing provisions, the term
"Restricted Payment" shall not include the making of any principal payment on,
or redemption, repurchase, defeasance or other acquisition or retirement for
value, prior to scheduled principal payment or maturity, of (1) any of the
Company's subordinated Indebtedness existing at the date of the Indenture as
long as no such acquisition or retirement is made with the proceeds of
Indebtedness which has a maturity date earlier than the existing subordinated
Indebtedness being acquired or retired or (2) any subordinated Indebtedness of
the Company incurred after the date of the Indenture, if such acquisition or
retirement is made with the proceeds of subordinated Indebtedness which has a
maturity date no earlier than the latest maturity date of any then Outstanding
Senior Notes. Notwithstanding the foregoing, securities, property or other
assets of any existing or future business of the Company engaged in the
processing or marketing of fresh or processed meat, poultry or seafood products
shall be valued at their net book value as determined in accordance with GAAP,
and up to $100 million in net book value (as so determined) of any dividend or
distribution of such securities, property or other assets to holders of capital
stock of the Company shall be permitted without regard to the foregoing
provisions and shall be excluded from any calculation pursuant to the foregoing
provisions.
Transactions with Related Persons. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into or suffer
to exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Related Person (other than a Subsidiary) unless (i) such
transaction or series of transactions is on terms that are no less favorable to
the Company or such Subsidiary, as the case may be, than would be available in a
comparable transaction with an unrelated third party and (ii)(A) with respect to
a transaction or series of transactions involving aggregate payments in excess
of $10 million but less than $20 million, the Company delivers an officer's
certificate to the Trustee certifying that such transaction complies with the
clause (i) above and (B) with respect to a transaction or series of transactions
involving aggregate payments equal to or greater than $20 million, such
transaction or series of related transactions is approved by a majority of the
Board of Directors of the Company including the approval of a majority of the
disinterested directors. Notwithstanding the foregoing, this provision will not
apply to (i) any transaction with an officer or director of the Company entered
into in the ordinary course of business (including compensation or employee
benefit arrangements with any officer or director of the Company) and (ii) any
transaction entered into in the ordinary course of business with a Subsidiary.
Purchase of Senior Notes upon Change of Control. If a "Change of Control
Triggering Event" shall occur at any time then each holder shall have the right
to require that the Company repurchase such holder's Senior Notes in whole or in
part in integral multiples of $1,000, at a purchase price in an amount equal to
101% of the
S-15
<PAGE> 16
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase, which shall be 90 days from the date the Company notifies the
holders of the occurrence of a Change of Control Triggering Event. The source of
funds for any such repurchase will be the Company's available cash or cash
generated from operations or other sources, including borrowings, sales of
assets or sales of equity. However, there can be no assurance that sufficient
funds will be available at the time of any Change of Control Triggering Event to
make any required repurchases. The Company agrees that it will comply with all
applicable tender offer rules, including Rule 14e-1 under the Exchange Act, if
the repurchase option is triggered upon a Change of Control Triggering Event.
The Company is obligated to give notice to holders of the Senior Notes and
the Trustee within fifteen days following a Change of Control Triggering Event
specifying the purchase date, the place at which the Senior Notes shall be
presented and surrendered for purchase, that interest accrued to the purchase
date will be paid upon such presentation and surrender and that interest will
cease to accrue on the Senior Notes surrendered for purchase as of such purchase
date. In order for a holder of the Senior Notes properly to put its Senior Notes
to the Company for purchase, the holder must present and surrender the Senior
Notes to the Company at the place specified in the Company's aforementioned
notice at least fifteen days prior to the purchase date. Any such tender by a
holder of the Senior Notes shall be irrevocable. The Company is not obligated to
notify holders of or to purchase the Senior Notes with respect to more than one
Change of Control Triggering Event.
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement and the related Terms Agreement
referred to therein (the "Underwriting Agreement"), to purchase from the Company
the principal amount of Senior Notes set forth opposite their respective names
below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS SENIOR NOTES
- ---------------------------------------------------------------- ---------------
<S> <C>
Lehman Brothers Inc. ........................................... $ 96,250,000
Kidder, Peabody & Co. Incorporated.............................. 39,375,000
Smith Barney Shearson Inc. ..................................... 39,375,000
---------------
Total...................................................... $ 175,000,000
---------------
---------------
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the Senior Notes are subject to certain conditions and
that if any of the foregoing Senior Notes are purchased by the Underwriters
pursuant to the Underwriting Agreement all the Senior Notes agreed to be
purchased by the Underwriters must be so purchased.
The Underwriters propose to offer the Senior Notes directly to the public
initially at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain selected dealers (who may include
Underwriters) at such public offering price less a selling concession not to
exceed .50% of the principal amount of the Senior Notes. The selected dealers
may reallow a selling concession to certain other dealers not to exceed .25% of
the principal amount of the Senior Notes. After the initial public offering of
the Senior Notes, the public offering price and such concessions may be changed
by the Underwriters.
The Company has been advised by the Underwriters that they intend to make a
market in the Senior Notes; however, they are not obligated to do so, and market
making with respect to the Senior Notes may be discontinued at any time without
notice. There can be no assurance that an active public market for the Senior
Notes will develop.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
of such liabilities.
Certain of the Underwriters have provided from time to time, and expect to
provide in the future, financial advisory and investment banking services to the
Company and its affiliates, for which such Underwriters have received and will
receive customary fees and commissions.
S-16
<PAGE> 17
PROSPECTUS
$400,000,000
CHIQUITA BRANDS INTERNATIONAL, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
------------------
Chiquita Brands International, Inc. ("Chiquita" or the "Company") may offer
from time to time (i) in one or more series unsecured debt securities, which may
be either senior or subordinated debt securities (together, the "Debt
Securities"), consisting of debentures, notes and/or other evidences of
indebtedness; (ii) in one or more series shares of Non-Voting Cumulative
Preferred Stock, par value $1.00 per share ("Preferred Stock"), and (iii) shares
of its Capital Stock, par value $0.33 per share ("Common Stock") (the Debt
Securities, Preferred Stock and Common Stock being collectively referred to as
the "Securities"), or any combination of the foregoing, at an aggregate initial
offering price not to exceed $400,000,000, at prices and on terms to be
determined at or prior to the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities and the initial price and the net proceeds to Chiquita from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Securities, without limitation, the following: (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior debt or subordinated debt, authorized denominations, maturity, rate (or
method of calculation thereof) of interest and dates (or method of determination
thereof) for payment thereof, and any exchangeability, conversion, redemption,
prepayment or sinking fund provisions, (ii) in the case of Preferred Stock, the
designation, number of shares, liquidation preference per share, initial public
offering price, dividend rate (or method of calculation thereof), dates on which
dividends shall be payable and dates from which dividends shall accrue, any
redemption or sinking fund provisions, any conversion or exchange rights and any
special voting or other special rights and (iii) in the case of Common Stock,
the number of shares of Common Stock and the terms of the offering and sale
thereof. The Prospectus Supplement will also contain information, where
applicable, about certain Federal income tax considerations relating to, and any
listing on a securities exchange of, the Securities covered by the Prospectus
Supplement.
The Securities may be offered for sale directly, through agents, to or
through underwriters or dealers designated from time to time or through a
combination of such methods. If agents of Chiquita or any underwriters or
dealers are involved in the sale of the Securities the names of such agents,
underwriters or dealers and any applicable commission or discounts will be set
forth in the Prospectus Supplement. See "Plan of Distribution."
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 28, 1994.
<PAGE> 18
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT, UNDERWRITER OR DEALER.
THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Chiquita is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Chiquita has
filed with the Commission a Registration Statement on Form S-3 (together with
all amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement and exhibits thereto, or amendments thereto, to
which reference is hereby made. Such reports, proxy and information statements,
Registration Statement and exhibits and other information filed by Chiquita may
be inspected and, upon payment of the Commission's customary charges, copied at
the public reference facilities of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of
the Commission at Suite 1300, 7 World Trade Center, New York, New York 10048,
and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661.
Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock
Exchanges. Reports, proxy and information statements and other information
concerning Chiquita may be inspected and copied at the Library of the New York
Stock Exchange at 20 Broad Street, New York, New York; at the Secretary's Office
of the Boston Stock Exchange at 1 Boston Place, Boston, Massachusetts; and at
the Listing Department of the Pacific Stock Exchange at 301 Pine Street, San
Francisco, California.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Chiquita will furnish, without charge, to any person to whom this
Prospectus is delivered, upon such person's written or oral request, a copy of
any and all of the information that has been incorporated by reference in the
Registration Statement of which this Prospectus is a part (not including
exhibits to such information unless such exhibits are specifically incorporated
by reference into such information). Any such request should be directed to the
Vice President, Corporate Affairs of Chiquita, 250 East Fifth Street,
Cincinnati, Ohio 45202; telephone: (513) 784-6366.
The Annual Report on Form 10-K for the year ended December 31, 1992 (which
incorporates by reference certain information contained in the Company's 1992
Annual Report to Shareholders) (the "1992 10-K"), the Quarterly Reports on Form
10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993
(the "1993 Third Quarter 10-Q" and, collectively, the "1993 10-Q's") and the
Current Reports on Form 8-K dated January 13, 1993, March 4, 1993 and January
21, 1994 filed by Chiquita with the Commission (Commission file number 1-1550)
are incorporated herein by reference and made a part hereof.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE> 19
THE COMPANY
Chiquita Brands International, Inc. is a leading international marketer,
processor and producer of quality fresh and processed food products. Chiquita
produces and markets an extensive line of fresh fruits and vegetables sold under
the Chiquita(R) and other brand names. These products include tropical fruit,
such as bananas, pineapples, mangos, papaya, kiwi and citrus, and a wide variety
of other fresh produce. The core of the Company's operations is the marketing,
distribution and sourcing of bananas.
The Company's operations also include brand extensions, such as fruit and
vegetable juices and banana puree, and other processed fruits and vegetables
marketed worldwide under the Chiquita and other brand names; wet and dry salads
sold under various brand names; and consumer packaged foods marketed in Latin
America under various brand names.
During the fourth quarter of 1992, the Company adopted a plan of disposal
for its Meat Division and classified it as a discontinued operation. The Meat
Division encompasses a wide range of value-added fresh meats and processed meat
products sold in the United States nationally under the John Morrell and Mosey's
brand names and under a number of regional brand names. See "Recent
Developments -- Discontinued Operations."
American Financial Corporation ("AFC") owns, either directly or through its
subsidiaries, approximately 47% of Chiquita's outstanding shares of Common Stock
and 31% of Chiquita's $1.32 Depositary Shares. All of the outstanding common
stock of AFC is owned by Carl H. Lindner and members of his family.
Chiquita is a New Jersey corporation. The address of its principal
executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 784-8011. Unless the context indicates otherwise, the
term "Chiquita" also includes the subsidiaries of the Company.
INVESTMENT CONSIDERATIONS
In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following before making an
investment in the Securities.
SUBSIDIARIES
Substantially all of the operations of the Company are conducted through
its subsidiaries and the Company is therefore dependent on the cash flow of its
subsidiaries to meet its obligations. Because the assets of the Company are held
by its subsidiaries (some of which are highly leveraged and others of which are
unleveraged), the claims of holders of the Securities will be structurally
subordinated to any existing and future obligations (whether or not for borrowed
money) of such subsidiaries. As of September 30, 1993, the total debt of the
Company's subsidiaries aggregated $748 million, of which $381 million
represented non-recourse long-term debt of the Company's shipping subsidiaries
secured by ships and related equipment and $114 million represented short-term
notes and loans payable.
RECENT LOSSES
From 1984 to 1991, Chiquita reported a continuous record of growth in
annual earnings. In 1992, however, Chiquita experienced unprecedented
challenges, including a decline in product quality resulting from an
extraordinary outbreak of banana plant disease and unusual weather patterns in
Latin America. These factors contributed to a loss of $146 million ($2.91 per
share) from continuing operations before taxes and non-recurring charges for the
year ended December 31, 1992. Chiquita's management addressed these challenges
by implementing control measures to address the quality issues and commenced an
aggressive program to adjust the Company's fresh fruit volume and cost structure
to reduce significantly production, distribution and overhead costs. This
program included consolidation of operations, asset disposals and workforce
reductions. As a result of the adoption of this program, restructuring and
reorganization charges of $61 million ($1.18 per share) were recorded in the
fourth quarter of 1992. In addition, during the fourth quarter of 1992, the
Company adopted a plan of disposal for its Meat Division and classified it as a
discontinued operation. The net loss for the year, including non-recurring
charges and losses from discontin-
3
<PAGE> 20
ued operations, was $284 million ($5.48 per share). Fixed charges exceeded
earnings by approximately $239 million for the year. See "Recent
Developments -- Results of Operations" below and "Management's Analysis of
Operations and Financial Condition" in the Company's 1992 10-K.
For the nine months ended September 30, 1993, the Company reported net
income of $9.3 million, compared to a net loss of $90.6 million (including a
loss on discontinued operations of $21.4 million) for the same period in 1992.
However, the Company expects to report a fourth quarter 1993 net loss in the
range of approximately $52 to $67 million, or $1.00 to $1.30 per share, compared
to a net loss of $193 million, or $3.77 per share (including restructuring and
reorganization charges of $61 million, or $1.18 per share, and a loss from
discontinued operations of $41 million, or $.80 per share) for the same period
last year.
For the year ended December 31, 1993, the Company expects to report a net
loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to
a net loss of $284 million, or $5.48 per share (including restructuring and
reorganization charges of $61 million, or $1.18 per share, and a loss from
discontinued operations of $62 million, or $1.20 per share), reported in 1992.
The improvement in 1993 over 1992 is attributable principally to the continuing
benefits of Chiquita's multi-year investment spending program and the ongoing
impact of its restructuring and cost reduction efforts. See "Recent
Developments -- Results of Operations."
LEVERAGE
As of September 30, 1993, the Company had short-term notes and loans
payable of $114.3 million and long-term debt (including current maturities) of
approximately $1.5 billion. As of September 30, 1993, the Company had total
long-term debt maturities and sinking fund requirements for the remainder of
1993 of $16 million, and for the years 1994 through 1997 amounts ranging from
$81 million to $96 million. The percentage of total debt to total capitalization
for the Company was 71.1% at September 30, 1993.
COMPETITION AND PRICING
Approximately 60% of the Company's consolidated net sales comes from the
sale of bananas. Banana marketing is highly competitive. In order to compete
successfully, Chiquita must be able to source bananas of uniformly high quality
and distribute them in worldwide markets on a timely basis. A limited number of
competitors account for most of the banana imports throughout the world. While
smaller companies, including growers' cooperatives, have also become a
competitive factor, Chiquita's principal competitors continue to be a limited
number of international companies. In addition, competition in the sale of
bananas also comes from other fresh fruit. Chiquita has been able to obtain a
premium price for its bananas due to its reputation for quality and its
innovative marketing techniques.
The effect of competition with respect to the majority of the Company's
products is intensified by their perishable nature. Bananas are highly
perishable and must be brought to market and sold generally within 60 days after
harvest. Therefore, selling prices which importers receive for bananas are
significantly affected by fluctuations in the available supplies of bananas and
other fresh fruit in each market and by the relative quality and wholesaler and
retailer acceptance of bananas offered by competing importers. Excess supplies
may result in increased price competition.
Although production of bananas tends to be relatively stable throughout the
year, competition in the sale of bananas from other fresh fruit may be seasonal
in nature. The resulting seasonal variations in demand cause banana pricing to
be seasonal, with the first six months of the calendar year being the strongest.
ADVERSE WEATHER CONDITIONS AND CROP DISEASE
Bananas are also vulnerable to adverse local weather conditions, which are
quite common but difficult to predict, and to crop disease, the control of which
entails significant expense. These factors may restrict worldwide supplies and
result in increased prices for bananas. However, competitors may be affected
differently, depending upon their ability to obtain adequate supplies from
sources in other geographic areas. During 1993, approximately 30% of all bananas
sold by Chiquita were sourced from Panama. Bananas sourced from other countries,
including Colombia, Costa Rica, Guatemala, Honduras, Mexico and the Philippines,
4
<PAGE> 21
comprised from 6% to 17% (depending on the country) of bananas sold by Chiquita
during 1993. See the Company's 1992 10-K.
EUROPEAN COMMUNITY BANANA REGULATION
On July 1, 1993, the European Community ("EC") implemented a new quota
restricting the volume of Latin American bananas imported into the EC. Most of
the Company's bananas are produced in Latin America and subject to the quota.
The quota is administered through a licensing system. Since imposition of the
new EC quota regime on July 1, 1993, prices within the EC have increased to a
higher level than for prior years. Banana prices in other worldwide markets,
however, have been lower than in previous years, as the displaced EC volume has
entered those markets. Challenges to the quota and many matters regarding
implementation and administration of the quota remain to be resolved. Therefore,
there can be no assurance that EC banana regulation will not change further. See
"Recent Developments -- European Community Banana Regulation" and "-- Results of
Operations" for further discussion of the EC quota and its impact on current
operations.
OTHER RISKS OF INTERNATIONAL OPERATIONS
A significant portion of the Company's operations are conducted in foreign
countries, and are subject to risks that are inherent in operating in such
foreign countries, including government regulation, currency restrictions and
other restraints, risks of expropriation and burdensome taxes. There is also a
risk that legal or regulatory requirements will be changed or that
administration and enforcement policies will change. Certain of the Company's
operations are dependent upon leases and other agreements with the governments
of these countries. Although the Company's operations are a significant factor
in the economies of many of the countries where the Company produces and
purchases bananas and other agricultural and consumer products, the Company's
overall risk from these factors, as well as from political changes, is reduced
by the large number and geographic diversity of its sources of bananas, which
exceed that of any competitor.
The Company's operations worldwide and the products it sells are subject to
numerous governmental regulations and inspections by environmental, food safety
and health authorities. Although the Company believes it is substantially in
compliance with such regulations, changes in legislation or regulations and
actions by regulators, including changes in administration and enforcement
policies, may from time to time require operational improvements or
modifications at various locations or the payment of fines and penalties, or
both.
The Company is also subject to a variety of governmental regulations in
certain countries where it markets its products, including import quotas and
tariffs, currency exchange controls and taxes.
The Company's operations involve transactions in a variety of currencies.
Results of its operations may be significantly affected by fluctuations of
currency exchange rates. Such fluctuations are significant to the Company's
banana operations because many of its costs are incurred in currencies different
from those that are received from the sale of bananas in foreign markets, and
there is normally a time lag between the incurrence of such costs and collection
of the related sales proceeds. The Company's policy is to exchange local
currencies for dollars immediately upon receipt, thus reducing exchange risk.
The Company also engages from time to time in various hedging activities to
minimize potential losses on cash flows originating in foreign currencies. See
Note 1 to the Company's Consolidated Financial Statements and "Management's
Analysis of Operations and Financial Condition" included in the Company's 1992
10-K for information with respect to foreign exchange.
SHARES AVAILABLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of such shares for future sales,
will have on the market price of Common Stock, or any then outstanding preferred
stock, prevailing from time to time. Sales of substantial amounts of Common
Stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock or, in certain instances, the
Preferred Stock. At January 17, 1994, the Company had outstanding 48,511,853
shares of Common Stock, including 22,868,805 shares held, directly or
indirectly, by AFC, and 648,310 shares of Cumulative Preference Stock, including
200,000 shares held, directly or indirectly, by AFC.
5
<PAGE> 22
In addition to the Securities offered from time to time hereby, the Company has
filed a Registration Statement on Form S-3 registering 1,616,480 shares of
Common Stock pursuant to the Securities Act on behalf of certain former
stockholders of Friday Canning Corporation. These shares were issued to such
holders in connection with the merger of Friday Canning Corporation into the
Company during the first quarter of 1992. Such Registration Statement was
declared effective on January 26, 1994.
ABSENCE OF PUBLIC MARKET FOR SECURITIES (OTHER THAN COMMON STOCK)
Since the Debt Securities and the Preferred Stock will be newly issued,
there is no current market for such Securities. The Company may, but has no
obligation to, apply for listing of such Securities on the New York Stock
Exchange or another stock exchange, and there can be no assurance that the
applicable listing requirements of any such exchange will be met. There can be
no assurance that there will be an active trading market for such Securities.
RECENT DEVELOPMENTS
EUROPEAN COMMUNITY BANANA REGULATION
On July 1, 1993, the EC implemented a new quota effectively restricting the
volume of Latin American bananas imported into the EC to approximately 80% of
prior levels. The quota is administered through a licensing system. Challenges
to the quota and many matters regarding implementation and administration of the
quota remain to be resolved. In May 1993, the principles underlying the new
regulation that discriminate against Latin American banana exporting countries
in favor of certain African, Caribbean and Pacific countries were ruled illegal
under the General Agreement on Tariffs and Trade ("GATT") by a GATT dispute
settlement panel. In December 1993, EC representatives discussed a tentative,
even more discriminatory proposal with a few Latin American banana producing
countries. The tentative proposal was rejected by an overwhelming majority of
the Latin American countries. As widely reported in the press, in January 1994 a
GATT dispute settlement panel ruled on a second lawsuit against the current EC
regulation in favor of the Latin American countries. GATT rulings in favor of
the Latin American countries could result in an increase in the total volume of
Latin American bananas, including banana volume of the Company, which could be
imported under the quota. However, there can be no assurance that the EC will
comply, or the manner in which it would comply, with such rulings. (See "Results
of Operations" below for discussion of the impact of the EC quota on current
operations.)
RESULTS OF OPERATIONS
Net sales for the third quarter of 1993 of $552 million and first nine
months of 1993 of $1.966 billion declined from the comparable prior year amounts
of $612 million and $2.102 billion primarily as a result of lower banana volumes
and prices. Nevertheless, for the third quarter of 1993, the Company reported a
reduced net loss of $25.9 million, or $.50 per share, compared to a 1992 third
quarter net loss of $79.4 million, or $1.55 per share (including a loss on
discontinued operations of $7.5 million, or $.15 per share). For the nine months
ended September 30, 1993, the Company reported net income of $9.3 million, or
$.18 per share, as compared to a net loss of $90.6 million, or $1.74 per share,
in the same period of 1992 (which included a loss on discontinued operations of
$21.4 million, or $.41 per share). This improvement is attributable to the
continuing benefits of Chiquita's multi-year investment spending program and the
ongoing impact of its restructuring and cost reduction efforts. These programs
address all aspects of the banana business including a decreased reliance on
high-cost purchased fruit, enhanced production practices, shipping fleet
realignment, reorganization and consolidation of marketing organizations, and
overhead reductions.
Since imposition of the new EC quota regime on July 1, 1993, prices within
the EC have increased to a higher level than the levels in prior years. Banana
prices in other worldwide markets have been lower than in previous years, as
displaced EC volume has entered those markets.
The favorable cost comparisons achieved during the first nine months of
1993 as a result of the Company's investment spending and cost reduction
programs have continued throughout the fourth quarter. Fourth quarter banana
price levels in the EC remained higher than pre-quota price levels of the 1992
fourth
6
<PAGE> 23
quarter. However, EC prices weakened during the fourth quarter from earlier
post-quota levels partially as a result of the EC's late issuance of fourth
quarter import licenses and its announcement of an expiration date for these
licenses that was earlier than marketplace expectations. The Company expects to
report a fourth quarter 1993 net loss in the range of approximately $52 to $67
million, or $1.00 to $1.30 per share, compared to a net loss of $193 million, or
$3.77 per share (including restructuring and reorganization charges of $61
million, or $1.18 per share, and a loss from discontinued operations of $41
million, or $.80 per share) for the same period last year.
For the year ended December 31, 1993, the Company expects to report a net
loss in the range of $43 to $58 million, or $.82 to $1.12 per share, compared to
a net loss of $284 million, or $5.48 per share (including restructuring and
reorganization charges of $61 million, or $1.18 per share, and a loss from
discontinued operations of $62 million, or $1.20 per share), reported in 1992.
Based on the expected range of results above, earnings before interest, income
tax, depreciation and amortization ("EBITDA") for 1993 are estimated to be in
the range of $214 to $229 million. For 1992, EBITDA excluding restructuring and
reorganization charges and discontinued operations was $44 million.
Chiquita also expects that the improved cost trend will continue into 1994.
In addition, the EC quota impact could cause first half 1994 banana prices in
the EC to exceed pre-quota first half 1993 levels as they have since
implementation of the quota. First half 1994 prices outside the EC could
continue at levels lower than in previous years as they have since
implementation of the quota, although the continuing growth in per capita
consumption of bananas outside the EC could mitigate any such decline.
DISCONTINUED OPERATIONS
During the fourth quarter of 1992, after evaluation of reorganization plans
announced earlier that year and completion of other preparatory actions, the
Company adopted a plan of disposal for all remaining Meat Division operations.
Accordingly, these operations were classified as discontinued operations and
were deconsolidated. (See Note 3 to the Company's Consolidated Financial
Statements for the year ended December 31, 1992, included in the Company's 1992
10-K.)
Pursuant to the plan, the Company immediately completed the sale of a major
fresh pork processing facility in December 1992.
During 1993, the Company engaged in extensive activity with respect to
execution of the balance of its disposal plan. Numerous proposals for the
purchase of individual components of the Meat Division were received from a
larger number of buyers than originally expected. Although progress under the
plan has been slower than anticipated, partially as a result of the Company
evaluating all these proposals in the interest of maximizing shareholder value,
the Company has made significant progress in the implementation of its disposal
plan. This progress includes:
- successful ongoing cost reduction efforts that have contributed to the
improvement in Meat Division operating results to approximately breakeven
levels for 1993.
- progress toward obtaining further substantial cost reductions for 1994
and beyond relating to retiree medical costs. In June 1993, the Company
received a favorable court ruling on its previously filed litigation that
confirms its right to unilaterally reduce medical benefits of retired
hourly employees. This ruling is being appealed by the union and a
hearing on the appeal is scheduled for February 1994.
- receiving subsidies and concessions from the State of South Dakota and
the City of Sioux Falls that will enhance the operating profitability of
the Sioux Falls plant. These incentives were offered in September 1993 by
newly installed state and city administration officials who took office
in April 1993 after their predecessors, including the Governor of South
Dakota, were killed in a plane crash on their return from a meeting to
discuss incentives with Company and Meat Division representatives.
- obtaining financial incentives and concessions in November 1993 from the
City of Sioux City, Iowa and the local labor union to enhance the
salability of the Sioux City pork processing plant as an operating
facility.
7
<PAGE> 24
- signing a letter of intent in December 1993 for the sale of the entire
Specialty Meat Group. The Company is presently negotiating with this
buyer and expects to complete the sale of this group in the first half of
1994.
- obtaining a new stand-alone revolving credit facility in June 1993 to
fund the Meat Division's working capital needs.
The Company also continues to be engaged in vigorous marketing efforts with
respect to the remaining Meat Division operations that now reflect improved
prospects as a result of the favorable developments described above. It expects
to complete the divestitures of these operations by the end of 1994.
The Company has reevaluated its provision for loss on discontinued
operations recorded in 1992 and believes it is adequate to provide for any
losses on disposition. The developments during 1993 regarding the Company's Meat
Division have not had and are not expected to have a material adverse effect on
the Company's liquidity, financial condition or results of operations.
Net sales from discontinued operations for the nine months ended September
30, 1993 were approximately $1.2 billion.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net proceeds
to be received by the Company from the sale of the Securities will be used to
repay outstanding debt of the Company and its subsidiaries and for general
corporate purposes.
8
<PAGE> 25
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below for the years
ended December 31, 1988 through 1992 were derived from the Company's audited
consolidated financial statements. Information presented below for interim
periods was derived from the Company's unaudited consolidated financial
statements and in the opinion of management includes all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
results of operations for the interim periods. This information should be read
in conjunction with the Company's Consolidated Financial Statements and notes
thereto and "Management's Analysis of Operations and Financial Condition"
included or incorporated by reference in the Company's Reports on Forms 10-K and
10-Q for such periods. Interim results are subject to significant seasonal
variations and are not necessarily indicative of the results of operations for a
full fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................ $1,965,790 $2,102,289 $2,723,250 $2,604,128 $2,186,452 $1,892,657 $1,679,429
Operating expenses
Cost of sales...................... 1,520,718 1,736,968 2,309,425 2,027,669 1,698,557 1,497,306 1,333,688
Selling, general and administrative
expenses......................... 246,122 279,966 368,675 324,240 284,299 205,780 205,712
Depreciation....................... 75,484 56,645 80,438 54,401 37,416 31,825 25,797
Restructuring and reorganization... -- -- 61,300 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
1,842,324 2,073,579 2,819,838 2,406,310 2,020,272 1,734,911 1,565,197
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)............ 123,466 28,710 (96,588) 197,818 166,180 157,746 114,232
Interest income...................... 17,512 32,830 43,301 47,319 31,461 28,169 25,376
Interest expense..................... (126,612) (111,829) (155,036) (88,406) (55,361) (53,952) (38,923)
Other income (expense), net.......... 5,969 (8,979) (8,385) 3,278 11,251 3,077 3,731
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations before income taxes... 20,335 (59,268) (216,708) 160,009 153,531 135,040 104,416
Income taxes......................... (11,000) (10,000) (5,000) (49,100) (57,700) (51,200) (47,200)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations....................... 9,335 (69,268) (221,708) 110,909 95,831 83,840 57,216
Discontinued operations(1)......... -- (21,355) (62,332) 17,586 (1,913) (16,073) 3,147
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................... $ 9,335 $ (90,623) $ (284,040) $ 128,495 $ 93,918 $ 67,767 $ 60,363
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Fully diluted earnings (loss) per
common share:
Continuing operations.............. $ .18 $ (1.33) $ (4.28) $ 2.19 $ 2.24 $ 2.05 $ 1.38
Discontinued operations(1)......... -- (.41) (1.20) .33 (.04) (.38) .07
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ .18 $ (1.74) $ (5.48) $ 2.52 $ 2.20 $ 1.67 $ 1.45
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed
charges(2)......................... 1.08 --(2) --(2) 1.73 2.13 2.20 2.18
Ratio of earnings to combined fixed
charges and preferred stock
dividends(2)....................... 1.06 --(2) --(2) 1.73 2.13 2.20 2.18
BALANCE SHEET DATA:
Cash and marketable securities..... $ 194,820 $ 491,206 $ 413,181 $ 825,447 $ 318,246 $ 287,658 $ 188,619
Working capital.................... 301,966 648,775 482,338 960,093 433,424 394,640 345,784
Total assets(1).................... 2,821,898 3,034,410 2,880,624 2,937,344 1,913,674 1,373,480 1,230,946
Short-term debt.................... 189,966 196,198 229,286 187,821 106,698 58,540 18,236
Long-term debt (other than
subordinated debt)............... 805,607 717,656 778,784 571,493 221,884 85,398 69,950
Subordinated debt.................. 633,530 632,226 632,535 631,346 272,298 299,852 297,764
Shareholders' equity............... 663,000 874,252 674,887 967,925 687,709 463,954 400,792
OTHER DATA:
Operating income (loss) plus
depreciation and amortization.... $ 204,351 $ 90,390 $ (9,079) $ 258,076 $ 208,963 $ 194,919 $ 144,482
Capital expenditures(3)............ 174,185 381,578 472,273 395,641 312,698 117,425 63,621
Dividends declared per common
share............................ .39 .49 .66 .55 .35 .20 .20
</TABLE>
- ---------------
(1) Includes net operating results (and, in 1992, provision for loss on
disposal) of the Company's Meat Division operations, which have been classified
as discontinued operations. See "Recent Developments -- Discontinued Operations"
and Note 3 to the Company's Consolidated Financial Statements for the year ended
December 31, 1992, included in the Company's 1992 10-K. All other Income
Statement Data presented above have been restated to exclude amounts relating to
the Meat Division. The Company's net investment in discontinued operations,
which is included in "Total assets", aggregated approximately $42 million at
September 30, 1993. The net assets of discontinued operations consist
principally of property, plant and equipment and trademarks, and at September
30, 1993 include a seasonally high $53 million of short-term borrowings under an
$80 million credit facility secured by Meat Division working capital. These net
assets also include net liabilities recorded for Meat Division defined benefit
pension plans of approximately $40 million at September 30, 1993.
(2) For purposes of calculating the ratios of earnings to fixed charges
and of earnings to combined fixed charges and preferred stock dividends,
earnings are calculated as the sum of the income (loss) from continuing
operations before income taxes, fixed charges (other than capitalized interest)
and amortization of capitalized interest, less undistributed earnings of
less-than-fifty-percent-owned investees. Fixed charges consist of interest on
indebtedness (including amortization of debt discount and capitalized interest)
and a portion (one-third) of rent considered to represent interest cost.
Preferred dividends are dividends on shares of Chiquita's Mandatorily
Exchangeable Cumulative Preference Stock, Series C, which have been outstanding
since October 1992. Fixed charges and combined fixed charges and preferred
stock dividends both exceeded earnings by approximately $80 million for the
nine months ended September 30, 1992, and approximately $239 million for the
year ended December 31, 1992.
(3) Includes capital expenditures in connection with the acquisition of
ships and containers of approximately $120 million during the nine months ended
September 30, 1993, $225 million during the nine months ended September 30,
1992, $280 million in 1992, $180 million in 1991, $200 million in 1990 and $20
million in 1989.
9
<PAGE> 26
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
do not apply to those Debt Securities will be described in the Prospectus
Supplement relating to such Debt Securities.
The Debt Securities will be general unsecured obligations of the Company
and will constitute either senior debt securities or subordinated debt
securities. In the case of Debt Securities that will be senior debt securities
("Senior Debt Securities"), the Debt Securities will be issued under an
Indenture (the "Senior Indenture") to be executed between the Company and The
Fifth Third Bank, Cincinnati, Ohio, as trustee (the "Senior Debt Trustee"),
under the Senior Indenture. In the case of Debt Securities that will be
subordinated debt securities ("Subordinated Debt Securities"), the Debt
Securities will be issued under an Indenture (the "Subordinated Indenture") to
be executed by the Company and Star Bank, N.A., Cincinnati, Ohio, as trustee
(the "Subordinated Debt Trustee"), under the Subordinated Indenture. The Senior
Indenture and the Subordinated Indenture are sometimes referred to herein
individually as an "Indenture" and collectively as the "Indentures." The Senior
Debt Trustee and the Subordinated Debt Trustee are sometimes referred to herein
individually as the "Trustee" or collectively as the "Trustees." The statements
made under this caption relating to the Debt Securities and the Indentures are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to the forms of Indentures or the Indentures which have
been filed with the Commission in connection with the issuance of any series of
Debt Securities. Such summaries make use of terms defined in the Indentures.
Wherever such terms are used herein, such terms are incorporated by reference
from the Indentures as part of the statements made herein. Summaries of certain
terms used herein will be included in the Prospectus Supplement relating to the
issuance of any particular series of Debt Securities.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
GENERAL. Except as may be set forth in the terms of the Debt Securities and
described in the Prospectus Supplement relating to such Debt Securities, neither
of the Indentures limits the amount of Debt Securities which can be issued
thereunder and each provides that additional Debt Securities may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company's Board of Directors. Reference is made to the
Prospectus Supplement for the following terms of the particular series of Debt
Securities being offered thereby: (i) the designation, aggregate principal
amount and authorized denominations of the series; (ii) the price at which the
series will be issued; (iii) the date or dates on which the series will mature
(or manner of determining the same); (iv) the rate or rates per annum, if any,
at which the series will bear interest (or the manner of calculation thereof)
and the date or dates from which such interest will accrue; (v) certain
covenants which will be applicable to that series of Debt Securities; (vi) the
times at which any interest will be payable (or manner of determining the same)
and the Regular Record Dates for Interest Payment Dates; (vii) the place or
places where the principal of (and premium, if any) and interest, if any, on the
series will be payable and each office or agency, as described below under
"Denominations, Registration and Transfer," where the Debt Securities may be
presented for transfer or exchange; (viii) any mandatory or optional sinking
fund or analogous provisions; (ix) the date, if any, after which, and the price
at which, such Debt Securities are payable pursuant to any optional or mandatory
redemption provisions; (x) the terms and conditions upon which the Debt
Securities of such series may be repayable prior to maturity at the option of
the holder thereof and the price at which such Debt Securities are so repayable;
(xi) any provisions regarding exchangeability or conversion of the Debt
Securities; (xii) information with respect to book-entry procedures, if any;
(xiii) any provisions of the Indenture which will not be applicable to that
series of Debt Securities; (xiv) whether the Debt Securities are Senior Debt
Securities or Subordinated Debt Securities; and (xv) any other additional
provisions or specific terms which may be applicable to that series of Debt
Securities.
Some of the Debt Securities may be issued as Discounted Securities (bearing
no interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any Discounted Securities will be described in the Prospectus Supplement
relating thereto.
10
<PAGE> 27
DENOMINATIONS, REGISTRATION AND TRANSFER. The Debt Securities of a series
will be issuable only in fully registered form. Unless otherwise provided in an
applicable Prospectus Supplement with respect to a series of Debt Securities,
Debt Securities will be issued only in denominations of $1,000 or any integral
multiple thereof.
Debt Securities of any series will be exchangeable for other Debt
Securities of the same series and of a like aggregate principal amount and tenor
of different authorized denominations. Debt Securities may be presented for
exchange or for registration of transfer (with the form of transfer duly
executed) at the office of a transfer agent designated by the Company for such
purpose with respect to any series of Debt Securities. If a Prospectus
Supplement refers to any transfer agent initially designated by the Company with
respect to any series of Debt Securities, the Company may at any time rescind
the designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for such series.
The Company is not required to issue, register the transfer of or exchange
Debt Securities of any series for the 15-day period prior to the mailing of a
notice of redemption and, with respect to any Debt Securities called for
redemption in whole or in part (except for the unredeemed portion of any Debt
Securities being redeemed in part), following such mailing.
PAYMENT AND PAYING AGENTS. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of principal of (and premium, if any) and
interest, if any, on Debt Securities will be made (i) by check mailed or
delivered to the address of the Person entitled thereto as such address shall
appear in the Security Register or (ii) by wire transfer to an account (with a
bank located inside the United States) maintained by the Person entitled
thereto. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on any Debt Security will be made to the
Person in whose name such Debt Security is registered at the close of business
on the Regular Record Date for such interest payment.
All moneys paid by the Company to the Trustee or a Paying Agent for the
payment of principal of (and premium, if any) and interest, if any, on any Debt
Security which remains unclaimed at the end of two years after such principal,
premium or interest shall have become due and payable will be repaid to the
Company and the holder of such Debt Security will thereafter look only to the
Company for payment thereof.
CONSOLIDATION, MERGER AND SALE OF ASSETS. Under each of the Indentures, the
Company may not consolidate with or merge into any other entity or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to any entity, unless: (1) either (a) the
Company shall be the continuing corporation or (b) the entity (if other than the
Company) formed by such consolidation or into which the Company is merged or the
entity that acquires, by sale, assignment, conveyance, transfer, lease or
disposition, all or substantially all of the properties and assets of the
Company as an entirety shall be a corporation, partnership or trust organized
and validly existing under the laws of the United States or any State thereof or
the District of Columbia, and shall expressly assume by a supplemental
indenture, the due and punctual payment of the principal of and premium, if any,
and interest on all the Debt Securities and the performance and observance of
every covenant of the Indenture on the part of the Company to be performed or
observed; (2) immediately thereafter, no Event of Default (and no event that,
after notice or lapse of time, or both, would become an Event of Default) shall
have occurred and be continuing; and (3) certain other conditions, if any, are
met, as are described in the Prospectus Supplement relating to the Debt
Securities being offered thereby.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which the Company is not the continuing corporation, the successor entity formed
or remaining would be substituted for the Company and the Company would be
discharged from all obligations and covenants under the Indenture and the Debt
Securities.
EVENTS OF DEFAULT. The following events are defined in each of the
Indentures as "Events of Default" with respect to a series of Debt Securities:
(i) default in the payment of any installment of interest on any Debt Securities
in such series for 30 days after becoming due; (ii) default in the payment of
the principal of (or premium, if any, on) any Debt Securities in such series
when due; (iii) default in the performance of any
11
<PAGE> 28
other covenant applicable to such series contained in the Debt Securities or the
Indenture for a period of 60 days after written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Trustee or to the Company and the Trustee by the holders of 25% in
aggregate principal amount of such series of Debt Securities then Outstanding;
(iv) default shall have occurred under any other series of Debt Securities or
any agreements, indentures or instruments under which the Company then has
outstanding Indebtedness in excess of $10 million in the aggregate and, if not
already matured in accordance with its terms, such Indebtedness shall have been
accelerated and such acceleration shall not have been rescinded or annulled
within ten days after notice thereof shall have been given to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of such series of Debt Securities then Outstanding,
provided, that if, prior to the entry of judgment in favor of the Trustee, such
default under such indenture or instrument shall be remedied or cured by the
Company, or waived by the holders of such Indebtedness, then the Event of
Default under such Indenture shall be deemed likewise to have been remedied,
cured or waived and provided, further, that if such default results from an
action of the United States government or a foreign government which prevents
the Company from performing its obligations under such agreement, indenture or
instrument, the occurrence of such default will not be an Event of Default under
such Indenture; (v) one or more judgments, orders or decrees for the payment of
money in excess of $10 million, either individually or in the aggregate, shall
be entered against the Company and shall not be discharged, there shall have
been a period of 60 days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect and there
shall have been given written notice of the default to the Company by the
Trustee or to the Company and the Trustee by the holders of 25% in aggregate
principal amount of such series of Debt Securities then Outstanding; or (vi)
certain events of bankruptcy, insolvency or reorganization with respect to the
Company shall have occurred. If an Event of Default shall occur and be
continuing with respect to a series of Debt Securities, either the Trustee or
the holders of at least 25% in principal amount of the Outstanding Debt
Securities of such series may declare the entire principal amount, or, in the
case of Discounted Securities, such lesser amount as may be provided for in such
Discounted Securities, of all the Debt Securities of such series to be
immediately due and payable.
Under each of the Indentures, the Company is required to furnish the
Trustee annually a statement by certain officers of the Company to the effect
that to the best of their knowledge the Company is not in default in the
fulfillment of any of its obligations under the Indenture or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default.
Each of the Indentures provides that the Trustee shall, within 90 days
after the occurrence of a default with respect to a particular series of Debt
Securities, give the holders of the Debt Securities of such series notice of
such default known to it (the term default to mean the events specified above
without grace periods); provided that, except in the case of a default in the
payment of principal of (or premium, if any) or interest, if any, on any of the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if it in good faith determines the withholding of such notice is in
the interest of the holders of the Debt Securities of such series.
The holders of a majority in principal amount of a particular series of
Debt Securities Outstanding have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such series or exercising any trust or
power conferred on the Trustee, and to waive certain defaults. Each of the
Indentures provides that in case an Event of Default shall occur and be
continuing, the Trustee shall exercise such of its rights and powers under the
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the Debt Securities unless they shall have
offered to the Debt Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request.
SATISFACTION AND DISCHARGE. Except as may otherwise be set forth in the
Prospectus Supplement relating to a series of Debt Securities, each of the
Indentures provides that the Company shall be discharged from its
12
<PAGE> 29
obligations under the Debt Securities of such series (with certain exceptions)
at any time prior to the Stated Maturity or redemption thereof when (a) the
Company has deposited with the Trustee, in trust, sufficient funds to pay the
principal of (and premium, if any) and interest, if any, to Stated Maturity (or
redemption) on, the Debt Securities of such series, (b) the Company has paid all
other sums payable with respect to the Debt Securities of such series and (c)
certain other conditions are met. Upon such discharge, the holders of the Debt
Securities of such series shall no longer be entitled to the benefits of the
Indenture, except for certain rights, including registration of transfer and
exchange of the Debt Securities of such series and replacement of mutilated,
destroyed, lost or stolen Debt Securities, and shall look only to such deposited
funds.
Such discharge may be treated as a taxable exchange of the related Debt
Securities for an issue of obligations of the trust or a direct interest in the
cash and securities held in the trust. In that case, holders of such Debt
Securities would recognize gain or loss as if the trust obligations or the cash
or securities deposited, as the case may be, had actually been received by them
in exchange for their Debt Securities. Such holders thereafter might be required
to include in income a different amount than would be includable in the absence
of discharge. Prospective investors are urged to consult their own tax advisors
as to the specific consequences of discharge.
MODIFICATION AND WAIVER. Certain modifications and amendments (which,
generally, either benefit or do not affect the holders of Outstanding Debt
Securities) of each of the Indentures may be made by the Company and the Trustee
without the consent of holders of the Debt Securities. Other modifications and
amendments of each Indenture require the consent of the holders of more than 50%
in principal amount of the Outstanding Debt Securities of each series issued
under the Indenture affected by the modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest, if
any, on any Debt Security, (b) reduce the principal amount of (or premium, if
any) or interest, if any, on any Debt Security, (c) reduce the amount of
principal of a Discounted Security payable upon acceleration of the Maturity
thereof, (d) change the Place of Payment, (e) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Security on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date) or (f) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of the holders of which
is required for modification or amendment of such Indenture or for waiver of
compliance with certain provisions of such Indenture or for waiver of certain
defaults.
The holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
The holders of not less than a majority in principal amount of the Outstanding
Debt Securities of any series may on behalf of the holders of all Debt
Securities of that series waive any past default under the Indenture with
respect to that series, except a default in the payment of the principal of (or
premium, if any) and interest, if any, on any Debt Security of that series or in
respect of a provision which under the Indenture cannot be modified or amended
without the consent of the holder of each Outstanding Debt Security of that
series affected.
NOTICES. Notices to holders of Debt Securities will be given by mail to the
addresses of such holders as they appear in the Security Register.
GOVERNING LAW. The Indentures and the Debt Securities are to be governed by
and construed in accordance with the laws of the State of New York.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
Senior Debt Securities will be issued under the Senior Indenture and will
rank pari passu with all other unsecured and unsubordinated debt of the Company.
13
<PAGE> 30
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
GENERAL. Subordinated Debt Securities will be issued under the Subordinated
Indenture and will rank pari passu with certain other subordinated debt of the
Company that may be outstanding from time to time and will rank junior to all
senior indebtedness of the Company (including any Senior Debt Securities) that
may be outstanding from time to time.
SUBORDINATION. The Indebtedness represented by the Subordinated Debt
Securities is subordinated in right of payment to the prior payment in full of
all Senior Indebtedness.
No payment or distribution shall be made on account of the principal of or
premium, if any, or interest on, or the purchase, redemption or other
acquisition of, the Subordinated Debt Securities in the event and during the
continuation of any default in the payment of any Senior Indebtedness beyond any
applicable grace period. Payments of principal, premium, if any, and interest
on, or redemption or other acquisition by the Company of, the Subordinated Debt
Securities may also be blocked in the event of other defaults which allow
acceleration of the maturity of any Senior Indebtedness.
The Subordinated Indenture will provide that in the event of any insolvency
or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or its assets, or any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary, or any assignment
for the benefit of creditors or other marshalling of assets or liabilities of
the Company, all Senior Indebtedness must be paid in full, or provision made for
such payment, before any payment or distribution (excluding certain permitted
equity or subordinated securities) is made on account of the principal of or
premium, if any, or interest on the Subordinated Debt Securities. By reason of
such subordination, in the event of liquidation or insolvency, creditors of the
Company who are holders of Senior Indebtedness may recover more, ratably, than
the holders of the Subordinated Debt Securities.
For purposes of the foregoing, Senior Indebtedness will be defined to mean
all Indebtedness of the Company and any accrued but unpaid interest on such
Indebtedness, unless in each case by the terms of the instrument creating or
evidencing such Indebtedness it is provided that such Indebtedness is not senior
in right of payment to the Subordinated Debt Securities or that such
Indebtedness is pari passu with or subordinate in right of payment to the
Subordinated Debt Securities; provided that Senior Indebtedness does not include
(i) the Company's 9 1/8% Subordinated Debentures due February 1, 1998, 10 1/4%
Subordinated Debentures due August 1, 2005, 10 1/2% Subordinated Debentures due
August 1, 2004, 11 1/2% Subordinated Notes due June 1, 2001, 11 7/8%
Subordinated Debentures due May 1, 2003 and 7% Convertible Subordinated
Debentures due March 28, 2001, (ii) any obligations of the Company to any of its
subsidiaries, or (iii) any obligations of the Company arising from redeemable
stock.
CONCERNING THE TRUSTEES
The Senior Debt Trustee, The Fifth Third Bank, Cincinnati, Ohio, is a state
banking association organized under the laws of the State of Ohio. The Bank is a
regional commercial bank offering a wide range of banking services to individual
and business customers. The Subordinated Debt Trustee, Star Bank, National
Association, Cincinnati, Ohio, is a national banking association organized under
the laws of the United States of America.
DESCRIPTION OF EQUITY SECURITIES
Chiquita has 100,000,000 authorized shares of Capital Stock, par value $.33
per share (the "Common Stock"), of which 48,511,853 shares were outstanding on
January 17, 1994. Chiquita has authorized 10,000,000 shares of Non-Voting
Cumulative Preferred Stock, $1.00 par value per share (the "Preferred Stock");
46,028 shares of voting $3.00 Cumulative Preferred Stock, without par value (the
"$3.00 Preferred"); and 4,000,000 shares of Cumulative Preference Stock, without
par value (the "Cumulative Preference Stock"), of which 2,568,096 shares have
been designated $1.20 Cumulative Convertible Preference Stock, Series A, none of
which is currently outstanding, 75,813 shares have been designated $3.20
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Cumulative Convertible Preference Stock, Series B, none of which is currently
outstanding, and 1,000,000 shares have been designated Mandatorily Exchangeable
Cumulative Preference Stock, Series C, 648,310 shares of which are currently
outstanding. Each of the Preferred Stock and the Cumulative Preference Stock may
be issued in one or more series having such designated preferences and rights,
qualifications and limitations as the Board of Directors may from time to time
determine without requiring any vote of the shareholders; however, the terms of
the designated series of Cumulative Preference Stock and of the $3.00 Preferred
are fixed and, should they be reissued, would have such terms unless the
Company's shareholders amend the Restated Certificate of Incorporation to delete
such terms and designations.
The issuance of preferred or preference stock by the Board of Directors
could be utilized, under certain circumstances, as a method of preventing a
takeover of Chiquita. There are no other provisions in the Company's Restated
Certificate of Incorporation or By-Laws that would have an effect of delaying,
deferring or preventing a change in control of Chiquita.
Various debt instruments of the Company restrict, among other things,
dividends and other distributions on, and repurchases or redemptions of, the
Company's capital stock. At September 30, 1993, these restrictions would have
allowed the payment of approximately $90 million for dividends and other
corporate distributions, redemptions or repurchases. The ability of the Company
to pay dividends when, as and if declared by the Board of Directors, may be
subject to restrictions contained in any future debt agreements and to
limitations contained in future series or classes of preferred or preference
shares and is subject to the legal availability of funds.
DESCRIPTION OF COMMON STOCK
Chiquita has 100,000,000 authorized shares of Common Stock, of which
48,511,853 were outstanding on January 17, 1994.
Holders of Common Stock are entitled to one vote per share on the election
of directors and all other matters submitted to a vote of shareholders. Shares
of Common Stock do not have cumulative voting rights.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors, out of funds legally available therefor;
provided, however, that all dividends on any preferred stock and preference
stock which may be issued in the future must be fully paid or declared and set
apart before any dividends can be paid or declared and set apart with respect to
the Common Stock.
Upon liquidation, dissolution or winding-up of Chiquita, the holders of the
Common Stock are entitled to share ratably in the assets of Chiquita remaining
after the payment of its obligations and liabilities and after payment due the
holders of Chiquita's preferred stock and preference stock.
Holders of Common Stock have no preemptive or other rights to subscribe for
or purchase additional securities of Chiquita. All outstanding shares of Common
Stock are fully paid and nonassessable.
DESCRIPTION OF PREFERRED STOCK
The Board of Directors of the Company may provide for the issuance of up to
10,000,000 shares of Preferred Stock in one or more series. The rights,
preferences, privileges and restrictions, including dividend rights, conversion
rights, terms of redemption and liquidation preferences, of the Preferred Stock
of each series will be fixed or designated by the Board of Directors without any
further vote or action by the Company's shareholders. Upon issuance after full
payment of the purchase price therefor, shares of Preferred Stock offered hereby
will be fully paid and nonassessable. The description of the terms of a
particular series of Preferred Stock which will be set forth in a Prospectus
Supplement does not purport to be complete and is qualified in its entirety by
reference to the Restated Certificate of Incorporation of the Company and the
Certificate of Amendment thereto which will be filed with the Secretary of State
of New Jersey to set forth the terms and designations of the particular series
of Preferred Stock.
The specific terms of a particular series of Preferred Stock offered hereby
will be described in a Prospectus Supplement relating to such series and will
include, without limitation, the following:
(i) The maximum number of shares to constitute the series and the
distinctive designation thereof;
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(ii) The annual dividend rate, if any, on shares of the series,
whether such rate is fixed or variable or both, the date or dates from
which dividends will begin to accrue or accumulate and whether dividends
will be cumulative;
(iii) Whether the shares of the series will be redeemable and, if so,
the price at and the terms and conditions on which the shares of the series
may be redeemed, including the time during which shares of the series may
be redeemed and any accumulated dividends thereon that the holders of
shares of the series shall be entitled to receive upon the redemption
thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(vi) The terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, any other debt or
equity securities;
(vii) Special voting rights, if any, of any series; and
(viii) Any other preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions
thereof.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through underwriters or dealers;
(ii) through agents; (iii) directly to one or more institutional purchasers; or
(iv) through a combination of any such methods of sale. The Prospectus
Supplement with respect to the Securities offered thereby will set forth the
terms of the offering of such Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of such Securities and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting compensation to underwriters, dealers or agents, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
by underwriters or dealers to other dealers and any securities exchanges on
which such Securities may be listed. Only underwriters so named in the
Prospectus Supplement are deemed to be underwriters in connection with the
Securities offered thereby.
If underwriters or dealers are used in the sale, the Securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase such
Securities will be subject to certain conditions precedent, and the underwriters
will be obligated to purchase all of the Securities offered by the Prospectus
Supplement if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of the Securities in respect of which this Prospectus is delivered will
be named, and any commissions payable by the Company to such agent (or the
method by which such commissions can be determined) will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement
any such agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain specified institutions to purchase Securities from the Company
at the public offering price set forth in the Prospectus Supplement pursuant to
contracts providing for payment and delivery on a specified date in the future.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
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<PAGE> 33
investment companies, educational and charitable institutions and such other
institutions as may be approved by the Company. The obligations of any such
purchasers pursuant to such delayed delivery and payment arrangements will not
be subject to any conditions except that such purchase shall not at the time of
delivery be prohibited under the laws of any jurisdiction to which such
purchaser is subject. The Prospectus Supplement will set forth the commission
payable for solicitation of such contracts. The underwriters and other persons
soliciting such contracts will have no responsibility for the validity or
performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
by the Company with respect to payments they may be required to make in respect
thereof. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course of
business.
Securities other than the Company's Common Stock may or may not be listed
on a national securities exchange. No assurances can be given that there will be
a market for such Securities.
LEGAL MATTERS
The legality of the Securities and certain other legal matters in
connection with the offering will be passed upon for Chiquita by Charles R.
Morgan, Vice President, General Counsel and Secretary of the Company. Certain
legal matters will be passed upon for any underwriter or agent by Simpson
Thacher & Bartlett (a partnership which includes professional corporations), New
York, New York. Charles R. Morgan presently holds shares of Chiquita's Common
Stock in the Company's Savings and Investment (401(k)) Plan, as well as employee
stock options to purchase additional shares of Chiquita's Common Stock.
EXPERTS
The Consolidated Financial Statements incorporated by reference in this
Prospectus and the Prospectus Supplement (other than those for interim periods)
have been audited by Ernst & Young, independent auditors, as stated in their
opinion (which is incorporated by reference in the Company's Annual Report on
Form 10-K for the year ended December 31, 1992), and have been so included in
reliance upon such opinion given upon the authority of that firm as experts in
accounting and auditing.
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the accompanying Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company, by the Underwriters or by any other person. This Prospectus
Supplement and the accompanying Prospectus do not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby to any
person or by anyone in any state in which such offer or solicitation may not
lawfully be made. Neither the delivery of this Prospectus Supplement and the
accompanying Prospectus, nor any sale made hereunder, shall, under any
circumstances, create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
------
<S> <C>
Prospectus Supplement Summary........... S-2
Selected Consolidated Financial Data.... S-4
Recent Developments..................... S-5
Use of Proceeds......................... S-7
Capitalization.......................... S-8
Description of Senior Notes............. S-9
Underwriting............................ S-16
Prospectus
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
The Company............................. 3
Investment Considerations............... 3
Recent Developments..................... 6
Use of Proceeds......................... 8
Selected Consolidated Financial Data.... 9
Description of Debt Securities.......... 10
Description of Equity Securities........ 14
Plan of Distribution.................... 16
Legal Matters........................... 17
Experts................................. 17
</TABLE>
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$175,000,000
[LOGO]
9 1/8% SENIOR NOTES DUE 2004
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PROSPECTUS SUPPLEMENT
February 8, 1994
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LEHMAN BROTHERS
KIDDER, PEABODY & CO.
INCORPORATED
SMITH BARNEY SHEARSON INC.
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