SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1994 Number 1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the I.R.S. Employer
I.D.
Laws of New Jersey No. 04-1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8011
Securities registered pursuant to Section 12(b) of the Act:
Name of Each
Exchange
Title of Each Class On Which
Registered
Capital Stock ($.33 par value) New York,
Pacific, Boston
$2.875 Non-Voting Cumulative Preferred Stock, Series A New York
$1.32 Depositary Shares, each representing one-fifth of a
share of
Series C Mandatorily Exchangeable Cumulative Preference
Stock New York
10-1/2% Subordinated Debentures due August 1, 2004New York, Pacific
Securities registered pursuant to Section 12(g) of the Act: None
Other securities for which reports are submitted pursuant to
Section 15(d) of the Act:
9-1/8% Senior Notes due March 1, 2004
9-5/8% Senior Notes due January 15, 2004
11-1/2% Subordinated Notes due June 1, 2001
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding
12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form
10-K. [ X ]
As of March 1, 1995, there were 49,809,149 shares of Common
Stock outstanding. The aggregate market
value of Common Stock held by non-affiliates at March 1, 1995 was
approximately $361 million.
Documents Incorporated by Reference
Portions of the Chiquita Brands International, Inc. 1994
Annual Report to Shareholders are incorporated by
reference in Parts I and II. Portions of the Chiquita Brands
International, Inc. Proxy Statement for the 1995
Annual Meeting of Shareholders are incorporated by reference in
Part III.
PAGE
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
Part I
Item 1.. . . . . . . . . . . . . . . . . . . . . . . Business 1
Item 2.. . . . . . . . . . . . . . . . . . . . . . Properties 9
Item 3.. . . . . . . . . . . . . . . . . . .Legal Proceedings 9
Item 4.. .Submission of Matters to a Vote of Security Holders
10
Part II
Item 5.. . .Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . 10
Item 6.. . . . . . . . . . . . . . . .Selected Financial Data
10
Item 7.. . .Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 10
Item 8.. . . . . .Financial Statements and Supplementary Data
10
Item 9.. . . Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . 10
Part III
Item 10. . Directors and Executive Officers of the Registrant
11
Item 11. . . . . . . . . . . . . . . . Executive Compensation
12
Item 12. . . .Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . 12
Item 13. . . . Certain Relationships and Related Transactions
12
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . .
14
PAGE
<PAGE>
PART I
ITEM 1 - BUSINESS
GENERAL
Chiquita Brands International, Inc. ("Chiquita" or the
"Company") is a leading international
marketer, processor and producer of quality fresh and
processed food products. The Company's
"Chiquita operations" constitute its only industry segment
other than its Meat Division, which is held
for sale. (See MEAT DIVISION HELD FOR SALE below.) Net
sales, operating income and identifiable assets of the
Company's Chiquita operations and Meat Division held for sale
are set forth in Note 3 to the Consolidated Financial
Statements included in the Company's 1994 Annual Report to
Shareholders, which is incorporated herein by reference.
In recent years, the Company has capitalized on its
"Chiquita" and other premium brand
names by building on its worldwide leadership position in the
marketing, distribution and sourcing of
bananas; by expanding its quality fresh fruit and vegetable
operations; and by further developing its
business in value-added processed foods.
Chiquita's products include:
- Bananas, apples, avocados, citrus, grapes, kiwi, mangos
and nectarines sold under the
"Chiquita" brand name;
- Bananas, citrus and other quality fresh fruit including
apples, apricots, cherries, grapes,
peaches, pears, plums, strawberries and tomatoes sold
under the "Consul," "Chico,"
"Amigo," "Frupac" and other brand names;
- A wide variety of fresh vegetables including asparagus,
beans, broccoli, carrots, celery,
lettuce, onions and potatoes sold under the "Premium" and
various other brand names;
- Fruit and vegetable juices and other processed fruits and
vegetables, including banana
puree, marketed under the "Chiquita," "Naked Juice,"
"Friday" and other brands;
- Wet, fresh cut and ready-to-eat salads sold under the
"Club Chef " and "Naked Foods"
brands; and
- Margarine, shortening and other consumer packaged foods
sold under the "Numar,"
"Clover" and various regional brand names.
No individual customer accounted for more than 10% of the
Company's consolidated net sales during any of the last three
years. See "Management's Analysis of Operations and Financial
Condition," which is incorporated by reference in Item 7
herein from the Company's 1994 Annual Report to Shareholders,
for a discussion of factors affecting results of the Company's
operations for 1994, 1993 and 1992. Factors which may cause
fluctuations in the results of operations are also discussed
in the description of the Company's operations below.
<PAGE> 1
<PAGE>
Fresh food products
The Company markets an extensive line of fresh fruits and
vegetables sold under the
"Chiquita" and other brand names. The core of Chiquita's
fresh foods operations is the marketing,
distribution and sourcing of bananas. Sales of bananas, as a
percent of consolidated net sales, were
38% in 1994, 36% in 1993 and 37% in 1992. Excluding revenues
of the Meat Division held for
sale, sales of bananas comprised 60%, 58% and 62% of the
Company's total net sales in 1994, 1993
and 1992, respectively.
Chiquita believes that it derives competitive benefits in
the marketing, distribution and
sourcing of fresh foods through its:
- Recognized brand names and reputation for quality;
- Strong market positions in Europe and North America, its
principal markets;
- Modern, cost-efficient fresh fruit transportation system;
and
- Industry leading position in terms of number and
geographic diversity of its sources of
bananas, which enhances its ability to provide customers
with premium quality products
on a consistent basis.
Chiquita has benefitted from its multi-year investment
spending program and its restructuring and cost reduction
efforts to adjust its fresh foods volume and cost
infrastructure to significantly reduce production,
distribution and overhead costs. (See "Distribution and
Logistics" and "Sourcing" below and ITEM 2 - PROPERTIES.) The
restructuring program also included measures to reorganize the
Company's European banana operations to adjust to a new quota
which effectively restricts the volume of Latin American
bananas imported into the European Union. (See RISKS OF
INTERNATIONAL OPERATIONS below.)
Marketing. Chiquita markets bananas under brand names
including "Chiquita," "Chiquita
Jr.," "Consul," "Amigo," "Chico" and "Bananos." Chiquita sold
over 40% of its total banana
volumes for 1994 in each of Europe and North America. As a
result of a decision in 1994 to significantly scale back
"green" banana trading operations in Japan, sales of bananas
in the Far East market are no longer a significant portion of
the Company's total banana net sales.
The Company has been able to obtain a premium price for its
bananas due to its reputation
for quality and its innovative marketing techniques, which
include providing retail marketing support
services to its customers. Chiquita sells bananas through its
regional sales organizations and
commissioned agents throughout the world directly to
wholesalers and retail chains, which in turn
ripen and resell or distribute the fruit. The Company also
sells bananas ripened in its own facilities
or under contractual ripening arrangements.
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 depend on the
available supplies of bananas and other fruit in each market,
the relative quality, and wholesaler and
retailer acceptance of bananas offered by competing importers.
Excess supplies may result in
increased price competition. Profit margins on sales may also
be significantly affected by
fluctuations in currency exchange rates. (See RISKS OF
INTERNATIONAL OPERATIONS
below.)
<PAGE> 2
Adverse weather such as major windstorms or floods in banana
growing areas may restrict
worldwide supplies and result in increased prices for bananas.
However, competing importers may
be affected differently, depending upon their ability to
obtain adequate supplies from sources in
other geographic areas.
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. The Company believes that it sells more bananas
than any of its competitors, accounting
for approximately one-fourth of all bananas imported into its
principal markets 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 large international companies.
Although production of bananas tends to be relatively stable
throughout the year, competition
in the sale of bananas comes not only from bananas sold by
others, but also from other fresh fruit
which 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 stronger period.
Chiquita's interests in food-related businesses include a
network of fresh fruit and vegetable
operations in Europe, North America and the Pacific Rim.
Through these affiliations, Chiquita sells
and distributes a variety of quality fruit and vegetable
products under other brand names. Certain of
these affiliations involve both the production and marketing
of fresh fruits and vegetables while
others involve only marketing. These businesses compete
against numerous other regional fresh
fruit and vegetable producers and distributors. No single
competitor has a dominant market share in
this industry due to the regionalized nature of these
businesses.
Distribution and Logistics. Transportation expenses
comprise approximately one-fourth of
the total costs incurred by Chiquita in its sale of tropical
fruit. Chiquita ships its tropical fruit in
vessels owned or chartered by the Company. All of Chiquita's
tropical fruit shipments into the
North American market are delivered using pallets or
containers that minimize damage to the
product by eliminating the need to handle individual boxes.
As a result of a multi-year investment
program, now completed, and the elimination of a substantial
amount of chartered ship capacity
under Chiquita's restructuring program, Chiquita now owns or
controls under long-term lease
approximately 60% of its aggregate shipping capacity. Most of
the remaining capacity is operated
under contractual arrangements having terms of three years or
less. (See also ITEM 2 -
PROPERTIES below and Notes 6 and 7 to the Consolidated
Financial Statements.) Chiquita also
operates loading and unloading facilities which it owns or
leases in Central and South America and
various ports of destination.
Sourcing. Chiquita has a greater number and geographic
diversity of sources of bananas
than any of its competitors. During 1994, approximately 35%
of all bananas sold by Chiquita were
sourced from Panama. Bananas sourced from other countries,
including Colombia, Costa Rica,
Guatemala and Honduras, comprised from 4% to 19% (depending on
the country) of bananas sold
by Chiquita during 1994.
In 1994, approximately two-thirds of the bananas sourced by
Chiquita were produced by
subsidiaries and the remainder were purchased under purchase
fruit arrangements from suppliers.
Under certain of the purchase fruit arrangements, which
require less initial capital investment by the
Company than owned production facilities, Chiquita furnishes
financial and technical assistance to its
suppliers to support the production and preparation of bananas
for shipment. No single supplier
provided a significant portion of the bananas sold by Chiquita
in 1994.
<PAGE> 3
Bananas are 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. Chiquita's overall risk
from these factors, as well as from
political changes in countries where bananas are grown, is
reduced by the low concentration of its
banana production in individual producing locations.
Labor cost, which is a significant portion of the cost of
producing bananas, varies depending
on the country of origin. Since bananas are shipped in
cardboard boxes, paper cost is also
significant.
The geographically diverse sources of other fresh fruits and
vegetables primarily involve
formal and informal purchase arrangements with numerous
unrelated producers and importers.
None of these arrangements is individually significant to the
Company's operations.
Processed Food Products
Chiquita's processed food products include fruit and
vegetable juices sold primarily in the
United States; processed fruit and vegetables, including
processed bananas, sold worldwide under
the "Chiquita," "Friday" and other brands; wet, fresh cut and
ready-to-eat salads sold under the
"Club Chef" and "Naked Foods" brands; and other consumer
packaged foods sold in Latin America
by the Numar Division.
Chiquita branded fruit juices include a full line of
tropical blends sold refrigerated, frozen
and in shelf stable individual servings. The refrigerated and
frozen lines include six varieties:
"Caribbean Splash," "Tropical Paradise," "Raspberry Passion,"
"Cranberry Seabreeze," "Calypso
Breeze" and "Hawaiian Sunrise." Individual servings are sold
in three of these varieties: "Caribbean Splash," "Tropical
Paradise" and "Calypso Breeze." These tropical blends are
available throughout most of the United States and are
manufactured by others from fruit juice concentrates and
purees to the Company's specifications. The Company also
produces and markets natural fresh fruit and vegetable juices
sold under the "Chiquita," "Ferraro's Earth Juice" and "Naked
Juice" brands.
Chiquita's processed banana products include banana puree,
sliced bananas and other
specialty products which are produced by the Company and sold
to producers of baby food, fruit
beverages, baked goods and fruit-based products, to
wholesalers of bakery and dairy food products,
and to selected licensees including Beech-Nut and General
Mills.
Friday Canning Corporation ("Friday") is one of the largest
private-label vegetable
processors in the United States. Friday markets a full line
of over twenty-five types of processed
vegetables to retail and food service customers throughout the
U.S. and other countries. Friday
competes directly with a few major producers of both branded
and private-label canned vegetables,
as well as indirectly with numerous marketers of frozen and
fresh vegetable products. The vegetable
processing industry is affected by the availability of
produce, which can vary due to local weather
conditions.
The Numar Division is a vertically integrated marketer,
refiner and producer of shortening,
margarine and vegetable oil products. These products are
derived primarily from oil palm grown on
the Company's plantations located in Costa Rica and Honduras.
Numar is the leading marketer of
such products in Costa Rica and, through a 50%-owned joint
venture, in Honduras. Numar sells its
products in these and other Central American countries under
the "Numar," "Clover" and other
brand names. Numar's competitors in Central America consist
principally of a number of small
local firms and subsidiaries of multinational corporations.
<PAGE> 4
RISKS OF INTERNATIONAL OPERATIONS
Information about the Company's operations by geographic
area is included in Note 3 to the
Consolidated Financial Statements included in the Company's
1994 Annual Report to Shareholders
and is incorporated herein by reference.
The Company is subject to a variety of governmental
regulations in countries where it
sources and markets its products, including import quotas and
tariffs, currency exchange controls
and taxes. On July 1, 1993, the European Union ("EU")
implemented a new quota effectively
restricting the volume of Latin American bananas imported into
the EU, which had the effect of
decreasing the Company's volume and market share in Europe.
The quota is administered through a
licensing system and grants preferred status to producers and
importers within the EU and its former
colonies, while imposing new quotas and tariffs on bananas
imported from other sources, including
Latin America, Chiquita's primary source of fruit. In two
separate rulings, General Agreement on
Tariffs and Trade ("GATT") panels found this banana policy to
be illegal. In March 1994, four of
the countries which had filed GATT actions against the EU
banana policy (Costa Rica, Colombia,
Nicaragua and Venezuela) reached a settlement with the EU by
signing a "Framework Agreement."
The Framework Agreement authorizes the imposition of
additional restrictive and discriminatory
quotas and export licenses on U.S. banana marketing firms,
while leaving EU firms exempt. Costa
Rica and Colombia are presently implementing this agreement.
Full implementation of the
Framework Agreement could significantly increase the Company's
cost to export bananas from these
sources. Three additional European countries (Sweden, Finland
and Austria) joined the EU effective
January 1, 1995. These countries, which have had
substantially unrestricted banana markets in
which Chiquita has supplied a significant portion of the
bananas, are in the process of transition to
the restrictive EU quota and licensing environment. The
timing and exact nature of any adjustments
in the quota and licensing regulations that will be made for
these new EU members have not yet
been determined.
In September 1994, Chiquita and the Hawaii Banana Industry
Association made a joint filing
with the Office of the U.S. Trade Representative under Section
301 of the U.S. Trade Act of 1974,
charging that the EU quota and licensing regime and the
Framework Agreement are unreasonable,
discriminatory, and a burden and restriction on U.S. commerce.
In response to this petition, the
U.S. Government initiated a formal investigation of the EU
banana import policy in October 1994.
In January 1995, the U.S. Government announced a preliminary
finding against the EU banana
import policy and launched separate investigations of the
Colombian and Costa Rican Framework
Agreement policies. The EU, Colombian and Costa Rican
investigations are continuing. Section
301 authorizes retaliatory measures, such as tariffs or
withdrawal of trade concessions, against the
offending countries. However, there can be no assurance as to
the results of the investigation, the
nature and extent of actions the U.S. Government might take,
or the impact on the EU quota regime
or the Framework Agreement.
Certain of the Company's operations are heavily dependent
upon products grown and
purchased in Central and South America. These activities, a
significant factor in the economies of
many of the countries where the Company produces and purchases
bananas and other agricultural
and consumer products, are subject to risks that are inherent
in operating in such 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 administrative policies will change. Certain of these
activities are dependent upon leases and
other agreements with the governments of these countries.
<PAGE> 5
The Company leases all the agricultural land it uses in
Panama from the Republic of
Panama under lease and operating agreements which
automatically renew each year unless canceled
by either party on four years prior notice. In the event of
termination of the agreements, the
government of Panama, which previously purchased such
agricultural lands from the Company, may
purchase other Panamanian assets of the Company at specified
values which approximate carrying
value but may be less than market value.
Certain facilities in Honduras previously owned by the
Company were transferred in prior
years to the government of Honduras with provision for their
subsequent use by the Company. Such
facilities include a railroad which the Company operates under
a lease with the government of
Honduras that expires December 31, 1995. The Company believes
that the lease, if required in
future years, can be extended or renewed.
Governmental price and export controls in Costa Rica and
Honduras could affect the Company's ability to initially
recover, through selling prices, cost increases related to its
oil palm operations.
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.
These regulations directly affect day-to-day operations.
Although the Company believes it is
substantially in compliance with such regulations, actions by
regulators have in the past required,
and in the future may require, operational modifications or
capital improvements at various locations
or the payment of fines and penalties, or both.
The Company's operations are conducted in many areas of the
world and involve
transactions in a variety of currencies. Results of its
operations may be significantly affected by
fluctuations of currency exchange rates. Such fluctuations
affect 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 non-U.S. 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
further minimize potential losses on cash
flows originating in currencies other than the U.S. dollar.
Fluctuations of currency exchange rates
may also affect the Company's Numar Division. Since Numar's
profits are generated in many of the
same Central American countries where the Company incurs costs
to produce bananas, exchange
fluctuations with an adverse effect on Numar's profits would
generally have a favorable impact on
the Company's cost of producing bananas. See Notes 1 and 9 to
the Consolidated Financial
Statements and "Management's Analysis of Operations and
Financial Condition" included in the
Company's 1994 Annual Report to Shareholders for information
with respect to currency exchange.
LABOR RELATIONS
The Company employs a total of approximately 40,000 persons
in its Chiquita operations.
Approximately 36,000 of these associates are employed in
Central and South America, including
28,000 workers covered by labor contracts.
The Company has approximately 85 labor contracts with terms
expiring from 1995 to 1997.
Strikes or other labor-related actions are often encountered
upon expiration of labor contracts and
also frequently occur during the term of the contracts.
During the summer of 1994, the Company's workers in La Lima,
Honduras struck its
operations there seeking higher wages. The contract covering
these approximately 4,800 employees
expires April 1, 1995. After a 35-day strike, the Company and
the workers' union reached an
agreement on additional contractual cost of living adjustments
for the remainder of the contract
period. The cost of living adjustments have not
<PAGE> 6
had a significant impact on the Company's operations.
Chiquita decided not to reopen four low productivity farms
which had been closed during the strike and, at the Company's
remaining Honduran farms, chopped back cultivations weakened
during the strike. Write-downs associated with the Honduran
farms and cultivations were approximately $25 million.
A contract covering approximately 5,100 workers at one of
Chiquita's Panamanian banana
producing locations expired in July 1994. The Company is in
the process of completing negotiations
on a new contract, and nearly all of the affected employees
are now working under the terms of the
new contract. The new terms of the contract are not expected
to have a material effect on the
Company's operations.
Approximately 30 other contracts covering 6,000 employees
expire in 1995.
MEAT DIVISION HELD FOR SALE
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. (See Note 2 to the
Company's Consolidated Financial
Statements included in the Company's 1994 Annual Report to
Shareholders.)
Pursuant to the plan, the Meat Division sold a major fresh
pork processing facility in
December 1992 and its specialty meat operations in 1994.
During 1993 and 1994, the Company
engaged in extensive activity with respect to execution of its
disposal plan. This activity included
successful ongoing cost reduction efforts that have
contributed to the improvement in Meat Division
operating results, terminating retiree medical benefits, and
obtaining government subsidies and financial incentives, union
concessions, and a new stand-alone revolving credit facility
to fund the Meat Division's working capital needs. The
Company is continuing to pursue the sale of the remainder of
its Meat Division operations.
Operations. The Meat Division is engaged in the processing
and marketing primarily of
fresh pork and processed meat products, including sausage,
frankfurters, bacon, hams and luncheon
meats. The Meat Division's products are sold principally in
the United States, and for export to
Japan, Mexico, Canada, and other Central American and Pacific
Rim countries. In addition to
operating its own meat-packing plants, the Company engages
other meat packers to custom slaughter
and process meat products.
The Meat Division's products are marketed in the United
States nationally under the "John
Morrell" brand name and regionally under brands such as
"Dinner Bell," "Kretschmar," "Rath Black
Hawk" and "Tobin's First Prize," as well as under various
private customer labels.
Profit margins in the fresh meat business are low and
competition among packers in the
United States is strong. Price, quality and brand
identification are major competitive factors. The
Meat Division's major competitors in fresh and processed meats
are large U.S. meat-packing
corporations, as well as a large number of U.S. regional and
local meat packers. Competition also
comes from other high protein products, including beef,
poultry, seafood and dairy products.
The Meat Division's operations involve supplying a
consistent quality product to a broad market, including large
food chains. The Meat Division maintains an experienced sales
force that sells its products principally in the United States
and in Japan. Some fresh and processed meats, including
export sales, are also sold through independent food brokers
or expedited through international trading companies.
<PAGE> 7
The availability of adequate supplies and cost of livestock
are significant to the profitability of the Meat Division's
fresh meat operations. Generally, results of operations are
adversely affected when livestock is in short supply because
competition among meat packers for available supplies is
strong and prices for livestock may increase. The
availability of livestock is determined primarily by decisions
made independently by a large number of growers and feeders
over a period of years and is beyond the control of the Meat
Division and competing meat packers.
Labor relations. The Meat Division employs approximately
4,800 domestic employees, nearly all of whom are covered under
11 labor contracts with terms expiring from 1995 to 1999.
A strike at Sioux Falls in May 1987 led to three lawsuits by
John Morrell & Co. ("Morrell") against the union. Following
judgments in favor of Morrell in the first two lawsuits which
resulted in payments to Morrell by the union totaling $29.3
million, the union demanded further arbitration of its claims
that its contract had required Morrell to recall the striking
employees. In the fall of 1991 in the third lawsuit, Morrell
sued the union in the U.S. District Court for the District of
South Dakota, seeking a ruling that the prior litigation
disposed of the union's recall claims. In March 1992, the
court ruled in Morrell's favor. On appeal, the Eighth Circuit
Court of Appeals reversed the lower court's decision, ruling
that the union was entitled to have its remaining arguments
heard in a second round of arbitration, and the United States
Supreme Court refused to grant certiorari. In October 1994,
the case was settled (with an aggregate payment of
approximately $2.3 million, or $1,250 per worker) and
dismissed.
In 1992, Morrell filed a declaratory judgment action in the
U.S. District Court for the District of South Dakota seeking
confirmation of its right to unilaterally reduce or eliminate
medical benefits of retired hourly employees. In 1993, the
District Court ruled in favor of Morrell. In 1994, this
ruling was upheld by the U.S. Court of Appeals for the Eighth
Circuit and Morrell subsequently terminated retiree medical
benefits.
Properties. The Meat Division owns and operates its
principal slaughtering plant and processed meat facility in
Sioux Falls, South Dakota. The Meat Division also owns or
leases and operates meat-processing facilities in Iowa and
Ohio. In order to obtain distribution efficiencies, the Meat
Division now uses public warehouses for its warehousing and
distribution operations, and is disposing of its remaining
distribution facilities. Although much of the Sioux Falls
plant is relatively old, the Company believes that it and
other more modern plants and facilities now used are, in
general, well maintained and suitable for its operations.
Certain products are produced for the Meat Division by custom
meat packers in plants located in Ohio and Kansas.
Regulation. The Meat Division's operations are subject to
numerous governmental regulations and regular inspections by
the U.S. Department of Agriculture and other environmental and
health authorities. Actions by regulators directly affect
day-to-day operations and have in the past required, and in
the future may require, plant improvements at various
locations or the payment of fines and penalties, or both.
While it is not possible to predict the cost of such future
improvements with a high degree of certainty, management does
not expect that such expenditures will have a material impact
on the Company's financial results.
In March 1993, Morrell brought to the attention of the
United States Environmental Protection Agency ("USEPA")
certain deficiencies relating to the wastewater treatment
facility at its Sioux Falls plant. The U.S. Department of
Justice ("DOJ") has proposed that Morrell enter into a
judicial civil consent order requiring compliance with certain
environmental laws, regulations and permits and other actions.
The DOJ indicated that the amount of civil penalties, if any,
to be imposed would be resolved later. In addition, the U.S.
Attorney for South Dakota and the DOJ are currently
investigating the matter; two former plant
<PAGE> 8
employees have entered into plea agreements with the United
States. Morrell has taken substantial steps to remedy past
noncompliance and to avoid future recurrences.
ITEM 2 - PROPERTIES
The Company owns approximately 130,000 acres and leases
approximately 41,000 acres of improved land, principally in
Costa Rica, Panama and Honduras. Substantially all of this
land is used for the cultivation of bananas and oil palm and
support activities, including the maintenance of floodways.
The Company also owns power plants, packing stations,
warehouses, irrigation systems and loading and unloading
facilities used in connection with its banana and oil palm
operations.
The Company owns or controls under long-term bareboat
charters 25 ocean-going refrigerated vessels, including 2
delivered in 1994, and has 17 additional such vessels under
time charters, primarily for transporting tropical fruit sold
by the Company. From time to time, excess capacity may be
chartered or subchartered to others. In addition, the Company
enters into spot charters as necessary to supplement its
transportation resources. The Company also owns or leases
other related equipment, including refrigerated container
units, used to transport fresh food. The majority of the
ships owned and related container units are pledged as
collateral for related financings.
Properties used by the Company's processed foods operations
include processing facilities in Costa Rica and Honduras, and
vegetable canning facilities in Wisconsin. Other operating
units of the Company own, lease and operate properties,
principally in the United States and Central and South
America. The Company leases the space for its executive
offices in Cincinnati, Ohio.
For further information with respect to the Company's
physical properties, see the descriptions under ITEM 1 -
BUSINESS - GENERAL and MEAT DIVISION HELD FOR SALE, above, and
Notes 6 and 7 to the Consolidated Financial Statements
included in the Company's 1994 Annual Report to Shareholders.
ITEM 3 - LEGAL PROCEEDINGS
A number of legal actions are pending against the Company,
including those described below and in ITEM 1 - BUSINESS -
MEAT DIVISION HELD FOR SALE affecting the Meat Division. Based
on evaluations of facts which have been ascertained and
opinions of counsel, management does not believe such
litigation will, individually or in the aggregate, have a
material adverse effect on the consolidated financial
condition or results of operations of the Company.
In 1993, the Company and other major banana producing
companies were added as defendants in several lawsuits, now
pending as three suits in the U.S. District Courts for the
Southern, Eastern, and Northern Districts of Texas. These
cases were originally filed in early 1993 against the
manufacturers of an agricultural chemical called DBCP and now
represent claims on behalf of an aggregate of approximately
25,000 individuals of whom less than 15% claim to have worked
for the Company's subsidiaries. Most of the plaintiffs are
foreign citizens who claim to have been employees of banana
companies, including in some cases subsidiaries of the
Company. The plaintiffs allege they were injured as a result
of exposure to DBCP, which was used primarily in the 1970's.
The damage claims have not been quantified. The suits are
Franklin Rodriguez Delgado, et al. v. Shell Oil Company, et
al., Del Monte Fresh Produce, N.A. v. Dead Sea Bromine Co.
Ltd., et al., Civil Action No. H-94-1337 (U.S. District Court,
Southern District of Texas, Houston Division) consolidated
with Ramon Rodriguez Rodriguez, et al. v. Shell Oil Company,
et al., Shell Oil Company, et al. v. Dead Sea Bromine Co.
Ltd., et al., Civil Action No. L-94-49 (U.S. District Court,
Southern District of Texas, Laredo Division); Narcisco Borja,
et al. v. Shell Oil Company, et al., The Dow Chemical Company,
et al. v. Dead Sea Bromine Co. Ltd., et al., Civil Action No.
94-CV-689D (U.S. District
<PAGE> 9
Court, Northern District of Texas, Dallas Division); and Juan
Ramon Valdez, et al. v. Shell Oil Company, et al., The Dow
Chemical Company, et al. v. Dead Sea Bromine Co. Ltd., et al.,
Civil Action No. 2-94-CV-69 (U.S. District Court, Eastern
District of Texas, Marshall Division). Similar suits on
behalf of individuals have been filed in Costa Rica and Panama
by approximately 900 individuals against subsidiaries of the
Company, including Compania Palma Tica and Compania Bananera
Atlantica Limitada. The Company has answered all suits,
believes it has substantial and meritorious defenses, and is
vigorously defending the actions.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The number of shareholders at March 1, 1995 and the markets
for the Company's capital stock are set forth on the inside
back cover of the Company's 1994 Annual Report to Shareholders
under "Investor Information." Price ranges of the Company's
capital stock and dividends declared thereon are set forth in
Note 15 to the Consolidated Financial Statements included in
the 1994 Annual Report to Shareholders. Restrictions on the
Company's ability to declare and pay dividends are described
in Note 8 to the Consolidated Financial Statements included in
the 1994 Annual Report to Shareholders. All such information
is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
This information is included in the table entitled "Selected
Financial Data" on page 6 of the Company's 1994 Annual Report
to Shareholders and is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
This information is included under the caption "Management's
Analysis of Operations and Financial Condition" included on
pages 7 through 9 of the Company's 1994 Annual Report to
Shareholders and is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of Chiquita Brands
International, Inc. and its subsidiaries included on pages 10
through 23 of the Company's 1994 Annual Report to
Shareholders, and "Quarterly Financial Data" which is set
forth in Note 15 to such Consolidated Financial Statements,
are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 10
PART III
Except for information relating to the Company's executive
officers set forth in ITEM 10 below, the information required
by the following Items will be included in Chiquita's
definitive Proxy Statement which will be filed with the
Securities and Exchange Commission in connection with the 1995
Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are:
Carl H. Lindner (age 75) - Mr. Lindner has been Chairman of
the Board of Directors and Chief Executive Officer of the
Company since 1984 and Chairman of the Board of Directors and
Chief Executive Officer of American Financial Corporation
("AFC") since AFC was founded over 35 years ago. AFC is a
holding company which, through subsidiaries, is engaged in a
variety of financial businesses, including property and
casualty insurance, annuities and portfolio investing. In
nonfinancial areas, AFC has substantial operations in the food
products industry, through its ownership in Chiquita, and in
radio and television station operations, through its ownership
of Citicasters Inc. (formerly Great American Communications
Company, or "GACC").
Keith E. Lindner (age 35) - Mr. Lindner has been President
and Chief Operating Officer of the Company since 1989 and
President of its Chiquita Brands, Inc. subsidiary since 1986.
He was Senior Executive Vice President of the Company from
1986 until 1989.
Fred J. Runk (age 52) - Mr. Runk has been a Vice President
of the Company since 1984. He was also the Company's Chief
Financial Officer from 1984 to 1994. Mr. Runk has served as
Vice President and Treasurer of AFC for over five years.
Steven G. Warshaw (age 41) - Mr. Warshaw was named Chief
Financial Officer of the Company in 1994 and has also been the
Company's Executive Vice President and Chief Administrative
Officer since 1990. Mr. Warshaw has served in various
capacities since 1986.
Robert F. Kistinger (age 42) - Mr. Kistinger was named
Senior Executive Vice President of the Company's Chiquita
Banana Group in 1994. He was Executive Vice President,
Operations for the Company's Chiquita Tropical Products
Division from 1989 to 1994 and has served in various
capacities since 1980.
Thomas E. Mischell (age 47) - Mr. Mischell has been Vice
President of the Company since 1986 and a Vice President of
AFC for more than five years.
Charles R. Morgan (age 48) - Mr. Morgan has been Vice
President, General Counsel and Secretary of the Company since
1990 and has served in various capacities since 1988.
Jos P. Stalenhoef (age 53) - Mr. Stalenhoef was named
President, Chiquita Banana-North American Division in 1994.
He was Senior Vice President, North America, Chiquita Tropical
Products Division from 1989 to 1994 and has served in various
capacities since 1988.
William A. Tsacalis (age 51) - Mr. Tsacalis has been Vice
President and Controller of the Company since 1987. He was
Controller from 1984 to 1987 and has served in various
capacities since 1980.
<PAGE> 11
Carl H. Lindner, Fred J. Runk and Thomas E. Mischell provide
broad policy determination and guidance to operating
management, which is headed by Keith E. Lindner, but devote
substantial portions of their time to the affairs of AFC and
its other subsidiaries.
In December 1993, GACC completed a comprehensive financial
restructuring which included a prepackaged plan of
reorganization filed in November of that year under Chapter 11
of the Bankruptcy Code. Carl H. Lindner, Fred J. Runk and
Thomas E. Mischell were executive officers of GACC within two
years before GACC's bankruptcy reorganization.
ITEM 11 - EXECUTIVE COMPENSATION
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements. The following consolidated
financial statements of the
Company and the Report of Independent Auditors are included
in the Company's 1994 Annual Report to Shareholders and are
incorporated by reference in Part II, Item 8:
Page of
Annual Report
Report of Independent Auditors 5
Consolidated Statement of Income for 1994, 1993 and
1992 10
Consolidated Balance Sheet at December 31, 1994 and
1993 11
Consolidated Statement of Shareholders' Equity for
1994, 1993 and 1992 12
Consolidated Statement of Cash Flow for 1994, 1993 and
1992 13
Notes to Consolidated Financial Statements 14
2. Financial Statement Schedule. Financial Statement
Schedule II - Allowance for
Doubtful Accounts Receivable is included on page 16 of this
Annual Report on Form 10-K. All other schedules are not
required under the related instructions or are inapplicable
and, therefore, have been omitted.
3. Exhibits. See Index of Exhibits (page 17) for a
listing of all exhibits filed with
this Annual Report on Form 10-K.
(b) The following reports on Form 8-K were filed during
the quarter ended Decemer 31,
1994:
October 10, 1994 - to report unusual charges and non-
recurring losses expected for the
quarter ended September 30, 1994.
October 17, 1994 - to report the U.S. Government's
agreement to initiate a formal
investigation of the EU banana import policy under
Section 301 of the U.S. Trade Act
of 1974.
<PAGE> 12
(This page left blank intentionally.)
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly
authorized on March 30, 1995.
CHIQUITA BRANDS INTERNATIONAL, INC.
By /s/ Carl H. Lindner
Carl H. Lindner
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been
signed below by the following persons on behalf of the
Registrant and in the capacities indicated
below on March 30, 1995:
/s/ Carl H. Lindner Chairman of the Board and
Carl H. Lindner Chief Executive Officer
/s/ Keith E. Lindner Director; President and
Keith E. Lindner Chief Operating Officer
/s/ S. Craig Lindner Director
S. Craig Lindner
/s/ Fred J. Runk Director and Vice President
Fred J. Runk
Jean H. Sisco* Director
Jean H. Sisco
William W. Verity* Director
William W. Verity
<PAGE> 14
/s/Oliver W. Waddell*
Director
Oliver W. Waddell
/s/ Ronald F. Walker Director
Ronald F. Walker
/s/ Steven G. Warshaw
Executive Vice President, Chief Administrative
Steven G. Warshaw Officer and Chief Financial Officer
/s/ William A. Tsacalis Vice
President and Controller
William A. Tsacalis (Chief Accounting Officer)
* By /s/ William A. Tsacalis
Attorney-in-Fact**
** By authority of powers of attorney filed with this annual
report on Form 10-K.
<PAGE> 15
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE II - ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of period $13,033 $11,733 $ 9,307
Additions:
Charged to costs and expenses 7,622 5,002
6,761
Deductions:
Write-offs 6,537 3,478 4,715
Other, net (31) 224 (380)
6,506 3,702 4,335
Balance at end of period $14,149 $13,033 $11,733
</TABLE>
<PAGE> 16
CHIQUITA BRANDS INTERNATIONAL, INC.
Index of Exhibits
Exhibit
Number Description
*3-a Second Restated Certificate of Incorporation, filed as
Exhibit 3(a) to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994
*3-b By-Laws, filed as Exhibit 3-b to Annual Report on Form
10-K for the year ended December 31, 1992
4 Registrant has no outstanding debt issues exceeding 10%
of the assets of Registrant and its consolidated
subsidiaries. The Registrant will furnish to the
Securities and Exchange Commission, upon request, copies
of all agreements and instruments defining the rights of
security holders for debt issues not exceeding 10% of
the assets of Registrant and its consolidated
subsidiaries.
*10-a Lease of Lands and Operating Contract between United
Brands Company, Chiriqui Land Company, Compania
Procesadora de Frutas and the Republic of Panama, dated
January 8, 1976, effective January 1, 1976, filed as
Exhibit 10-a to Annual Report on Form 10-K for the year
ended December 31, 1993
*10-b Agreement dated April 22, 1976 effective January 1, 1976
between Tela Railroad Company and the Government of
Honduras, filed as Exhibit 10-b to Annual Report on Form
10-K for the year ended December 31, 1993
Executive Compensation Plans
*10-c 1986 Stock Option and Incentive Plan, as amended, filed
as Exhibit 10(c) to Quarterly Report on Form 10-Q for
the quarter ended June 30, 1994
*10-d Individual Stock Option Plan and Agreement, filed as
Exhibit 4 to Registration Statement on Form S-8 No. 33-
25950 dated December 7, 1988
*10-e Deferred Compensation Plan, filed as Exhibit 10-e to
Annual Report on Form 10-K for the year ended December
31, 1992
11 Computation of Earnings Per Common Share
13 Chiquita Brands International, Inc. 1994 Annual Report
to Shareholders (pages 5 through 23 and inside back
cover)
21 Subsidiaries of Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedule
99 Annual Reports on Form 11-K for the Chiquita Savings and
Investment Plan and the John Morrell & Co. Salaried
Employees Incentive Savings Plan for 1994 will be filed
by amendment on or before June 29, 1995.
* Incorporated by reference.
<PAGE> 17
CHIQUITA BRANDS INTERNATIONAL, INC. EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
A.Computation of primary
earnings (loss) per
common share:
Income (loss) before
extraordinary item $(48,700)$(51,081)$(284,040)$128,495$93,918
Dividends on Series A
preferred stock (7,232) -- -- -- --
Income (loss) available to
common shares before
extraordinary item (55,932) (51,081)(284,040) 128,495 93,918
Extraordinary loss from
prepayment of debt (22,840) -- -- -- --
Net income (loss) used to
calculate primary earnings
per share $(78,772)$(51,081)$(284,040)$128,495$93,918
Shares used in calculation of
per share data:
Weighted average common
and equivalent Series C
preference shares
outstanding 52,033 51,427 51,804 47,834 40,100
Dilutive effect of assumed
exercise of certain stock
options and warrants -- -- -- 2,548
1,989
Weighted average common
shares used to calculate
primary earnings (loss)
per share 52,033 51,427 51,804 50,382 42,089
Primary earnings (loss) per
common share:
- Before extraordinary item $(1.07) $(.99)$
(5.48) $2.55 $ 2.23
- Extraordinary item (.44) -- ---
- --
- Net income (loss) $ (1.51 ) $(.99)$
(5.48) $2.55 $ 2.23
</TABLE>
<PAGE>
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.EXHIBIT 11 (cont.)
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
B. Computation of fully
diluted earnings (loss)
per common share:
Income (loss) available to
common shares before
extraordinary item $(55,932)$(51,081)$(284,040)$128,495$93,918
Additional income as a result of
assumed conversion of
convertible debentures -- -- -- 4,836
1,175
Income (loss) used to calculate
fully diluted earnings per share
before extraordinary item (55,932)(51,081)(284,040)133,331
95,093
Extraordinary loss from
prepayment of debt (22,840) -- -- -- --
Net income (loss) used to
calculate fully diluted
earnings per share $(78,772)$(51,081)$(284,040)$133,331$95,093
Shares used in calculation
of per share data:
Weighted average common
shares used to calculate
primary earnings (loss)
per share 52,033 51,427 51,804 50,382 42,089
Additional shares resulting
from assumed exercise of
options and assumed
conversions of convertible
subordinated debentures -- -- -- 2,530
1,201
Weighted average common
shares used to calculate
fully diluted earnings
(loss) per share 52,033 51,427 51,804 52,912 43,290
Fully diluted earnings (loss)
per common share:
- Before extraordinary item $(1.07) $(.99)$
(5.48) $2.52 $ 2.20
- Extraordinary item (.44) -- ---
- --
- Net income (loss) $ (1.51 ) $(.99)$
(5.48) $2.52 $ 2.20
</TABLE>
<PAGE>
EXHIBIT 21
CHIQUITA BRANDS INTERNATIONAL, INC.
SUBSIDIARIES
As of March 1, 1995, the major subsidiaries of the Company,
the jurisdiction in which organized and the percent of voting
securities owned by the immediate parent corporation were as
follows:
Percent of
Voting Securities
Organized Owned by
Under Laws ofImmediate Parent
Chiquita Brands, Inc. Delaware 100%
American Produce Company Delaware 100%
Banana Supply Co., Inc. Florida 100%
California Day-Fresh Foods, Inc. California 100%
Caribbean Enterprises, Inc. Delaware 100%
Great White Fleet, Ltd. Bermuda 100%
BVS Ltd. Bermuda 100%
CDV, Ltd. Bermuda 100%
CDY, Ltd. Bermuda 100%
CKQ, Ltd. Cayman Islands 100%
CRH Shipping, Ltd. Bermuda 100%
Danfund Ltd. Bermuda 100%
Danop, Ltd. Bermuda 100%
DSF, Ltd. Bermuda 100%
Elke Shipping Limited Bermuda 100%
GPH, Ltd. Bermuda 100%
NCV, Ltd. Bermuda 100%
Norvel, Ltd. Bermuda 100%
Chiquita Brands Company, North America
Delaware 100%
CB Containers, Inc. Delaware 100%
OV Containers, Inc. Delaware 100%
Chiquita Citrus Packers, Inc. Delaware 80%
Chiquita Europe, B.V. Netherlands 100%
Chiquita Banana Company, B.V. Netherlands 100%
Chiquita Italia, S.p.A. Italy 100%
Chiquita Finland Oy Finland 100%
Chiquita Norge AS Norway 100%
Chiquita Packaged Foods, B.V. Netherlands 100%
Chiquita Sweden AB Sweden 100%
Chiquita Tropical Fruit Company, B.V.
Netherlands 100%
(Continued)
PAGE
<PAGE>
EXHIBIT 21 (Cont.)
Percent of
Voting Securities
Organized Owned by
Under Laws ofImmediate Parent
Chiquita Frupac, Inc. Delaware 100%
Chiquita International Trading Company Delaware
100%
Chiquita International Limited
Bermuda 100%
Chiquita Brands South Pacific Limited Australia
100%
Exportadora Frupac Limitada Chile 100%
M.M. Holding Ltd. Bermuda 100%
Chiquita Tropical Products Company
Delaware 100%
Chiquita Gulf Citrus, Inc. Delaware 100%
Chiquita Ventures, Inc. Delaware 100%
Chiriqui Land Company Delaware 100%
Compania Agricola del Guayas Delaware 100%
Compania Agricola de Rio Tinto Delaware 100%
Compania Frutera de Sevilla Delaware 100%
Corpofinanzas, S.A. Costa Rica 100%
Friday Canning Corporation Wisconsin 100%
Maritrop Trading Corporation Delaware 100%
Polymer United, Inc. Delaware 100%
Progressive Produce Corporation Ohio 100%
Tela Railroad Company Delaware 100%
United Brands Japan, Ltd. Japan 95%
Compania Numar, S.A. Costa Rica 100%
Compania Palma Tica Delaware 100%
Compania Bananera Atlantica Limitada
Costa Rica 100%
Compania Mundimar, S.A. Costa Rica 100%
Polymer United G.C., Inc. Delaware 100%
John Morrell & Co. Delaware 100%
United Brands Food Ventures, Ltd. Delaware 100%
Solar Aquafarms, Inc. California 78%
United Marketing, S.A. Delaware 100%
The names of approximately 500 wholly-owned subsidiaries have
been omitted. In the aggregate
these subsidiaries, after excluding approximately 170 foreign
subsidiaries whose immediate parents are
listed above and which are involved in fresh foods operations, do
not constitute a significant subsidiary.
The consolidated financial statements include the accounts of the
Company and all majority-owned
subsidiaries.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report on Form 10-K of Chiquita Brands International, Inc. and
subsidiary companies of our report dated February 27, 1995,
included in the 1994 Annual Report of Chiquita Brands
International, Inc. and subsidiary companies.
Our audits also included the financial statement schedule of
Chiquita Brands International, Inc. and subsidiary companies
listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, the financial statement
schedule referred to above, when considered in relation to the
basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in the
following Registration Statements and related prospectuses of
Chiquita Brands International, Inc. and subsidiary companies of
our report dated February 27, 1995, with respect to the
consolidated financial statements and schedule of Chiquita Brands
International, Inc. and subsidiary companies incorporated by
reference in the Annual Report on Form 10-K for the year ended
December 31, 1994.
Registration
Form No. Description
S-3 33-43333 Dividend Reinvestment Plan
33-58424
S-3 33-41057 Common Stock issuable upon
conversion
of Convertible Subordinated
Debentures
S-3 33-51995 Debt Securities, Preferred Stock
and Common Stock
S-8 33-2241 Chiquita Savings and Investment
Plan
33-16801
33-42733
33-56572
S-8 33-14254 1986 Stock Option and Incentive
Plan
33-38284
33-41069
33-53993
S-8 33-25950 Individual Stock Option Plan
S-8 33-29147 John Morrell & Co. Salaried
33-56570 Employees Incentive Savings
Plan
S-8 33-38147 Associate Stock Purchase Plan
Cincinnati, Ohio /s/ERNST & YOUNG LLP
March 30, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned officers and directors of Chiquita
Brands International, Inc. (the Company) hereby severally
constitute and appoint Fred J. Runk and William A. Tsacalis, and
each of them singly, our true and lawful attorneys and agents
with full power to them and each of them to do any and all acts
and things in connection with the preparation and filing of the
Company's Annual Report on Form 10-K for the year ended December
31, 1994 (the Report) pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange
Commission in response thereof, including specifically, but
without limiting the generality of the foregoing, the power and
authority to sign the name of the Company and the names of the
undersigned directors and officers in the capacities indicated
below to the Report, and any and all amendments and supplements
thereto and any and all other instruments and documents which
said attorneys and agents or any of them may deem necessary or
advisable in connection therewith.
Signature Title Date
Director, Chairman of the March , 1995
(Carl H. Lindner) Board of Directors, Chief
Executive Officer and Chairman
of the Executive Committee
(Principal Executive Officer)
Director, President and March ,
1995
(Keith E. Lindner) Chief Operating Officer
Director March ,
1995
(S. Craig Lindner)
Director March ,
1995
(Fred J. Runk)
PAGE
<PAGE>
EXHIBIT 24 (Continued)
/s/Jean H. Sisco Director March 31,
1995
(Jean H. Sisco)
/s/William W. Verity DirectorMarch
31, 1995
(William W. Verity)
/s/Oliver W. Waddell DirectorMarch
31, 1995
(Oliver W. Waddell)
Director March ,
1995
(Ronald F. Walker)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Chiquita
Brands International, Inc. Form 10-K for the year ended December 31, 1994 and
is qualified in its entirety by references to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 178,855
<SECURITIES> 0
<RECEIVABLES> 271,926
<ALLOWANCES> 14,149
<INVENTORY> 351,730
<CURRENT-ASSETS> 918,242
<PP&E> 2,077,572
<DEPRECIATION> 643,714
<TOTAL-ASSETS> 2,902,021
<CURRENT-LIABILITIES> 653,817
<BONDS> 1,364,877
<COMMON> 16,434
0
190,639
<OTHER-SE> 437,736
<TOTAL-LIABILITY-AND-EQUITY> 2,902,021
<SALES> 3,961,720
<TOTAL-REVENUES> 3,961,720
<CGS> 3,293,341
<TOTAL-COSTS> 3,293,341
<OTHER-EXPENSES> 115,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169,521
<INCOME-PRETAX> (35,200)
<INCOME-TAX> 13,500
<INCOME-CONTINUING> (48,700)
<DISCONTINUED> 0
<EXTRAORDINARY> (22,840)
<CHANGES> 0
<NET-INCOME> (71,540)
<EPS-PRIMARY> (1.51)<F1>
<EPS-DILUTED> (1.51)<F1>
<FN>
<F1>Amounts include an extraordinary loss of $.44 per share resulting from the
prepayment of debt in the first quarter.
</FN>
</TABLE>
EXHIBIT 13
FINANCIAL REPORT
Statement of Management Responsibility
The financial information presented in this Annual Report is
the responsibility of Chiquita Brands International, Inc.
management, who believes that it presents fairly its consolidated
financial position and results of operations in accordance with
generally accepted accounting principles.
The Company's system of internal accounting controls, which is
supported by formal financial and administrative policies, is
designed to provide reasonable assurance that the financial
records are reliable for preparation of financial statements and
that assets are safeguarded against losses from unauthorized use
or disposition. Management reviews, modifies and improves these
systems and controls as changes occur in business conditions and
operations. The Company's worldwide internal audit function
reviews the adequacy and effectiveness of controls and compliance
with policies.
The Audit Committee of the Board of Directors reviews the
Company's financial statements, accounting policies and internal
controls. In performing its reviews, the Committee meets with
the independent auditors, management and internal auditors
periodically to discuss these matters.
The Company engages Ernst & Young LLP, an independent auditing
firm, to audit its financial statements and express an opinion
thereon. The scope of the audit is set by Ernst & Young LLP who
have full and free access to all Company records and personnel in
conducting their audits. Representatives of Ernst & Young LLP
are free to meet with the Audit Committee, with or without
members of management present, to discuss their audit work and
any other matters they believe should be brought to the attention
of the Committee.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Shareholders of
Chiquita Brands International, Inc.
We have audited the accompanying consolidated balance sheets of
Chiquita Brands International, Inc. and subsidiary companies as
of December 31, 1994 and 1993, and the related consolidated
statements of income, shareholders' equity and cash flow for each
of the three years in the period ended December 31, 1994. These
financial statements, appearing on pages 10 through 23, are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Chiquita Brands International, Inc. and
subsidiary companies at December 31, 1994 and 1993 and the
consolidated results of their operations and their cash flow for
each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
February 27, 1995
<PAGE> 5<PAGE>
<TABLE>
Selected Financial Data
Chiquita Brands International, Inc. and Subsidiary Companies
<CAPTION>
(In thousands, except
per share amounts) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION
Working capital $264,425 $273,751 $490,708 $983,329 $438,137
Capital expenditures 148,834 205,380 481,014 410,652 323,334
Total assets 2,902,021 2,889,250 3,041,568 3,142,532
2,174,437
Capitalization
Short-term debt 221,195 218,355 251,513 212,818 163,698
Long-term debt 1,364,877 1,438,439 1,428,100 1,226,575 521,923
Shareholders' equity 644,809 584,069 667,962 967,925 687,709
OPERATIONS
Net sales $3,961,720$4,082,637$4,468,046$4,627,397$4,272,660
Operating income (loss) * 109,783 110,203 (153,781) 226,155 173,762
Income (loss) before income taxes (35,200) (39,081) (279,040) 183,395
151,618
Income (loss) before extraordinary item(48,700)(51,081) (284,040) 128,495
93,918
Net income (loss)* (71,540) (51,081) (284,040) 128,495 93,918
SHARE DATA
Average number of common shares
outstanding 52,033 51,427 51,804 50,382
42,089
Earnings (loss) per common share:
Primary -Before extraordinary item $(1.07) $(0.99) $(5.48) $2.55
$2.23
-Extraordinary item(0.44) -- -- -- --
-Net income (loss)(1.51) (0.99)) (5.48) 2.55 2.23
Fully diluted-Before extraordinary item(1.07) (0.99) (5.48) 2.52
2.20
-Extraordinary item(0.44) -- -- -- --
-Net income (loss)(1.51) (0.99) (5.48) 2.52 2.20
Dividends declared per common share .20 .44 .66 .55.35
Market price per common share:
High 19.25 17.50 40.13 50.63 32.00
Low 11.25 10.13 15.75 29.63 16.13
End of year 13.63 11.50 17.25 40.00
32.00
* Includes unusual charges and losses of $57.2 million in 1994 and
restructuring and reorganization charges of $96.4million in 1992 (see Notes 3 and 15 to the Consolidated Financial Statements).
</TABLE>
<PAGE> 6<PAGE>
Management's Analysis of Operations and Financial Condition
Chiquita Brands International, Inc. and Subsidiary Companies
Operations
As described in Note 2 to the Consolidated Financial
Statements, the Company's Meat Division has been reconsolidated
for financial reporting purposes. The Company is continuing to
pursue the sale of the remainder of its Meat Division operations.
<TABLE>
<CAPTION>
Consolidated Results
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales $3,961,720 $4,082,637 $4,468,046
Operating income (loss) 109,783 110,203 (153,781)
Net loss (71,540) (51,081) (284,040)
</TABLE>
Sales decreased 3% in 1994 and 9% in 1993 principally as a
result of the sale or closing of certain meat operations and
lower banana volumes. Operating income was comparable in 1994
and 1993 as an improvement in Meat Division operations was offset
by a decline in Chiquita operations resulting primarily from
charges and losses relating to farm closings and banana
cultivation write-downs in Honduras and the substantial reduction
of the Company's Japanese "green" banana trading operations.
Operating income in 1993 improved by $264 million over 1992
(which included restructuring and reorganization charges of $96
million) as a result of benefits from the Company's multi-year
investment spending program and its restructuring and cost
reduction efforts. The depreciation and interest components of
total costs were higher during this period (depreciation by $21
million and net interest expense by $37 million) principally as a
result of the shift from rented to owned production and shipping
capacity, a majority of which was financed.
Net interest expense decreased in 1994 primarily as a result
of the prepayment of debt early in the year with the proceeds of
first quarter issuances of preferred stock and senior notes. The
net loss in 1994 includes a $23 million extraordinary charge from
this debt prepayment, consisting principally of write-offs of
unamortized discounts and $5 million of call premiums.
Income taxes consist principally of foreign income taxes
currently paid or payable. No tax benefit was recorded for U.S.
net operating loss carryforwards or other available tax credits.
<TABLE>
<CAPTION>
Chiquita Operations
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales $2,505,826 $2,532,925 $2,723,250
Operating income (loss) 71,185 103,848 (96,588)
</TABLE>
"Chiquita operations" represent the Company's core business
operations other than the Meat Division. Net sales for 1994
declined $27 million (1%) from the prior year level. More than
three-fourths of the effect of lower volumes on revenues was
offset by the effect of a higher average worldwide banana price.
Operating income for 1994, which decreased $33 million, includes
$57 million of third quarter charges and losses as follows:
- approximately $25 million in write-downs from the shutdown of
over 1,200 hectares of low productivity Honduran banana farms
following an unusually severe strike and the chopback of
additional cultivations weakened during the strike.
- approximately $13 million of shut-down costs (principally
workforce severance and facility closures) and operating
losses associated with the substantial reduction of the
Company's Japanese "green" banana trading operations.
- approximately $18 million of charges and losses related to
excess shipping capacity caused in part by the scale- back of
Japanese "green" banana trading operations. These charges and
losses represented provisions for losses on sale of owned
ships, subchartering or idling of other ships and unrecovered
shipping costs.
In addition, higher costs have been incurred to replace
Honduran volume that was curtailed following the strike.
Sales decreased 7% to $2.5 billion in 1993 primarily as a
result of lower banana volumes. Nevertheless, operating income
for 1993 was $104 million compared to an operating loss for 1992
of $97 million, which included restructuring and reorganization
charges of $61 million. This improvement was largely
attributable to cost improvements relating to decreased reliance
on high cost purchased fruit, enhanced production practices,
shipping fleet realignment, reorganization and consolidation of
marketing organizations, and overhead reductions.
<PAGE> 7
<PAGE>
Subsequent to imposition of a new quota system on July 1, 1993
(see "International Operations") which restricts the volume of
Latin American bananas imported into the European Union ("EU"),
1993 prices within the EU increased to a higher level than in
prior years. Banana prices outside the EU following
implementation of the quota were lower than in previous years, as
displaced EU volume entered those markets.
<TABLE>
<CAPTION>
Meat Division Held for Sale
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales $1,455,894 $1,549,712 $1,744,796
Operating income (loss) 38,598 6,355 (57,193)
</TABLE>
In 1992, the Company adopted a plan of disposal for its Meat
Division operations. Pursuant to the plan, the Meat Division
sold a major fresh pork processing facility in December 1992 and
sold its specialty meat operations in 1994. In addition, the
Meat Division obtained government subsidies and financial
incentives, union concessions, and a new stand-alone credit
facility to fund its working capital needs. It also terminated
retiree medical benefits. These benefits had an annual cost of
over $12 million in each of the last three years.
Sales decreased 6% in 1994 and 11% in 1993 primarily as a
result of operations sold or closed.
Operating income improved by $32 million in 1994 primarily as
a result of higher industry margins for fresh pork, reduced
selling and administrative costs and a $10 million gain from the
sale of the Meat Division's specialty meat operations. Operating
income increased $64 million in 1993 primarily due to successful
cost reduction efforts and the absence of $35 million of
restructuring and reorganization charges recorded in 1992. The
1992 restructuring and reorganization charges represented a
provision for loss on disposal of Meat Division operations,
including the costs of various preparatory actions related to the
divestiture as well as the writedown of certain facilities held
for sale or to be closed.
International Operations
Chiquita's products are distributed in more than 40 countries
and its international sales are made primarily in U.S. dollars
and major European currencies. The Company manages currency
exchange risks from sales originating in currencies other than
the dollar generally by exchanging local currencies for dollars
immediately upon receipt, and by engaging from time to time in
various hedging activities. Debt denominated in currencies other
than the U.S. dollar serves as a hedge of the net investment in
those respective countries. In addition, various hedging
activities are used to offset currency exchange movements on firm
commitments and other transactions where the potential for loss
exists. (See Note 9 of the Consolidated Financial Statements for
additional discussion of the Company's hedging activities.)
On July 1, 1993, the EU implemented a new quota effectively
restricting the volume of Latin American bananas imported into
the EU, which had the effect of decreasing the Company's volume
and market share in Europe. The quota is administered through a
licensing system and grants preferred status to producers and
importers within the EU and its former colonies, while imposing
new quotas and tariffs on bananas imported from other sources,
including Latin America, Chiquita's primary source of fruit. In
two separate rulings, General Agreement on Tariffs and Trade
("GATT") panels found this banana policy to be illegal. In March
1994, four of the countries which had filed GATT actions against
the EU banana policy (Costa Rica, Colombia, Nicaragua and
Venezuela) reached a settlement with the EU by signing a
"Framework Agreement." The Framework Agreement authorizes the
imposition of additional restrictive and discriminatory quotas
and export licenses on U.S. banana marketing firms, while leaving
EU firms exempt. Costa Rica and Colombia are presently
implementing this agreement. Full implementation of the Framework
Agreement could significantly increase the Company's cost to
export bananas from these sources. Three additional European
countries (Sweden, Finland and Austria) joined the EU effective
January 1, 1995. These countries, which have had substantially
unrestricted banana markets in which Chiquita has supplied a
significant portion of the bananas, are in the process of
transition to the restrictive EU quota and licensing environment.
The timing and exact nature of any adjustments in the quota and
licensing regulations that will be made for these new EU members
have not yet been determined.
<PAGE> 8
<PAGE>
In September 1994, Chiquita and the Hawaii Banana Industry
Association made a joint filing with the Office of the U.S. Trade
Representative under Section 301 of the U.S. Trade Act of 1974,
charging that the EU quota and licensing regime and the Framework
Agreement are unreasonable, discriminatory, and a burden and
restriction on U.S. commerce. In response to this petition, the
U.S. Government initiated a formal investigation of the EU banana
import policy in October 1994. In January 1995, the U.S.
Government announced a preliminary finding against the EU banana
import policy and launched separate investigations of the
Colombian and Costa Rican Framework Agreement policies. The EU,
Colombian and Costa Rican investigations are continuing. Section
301 authorizes retaliatory measures, such as tariffs or
withdrawal of trade concessions, against the offending countries.
However, there can be no assurance as to the results of the
investigation, the nature and extent of actions the U.S.
Government might take, or the impact on the EU quota regime or
the Framework Agreement.
Financial Condition
Cash flow provided by operations was $87 million for 1994
compared to $49 million for 1993 and a negative cash flow of $43
million for 1992. A significant portion of the 1994 operating
loss represented non-cash charges for depreciation and
amortization and write-downs of farms and cultivations. At
December 31, 1994, Chiquita had $179 million of cash and
equivalents, not including $75 million of restricted cash on
deposit.
<TABLE>
<CAPTION>
Capital expenditures for the last three years were as follows:
(In millions) 1994 1993 1992
<S> <C> <C> <C>
Investment spending (primarily
transportation system improvements
and fresh fruit production capacity) $72 $144
$405*
Normal spending 77 61 76
$149 $205 $481
* Includes $63 million of purchases which were directly
financed.
</TABLE>
During 1994, the Company completed its multi-year investment
spending program with the delivery of the last two ships under
construction. This program was the primary reason for
approximately $500 million in long-term subsidiary borrowings
during the last three years. "Normal spending" for 1994 exceeded
1993 levels principally due to the post-strike renovation of
Honduras cultivations. Capital expenditures for 1995 are
expected to approximate "normal spending" levels experienced in
1993.
In order to strengthen its balance sheet, enhance short-term
liquidity and reduce overall borrowing costs, Chiquita:
- raised approximately $310 million in a 1994 public offering
of 9 1/8% senior notes and preferred stock. The Company used
the proceeds of these offerings to redeem or repay
subordinated and subsidiary debt, including 11 7/8%
subordinated debentures, and 10 1/2% and 10 1/4% subordinated
debentures which carried effective interest rates of 12.1%
and 13.7%, respectively.
- sold and leased back shipping containers in 1994 which
generated gross proceeds of $32 million. Approximately $20
million of related 9.8% debt financing was retired.
- sold its specialty meat operations in 1994 for $53 million in
cash and used the proceeds primarily to reduce short-term
borrowings of the Meat Division.
- reduced the annual dividend rate on its capital stock in mid-
1993 from $.68 per share to $.20 per share.
Chiquita is also exploring various alternatives to extend
maturities of certain lower cost subsidiary indebtedness.
In 1992, Chiquita issued 2.7 million shares of capital stock
in exchange for all outstanding common shares of Friday Canning
Corporation, a private-label vegetable processor. The Company
also repurchased 1.7 million shares of capital stock during 1992
for approximately $35 million.
<PAGE> 9
<PAGE>
<TABLE>
Consolidated Statement of Income
Chiquita Brands International, Inc. and Subsidiary Companies
<CAPTION>
Year Ended December 31,
(In thousands, except per share amounts)1994 1993 1992
<S> <C> <C> <C>
Net sales $3,961,720$4,082,637$4,468,046
Operating expenses
Cost of sales 3,293,341 3,412,151
3,948,429
Selling, general and administrative expenses442,780 448,685
486,397
Depreciation 115,816 111,598
90,601
Restructuring and reorganization -- -- 96,400
3,851,937 3,972,434 4,621,827
Operating income (loss) 109,783 110,203 (153,781)
Interest income 22,967 20,413
43,356
Interest expense (169,521) (174,112)
(160,285)
Other income (expense), net 1,571 4,415 (8,330)
Loss before income taxes (35,200) (39,081) (279,040)
Income taxes (13,500) (12,000) (5,000)
Loss before extraordinary item (48,700) (51,081) (284,040)
Extraordinary loss from prepayment of debt (22,840) -- --
Net loss $(71,540) $(51,081)$(284,040)
Less dividends on Series A preferred stock (7,232) -- --
Net loss on common shares $(78,772) $(51,081)$(284,040)
Per common share - primary and fully diluted
- Loss before extraordinary item $(1.07) $(.99) $(5.48)
- Extraordinary item (.44) -- --
- Net loss (1.51) (.99) (5.48)
Weighted average number of common
shares outstanding 52,033 51,427 51,804
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 10
<PAGE>
<TABLE>
Consolidated Balance Sheet
Chiquita Brands International, Inc. and Subsidiary Companies
<CAPTION>
December 31,
(In thousands, except share amounts) 1994 1993
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents $178,855 $151,226
Trade receivables, less allowances of $14,149 and
$13,033, respectively 257,777 241,953
Other receivables, net 95,948 87,495
Inventories 351,730 364,915
Other current assets 33,932 40,029
Total current assets 918,242 885,618
Restricted cash 75,030 51,020
Property, plant and equipment, net 1,433,858 1,480,936
Investments and other assets 309,721 291,304
Intangibles, net 165,170 180,372
Total assets $2,902,021$2,889,250
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $130,163 $138,925
Long-term debt due within one year 91,032 79,430
Accounts payable 270,033 244,669
Accrued liabilities 162,589 148,843
Total current liabilities 653,817 611,867
Long-term debt of parent company 840,377 881,124
Long-term debt of subsidiaries 524,500 557,315
Accrued pension and other employee benefits120,325 130,924
Other liabilities 118,193 123,951
Total liabilities 2,257,212 2,305,181
Shareholders' equity
Preferred and preference stock 190,639 52,270
Capital stock, $.33 par value (49,300,881 and
48,510,353 shares outstanding, respectively)16,43416,170
Capital surplus 505,800 494,240
Retained earnings (deficit) (52,940) 39,318
Minimum pension liability adjustment (15,124) (17,929)
Total shareholders' equity 644,809 584,069
Total liabilities and shareholders' equity$2,902,021$2,889,250
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 11
<PAGE>
<TABLE>
Consolidated Statement of Shareholders' Equity
Chiquita Brands International, Inc. and Subsidiary Companies
<CAPTION>
Minimum Total
Preferred and Retainedpension Share-
preference Capitalearningsliabilityholders'
stockCapital stock surplus(deficit)adjustmentequity
(In thousands, except share amounts)SharesPar value
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $ --49,925,777$16,642$533,627$417,656$
-- $967,925
Capital stock repurchased --(1,699,100)(566)(17,395)(16,542)--
(34,503)
Stock options exercised --297,573 99 4,549 -- --
4,648
Series C preference stock issued
in exchange for capital stock 52,270(3,241,546)(1,081)(32,909)(18,795)--
(515)
Shares issued in an acquisition --2,694,136 898 (751)52,258 -
- 52,405
Other shares issued -- 186,720 63 3,248 -- -- 3,311
Change in minimum pension
liability adjustment -- -- -- -- -- (6,925)
(6,925)
Net loss -- -- -- --(284,040) --
(284,040)
Dividends
Capital stock -- -- -- --(33,566) --
(33,566)
Preference stock -- -- -- -- (778) --
(778)
Balance at December 31, 1992 $52,27048,163,560$16,055$490,369$116,193
$(6,925) $667,962
Capital stock repurchased -- (30,000) (10) (102) (325)--
(437)
Stock options exercised -- 17,120 6 168 -- --
174
Other shares issued -- 168,000 55 1,738 -- -- 1,793
Change in minimum pension
liability adjustment -- -- -- -- -- (11,004)
(11,004)
Net loss -- -- -- --(51,081) --
(51,081)
Dividends
Capital stock -- -- -- --(21,191) --
(21,191)
Preference stock -- 191,673 64 2,067 (4,278) --
(2,147)
Balance at December 31, 1993 $52,27048,510,353$16,170$494,240$39,318
$(17,929) $584,069
Stock options exercised --118,133 40 1,325 -- --
1,365
Series A preferred stock issued 138,369 -- -- -- -- -
- 138,369
Other shares issued -- 358,244 119 6,075 -- -- 6,194
Change in minimum pension
liability adjustment -- -- -- -- -- 2,805
2,805
Net loss -- -- -- --(71,540) --
(71,540)
Dividends
Capital stock -- -- -- -- (9,757) --
(9,757)
Preferred and preference stock--314,151 105 4,160 (10,961) -
- (6,696)
Balance at December 31, 1994 $190,63949,300,881$16,434$505,800$(52,940)
$(15,124) $644,809
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 12<PAGE>
<TABLE>
Consolidated Statement of Cash Flow
Chiquita Brands International, Inc. and Subsidiary Companies
<CAPTION>
Year Ended December 31,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Cash provided (used) by:
Operations
Loss before extraordinary item$(48,700)$(51,081)$(284,040)
Depreciation and amortization 122,173 119,184 98,558
Non-cash charges (write-downs of farms
and cultivations in 1994 and restructuring
and reorganization charges in 1992) 24,600 --
69,500
Changes in current assets and liabilities
Receivables (18,243) (10,030) 51,756
Inventories (23,144) 35,510 41,796
Accounts payable 23,749 (12,872) (55,035)
Other current assets and liabilities 20,502 (30,240)
33,701
Other (14,365) (1,438)
553
Cash flow from operations 86,572 49,033 (43,211)
Investing
Capital expenditures (148,834) (205,380) (418,511)
Restricted cash deposits (24,010) (51,020) --
Acquisitions and long-term investments (7,717) (49,466)
(35,217)
Decrease in marketable securities -- 25,212 87,113
Proceeds from sales of ships and equipment41,705 22,000 -
-
Proceeds from sales of meat operations 52,700 --
4,498
Other (4,318) 12,081 (8,330)
Cash flow from investing (90,474) (246,573) (370,447)
Financing
Debt transactions
Issuances of long-term debt 278,388 151,160 254,820
Repayments of long-term debt(369,684)(154,067) (69,684)
Decrease in notes and loans payable (4,095) (17,192)
(34,598)
Stock transactions
Issuance of preferred stock 138,369 -- --
Issuances of capital stock 5,006 1,854 6,101
Repurchases of capital stock -- (437) (34,503)
Dividends (16,453) (23,338) (34,344)
Cash flow from financing 31,531 (42,020) 87,792
Increase (decrease) in cash and equivalents 27,629 (239,560)
(325,866)
Balance at beginning of year 151,226 390,786 716,652
Balance at end of year $178,855 $151,226 $390,786
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 13<PAGE>
Notes to Consolidated Financial Statements
Chiquita Brands International, Inc. and Subsidiary Companies
Note 1 -- Summary of Significant Accounting Policies
American Financial Corporation and its subsidiaries ("AFC") owned
approximately 46% of the voting stock of Chiquita Brands
International, Inc. ("Chiquita" or the "Company") as of December
31, 1994.
Consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries, including its Meat
Division held for sale (see Note 2). Intercompany balances and
transactions have been eliminated.
Investments representing minority interests are accounted for by
the equity method when Chiquita has the ability to exercise
significant influence in the investees' operations; otherwise,
they are accounted for at cost. At December 31, 1994 and 1993,
investments in food-related companies of $66 million and $54
million, respectively, were accounted for using the equity
method. The excess ($18 million) of the carrying value over
Chiquita's share of the fair value of the investees' net assets
at the date of acquisition is being amortized over 40 years.
Cash and Equivalents
Cash and equivalents include all unrestricted cash and highly
liquid investments with a maturity when purchased of three months
or less.
Inventories
Inventories are valued at the lower of cost or market, except for
certain meat products which are valued at approximate market.
Cost for growing crops and certain banana inventories is
determined principally on the "last-in, first-out" (LIFO) basis.
Cost for other inventory categories is determined principally on
the "first-in, first-out" (FIFO) or average cost basis.
Intangibles
Intangibles consist of goodwill and trademarks which are being
amortized over 40 years. Accumulated amortization was $35.2
million and $32.2 million at December 31, 1994 and 1993,
respectively.
Income Taxes
Deferred income taxes are recognized at currently enacted tax
rates for temporary differences between the financial reporting
and income tax bases of assets and liabilities. Deferred taxes
are not provided on the undistributed earnings of subsidiaries
operating outside the U.S. that have been or are intended to be
permanently reinvested.
Foreign Currencies
Chiquita utilizes the U.S. dollar as its functional currency.
Net foreign exchange gains, which amounted to approximately $11.0
million, $7.5 million and $4.8 million in 1994, 1993 and 1992,
respectively, are included in income.
The Company has a long-standing policy of periodically entering
into foreign exchange forward contracts and purchasing foreign
currency options to hedge transactions denominated in foreign
currencies in order to protect the Company from the risk that the
eventual dollar cash flows of the transactions will be adversely
affected by changes in exchange rates. Gains and losses on
forward contracts used to hedge firm commitments and on
purchased options are deferred and included in the measurement of
the underlying transactions. Gains and losses on forward
contracts used to hedge other transactions are included in income
on a current basis.
Earnings Per Share
Primary earnings per share is calculated on the basis of the
weighted average number of shares of common stock and equivalent
Series C preference stock outstanding during the year and the
dilutive effect, if any, of assumed conversion of other common
stock equivalents (stock options and warrants). Fully diluted
earnings per share includes the dilutive effect, if any, of
assumed conversion of Series A preferred stock and convertible
subordinated debentures.
<PAGE> 14
<PAGE>
Note 2 -- Meat Division Held for Sale
During the fourth quarter of 1992, after evaluation of
reorganization plans announced earlier that year and completion
of other preparatory actions, Chiquita adopted a plan of disposal
for all remaining Meat Division operations (see Note 4).
Pursuant to the plan, the Company completed the sale of a major
fresh pork processing facility in December 1992. During 1994,
the Division's specialty meat operations were sold for
approximately $53 million in cash and the Meat Division
obtained a favorable Federal Circuit Court of Appeals ruling that
reconfirmed its right to unilaterally reduce or eliminate medical
benefits of retired hourly employees. The Meat Division
subsequently terminated these benefits, which had an annual cost
of approximately $12.2 million in 1994, $15.3 million in 1993
and $12.9 million in 1992.
The Company is continuing to pursue the sale of the remainder of
its Meat Division operations. The Meat Division was previously
accounted for as a discontinued operation and, accordingly, was
not consolidated in the financial statements. However, as
required by current Securities and Exchange Commission practices
and interpretations, which have evolved since 1992, the Meat
Division has been reconsolidated in the 1994 financial statements
because the disposition of all remaining meat operations was not
entirely completed as of December 31, 1994. Prior years'
financial statements have been presented on a comparable basis.
At December 31, 1994, the net assets of the Meat Division held
for sale included in the consolidated balance sheet are as
follows:
<TABLE>
(In thousands)
<S> <C>
Current assets $113,917
Property, plant and equipment, net 46,726
Other assets 13,857
Total assets 174,500
Current liabilities 79,926
Accrued pension and other employee benefits 45,470
Other liabilities 2,386
Total liabilities 127,782
Total net assets $46,718
</TABLE>
The Company has evaluated the recoverability of its
investment in the Meat Division and has concluded that the
investment is recoverable through the completion of its disposal
plan.
See Note 3 for information regarding Meat Division net
sales, operating income and identifiable assets and Note 6 for
information regarding Meat Division depreciation expense and
capital expenditures. Meat Division cost of sales and selling,
general and administrative expenses included in the consolidated
income statement for 1994 were $1.3 billion and $111 million,
respectively.
Note 3 -- Industry Segment and Geographic Area Information
The Company is one of the world's leading marketers,
processors and producers of quality food products. The Company's
products are sold throughout the world and its principal
production and processing operations are conducted in North,
Central and South America. The Company's "Chiquita operations"
constitute its only industry segment other than the Meat Division
held for sale, the operations of which are conducted in North America.
Chiquita's earnings are heavily dependent upon products
grown and purchased in Central and South America. These
activities, a significant factor in the economies of the
countries where Chiquita produces bananas and other agricultural
and consumer products, are subject to the risks that are inherent
in operating in such foreign countries, including government
regulation, currency restrictions and other restraints, risk of
expropriation and burdensome taxes. Certain of these operations
are substantially dependent upon leases and other agreements with
these governments.
The Company is also subject to a variety of governmental
regulations in certain countries where it markets bananas,
including import quotas and tariffs, currency exchange controls
and taxes.
Financial information with respect to the Company's
operations by industry segment and geographic area is shown on
the following page.
<PAGE> 15
<PAGE>
<TABLE>
INFORMATION BY INDUSTRY SEGMENT
<CAPTION>
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales
Chiquita operations $2,505,826 $2,532,925 $2,723,250
Meat Division held for sale1,455,894 1,549,712 1,744,796
Consolidated net sales $3,961,720 $4,082,637 $4,468,046
Operating income (loss)
Chiquita operations $71,185 $103,848 $(96,588)
Meat Division held for sale 38,598 6,355 (57,193)
Consolidated operating income (loss)$109,783$110,203$(153,781)
Identifiable assets
Chiquita operations $2,727,521 $2,697,885 $2,857,870
Meat Division held for sale 174,500 191,365 183,698
Consolidated assets $2,902,021 $2,889,250 $3,041,568
INFORMATION BY GEOGRAPHIC AREA
(In thousands) 1994 1993 1992
Net sales to unaffiliated customers
North America $2,680,008 $2,788,390 $2,937,409
Central and South America 179,726 184,060 187,753
Europe and other international1,101,9861,110,187 1,342,884
Consolidated net sales $3,961,720 $4,082,637 $4,468,046
Operating income (loss)
North America $30,228 $26,824 $(104,777)
Central and South America 19,071 17,607 16,906
Europe and other international73,746 78,691 (52,541)
Unallocated expenses (13,262) (12,919) (13,369)
Consolidated operating income (loss)$109,783$110,203$(153,781)
Identifiable assets
North America $652,320 $698,609 $719,826
Central and South America 864,232 912,321 918,230
Europe and other international385,241 339,374 306,131
Shipping operations 671,756 656,816 586,960
Corporate assets 328,472 282,130 510,421
Consolidated assets $2,902,021 $2,889,250 $3,041,568
</TABLE>
See Note 6 for information regarding depreciation and capital
expenditures by industry segment.
Net sales in the preceding tables exclude intercompany sales
of bananas from Central and South America to different geographic
areas. These sales, which are eliminated in consolidation and
are measured at cost under the method used for internal
management financial reporting purposes, were approximately $500
million in each of the last three years. There are no banana
sales to unaffiliated customers in Central and South America.
Other intergeographic sales are not significant.
Operating income for 1994 includes third quarter charges and
losses within Chiquita operations totaling $57.2 million
primarily resulting from farm closings and write-downs of banana
cultivations in Honduras and the substantial reduction of the
Company's Japanese "green" banana trading operations as follows:
North America, $27.1 million; Europe and other international,
$30.1 million. Operating income for 1992 includes restructuring
and reorganization charges (see Note 4) allocated as follows:
North America, $41.9 million; Europe and other international,
$54.5 million.
For purposes of reporting identifiable assets by geographic
area, cash and equivalents, marketable securities, restricted
cash and trademarks are included in corporate assets. Minority
equity investments are included in the geographic area where
their operations are located.
Note 4 -- Restructuring and Reorganization
During the fourth quarter of 1992, the Company undertook a
program to adjust its fresh foods volume and cost infrastructure
to significantly reduce production, distribution and overhead
costs. This program, which included consolidation of operations,
asset disposals and workforce reductions, resulted in
restructuring and reorganization charges of $61.3 million.
In 1992, the Company recorded a provision for loss on disposal
of the Meat Division of $35.1 million, which included the costs
of various preparatory actions related to the divestiture of the
Meat Division as well as the writedown of certain facilities
held for sale or to be closed.
<PAGE> 16
<PAGE>
<TABLE>
Note 5 -- Inventories
<CAPTION>
Inventories consist of the following:
December 31,
(In thousands) 1994 1993
<S> <C> <C>
Bananas and other fresh produce $47,592 $42,918
Meat 35,165 48,174
Other food products 63,565 56,043
Growing crops 115,177 117,839
Materials and supplies 76,078 84,874
Other 14,153 15,067
$351,730 $364,915
</TABLE>
The carrying value of inventories valued by the LIFO method was
$126 million at December 31, 1994 and $129 million at December
31, 1993. If inventories were stated at current costs, total
inventory values would have been approximately $30 million and
$10 million higher than reported at December 31, 1994 and 1993.
<TABLE>
Note 6 -- Property, Plant and Equipment, Net
<CAPTION>
Property, plant and equipment consist of the following:
December 31,
(In thousands) 1994 1993
<S> <C> <C>
Land $108,334 $107,288
Buildings and improvements 244,847 248,768
Machinery and equipment 531,210 556,133
Ships and containers 796,906 790,817
Cultivations 317,233 305,546
Other 79,042 80,023
2,077,572 2,088,575
Less accumulated depreciation (643,714) (607,639)
Property, plant and equipment, net $1,433,858 $1,480,936
</TABLE>
Property, plant and equipment are stated at cost and, except
for land and certain improvements, are depreciated on a straight-
line basis over their estimated useful lives. The Company
capitalized interest costs of $4 million in 1994, $8 million in
1993 and $21 million in 1992 as part of the cost of major
production and shipping asset construction projects.
The following tables present depreciation and capital
expenditures for Chiquita operations and the Meat Division held
for sale:
<TABLE>
(In thousands) 1994 1993 1992
Depreciation
<S> <C> <C> <C>
Chiquita operations $106,964 $102,591 $80,438
Meat Division held for sale 8,852 9,007 10,163
$115,816 $111,598 $ 90,601
Capital Expenditures
Chiquita operations $136,981 $196,554 $472,273
Meat Division held for sale11,853 8,826 8,741
$148,834 $205,380 $481,014
</TABLE>
Capital expenditures of Chiquita operations presented above for
1992 include $62.5 million of purchases which were directly
financed.
<TABLE>
Note 7 -- Leases
<CAPTION>
Total rental expense consists of the following:
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Gross rentals-ships and containers $101,207 $142,969
$222,916
- other 40,985 41,632 45,023
142,192 184,601 267,939
Less sublease rentals (4,740) (7,189) (20,775)
$137,452 $177,412 $247,164
</TABLE>
Future minimum rental payments required under operating leases
having initial or remaining non-cancelable lease terms in excess
of one year at December 31, 1994 are as follows:
<TABLE>
(In thousands)
Gross Rentals
Ships and containers Other Total
<S> <C> <C> <C>
1995 $71,749 $19,513 $91,262
1996 29,168 16,914 46,082
1997 27,492 14,012 41,504
1998 22,601 9,940 32,541
1999 22,253 5,038 27,291
Later years 70,425 6,703
77,128
</TABLE>
Portions of the minimum rental payments for ships constitute
reimbursement for ship operating costs paid for by the lessor.
Future minimum rental payments to be received from non-cancelable
subleases at December 31, 1994, principally for office space and
ships, are $49.3 million.
<PAGE> 17
<PAGE>
<TABLE>
Note 8 -- Debt
<CAPTION>
Long-term debt consists of the following:
(In thousands) December 31,
Parent Company 1994 1993
<S> <C> <C>
9 1/8% senior notes, due 2004 $175,000 $ --
9 5/8% senior notes, due 2004, less unamortized discount
of $2,632 and $2,805 (imputed interest rate of 9.8%)247,368
247,195
7% subordinated debentures, due 2001, convertible
into capital stock at $43 per share 138,000 138,000
10 1/2% subordinated debentures, due 2004, less
unamortized discount of $5,839 and $10,391
(imputed interest rate of 12.1%) 59,980 100,429
11 1/2% subordinated notes, due 2001 220,000 220,000
9 1/8% subordinated debentures, due 1998, less
unamortized discount of $1,776 (imputed
interest rate of 13.2%) -- 15,900
10 1/4% subordinated debentures, due 2005, less
unamortized discount of $7,538 (imputed
interest rate of 13.7%) -- 34,554
11 7/8% subordinated debentures, due 2003 -- 125,000
Other notes and loans 47 62
Less current maturities (18) (16)
Long-term debt of parent company $840,377 $881,124
Subsidiary Companies
Loans payable secured by ships and containers, due in
installments from 1995 to 2005, bearing interest at effective
rates averaging 8.8% (8.1% at December 31, 1993) $368,146
$376,492
Caribbean Basin Projects Financing Authority (CBI
Industrial Revenue Bonds 1993 Series A) loan, due
1998, bearing interest at a variable rate of 4.4% (2.7%
at December 31, 1993) 38,000 38,000
Overseas Private Investment Corporation loans, due in
installments through 2002, bearing interest at rates
averaging 9% 17,774 25,275
Note payable, due in installments from 1995 through
1998, bearing interest at 1% below prime17,200 19,200
Loans and notes payable in foreign currencies maturing
through 2008, bearing interest at rates averaging 22%
(23% at December 31, 1993) 50,846 81,902
Other loans and notes payable maturing through 2012,
bearing interest at rates averaging 9% (8% at
December 31, 1993) 123,548 95,860
Less current maturities (91,014) (79,414)
Long-term debt of subsidiaries $524,500 $557,315
</TABLE>
Certain of the subordinated debentures have sinking fund
requirements and are callable at the Company's option at prices
ranging from par to premiums of 1.9% to 5.7% over par at various
dates through 1998. Certain of the Company's debt agreements
contain restrictions on the payment of cash dividends. At
December 31, 1994, approximately $155 million was available for
dividend payments under the most restrictive of these agreements.
In February 1994, the Company issued $175 million principal
amount of 9 1/8% senior notes due 2004. The unsecured notes rank
equally with existing and future senior unsecured indebtedness of
the Company. The proceeds from this issuance, together with the
proceeds from the sale of preferred stock (see Note 12), were
used to redeem or repay subordinated and subsidiary debt,
including 11 7/8% Subordinated Debentures, 10 1/4% Subordinated
Debentures, 9 1/8% Subordinated Debentures and a portion ($45
million principal amount) of its 10 1/2% Subordinated
Debentures. These prepayments resulted in an extraordinary loss
of $22.8 million on which no tax benefit was recorded. This loss
consists principally of write-offs of unamortized discounts and
$5 million of call premiums.
At December 31, 1994, $70 million of the carrying amount of
loans secured by ships bear interest at fixed rates averaging
6.9%. The remaining ship and container loans carry variable
interest rates ranging from .75% to 1.5% over LIBOR. Interest
rate swap agreements fix the rate of interest on $92 million of
these variable rate ship and container loans at an average rate
of 9.1% (see Note 9). The overall effective interest rate on
ship and container loans includes the amortization of deferred
hedging gains and losses from interest rate futures contracts.
No such contracts were outstanding at December 31, 1994 or 1993.
Cash payments relating to
interest expense were $161.2 million, $164.3 million and $144.8
million in 1994, 1993 and 1992, respectively.
<PAGE> 18
<PAGE>
Maturities and sinking fund
requirements on long-term debt during the next five years, after
application of previously reacquired debentures to meet sinking
fund requirements, are:
<TABLE>
Parent Subsidiary
(In thousands) Company Companies Total
<S> <C> <C> <C>
1995 $18 $91,014
$91,032
1996 20 91,709
91,729
1997 9 104,780
104,789
1998 -- 117,892
117,892
1999 -- 46,854
46,854
</TABLE>
The Company maintains lines of credit with various domestic and foreign
banks for borrowing funds on a short-term basis. The Meat
Division has an $80 million revolving credit facility (available
through September 1995) secured by its working capital which
bears interest at prime plus 2%. An annual fee of 1/2% is
payable on the unused portion of the facility. No borrowings
were outstanding under this facility at December 31, 1994 and $26
million was outstanding at December 31, 1993. Chiquita also has
short-term working capital loans with domestic and foreign banks.
At December 31, 1994, the weighted average interest rate for all
short-term notes and loans payable was 11.7% (10.3% at December
31, 1993).
Note 9 -- Hedging Transactions
At December 31, 1994, the Company had foreign exchange forward contracts
to ensure conversion at an average exchange rate of 1.54 Deutsche
mark for each U.S. dollar of approximately $179 million of
foreign sales commitments for 1995. The Company also had
purchased foreign currency options to ensure conversion at an
average exchange rate of 1.60 Deutsche mark for each U.S. dollar
of approximately $62 million of foreign sales commitments in the
first half of 1995. The fair value of these contracts and
options, based on quoted market prices, was not significant.
Chiquita has interest rate swap agreements to fix the rate of interest
on approximately $92 million of its variable rate ship and
container loans maturing between 1998 and 2001. The Company has
also entered into foreign currency swap agreements to convert $59
million of ship debt denominated in pounds sterling to U.S.
dollar loans maturing in 2004 and 2005 in order to protect the
Company from the risk that interest and principal repayments will
be adversely affected by changes in exchange rates. The swap
agreements have maturities which correspond with those of the
underlying loans.
The carrying values and estimated fair values of the Company's debt and
associated swap agreements are summarized below:
<TABLE>
December 31,
1994 1993
<S> <C> <C> <C> <C>
Carrying Estimated Carrying Estimated
(In thousands) value fair value valuefair value
Debt $1,586,072 $1,531,600$1,656,794$1,720,000
Interest rate swap agreements -- (300) --10,700
Foreign currency swap
agreements -- 400 -- (4,100)
$1,586,072 $1,531,700$1,656,794$1,726,600
</TABLE>
Fair value for the Company's publicly traded debt is based on
quoted market prices. Fair value for other debt is estimated
based on the current rates offered to the Company for debt of
similar maturities. The fair values of interest rate and foreign
currency swap agreements are estimated based on the cost to
terminate the agreements.
The Company is exposed to credit loss in the event of
nonperformance by counterparties on foreign exchange forward
contracts, interest rate swap agreements and currency swap
agreements. However, because the Company's hedging activities
are transacted only with highly rated institutions, Chiquita does
not anticipate nonperformance by any of these counterparties.
The amount of any credit exposure is limited to unrealized gains
on such contracts and swaps.
<PAGE> 19
<PAGE>
Note 10 -- Pension and Severance Benefits
The Company and its subsidiaries have several defined benefit
and contribution pension plans covering approximately 9,000
domestic and foreign employees. Approximately 35,000 employees
are covered by Central and South American severance plans.
Pension plans covering eligible salaried employees and Central
and South American severance plans for all employees call for
benefits to be based upon years of service and compensation
rates. Other plans covering hourly workers generally provide
benefits of stated amounts for each year of service.
<TABLE>
Pension and severance expense consists of the following:
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Defined benefit and severance plans:
Service cost -- benefits earned during the period $6,637
$6,980 $6,328
Interest cost on projected benefit obligation20,840 20,927
20,330
Actual return on plan assets 424 (10,176) (4,400)
Net amortization and deferral (13,185) (4,022) (9,207)
14,716 13,709 13,051
Defined contribution and multi-employer plans 7,140 6,021
7,004
Total pension and severance expense$21,856 $19,730 $20,055
</TABLE>
Total pension expense included in the table above for plans of
the Meat Division held for sale was $6.2 million in 1994, $4.5
million in 1993 and $5.3 million in 1992.
The projected benefit obligations were determined using assumed
discount rates of approximately 9 1/4% 1994 and 1993 for unfunded
Central and South American pension and severance benefits and
approximately 8 3/4% in 1994 and 7 3/4% in 1993 for all other
plan benefits. The assumed long-term rate of compensation
increase was between 5% and 6% and the assumed long-term rate of
return on plan assets was approximately 9% in 1994 and 1993.
Pensions are funded in accordance with the requirements of the
Employee Retirement Income Security Act or equivalent foreign
regulations. Plan assets consist primarily of corporate debt,
U.S. government and agency obligations and collective trust
funds. Severance benefits in Central and South America are
generally funded as benefits are paid. <PAGE>
The funded status of the Company's
domestic and foreign defined benefit pension and severance plans is as follows:
<TABLE>
Plans for which
Plans for which
Assets Exceed
Accumulated Benefits
Accumulated Benefits
Exceed Assets
at December 31, at
December 31,
(In thousands) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Plan assets at fair market value $73,757 $74,839 $66,645$72,069
Present value of benefit obligations:
Vested 62,649 68,068 156,689 166,673
Nonvested 2,562 3,439 6,594 6,713
Accumulated benefit obligation65,21171,507 163,283 173,386
Additional amounts related to projected
pay increases 7,180 8,543 18,333 19,062
Projected benefit obligation72,391 80,050 181,616 192,448
Projected benefit obligation less than
(in excess of) plan assets1,366 (5,211) (114,971) (120,379)
Projected benefit obligation not yet
recognized in the balance sheet:
Net actuarial loss 9,926 14,374 26,044 24,231
Prior service cost -- -- 2,333 2,684
Obligation (asset) at transition,
net of amortization (4,413) (5,152) 7,119 8,709
Adjustment required to recognize
minimum liability -- -- (15,948) (18,833)
Net balance sheet asset (liability)$6,879 $4,011 $(95,423)
$(103,588)
</TABLE>
The fair value of plan assets, the projected benefit obligation
and the net balance sheet liability included in the table above
for plans of the Meat Division held for sale at December 31, 1994
were $102.6 million, $149.7 million and $41.1 million,
respectively ($108.3 million, $166.5 million and $50.0 million,
respectively, at December 31, 1993). The adjustment required to
recognize the minimum pension liability is based on the excess of
the accumulated benefit obligation over the fair market value of
assets of the Meat Division's plan for hourly workers.
<PAGE> 20
<PAGE>
Note 11 -- Stock Options
Under a non-qualified stock option plan, the Company may grant
options to purchase up to an aggregate of 15,000,000 shares of
capital stock. Under this plan and other formal stock option and
incentive plans, options have been granted to directors, officers
and other key employees to purchase shares of the Company's
capital stock at the fair market value at the date of grant. The
options may be exercised over a period not in excess of 20 years.
<TABLE>
1994 1993
Option Option
Shares Price Shares Price
<S> <C> <C> <C> <C>
Under option at beginning
of year 5,451,768$5.75 - 47.755,969,996$5.75 - 49.63
Options granted 287,16511.44 - 17.063,282,76510.19 - 14.25
Options exercised (118,133)8.67 - 16.38 (17,120)8.67 - 16.13
Options canceled or expired(407,042)8.67 - 47.75(3,783,873)8.67 - 49.63
Under option at end of year5,213,758$5.75 - 34.445,451,768$ 5.75 - 47.75
Options exercisable at end of year2,234,823 1,517,236
Shares available for future grant7,968,754 2,852,598
</TABLE>
In 1993, in connection with a voluntary exchange offer, the
Company canceled options for 2,298,186 shares at prices ranging
from $15.81 to $49.63 issued in 1988 through 1992 and, in
exchange, reissued options for 1,451,430 shares at a price of
$10.31, the exchange date market value. Existing options were
canceled at rates ranging from 1.5 to 2.0 outstanding option
shares for each new option share granted pursuant to the offer.
The new options vest over periods of up to nine years.
Stock options for 297,573 shares were exercised during 1992 at
prices ranging from $5.75 to $34.44 per share.
Note 12 -- Shareholders' Equity
At December 31, 1994, there were 150,000,000 authorized shares
of capital stock. Of the shares authorized but unissued at
December 31, 1994, approximately 54,000,000 shares were reserved
for issuance upon conversion of other securities and under stock
option and other employee benefit plans.
In February 1994, the Company sold 2,875,000 shares of $2.875
Non-Voting Cumulative Preferred Stock, Series A, par value $1.00
per share (the "Series A Shares") for aggregate net proceeds of
$138 million. The Series A Shares have a liquidation preference
of $50.00 per share; pay an annual cash dividend of $2.875 per
share; and are convertible into 2.6316 shares of capital stock at
each holder's option. The Company may convert the Series A
Shares at its option, under certain circumstances, after
February 14, 1997. The Board of Directors has the authority to
fix the terms of 7,125,000 additional shares of Non-Voting
Cumulative Preferred Stock.
The Company has 4,000,000 authorized shares of Cumulative
Preference Stock, 1,000,000 of which have been designated as
Series C Shares. In October 1992, Chiquita issued 648,310 shares
of Mandatorily Exchangeable Cumulative Preference Stock, Series C
(the "Series C Shares"), represented by 3,241,546 $1.32
depositary shares (the "Depositary Shares"), in exchange for
3,241,546 shares of the Company's capital stock. The Depositary
Shares have one vote per share, voting with the capital stock;
have a liquidation preference of $18.00 per share; pay annual
dividends in cash or capital stock at the Company's option of
$1.32 per share and will convert back into capital stock on
September 7, 1995, or earlier at the Company's option or upon the
occurrence of certain events at a rate of one-for-one (except
that the rate will be proportionately less than one-for-one if
the market value of the capital stock exceeds $24.00 per share at
the time of the conversion). In the third quarter of 1993, the
Company began paying Series C dividends in capital stock.
Holders of Series A and Depositary Shares have the right to
elect additional directors in addition to the directors
ordinarily elected by holders of capital stock and Depositary
Shares in certain circumstances where the Company fails to pay
quarterly dividends on the preferred and preference stock.
In March 1992, the Company exchanged 2,694,136 shares of its
capital stock for all of the outstanding common shares of Friday
Canning Corporation, one of the largest U.S. private-label
vegetable processors. The net assets of Friday at the time of
the merger were $52 million and included $67 million of
inventories and $19 million of notes and loans payable. This
transaction was accounted for as a pooling of interests.
<PAGE> 21
<PAGE>
<TABLE>
Note 13 - Income Taxes
<CAPTION>
Income taxes consist of the following:
United States
(In thousands) Federal State Foreign Total
<S> <C> <C> <C> <C>
1994Current tax expense$ -- $1,024 $11,566 $12,590
Deferred tax expense -- -- 910 910
$ -- $1,024 $12,476 $13,500
1993
Current tax expense $ -- $1,944 $13,247 $15,191
Deferred tax benefit -- -- (3,191) (3,191)
$ -- $1,944 $10,056 $12,000
1992
Current tax expense $ -- $468 $4,532 $5,000
Deferred tax expense -- -- -- --
$ -- $468 $4,532 $5,000
Income (loss) before income taxes consists of the following:
(In thousands)
Subject to tax in: 1994 1993 1992
United States $(76,165) $(94,314)$(215,109)
Foreign jurisdictions 40,965 55,233 (63,931)
$(35,200) $(39,081)$(279,040)
Income tax expense differs from income taxes computed at the
U.S. federal statutory rate for the following reasons:
(In thousands) 1994 1993 1992
Income tax benefit computed at U.S.
federal statutory rate $(12,320) $(13,678)$(94,874)
State income taxes, net of federal benefit 666 1,264
309
U.S. losses for which no tax benefit has
been recognized 22,951 19,694 55,503
Foreign losses for which no tax benefit
has been recognized 19,406 13,166 44,347
Taxes on foreign operations at other than U.S.
rates (19,914) (12,005) (1,482)
Other 2,711 3,559 1,197
Income tax expense $13,500 $12,000 $5,000
The components of deferred income taxes included on the balance
sheet at December 31, 1994 and 1993 are as follows:
(In thousands) 1994 1993
Deferred tax benefits
Employee benefits $42,878 $51,389
Accrued expenses 26,775 27,043
Other 16,951 22,464
86,604 100,896
Valuation allowance (14,442) (15,906)
72,162 84,990
Deferred tax liabilities
Depreciation and amortization (23,959) (28,936)
Growing crops (20,968) (22,454)
Long-term debt (16,651) (19,281)
Other (14,032) (16,318)
(75,610) (86,989)
Net deferred tax liability$(3,448) $(1,999)
</TABLE>
Net deferred taxes do not reflect the benefit that would be
available to the Company from the use of its U.S. operating loss
carryforwards of $202 million, alternative minimum tax credits of
$5 million and foreign tax credit carryforwards of $66 million.
The loss carryforwards expire in 2008 and 2009 and the foreign
tax credit carryforwards expire between now and 1999.
Undistributed earnings of foreign subsidiaries which have been,
or are intended to be, permanently reinvested in operating
assets, if remitted, are expected to result in little or no tax
by operation of relevant statutes and the carryforward attributes
described above.
Cash payments for income taxes, net of refunds, were $12.5
million in 1994, $17.2 million in 1993 and $5.4 million in 1992.
Note 14 -- Litigation
A number of legal actions are pending against the Company.
Based on evaluation of facts which have been ascertained, and on
opinions of counsel, management does not believe such litigation
will, individually or in the aggregate, have a material adverse
effect on the financial statements of the Company.
<PAGE> 22
<PAGE>
Note 15 -- Quarterly Financial Data (Unaudited)
The following quarterly financial data are unaudited, but in
the opinion of management include all necessary adjustments for a
fair presentation of the interim results, which are subject to
significant seasonal variations. All quarters reflect the
reconsolidation of the Company's Meat Division held for sale (see
Note 2).
<TABLE>
1994
(In thousands, except per share amounts)March 31 June 30 Sept.30
Dec. 31
<S> <C> <C> <C> <C>
Net sales $1,056,247$1,007,121 $900,941 $997,411
Cost of sales (840,956) (793,517) (810,487)(848,381)
Operating income (loss) 81,985 70,501 (44,174) 1,471
Income (loss) before extraordinary item 35,534 30,945 (80,652)
(34,527)
Extraordinary loss from prepayment of debt(22,840) -- --
--
Net income (loss) 12,694 30,945 (80,652) (34,527)
Fully diluted earnings (loss) per share
- Income (loss) before extraordinary item .62 .51 (1.59)
(.70)
- Extraordinary item (.40) -- -- --
- Net income (loss) .22 .51 (1.59) (.70)
Dividends per common share .05 .05 .05 .05
Capital stock market price
High 19.25 17.63 17.00 16.50
Low 11.25 12.13 12.13 12.38
1993
(In thousands, except per share amounts)March 31 June 30 Sept.30
Dec. 31
Net sales $1,125,121$1,063,253 $924,547 $969,716
Cost of sales (906,076) (885,376) (780,017)(840,682)
Operating income (loss) 71,331 42,709 12,431 (16,268)
Net income (loss) 27,530 7,673 (25,868) (60,416)
Fully diluted earnings (loss) per share .53 .15 (.50)
(1.17)
Dividends per common share .17 .17 .05 .05
Capital stock market price
High 17.50 15.63 14.00 11.88
Low 13.25 10.50 10.25 10.13
</TABLE>
The operating loss for the quarter ended September 30, 1994
includes charges and losses totaling $57.2 million primarily
resulting from write-downs associated with farms and cultivations
in Honduras and shut-down costs, operating losses and charges for
excess shipping capacity related to the reduction of the
Company's Japanese "green" banana trading operations. For the
quarter ended December 31, 1994, results include a $10.2 million
gain from the sale of the Meat Division's specialty meat
operations which was substantially offset by write-downs of ships
held for sale and losses from the scale-back of the Company's
Japanese "green" banana trading operations.
A separate computation of earnings per share is made for each
quarter presented. The dilutive effect on earnings per share
resulting from the assumed conversions of preferred stock and
convertible debt and exercise of stock options and warrants is
included in each quarter in which dilution occurs. The earnings
per share computation for the year is a separate annual
calculation. Accordingly, the sum of the quarterly earnings per
share amounts will not necessarily equal the earnings per share
for the year.
<PAGE> 23
<PAGE>
Investor Information
Chiquita Brands International, Inc.
Stock Exchange Listings:New York, Boston & Pacific
Stock Symbol: CQB
Shareholders of Record
At March 1, 1995, there were 7,203 common shareholders of record.
Transfer Agent and Registrar -
Capital Stock, $2.875 Non-Voting Cumulative
Preferred Stock,
Series A and Mandatorily Exchangeable
Cumulative Preference Stock,
Series C ($1.32 Depositary Shares)
Chiquita Brands International, Inc.
c/o Securities Transfer Company
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2414
(800) 368-3417
Dividend Reinvestment
Shareholders who hold at least 100 common shares may increase
their investment in Chiquita shares through the Dividend
Reinvestment Plan without payment of any brokerage commission or
service charge. Full details concerning the Plan may be obtained
from Corporate Affairs or the Transfer Agent.
Annual Meeting: May 10, 1995
10 a.m. Eastern Daylight Time
Omni Netherland Plaza
35 West Fifth Street
Cincinnati, Ohio 45202
Investor Inquiries:For other questions concerning your investment in
Chiquita, contact Vice President, Corporate Affairs at (513) 784-6366.
<PAGE>
Trustees and Transfer Agents - Debentures/Notes
7% Convertible Subordinated Debentures due March 28, 2001
Trustee- Chemical Bank
450 West 33rd Street
New York, New York 10001
Transfer, Paying and Conversion Agents
Chemical Bank - London, England
Banque Paribas Luxembourg- Luxembourg
Banque Bruxelles Lambert S.A.-Brussels, Belgium
Bank Leu, Ltd.-Zurich, Switzerland
9 1/8% Senior Notes due March 1, 2004 *
9 5/8% Senior Notes due January 15, 2004 *
Trustee- The Fifth Third
Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
10 1/2% Subordinated Debentures due August 1, 2004*
11 1/2% Subordinated Notes due June 1, 2001*
Trustee- Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
* Chiquita Brands
International, Inc., c/o Securities
Transfer Company is
transfer agent for these Notes
and Debentures
