FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
September 30, 1995 Number 1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the IRS Employer I.D.
Laws of New Jersey No. 04-1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8011
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
As of November 1, 1995, there were 54,208,647 shares of Common Stock
outstanding.
Page 1 of 12 Pages<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
PART I - Financial Information
Consolidated Statement of Income for the quarters and
nine months ended September 30, 1995 and 1994 . . . . . 3
Consolidated Balance Sheet as of September 30, 1995,
December 31, 1994 and September 30, 1994 . . . . . . . 4
Consolidated Statement of Cash Flow for the nine months
ended September 30, 1995 and 1994 . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . 6
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . . . . 7 - 8
PART II - Other Information
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . 9
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . 9
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 10<PAGE>
Part I - Financial Information
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 950,527 $ 900,941 $ 3,064,962 $ 2,964,309
-------- -------- ---------- ---------
Operating expenses
Cost of sales 796,285 810,487 2,494,521 2,444,960
Selling, general and administrative 103,858 106,169 314,140 325,385
Depreciation 27,205 28,459 80,249 85,652
-------- -------- ---------- ---------
927,348 945,115 2,888,910 2,855,997
-------- -------- ---------- ---------
Operating income (loss) 23,179 (44,174) 176,052 108,312
Interest income 7,345 4,740 22,694 15,481
Interest expense (41,567) (41,612) (125,101) (127,239)
Other income, net 52 394 1,022 2,773
-------- -------- ---------- ---------
Income (loss) before income
taxes and extraordinary item (10,991) (80,652) 74,667 (673)
Income taxes -- -- (13,900) (13,500)
-------- -------- ---------- ---------
Income (loss) before
extraordinary item (10,991) (80,652) 60,767 (14,173)
Extraordinary loss from
debt refinancing -- -- (4,713) (22,840)
-------- -------- ---------- ---------
Net income (loss) $ (10,991) $ (80,652) $ 56,054 $ (37,013)
======== ======== ========== =========
Weighted average number of
common shares outstanding
(see Exhibit 11) 53,368 52,054 53,585 51,939
======== ======== ========== =========
Earnings (loss) per common share:
Primary - Income (loss) before
extraordinary item $ (.24) $ (1.59) $ 1.02 $ (.37)
- Extraordinary item -- -- (.09) (.44)
-------- -------- ---------- ---------
- Net income (loss) $ (.24) $ (1.59) $ .93 $ (.81)
======== ======== ========== =========
Fully
diluted - Income (loss) before
extraordinary item $ (.24) $ (1.59) $ .99 $ (.37)
- Extraordinary item -- -- (.08) (.44)
-------- -------- ---------- ---------
- Net income (loss) $ (.24) $ (1.59) $ .91 $ (.81)
======== ======== ========== =========
Dividends per common share $ .05 $ .05 $ .15 $ .15
======== ======== ========== =========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
ASSETS
<S> <C> <C> <C>
Current assets
Cash and equivalents $ 223,675 $ 178,855 $ 151,292
Trade receivables (less allowances
of $14,189, $14,149 and $14,288) 278,505 257,777 284,880
Other receivables, net 92,006 95,948 95,983
Inventories 366,311 351,730 373,585
Other current assets 34,568 33,932 33,728
-------- -------- --------
Total current assets 995,065 918,242 939,468
Restricted cash 69,530 75,030 69,592
Property, plant and equipment, net 1,323,872 1,433,858 1,482,766
Investments and other assets 335,286 309,721 301,399
Intangibles, net 160,641 165,170 164,050
Total assets $ 2,884,394 $ 2,902,021 $ 2,957,275
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $ 133,596 $ 130,163 $ 123,024
Long-term debt due within one year 66,460 91,032 89,201
Accounts payable 262,217 270,033 258,693
Accrued liabilities 171,959 162,589 155,292
-------- -------- --------
Total current liabilities 634,232 653,817 626,210
Long-term debt of parent company 840,783 840,377 840,251
Long-term debt of subsidiaries 479,523 524,500 554,010
Accrued pension and other employee
benefits 119,334 120,325 125,894
Other liabilities 116,153 118,193 134,171
Total liabilities 2,190,025 2,257,212 2,280,536
-------- -------- --------
Shareholders' equity
Preferred and preference stock 138,369 190,639 190,639
Capital stock, $.33 par value (53,807,078,
49,300,881 and 48,893,012 shares) 17,936 16,434 16,298
Capital surplus 567,005 505,800 500,553
Retained deficit (13,817) (52,940) (12,822)
Minimum pension liability adjustment (15,124) (15,124) (17,929)
Total shareholders' equity 694,369 644,809 676,739
-------- -------- --------
Total liabilities and shareholders'
equity $ 2,884,394 $ 2,902,021 $ 2,957,275
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash provided (used) by:
Operations
Income (loss) before extraordinary item $ 60,767 $ (14,173)
Depreciation and amortization 84,780 90,559
Write-downs of farms and cultivations -- 24,600
Changes in current assets and liabilities (54,980) (55,308)
Other (13,577) (1,078)
-------- --------
Cash flow from operations 76,990 44,600
-------- --------
Investing
Capital expenditures (57,353) (124,632)
Sales of fresh fruit shipping and distribution assets 102,708 --
Sale of meat operations -- 52,700
Restricted cash deposits 5,500 (18,572)
Other (2,252) (7,248)
-------- --------
Cash flow from investing 48,603 (97,752)
-------- --------
Financing
Debt transactions
Issuances of long-term debt 202,115 263,731
Repayments of long-term debt (281,216) (326,208)
Increase (decrease) in notes and loans payable 9,967 (13,988)
Stock transactions
Issuance of preferred stock -- 138,369
Issuances of capital stock 2,093 3,242
Dividends (13,732) (11,928)
-------- --------
Cash flow from financing (80,773) 53,218
-------- --------
Increase in cash and equivalents 44,820 66
Balance at beginning of period 178,855 151,226
-------- --------
Balance at end of period $ 223,675 $ 151,292
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Interim results are subject to significant seasonal variations
and are not necessarily indicative of the results of operations
for a full fiscal year. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary for a fair statement of the results of the interim
periods shown have been made. See Notes to Consolidated
Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994 for additional
information relating to the Company's financial statements.
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
<S> <C> <C> <C>
Bananas and other fresh produce $ 41,638 $ 47,592 $ 44,498
Meat 44,115 35,165 45,201
Other food products 77,672 63,565 74,167
Growing crops 116,046 115,177 115,208
Materials and supplies 72,602 76,078 81,249
Other 14,238 14,153 13,262
-------- -------- --------
$ 366,311 $ 351,730 $ 373,585
======== ======== ========
</TABLE>
During the second quarter of 1995, the Company replaced $153
million of ship loans with loans having longer maturities
totaling $187 million resulting in an extraordinary loss of $4.7
million. The Company also negotiated an extension of the
maturities on another $23 million ship loan.
In the first quarter of 1994, the Company completed the sale
of $175 million principal amount of 9-1/8% Senior Notes due 2004
and 2,875,000 shares of $2.875 Non-Voting Cumulative Preferred
Stock, Series A. Most of the net proceeds from the offerings
were used to prepay higher rate subordinated debentures. These
refinancings resulted in an extraordinary loss of $22.8 million.
In accordance with its long-standing policy to periodically
hedge transactions denominated in foreign currencies, at
September 30, 1995, the Company had foreign exchange forward
contracts to ensure conversion of approximately $95 million of
foreign sales commitments for the remainder of 1995 at an average
exchange rate of 1.51 Deutsche marks per dollar. The fair value
of these contracts, based on quoted market prices, was
approximately $5 million. The Company also had option contracts
which ensure conversion through 1996 of approximately $95 million
of foreign sales at a rate not higher than 1.44 Deutsche marks<PAGE>
per dollar and approximately $175 million of foreign sales at
a rate not higher than 1.45 Deutsche marks per dollar or lower
than 1.33 Deutsche marks per dollar. The carrying value of the
option contracts, and the fair value based on quoted market prices,
were not significant.
On September 7, 1995, $52.3 million of Series C Mandatorily
Exchangeable Cumulative Preference Stock converted back into
3,241,546 shares of Chiquita's capital stock in accordance with
the terms of the Series C Preference shares.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
MANAGEMENT'S ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
OPERATIONS
Net sales for the quarter ended September 30, 1995 increased
5.5% from the same quarter last year primarily as a result of
increased sales for the Company's Meat Division held for sale.
Operating income for the third quarter was $23.2 million in 1995
compared to an operating loss of $44.2 million in 1994. Operating
income included the following:
- in 1995, a net gain of $5.8 million resulting principally
from the sale of older ships; and,
- in 1994, charges and losses of $57.2 million resulting
primarily from farm closings and write-downs of banana
cultivations in Honduras, and the substantial reduction of
the Company's Japanese "green" banana trading operations.
In addition to the above, operating income for the 1995 third
quarter reflects earnings improvements from the sale of bananas
and other food products within the Chiquita operations segment.
Net sales for the nine-month period increased 3.4% from the
prior year level primarily as a result of higher fresh fruit
prices. Nine-month operating income improved to $176.1 million
in 1995 compared to $108.3 million in 1994, reflecting the
effects of the items described above, higher banana prices in
markets outside the European Union ("EU") since early in the
second quarter, and earnings improvements from other food
products within the Chiquita operations segment. These favorable
effects on operating income were partially offset by higher
banana operating costs, including the impact of implementation of
the banana Framework Agreement between the EU, Colombia and Costa
Rica, and higher paper costs. Following higher pricing in the
first half of 1995, banana pricing in the EU has been lower
during the 1995 third quarter and fourth quarter to date
primarily as a result of the recent overissuance of quarterly
import licenses to European-based banana companies as relief for
hurricane damage sustained in the Caribbean. Third quarter and
nine-month results for the Company's Meat Division held for sale
were not significant in either 1995 or 1994.
Net interest expense for the quarter and nine months decreased
from the prior year as a result of a higher average yield earned
on invested cash balances during 1995 and debt refinancing and
reduction activities since the beginning of 1994.<PAGE>
The Company's effective tax rate is affected by the level and
mix of income between various domestic and foreign jurisdictions
in which the Company operates.
FINANCIAL CONDITION
The $45 million increase in cash and equivalents during the
nine months ended September 30, 1995 resulted primarily from cash
flow from operations. Proceeds received from the sale of
older ships and container equipment during this period have been
used primarily to prepay related long-term debt. As a result of
these prepayments, as well as the refinancings completed during
the second quarter of 1995, current maturities of long-term debt
have been reduced to $66 million, including $33 million for
shipping-related financings.<PAGE>
OTHER
As previously announced, on October 6, 1995, Chiquita entered
into a letter of intent with Smithfield Foods, Inc.
("Smithfield") relating to the sale of the Meat Division. The
letter of intent calls for a sale price of $58 million,
consisting of $25 million in cash and $33 million of Smithfield
common stock. The transaction, which is expected to close around
the end of the year, is subject to negotiation and execution of a
definitive agreement and receipt of all necessary governmental
regulatory approvals.
Reference is made to Part I, Item 1 - "Business-Risks of
International Operations" in the Company's 1994 Form 10-K and
"Management's Analysis of Operations and Financial Condition" in
the Company's 1994 Annual Report to Shareholders and the
discussion of the EU quota, the Framework Agreement and the
Section 301 petition to the Office of the U.S. Trade
Representative ("USTR") under Section 301 of the U.S. Trade Act
of 1974 ("Section 301"). On September 28, 1995, based on
information obtained in the USTR's investigation under Section
301, the United States, joined by Guatemala, Honduras and Mexico,
commenced a new international trade challenge against the EU
regime using the procedures of the new World Trade Organization
("WTO"). Also on that date, the USTR announced it was continuing
related Section 301 investigations of the banana export practices
of Colombia and Costa Rica, which have implemented their
Framework Agreement with the EU. Both the WTO and Section 301
authorize 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 WTO and
Section 301 proceedings, the nature and extent of actions that
may be taken by the United States or other adversely affected
countries, or the impact on the EU quota regime or the Framework
Agreement.<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
Reference is made to Part I, Item 3 - "Legal Proceedings"
in the Company's 1994 Form 10-K and Part II, Item 1 - "Legal
Proceedings" in the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995 and the discussion of the
cases pending in various state and federal courts alleging
injuries as a result of exposure to DBCP, an agricultural
chemical. In October 1995, several of the cases pending in
federal court in Texas, involving approximately 80% of all
plaintiffs, were dismissed on the grounds that courts in the
plaintiffs' home countries (limited to Costa Rica, Panama and
the Philippines in cases involving the Company) were more
appropriate forums for pursuing their claims. The two
remaining cases, involving approximately 4,500 plaintiffs,
including approximately 600 who claim injuries for which they
allege the Company is liable, were remanded to Texas state
courts, where procedural matters are currently being
addressed, including changing venue and adding third party
defendants. A new suit was filed in August 1995 in a
state court in Louisiana by approximately 4,000 plaintiffs,
most of whom are foreign citizens alleging similar injuries.
This case was removed to U.S. District Court where defendants'
motion to dismiss in favor of more appropriate forums and
plaintiffs' motion to remand to state court are pending.
The Company continues to vigorously defend itself in these
cases. The Company believes it has a number of meritorious
defenses in these cases, including that at all times during which
it used DBCP commercially, the product was registered for use
by the United States Environmental Protection Agency.
In addition, the Company ceased using the product on a commercial
basis in 1977, promptly after learning that health hazards might
exist.
Reference is also made to Part I, Item 1 - "Business-Meat
Division Held for Sale-Regulation" in the Company's 1994 Form
10-K and the discussion of the investigation by the United
States Environmental Protection Agency and Department of
Justice ("DOJ") of deficiencies relating to the wastewater
treatment facility at the John Morrell & Co. ("Morrell") Sioux
Falls plant. Morrell and DOJ have now entered into a partial
civil consent decree, subject to certain procedural approvals,
pursuant to which Morrell neither admits nor denies any
liability. The amount of civil penalties, if any, to be
imposed will be resolved later. The consent decree requires
Morrell to continue to comply with its wastewater permit
conditions, to undertake certain monitoring, maintenance and
reporting requirements for a one-year period from August 1995
to August 1996, and to make certain capital improvements at
the facility, none of which is expected to have a material
financial impact.<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
Page Numbers
(a) Exhibit 11 - Computation of Earnings Per
Common Share . . . . . . . . . . . . . . . . . . 11-12
Exhibit 27 - Financial Data Schedule . . . . . . **
** Copy omitted from this Quarterly Report on Form 10-Q.
Copy included in report filed electronically with the
Securities and Exchange Commission.
(b) There were no reports on Form 8-K filed by the Company
during the quarter ended September 30, 1995.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
William A. Tsacalis
Vice President and Controller
(Chief Accounting Officer)
November 14, 1995<PAGE>
Exhibit 11
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
A. Primary earnings (loss) per common share
Income (loss) used to calculate primary earnings
(loss) per common share:
Income (loss) before extraordinary item $ (10,991) $ (80,652) $ 60,767 $ (14,173)
Dividends on Series A Preferred Stock (2,066) (2,066) (6,199) (5,166)
-------- -------- -------- --------
Income (loss) attributable to common shares
before extraordinary item (13,057) (82,718) 54,568 (19,339)
Extraordinary loss from debt refinancing -- -- (4,713) (22,840)
-------- -------- -------- --------
Net income (loss) attributable to common
shares $ (13,057) $ (82,718) $ 49,855 $ (42,179)
======== ======== ======== ========
Shares used to calculate primary earnings (loss)
per common share:
Weighted average common and equivalent
Series C preference shares outstanding 53,732 52,054 53,429 51,939
Less restricted common shares (364) -- (391) --
Dilutive effect of assumed exercise of
stock options and warrants -- -- 547 --
-------- -------- -------- --------
53,368 52,054 53,585 51,939
======== ======== ======== ========
Primary earnings (loss) per common share:
Income (loss) before extraordinary item $ (.24) $ (1.59) $ 1.02 $ (.37)
Extraordinary item -- -- (.09) (.44)
-------- -------- -------- --------
Net income (loss) $ (.24) $ (1.59) $ .93 $ (.81)
======== ======== ======== ========
/TABLE
<PAGE>
Exhibit 11 (continued)
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
B. Fully diluted earnings (loss) per common share
Income (loss) used to calculate fully diluted earnings
(loss) per common share:
Income (loss) before extraordinary item $ (10,991) $ (80,652) $ 60,767 $ (14,173)
Dividends on Series A Preferred Stock (2,066) (2,066) -- (5,166)
-------- -------- -------- --------
Income (loss) attributable to common shares
before extraordinary item (13,057) (82,718) 60,767 (19,339)
Extraordinary loss from debt refinancing -- -- (4,713) (22,840)
-------- -------- -------- --------
Net income (loss) attributable to
common shares $ (13,057) $ (82,718) $ 56,054 $ (42,179)
======= ======== ======= ========
Shares used to calculate fully diluted earnings
(loss) per common share:
Weighted average common and equivalent
Series C preference shares outstanding 53,732 52,054 53,429 51,939
Less restricted common shares (364) -- (358) --
Dilutive effect of assumed exercise of stock
options and warrants -- -- 626 --
Dilutive effect of assumed conversion of
Series A Preferred Stock -- -- 7,566 --
53,368 52,054 61,263 51,939
Fully diluted earnings (loss) per common share:
Income (loss) before extraordinary item $ (.24) $ (1.59) $ .99 $ (.37)
Extraordinary item -- -- (.08) (.44)
Net income (loss) $ (.24) $ (1.59) $ .91 $ (.81)
/TABLE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Chiquita
Brands International, Inc. Form 10-Q for the quarterly period ended September
30, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 223,675
<SECURITIES> 0
<RECEIVABLES> 292,694
<ALLOWANCES> 14,189
<INVENTORY> 366,311
<CURRENT-ASSETS> 995,065
<PP&E> 2,009,073
<DEPRECIATION> 685,201
<TOTAL-ASSETS> 2,884,394
<CURRENT-LIABILITIES> 634,232
<BONDS> 1,320,306
<COMMON> 17,936
0
138,369
<OTHER-SE> 538,064
<TOTAL-LIABILITY-AND-EQUITY> 2,884,394
<SALES> 3,064,962
<TOTAL-REVENUES> 3,064,962
<CGS> 2,494,521
<TOTAL-COSTS> 2,494,521
<OTHER-EXPENSES> 80,249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125,101
<INCOME-PRETAX> 74,667
<INCOME-TAX> 13,900
<INCOME-CONTINUING> 60,767
<DISCONTINUED> 0
<EXTRAORDINARY> (4,713)
<CHANGES> 0
<NET-INCOME> 56,054
<EPS-PRIMARY> .93<F1>
<EPS-DILUTED> .91<F1>
<FN>
<F1>Amounts include an extraordinary loss of $.09 per share ($.08 per share
fully diluted) from debt refinancing in the second quarter.
</FN>
</TABLE>
