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
June 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 August 1, 1995, there were 50,369,567 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
six months ended June 30, 1995 and 1994 . . . . . . 3
Consolidated Balance Sheet as of June 30, 1995,
December 31, 1994 and June 30, 1994 . . . . . . . . 4
Consolidated Statement of Cash Flow for the six months
ended June 30, 1995 and 1994 . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . 6
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . . 7
PART II - Other Information
Item 1 - Legal Proceedings . . . . . . . . . . . . . 8
Item 4 - Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . 8
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 June 30, Six Months Ended June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 1,086,072 $1,007,121 $ 2,114,435 $ 2,063,368
Operating expenses
Cost of sales 876,985 793,517 1,698,236 1,634,473
Selling, general and
administrative 110,130 114,337 210,282 219,216
Depreciation 26,511 28,766 53,044 57,193
--------- --------- --------- ---------
1,013,626 936,620 1,961,562 1,910,882
--------- --------- --------- ---------
Operating income 72,446 70,501 152,873 152,486
Interest income 8,541 5,571 15,349 10,741
Interest expense (41,806) (41,357) (83,534) (85,627)
Other income, net 549 1,730 970 2,379
--------- --------- --------- ---------
Income before income taxes
and extraordinary item 39,730 36,445 85,658 79,979
Income taxes (5,600) (5,500) (13,900) (13,500)
--------- --------- --------- ---------
Income before extraordinary item 34,130 30,945 71,758 66,479
Extraordinary loss from
refinancing of debt (4,713) -- (4,713) (22,840)
--------- --------- --------- ---------
Net income $ 29,417 $ 30,945 $ 67,045 $ 43,639
========= ========= ========= =========
Weighted average number of common
shares outstanding
(see Exhibit 11) 53,907 53,011 53,694 53,094
========= ========= ========= =========
Earnings (loss) per common share:
Primary - Income before
extraordinary item $ .59 $ .54 $ 1.26 $ 1.19
- Extraordinary item (.08) -- (.09) (.43)
- Net income $ .51 $ .54 $ 1.17 $ .76
Fully - Income before
diluted extraordinary item $ .55 $ .51 $ 1.17 $ 1.13
- Extraordinary item (.07) -- (.08) (.39)
- Net income $ .48 $ .51 $ 1.09 $ .74
Dividends per common share $ .05 $ .05 $ .10 $ .10
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and equivalents $ 227,787 $ 178,855 $ 269,159
Trade receivables (less allowances
of $15,860, $14,149 and $13,086) 302,030 257,777 294,837
Other receivables, net 94,310 95,948 98,448
Inventories 341,006 351,730 340,313
Other current assets 34,505 33,932 29,319
--------- --------- ---------
Total current assets 999,638 918,242 1,032,076
Restricted cash 77,530 75,030 52,520
Property, plant and equipment, net 1,390,510 1,433,858 1,486,945
Investments and other assets 333,645 309,721 304,627
Intangibles, net 161,930 165,170 170,640
Total assets $ 2,963,253 $2,902,021 $ 3,046,808
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $ 120,821 $ 130,163 $ 129,624
Long-term debt due within one year 76,700 91,032 83,882
Accounts payable 284,902 270,033 256,879
Accrued liabilities 161,383 162,589 148,668
Total current liabilities 643,806 653,817 619,053
Long-term debt of parent company 840,644 840,377 840,125
Long-term debt of subsidiaries 533,062 524,500 550,083
Accrued pension and other
employee benefits 121,972 120,325 130,799
Other liabilities 115,230 118,193 145,147
Total liabilities 2,254,714 2,257,212 2,285,207
--------- --------- ---------
Shareholders' equity
Preferred and preference stock 190,639 190,639 190,639
Capital stock, $.33 par value
(50,384,019, 49,300,881 and
48,779,465 shares) 16,795 16,434 16,260
Capital surplus 513,398 505,800 499,225
Retained earnings (deficit) 2,831 (52,940) 73,406
Minimum pension liability adjustment (15,124) (15,124) (17,929)
--------- --------- ---------
Total shareholders' equity 708,539 644,809 761,601
Total liabilities and
shareholders' equity $ 2,963,253 $2,902,021 $ 3,046,808
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
--------- ---------
<S> <C> <C>
Cash provided (used) by:
Operations
Income before extraordinary item $ 71,758 $ 66,479
Depreciation and amortization 56,072 60,557
Changes in current assets and liabilities (32,280) (39,061)
Other 323 (2,009)
-------- ---------
Cash flow from operations 95,873 85,966
--------- ---------
Investing
Capital expenditures (34,801) (71,471)
Restricted cash deposits (2,500) (1,500)
Proceeds from sale of containers 6,830 --
Proceeds from sales of businesses 5,378 52,700
Other 1,217 (2,297)
--------- ---------
Cash flow from investing (23,876) (22,568)
--------- ---------
Financing
Debt transactions
Issuances of long-term debt 196,697 212,662
Repayments of long-term debt (209,142) (284,573)
Decrease in notes and loans payable (2,420) (7,447)
Stock transactions
Issuance of preferred stock -- 138,369
Issuances of capital stock 942 2,943
Dividends (9,142) (7,419)
--------- ---------
Cash flow from financing (23,065) 54,535
--------- ---------
Increase in cash and equivalents 48,932 117,933
Balance at beginning of period 178,855 151,226
--------- ---------
Balance at end of period $ 227,787 $ 269,159
========= =========
</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>
June 30, December 31, June 30,
1995 1994 1994
----------- ------------- ------------
<S> <C> <C> <C>
Bananas and other fresh produce $ 36,767 $ 47,592 $ 43,374
Meat 43,928 35,165 43,752
Other food products 46,711 63,565 40,296
Growing crops 115,730 115,177 120,002
Materials and supplies 83,054 76,078 79,968
Other 14,816 14,153 12,921
--------- --------- ---------
$ 341,006 $ 351,730 $ 340,313
========= ========= =========
</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.<PAGE>
In accordance with its long-standing policy to periodically
hedge transactions denominated in foreign currencies, at June 30,
1995, the Company had foreign exchange forward contracts to
ensure conversion of approximately $150 million of foreign sales
commitments for the remainder of 1995 at an average exchange rate
of 1.52 Deutsche marks per dollar. The fair value of these
contracts, based on quoted market prices, was approximately $16
million. The Company also had option contracts which ensure
conversion through 1996 of approximately $130 million of foreign
sales at a rate not higher than 1.45 Deutsche marks per dollar
and approximately $120 million of foreign sales at a rate not
higher than 1.43 Deutsche marks per dollar or lower than 1.29
Deutsche marks per dollar. The fair value of the option
contracts, based on quoted market prices, was not significant.<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
MANAGEMENT'S ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
OPERATIONS
Net sales for the quarter ended June 30, 1995 increased 7.8%
from the same quarter last year primarily as a result of higher
prices for fresh fruit. Net sales for the first half of 1995
increased 2.5% from the prior year level primarily as a result of
these higher prices, partially offset by a 2.6% decrease in sales
for the first quarter of 1995 as a result of the sale of the
Company's specialty meat operations during the prior year first
quarter.
Operating income for the quarter and six months was $72.4
million and $152.9 million in 1995 compared to $70.5 million and
$152.5 million in 1994, with lower earnings from the sale of
bananas offset by improved earnings from other food products
within the Chiquita operations segment. Higher banana operating
costs, including the impact of higher paper prices,
implementation of the banana Framework Agreement between the
European Union, Colombia and Costa Rica, and reduced first
quarter Honduran production, offset the benefit of a higher
average worldwide banana price. Although improved, second
quarter and first half operating income for the Company's Meat
Division held for sale was not significant in either 1995 or
1994.
Net interest expense for the quarter and first half 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.
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 $49 million increase in cash and equivalents during the
first half of 1995 resulted primarily from operating cash flow.
Cash used for capital expenditures was $35 million and proceeds
from the sales of container equipment and the Company's New
Zealand fresh produce distribution business amounted to $12
million.<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
Reference is made to (a) Part I, Item 1 - "Business-Meat
Division Held for Sale-Labor relations" in the Company's 1994
Form 10-K, (b) Note 2 to the Company's Consolidated Financial
Statements included in the Company's 1994 Annual Report to
Shareholders and (c) Part II, Item 1 - "Legal Proceedings" in
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1995 and the discussion of the case
concerning medical benefits for retired hourly employees. In
June 1995, the United States Supreme Court denied the union's
request for a review of the matter and, therefore, the lower
court decisions in favor of Morrell stand.
Reference is made to Part I, Item 3 - "Legal Proceedings"
in the Company's 1994 Form 10-K and the discussion of the
cases pending in U.S. District Courts in Texas alleging
injuries as a result of exposure to DBCP, an agricultural
chemical. In all of the cases, motions have been filed by
defendants for dismissal of the cases from U.S. federal court
to a more appropriate forum in the foreign countries where the
plaintiffs reside. Concurrently, the plaintiffs filed motions
to remand the cases to Texas state court. In July 1995, two
of the cases were remanded to Texas state court while the
remaining cases were dismissed in favor of actions in the
plaintiffs' home countries (subject to various conditions,
including the defendants submitting to jurisdiction in the
plaintiffs' home countries). The Company continues to
vigorously defend itself in these cases.
Item 4 - Submission of Matters to a Vote of Security Holders
In connection with the election of eight directors of the
Company, proxies were solicited pursuant to Regulation 14
under the Securities Exchange Act of 1934 and the following
votes were made at the Company's Annual Meeting of
Shareholders held on May 10, 1995:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
<S> <C> <C>
Carl H. Lindner 44,910,167 584,733
Keith E. Lindner 44,969,764 525,136
S. Craig Lindner 44,931,184 563,716
Fred J. Runk 44,942,667 552,233
Jean Head Sisco 44,963,580 531,320
William W. Verity 44,948,222 546,678
Oliver W. Waddell 44,990,468 504,432
Ronald F. Walker 44,955,734 539,166
</TABLE>
Proxies representing 7,972,068 shares were not voted.<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) The following report on Form 8-K was filed during the
quarter ended June 30, 1995:
April 27, 1995 -to report the Company's announcement of
results of operations for the quarter ended
March 31, 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)
August 11, 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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
A. Primary earnings (loss) per common share
Income used to calculate primary earnings
(loss) per common share:
Income before extraordinary item $ 34,130 $ 30,945 $ 71,758 $ 66,479
Dividends on Series A Preferred Stock (2,066) (2,066) (4,133) (3,100)
--------- --------- --------- ---------
Income available to common shares
before extraordinary item 32,064 28,879 67,625 63,379
Extraordinary loss from refinancing
of debt (4,713) -- (4,713) (22,840)
--------- --------- --------- ---------
Net income available to common shares $ 27,351 $ 28,879 $ 62,912 $ 40,539
========= ========= ========= =========
Shares used to calculate primary earnings
(loss) per common share:
Weighted average common and equivalent
Series C preference shares outstanding 53,512 51,956 53,279 51,882
Less restricted common shares (419) -- (405) --
Dilutive effect of assumed exercise of
stock options and warrants 814 1,055 820 1,212
--------- --------- --------- ---------
53,907 53,011 53,694 53,094
========= ========= ========= =========
Primary earnings (loss) per common share:
Income before extraordinary item $ .59 $ .54 $ 1.26 $ 1.19
Extraordinary item (.08) -- (.09) (.43)
--------- --------- --------- ---------
Net income $ .51 $ .54 $ 1.17 $ .76
========= ========= ========= =========
/TABLE
<PAGE>
Exhibit 11 (continued)
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
B. Fully diluted earnings (loss) per common share
Income used to calculate fully diluted earnings
(loss) per common share:
Income before extraordinary item $ 34,130 $ 30,945 $ 71,758 $ 66,479
Extraordinary loss from refinancing of debt (4,713) -- (4,713) (22,840)
--------- --------- --------- ---------
Net income $ 29,417 $ 30,945 $ 67,045 $ 43,639
========= ========= ========= =========
Shares used to calculate fully diluted earnings
(loss) per common share:
Weighted average common and equivalent
Series C preference shares outstanding 53,512 51,956 53,279 51,882
Less restricted common shares (399) -- (384) --
Dilutive effect of assumed exercise of stock
options and warrants 1,036 1,055 938 1,382
Dilutive effect of assumed conversion of
Series A Preferred Stock 7,566 7,566 7,566 5,675
--------- --------- --------- ---------
61,715 60,577 61,399 58,939
========= ========= ========= =========
Fully diluted earnings (loss) per common share:
Income before extraordinary item $ .55 $ .51 $ 1.17 $ 1.13
Extraordinary item (.07) -- (.08) (.39)
--------- --------- --------- ---------
Net income $ .48 $ .51 $ 1.09 $ .74
========= ========= ========= =========
/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 June 30,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 227,787
<SECURITIES> 0
<RECEIVABLES> 317,890
<ALLOWANCES> 15,860
<INVENTORY> 341,006
<CURRENT-ASSETS> 999,638
<PP&E> 2,066,110
<DEPRECIATION> 675,600
<TOTAL-ASSETS> 2,963,253
<CURRENT-LIABILITIES> 643,806
<BONDS> 1,373,706
<COMMON> 16,795
0
190,639
<OTHER-SE> 501,105
<TOTAL-LIABILITY-AND-EQUITY> 2,963,253
<SALES> 2,114,435
<TOTAL-REVENUES> 2,114,435
<CGS> 1,698,236
<TOTAL-COSTS> 1,698,236
<OTHER-EXPENSES> 53,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,534
<INCOME-PRETAX> 85,658
<INCOME-TAX> 13,900
<INCOME-CONTINUING> 71,758
<DISCONTINUED> 0
<EXTRAORDINARY> (4,713)
<CHANGES> 0
<NET-INCOME> 67,045
<EPS-PRIMARY> 1.17<F1>
<EPS-DILUTED> 1.09<F1>
<FN>
<F1>Amounts include an extraordinary loss of $.09 per share ($.08 per share
fully diluted) resulting from refinancing of debt in the second quarter.
</FN>
</TABLE>
