<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): February 7, 1996
CHIQUITA BRANDS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-1550 04-1923360
(State of other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
250 East Fifth Street, Cincinnati, Ohio 45202
(Address of principal executive offices)
Registrant's telephone number, including area code: (513) 784-8000
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 2, 3, 4, 6 and 8 are not applicable and are omitted from this Report.
Item 5. Other Events
As previously reported, on December 20, 1995, the Company completed the
sale of its wholly owned subsidiary, John Morrell & Co., which comprised the
Meat Division, to Smithfield Foods, Inc. This sale represents the final step in
the Company's divestiture of its meat business. Accordingly, the Company's
audited financial statements for the year ended December 31, 1994 and unaudited
financial statements for the nine months ended September 30, 1995 and related
schedules and exhibits have been restated to deconsolidate the discontinued Meat
Division operations. The Company is making this filing in order to place the
information contained herein on file with the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
Reference is made to the restated consolidated financial statements
attached as Exhibits 7(c)13.1 and 13.2 and the computations of earnings per
common share attached as Exhibit 7(c) 11.1 and 11.2.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
11.1 Computation of Earnings per Common Share for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990.
11.2 Computation of Earnings per Common Share for the nine month
periods ended September 30, 1995 and 1994.
13.1 Restated Consolidated Financial Statements of the Company and
Report of Independent Auditors thereon, together with Selected Financial Data
and Financial Statement Schedule II to restate the corresponding information
included in the Chiquita Brands International, Inc. 1994 Annual Report
to shareholders (pages 5, 6 and 10 through 23) and page 16 of Annual Report on
Form 10-K. The following financial statements and other items are specifically
included in Exhibit 13.1:
Selected Financial Data
Report of Independent Auditors
Consolidated Statement of Income for the Years ended December 31,
1994, 1993 and 1992
Consolidated Balance Sheet at December 31, 1994 and 1993
Consolidated Statement of Shareholders' Equity for the Years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flow for the Years ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements
Financial Statements Schedule II - Allowance for Doubtful Accounts
Receivable
13.2 Restated unaudited Consolidated Financial Statements to restate
the consolidated financial statements included in the Company's Quarterly Report
on Form 10-Q for the Quarter ended September 30, 1995. The following financial
statements and other items are specifically included in Exhibit 13.2:
Consolidated Statement of Income for the Nine Months ended
September 30, 1995 and 1994
Consolidated Balance Sheet at September 30, 1995,
December 31, 1994 and September 30, 1994
Consolidated Statement of Cash Flow for the Nine Months ended
September 30, 1995 and 1994
Notes to Consolidated Financial Statements
2
<PAGE> 3
SIGNATURES
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 hereunto duly authorized.
Date: February 7, 1996 CHIQUITA BRANDS INTERNATIONAL, INC.
By /s/ William A. Tsacalis
-----------------------
William A. Tsacalis
Vice President and Controller
3
<PAGE> 1
Exhibit 11.2
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
----------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
A. Primary earnings (loss) per common share
----------------------------------------
Income (loss) used to calculate primary earnings
(loss) per common share:
Income (loss) from continuing operations $ 57,416 $ (14,173)
Dividends on Series A Preferred Stock (6,199) (5,166)
----------- -----------
Income (loss) from continuing operations
available to common shares 51,217 (19,339)
Discontinued operations 3,351 --
----------- -----------
Income (loss) available to common shares
before extraordinary item 54,568 (19,339)
Extraordinary loss from debt refinancing (4,713) (22,840)
----------- -----------
Net income (loss) available to common shares $ 49,855 $ (42,179)
=========== ===========
Shares used to calculate primary earnings (loss)
per common share:
Weighted average common and equivalent
Series C preference shares outstanding 53,429 51,939
Less restricted common shares (391) --
Dilutive effect of assumed exercise of
stock options and warrants 547 --
----------- -----------
53,585 51,939
=========== ===========
Primary earnings (loss) per common share:
Continuing operations $ .96 $ (.37)
Discontinued operations .06 --
Extraordinary item (.09) (.44)
----------- -----------
Net income (loss) $ .93 $ (.81)
=========== ===========
</TABLE>
<PAGE> 2
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
----------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
B. Fully diluted earnings (loss) per common share
----------------------------------------------
Income (loss) used to calculate fully diluted earnings
(loss) per common share:
Income (loss) from continuing operations $ 57,416 $ (14,173)
Dividends on Series A Preferred Stock -- (5,166)
----------- -----------
Income (loss) from continuing operations available
to common shares 57,416 (19,339)
Discontinued operations 3,351 --
----------- -----------
Income (loss) available to Common Shares
before extraordinary item 60,767 (19,339)
Extraordinary loss from debt refinancing (4,713) (22,840)
----------- -----------
Net income (loss) available to common shares $ 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 53,429 51,939
Less restricted common shares (358) --
Dilutive effect of assumed exercise of stock
options and warrants 626 --
Dilutive effect of assumed conversion of
Series A Preferred Stock 7,566 --
----------- -----------
61,263 51,939
=========== ===========
Fully diluted earnings (loss) per common share:
Continuing operations $ .94 $ (.37)
Discontinued operations .05 --
Extraordinary item (.08) (.44)
----------- -----------
Net income (loss) $ .91 $ (.81)
=========== ===========
</TABLE>
<PAGE> 1
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 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,
except for Note 1, as to which the date is
December 20, 1995
<PAGE> 2
EXHIBIT 13.1
<TABLE>
<CAPTION>
Selected Financial Data
Chiquita Brands International, Inc. and Subsidiary Companies
(In thousands, except
per share amounts) 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION
Working capital $230,434 $266,793 $482,338 $960,093 $433,424
Capital expenditures 136,981 196,554 472,273 395,641 312,698
Total assets 2,774,239 2,722,824 2,873,699 2,937,344 1,913,674
Capitalization
Short-term debt 221,051 192,207 229,286 187,821 106,698
Long-term debt 1,364,836 1,438,378 1,411,319 1,202,839 494,182
Shareholders' equity 644,809 584,069 667,962 967,925 687,709
--------- --------- --------- --------- ---------
OPERATIONS
Net sales $2,505,826 $2,532,925 $2,723,250 $2,604,128 $2,186,452
Operating income (loss)* 71,185 103,848 (96,588) 197,818 166,180
Income (loss) from continuing
operations before
income taxes (70,811) (39,081) (216,708) 160,009 153,531
Income (loss) from continuing
operations (84,311) (51,081) (221,708) 110,909 95,831
Discontinued operations 35,611 -- (62,332) 17,586 (1,913)
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
-Continuing operations $(1.76) $(.99) $(4.28) $2.20 $2.28
-Discontinued operations .69 -- (1.20) .35 (.05)
-Extraordinary item (.44) -- -- -- --
-Net income (loss) (1.51) (.99) (5.48) 2.55 2.23
Fully diluted
-Continuing operations (1.76) (.99) (4.28) 2.19 2.24
-Discontinued operations .69 -- (1.20) .33 (.04)
-Extraordinary item (.44) -- -- -- --
-Net income (loss) (1.51) (.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
--------- --------- --------- --------- ---------
<FN>
* Includes unusual charges and losses of $67.2 million in 1994 and
restructuring and reorganization charges of $61.3 million in 1992 (see
Notes 3 and 15 to the Consolidated Financial Statements).
</TABLE>
<PAGE> 3
Consolidated Statement of Income
Chiquita Brands International, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Year Ended December 31,
(In thousands, except per share amounts) 1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales $2,505,826 $2,532,925 $2,723,250
-------------- -------------- --------------
Operating expenses
Cost of sales 1,996,179 1,993,552 2,309,425
Selling, general and administrative expenses 331,498 332,934 368,675
Depreciation 106,964 102,591 80,438
Restructuring and reorganization -- -- 61,300
-------------- -------------- --------------
2,434,641 2,429,077 2,819,838
-------------- -------------- --------------
Operating income (loss) 71,185 103,848 (96,588)
Interest income 22,902 20,377 43,301
Interest expense (167,464) (169,789) (155,036)
Other income (expense), net 2,566 6,483 (8,385)
-------------- -------------- --------------
Loss from continuing operations
before income taxes (70,811) (39,081) (216,708)
Income taxes (13,500) (12,000) (5,000)
-------------- -------------- --------------
Loss from continuing operations (84,311) (51,081) (221,708)
Discontinued operations 35,611 -- (62,332)
-------------- -------------- --------------
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
- Continuing operations $(1.76) $(.99) $(4.28)
- Discontinued operations .69 -- (1.20)
- Extraordinary item (.44) -- --
- Net loss (1.51) (.99) (5.48)
-------------- -------------- --------------
Weighted average number of common
shares outstanding 52,033 51,427 51,804
-------------- -------------- --------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
Consolidated Balance Sheet
Chiquita Brands International, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
December 31,
(In thousands, except share amounts) 1994 1993
-------------- --------------
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents $165,523 $151,226
Trade receivables, less allowances of $13,060
and $12,393, respectively 205,194 187,936
Other receivables, net 92,725 85,170
Inventories 308,549 307,073
Other current assets 32,334 39,054
-------------- --------------
Total current assets 804,325 770,459
Restricted cash 75,030 51,020
Net assets of discontinued operations 46,718 24,481
Property, plant and equipment, net 1,387,132 1,427,191
Investments and other assets 301,776 282,914
Intangibles, net 159,258 166,759
-------------- --------------
Total assets $2,774,239 $2,722,824
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $130,040 $112,796
Long-term debt due within one year 91,011 79,411
Accounts payable 232,535 202,923
Accrued liabilities 120,305 108,536
-------------- --------------
Total current liabilities 573,891 503,666
Long-term debt of parent company 840,377 881,124
Long-term debt of subsidiaries 524,459 557,254
Accrued pension and other employee benefits 74,855 74,588
Other liabilities 115,848 122,123
-------------- --------------
Total liabilities 2,129,430 2,138,755
-------------- --------------
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) 16,434 16,170
Capital surplus 505,800 494,240
Retained earnings (deficit) (52,940) 39,318
Minimum pension liability adjustment
for discontinued operations (15,124) (17,929)
-------------- --------------
Total shareholders' equity 644,809 584,069
-------------- --------------
Total liabilities and shareholders' equity $2,774,239 $2,722,824
-------------- --------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 5
Consolidated Statement of Shareholders' Equity
Chiquita Brands International, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Minimum
pension
liability
adjust-
Preferred ment for Total
and Retained discon- share-
preference Capital earnings tinued holders'
stock Capital stock surplus (deficit) operations equity
- - - ----------------------------------------------------------------------------------------------------------------------------------
(In thousands, Par
except share amounts) Shares 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 $52,270 48,163,560 $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 $52,270 48,510,353 $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 $190,639 49,300,881 $16,434 $505,800 $(52,940) $(15,124) $644,809
- - - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 6
Consolidated Statement of Cash Flow
Chiquita Brands International, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Year Ended December 31,
(In thousands) 1994 1993 1992
- - - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided (used) by:
Operations
Loss from continuing operations $(84,311) $(51,081) $(221,708)
Depreciation and amortization 113,080 109,711 87,509
Deferred income taxes -- (3,191) --
Non-cash charges (write-downs of farms
and cultivations in 1994 and restructuring
and reorganization charges in 1992) 24,600 -- 45,600
Changes in current assets and liabilities
Receivables (19,418) (7,571) 30,675
Inventories (14,275) 40,535 24,910
Accounts payable 26,083 (41,027) (39,502)
Other current assets and liabilities 19,454 (4,249) 33,904
Other 7,600 4,086 9,447
- - - -----------------------------------------------------------------------------------------------------------
Cash flow from operations 72,813 47,213 (29,165)
- - - -----------------------------------------------------------------------------------------------------------
Investing
Capital expenditures (136,981) (196,554) (409,770)
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 equipment 41,705 22,000 --
Other (6,518) 11,828 (8,126)
- - - -----------------------------------------------------------------------------------------------------------
Cash flow from investing (133,521) (238,000) (366,000)
- - - -----------------------------------------------------------------------------------------------------------
Financing
Debt transactions
Issuances of long-term debt 278,388 151,160 254,820
Repayments of long-term debt (369,666) (132,839) (63,907)
Increase (decrease) in notes and
loans payable 21,911 (25,621) (30,898)
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 57,555 (29,221) 97,269
- - - -----------------------------------------------------------------------------------------------------------
Discontinued operations 17,450 (16,735) (26,140)
- - - ----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and equivalents 14,297 (236,743) (324,036)
Balance at beginning of year 151,226 387,969 712,005
- - - -----------------------------------------------------------------------------------------------------------
Balance at end of year $165,523 $151,226 $387,969
- - - -----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 7
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, other than the Meat Division which was
sold in December 1995 and is accounted for as a discontinued operation.
Consolidated financial statements have been restated for discontinued
operations. The accompanying notes present amounts related only to continuing
operations, unless otherwise indicated. 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. 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 $34.0 million and $30.5 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
<PAGE> 8
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.
Note 2 -- Discontinued Operations
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.
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.
Net sales for the Meat Division were $1,456 million in 1994, $1,550 million
in 1993 and $1,745 million in 1992. Meat Division operating results included
in Chiquita's Consolidated Statement of Income as "Discontinued operations"
were income of $35.6 million in 1994, approximately breakeven in 1993 and a
loss of $62.3 million in 1992. The 1994 operating results include a $10.2
million gain from the sale of the specialty meat operations. The 1992
operating results include a $35.1 million provision for estimated loss on
disposal.
At December 31, 1994, the net assets of discontinued operations consist of
the following:
<TABLE>
<CAPTION>
(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>
<PAGE> 9
The adjustment to shareholders' equity for minimum pension liability represents
the excess of the accumulated benefit obligation over the fair market value of
plan assets in the Meat Division's hourly workers' pension plan.
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. With the sale of its remaining Meat
Division operations in December 1995, the Company's continuing operations
constitute a single business segment.
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
geographic area is shown on the following page.
<PAGE> 10
INFORMATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales to unaffiliated customers
North America $1,224,114 $1,238,678 $1,192,613
Central and South America 179,726 184,060 187,753
Europe and other international 1,101,986 1,110,187 1,342,884
-------------- -------------- --------------
Consolidated net sales $2,505,826 $2,532,925 $2,723,250
-------------- -------------- --------------
Operating income (loss)
North America $(8,370) $20,469 $(47,584)
Central and South America 19,071 17,607 16,906
Europe and other international 73,746 78,691 (52,541)
Unallocated expenses (13,262) (12,919) (13,369)
-------------- -------------- --------------
Consolidated operating income (loss) $ 71,185 $ 103,848 $ (96,588)
-------------- -------------- --------------
Identifiable assets
North America $493,079 $509,760 $538,165
Central and South America 864,232 912,321 918,230
Europe and other international 385,241 339,374 306,131
Shipping operations 671,756 656,816 586,960
Corporate assets 359,931 304,553 524,213
-------------- -------------- --------------
Consolidated assets $2,774,239 $2,722,824 $2,873,699
-------------- -------------- --------------
</TABLE>
<PAGE> 11
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 charges and losses totaling
$67.2 million primarily resulting from farm closings and write-downs of banana
cultivations in Honduras, the substantial reduction of the Company's Japanese
"green" banana trading operations and write-downs of ships held for sale as
follows: North America, $27.1 million; Europe and other international, $40.1
million. Operating income for 1992 includes restructuring and reorganization
charges (see Note 4) allocated as follows: North America, $6.8 million; Europe
and other international, $54.5 million.
For purposes of reporting identifiable assets by geographic area, cash and
equivalents, marketable securities, restricted cash, trademarks and the net
assets of discontinued operations 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.
Note 5 -- Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31,
(In thousands) 1994 1993
----------- -----------
<S> <C> <C>
Bananas and other fresh produce $42,444 $36,851
Other food products 68,713 62,110
Growing crops 115,177 117,839
Materials and supplies 68,062 75,206
Other 14,153 15,067
----------- -----------
$308,549 $307,073
=========== ===========
</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.
<PAGE> 12
Note 6 -- Property, Plant and Equipment, Net
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
(In thousands) 1994 1993
-------------- --------------
<S> <C> <C>
Land $107,579 $103,987
Buildings and improvements 205,735 198,434
Machinery and equipment 399,437 411,693
Ships and containers 796,906 790,817
Cultivations 317,233 305,546
Other 78,352 79,333
-------------- --------------
1,905,242 1,889,810
Less accumulated depreciation (518,110) (462,619)
-------------- --------------
Property, plant and equipment, net $1,387,132 $1,427,191
============== ==============
</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.
<PAGE> 13
Capital expenditures for 1992 include $62.5 million of purchases which
were directly financed.
Note 7 -- Leases
Total rental expense consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Gross rentals
- ships and containers $101,207 $142,969 $222,916
- other 34,084 32,528 34,513
------------ ------------ ------------
135,291 175,497 257,429
Less sublease rentals (4,740) (7,189) (20,775)
------------ ------------ ------------
$130,551 $168,308 $236,654
============ ============ ============
</TABLE>
<PAGE> 14
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>
<CAPTION>
(In thousands) Gross Rentals
Ships and containers Other Total
-------------- -------------- --------------
<S> <C> <C> <C>
1995 $71,749 $15,767 $87,516
1996 29,168 15,355 44,523
1997 27,492 13,330 40,822
1998 22,601 9,693 32,294
1999 22,253 5,021 27,274
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> 15
Note 8 -- Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
(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 install-
ments 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 prime 17,200 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) 123,486 95,780
Less current maturities (90,993) (79,395)
-------------- --------------
Long-term debt of subsidiaries $524,459 $557,254
============== ==============
</TABLE>
<PAGE> 16
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 $158.7 million, $159.4
million and $139.3 million in 1994, 1993 and 1992, respectively.
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>
<CAPTION>
Parent Subsidiary
(In thousands) Company Companies Total
-------------- -------------- --------------
<S> <C> <C> <C>
1995 $18 $90,993 $91,011
1996 20 91,687 91,707
1997 9 104,761 104,770
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 and 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% (10.9% at December 31, 1993).
<PAGE> 17
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>
<CAPTION>
December 31, December 31,
1994 1993
-------------- --------------- -------------- --------------
Carrying Estimated Carrying Estimated
(In thousands) value fair value value fair value
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Debt $1,585,887 $1,531,400 $1,630,585 $1,693,800
Interest rate
swap agreements -- (300) -- 10,700
Foreign currency
swap agreements -- 400 -- (4,100)
-------------- --------------- -------------- --------------
$1,585,887 $1,531,500 $1,630,585 $1,700,400
============== =============== ============== ==============
</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.
Note 10 -- Pension and Severance Benefits
The Company and its subsidiaries have several defined benefit and
contribution pension plans covering approximately 6,000 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.
<PAGE> 18
Pension and severance expense consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Defined benefit and severance plans:
Service cost -- benefits earned
during the period $5,383 $5,885 $5,126
Interest cost on projected
benefit obligation 8,412 8,423 7,784
Actual return on plan assets (623) (2,215) (1,868)
Net amortization and deferral (1,181) (521) (566)
----------- ----------- -----------
11,991 11,572 10,476
Defined contribution and
multi-employer plans 3,648 3,669 4,304
----------- ----------- -----------
Total pension and severance expense $15,639 $15,241 $14,780
=========== =========== ===========
</TABLE>
The projected benefit obligations were determined using assumed discount
rates of approximately 9 1/4% in 1994 and 1993 for unfunded Central and South
American pension and severance benefits and approximately 7% in 1994 and 1993
for all other plan benefits. The assumed long-term rate of compensation
increase was between 5% and 6% in 1994 and 1993 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> 19
The funded status of the Company's domestic and foreign defined benefit
pension and severance plans is as follows:
<TABLE>
<CAPTION>
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 $15,193 $15,316 $22,587 $23,279
------------ ------------ ------------ ------------
Present value of benefit obligations:
Vested 13,875 13,807 67,056 67,221
Nonvested 37 7 4,182 3,738
------------ ------------ ------------ ------------
Accumulated benefit obligation 13,912 13,814 71,238 70,959
Additional amounts related to projected
pay increases 854 2,144 18,333 19,062
------------ ------------ ------------ ------------
Projected benefit obligation 14,766 15,958 89,571 90,021
------------ ------------ ------------ ------------
Projected benefit obligation less than
(in excess of) plan assets 427 (642) (66,984) (66,742)
Projected benefit obligation not yet
recognized in the balance sheet:
Net actuarial (gain) loss (414) 1,054 10,920 6,302
Prior service cost -- -- 2,333 2,684
Obligation (asset) at transition,
net of amortization (45) (52) 6,295 7,805
------------ ------------ ------------- ------------
Net balance sheet asset (liability) $ (32) $ 360 $ (47,436) $ (49,951)
============ ============ ============= ============
</TABLE>
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.
<PAGE> 20
<TABLE>
<CAPTION>
1994 1993
Option Option
Shares Price Shares Price
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Under option at beginning
of year 5,451,768 $5.75 - 47.75 5,969,996 $5.75 - 49.63
Options granted 287,165 11.44 - 17.06 3,282,765 10.19 - 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 year 5,213,758 $5.75 - 34.44 5,451,768 $ 5.75 - 47.75
------------- ----------------- ------------- -----------------
Options exercisable at end of year 2,234,823 1,517,236
------------- ----------------- ------------- -----------------
Shares available for future grant 7,968,754 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
<PAGE> 21
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.
Note 13 - Income Taxes
Income taxes consist of the following:
<TABLE>
<CAPTION>
United States
(In thousands) Federal State Foreign Total
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1994
Current 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
-------- -------- -------- --------
</TABLE>
<PAGE> 22
Loss from continuing operations before income taxes consists of the
following:
<TABLE>
<CAPTION>
(In thousands)
Subject to tax in: 1994 1993 1992
------------ ------------ -------------
<S> <C> <C> <C>
United States $(111,776) $(94,314) $(152,777)
Foreign jurisdictions 40,965 55,233 (63,931)
------------ ------------ -------------
$(70,811) $(39,081) $(216,708)
------------ ------------- ------------
</TABLE>
Income tax expense differs from income taxes computed at the U.S. federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income tax benefit computed at U.S.
federal statutory rate $(24,784) $(13,678) $(73,681)
State income taxes, net of federal benefit 666 1,264
309
U.S. losses for which no tax benefit has
been recognized 34,012 19,694 34,310
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 4,114 3,559 1,197
------------ ------------ ------------
Income tax expense $13,500 $12,000 $5,000
------------ ------------ ------------
</TABLE>
The components of deferred income taxes included on the balance sheet at
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
----------- -----------
<S> <C> <C>
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
----------- -----------
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Deferred tax liabilities
<S> <C> <C>
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 $12.1 million in 1994,
$17.0 million in 1993 and $3.6 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> 24
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.
<TABLE>
<CAPTION>
1994
(In thousands, except per share amounts) March 31 June 30 Sept. 30 Dec. 31
--------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net sales $669,168 $652,910 $557,414 $626,334
Cost of sales (485,095) (469,519) (495,250) (546,315)
Operating income (loss) 81,183 70,133 (44,891) (35,240)
Income (loss) from continuing operations 35,534 30,945 (80,652) (70,138)
Discontinued operations -- -- -- 35,611
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
- Continuing operations .62 .51 (1.59) (1.38)
- Discontinued operations -- -- -- .68
- 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 $731,109 $682,352 $552,329 $567,135
Cost of sales (547,061) (535,555) (438,102) (472,834)
Operating income (loss) 70,342 41,985 11,139 (19,618)
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 million primarily resulting from write-downs
associated with farms and cultivations in Honduras, 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, operating loss includes approximately $10 million of charges
and losses primarily resulting from write-downs of ships held for sale and
losses from the scale-back of the Company's Japanese "green" banana trading
operations. Discontinued operations for the quarter ended December 31, 1994
includes a $10 million gain from the sale of the Meat Division's specialty
meat operations.
<PAGE> 25
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> 26
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 $12,393 $11,040 $ 8,542
-------- -------- -------
Additions:
Charged to costs and expenses $ 6,966 $ 4,797 $ 6,300
-------- -------- -------
Deductions:
Write-offs $ 6,330 $ 3,220 $ 4,182
Other, net (31) 224 (380)
-------- -------- -------
6,299 3,444 3,802
-------- -------- -------
Balance at end of period $13,060 $12,393 $11,040
======== ======== =======
</TABLE>
<PAGE> 1
CHIQUITA BRANDS INTERNATIONAL, INC. EXHIBIT 11.1
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) from continuing operations $(84,311) $(51,081) $(221,708) $110,909 $95,831
Dividends on Series A Preferred Stock (7,232) -- -- -- --
-------- -------- --------- -------- -------
Income (loss) from continuing operations
available to common shares (91,543) (51,081) (221,708) 110,909 95,831
Discontinued operations 35,611 -- (62,332) 17,586 (1,913)
-------- -------- --------- -------- -------
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:
-- Continuing operations $ (1.76) $ (.99) $ (4.28) $ 2.20 $ 2.28
-- Discontinued operations .69 -- (1.20) .35 (0.05)
-- Extraordinary item (.44) -- -- -- --
-------- -------- -------- ------- -------
-- Net income (loss) $ (1.51) $ (.99) $ (5.48) $ 2.55 $ 2.23
======== ======== ======== ======= =======
</TABLE>
<PAGE> 2
CHIQUITA BRANDS INTERNATIONAL, INC.
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) from comtinuing operations $(84,311) $(51,081) $(221,708) $110,909 $95,831
Dividends on Series A Preferred Stock (7,232) -- -- -- --
-------- -------- --------- -------- -------
Income (loss) from continuing
operations available to common shares (91,543) (51,081) (221,708) 110,909 95,831
Additional income as a result of assumed
conversion of convertible debentures -- -- -- 4,836 1,175
-------- -------- --------- -------- -------
Income (loss) from continuing operations
used to calculate fully diluted
earnings per share (91,543) (51,081) (221,708) 115,745 97,006
Discontinued operations 35,611 -- (62,332) 17,586 (1,913)
-------- -------- --------- -------- -------
Income (loss) available to common
shares before extraodinary 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:
-- Continuing operations $ (1.76) $ (.99) $ (4.28) $ 2.19 $ 2.24
-- Discontinued operations .69 -- (1.20) .33 (.04)
-- Extraodinary item (.44) -- -- -- --
-------- -------- --------- -------- -------
-- Net income (loss) $ (1.51) $ (.99) $ (5.48) $ 2.52 $ 2.20
======== ======== ========= ======== =======
</TABLE>
<PAGE> 3
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
--------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------
1995 1994
---- ----
<S> <C> <C>
NET SALES $1,970,793 $1,879,492
---------- ----------
Operating expenses
Cost of sales 1,481,215 1,449,864
Selling, general and administrative 243,789 243,313
Depreciation 74,064 79,890
----------- -----------
1,799,068 1,773,067
---------- ----------
OPERATING INCOME 171,725 106,425
Interest income 22,387 15,458
Interest expense (123,793) (125,558)
Other income, net 997 3,002
------------ ------------
Income (loss) from continuing operations
before income taxes 71,316 (673)
Income taxes (13,900) (13,500)
------------ -----------
Income (loss) from continuing operations 57,416 (14,173)
Discontinued operations 3,351 --
------------ --------------
Income (loss) before extraordinary item 60,767 (14,173)
Extraordinary loss from debt refinancing (4,713) (22,840)
------------ -----------
NET INCOME (LOSS) $ 56,054 $ (37,013)
=========== ===========
Weighted average number of common
shares outstanding (see Exhibit 11) 53,585 51,939
=========== ===========
Earnings (loss) per common share:
Primary - Continuing operations $ .96 $ (.37)
- Discontinued operations .06 --
- Extraordinary item (.09) (.44)
------------- -------------
- Net income (loss) $ .93 $ (.81)
============= =============
Fully diluted - Continuing operations $ .94 $ (.37)
- Discontinued operations .05 --
- Extraordinary item (.08) (.44)
------------- -------------
- Net income (loss) $ .91 $ (.81)
============= =============
Dividends per common share $ .15 $ .15
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
CHIQUITA BRANDS INTERNATIONAL, INC.
------------------------------------
CONSOLIDATED BALANCE SHEET (Unaudited)
--------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
- - - ------
CURRENT ASSETS
Cash and equivalents $ 223,675 $ 165,523 $ 151,292
Trade receivables (less allowances
of $13,361, $13,060 and $13,477) 210,769 205,194 223,723
Other receivables, net 86,963 92,725 95,450
Inventories 312,483 308,549 318,765
Other current assets 33,858 32,334 33,367
-------------- --------------- ---------------
TOTAL CURRENT ASSETS 867,748 804,325 822,597
Restricted cash 69,530 75,030 69,592
Net assets of discontinued
operations 51,061 46,718 20,481
Property, plant and equipment, net 1,271,034 1,387,132 1,433,196
Investments and other assets 327,537 301,776 294,160
Intangibles, net 154,757 159,258 157,969
-------------- --------------- ---------------
TOTAL ASSETS $ 2,741,667 $ 2,774,239 $ 2,797,995
============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
- - - ------------------------------------
CURRENT LIABILITIES
Notes and loans payable $ 114,381 $ 130,040 $ 115,042
Long-term debt due within one year 66,230 91,011 89,182
Accounts payable 221,111 232,535 216,785
Accrued liabilities 139,519 120,305 111,697
-------------- --------------- ---------------
TOTAL CURRENT LIABILITIES 541,241 573,891 532,706
Long-term debt of parent company 840,783 840,377 840,251
Long-term debt of subsidiaries 475,896 524,459 553,963
Accrued pension and other employee benefits 74,001 74,855 75,037
Other liabilities 115,377 115,848 119,299
-------------- --------------- ---------------
TOTAL LIABILITIES 2,047,298 2,129,430 2,121,256
-------------- --------------- ---------------
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 for discontinued
operations (15,124) (15,124) (17,929)
-------------- --------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 694,369 644,809 676,739
-------------- --------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,741,667 $ 2,774,239 $ 2,797,995
============== =============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 5
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) from continuing operations $ 57,416 $ (14,173)
Depreciation and amortization 78,437 84,633
Write-downs of farms and cultivations -- 24,600
Changes in current assets and liabilities (22,840) (30,953)
Other (13,057) 2,272
------------- --------------
CASH FLOW FROM OPERATIONS 99,956 66,379
------------- --------------
Investing
Capital expenditures (47,145) (115,790)
Sales of fresh fruit shipping and distribution assets 102,708 --
Restricted cash deposits 5,500 (18,572)
Acquisitions and long-term investments -- (386)
Other (2,159) (6,944)
------------- --------------
CASH FLOW FROM INVESTING 58,904 (141,692)
------------- --------------
Financing
Debt transactions
Issuances of long-term debt 202,356 263,745
Repayments of long-term debt (281,034) (326,208)
Increase (decrease) in notes and loans payable (8,432) 4,159
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 (98,749) 71,379
------------- --------------
Discontinued operations (1,959) 4,000
------------- --------------
Increase in cash and equivalents 58,152 66
Balance at beginning of period 165,523 151,226
------------- --------------
Balance at end of period $ 223,675 $ 151,292
============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 6
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 $ 37,821 $ 42,444 $ 38,536
Other food products 81,489 68,713 80,129
Growing crops 116,046 115,177 115,208
Materials and supplies 62,889 68,062 71,630
Other 14,238 14,153 13,262
------------ ------------ ------------
$ 312,483 $ 308,549 $ 318,765
============ ============ ============
</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 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.
