PROSPECTUS
1,564,623 Shares
[LOGO] Chiquita Brands International, Inc.
Common Stock
This Prospectus relates to 1,564,623 shares of the Capital Stock, par
value $.33 per share (the "Common Stock"), of Chiquita Brands
International, Inc. ("Chiquita" or the "Company").
The Common Stock is listed on the New York, Boston and Pacific Stock
Exchanges. On December 8, 1997 the last sale price of the Common Stock as
reported on the New York Stock Exchange Composite Tape was $ 17.00 per
share.
The shares of Common Stock offered hereby (the "Shares") are being
sold for the accounts of and by the persons named under the caption
"Selling Shareholders." The Shares may be sold from time to time in
transactions on the open market or in negotiated transactions, in each
case at prices satisfactory to the Selling Shareholders. (See "Plan of
Distribution.") The Company will not receive any proceeds from any sales
of the Shares.
See "Risk Factors" beginning on page 4 for a discussion of certain
factors which should be considered by prospective purchasers of the Common
Stock.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is December 8, 1997.
<PAGE>
AVAILABLE INFORMATION
Chiquita is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Chiquita has filed with the Commission a Registration
Statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Shares offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and
exhibits thereto, or amendments thereto, to which reference is hereby
made. Such reports, proxy and information statements, Registration
Statement and exhibits and other information filed by Chiquita may be
inspected and, upon payment of the Commission's customary charges, copied
at the public reference facilities of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the Commission at Suite 1300, 7 World Trade
Center, New York, New York 10048, and at Suite 1400, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains a Website that contains reports, proxy and
information statements and other information regarding companies,
including Chiquita, that file electronically with the Commission at
http://www.sec.gov.
Chiquita's Common Stock is listed on the New York, Boston and Pacific
Stock Exchanges. Reports, proxy and information statements and other
information concerning Chiquita may be inspected and copied at the Library
of the New York Stock Exchange at 20 Broad Street, New York, New York; at
the Secretary's Office of the Boston Stock Exchange at One Boston Place,
Boston, Massachusetts; and at the Listing Department of the Pacific Stock
Exchange at 301 Pine Street, San Francisco, California.
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No person has been authorized to give any information or to make
on behalf of the Company or the Selling Shareholders any
representations, other than those contained in this Prospectus, in
connection with the offer made hereby, and, if given or made, such other
information or representation must not be relied upon as having been
authorized by the Company or the Selling Shareholders. This Prospectus
does not constitute an offer to sell, or a solicitation of an offer to
buy, any security other than the securities offered hereby, or an offer
to sell or solicitation of an offer to buy such securities in any
jurisdiction in which such offer or solicitation is not qualified or to
any person to whom such offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been
no change in the affairs of the Company since the date hereof or that
the information contained or incorporated by reference herein is correct
as of any date subsequent to the date hereof.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Chiquita will furnish, without charge, to any person to whom this
Prospectus is delivered, upon such person's written or oral request, a
copy of any and all of the information that has been incorporated by
reference in the Registration Statement of which this Prospectus is a part
(not including exhibits to such information unless such exhibits are
specifically incorporated by reference into such information). Any such
request should be directed to the Vice President, Corporate Affairs of
Chiquita, 250 East Fifth Street, Cincinnati, Ohio 45202; telephone: (513)
784-6366.
The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (which incorporates by reference certain information contained in
the Company's 1996 Annual Report to Shareholders) (the "1996 10-K") filed
by Chiquita with the Commission (Commission file number 1-1550), the
Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997 (the "1997 10-Q's"),
the Company's Current Reports on Form 8-K dated September 15, 1997,
November 20, 1997 and December 1, 1997 (the "1997 8-Ks"), and the
description of Capital Stock of Chiquita contained in a Registration
Statement on Form 8-A filed by Chiquita (then called United Brands
Company) on September 11, 1970, are incorporated herein by reference and
made a part hereof.
All documents filed by Chiquita pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereunder shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof
from the respective dates of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein, or in
any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
FORWARD-LOOKING STATEMENTS
This Prospectus, including the information incorporated by reference
herein, information included in, or incorporated by reference from, future
filings by the Company with the Commission and information contained in
written material, press releases and oral statements issued by or on
behalf of the Company, contains, or may contain, certain statements that
may be deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
All statements, other than statements of historical facts, included in
this Prospectus that address activities, events or developments that
Chiquita expects, believes or anticipates will or may occur in the future
are forward-looking statements. These statements are based on certain
assumptions and analyses made by the Company in light of their experience
<PAGE>
and perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate under the
circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, such as (i) the prices at which Chiquita can sell
its products, (ii) the costs at which it can purchase (or grow) fresh
produce and other raw materials and inventory, and (iii) the various
market, competitive and agricultural factors which may impact those prices
and costs, many of which are beyond the control of Chiquita. Some of
these risks are described in more detail in "Risk Factors" below.
Investors are cautioned that any such statements are not guarantees of
future performance and that actual results or developments may differ
materially from the expectations expressed in the forward-looking
statements.
<PAGE>
THE COMPANY
Chiquita Brands International, Inc. is a leading international
marketer, producer and distributor of bananas and other quality fresh and
processed food products sold under the Chiquita and other brand names. In
addition to bananas, these products include other tropical fruit, such as
mangoes, kiwi and citrus, and a wide variety of other fresh produce.
Chiquita's operations also include fruit and vegetable juices and
beverages; processed bananas and other processed fruits and vegetables;
and fresh cut and ready-to-eat salads; and edible oil-based consumer
products.
American Financial Group, Inc. ("AFG") owns, either directly or
indirectly through its subsidiaries, approximately 39% of Chiquita's
outstanding shares of Common Stock. Approximately 45% of the outstanding
stock of AFG is beneficially owned by Carl H. Lindner, members of his
family and trusts for their benefit.
Chiquita is a New Jersey corporation. The address of its principal
executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 784-8000. Unless the context indicates
otherwise, the term "Chiquita" also includes Chiquita's subsidiaries.
RISK FACTORS
In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following in the
context of the more complete disclosure in the Company's 1996 10-K before
making an investment in the Shares.
Recent Losses. From 1984 to 1991, Chiquita reported a continuous
record of growth in annual earnings. However, Chiquita reported losses
from continuing operations for 1992, 1993, 1994 and 1996 of $222 million,
$51 million, $84 million, and $28 million, respectively, and earnings of
$28 million in 1995. The 1994 loss included charges and losses totaling
$67 million resulting primarily from farm closings and banana cultivation
write-downs in Honduras following an unusually severe strike and the
substantial reduction of Chiquita's Japanese "green" banana trading
operations. The 1995 earnings included a net gain of $19 million
primarily resulting from divestitures of operations, sales of older ships
and other actions taken as part of Chiquita's ongoing program to improve
shareholder value. The 1996 loss included write-downs and costs of $70
million resulting from industry-wide flooding in Costa Rica, Guatemala and
Honduras; certain strategic undertakings designed to achieve further long-
term reductions in the delivered product cost of Chiquita bananas through
the modification of distribution logistics and the wind-down of particular
production facilities; and certain claims relating to prior EU quota
restructuring actions.
For the first nine months of 1997, the Company reported net income
from continuing operations of $56 million, after giving effect to a loss
of $28 million in the third quarter. At September 30, 1997, Chiquita's
<PAGE>
accumulated deficit totaled $103 million. The Company's interim results
are subject to significant seasonal variations; typically the first six
months of the calendar year are the stronger period. See "--Competition
and Pricing." Operating income in the third quarter of 1997 compared to
the third quarter of 1996 was adversely affected by (1) a stronger dollar,
mitigated in part by the Company's foreign currency hedging program, and
(2) increased banana production costs arising from weather-related effects
and other influences on current productivity; the adverse impact of these
items was partially offset by the benefit of higher local currency pricing
for bananas in Europe. These trends, including higher production costs,
have continued into the fourth quarter.
European Union Banana Regulation. On July 1, 1993, the European
Union ("EU") implemented a new quota regulation effectively restricting
the volume of Latin American bananas imported into the EU, which had the
effect of decreasing Chiquita's volume and market share in Europe. The
quota regulation is administered through a licensing system which grants
preferred status to producers and importers within the EU and its former
colonies. The regulation also imposes quotas and tariffs on bananas
imported from other sources, including Latin America, Chiquita's primary
source of fruit. Since imposition of the EU quota regime, prices within
the EU have increased to a higher level than the levels prevailing prior
to the quota. Banana prices in other worldwide markets, however, have
been lower than in years prior to the EU quota, as the displaced EU volume
has entered those markets.
In two separate rulings, General Agreement on Tariffs and Trade
("GATT") panels found the EU banana policy to be illegal. In March 1994,
four of the countries which had filed GATT actions against the EU banana
policy (Costa Rica, Colombia, Nicaragua and Venezuela) reached a
settlement with the EU by signing a "Framework Agreement." The Framework
Agreement authorizes the imposition of additional restrictive and
discriminatory quotas and export licenses on U.S. banana marketing firms,
while leaving EU firms exempt. Costa Rica and Colombia implemented this
agreement in 1995, significantly increasing Chiquita's cost to export
bananas from these countries.
In July 1996, the EU adopted an interim measure that increased its
annual banana quota to adjust for the entry of Sweden, Finland and Austria
into the EU and made its preferential licensing system applicable to the
increase. Prior to their entry into the EU, these countries had had
unregulated banana markets in which Chiquita supplied a significant
portion of the bananas. Implementation of the quota and licensing regime
continues to evolve, and there can be no assurance that the EU banana
regulation will not change further.
In September 1994, Chiquita and the Hawaii Banana Industry
Association made a joint filing with the Office of the U.S. Trade
Representative ("USTR") under Section 301 of the U.S. Trade Act of 1974,
charging that the EU quota and licensing regime and the Framework
Agreement are unreasonable, discriminatory, and a burden and restriction
on U.S. commerce. In response to this petition, the U.S. Government
initiated formal investigations of the EU banana import policy and of the
<PAGE>
Colombian and Costa Rican Framework Agreement export policies. In January
1995, the U.S. Government announced a preliminary finding against the EU
banana import policy and, in January 1996, the USTR announced it had found
the banana Framework Agreement export policies of Costa Rica and Colombia
to be unfair.
In September 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 World Trade Organization
("WTO"). In February 1996, Ecuador, the world's largest exporter of
bananas, joined the United States, Guatemala, Honduras and Mexico in
challenging the EU regime and Framework Agreement under the WTO. During
the fourth quarter of 1996, a WTO arbitration panel heard the case against
the EU quota and licensing regime and Framework Agreement. In May 1997,
the WTO panel hearing the case issued its final report, finding that the
licensing and quota systems under the EU regime and the Framework
Agreement violate numerous international trade obligations to the
detriment of Latin American supplying countries and non-EU marketing firms
such as Chiquita. In June 1997, the EU appealed the report and in
September 1997 the WTO Appellate Body upheld the panel report. The full
WTO body has adopted the panel and Appellate Body reports, which now
require the EU to bring its import regime for bananas into conformity with
these reports. In October 1997, the EU notified the WTO that it will
honor its international obligations. The EU has a "reasonable" period of
time (not to exceed 15 months) to implement the reports' recommendations.
On December 1, 1997, the United States, Ecuador, Guatemala, Honduras and
Mexico, the governments which originally filed the WTO proceeding,
requested the WTO to appoint an arbitrator to determine the "reasonable
period of time" for implementation by the EU of the final WTO panel and
Appellate Body reports. If the EU fails to comply within a reasonable
period of time, the injured governments may engage in retaliatory trade
measures against 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 ultimate outcome
of the WTO and Section 301 proceedings, the nature and extent of actions
that may be taken by the affected countries, or the impact on the EU quota
regime or the Framework Agreement.
Leverage. As of September 30, 1997, Chiquita and its subsidiaries
had short-term notes and loans payable of $36 million and long-term debt
(including current maturities) of approximately $1.1 billion; the
percentage of total debt to total capitalization for Chiquita was 58%. As
of September 30, 1997, maturities for the remainder of 1997 and for the
years 1998 through 2001 are $20 million, $88 million, $50 million, $41
million, and $174 million, respectively.
Subsidiaries. Most of Chiquita's operations are conducted through
its subsidiaries and Chiquita is therefore dependent on the cash flow of
its subsidiaries to meet its obligations. The claims of holders of
Chiquita Common Stock will be subordinate to any existing and future
<PAGE>
obligations of Chiquita and will be structurally subordinated to any
existing and future obligations (whether or not for borrowed money) of its
subsidiaries, many of which have direct obligations to lenders and other
third-party creditors. As of September 30, 1997, the total debt of
Chiquita's subsidiaries aggregated $411 million, of which $253 million
represented non-recourse long-term debt of Chiquita's shipping
subsidiaries secured by ships and related equipment and $36 million
represented short-term notes and loans payable.
Competition and Pricing. Approximately 60% of Chiquita's 1996
consolidated net sales were attributable to the sale of bananas. Banana
marketing is highly competitive. While smaller companies, including
growers' cooperatives, are a competitive factor, Chiquita's primary
competitors are a limited number of other international banana importers
and exporters. Chiquita has been able to obtain a premium price for its
bananas due to its reputation for quality and its innovative marketing
techniques. In order to compete successfully, Chiquita must be able to
source bananas of uniformly high quality and, on a timely basis, transport
and distribute them to worldwide markets. Bananas are highly perishable
and must be brought to market and sold generally within 60 days after
harvest. Therefore, the selling price which an importer receives for
bananas depends on several factors, including: availability of bananas
and other fruit in each market; the relative quality of competing fruit;
and wholesaler and retailer acceptance of bananas offered by competing
importers. Excess supplies may result in increased price competition.
Competition in the sale of bananas also comes from other fresh fruit,
which may be seasonal in nature. The resulting seasonal variations in
demand cause banana pricing to be seasonal, with the first six months of
the calendar year being the stronger period.
Chiquita's vegetable canning business competes with numerous
producers of both branded and private-label vegetables, as well as with
numerous marketers of frozen and fresh vegetable products.
Adverse Weather Conditions and Crop Disease. Bananas are vulnerable
to adverse local weather conditions, which are quite common but difficult
to predict, and to crop disease. These factors may result in lower sales
volume and increased costs, but may also restrict worldwide supplies and
lead to increased prices for bananas. However, competitors may be
affected differently, depending upon their ability to obtain adequate
supplies from sources in other geographic areas. Chiquita has a greater
number and geographic diversity of sources of bananas than any of its
competitors. During 1996, approximately 30% of all bananas sold by
Chiquita were sourced from Panama. Bananas are sourced from numerous
other countries, including Colombia, Costa Rica, Ecuador, Guatemala and
Honduras which comprised 5% to 21% (depending on the country) of bananas
sold by Chiquita during 1996.
The vegetable processing industry is also affected by the
availability of produce, which can vary due to local weather conditions.
<PAGE>
Labor Relations. Chiquita employs approximately 36,000 employees.
Approximately 32,000 of these employees are employed in Central and South
America, including 23,000 workers covered by approximately 70 labor
contracts. Approximately 25 contracts covering approximately 10,000
employees are currently being renegotiated or expire through September 30,
1998. Strikes or other labor-related actions are sometimes encountered
upon expiration of labor contracts or during the term of the contracts.
Other Risks of International Operations. Certain of Chiquita's
operations are heavily dependent upon products grown and purchased in
Central and South American countries; at the same time, Chiquita's
operations are a significant factor in the economies of many of these
countries. These activities are subject to risks that are inherent in
operating in these countries, including government regulation, currency
restrictions and other restraints, risks of expropriation and burdensome
taxes. There is also a risk that legal or regulatory requirements will be
changed or that administrative policies will change. Certain of the
activities are substantially dependent upon leases and other agreements
with the governments of these countries. Chiquita's overall risk from
these factors, as well as from political changes, is reduced by the large
number and geographic diversity of its sources of bananas. Chiquita's
worldwide operations and products are subject to numerous governmental
regulations and inspections by environmental, food safety and health
authorities. Although Chiquita believes it is substantially in compliance
with such regulations, actions by regulators have in the past required,
and in the future may require, operational modifications or capital
improvements at various locations or the payment of fines and penalties,
or both.
Shares Available for Future Sale. No prediction can be made as to
the effect, if any, that future sales of shares of Common Stock, or the
availability of such shares for future sales, will have on the market
price prevailing from time to time of Common Stock. Sales of substantial
amounts of Common Stock, or the perception that such sales could occur,
could adversely affect prevailing market prices for the Common Stock. At
December 8, 1997, there were outstanding 61,029,563 shares of Common
Stock, including 23,996,295 shares held, directly or indirectly, by AFG.
The outstanding shares include approximately 3 million shares of Common
Stock issued in a private transaction in connection with the recent
acquisition of the Owatonna Canning group of companies, of which up to
500,000 shares may be registered for resale between September 24, 1997 and
September 23, 1998. In addition, up to approximately 3.2 million shares
of Common Stock are expected to be issued in January 1998 in connection
with the acquisition of Stokely USA, Inc.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholders.
<PAGE>
SELLING SHAREHOLDERS
The following information regarding the Shares offered hereby has
been provided to the Company by the Selling Shareholders identified below
and reflects information concerning beneficial ownership of Common Stock
as of the date of this Prospectus. Each of the Selling Shareholders is a
former shareholder of American Fine Foods, Inc., an Idaho corporation
("AFF"). The Selling Shareholders received the Shares in connection with
the acquisition by the Company of all of the outstanding capital stock of
AFF on December 8, 1997.
<TABLE>
<CAPTION>
Shares of the Company's
Shares of the Shares of the Common Stock to
Company's Company's be Owned After
Name of Selling Common Stock Common Stock Offered Completion
Shareholder Beneficially Owned Hereby of this Offering
- - --------------- -------------------- ---------------------- -----------------
<S> <C> <C> <C>
Steiner Corporation 1,419,029 1,419,029 - -
Robert Moss 137,931 137,931 - -
Dillon Wilson 7,663 7,663 - -
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by or for the account of the
Selling Shareholders directly to purchasers, to or through broker-dealers
or through a combination of these methods. Sales by means of this
Prospectus may be made privately at prices to be individually negotiated
with the purchasers or publicly through transactions on the New York Stock
Exchange, other exchanges or in the over-the-counter market, including
block trades, at prices reasonably related to market prices at the time of
sale or at negotiated prices. Broker-dealers participating in such
transactions may act as agent or as principal and may receive commissions
from the purchasers as well as from the Selling Shareholders. Steiner
Corporation may elect to engage an underwriter to sell the Shares being
offered by it, in which case the remaining Selling Shareholders must
either offer their Shares through such underwriter or refrain from
offering their Shares. The Selling Shareholders have advised the Company
that they do not presently intend to engage an underwriter with respect to
the offering made hereby.
All expenses relating to the registration of the Shares other than fees
and expenses of counsel, accountants or other consultants to the Selling
Shareholders will be paid, directly or indirectly, by the Company. Under
certain circumstances, the Company may pay a portion of certain costs of
sale of the Shares.
<PAGE>
The Company has agreed with the Selling Shareholders, subject to
certain exceptions, to keep the Registration Statement covering the Shares
effective until the earlier of (i) 120 days after the date the
Registration Statement is declared effective or (ii) the date on which
all Shares have been sold by the Selling Shareholders pursuant to the
Registration Statement.
In addition, the Company and the Selling Shareholders will indemnify
each other for certain liabilities, including civil liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon by
Robert W. Olson. Mr. Olson, Senior Vice President, General Counsel and
Secretary of Chiquita, presently holds shares of Common Stock in the
Company's Savings and Investment (401(k)) Plan as well as employee stock
options to purchase additional shares of Common Stock.
EXPERTS
The consolidated financial statements of Chiquita Brands International,
Inc. appearing (or incorporated by reference) in its Annual Report (Form
10-K) for the year ended December 31, 1996, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
included (or incorporated by reference) therein and incorporated herein by
reference. The financial statements of Owatonna Canning Company for the
years ended February 28, 1997, February 29, 1996 and February 28, 1995
appearing in Chiquita's Current Report on Form 8-K dated September 15,
1997 have been audited by Hutton, Nelson & McDonald LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. The financial statements of Stokely
USA, Inc. for the years ended March 31, 1997, 1996 and 1995 incorporated
by reference into Chiquita's Current Report on Form 8-K dated November 20,
1997 have been audited by Deloitte & Touche LLP, independent auditors, as
set forth in their report thereon incorporated therein and herein by
reference. Such Chiquita consolidated financial statements, Owatonna
Canning Company financial statements and Stokely USA, Inc. financial
statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firms as experts in accounting
and auditing.
