FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
March 31, 1997 Number 1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the IRS Employer I.D.
Laws of New Jersey No. 04-1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days. YES X NO
As of May 1, 1997, there were 56,286,962 shares of Common
Stock outstanding.
Page 1 of 11 Pages
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CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
PART I - Financial Information
Consolidated Statement of Income for the quarters
ended March 31, 1997 and 1996 . . . . . . . . . . 3
Consolidated Balance Sheet as of March 31, 1997,
December 31, 1996 and March 31, 1996 . . . . . . . 4
Consolidated Statement of Cash Flow for the quarters
ended March 31, 1997 and 1996 . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . 6
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . 7
PART II - Other Information
Item 2 - Changes in Securities . . . . . . . . . . 8
Item 6 - Exhibits and Reports on Form 8-K . . . . . 8
Signature . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
Part I - Financial Information
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
Net sales $631,410 $624,806
--------- ---------
Operating expenses
Cost of sales 464,071 471,999
Selling, general and administrative 74,378 73,235
Depreciation 21,575 21,711
--------- ---------
560,024 566,945
--------- ---------
Operating income 71,386 57,861
Interest income 4,386 7,340
Interest expense (28,458) (35,167)
Other income, net 280 194
--------- ---------
Income before income taxes 47,594 30,228
Income taxes (4,300) (6,000)
--------- ---------
Net income $43,294 $24,228
========= =========
Shares used to calculate earnings per
common share:
Primary 56,952 55,919
========= =========
Fully diluted 72,516 63,829
========= =========
Earnings per common share:
Primary $.69 $.40
========= =========
Fully diluted $.60 $.38
========= =========
Dividends per common share $.05 $.05
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)
March 31, December 31, March 31,
1997 1996 1996
----------- ------------- -----------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and equivalents $164,670 $285,558 $211,945
Marketable securities -- -- 31,734
Trade receivables (less allowances
of $9,373, $9,832 and $11,075) 217,281 162,566 216,317
Other receivables, net 88,908 91,126 94,017
Inventories 267,638 275,177 277,141
Other current assets 47,643 29,884 36,919
----------- ----------- -----------
Total current assets 786,140 844,311 868,073
Restricted cash -- -- 39,520
Property, plant and equipment, net 1,132,238 1,139,677 1,163,123
Investments and other assets 323,039 319,149 357,321
Intangibles, net 158,257 163,797 166,941
----------- ----------- -----------
Total assets $2,399,674 $2,466,934 $2,594,978
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $37,349 $78,107 $107,370
Long-term debt due within one year 94,191 56,982 49,876
Accounts payable 196,697 193,875 208,881
Accrued liabilities 83,833 135,370 101,875
----------- ----------- -----------
Total current liabilities 412,070 464,334 468,002
Long-term debt of parent company 702,712 704,763 841,072
Long-term debt of subsidiaries 321,805 374,488 394,667
Accrued pension and other employee benefits 84,051 83,797 85,935
Other liabilities 112,811 115,299 109,769
----------- ----------- -----------
Total liabilities 1,633,449 1,742,681 1,899,445
----------- ----------- -----------
Shareholders' equity
Preferred stock 249,256 249,256 138,369
Capital stock, $.33 par value (56,245,552,
55,841,384 and 55,234,823 shares) 18,748 18,614 18,412
Capital surplus 600,458 594,885 584,786
Accumulated deficit (102,237) (138,502) (46,034)
----------- ----------- -----------
Total shareholders' equity 766,225 724,253 695,533
----------- ----------- -----------
<PAGE>
Total liabilities and shareholders'
equity $2,399,674 $2,466,934 $2,594,978
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(In thousands)
Quarter Ended
March 31,
1997 1996
---------- ----------
<S> <C> <C>
Cash provided (used) by:
Operations
Net income $43,294 $24,228
Depreciation and amortization 22,957 23,145
Write-down of Costa Rican banana
producing assets -- 8,900
Changes in current assets and liabilities:
Receivables (54,351) (37,869)
Inventories 7,102 16,230
Accounts payable 5,509 2,589
Other current assets and liabilities (53,043) (27,742)
Other 745 (5,458)
--------- ---------
Cash flow from operations (27,787) 4,023
--------- ---------
Investing
Capital expenditures (13,211) (12,255)
Refundable deposits for container
equipment (15,849) --
Other (991) 4,699
--------- ---------
Cash flow from investing (30,051) (7,556)
--------- ---------
Financing
Debt transactions
Issuances of long-term debt -- 4,758
Repayments of long-term debt (18,070) (13,488)
Decrease in notes and loans payable (40,064) (9,234)
Stock transactions
Issuances of capital stock 2,113 1,592
Dividends (7,029) (4,825)
--------- ---------
Cash flow from financing (63,050) (21,197)
--------- ---------
Decrease in cash and equivalents (120,888) (24,730)
Balance at beginning of period 285,558 236,675
--------- ---------
Balance at end of period $164,670 $211,945
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Interim results are subject to significant seasonal variations
and are not necessarily indicative of the results of operations
for a full fiscal year. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary for a fair statement of the results of the interim
periods shown have been made. See Notes to Consolidated
Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 for additional
information relating to the Company's financial statements.
<TABLE>
<CAPTION>
Inventories consist of the following (in thousands):
March 31, December 31, March 31,
1997 1996 1996
---------- ------------ ----------
<S> <C> <C> <C>
Bananas and other fresh produce $41,060 $34,557 $42,810
Other food products 54,756 66,929 47,139
Growing crops 113,650 114,425 120,080
Materials and supplies 48,527 49,699 56,650
Other 9,645 9,567 10,462
---------- ---------- ----------
$267,638 $275,177 $277,141
========== ========== ==========
</TABLE>
In accordance with its long-standing policy to periodically
hedge transactions denominated in foreign currencies, at March
31, 1997, the Company had option contracts which ensure
conversion of approximately $330 million of foreign sales through
1997 at a rate of 1.55 Deutsche marks per dollar and
approximately $170 million of foreign sales in 1998 at rates not
higher than 1.63 Deutsche marks per dollar or lower than 1.50
Deutsche marks per dollar. At March 31, 1997, the carrying value
of these option contracts was approximately $5 million and their
fair value based on quoted market prices was approximately $29
million.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share," which the Company
is required to adopt on December 31, 1997. At that time, the
Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods.
Statement No. 128 is not expected to have a material effect on
the Company's earnings per share.
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
MANAGEMENT'S ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
OPERATIONS
Net sales for the quarter ended March 31, 1997 were
comparable to sales for the same quarter of 1996.
Operating income for the 1997 first quarter was $71 million
compared to 1996 first quarter operating income of $58 million,
which included write-downs and costs of $12 million resulting
from damage to the Company s banana producing assets caused by
industry-wide flooding in Costa Rica during the 1996 first
quarter. Worldwide banana volume and average pricing increased
in 1997 in comparison to the first quarter of 1996. The benefit
of these favorable developments was offset by (i) the adverse
impact of a stronger dollar, mitigated in part by the Company's
foreign currency hedging program, and (ii) additional costs which
are being incurred during 1997 for the purchase and shipment of
replacement fruit as a result of flooding in Honduras and
Guatemala in late 1996.
Net interest expense was reduced by $4 million in comparison
to the first quarter of 1996 as a result of the Company's debt
refinancing and reduction activities.
The Company's effective tax rate is affected by the level and
mix of income between various domestic and foreign jurisdictions
in which the Company operates.
FINANCIAL CONDITION
Cash decreased by $121 million during the first quarter of
1997 due primarily to seasonal increases in working capital and
prepayments of debt. As a result of debt refinancing and
reduction activities, net debt (total debt less cash and
marketable securities) has decreased by $118 million since March
31, 1996 to approximately $1.0 billion at March 31, 1997.
OTHER
Reference is made to the discussion of the European Union
("EU") banana quota and licensing regime, the Framework Agreement
and the pending World Trade Organization ("WTO") proceeding
regarding this regime contained in Part I, Item 1 - "Business-
Risks of International Operations" in the Company's 1996 Form 10-
K and "Management's Analysis of Operations and Financial
Condition" in the Company's 1996 Annual Report to Shareholders.
It has been widely reported that in April 1997 the WTO panel
hearing the case issued its final report to the governments
involved in the proceeding, finding that the licensing and quota
<PAGE>
systems under the EU regime and the Framework Agreement violate
numerous international trade agreements to the detriment of Latin
American supplying countries and U.S. marketing firms such as
Chiquita. Reportedly, the report recommends that the WTO request
the EU to bring its import regime for bananas into conformity
with these agreements. The report is subject to appeal
procedures that could extend by a few months the time before it
could be adopted. Thereafter, the parties would have a
"reasonable" period of time (not to exceed 15 months) to
implement the report's recommendations. There can be no
assurance as to the ultimate outcome of the WTO proceedings,
including any appeal of the final report, the nature and extent
of any actions that may be taken by the affected countries or the
impact on the EU quota regime or the Framework Agreement.
<PAGE>
Part II - Other Information
Item 2 - Changes in Securities
(c) On January 29, 1997, the Company issued 206,777 shares of
Common Stock to the seller of agricultural assets in a
transaction exempt from registration pursuant to Section
4(2) of the Securities Act of 1933. The shares were
issued as consideration for the approximately $3 million
purchase price of the assets.
Item 6 - Exhibits and Reports on Form 8-K
Page
Number(s)
(a) Exhibit 11 - Computation of Earnings Per
Common Share . . . . . . . . . . . . . . . 10-11
Exhibit 27 - Financial Data Schedule . . . **
** Copy omitted from this Quarterly Report on Form 10-Q.
Copy included in report filed electronically with the
Securities and Exchange Commission.
(b) There were no reports on Form 8-K filed by the Company
during the quarter ended March 31, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
William A. Tsacalis
Vice President and Controller
(Chief Accounting Officer)
May 12, 1997
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
A. Primary earnings per common share
Net income $43,294 $24,228
Dividends on preferred stock (4,223) (2,066)
--------- ---------
Net income attributable to common shares $39,071 $22,162
========= =========
Shares used in calculation of per share data:
Weighted average common shares outstanding 56,059 55,089
Less restricted common shares (200) (310)
Dilutive effect of assumed exercise of
stock options 1,093 1,140
56,952 55,919
========= =========
Primary earnings per common share $.69 $.40
========= =========
</TABLE>
10
<PAGE>
Exhibit 11 (continued)
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
B. Fully diluted earnings per common share
Net income $43,294 $24,228
========= =========
Shares used in calculation of per
share data:
Weighted average common shares
outstanding 56,059 55,089
Less restricted common shares (189) (289)
Dilutive effect of assumed conversion
of preferred stock 15,232 7,566
Dilutive effect of assumed exercise of
stock options 1,414 1,463
--------- ----------
72,516 63,829
========== ==========
Fully diluted earnings per common share $.60 $.38
========== ==========
11
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Chiquita Brands International, Inc. Form 10-Q for the three months ended
March 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 164,670
<SECURITIES> 0
<RECEIVABLES> 226,654
<ALLOWANCES> 9,373
<INVENTORY> 267,638
<CURRENT-ASSETS> 786,140
<PP&E> 1,725,060
<DEPRECIATION> 592,822
<TOTAL-ASSETS> 2,399,674
<CURRENT-LIABILITIES> 412,070
<BONDS> 1,024,517
0
249,256
<COMMON> 18,748
<OTHER-SE> 498,221
<TOTAL-LIABILITY-AND-EQUITY> 2,399,674
<SALES> 631,410
<TOTAL-REVENUES> 631,410
<CGS> 464,071
<TOTAL-COSTS> 464,071
<OTHER-EXPENSES> 21,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,458
<INCOME-PRETAX> 47,594
<INCOME-TAX> 4,300
<INCOME-CONTINUING> 43,294
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,294
<EPS-PRIMARY> .69
<EPS-DILUTED> .60
</TABLE>
