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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): November 20,1997
CHIQUITA BRANDS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-1550 04-1923360
(State or 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
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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.
The Company is making this filing in order to place the information
contained or incorporated by reference herein on file with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934.
A. Reference is made to the Pro Forma Financial Information included as
Item 7(b). This pro forma financial information corresponds to the pro forma
financial information included in the Company's Current Report on Form 8-K dated
September 15, 1997 but, in accordance with Rule 3-12 of Regulation S-X, has been
updated to include financial information for the quarter ended September 30,
1997.
B. Pursuant to the requirements of Rule 3-05 of Regulation S-X, the
Company hereby incorporates by reference the following consolidated financial
statements of Stokely USA, Inc. ("Stokely") (SEC File No. 0-13943) listed
under Item 7(a).
C. The following information is included in two registration statements
being filed under the Securities Act of 1933 and supplements Management's
Analysis of Operations and Financial Condition included in the Company's Current
Report on Form 10-Q for the quarter ended September 30, 1997:
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 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. 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.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
1. Audited financial statements of Stokely, including the notes thereto:
Independent Auditors' Report dated June 19, 1997
(October 10, 1997 as to Note L)
Consolidated Balance Sheets as of March 31, 1997 and 1996
Consolidated Statements of Operations for the Years Ended
March 31, 1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity for the Years Ended
March 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
The foregoing consolidated financial statements and Independent Auditors' Report
are incorporated by reference to Item 8, pages 42 - 63 of Stokely's Annual
Report on Form 10-K for the Year Ended March 31, 1997 as amended on Form 10-K/A
filed on October 14, 1997.
2. Interim financial statements (unaudited) of Stokely for the quarter and
six months ended September 30, 1997:
Consolidated Condensed Balance Sheets -
September 30, 1997, September 30, 1996 and March 31, 1997
Consolidated Condensed Statements of Operations -
Three and Six Months Ended September 30, 1997 and 1996
Consolidated Condensed Statements of Cash Flows -
Six Months Ended September 30, 1997 and 1996
Notes to Consolidated Condensed Financial Statements
The foregoing financial statements and notes are incorporated by reference from
Item 1, pages 3-10 of Stokely's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1997.
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(b) Pro Forma Financial Information.
Page No.
Chiquita Brands International, Inc.
Pro Forma Combined Balance Sheet (unaudited)
as of September 30, 1997 6
Pro Forma Combined Income Statement (unaudited)
for the year ended December 31, 1996 8
Pro Forma Combined Income Statement (unaudited)
for the nine months ended September 30, 1997 10
(c) Exhibits
23.1 Consent of Independent Auditors (Deloitte & Touche, LLP)
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CHIQUITA BRANDS INTERNATIONAL, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give
effect to the acquisition by Chiquita of Owatonna Canning Company, Olivia
Canning Company, Midwest Foods, Inc. and Goodhue Canning Company (collectively,
the "Owatonna Companies") and the proposed acquisitions by Chiquita of Stokely
and American Fine Foods, Inc. ("AFF"). All of these acquisitions were reported
by Chiquita in its Current Report on Form 8-K dated September 15, 1997 (the
"September 8-K") and will be accounted for as purchases. The unaudited pro forma
combined balance sheet is based on the balance sheets of Chiquita (including the
Owatonna Companies, which were acquired in September 1997), Stokely and AFF at
September 30, 1997 and has been prepared to reflect the pending acquisitions
assuming they had occurred on September 30, 1997. The unaudited pro forma
combined income statement for the year ended December 31, 1996 is based on the
income statements of Chiquita, Stokely and AFF for the twelve months ended
December 31, 1996 and of the Owatonna Companies for the twelve months ended
February 28, 1997 and has been prepared as if the acquisitions had occurred on
January 1, 1996. The unaudited pro forma combined income statement for the nine
months ended September 30, 1997 combines the income statements of Chiquita, the
Owatonna Companies, Stokely and AFF for the same period and is prepared as if
the acquisitions had occurred on January 1, 1997. These unaudited pro forma
financial statements should be read in conjunction with the historical financial
statements and notes thereto of Owatonna Canning Company included in the
September 8-K and the historical financial statements and notes thereto of
Stokely incorporated by reference in this Form 8-K.
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Chiquita Brands International, Inc.
Pro Forma Combined Balance Sheet (unaudited)
September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Chiquita
(including
Owatonna Pro Forma Pro Forma
Companies) Stokely AFF Adjustments Combined
----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 172,330 $ 1,515 $ 179 $ (45,977)(a) $ 128,047
Trade receivables, net 203,788 12,931 5,776 -- 222,495
Other receivables, net 65,726 -- 317 -- 66,043
Inventories 321,616 91,469 42,444 -- 455,529
Other current assets 39,595 750 3,377 (572)(b) 43,150
----------- --------- -------- ----------- -----------
TOTAL CURRENT ASSETS 803,055 106,665 52,093 (46,549) 915,264
Property, plant and equipment, net 1,143,005 39,625 10,504 1,193,134
Investments and other assets 312,574 2,507 922 316,003
Intangibles, net 156,564 -- -- 12,407 (c) 168,971
----------- --------- -------- ----------- -----------
TOTAL ASSETS $ 2,415,198 $ 148,797 $ 63,519 $ (34,142) $ 2,593,372
=========== ========= ======== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and loans payable $ 36,395 $ 47,725 $ 20,998 $ (43,723)(a) $ 61,395
Long-term debt due within
one year 90,430 43,300 1,142 (33,227)(a) 101,645
Accounts payable 208,307 45,017 5,873 -- 259,197
Accrued liabilities 108,691 5,663 6,664 2,700 (d) 123,718
----------- --------- -------- ----------- -----------
TOTAL CURRENT LIABILITIES 443,823 141,705 34,677 (74,250) 545,955
Long-term debt of parent company 696,731 -- -- -- 696,731
Long-term debt of subsidiaries 284,615 2,100 1,112 (1,112)(a) 286,715
Accrued pension and other
employee benefits 87,107 2,883 521 (114)(e) 90,397
Other liabilities 90,246 -- 1,193 (3,193)(b)(f) 88,246
----------- --------- -------- ----------- -----------
TOTAL LIABILITIES 1,602,522 146,688 37,503 (78,669) 1,708,044
----------- --------- -------- ----------- -----------
SHAREHOLDERS' EQUITY
Preferred stock 253,239 -- -- 173 (f) 253,412
Capital stock 19,786 572 865 178 (a)(f)(g) 21,401
Capital surplus 642,881 43,508 2,498 24,858 (a)(f)(g) 713,745
Other shareholders' equity -- (296) (526) 822 (g) --
Accumulated deficit (103,230) (41,675) 23,179 18,496 (g) (103,230)
----------- --------- -------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 812,676 2,109 26,016 44,527 885,328
----------- --------- -------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,415,198 $ 148,797 $ 63,519 $ (34,142) $ 2,593,372
=========== ========= ======== =========== ===========
</TABLE>
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NOTE: The Pro Forma Combined Balance Sheet, which gives effect to the
acquisition by Chiquita of the Owatonna Companies and the proposed acquisitions
of Stokely and AFF, includes pro forma adjustments to reflect:
(a) Assumed repayment of all $23.3 million of AFF debt with cash, assumed
repayment of $32.1 million of Stokely long-term debt with approximately 2.1
million shares of Chiquita Common Stock, and assumed reduction of Stokely
working capital loans payable to $25 million using cash.
(b) Elimination of deferred tax assets and liabilities of the acquired
companies.
(c) The excess of acquisition cost (including transaction costs) over the fair
value of net assets acquired, totaling $10.7 million for Stokely and $1.8
million for AFF.
(d) Estimated transaction costs for professional services incurred in connection
with the acquisitions.
(e) Adjustment of the accumulated postretirement benefit liabilities of Stokely
and AFF.
(f) Issuance of: $11.4 million (.8 million shares) of Chiquita Common Stock in
exchange for 100% of the equity of Stokely; $27.2 million (1.8 million
shares) of Chiquita Common Stock in exchange for 100% of the equity of AFF;
and estimated additional consideration of $1.8 million (.1 million shares)
of Chiquita Common Stock and $.2 million (3,500 shares) of Chiquita Series C
Preference Stock in connection with the acquisition of the Owatonna
Companies. The historical Chiquita balance sheet includes preliminary
consideration of $42 million (3.0 million shares) of Chiquita Common Stock
and $4 million (.1 million shares) of Chiquita Series C Preference Stock
issued in connection with the acquisition of the Owatonna Companies.
(g) Elimination of the shareholders' equity accounts of Stokely and AFF.
purchase price to the net assets acquired. Furthermore, it is not necessarily
indicative of the actual or future financial position that would have occurred
or will occur upon consummation of the acquisitions of the Owatonna Companies,
Stokely and AFF.
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Chiquita Brands International, Inc.
Pro Forma Combined Income Statement (unaudited)
Year Ended December 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
Owatonna Pro Forma Pro Forma
Chiquita Companies Stokely AFF Adjustments Combined
----------- --------- --------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 2,435,248 $ 61,885 $ 198,108 $81,111 $ (40,329)(a) $ 2,736,023
Operating expenses
Cost of sales 1,947,888 32,346 160,022 69,178 (38,900)(a) 2,170,534
Selling, general and
administrative 313,490 18,243 30,632 5,458 (1,000)(a)(b) 366,823
Depreciation 89,534 2,690 6,675 1,692 (569)(a) 100,022
Nonrecurring charges -- -- 26,029 -- (12,500)(a) 13,529
----------- -------- --------- ------- -------- -----------
Operating income (loss) 84,336 8,606 (25,250) 4,783 12,640 85,115
Interest income 28,276 573 -- 12 (1,750)(c) 27,111
Interest expense (130,232) (365) (11,066) (1,645) 8,400(a)(c) (134,908)
Other income, net 892 163 -- 53 -- 1,108
----------- -------- --------- ------- -------- -----------
Income (loss) before income taxes (16,728) 8,977 (36,316) 3,203 19,290 (21,574)
Income taxes (11,000) (2,755) -- (1,339) 3,794(d) (11,300)
----------- -------- --------- ------- -------- -----------
Income (loss) before extraordinary item (27,728) 6,222 (36,316) 1,864 23,084 (32,874)
Less dividends on preferred stock (11,955) -- -- -- (208)(e) (12,163)
----------- -------- --------- ------- -------- -----------
Loss before extraordinary item
attributable to common shares $ (39,683) $ 6,222 $ (36,316) $ 1,864 $ 22,876 $ (45,037)
=========== ======== ========= ======= ======== ===========
Loss per common share before
extraordinary item - primary
and fully diluted $ (.72) $ (0.71)
=========== ============
Shares used to calculate loss
per common share before
extraordinary item 55,167 63,338
=========== ===========
</TABLE>
NOTE: This Pro Forma Combined Income Statement, which gives effect to the
acquisition of the Owatonna Companies and the proposed acquisitions of Stokely
and AFF by Chiquita, includes pro forma adjustments to reflect:
(a) Elimination of: revenues and direct operating expenses of Stokely's frozen
vegetable business; interest expense ($1.6 million) from borrowings
associated with frozen vegetable assets; and nonrecurring charges resulting
from Stokely's sale of this business. The acquisition of Stokely by Chiquita
does not include any assets or operating activity in the frozen vegetable
business.
(b) Amortization of goodwill totaling $0.3 million arising from the acquisitions
on a straight-line basis over 40 years.
(c) Reductions of interest expense of:
- $1.6 million due to the assumed repayment of all AFF debt with cash;
- $4.3 million due to the assumed repayment of $32.1 million of Stokely
long-term debt with approximately 2.1 million shares of Chiquita Common
Stock; and
- $.9 million due to the assumed reduction of Stokely working capital loans
payable remaining after giving effect to the disposition of the frozen
vegetable business to an average balance of $25 million using cash.
Interest income is reduced by $1.8 million to reflect the use of cash
equivalents for these debt repayments.
(d) Elimination of tax expense of the Owatonna Companies and AFF as a result of
including these companies in the Chiquita consolidated tax returns.
(e) Dividends on Chiquita Series C Preference Stock issued in connection with
the acquisition of the Owatonna Companies.
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The Pro Forma Combined Income Statement does not include any adjustment to
eliminate $13.5 million ($.21 per share on a pro forma basis) of nonrecurring
charges which are principally associated with the closing and write-down of
plant and office facilities and are included in Stokely's historical operating
income.
This Pro Forma Combined Income Statement is based on a preliminary allocation of
purchase price to the net assets acquired. Furthermore, it is not necessarily
indicative of the actual operating results of the combined companies had the
acquisitions occurred on January 1, 1996 or of future results of the combined
companies.
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Chiquita Brands International, Inc.
Pro Forma Combined Income Statement (unaudited)
Nine Months Ended September 30, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Owatonna Pro Forma Pro Forma
Chiquita Companies Stokely AFF Adjustments Combined
----------- -------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,833,904 $ 44,714 $ 109,563 $ 53,611 -- $ 2,041,792
Operating expenses
Cost of sales 1,412,100 25,930 87,335 43,772 -- 1,569,137
Selling, general and
administrative 223,479 17,255 20,384 4,163 $ (1,692) (a)(b) 263,589
Depreciation 64,418 2,171 3,631 1,163 -- 71,383
----------- -------- --------- -------- -------- -----------
Operating income (loss) 133,907 (642) (1,787) 4,513 1,692 137,683
Interest income 12,481 330 -- 6 (1,100)(c) 11,717
Interest expense (82,482) (177) (7,334) (645) 4,600 (c) (86,038)
Other income, net 656 164 -- 34 -- 854
----------- -------- --------- -------- -------- -----------
Income before income taxes 64,562 (325) (9,121) 3,908 5,192 64,216
Income taxes (8,200) 109 -- (1,264) 855 (d) (8,500)
----------- -------- --------- -------- -------- -----------
Net income (loss) 56,362 (216) (9,121) 2,644 6,047 55,716
Less dividends on preferred
stock (12,672) -- -- -- (152)(e) (12,824)
----------- -------- --------- -------- -------- -----------
Net income (loss) attributable
to common shares $ 43,690 $ (216) $ (9,121) $ 2,644 $ 5,895 $ 42,892
=========== ======== ========= ======== ======== ===========
Earnings per common share:
- Primary $ 0.77 $ 0.66
- Fully diluted $ 0.77 $ 0.66
Shares used to calculate earnings
per common share:
- Primary 56,869 64,733
- Fully diluted 56,979 64,843
</TABLE>
NOTE: This Pro Forma Combined Income Statement, which gives effect to the
acquisition of the Owatonna Companies and the proposed acquisitions of Stokely
and AFF by Chiquita, includes pro forma adjustments to reflect:
(a) Amortization of goodwill totaling $.2 million arising from the acquisitions
on a straight-line basis over 40 years.
(b) Transaction costs for professional services incurred by the acquired
companies totaling $1.9 million.
(c) Reductions of interest expense of:
- $.6 million due to the assumed repayment of all AFF debt with cash;
- $2.9 million due to the assumed repayment of $32.1 million of Stokely
long-term debt with approximately 2.1 million shares of Chiquita Common
Stock; and
- $1.1 million due to the assumed reduction of Stokely working capital loans
payable to an average balance of $25 million using cash.
Interest income is reduced by $1.1 million to reflect the use of cash
equivalents for these debt repayments.
(d) Elimination of tax expense of the Owatonna Companies and federal tax expense
of AFF as a result of including these companies in the Chiquita consolidated
tax returns.
(e) Dividends on Chiquita Series C Preference Stock issued in connection with
the acquisition of the Owatonna Companies.
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This Pro Forma Combined Income Statement is based on a preliminary allocation of
purchase price to the net assets acquired. Furthermore, it is not necessarily
indicative of the actual operating results of the combined companies had the
acquisitions occurred on January 1, 1997 or of the future results of the
combined companies.
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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: November 20, 1997 CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
-----------------------------------
William A. Tsacalis
Vice President and Controller
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements and related prospectuses of Chiquita Brands International, Inc. of
our report dated June 19, 1997 (October 10, 1997 as to Note L) appearing in the
Annual Report on Form 10-K/A of Stokely USA, Inc. for the year ended March 31,
1997 and incorporated by reference in this Current Report on Form 8-K dated
November 20, 1997.
Registration
Form No. Description
- -------------------------------------------------------------------------------
S-3 33-58424 Dividend Reinvestment Plan
S-3 33-41057 Common Stock issuable upon conversion of Convertible
Subordinated Debentures
S-3 333-00789 Debt Securities, Preferred Stock, Preference Stock,
Depositary Shares, Common Stock and Securities Warrants
S-3 333-37187 Common Stock to be sold in a secondary offering
S-8 33-2241 Chiquita Savings and Investment Plan
33-16801
33-42733
33-56572
333-39671
S-8 33-14254 1986 Stock Option and Incentive Plan
33-38284
33-41069
33-53993
S-8 33-25950 Individual Stock Option Plan
S-8 33-38147 Associate Stock Purchase Plan
/s/Deloitte & Touche, LLP
Milwaukee, Wisconsin
November 20, 1997
