<PAGE>
- --------------------------------------------------------------
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
June 30, 1998 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 July 31, 1998, there were 65,369,317 shares of Common
Stock outstanding.
Page 1 of 13 Pages
- --------------------------------------------------------------
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
----------------------------------
TABLE OF CONTENTS
-----------------
Page
-----
PART I - Financial Information
- ------
<TABLE>
<CAPTION>
<S> <C>
Consolidated Statement of Income for the quarters
and six months ended June 30, 1998 and 1997 . . . . . 3
Consolidated Balance Sheet as of June 30, 1998,
December 31, 1997 and June 30, 1997 . . . . . . . . . 4
Consolidated Statement of Cash Flow for the six
months ended June 30, 1998 and 1997 . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . 6
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . . . 9
PART II - Other Information
- -------
Item 1 - Legal Proceedings. . . . . . . . . . . . . . . . . . 10
Item 2 - Changes in Securities and Use of
Proceeds. . . . . . . . . . . . . . . . . . . . . . . 11
Item 4 - Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . 11
Item 5 - Other Information. . . . . . . . . . . . . . . . . . 12
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . 12
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE>
Part I - Financial Information
- ------------------------------
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
----------------- -------------------
1998 1997 1998 1997
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $744,191 $646,233 $1,461,408 $1,277,643
-------- -------- ---------- ----------
Operating expenses
Cost of sales 561,900 484,036 1,102,487 948,107
Selling, general
and administrative 85,085 72,834 168,692 147,212
Depreciation 22,990 21,466 46,243 43,041
-------- -------- ---------- ----------
669,975 578,336 1,317,422 1,138,360
-------- -------- ---------- ----------
Operating income 74,216 67,897 143,986 139,283
Interest income 3,828 4,247 6,890 8,633
Interest expense (27,530) (27,320) (55,529) (55,778)
Other income, net 6,828 159 7,073 439
-------- -------- ---------- ----------
Income before
income taxes 57,342 44,983 102,420 92,577
Income taxes (4,500) (3,900) (8,500) (8,200)
Net income $ 52,842 $ 41,083 $ 93,920 $ 84,377
======== ======== ========== ==========
Earnings per
common share:
Basic $ .75 $ .66 $ 1.33 $ 1.36
Diluted .66 .57 1.17 1.17
Dividends per
common share $ .05 $ .05 $ .10 $ .10
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
CONSOLIDATED BALANCE SHEET (Unaudited)
------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1998 1997 1997
---------- ----------- ----------
<S> <C> <C> <C>
ASSETS
- ------
Current assets
Cash and equivalents $ 146,057 $ 125,702 $ 233,077
Trade receivables
(less allowances
of $11,211, $10,683
and $9,599) 232,114 184,913 197,458
Other receivables, net 79,275 87,301 72,739
Inventories 359,009 349,948 250,136
Other current assets 28,509 35,602 33,644
--------- ---------- ----------
Total current assets 844,964 783,466 787,054
Property, plant and
equipment, net 1,200,163 1,151,396 1,130,785
Investments and other
assets 303,069 301,173 312,912
Intangibles, net 200,470 165,578 156,701
---------- ---------- ----------
Total assets $2,548,666 $2,401,613 $2,387,452
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Notes and loans
payable $ 52,419 $ 59,659 $ 27,110
Long-term debt due
within one year 43,953 92,905 97,489
Accounts payable 212,263 205,323 199,281
Accrued liabilities 107,867 125,231 90,033
---------- ---------- ----------
Total current
liabilities 416,502 483,118 413,913
Long-term debt of
parent company 687,258 689,080 697,788
Long-term debt of
subsidiaries 350,057 272,892 299,577
Accrued pension and
other employee benefits 81,406 86,676 86,127
Other liabilities 92,296 89,761 89,679
---------- ---------- ----------
Total liabilities 1,627,519 1,621,527 1,587,084
---------- ---------- ----------
Shareholders' equity
Preferred and
preference stock 253,475 253,239 249,256
Common stock, 1998 -
$.01 par value
(65,337,341 shares),
1997 - $.33 par
value (61,167,990 and
56,249,551 shares) 653 20,389 18,750
Capital surplus 754,562 672,944 600,540
Accumulated deficit (87,543) (166,486) (68,178)
---------- ---------- ----------
Total shareholders'
equity 921,147 780,086 800,368
---------- ---------- ----------
Total liabilities
and shareholders'
equity $2,548,666 $2,401,613 $2,387,452
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
-----------------------------------
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
----------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
---------- ---------
<S> <C> <C>
Cash provided (used) by:
Operations
Net income $ 93,920 $ 84,377
Depreciation and amortization 49,501 45,739
Write-downs of cultivations and
long-term investment 8,900 --
Changes in current assets and
liabilities (18,237) (29,470)
Other (318) (2,308)
--------- ---------
Cash flow from operations 133,766 98,338
--------- ---------
Investing
Capital expenditures (50,546) (34,319)
Acquisitions of businesses (25,518) --
Refundable deposits for
container equipment -- (8,589)
Investment in Japanese
joint venture (2,000) (4,474)
Other 3,647 (1,328)
--------- ---------
Cash flow from investing (74,417) (48,710)
--------- ---------
Financing
Debt transactions
Issuances of long-term debt 67,266 --
Repayments of long-term debt (76,891) (42,112)
Decrease in notes and loans
payable (15,489) (50,248)
Stock transactions
Issuances of common stock 1,097 4,304
Dividends (14,977) (14,053)
--------- ---------
Cash flow from financing (38,994) (102,109)
--------- ---------
Increase (decrease) in cash
and equivalents 20,355 (52,481)
Balance at beginning of period 125,702 285,558
--------- ---------
Balance at end of period $ 146,057 $ 233,077
========= =========
</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, 1997 for additional information relating to the
Company's financial statements.
Earnings Per Share
- ------------------
Basic and diluted earnings per common share ("EPS") are
calculated as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $52,842 $41,083 $ 93,920 $ 84,377
Dividends on preferred
and preference stock (4,275) (4,223) (8,551) (8,445)
Net income attributable
to common shares for
basic EPS 48,567 36,860 85,369 75,932
Add back dividends on
preferred and
preference stock 4,275 4,223 8,551 8,445
------- ------- ------- --------
Net income for
diluted EPS $52,842 $41,083 $ 93,920 $ 84,377
======= ======= ======= =======
Weighted average common
shares outstanding 64,453 56,233 64,068 56,146
Nonvested restricted
shares (72) (160) (72) (160)
------- ------- ------- -------
Shares used to
calculate basic EPS 64,381 56,073 63,996 55,986
Assumed conversion of
preferred and
preference stock 15,479 15,232 15,479 15,232
Assumed exercise of
stock options 762 1,207 698 1,150
-------- ------- -------- -------
Shares used to
calculate diluted EPS 80,622 72,512 80,173 72,368
======= ======= ======= =======
Basic EPS $ .75 $ .66 $ 1.33 $ 1.36
Diluted EPS .66 .57 1.17 1.17
</TABLE>
The assumed conversion to common stock of the Company's 7% convertible
subordinated debentures would have an anti-dilutive effect on diluted EPS
and, therefore, has not been included in the computation.
6
<PAGE>
Acquisitions
- ------------
In January 1998, Chiquita acquired Stokely USA, Inc.
("Stokely"), previously a publicly-owned vegetable canning
business with annual net sales of approximately $150 million.
In connection with the acquisition, Chiquita issued $11
million of common stock (.8 million shares) in exchange for
all outstanding Stokely shares and issued $33 million of
common stock (2.2 million shares) and paid $18 million of cash
to retire corresponding amounts of Stokely debt.
In June 1998, Chiquita's Australian subsidiary acquired
Campbell Mushrooms Pty Limited and Campbell Mushrooms Centre
Pty Limited (collectively, the "Australian Mushroom
Companies"), which had annual net sales of approximately $30
million. In connection with the acquisition, Chiquita issued
$12 million of common stock (.9 million shares) and paid $4
million of cash in exchange for all of the outstanding capital
stock of the Australian Mushroom Companies.
The assets acquired of Stokely and the Australian Mushroom
Companies consisted primarily of trade receivables ($13
million), inventories ($66 million), property, plant and
equipment ($50 million) and intangibles ($35 million).
Liabilities consisted primarily of debt ($36 million) and
accounts payable and accrued liabilities ($42 million). Each
transaction was accounted for as a purchase.
Inventories (in thousands)
- -------------------------
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1998 1997 1997
---------- ----------- ----------
<S> <C> <C> <C>
Bananas and other
fresh produce $ 38,761 $ 36,035 $ 34,774
Canned vegetables 111,365 128,824 35,907
Other food products 8,212 8,661 8,945
Growing crops 119,865 115,007 113,359
Materials and supplies 72,927 53,909 49,064
Other 7,879 7,512 8,087
---------- ---------- ----------
$ 359,009 $ 349,948 $ 250,136
========== ========== ==========
</TABLE>
Other
- -----
Chiquita has a long-standing policy of periodically hedging
transactions denominated in foreign currencies. At June 30,
1998, the Company had option contracts which ensure conversion
of approximately $180 million of foreign sales through the end
of 1998 at rates not higher than 1.78 Deutsche marks per
dollar or lower than 1.60 Deutsche marks per dollar and
approximately $120 million of foreign sales in 1999 at rates
not higher than 1.80 Deutsche marks per dollar or lower than
1.61 Deutsche marks per dollar. The carrying value of these
option contracts at June 30, 1998 was approximately $6
million; fair value based on quoted market prices was
approximately $9 million.
7
<PAGE>
In 1998, Chiquita adopted Statement of Financial Accounting
Standards No. 130 "Comprehensive Income" and applied this
standard to all periods presented in these financial
statements. The adoption of this Statement had no impact on
the Company's net income or shareholders' equity. For the
first half of 1998 and 1997, the Company had comprehensive
income of $93 million and $79 million, which consisted of net
income and unrealized foreign currency translation losses of
$1 million and $5 million. For the second quarters of 1998
and 1997, the Company had comprehensive income of $54 million
and $39 million, which consisted of net income and unrealized
foreign currency gains (losses) of $1 million and $(2)
million.
In June 1998, the Financial Accounting Standards Board
issued Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities." The Statement requires
the recognition of all derivatives (primarily foreign currency
option contracts and foreign exchange forward contracts) on
the balance sheet at fair value. The Company's derivatives
are specifically designated as hedges. Changes in the fair
value of these derivatives will either be offset against the
change in fair value of the corresponding hedged assets,
liabilities, or firm commitments through earnings or reflected
as other comprehensive income until the hedged item is
recognized in earnings. Adoption of the Statement is required
by January 1, 2000. If the Company were to adopt the new
Statement as of July 1, 1998, the effect of adoption would be
immaterial to the financial statements.
8
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
----------------------------------
MANAGEMENT'S ANALYSIS OF
------------------------
OPERATIONS AND FINANCIAL CONDITION
----------------------------------
Operations
- ----------
Net sales for the quarter and six months ended June 30, 1998
increased by approximately 15% over the prior year amounts
primarily from the expansion of Chiquita's vegetable canning
operations through acquisitions completed in late 1997 and
early 1998. Operating expenses also increased over the prior
year levels primarily as a result of these acquisitions.
The increase in second quarter earnings over
the prior year level was primarily due to improved banana
pricing in the Company's major markets, despite the adverse
effect of a stronger dollar in comparison with European and
Japanese currencies. The Company's banana volume for the
second quarter was comparable to the prior year level,
although industry volume was lower as exports from
Ecuador and Colombia were reduced due to El Nino climatic
conditions. In the first quarter, North American banana
pricing was lower than for the prior year period on higher
industry volume, while dollar price realizations in Europe
were comparable to the prior year. Additionally, the
Company's Diversified Foods Group, which includes vegetable
canning operations, generated modest improvements in earnings
in both the first and second quarters.
The second quarter 1998 results include certain charges,
primarily write-offs of a non-operating investment and of
banana cultivations in Panama (see below), which were offset
by a gain from a cash settlement in excess of $10 million of
claims against The Cincinnati Enquirer concerning a series of
newspaper articles about the Company published in May 1998
(see Part II, Item 1 - "Legal Proceedings"). The write-off of
the investment and the settlement gain are included in "Other
income, net," and the write-off of banana cultivations is
included in "Cost of sales."
As a result of a two-month strike in Chiquita's western
Panama division which ended in mid-April, production was
suspended in the division pending farm restoration. During
the second quarter, the Company wrote off impaired banana
cultivations which it was unable to properly maintain during
the strike period. In addition, this non-productive division
has been incurring unrecovered fixed costs. Production at
this division is expected to be restored in the first quarter
of 1999. Otherwise, the Company achieved lower overall
delivered product costs during the second quarter and first
half of 1998.
The Company's effective tax rate is affected by the level
and mix of income among various domestic and foreign
jurisdictions in which the Company operates.
Financial Condition
- -------------------
Cash flow from operations increased to $134 million in the
first half of 1998 from $98 million in the prior year period
primarily as a result of improved earnings and the inclusion
of seasonal cash flow of recently acquired canning operations.
Cash from operations in 1998 was used primarily for capital
expenditures and business acquisitions. At June 30, 1998, $23
million of borrowings were drawn against Chiquita's $125
million revolving credit facility.
9
<PAGE>
Other
- -----
Reference is made to the discussion of the European Union
("EU") banana quota and licensing regime, the Framework
Agreement and the World Trade Organization ("WTO") proceeding
regarding this regime contained in Part I, Item 1 - "Business
- - Risks of International Operations" in the Company's 1997
Form 10-K and "Management's Analysis of Operations and
Financial Condition" in the Company's 1997 Annual Report to
Shareholders. In July 1998, the EU adopted a proposed new
quota and license regime for implementation in January 1999
which would continue to discriminate in favor of producers and
importers within the EU and its former colonies and limit the
volume of bananas imported into the EU that are grown in Latin
America, Chiquita's primary source of fruit. The United States
and the five other governments that are challenging the EU
banana policy in the WTO (Ecuador, Panama, Guatemala, Honduras
and Mexico) have all indicated that they do not believe this
EU proposal complies with the 1997 WTO findings. If the EU
fails to comply with the WTO rulings by January 1, 1999, the
WTO authorizes the injured governments to engage in
retaliatory trade measures, such as the imposition of new
tariffs or withdrawal of trade concessions, against the EU.
Section 301 of the Trade Act of 1974, under which the case is
also pending, also provides authority for U.S. retaliation if
the EU does not comply by the January 1, 1999 deadline. Many
administrative and implementation issues must be addressed in
regulations to be adopted in the coming months and there can
be no assurance as to the results of the WTO proceedings, the
nature and extent of actions that may be taken by the affected
countries or the impact on the EU quota and licensing regime,
including the Framework Agreement.
In connection with its ongoing information system management
efforts, Chiquita has previously replaced or modified a
significant portion of its key financial information and
operational systems that were not year 2000 compliant.
Remaining financial and operational systems have been
assessed, and detailed plans have been developed and are being
implemented to make the necessary modifications to ensure year
2000 compliance. The financial impact of making the required
system changes for year 2000 compliance are not expected to
have a material effect on Chiquita's financial statements.
This quarterly report contains certain statements that may
be deemed to be "forward-looking statements" within the
meaning of the Private Securities Litigation Act of 1995.
These statements are subject to a number of assumptions, risks
and uncertainties, including product pricing, costs to
purchase or grow (and availability of) fresh produce and other
raw materials, currency exchange rate fluctuations, natural
disasters and unusual weather conditions, operating
efficiencies, labor relations, access to capital, actions of
governmental bodies and other market and competitive
conditions, many of which are beyond the control of Chiquita.
Actual results or developments may differ materially from the
expectations expressed in the forward-looking statements.
Part II - Other Information
- ---------------------------
Item 1 - Legal Proceedings
--------------------------
Reference is made to the discussion in the Company's
March 31, 1998 Form 10-Q of three shareholder derivative
lawsuits filed in early May 1998 in Ohio State Court shortly
after publication of a series of newspaper articles
concerning Chiquita by The Cincinnati Enquirer. Two
additional similar lawsuits were filed later in May 1998 in
the same court. In late June 1998, The Cincinnati Enquirer
renounced the entire series of articles as containing untrue
accusations and conclusions and creating a false and
misleading impression of Chiquita's business practices. In
late July 1998, all five lawsuits were dismissed without
prejudice at the plaintiffs' request.
10
<PAGE>
Reference is made to the discussion contained in the
Company's 1997 Form 10-K of the lawsuits pending in several
jurisdictions against Chiquita and other banana producing
companies which used an agricultural chemical called DBCP,
primarily in the 1970's, alleged to have caused sterility
and other injuries. In June 1998, the Company entered into
an agreement providing for settlements with the plaintiffs
in the cases pending in Texas, Louisiana, Costa Rica, Panama
and the Philippines. The Company is funding the settlement
through an escrow account established for the benefit of
these plaintiffs. The escrowed funds will be apportioned,
according to a prescribed formula, among plaintiffs who
execute releases. The settlement amount is not material to
the Company's financial statements.
Item 2 - Changes in Securities and Use of Proceeds
--------------------------------------------------
(a) Reference is made to the amendments in the terms of
the Company's 9 5/8% Senior Notes due 2004 described
below in the last paragraph of Item 4.
(c) On June 25, 1998, the Company issued 873,710 shares
of common stock to Campbell Investment Company in
payment of a portion of the purchase price for the
Australian Mushroom Companies. The transaction was
exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933. The shares were valued
at $14.1125, based on an average market value of
Chiquita common stock preceding such date.
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
The matters indicated below were voted upon at the
Company's Annual Meeting of Shareholders held on May 13,
1998.
(i) Election of Seven Directors
<TABLE>
<CAPTION>
Votes
-------------------------
Name For Withheld
----------------- ---------- -------
<S> <C> <C>
Carl H. Lindner 52,897,963 662,598
Keith E. Lindner 52,896,948 663,613
Fred J. Runk 52,924,422 636,139
Jean Head Sisco 52,935,011 625,550
William W. Verity 52,936,826 623,735
Oliver W. Waddell 52,938,596 621,965
Steven G. Warshaw 52,961,528 599,033
</TABLE>
(ii) Approval of the Company's 1998 Stock Option and
Incentive Plan. The votes were: For - 37,803,574;
Against - 8,965,761; Abstain - 268,391; Broker Non-Votes -
6,522,835.
(iii) Adoption of an amendment to the Certificate of
Incorporation to increase the Company's number of
authorized shares of Capital Stock from 150 million
shares to 200 million shares. The votes were: For -
51,698,392; Against - 1,622,177; Abstain - 239,992.
(iv) Adoption of an amendment to the Certificate of
Incorporation to change the title and par value of
the Company's Capital Stock, $.33 par value, to
Common Stock, $.01 par value. The votes were: For -
52,694,204; Against - 641,842; Abstain - 224,515.
11
<PAGE>
(v) Adoption of an amendment to the Certificate of
Incorporation to decrease the shareholder vote
required to make future amendments to the Certificate
of Incorporation from two-thirds to a majority of the
votes cast. The votes were: For - 45,526,233;
Against - 1,321,938; Abstain - 198,555; Broker Non-Votes -
6,513,835.
In June 1998 the Company obtained consents from the
holders of its 9 5/8% Senior Notes due 2004 (the "Notes") to
amend the definition of Permitted Indebtedness in the
Indenture dated as of November 30, 1991 (the "Indenture")
under which the Notes were issued. The amendments permit
subsidiaries of the Company to borrow money for working
capital purposes in food related businesses at times when
the Company does not meet specified financial tests and the
covenants under the Indenture would otherwise limit the
ability of the Company and its subsidiaries to incur such
debt. The amendments conform these provisions in the
Indenture to corresponding provisions applicable to the
Company's 9 1/8% Senior Notes due 2004 and 10 1/4% Senior
Notes due 2006. Consents were solicited from holders of the
Notes from June 12 through June 26, at which time consents
had been received from holders of more than the requisite
majority of Notes. Holders of $197,671,000 principal amount
of the $250,000,000 aggregate principal amount of Notes
outstanding, or 79.1% of the Notes, voted in favor of the
amendments. The Company paid $5 per $1,000 principal amount
of Notes to consenting holders. The amendments are set forth
in the First Supplemental Indenture attached as Exhibit 99.1.
Item 5 - Other Information
--------------------------
Shareholders must submit proposals intended to be
included in the Company's 1999 proxy materials by December
1, 1998. If the Company does not receive notice by February
22, 1999 of any other matter intended to be presented by a
shareholder at the 1999 annual meeting, then management
proxies will be permitted to use their discretionary voting
authority to vote on the proposal at the meeting without any
reference to it in the proxy statement. Proposals and
notices of other matters should be mailed to the attention
of the Secretary of the Company at the Company's executive
offices at 250 East Fifth Street, Cincinnati, Ohio 45202.
Item 6 - Exhibits and Reports on Form 8-K
---------------------------------------- Page
Number(s)
---------
(a) Exhibit 27 - Financial Data Schedule. . . . **
Exhibit 99.1 - First Supplemental
Indenture, dated as of June 26, 1998, to
Indenture dated as of November 30,1991
between Chiquita Brands International,
Inc. and The Fifth Third Bank,
as trustee. . . . . . . . . . . . . . . . . **
** Omitted from this copy of Quarterly
Report on Form 10-Q. Copy included
in report filed electronically with
the Securities and Exchange Commission.
(b) The following reports on Form 8-K were filed during
the quarter ended June 30, 1998:
April 22, 1998 - to provide unaudited pro forma
combined financial statements of the Company for
the year ended December 31, 1997; to provide the
unaudited consolidated financial statements of
Stokely for the nine months ended December 31,
1997; and to report the Company's results of
operations for the first quarter of 1998.
12
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
------------------------
William A. Tsacalis
Vice President and Controller
(Chief Accounting Officer)
August 12, 1998
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Chiquita Brands International, Inc. Form 10-Q for the six months ended
June 30, 1998 and is qualified in its entirety by reference to such
financial information.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 146,057
<SECURITIES> 0
<RECEIVABLES> 243,325
<ALLOWANCES> 11,211
<INVENTORY> 359,009
<CURRENT-ASSETS> 844,964
<PP&E> 1,886,798
<DEPRECIATION> 686,635
<TOTAL-ASSETS> 2,548,666
<CURRENT-LIABILITIES> 416,502
<BONDS> 1,037,315
0
253,475
<COMMON> 653
<OTHER-SE> 667,019
<TOTAL-LIABILITY-AND-EQUITY> 2,548,666
<SALES> 1,461,408
<TOTAL-REVENUES> 1,461,408
<CGS> 1,102,487
<TOTAL-COSTS> 1,102,487
<OTHER-EXPENSES> 46,243
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,529
<INCOME-PRETAX> 102,420
<INCOME-TAX> 8,500
<INCOME-CONTINUING> 93,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,920
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.17
</TABLE>
CHIQUITA BRANDS INTERNATIONAL, INC.
and
THE FIFTH THIRD BANK, as Trustee
--------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 26, 1998
To
INDENTURE
Dated as of November 30, 1991
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Amending the Indenture, dated as of November 30, 1991,
between Chiquita Brands International, Inc. and The Fifth
Third Bank, as trustee, with respect to the 9-5/8% Senior
Notes due 2004 issued by Chiquita Brands International, Inc.
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FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental
Indenture" ) dated as of June 26 , 1998, by and between
C h i q u ita Brands International, Inc., a New Jersey
corporation (the "Company"), and The Fifth Third Bank, an
Ohio banking corporation, as trustee (the "Trustee"), with
respect to the 9-5/8% Senior Notes due 2004 issued by the
Company (the "Senior Notes" ).
RECITALS
T h e Company and the Trustee are parties to an
Indenture, dated as of November 30, 1991 (the "Indenture"),
pursuant to which the Company has issued the Senior Notes in
the aggregate principal amount of $250,000,000, all of which
Senior Notes are Outstanding as of the date hereof. A Board
Resolution sets forth the terms of the Senior Notes,
i n c luding certain definitions and covenants relating
thereto. Capitalized terms used herein without definition
shall have the respective meanings given such terms in the
Indenture.
The Company has duly authorized the execution and
delivery of this First Supplemental Indenture in order to
provide for the amendment of the definition of "Permitted
Indebtedness" and to add a definition of "Food-Related
Businesses" (collectively, the "Amendment").
Section 902 of the Indenture provides that the Company
may, when authorized by a Board Resolution and with the
consent of Holders of more than 50% in aggregate principal
amount of Outstanding Debt Securities of any series of Debt
Securities then Outstanding affected thereby, effect an
amendment to the Indenture. The Senior Notes are the sole
series of Debt Securities affected by the Amendment. All of
the Senior Notes were Outstanding as of the record date for
determining Holders entitled to consent to the Amendment.
Consents to the Amendment have been received by the Trustee
f r om Holders of more than $164,969,000 in aggregate
p r i ncipal amount of Outstanding Senior Notes, which
represents an amount in excess of 50% in aggregate principal
amount of Outstanding Senior Notes.
The Company has requested the Trustee and the Trustee
has agreed to join with it in the execution and delivery of
this First Supplemental Indenture.
The purpose of this First Supplemental Indenture is to
effect the Amendment with respect to the Senior Notes. All
conditions and requirements necessary to make this First
Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement in accordance with its terms and
for the purposes herein expressed have been performed and
fulfilled.
All things necessary to make this First Supplemental
Indenture a valid agreement of the Company and the Trustee
and a valid amendment of and supplement to the Indenture
have been done.
NOW, THEREFORE, it is agreed that the Indenture is
amended with respect to the Senior Notes as follows from and
after the date hereof:
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ARTICLE 1
AMENDMENT TO INDENTURE
Section 1. The definition of "Food-Related
Businesses" is hereby added as follows:
"F o o d-Related Businesses" means businesses or
operations involving food or food products, including,
without limitation, sourcing, processing, transportation,
s h i p p ing and distribution, and related assets and
infrastructure.
Section 2. T h e previous definition of "Permitted
Indebtedness" is hereby deleted in its entirety and replaced
with the following:
"Permitted Indebtedness" means (1) Indebtedness of the
Company or any Subsidiary outstanding on the date of this
Indenture; (2) Debt Securities having aggregate gross
proceeds not in excess of $350,000,000; (3) Indebtedness of
the Company under its existing unsecured revolving credit
facility as in effect on the date of this Indenture, whether
or not such Indebtedness is outstanding on the date of this
Indenture; PROVIDED, HOWEVER, that the proceeds of such
Indebtedness shall be invested in, or used in connection
with, Food-Related Businesses; (4) Indebtedness of the
Company not in excess of $150 million under revolving credit
f a c i l ities or other loan facilities or agreements
established after the date of this Indenture; PROVIDED,
HOWEVER, that the proceeds of such Indebtedness shall be
invested in, or used in connection with, Food-Related
Businesses; (5) Indebtedness of a Subsidiary of the Company
(including Acquired Indebtedness), which is non-recourse to
the Company, the proceeds of which are or have been used for
w o rking capital purposes or for capital expenditures
relating to Food-Related Businesses; (6) Indebtedness of a
Subsidiary borrowed from a lender located in any country
producing tropical fruit and denominated in the currency of
such country other than U.S. dollars, which Indebtedness is
incurred for hedging purposes in the ordinary course of
business consistent with past practice; (7) Intercompany
Debt Obligations of the Company and each of its wholly-owned
Subsidiaries; PROVIDED, HOWEVER, that the obligations of the
Company with respect to such Indebtedness shall be evidenced
by an intercompany note and shall be subordinated in right
of payment from and after such time as all Debt Securities
issued and outstanding under this Indenture shall become due
and payable (whether at Stated Maturity, by acceleration or
otherwise) to the payment and performance of the Company's
obligations under this Indenture or the Debt Securities; (8)
a d ditional Indebtedness of the Company the aggregate
principal amount of which outstanding at any time does not
exceed 5% of Consolidated Assets; and (9) any renewals,
e x tensions, substitutions, refundings, refinancings or
replacements of any Indebtedness described in clauses (1),
(2), (3), (4) or (8) above (including the replacement or
s u b s t itution of any unused commitment relating to
I n d e btedness), so long as the aggregate amount of
Indebtedness represented thereby is not increased by such
renewal, extension, substitution, refunding, refinancing or
replacement.
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ARTICLE 2
MISCELLANEOUS
Section 2.1 This First Supplemental Indenture may be
executed in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts
together shall constitute but one and the same instrument.
Section 2.2. All provisions of this First
Supplemental Indenture shall be deemed to be incorporated
in, and made part of, the Indenture; and the Indenture, as
supplemented by the First Supplemental Indenture, shall be
read, taken and construed as one and the same instrument.
Section 2.3. In case any provision in this First
S u p plemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or
impaired thereby.
Section 2.4. N o thing in this First Supplemental
Indenture, express or implied, shall give to any Person
(other than the parties hereto, any Senior Notes Registrar,
any Paying Agent, and Authenticating Agent and their
successors under the Indenture, and the Holders of the
Senior Notes), any benefit or any legal or equitable right,
remedy or claim under the Indenture.
Section 2.5 This First Supplemental Indenture shall
be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be signed and acknowledged by
their respective officers thereunto duly authorized as of
the day and year first above written.
CHIQUITA BRANDS INTERNATIONAL,
INC.
[Seal]
/s/Gerald R. Kondritzer
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Attest: Gerald R. Kondritzer
Vice President and Treasurer
/s/Donna K. Leonard
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Assistant General Counsel
and Assistant Secretary
THE FIFTH THIRD BANK, Trustee
[Seal] /s/Gregory R. Hahn
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Attest: Gregory R. Hahn
Trust Officer
/s/Thomas P. Huelsman
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Assistant Vice President
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STATE OF OHIO )
) SS.
COUNTY OF HAMILTON)
O n the 26th day of June, 1998, before me
personally came Gregory R. Hahn, to me known, who being by
me duly sworn, did depose and say that he resides at 540
Morrvue Dr., Cincinnati, OH 45238, that he is a Trust
Officer of THE FIFTH THIRD BANK, one of the corporations
described in and which executed the above instrument; that
he knows the corporate seal of said corporation; that one of
the seals affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name
thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and
a f fixed my official seal the day and year in this
certificate first above written.
/s/Barbara M. Howland\
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Notary Public, State of Ohio
Commission expires: July 19, 1998
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[Seal]
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STATE OF OHIO )
) SS.
COUNTY OF HAMILTON)
O n the 26th day of June, 1998, before me
personally came Gerald R. Kondritzer, to me known, who being
by me duly sworn, did depose and say that he resides at 2324
Madison Road, #1904, Cincinnati, OH 45241, that he is Vice
President and Treasurer of CHIQUITA BRANDS INTERNATIONAL,
INC., one of the corporations described in and which
executed the above instrument; that he knows the corporate
seal of said corporation; that one of the seals affixed to
the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like
authority.
IN WITNESS WHEREOF, I have hereunto set my hand and
a f fixed my official seal the day and year in this
certificate first above written.
/s/Barbara M. Howland
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Notary Public, State of Ohio
Commission expires: July 19, 1998
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[Seal]
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