- ------------------------------------------------------------------------
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, 1999 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 30, 1999, there were 65,800,479 shares of Common Stock
outstanding.
Page 1 of 13 Pages
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<PAGE>
CHIQUITA BRANDS INTERNATIONAL,INC.
----------------------------------
TABLE OF CONTENTS
-----------------
Page
----
PART I - Financial Information
- ------
Item 1 - Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C>
Consolidated Statement of Income for the quarters
and six months ended June 30, 1999 and 1998 3
Consolidated Balance Sheet as of June 30, 1999,
December 31, 1998 and June 30, 1998 4
Consolidated Statement of Cash Flow for the
six months ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Analysis of Operations and
Financial Condition 9
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 10
PART II - Other Information
- -------
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities and Use of Proceeds 11
Item 4 - Submission of Matters to a Vote of Security
Holders 11
Item 6 - Exhibits and Reports on Form 8-K 12
Signature 13
</TABLE>
<PAGE>
Part I - Financial Information
- ------------------------------
Item 1 - Financial Statements
- -----------------------------
CHIQUITA BRANDS INTERNATIONAL,INC.
----------------------------------
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
--------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
1999 1998 1999 1998
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 676,857 $ 744,191 $1,369,859 $1,461,408
--------- --------- ---------- ----------
Operating expenses
Cost of sales 536,049 561,900 1,050,824 1,102,487
Selling, general and
administrative 82,204 85,085 160,942 168,692
Depreciation 22,433 22,990 44,698 46,243
--------- ---------- ---------- ----------
640,686 669,975 1,256,464 1,317,422
--------- ---------- ---------- ----------
Operating income 36,171 74,216 113,395 143,986
Interest income 2,311 3,828 4,600 6,890
Interest expense (26,951) (27,530) (53,644) (55,529)
Other income, net 93 6,828 181 7,073
--------- ---------- ---------- ----------
Income before income
taxes 11,624 57,342 64,532 102,420
Income taxes (4,300) (4,500) (8,500) (8,500)
--------- ---------- ---------- ----------
Net income $ 7,324 $ 52,842 $ 56,032 $ 93,920
========= ========== ========== ==========
Earnings per common share:
Basic $ . 05 $ . 75 $ . 72 $ 1.33
Diluted . 05 .66 .69 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,
1999 1998 1998
---------- ------------- ----------
<S> <C> <C> <C>
ASSETS
- ------
Current assets
Cash and equivalents $ 180,362 $ 88,906 $ 146,057
Trade receivables (less
allowances of $10,924,
$10,603 and $11,211) 237,477 201,574 232,114
Other receivables, net 76,706 128,293 79,275
Inventories 343,651 387,293 359,009
Other current assets 32,655 34,168 28,509
----------- ---------- ----------
Total current assets 870,851 840,234 844,964
Property, plant and
equipment, net 1,155,662 1,122,847 1,200,163
Investments and other assets 383,492 356,228 303,069
Intangibles, net 187,348 189,824 200,470
---------- ---------- ----------
Total assets $2,597,353 $2,509,133 $2,548,666
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Notes and loans payable $ 56,861 $ 131,768 $ 52,419
Long-term debt due within
one year 92,943 37,511 43,953
Accounts payable 223,220 217,266 212,263
Accrued liabilities 104,043 144,884 107,867
---------- ---------- ----------
Total current liabilities 477,067 531,429 416,502
Long-term debt of parent
company 883,548 683,294 687,258
Long-term debt of subsidiaries 222,446 319,312 350,057
Accrued pension and other
employee benefits 84,424 90,382 81,406
Other liabilities 98,186 90,736 92,296
---------- ---------- ----------
Total liabilities 1,765,671 1,715,153 1,627,519
---------- ---------- ----------
Shareholders' equity
Preferred and preference
stock 253,475 253,475 253,475
Common stock, $.01 par value
(65,788,077, 65,447,875 and
65,337,341 shares) 658 654 653
Capital surplus 759,632 755,660 758,953
Accumulated deficit (174,057) (214,967) (87,543)
Accumulated other
comprehensive loss (8,026) (842) (4,391)
---------- ---------- ----------
Total shareholders' equity 831,682 793,980 921,147
---------- ---------- ----------
Total liabilities and share-
holders' equity $2,597,353 $2,509,133 $2,548,666
========== ========== ==========
</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,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash provided (used) by:
Operations
Net income $ 56,032 $ 93,920
Depreciation and amortization 47,915 49,501
Write-downs of cultivations and
long-term investment -- 8,900
Changes in current assets and
liabilities and other (17,217) (18,555)
----------- ----------
Cash flow from operations 86,730 133,766
----------- ----------
Investing
Capital expenditures (74,475) (50,546)
Hurricane Mitch insurance proceeds 25,000 --
Acquisitions of businesses (21,619) (25,518)
Refundable deposits for container
equipment 9,673 --
Long-term investments (8,142) (2,000)
Other 11,424 3,647
----------- ----------
Cash flow from investing (58,139) (74,417)
----------- ----------
Financing
Debt transactions
Issuances of long-term debt 194,623 67,266
Repayments of long-term debt (42,330) (76,891)
Decrease in notes and loans payable (74,363) (15,489)
Stock transactions
Issuances of common stock 57 1,097
Dividends (15,122) (14,977)
----------- ----------
Cash flow from financing 62,865 (38,994)
----------- ----------
Increase in cash and equivalents 91,456 20,355
Balance at beginning of period 88,906 125,702
----------- ----------
Balance at end of period $ 180,362 $ 146,057
=========== ==========
</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, 1998 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,
---------------- ------------------
1999 1998 1999 1998
------ ------- -------- --------
<S> <C> <C> <C> <C>
Net income $7,324 $52,842 $56,032 $93,920
Dividends on preferred and
preference stock (4,275) (4,275) (8,551) (8,551)
------- ------- ------- -------
Net income attributed to
common shares for basic EPS 3,049 48,567 47,481 85,369
Add back dividends on preferred
and preference stock -- 4,275 8,551 8,551
------ ------- ------- -------
Net income attributed to
common shares for diluted
EPS $3,049 $52,842 $56,032 $93,920
====== ======= ======= =======
Weighted average common
shares outstanding 65,761 64,453 65,690 64,068
Nonvested restricted shares -- (72) -- (72)
------- ------- ------- -------
Shares used to calculate
basic EPS 65,761 64,381 65,690 63,996
Convertible preferred and
preference stock -- 15,479 15,479 15,479
Stock options and other
stock awards 137 762 176 698
------- ------- ------- -------
Shares used to calculate
diluted EPS 65,898 80,622 81,345 80,173
======= ======= ======= =======
Basic EPS $ .05 $ .75 $ .72 $ 1.33
Diluted EPS .05 .66 .69 1.17
</TABLE>
The assumed conversions to common stock of the Company's 7% convertible
subordinated debentures, preferred stock and preference stock are
excluded from the diluted EPS computations for periods in which these
items, on an individual basis, have an anti-dilutive effect on diluted
EPS.
6
<PAGE>
Segment Information (in thousands)
- ---------------------------------
Financial information for the Company's business segments is as
follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
1999 1998 1999 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales
Fresh Produce $ 557,816 $ 625,725 $1,131,079 $1,228,076
Processed Foods 119,041 118,466 238,780 233,332
--------- --------- ---------- ----------
$ 676,857 $ 744,191 $1,369,859 $1,461,408
========= ========= ========== ==========
Operating income
Fresh Produce $ 29,273 $ 67,997 $ 100,979 $ 130,538
Processed Foods 6,898 6,219 12,416 13,448
--------- --------- ---------- ----------
$ 36,171 $ 74,216 $ 113,395 $ 143,986
========= ========= ========== ==========
Inventories (in thousands)
- -------------------------
June 30, December 31, June 30,
1999 1998 1998
----------- ------------ ----------
<S> <C> <C> <C>
Fresh produce $ 36,480 $ 43,052 $ 38,761
Processed food products 131,972 184,438 119,577
Growing crops 110,406 109,891 119,865
Materials, supplies and
other 64,793 49,912 80,806
--------- ------------ ---------
$ 343,651 $ 387,293 $ 359,009
=========== ============ =========
</TABLE>
Hedging
- -------
Chiquita has a long-standing policy of periodically hedging
transactions denominated in foreign currencies. At June 30, 1999, the
Company had option contracts denominated in Deutsche marks and the
European Union common currency (the "euro") which ensure conversion of
approximately $180 million of foreign sales through the end of 1999 at
equivalent rates not higher than 1.79 Deutsche marks (.91 euro) per
dollar or lower than 1.62 Deutsche marks (.83 euro) per dollar and
approximately $80 million of foreign sales in 2000 at equivalent rates
not higher than 1.82 Deutsche marks (.93 euro) per dollar or lower than
1.63 Deutsche marks (.83 euro) per dollar. The carrying value of these
option contracts at June 30, 1999 was approximately $4 million and their
fair value based on quoted market prices was approximately $14 million.
7
<PAGE>
Senior Note Issuance
- --------------------
In June 1999, the Company issued $200 million principal amount of 10%
Senior Notes due 2009 for net proceeds of approximately $195 million.
Through the end of the second quarter, the Company used approximately
$110 million of these proceeds to repay borrowings under revolving lines
of credit and to prepay debt of subsidiaries. The remaining proceeds
from the offering are being used to repay other outstanding debt of the
Company and its subsidiaries and for other general corporate purposes.
Acquisitions and Divestitures
- -----------------------------
In April 1999, Chiquita Processed Foods, L.L.C., the Company's
vegetable canning subsidiary, acquired certain canning assets in Oregon.
The purchase price of approximately $20 million was funded with
borrowings under Chiquita Processed Foods' revolving credit facility.
In January 1998, Chiquita acquired Stokely USA, Inc., previously a
publicly-owned vegetable canning business. 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"). 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.
Each of these acquisitions was accounted for as a purchase.
In late 1998, the Company merged its Chilean fresh produce operations
into a joint venture and sold its Central American plastic products
operations. The sales and operating expenses of these operations are no
longer consolidated in the Company's financial statements for periods
after these transactions.
Comprehensive Income
- --------------------
Comprehensive income for all periods presented consisted solely of net
income and unrealized foreign currency translation gains (losses), as
follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ------------------
1999 1998 1999 1998
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 7,324 $52,842 $56,032 $93,920
Unrealized foreign currency
translation gains (losses) (3,938) 856 (7,184) (983)
------- ------- ------- -------
Comprehensive income $ 3,386 $53,698 $48,848 $92,937
======= ======= ======== =======
</TABLE>
8
<PAGE>
Item 2
- ------
CHIQUITA BRANDS INTERNATIONAL,INC.
----------------------------------
MANAGEMENT'S ANALYSIS OF
------------------------
OPERATIONS AND FINANCIAL CONDITION
----------------------------------
Operations
- ----------
Operating income for the quarter and six months ended June 30, 1999
decreased $38 million and $31 million from the prior year primarily as a
result of decreased earnings in the Company's Fresh Produce business
segment. Operating results for the Company's Processed Foods segment
were comparable to the prior year.
The decrease in Fresh Produce earnings resulted from significantly
lower banana pricing in Europe on higher industry volume in the second
quarter of 1999. In the European Union ("EU"), the lower pricing was
primarily due to a disproportionately large second quarter allocation of
the annual quota of banana import licenses as compared to any prior
second quarter allocation since the inception of the EU banana quota
regime. To a lesser extent, the Kosovo conflict in the Balkans and the
continued depressed Russian market put additional downward pressure on
pricing in neighboring countries. Second quarter banana pricing was
also lower in North America compared to the prior year, when El Nino
related volume reduction resulted in higher short-term pricing. Early
in the third quarter of 1999, the Company has been experiencing
significantly lower banana pricing in comparison to the same period in
1998.
Net sales for the quarter and six months ended June 30, 1999 decreased
9% and 6% from the corresponding periods in 1998 primarily as a result
of the decreased banana pricing.
The 1998 second quarter results include unusual charges (primarily
write-offs of a non-operating investment and long-term production
assets) which were offset by a gain from a settlement in excess of $10
million of claims against a newspaper. A portion of the unusual
charges, including the write-off of production assets, is included in
"Cost of sales." "Other income, net" includes the gain from the
settlement of claims against the newspaper and the non-operating
investment write-off.
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
- -------------------
Operating cash flow decreased from $134 million in the first six months
of 1998 to $87 million in the comparable period in 1999 primarily as a
result of lower earnings.
In June 1999, the Company issued $200 million principal amount of 10%
Senior Notes due 2009 for net proceeds of approximately $195 million.
Through the end of the second quarter, the Company used approximately
$110 million of these proceeds to repay borrowings under revolving lines
of credit and to prepay debt of subsidiaries. The remaining proceeds
from the offering are being used to repay other outstanding debt of the
Company and its subsidiaries and for other general corporate purposes.
9
<PAGE>
At July 30, 1999, no borrowings were outstanding under Chiquita's $125
million revolving credit facility, and approximately $70 million of
borrowings were available under committed lines of credit of
subsidiaries.
During the first half of 1999, capital expenditures of $74 million
included approximately $40 million of spending to rehabilitate farms in
Honduras and Guatemala destroyed or damaged by Hurricane Mitch flooding
in late 1998. The Company expects to finance the remaining flood
rehabilitation and its other capital expenditures with cash flow from
operations, insurance proceeds and available cash. During the first
quarter of 1999, the Company received an initial insurance payment of
$25 million.
Year 2000 Project
- -----------------
Reference is made to the discussion of Chiquita's company-wide Year
2000 Project (the "Project") in "Management's Analysis of Operations and
Financial Condition" in the Company's 1998 Annual Report to
Shareholders. The Project has included the following phases: (1)
inventorying the Company's hardware, software and equipment; (2)
assessing which items have Year 2000 issues; (3) determining critical
versus non-critical items; (4) replacing or repairing items that have
Year 2000 issues; (5) testing material items; (6) assessing the Year
2000 readiness of the Company's material customers and suppliers; and
(7) developing contingency plans. As of June 30, 1999, the first six
phases of the Project are substantially complete. The Company has
substantially completed assessing the Year 2000 readiness of material
customers and suppliers, including financial institutions,
telecommunications companies, public utility companies and commercial
vendors. Assessment included obtaining written certifications of Year
2000 readiness from third parties, review of their Year 2000 readiness
plans and site visits. Development of necessary contingency plans for
third parties and critical internal systems is expected to be completed
before the end of 1999. Chiquita's contingency planning is focusing on
minimizing Year 2000 disruptions, should they occur, by having
sufficient resources and personnel in place to permit an appropriate
response to specific problems.
The estimated total cost of the Project for systems that have not been
replaced or upgraded in the normal course is less than $10 million.
Most of this cost has already been incurred by the Company.
Due to the widespread uncertainties inherent in the Year 2000 problem,
resulting primarily from the widely reported uncertainty of the Year
2000 readiness of suppliers, customers and other third parties,
including U.S. and foreign governmental entities, the Company is unable
to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's financial statements.
However, the Company believes the most reasonably likely worst case
scenario is that there could be some localized, temporary disruptions to
portions of business activities, such as agricultural production,
shipping, ripening and data processing, rather than systemic or long-
term problems affecting its business operations as a whole.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
Reference is made to the discussion of Chiquita's Management of Market
Risk in "Management's Analysis of Operations and Financial Condition" in
the Company's 1998 Annual Report to Shareholders. As of June 30, 1999,
there were no material changes to the information presented.
10
<PAGE>
* * * * *
This quarterly report contains certain information that may be deemed
to be "forward-looking statements" within the meaning of the Private
Securities Litigation Act of 1995. This information is 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, actions or
failures to act of customers, suppliers and other third parties with
respect to Year 2000 readiness issues, 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 or implied in the forward-looking information.
Part II - Other Information
- ---------------------------
Item 1 - Legal Proceedings
--------------------------
The Illinois Attorney General's Office filed a complaint in Peoria
County in November 1998 seeking an injunction and civil penalties for
alleged environmental violations at a vegetable canning facility in
Princeville, Illinois now owned by Chiquita Processed Foods, L.L.C.,
the Company's vegetable canning subsidiary. The facility is currently
operating in compliance with the terms of a preliminary injunction
entered by agreement of the parties. The Company expects monetary
sanctions to be less than $150,000.
Item 2 - Changes in Securities and Use of Proceeds
--------------------------------------------------
On June 22, 1999, the Company issued $200 million of 10% Senior Notes
due 2009 ("Senior Notes"). The Senior Notes are general unsecured
obligations of the Company and rank pari passu with the Company's
existing and future senior unsecured indebtedness, and senior to the
Company's existing and future subordinated indebtedness. The terms of
the Senior Notes contain restrictions on the payment of dividends and
other distributions on, and repurchases and redemptions of, the
Company's common stock. The restrictions are similar to those of
other senior note indenture agreements of the Company.
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
In connection with the election of seven directors of the Company,
proxies were solicited pursuant to Regulation 14 under the Securities
Exchange Act of 1934 and the following votes were cast at the
Company's Annual Meeting of Shareholders held on May 12, 1999:
<TABLE>
<CAPTION>
Votes
--------------------------
Name For Withheld
---------------- ---------- -----------
<S> <C> <C>
Carl H. Lindner 54,057,970 1,121,552
Keith E. Lindner 54,059,154 1,120,368
Fred J. Runk 54,072,581 1,106,941
Jean Head Sisco 54,081,965 1,097,557
William W. Verity 54,085,839 1,093,683
Oliver W. Waddell 54,100,686 1,078,836
Steven G. Warshaw 54,054,128 1,125,394
</TABLE>
11
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------
<TABLE>
<CAPTION>
Page
Number(s)
--------
<S> <C>
(a) Exhibit 4(a) - Third Supplemental Indenture
dated as of June 15, 1999 to indenture dated
as of February 15, 1994 between the Company
and Fifth Third Bank (f/k/a The Fifth Third
Bank), Trustee, filed as Exhibit 4.2 to
Amendment No. 1 to Form 8-A dated June 23,
1999 *
Exhibit 4(b) - Certificate of Actions Taken
by the President of the Company establishing
the terms of the 10% Senior Notes due 2009,
filed as Exhibit 4.3 to Amendment No. 1 to
Form 8-A dated June 23, 1999 *
Exhibit 10 - Amendment No. 2 dated as of
May 19, 1999 and Amendment No. 3 dated as of
July 23, 1999 to Credit Agreement dated
December 31, 1996 among Chiquita Brands
International, Inc., BankBoston N.A.
(f/k/a The First National Bank of Boston), as
administrative agent, and the financial
institutions which are lenders relating to
the Company's $125 million revolving credit
facility **
Exhibit 27 - Financial Data Schedule **
* Incorporated by reference.
** 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 have been
filed by the Company during the quarter ended
June 30, 1999:
May 18, 1999 - to report the Company's expected
results for the second quarter of 1999.
June 4, 1999 - to report the Company's plans for
offerings of senior notes and to provide the
Company's Computation of Earnings to Fixed Charges
(Exhibit 12).
June 15, 1999 - to report the terms of the
offering of the Company's 10% Senior Notes.
</TABLE>
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 9, 1999
13
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2, dated as of May 19, 1999, to the
Credit Agreement, dated as of December 31, 1996 (the "CREDIT
AGREEMENT"), among (i) CHIQUITA BRANDS INTERNATIONAL, INC.,
a New Jersey corporation ("BORROWER"), (ii) the financial
institutions which are now, or in accordance with SECTION
12.2 of the Credit Agreement hereafter become, parties to
the Credit Agreement (collectively, "LENDERS"), (iii)
BANKBOSTON, N.A. as Administrative Agent for the Lenders,
and (iv) BANKBOSTON, N.A., ING BANK N.V., and PNC BANK,
N.A., as Co-agents for the Lenders.
RECITALS
The Borrower, the Lenders and the Agents party to
this Amendment No. 2 ("THIS AGREEMENT") have agreed to amend
certain of the provisions contained in the Credit Agreement
as set forth herein.
Accordingly, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined
herein, terms defined in the Credit Agreement are used
herein as therein defined.
ARTICLE II
AMENDMENTS
Effective on and as of May 19, 1999 ("EFFECTIVE DATE"),
the Credit Agreement is hereby amended in the following
respect:
SECTION 2.1. AMENDMENT TO DEFINED TERM. The defined
term "CONSOLIDATED EBITDA" appearing in SECTION 1.1 of the
Credit Agreement (as previously amended by Amendment No. 1,
dated as of December 8, 1997,
to the Credit Agreement) is hereby further amended by
inserting the following new paragraph immediately after the
first two paragraphs of the defined term "CONSOLIDATED
EBITDA":
"For purposes of determining the Consolidated
EBITDA of the Borrower and its Subsidiaries for
the Reference Period ending June 30, 1999 and also
for the Reference Period ending September 30,
1999, there shall be added to the Consolidated
Operating Income of the Borrower and its
Subsidiaries for such Reference Period
$58,000,000, representing non-cash charges
resulting from Hurricane Mitch during the fourth
fiscal quarter of 1998."
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Borrower represents and warrants to and covenants
with each Agent and Lender as follows:
SECTION 3.1. REPRESENTATIONS IN LOAN DOCUMENTS. Each
of the representations and warranties made by or on behalf
of the Borrower to the Agents and the Lenders in the Loan
Documents was true and correct in all material respects when
made and is true and correct in all material respects on and
as of the date hereof, except, in each case, (a) as affected
by the consummation of the transactions contemplated by the
Loan Documents (including this Agreement), and (b) to the
extent that any such representation or warranty relates by
its express terms solely to a prior date.
SECTION 3.2. CORPORATE AUTHORITY, ETC. The execution
and delivery by the Borrower of this Agreement and the
performance by the Borrower of its agreements and
obligations under this Agreement have been duly and properly
authorized by all necessary corporate or other action on the
part of the Borrower, and do not and will not conflict with,
result in any violation of, or constitute any default under
(a) any provision of any Governing Document of the Borrower,
(b) any Contractual Obligation of the Borrower, or (c) any
Applicable Law.
SECTION 3.3. VALIDITY, ETC. This Agreement has been
duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws at the time in effect affecting the
enforceability of the rights of creditors generally and to
general equitable principles. The Borrower hereby ratifies
and confirms all of the Obligations in all respects.
SECTION 3.4. NO DEFAULTS. Before and after giving
effect to this Agreement, no Defaults or Events of Default
are or will be continuing under the Credit Agreement.
SECTION 3.5. AMENDMENT FEE. In consideration of the
execution and delivery of this Agreement by the
Administrative Agent and the Required Lenders, the Borrower
hereby promises to pay to the Administrative Agent on the
Effective Date, for the account of each of the Lenders, an
amendment fee ("AMENDMENT FEE") equal to 1/8th of 1%
(.00125) of the Commitment of each such Lender in effect on
the Effective Date.
ARTICLE IV
PROVISIONS OF GENERAL APPLICATION
This Agreement shall become effective on and as of the
Effective Date once the Administrative Agent has received
(a) duly executed counterparts hereof signed by the Borrower
and the Required Lenders, and (b) payment of the Amendment
Fee for the account of each Lender. Except as otherwise
expressly provided by this Agreement, all of the terms,
conditions and provisions of the Credit Agreement and each
of the other Loan Documents shall remain unaltered. This
Agreement is a Loan Document for all purposes of the Credit
Agreement. This Agreement and the rights and obligations
hereunder of each of the parties hereto shall in all
respects be construed in accordance with and governed by the
internal laws of the State of New York. This Agreement may
be executed in any number of counterparts and by different
parties hereto in separate counterparts, but all of such
counterparts shall together constitute but one and the same
agreement. In making proof of this Agreement, it shall not
be necessary to produce or account for more than one
counterpart hereof signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this AMENDMENT NO. 2 to be executed by their respective
authorized officers as of the date first above written.
THE BORROWER:
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/Gerald R. Kondritzer
-------------------------------
Name: Gerald R. Kondritzer
Title: Vice President and
Treasurer
THE AGENTS AND LENDERS:
BANKBOSTON, N.A., AS ADMINISTRATIVE
AGENT, AS ONE OF THE CO-AGENTS,
AND AS ONE OF THE LENDERS
By: /s/Robert F. Milordi
-------------------------------
Name: Robert F. Milordi
Title: Managing Director
ING BANK N.V., AS ONE OF THE CO-
AGENTS AND AS ONE OF THE LENDERS
By: /s/H.W.L. Englehart
-------------------------------
Name: H.W.L. Englehart
Title: Senior Relationship Manager
/s/J.J. Henff
-------------------------------
Name: J.J. Henff
Title: Senior Relationship Manager
PNC BANK, N.A., AS ONE OF THE CO-
AGENTS AND AS ONE OF THE LENDERS
By: /s/D.F. Knuth
-------------------------------
Name : David F. Knuth
Title: Vice President
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH, AS ONE OF THE
LENDERS
By: /s/John H. Kemper
-------------------------------
Name: John H. Kemper
Title: Senior Vice President
BANK OF AMERICA ILLINOIS, AS ONE OF
THE LENDERS
By: /s/Casey Cosgrove
-------------------------------
Name: Casey Cosgrove
Title: Vice President
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, AS ONE OF THE
LENDERS
By /s/Martin Lunder /s/Hans Chr.
Kjelsrud
-----------------------------------
Name: Martin Lunder Hans Chr.
Kjelrud
Title: Sr. Vice Pres. Sr. Vice
Pres.
THE MITSUBISHI TRUST AND BANKING
CORPORATION, AS ONE OF THE
LENDERS
By: /s/Nobuo Tominaga
-------------------------------
Name: Nobuo Tominaga
Title: Chief Manager
FIRSTSTAR BANK, N.A., AS ONE OF THE
LENDERS
By: /s/Derek S. Rodebush
-------------------------------
Name: Derek S. Rodebush
Title: Vice President
SUNTRUST BANK, N.A., AS ONE OF THE
LENDERS
By /s/Jack G. Prevost
-------------------------------
Name: Jack G. Prevost
Title: Managing Director
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT NO. 3, dated as of July 23, 1999, to the
Credit Agreement, dated as of December 31, 1996 (the "Credit
Agreement"), among (i) CHIQUITA BRANDS INTERNATIONAL, INC.,
a New Jersey corporation ("Borrower"), (ii) the financial
institutions which are now, or in accordance with SECTION
12.2 of the Credit Agreement hereafter become, parties to
the Credit Agreement (collectively, "LENDERS"), (iii)
BANKBOSTON, N.A. as Administrative Agent for the Lenders,
and (iv) BANKBOSTON, N.A., ING BANK N.V., and PNC BANK,
N.A., as Co-agents for the Lenders.
RECITALS
The Borrower, the Lenders and the Agents party to
this Amendment No. 3 ("THIS AGREEMENT") have agreed to amend
certain of the provisions contained in the Credit Agreement
as set forth herein.
Accordingly, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined
herein, terms defined in the Credit Agreement are used
herein as therein defined.
ARTICLE II
AMENDMENTS
Effective on and as of July 23, 1999 ("EFFECTIVE
DATE"), the Credit Agreement is hereby amended in each of
the following respects:
SECTION 2.1. AMENDMENTS TO CERTAIN NEGATIVE COVENANTS.
(a) SECTION 9.2.1(D). SUBCLAUSE (II) of Section
9.2.1(d) is amended by deleting the Dollar amount
"$375,000,000" appearing in such SUBCLAUSE (II), and by
inserting in place thereof the Dollar amount
"$325,000,000."
(b) SECTION 9.2.3(A). PARAGRAPH (A) of SECTION
9.2.3 is amended to read in its entirety as follows:
"(a) LEVERAGE RATIO: Permit the Leverage
Ratio (i) to be greater than the ratio of 0.40:1.0
at any time prior to July 1, 1999, or (ii) to be
greater than the ratio of 0.50:1.0 at any time on
or after July 1, 1999."
(c) SECTION 9.2.4(B). SUBCLAUSE (II) of SECTION
9.2.4(B) is amended by inserting the following proviso
at the end of such SUBCLAUSE (II), immediately prior to
the word "and":
"; PROVIDED, HOWEVER, that the Borrower shall
not at any time after June 30, 1999 use more than
$5,000,000 of the proceeds from the Borrower's
issuance of its 10% Senior Notes due 2009 to make
any payments or distributions on account of the
redemption, repurchase or other acquisition for
value of, or to prepay, any Indebtedness for
Borrowed Money of the Borrower under its 7%
Convertible Subordinated Debentures due 2001;"
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Borrower represents and warrants to and covenants
with each Agent and Lender as follows:
SECTION 3.1. REPRESENTATIONS IN LOAN DOCUMENTS. Each
of the representations and warranties made by or on behalf
of the Borrower to the Agents and the Lenders in the Loan
Documents was true and correct in all material respects when
made and is true and correct in all material respects on and
as of the date hereof, except, in each case, (a) as affected
by the consummation of the transactions contemplated by the
Loan Documents (including this Agreement), and (b) to the
extent that any such representation or warranty relates by
its express terms solely to a prior date.
SECTION 3.2. CORPORATE AUTHORITY, ETC. The execution
and delivery by the Borrower of this Agreement and the
performance by the Borrower of its agreements and
obligations under this Agreement have been duly and properly
authorized by all necessary corporate or other action on the
part of the Borrower, and do not and will not conflict with,
result in any violation of, or constitute any default under
(a) any provision of any Governing Document of the Borrower,
(b) any Contractual Obligation of the Borrower, or (c) any
Applicable Law.
SECTION 3.3. VALIDITY, ETC. This Agreement has been
duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws at the time in effect affecting the
enforceability of the rights of creditors generally and to
general equitable principles. The Borrower hereby ratifies
and confirms all of the Obligations in all respects.
SECTION 3.4. NO DEFAULTS. Before and after giving
effect to this Agreement, no Defaults or Events of Default
are or will be continuing under the Credit Agreement.
SECTION 3.5. AMENDMENT FEE. In consideration of the
execution and delivery of this Agreement by the
Administrative Agent and the Required Lenders, the Borrower
hereby promises to pay to the Administrative Agent on July
30, 1999, for the account of each of the Lenders (each, a
"CONSENTING LENDER") that (a) executes and delivers this
Agreement, AND (b) delivers to the Administrative Agent or
its special counsel by July 23, 1999, an execution copy of
this Agreement signed by such Lender (or a facsimile copy
thereof), an amendment fee ("AMENDMENT FEE") equal to 1/8th
of 1% (.00125) of the Commitment of each such Consenting
Lender in effect on the Effective Date.
ARTICLE IV
PROVISIONS OF GENERAL APPLICATION
This Agreement shall become effective ON AND AS OF THE
EFFECTIVE DATE once the Administrative Agent has received
(a) duly executed counterparts hereof signed by the Borrower
and the Required Lenders, and (b) payment of the Amendment
Fee for the account of each Consenting Lender. Except as
otherwise expressly provided by this Agreement, all of the
terms, conditions and provisions of the Credit Agreement and
each of the other Loan Documents shall remain unaltered.
This Agreement is a Loan Document for all purposes of the
Credit Agreement. This Agreement and the rights and
obligations hereunder of each of the parties hereto shall in
all respects be construed in accordance with and governed by
the internal laws of the State of New York. This Agreement
may be executed in any number of counterparts and by
different parties hereto in separate counterparts, but all
of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it
shall not be necessary to produce or account for more than
one counterpart hereof signed by each of the parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused
this AMENDMENT NO. 3 to be executed by their respective
authorized officers as of the date first above written.
THE BORROWER:
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/Gerald R. Kondritzer
---------------------------
Name: Gerald R. Kondritzer
Title: Vice President and
Treasurer
THE AGENTS AND LENDERS:
BANKBOSTON, N.A., AS ADMINISTRATIVE
AGENT, AS ONE OF THE CO-AGENTS,
AND AS ONE OF THE LENDERS
By: /s/Robert F. Milordi
---------------------------
Name: Robert F. Milordi
Title: Managing Director
ING BANK N.V., AS ONE OF THE CO-
AGENTS AND AS ONE OF THE LENDERS
By: /s/Drs. H. W. L. Engelhart
------------------------
Name: Drs. H. W. L. Engelhart
Title:
By: /s/Mr. A.P. deRidder
-------------------------
Name: Mr. A.P. deRidder
Title:
PNC BANK, N.A., AS ONE OF THE CO-
AGENTS AND AS ONE OF THE LENDERS
By; /s/Bruce A. Kintner
---------------------------
Name: Bruce A. Kintner
Title: Vice President
THE SUMITOMO BANK, LIMITED, CHICAGO
BRANCH, AS ONE OF THE LENDERS
By: /s/John H. Kemper
--------------------------
Name: John H. Kemper
Title: Senior Vice President
BANK OF AMERICA ILLINOIS, AS ONE OF
THE LENDERS
By: /s/Casey Cosgrove
----------------------------
Name: Casey Cosgrove
Title: Vice President
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, AS ONE OF THE
LENDERS
By: /s/Hans Chr. Kjlsrud
-----------------------
Name: Hans Chr. Kjelsrud
Title: Sr. Vice President
By: /s/ Angela Dognancay
--------------------
Name: Angela Dognancay
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION, as one of the Lenders
By: /s/Nobuo Tominago
----------------------------
Name: Nobuo Tominago
Title: Chief Manager
FIRSTSTAR BANK, N.A., as one of the
Lenders
By: /s/Thomas G. Gibbons
------------------------
Name: Thomas G. Gibbons
Title: Vice President
SUNTRUST BANK, N.A., as one of the
Lenders
By: /s/Jack Prevost
----------------------------
Name: Jack Prevost
Title: Mgg. Director
<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, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 180,362
<SECURITIES> 0
<RECEIVABLES> 248,401
<ALLOWANCES> 10,924
<INVENTORY> 343,651
<CURRENT-ASSETS> 870,851
<PP&E> 1,838,848
<DEPRECIATION> 683,186
<TOTAL-ASSETS> 2,597,353
<CURRENT-LIABILITIES> 477,067
<BONDS> 1,105,994
0
253,475
<COMMON> 658
<OTHER-SE> 577,549
<TOTAL-LIABILITY-AND-EQUITY> 2,597,353
<SALES> 1,369,859
<TOTAL-REVENUES> 1,369,859
<CGS> 1,050,824
<TOTAL-COSTS> 1,050,824
<OTHER-EXPENSES> 44,698
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,644
<INCOME-PRETAX> 64,532
<INCOME-TAX> 8,500
<INCOME-CONTINUING> 56,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,032
<EPS-BASIC> .72
<EPS-DILUTED> .69
</TABLE>
