CHIQUITA BRANDS INTERNATIONAL INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-1550

CHIQUITA BRANDS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)

New Jersey		04-1923360
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S.Employer Identification No.)

250 East Fifth Street
Cincinnati, Ohio 45202
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of April 30, 2003, there were 39,907,921 shares of Common Stock outstanding.

CHIQUITA BRANDS INTERNATIONAL, INC.

TABLE OF CONTENTS

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PART I - Financial Information

Item 1 - Financial Statements

Consolidated Statement of Income for the quarters ended March 31, 2003 and 2002	3

Consolidated Balance Sheet as of March 31, 2003, December 31, 2002 and March 31, 2002	4

Consolidated Statement of Cash Flow for the quarters ended March 31, 2003 and 2002	5

Notes to Consolidated Financial Statements	6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3 - Quantitative and Qualitative Disclosures About Market Risk	19

Item 4 - Controls and Procedures	19

PART II - Other Information

Item 6 - Exhibits and Reports on Form 8-K	20

Signature	21

Certification of Chief Executive Officer	22

Certification of Chief Financial Officer	23

Part I - Financial Information

Item 1 - Financial Statements

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In thousands, except per share amounts)

	Reorganized Company*			Predecessor Company*

							Pro Forma for Accounting Change*

	Quarter Ended March 31, 2003			Quarter Ended March 31, 2002			Quarter Ended March 31, 2002

Net sales	$	471,329		$	446,146		$	446,146

Operating expenses
Cost of sales		381,507			346,500			364,530
Selling, general and administrative		44,970			42,191			42,191
Depreciation		7,175			16,877			16,877

		433,652			405,568			423,598

Operating income		37,677			40,578			22,548
Interest income		392			624			624
Interest expense		(9,565	)		(7,555	)		(7,555	)
Financial restructuring items		—			(222,341	)		(222,341	)

Income (loss) from continuing operations before income taxes and cumulative effect of a change in method of accounting		28,504			(188,694	)		(206,724	)
Income taxes		(2,000	)		(1,000	)		(1,000	)

Income (loss) from continuing operations before cumulative effect of a change in method of accounting		26,504			(189,694	)		(207,724	)
Discontinued operations
Financial restructuring items		—			(63,481	)		(63,481	)
Loss from operations		(3,528	)		(125	)		(125	)
Gain on disposal of discontinued operation		1,905			—			—

Income (loss) before cumulative effect of a change in method of accounting		24,881			(253,300	)		(271,330	)
Cumulative effect of a change in method of accounting for goodwill		—			(144,523	)		(144,523	)

Net income (loss)	$	24,881		$	(397,823	)	$	(415,853	)

Basic and diluted earnings per common share:
- Continuing operations	$	.66		$	(2.42	)	$	(2.65	)
- Discontinued operations		(.04	)		(.81	)		(.81	)
- Cumulative effect of a change in method of accounting for goodwill		—			(1.85	)		(1.85	)

- Net income (loss)	$	.62		$	(5.08	)	$	(5.31	)

*See Notes to Consolidated Financial Statements, including “Basis of Presentation” describing the Reorganized Company and Predecessor Company and “Accounting Change” describing the Company’s change in method of accounting for certain tropical production and logistics expenses in interim periods.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)

	March 31, 2003*			December 31, 2002			March 31, 2002

ASSETS
Current assets
Cash and equivalents	$	35,660		$	52,885		$	54,660
Trade receivables (less allowances of $14,885, $7,023, and $9,658)		337,759			186,280			193,221
Other receivables, net		86,567			73,137			75,017
Inventories		199,252			173,368			179,327
Prepaid expenses		24,717			14,045			36,810
Other current assets		14,132			4,588			18,345

Total current assets		698,087			504,303			557,380
Property, plant and equipment, net		407,692			308,316			371,111
Investments and other assets, net		129,519			146,083			142,661
Trademark		387,585			387,585			387,585
Goodwill		42,181			—			—
Assets of discontinued operations		245,145			295,954			320,282

Total assets	$	1,910,209		$	1,642,241		$	1,779,019

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	32,599		$	5,375		$	25,280
Long-term debt of subsidiaries due within one year		48,006			36,326			39,650
Accounts payable		298,551			130,829			155,472
Accrued liabilities		106,367			87,813			80,134

Total current liabilities		485,523			260,343			300,536
Long-term debt of parent company		250,000			250,000			250,000
Long-term debt of subsidiaries		198,473			144,796			217,315
Accrued pension and other employee benefits		104,543			98,069			100,112
Other liabilities		79,615			80,982			104,224
Liabilities of discontinued operations		135,488			178,762			194,079

Total liabilities		1,253,642			1,012,952			1,166,266

Shareholders’ equity
Common stock, $.01 par value (39,903,468, 39,846,755 and 39,065,950 shares outstanding, respectively)		399			398			391
Capital surplus		625,924			625,589			612,362
Retained earnings		38,076			13,195			—
Accumulated other comprehensive loss		(7,832	)		(9,893	)		—

Total shareholders’ equity		656,567			629,289			612,753

Total liabilities and shareholders’ equity	$	1,910,209		$	1,642,241		$	1,779,019

* Includes the accounts of Scipio GmbH & Co., which was acquired in March 2003. (See Notes to Consolidated Financial Statements – "Acquisition of German Distributor").

See Notes to Consolidated Financial Statements.

CHIQUITA BRANDS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(In thousands)

	Reorganized Company*		Predecessor Company*

	Quarter Ended March 31, 2003		Quarter Ended March 31, 2002

Cash provided (used) by:
Operations
Income (loss) from continuing operations before cumulative effect of a change in method of accounting	$	26,504	$	(189,694	)
Financial restructuring items		—		209,480

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