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 September 30, 2004
OR
| ¨ | 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 x. No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x. No ¨.
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 x. No ¨.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of October 31, 2004, there were 40,857,949 shares of Common Stock outstanding.
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
2
Part I - Financial Information
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In thousands, except per share amounts)
| Quarter Ended Sept. 30, |
Nine Months Ended Sept. 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net sales |
$ | 661,610 | $ | 627,511 | $ | 2,303,164 | $ | 1,928,013 | ||||||||
| Operating expenses |
||||||||||||||||
| Cost of sales |
572,336 | 546,034 | 1,963,777 | 1,643,561 | ||||||||||||
| Selling, general and administrative |
68,986 | 61,327 | 219,989 | 167,642 | ||||||||||||
| Depreciation |
10,235 | 9,495 | 31,742 | 25,928 | ||||||||||||
| Loss on sale of Colombian division |
— | — | 9,289 | — | ||||||||||||
| Gain on sale of Armuelles division |
— | — | — | (20,658 | ) | |||||||||||
| Gain on sale of equity method investments |
— | (12,038 | ) | — | (9,754 | ) | ||||||||||
| 651,557 | 604,818 | 2,224,797 | 1,806,719 | |||||||||||||
| Operating income |
10,053 | 22,693 | 78,367 | 121,294 | ||||||||||||
| Interest income |
2,347 | 943 | 3,710 | 1,980 | ||||||||||||
| Interest expense |
(9,823 | ) | (11,191 | ) | (29,850 | ) | (32,312 | ) | ||||||||
| Other income (expense), net |
(19,706 | ) | — | (19,706 | ) | — | ||||||||||
| Income (loss) from continuing operations before income taxes |
(17,129 | ) | 12,445 | 32,521 | 90,962 | |||||||||||
| Income taxes |
(2,700 | ) | (1,800 | ) | (2,200 | ) | (5,300 | ) | ||||||||
| Income (loss) from continuing operations |
(19,829 | ) | 10,645 | 30,321 | 85,662 | |||||||||||
| Discontinued operations |
||||||||||||||||
| Loss from operations |
— | (107 | ) | — | (5,497 | ) | ||||||||||
| Gain (loss) on disposal of discontinued operations |
— | (653 | ) | — | 11,156 | |||||||||||
| Net income (loss) |
$ | (19,829 | ) | $ | 9,885 | $ | 30,321 | $ | 91,321 | |||||||
| Basic earnings per common share: |
||||||||||||||||
| - Continuing operations |
$ | (0.49 | ) | $ | 0.27 | $ | 0.74 | $ | 2.14 | |||||||
| - Discontinued operations |
— | (0.02 | ) | — | 0.14 | |||||||||||
| - Net income (loss) |
$ | (0.49 | ) | $ | 0.25 | $ | 0.74 | $ | 2.28 | |||||||
| Diluted earnings per common share: |
||||||||||||||||
| - Continuing operations |
$ | (0.49 | ) | $ | 0.27 | $ | 0.72 | $ | 2.14 | |||||||
| - Discontinued operations |
— | (0.02 | ) | — | 0.14 | |||||||||||
| - Net income (loss) |
$ | (0.49 | ) | $ | 0.25 | $ | 0.72 | $ | 2.28 | |||||||
See Notes to Consolidated Financial Statements.
3
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)
| September 30, 2004 |
December 31, 2003 |
September 30, 2003 | |||||||
| ASSETS |
|||||||||
| Current assets |
|||||||||
| Cash and equivalents |
$ | 229,617 | $ | 134,296 | $ | 158,255 | |||
| Trade receivables (less allowances of $11,020, $13,066, and $14,464) |
267,548 | 292,522 | 250,519 | ||||||
| Other receivables, net |
74,983 | 84,289 | 79,092 | ||||||
| Inventories |
163,819 | 193,968 | 180,154 | ||||||
| Prepaid expenses |
16,220 | 17,528 | 18,780 | ||||||
| Other current assets |
25,156 | 15,347 | 12,103 | ||||||
| Total current assets |
777,343 | 737,950 | 698,903 | ||||||
| Property, plant and equipment, net |
402,360 | 440,978 | 420,443 | ||||||
| Investments and other assets, net |
145,337 | 93,377 | 117,096 | ||||||
| Trademark |
387,585 | 387,585 | 387,585 | ||||||
| Goodwill |
42,501 | 43,219 | 42,384 | ||||||
| Assets of discontinued operations |
— | 3,610 | 15,082 | ||||||
| Total assets |
$ | 1,755,126 | $ | 1,706,719 | $ | 1,681,493 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||
| Current liabilities |
|||||||||
| Notes and loans payable |
$ | 12,620 | $ | 9,195 | $ | 11,318 | |||
| Long-term debt of parent company due within one year |
40,917 | — | — | ||||||
| Long-term debt of subsidiaries due within one year |
23,448 | 38,875 | 74,140 | ||||||
| Accounts payable |
260,932 | 264,373 | 233,444 | ||||||
| Accrued liabilities |
104,943 | 144,230 | 106,705 | ||||||
| Total current liabilities |
442,860 | 456,673 | 425,607 | ||||||
| Long-term debt of parent company |
250,000 | 250,000 | 250,000 | ||||||
| Long-term debt of subsidiaries |
80,850 | 96,490 | 100,207 | ||||||
| Accrued pension and other employee benefits |
73,394 | 81,899 | 79,596 | ||||||
| Other liabilities |
84,313 | 62,414 | 67,095 | ||||||
| Liabilities of discontinued operations |
— | 1,897 | 9,195 | ||||||
| Total liabilities |
931,417 | 949,373 | 931,700 | ||||||
| Shareholders’ equity |
|||||||||
| Common stock, $.01 par value (40,858,263, 40,037,281 and 39,942,652 shares outstanding, respectively) |
409 | 400 | 399 | ||||||
| Capital surplus |
650,709 | 630,868 | 626,567 | ||||||
| Retained earnings |
142,722 | 112,401 | 104,516 | ||||||
| Accumulated other comprehensive income |
29,869 | 13,677 | 18,311 | ||||||
| Total shareholders’ equity |
823,709 | 757,346 | 749,793 | ||||||
| Total liabilities and shareholders’ equity |
$ | 1,755,126 | $ | 1,706,719 | $ | 1,681,493 | |||
See Notes to Consolidated Financial Statements.
4
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(In thousands)
| Nine Months Ended Sept. 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash provided (used) by: |
||||||||
| Operations |
||||||||
| Income from continuing operations |
$ | 30,321 | $ | 85,662 | ||||
| Depreciation |
31,742 | 25,928 | ||||||
| Loss on extinguishment of debt |
22,015 | — | ||||||
| Loss on sale of Colombian division |
3,589 | — | ||||||
| Gain on sale of Armuelles division |
— | (20,658 | ) | |||||
| Gain on sale of equity method investements |
— | (9,754 | ) | |||||
| Severance payments for Armuelles division |
— | (16,713 | ) | |||||
| Changes in current assets and liabilities and other |
2,395 | 11,825 | ||||||
| Cash flow from operations |
90,062 | 76,290 | ||||||
| Investing |
||||||||
| Capital expenditures |
(27,588 | ) | (36,801 | ) | ||||
| Proceeds from sale of: |
||||||||
| Colombian division |
28,500 | — | ||||||
| Armuelles division |
860 | 14,802 | ||||||
| Equity method investments |
— | 18,692 | ||||||
| Other property, plant and equipment |
8,066 | 2,909 | ||||||
| Consolidation of variable interest entity |
— | 7,579 | ||||||
| Other |
(1,867 | ) | 3,808 | |||||
| Cash flow from investing |
7,971 | 10,989 | ||||||