Chiquita Brands International, Inc. (NYSE: CQB) yesterday reported third quarter results as follows (in millions, except per share amounts):
Earnings before interest, taxes,
depreciation and amortization (EBITDA) $27.7 $0.4
Earnings before interest and taxes (EBIT) 4.9 (23.7)
Loss before unusual items (26.5) (51.9)
Loss per share before unusual items (0.40) (0.84)
Note: The above amounts are presented before 2001 unusual charges of $12 million relating to the shutdown of certain farms in Panama and parent company debt restructuring costs, and before a $2 million extraordinary loss in 2000 from debt refinancing.
The improvement in third quarter results occurred in the Company’s Fresh Produce business primarily as a result of higher pricing in European and North American markets. The benefit of higher pricing more than offset the negative effect of weak European currencies in relation to the U.S. dollar. The Company’s Processed Foods operating results declined primarily due to lower market pricing for canned vegetables in the third quarter of 2001, when the industry was reducing inventory levels.
Net sales for the third quarter of 2001 increased $43 million to $509 million primarily as a result of the higher pricing and, to a lesser extent, higher volume in Fresh Produce.
The third quarter unusual charges include $9 million for the closure of non-competitive farms that represented about 20% of the Company’s Armuelles, Panama, banana production division. The Company has since reached agreement with the local labor union regarding work practices in its remaining farms in Armuelles. The new agreement should improve the quality, productivity and cost performance of the remaining farms. However, additional improvements will be needed in order for the remaining farms to become cost-competitive in world markets.
Chiquita continues to make progress in negotiation with bondholder committees regarding an initiative announced in January to restructure the public debt of Chiquita Brands International, Inc. (“CBII”), which is a parent holding company without business operations of its own. The Company’s operations will continue as normal throughout the restructuring process, which will neither involve nor affect the Company’s operating subsidiaries. The restructuring will include the conversion of a significant portion of CBII’s debt into common equity, which will result in a substantial dilution of the interests of Chiquita’s common and preferred stockholders. If an agreement on such a restructuring plan is reached, the Company would present the plan for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns. The Company is not currently in a position to predict the outcome or timing of these negotiations.
Chiquita is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods.
This press release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of assumptions, risks and uncertainties, including the Company’s ability to reach agreement on a restructuring of the parent company’s debt, the terms of any such restructuring, the implementation of the announced U.S. – EU agreement regarding the EU’s banana import regime, the prices at which Chiquita can sell its products, the costs at which it can 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, actions of governmental bodies, and other market and competitive conditions, many of which are beyond the control of Chiquita. The forward-looking statements speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the Company undertakes no obligation to update any such statements.
CHIQUITA BRANDS INTERNATIONAL, INC. PRELIMINARY
CONSOLIDATED INCOME STATEMENT INFORMATION
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(In millions, except per share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
EBITDA before unusual
items $27.7 $0.4 $135.2 $161.2
amortization 22.8 24.1 67.5 73.0
EBIT before unusual
items 4.9 (23.7) 67.7 88.2
Loss before unusual
items (26.5) (51.9) (30.3) (6.1)
Unusual items* (11.7) – (14.8) –
(loss) – (1.8) – 0.1
Net loss (38.2) (53.7) (45.1) (6.0)
Before unusual items $(0.40) $(0.84) $(0.55) $(0.28)
Unusual items* (0.16) – (0.21) –
Extraordinary loss – (0.03) – –
Net loss (0.56) (0.87) (0.76) (0.28)
Shares used to calculate
diluted earnings per
share 74.0 66.6 72.0 66.4
Net sales $508.7 $465.8 $1,681.4 $1,725.3
Cost of sales 435.6 408.8 1,386.5 1,369.1
and administrative 55.7 58.2 173.2 200.1
Depreciation 21.2 22.6 62.8 68.1
Total 512.5 489.6 1,622.5 1,637.3
Operating income (loss) (3.8) (23.8) 58.9 88.0
Interest income 2.0 3.4 7.1 9.3
Interest expense (33.4) (31.6) (98.1) (95.6)
Other income (expense),
net (3.0) 0.1 (6.0) 0.2
Income (loss) before
items (38.2) (51.9) (38.1) 1.9
Income taxes – – (7.0) (8.0)
extraordinary items (38.2) (51.9) (45.1) (6.1)
Extraordinary gain (loss) – (1.8) – 0.1
Net loss $(38.2) $(53.7) $(45.1) $(6.0)
* Unusual items in 2001 include $9 million of third quarter charges
related to the shutdown of certain farms in Panama and parent company
debt restructuring costs of $3 million in the third quarter ($6 million
year to date).
Quarterly results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year.