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SMALL BUSINESS
Chiquita Reports Significantly Improved Third Quarter 2009 Results
For the third quarter 2009, the company reported GAAP income of
"Our third quarter results reflect the terrific progress of our
diversification strategy and ongoing pricing and cost discipline," said
Aguirre added, "We are encouraged by our strong momentum and are confident that, absent any major unforeseen events, we will achieve a year-over-year improvement in comparable second-half results of at least as much as we achieved in the first-half. Looking ahead, we are well-positioned to capitalize on profitable growth opportunities as we continue to transform into a more stable and predictable business. While we will remain diligent in managing our business for profitability, our attention is focused on growth in new geographies, distribution channels and innovative products."
2009 THIRD QUARTER SUMMARY
(The following table shows adjustments made to income and EPS from continuing operations between comparable and GAAP results. See "Items affecting comparability" below for a description of items excluded on a comparable basis. Exhibit B provides a reconciliation by segment for "Operating income.")
(All amounts in US Dollars unless otherwise specified)
(in millions, except per Income (loss) per
share amounts) Income (loss) diluted share
2009 2008 2009 2008
---- ---- ---- ----
Comparable results $9 $(15) $0.20 $(0.33)
Restructuring costs (2) (1) (0.04) (0.02)
Incremental non-cash interest
expense on Convertible Notes (2) (2) (0.04) (0.03)
Gain (loss) on debt purchases (0) 10 (0.00) 0.22
--- --- ----- ----
As Reported on a GAAP basis $5 $(7) $0.11 $(0.16)
=== === ===== ======
Table may not total due to rounding.
Net Sales and Comparable Results: Quarterly sales decreased 5 percent
year-over-year to
Cash, Debt and Liquidity: Cash flow from operations for the first nine
months of 2009 was
Banana Segment: Net sales for the segment were roughly flat at
Salads and Healthy Snacks Segment: Net sales decreased 11 percent to
Other Produce: Net sales for the segment were
2009 OUTLOOK
Based on the company's strong performance for the first nine months of 2009 and absent any major unforeseen negative events, the company continues to expect significant full-year 2009 improvement on a comparable basis versus 2008. Second-half 2009 comparable net income is expected to improve from 2008 levels by at least as much as in the first half of the year, even though fourth quarter results are likely to be lower than the third quarter due to seasonally lower consumption of salads and planned investments in consumer marketing and innovation, consistent with the company's long-term plans to drive profitable sales growth.
In the Banana segment, sourcing and production costs are expected to be
higher in the fourth quarter of 2009 compared to the year-ago period due to
increases in purchased fruit contract pricing and government-imposed exit
prices. Banana pricing is expected to remain relatively stable in
In the Salads and Healthy Snacks segment, the company expects to deliver
an operating margin for salads of seven to eight percent for the full-year
2009. Salad results in the fourth quarter are expected to reflect seasonally
lower consumption, as well as planned investments in consumer marketing and
innovation. In healthy snacks, the company expects reduced operating losses
in 2009 from the roll-out of
In addition to the company's overall business outlook, the following chart summarizes management's estimates of certain key items for 2009:
(in millions) Q1 2009 Q2 2009 Q3 2009 FY 2009
Actual Actual Actual Estimate
------ ------ ------ --------
Capital expenditures $11 $11 $16 $70-80
Depreciation and amortization $16 $15 $16 $62-64
Gross interest expense (1) $15 $14 $14 $55-57
Net interest expense (1) $13 $13 $12 $49-51
(1) Interest expense excludes the impact of adopting a new accounting
standard that changed the method used to account for the company's
Convertible Notes.
Conference Call
Chiquita will hold a conference call for investors to discuss its results
at
NON-GAAP MEASUREMENTS
The company reports its financial results in accordance with generally
accepted accounting principles in
ITEMS AFFECTING COMPARABILITY
(See Exhibit B for Reconciliation of GAAP and Non-GAAP Operating Information)
Third Quarter 2009 & 2008 Items
- Restructuring related costs: In the fourth quarter of 2008, the company
committed to relocate its European headquarters from Belgium to
Switzerland in order to optimize the company's long-term tax structure.
The relocation, which is now substantially complete, is expected to
result in one-time costs of approximately US$19 million, of which US$2
million and US$1 million were recognized in the third quarters of 2009
and 2008, respectively, US$4 million in the second quarter of 2009,
US$5 million in the first quarter of 2009, and US$7 million recognized
in prior periods. As shown in Exhibit B, restructuring related costs
are included in reportable figures as a component of operating income,
but are not allocated to the reportable segments.
- Incremental non-cash interest expense on Convertible Notes: As
previously disclosed, the company retrospectively adopted new
accounting standards related to its convertible debt instruments. These
new standards changed the method of accounting for, and increased the
amount of reported GAAP interest expense on, the company's US$200
million of 4.25% Convertible Senior Notes. In determining earnings on a
comparable basis, the company excludes the additional non-cash interest
expense that results from the application of these new accounting
standards. This higher non-cash interest expense was US$2 million for
both the third quarters in 2009 and 2008, and will be US$7 million and
US$5 million, respectively, for the full years 2009 and 2008.
About Chiquita Brands International, Inc.
Chiquita Brands International, Inc. (NYSE: CQB) is a leading
international marketer and distributor of high-quality fresh and value-added
food products - from energy-rich bananas and other fruits to nutritious
blends of convenient green salads. The company markets its healthy, fresh
products under the Chiquita(R) and Fresh Express(R) premium brands and other
related trademarks. With annual revenues of nearly
Forward-looking Statements
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, many of which are beyond the control of Chiquita,
including: the customary risks experienced by global food companies, such as
prices for commodity and other inputs, currency exchange rate fluctuations,
industry and competitive conditions (all of which may be more unpredictable
in light of uncertainty in the global economic environment), government
regulations, food safety issues and product recalls affecting the company or
the industry, labor relations, taxes, political instability and terrorism;
unusual weather events, conditions or crop risks; access to and cost of
financing; any negative operating or other impacts from the relocation of the
company's European headquarters to
Any forward-looking statements made in this press release 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. Additional information on factors that could influence Chiquita's financial results is included in its SEC filings, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Exhibit A:
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENT
(Unaudited - in millions, except per share amounts)
Quarter Ended Nine Months Ended
Sept 30, Sept 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $801 $840 $2,597 $2,770
---- ---- ------ ------
Operating expenses:
Cost of sales 669 734 2,128 2,321
Selling, general and
administrative 91 94 262 275
Depreciation 13 14 39 48
Amortization 3 2 8 7
Equity in earnings of
investees (0) (1) (16) (7)
European headquarters
relocation 2 1 11 2
--- --- --- ---
778 845 2,432 2,646
--- --- ----- -----
Operating income (loss) 23 (5) 166 124
Interest income 2 2 4 5
Interest expense(1) (15) (18) (47) (64)
(Loss) gain on debt
extinguishment, net (0) 10 (0) 10
Other income(2) - - - 9
--- --- --- ---
Income (loss) from continuing
operations before taxes 9 (12) 122 84
Income tax (expense) benefit (4) 4 (5) (2)
-- - -- --
Income (loss) from continuing
operations 5 (7) 117 82
Income from discontinued
operations - 0 - 2
--- --- --- ---
Net income (loss) $5 $(7) $117 $85
== === ==== ===
Basic earnings per share:
Continuing operations $0.11 $(0.16) $2.63 $1.89
Discontinued operations - 0.00 - 0.06
--- ---- --- ----
$0.11 $(0.16) $2.63 $1.95
===== ====== ===== =====
Diluted earnings per share:
Continuing operations $0.11 $(0.16) $2.58 $1.85
Discontinued operations - 0.00 - 0.05
--- ---- --- ----
$0.11 $(0.16) $2.58 $1.90
===== ====== ===== =====
Shares used to calculate basic
earnings per share 44.7 44.2 44.5 43.5
Shares used to calculate
diluted earnings per share 45.2 44.2 45.4 44.6
Table may not total due to rounding.
(1) Nine months ended September 30, 2008 includes $9 million of
"Interest expense" for the write-off of deferred fees related
to the refinancing of the company's credit facility. 2008
amounts differ from those previously reported due to the adoption
of new accounting standards related to the Convertible Notes.
(2) Other income includes the resolution of a claim related to a
non-income tax refund. An offsetting $3 million of related
expense is included in "Income tax (expense) benefit."
Exhibit B:
CHIQUITA BRANDS INTERNATIONAL, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
OPERATING INCOME (LOSS) - THIRD QUARTER & NINE MONTHS
(Unaudited - in millions)
Salads & Operating
Healthy Other Restruc- income
Bananas Snacks Produce Corporate turing (loss)
Q3 2009 ------- -------- ------- --------- -------- ---------
Reconciliation
---------------
Comparable results
(Non-GAAP) $22 $24 $(2) $(19) $- $25
Restructuring
related costs - - - - (2) (2)
--- --- --- --- --- ---
Reported results
(GAAP) $22 $24 $(2) $(19) $(2) $23
=== === === ==== === ===
YTD 2009
Reconciliation
---------------
Comparable results
(Non-GAAP) $158 $67 $5 $(57) $- $173
Gain on
divestitures 4 - - - - 4
Restructuring
related costs - - - - (11) (11)
--- --- --- --- --- ---
Reported results
(GAAP) $162 $67 $5 $(57) $(11) $166
==== === == ==== ==== ====
Q3 2008
Reconciliation
---------------
Comparable results
(Non-GAAP) $22 $(8) $0 $(17) $- $(4)
Restructuring
related costs - - - - (1) (1)
--- --- --- --- -- --
Reported results
(GAAP) $22 $(8) $0 $(17) $(1) $(5)
=== === == ==== === ===
YTD 2008
Reconciliation
---------------
Comparable results
(Non-GAAP) $171 $(11) $8 $(43) $- $126
Restructuring
related costs - - - - (2) (2)
--- --- --- --- -- --
Reported results
(GAAP) $171 $(11) $8 $(43) $(2) $124
==== ==== == ==== === ====
Table may not total due to rounding.
Exhibit C:
CHIQUITA BRANDS INTERNATIONAL, INC.
OPERATING STATISTICS - THIRD QUARTER & NINE MONTHS
(Unaudited - in millions, except for percentages and exchange rates)
Percent Percent
Change Nine Change
Quarter Ended Favorable Months ended Favorable
September 30, (Unfavorable) September 30, (Unfavorable)
2009 2008 vs. 2008 2009 2008 vs. 2008
Net sales by
segment
Bananas $472 $474 (0.4)% $1,513 $1,564 (3.3)%
Salads and
Healthy Snacks 289 325 (11.1)% 875 1,010 (13.4)%
Other Produce 40 42 (3.5)% 209 196 6.5%
-- -- ----- --- --- ---
Total net
sales $801 $840 (4.6)% $2,597 $2,770 (6.2)%
Comparable segment
operating income
(loss)(1)
Bananas $22 $22 3.7% $158 $171 (7.6)%
Salads and
Healthy Snacks 24 (8) N/A 67 (11) N/A
Other Produce (2) 0 N/A 5 8 (37.3)%
Corporate (19) (17) (9.7)% (57) (43) (33.7)%
--- --- ----- --- --- ------
Total operating
income (loss) $25 $(4) N/A $173 $126 37.4%
Comparable
operating margin
by segment
Bananas 4.7% 4.6% 0.2pts 10.7% 11.0% (0.3)pts
Salads and
Healthy Snacks 8.4% (2.6)% 11.0pts 7.6% (1.1)% 8.7pts
Other Produce (5.3)% 0.5% (5.8)pts 2.5% 4.2% (1.7)pts
SG&A as a percent
of sales 11.3% 11.2% (0.1)pts 10.1% 9.9% (0.2)pts
Company banana
sales volume
(40 lb. boxes)
North America 15.7 15.3 2.6% 46.9 46.6 0.6%
Europe &
Middle East
Core European
markets(2) 9.8 11.6 (15.5)% 33.4 36.8 (9.2)%
Mediterranean
& Middle
East 5.8 3.6 61.1% 13.9 10.1 37.6%
Banana Pricing
North America (0.2)% 4.9%
Core European
markets(2)
U.S. Dollar 3.0% (3.8)%
Local 9.7% 7.4%
Fresh Express-branded
retail value-added
salads
Volume (12-count
cases) 15.7 15.6 0.9% 49.4 49.0 0.9%
Pricing(3) 0.7% 0.9%
Euro average
exchange rate,
spot (dollars
per euro) $1.42 $1.51 (6.0)% $1.35 $1.52 (11.2)%
Euro average
exchange rate,
hedged (dollars
per euro) $1.40 $1.49 (6.0)% $1.36 $1.49 (8.7)%
Table may not total due to rounding.
(1) See detailed description of reconciling items between GAAP and
comparable basis figures in Exhibit B and in the text of this press
release under the heading titled "Items affecting comparability."
(2) The company's core European Markets include the 27 member states of
the European Union, Switzerland, Norway and Iceland.
(3) Pricing is for Fresh Express-branded products only, and includes
fuel and regulatory surcharges.
Exhibit D:
EUROPEAN CURRENCY
YEAR-OVER-YEAR CHANGE - FAVORABLE (UNFAVORABLE)
2009 vs. 2008
(Unaudited - in millions)
Currency Impact (Euro/Dollar) Q3 YTD
---- ---
Revenue $(13) $(93)
Local Costs 5 26
Hedging(1) 0 15
Balance sheet translation(2) 5 3
--- ---
Net European currency impact $(3) $(48)
=== ====
Table may not total due to rounding.
(1) Hedging costs were $2 million in each of the third quarters of
2009 and 2008. Hedging gains for YTD 2009 were $2 million compared
to costs of $13 million for YTD 2008.
(2) Balance sheet translation for the third quarter of 2009 was a gain
of $2 million compared to a loss of $3 million in the third quarter
of 2008. Balance sheet translation for YTD 2009 was a gain of $1
million compared to a loss of $2 million for YTD 2008.