Saturday, March 15, 2003

Chiquita consults with SEC on bankruptcy write-downs

The Associated Press

Chiquita Brands International Inc. said Friday it is seeking guidance from federal regulators about when the company's books should show financial write-downs from Chiquita's emergence from bankruptcy reorganization.

Chiquita said it is talking with the Securities and Exchange Commission about whether its books should reflect some of those write-downs in periods before its March 2002 emergence from Chapter 11 bankruptcy reorganization.

Chiquita officials said they initiated the talks with the SEC about accounting issues. They said they expect to resolve the issue before Chiquita files its 2002 annual report by the end of March.

Chiquita said the issue, concerning the noncash write-downs, does not affect the company's post-bankruptcy financial statements because the write-downs have already been reflected in the company's balance sheet of March 31, 2002.

For the first quarter of 2002, Chiquita said it followed the accounting method required for companies emerging from bankruptcy, referred to as "fresh start." Under this method, a company's assets and liabilities are recorded at estimated current fair value when the company gets out of bankruptcy. For Chiquita, this resulted in $170 million in write-downs of long-term equity investments.

Chiquita officials said they are asking whether long-term investments accounted for under the equity method need to be written down in periods before the company's emergence from bankruptcy. The company had analyzed its undiscounted cash flows and determined that no write-downs were required in those periods.

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