This summary is based on the first quarter fiscal 2007 earnings call conducted by Chiquita Brands International, Inc. (CQB: chart) on May 01, 2007.

Director of Corporate Communications: Michael Mitchell
Chairman, President and Chief Executive Officer: Fernando Aguirre
Senior Vice President and Chief Financial Officer: Jeffrey M. Zalla

Key Investors Issues

- EPS were a loss of 8 cents per share compared to 46 cents per share a last year.
- Net income was a loss of $3.4 million compared to $19.5 million.
- Revenue increased to $1.2 billion compared to $1.15 billion a year ago.

First Quarter Highlights

Net sales rose 3% to $1.2 billion driven by banana volume growth in Europe and North America as well as favorable European exchange rates.

The company incurred a net loss of $3 million or 8 cents per share including a $5 million charge or 12 cents per share to exit unprofitable farm leases in Chile. This compares to net income of $20 million or 46 cents per share in the year ago quarter. The company’s operating income was $18 million compared to $39 million in the year ago quarter.

Operating cash flow improved to $6 million use of cash compared to a $19 million use of cash in the year ago period.

The improvement reflects the efficiencies in use of working capital mostly through fewer days, sales outstanding and receivables partly offset by the lower operating results.

Operating income decreased year-over-year due to higher purchased fruit and other industry costs, lower local banana pricing in the European market, higher costs due to a record January freeze in Arizona, which affected lettuce sourcing, and the charge related to a decision to exit certain farm leases in Chile. These were partially offset by favorable year-over-year European exchange rates and the absence of residual costs from Tropical Storm Gamma that affected the year-ago period.

The increase in total debt was due to $36 million of borrowings on the company''s revolving credit facility, which brought total borrowings under the facility to $80 million at March 31, 2007, compared to $27 million at March 31, 2006. The company repaid $16 million in April and currently expects to repay all outstanding borrowings under its revolving credit facility by the end of the second quarter 2007. The company expects to apply excess cash flow primarily to pay down debt until it reaches its target total debt-to-capital ratio of 40%. At March 31, 2007, this ratio was 55% and would have been 51% pro forma for the debt reduction resulting from the ship sale transaction described below.

Chiquita has modified its reportable business segments to better align with the company''s current internal management reporting procedures and practices of other consumer food companies.

Beginning in 2007, the company reports three business segments:

- Bananas: This segment includes the sourcing (purchase and production), transportation, marketing and distribution of bananas.
- Salads and Healthy Snacks: This segment includes value-added salads, fresh vegetable and fruit ingredients used in foodservice, fresh-cut fruit operations, and processed fruit ingredient products.
- Other Produce: This segment includes the sourcing, marketing and distribution of whole fresh fruits and vegetables other than bananas.

In addition, to provide more transparency to the operating results of each segment, the company no longer allocates certain corporate expenses to the reportable segments. These expenses are now included in ""Corporate."" Prior- period figures have been reclassified to reflect these changes.

Net sales for the bananas segment increased 8% to $523 million. Segment operating income was $33 million, compared to $37 million in the same quarter in 2006.

Segment operating income was adversely affected by the following factors:

- $17 million of net industry cost increases for purchased fruit, paper, ship charters and fuel, which was in line with previous company guidance.
- $10 million from lower European local banana pricing.
- $5 million of fuel hedging gains in the first quarter 2006 that did not recur.
- $3 million due to higher European tariff costs.
- $3 million of other higher costs.

These adverse items were partially offset by:

- $16 million benefit from the absence of residual costs related to Tropical Storm Gamma, which occurred in the fourth quarter 2005 and affected sourcing, logistics and other costs in the 2006 first quarter. (The company noted that it incurred $8 million of such costs in the second quarter 2006, which will not recur in the second quarter 2007.)
- $13 million benefit from the impact of European currency.
- $3 million from lower incentive compensation accruals.
- $3 million of cost savings, primarily related to efficiencies in the company''s supply chain and tropical production.