Chiquita Reports Improved Third Quarter 2008 Results

31/10/08 Chiquita Brands International, Inc. released financial and operating results for the third quarter 2008. For continuing operations, the company reported net sales of $840 million, up 7 percent year-over-year, and a net loss of $6 million, or $(0.13) per diluted share, compared to a net loss of $26 million, or $(0.61) per diluted share, in the year-ago period. The 2008 quarter included a gain of $10 million, or $0.22 per diluted share, from repurchases of senior notes, and the 2007 quarter included a charge of $4 million, or $(0.09) per share, related to the exit of owned operations in Chile. All financial results in this press release are for continuing operations only, unless otherwise stated.

"Our operating results improved over last year," said Fernando Aguirre, chairman and chief executive officer. "Our pricing discipline and focus on profitability has improved the year-on-year performance of our banana segment for the fifth consecutive quarter, which more than offset lower results in our salad operations. We are making progress on all the elements of our profit improvement plans for salads, including permanent contract pricing and fuel related surcharges, to deliver better margins over time. Looking ahead, we continue to expect to achieve significantly better operating results for the full year versus 2007."

Mr. Aguirre added, "As we committed to investors, we used most of the proceeds from the sale of Atlanta AG to reduce debt. We repurchased senior notes at prices that reflect an attractive long-term value for shareholders. Our improved operating performance, strong capital structure and liquidity enable us to remain focused on executing our profitable growth strategy, despite turmoil in global financial markets. While others are restructuring their operations and addressing balance sheet concerns, we have already delivered in these areas and our year-to-date results demonstrate that we are a compelling long-term investment opportunity."

Third quarter 2008 includes a net gain of approximately $10 million, or $0.22 per diluted share, related to open market repurchases of $66 million principal amount of senior notes using $55 million of cash. The senior note repurchase program was completed in October 2008, through the use of an additional $20 million in cash to repurchase $25 million principal amount of senior notes, for an additional net gain of $4 million.

-- Net sales: Quarterly sales rose primarily due to higher banana pricing in North America and favorable average euro exchange rates, partly offset by lower banana volumes in core European markets.

-- Operating income: Quarterly operating losses decreased year-over-year due to higher banana pricing in North America, favorable average euro exchange rates and savings from the company's business restructuring, offset by continued weakness in salad operations. For third quarter net sales and operating income information by segment, see Exhibit A.

-- Total debt: Adjusted for completion of the senior note repurchase program in October, the company's total debt would have been $780 million at September 30, 2008, and its debt-to-capital ratio would have been 44 percent versus a long-term target of 40 percent. See the detailed debt schedule in Exhibit F and the senior note repurchases discussion below.

ATLANTA AG SALE COMPLETION

As previously announced, the company completed the sale of its wholly owned German subsidiary Atlanta AG to UNIVEG Fruit and Vegetables BV in August 2008 for net proceeds of $94 million, resulting in a net gain on sale of approximately $1 million.

SENIOR NOTE REPURCHASES

As it had committed, the company used most of the proceeds of the Atlanta AG sale to reduce debt. During September and October 2008, the company used approximately $75 million of cash to repurchase a total of $91 million principal amount of its 7 1/2% senior notes due 2014 and 8 7/8% senior notes due 2015 in the open market, as shown below. The repurchases resulted in net gains of approximately $10 million in the third quarter and $4 million in the fourth quarter.

Adjusted figures reflect the repurchase of $25 million in senior notes during October 2008, as detailed in Exhibit F.

On an adjusted basis reflecting the completion of the senior note repurchase program in October 2008, the company had $150 million in cash and cash equivalents at the end of the third quarter 2008, a bank revolving credit facility with approximately $129 million in available borrowing capacity, and debt maturities of no more than $20 million per year until 2014. In addition, annualized interest expense will be reduced by approximately $8 million as a result of the repurchases.

EUROPEAN HEADQUARTERS RELOCATION

In late October 2008, the company committed to the relocation of its European headquarters from Belgium to Switzerland, which is expected to be completed in 2009. The company expects to incur one-time costs related to this relocation in the range of $15-25 million, of which approximately $5-9 million will be recognized in the fourth quarter of 2008 and most of the remainder will be recognized in the first half of 2009. This relocation is expected to optimize the company's long-term tax structure.