10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2006 or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from              to             

Commission File Number 1-1550

CHIQUITA BRANDS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

New Jersey	04-1923360
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
250 East Fifth Street, Cincinnati, Ohio	45202
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (513) 784-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock, par value $.01 per share	New York
Warrants to Subscribe for Common Stock	New York

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of Common Stock held by non-affiliates at June 30, 2006, the last business day of the registrant’s most recently completed second quarter, was approximately $575 million.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  x    No  ¨

As of February 15, 2007, 42,372,776 shares of Common Stock were outstanding.

Documents Incorporated by Reference

Portions of the Chiquita Brands International, Inc. 2006 Annual Report to Shareholders are incorporated by reference in Parts I and II. Portions of the Proxy Statement for the 2007 Annual Meeting of Shareholders are incorporated by reference in Part III.

CHIQUITA BRANDS INTERNATIONAL, INC.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	1
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	23
Item 3.	Legal Proceedings	24
Item 4.	Submission of Matters to a Vote of Security Holders	28
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	29
Item 9A.	Controls and Procedures	30
Item 9B.	Other Information	30
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	31
Item 11.	Executive Compensation	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accountant Fees and Services	33
Part IV
Item 15.	Exhibits and Financial Statement Schedules	34
Signatures		35

This Annual Report on Form 10-K 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 impact of the 2006 conversion to a tariff-only banana import regime in the European Union; unusual weather conditions; industry and competitive conditions; financing; product recalls and other events affecting the industry and consumer confidence in the company’s products; the customary risks experienced by global food companies, such as the impact of product and commodity prices, food safety, currency exchange rate fluctuations, government regulations, labor relations, taxes, crop risks, political instability and terrorism; and the outcome of pending governmental investigations and claims involving the company. See “Risk Factors” for further information.

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.

PART I

ITEM 1- BUSINESS

GENERAL

Chiquita Brands International, Inc. (“CBII”) and its subsidiaries (collectively, “Chiquita” or the company) operate as a leading international marketer and distributor of bananas and other fresh produce sold under the “Chiquita” and other brand names in approximately 80 countries, and packaged salads sold under the “Fresh Express” brand name primarily in the United States. The company also distributes and markets fresh-cut fruit and other branded, value-added fruit-based products. The company produces approximately 30% of the bananas it markets on its own farms, and purchases the remainder of the bananas, all of the lettuce and substantially all of the other fresh produce from third-party suppliers throughout the world.

In June 2005, the company purchased the Fresh Express packaged salad and fresh-cut fruit business from Performance Food Group (“PFG”) for $855 million in cash. The company believes that the Fresh Express acquisition diversified its business, accelerated revenue growth in higher margin value-added products and provided a more balanced mix of sales between Europe and North America, which makes the company less susceptible to risks unique to Europe, such as the recent changes to the European Union (“EU”) banana import regime and foreign exchange risk.

In 2006, the company outlined its vision to become a global leader in branded, healthy, fresh foods, and refined its strategic objectives to include:

• Become a consumer-driven, customer-preferred company. Chiquita’s objective is to hold the No. 1 or No. 2 value share in each product category in which it competes and to hold the No. 1 value share with its top customers. In Europe, the company is the market leader and obtains a price premium for its Chiquita^® bananas. In North America, the company is the market leader and obtains a price premium in value-added salads with the Fresh Express^® brand and maintains a No. 2 market position in bananas.

The company is keenly focused on meeting consumer needs for healthy, convenient and fresh foods and on meeting customer needs by excelling in category management, product quality, customer service and in-store execution. In 2006, for example, Progressive Grocer magazine recognized Chiquita and Fresh Express as “Category All-Stars” for having won at least five Category Captain awards for exceptional category management over the past 10 years: Chiquita won for the eighth consecutive year and Fresh Express for the sixth consecutive year.

• Be an innovative, high-performance organization. Chiquita’s objectives are to attract, engage and retain high-performing employees, apply best-in-class people practices to ensure the company has the right people in the right jobs, leverage processes and technology to improve decision making, employ conservative financial practices and continue to demonstrate leadership in corporate responsibility.

In addition, the company intends to generate increasing revenues from new value-added products. The growing desire of consumers for healthy, fresh and convenient food choices has driven the company’s innovations. A major focus is innovation in products, technology and marketing, including expanding distribution channels, extending product shelf life and developing new product varieties. In 2006, the company expanded its distribution of convenient, single “Chiquita-To-Go” bananas into 8,000 non-grocery convenience outlets. In addition, “Chiquita Fresh and

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Ready,” packages of three individual bananas for sale in traditional grocery stores, was introduced for testing in late 2006 as an innovative way for consumers to keep bananas fresher for up to four days longer. The company also continued to leverage Fresh Express’ reputation for innovation and customer service to launch new products and increase distribution outlets. In 2006, Fresh Express expanded its line of ready-to-eat salad kits and premium value-added salads with 12 new offerings. According to an Information Resources, Inc. report released in November, two of these new products, “5-Lettuce Mix” and “Sweet Butter” blends, were the top two new items across all categories introduced in U.S. supermarkets in the third quarter. Chiquita intends to continue providing differentiated, value-added products and services in ways it believes better satisfy consumers, increase retailer profitability and boost the in-store presence of Chiquita and Fresh Express branded products.

• Deliver leading food industry shareholder returns. Chiquita is committed to profitable growth by focusing on healthy, value-added, higher-margin products, and selectively investing in markets that have the greatest potential for profitable growth. The company remains focused on cost savings in both production and logistics, including synergies achieved by combining the strengths of Chiquita and Fresh Express.

Chiquita believes the following competitive strengths should enable the company to adjust to challenges in its business and to capitalize on future growth opportunities.

• Powerful Brand. Chiquita believes that customers and consumers associate the Chiquita brand with healthy, fresh and high-quality food products and that opportunities exist to leverage the Chiquita brand through product extensions and new product introductions. Fresh Express is the North American industry leader in packaged salads and its brand is synonymous with healthy and fresh products.

• High Quality Products and Value-Added Services. Chiquita believes it delivers value to its retail customers by providing high-quality products and value-added services in customer service and category management.

• Strong Market Positions. Chiquita holds the No. 1 value share position in U.S. value-added salads at retail. The company also holds the No. 1 market share for bananas in the European Union and holds the No. 2 market position in North America.

• Competitive Supply and Logistics Costs. Chiquita believes that it is able to produce and/or source bananas, lettuce and other fresh produce and deliver them to customers at competitive costs. This competitive position has resulted, in part, from gains achieved in recent years in improving farm productivity, diversifying the company’s supplier base, reducing waste, divesting nonproductive assets, centralizing purchasing and improving efficiency throughout its global supply chain operations.

• Geographic Diversity of Sourcing. Chiquita maintains wide geographic diversity in its sourcing of bananas or other produce, which reduces its risk from natural disasters, labor disruptions and other supply interruptions in any one particular country. Sourcing in both the northern and southern hemispheres permits Chiquita to provide many produce varieties year-round. For its leafy green products, Chiquita sources from independent growers in California, Arizona and Mexico.

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• High Level of Corporate Responsibility. Chiquita manages its operations in accordance with its Core Values – Integrity, Respect, Opportunity and Responsibility – and the Chiquita Code of Conduct that clearly defines its standards. The company’s goal is to achieve high environmental, social and ethical standards while balancing stakeholder interests. For example, 100 percent of Chiquita’s owned banana farms in Latin America have been certified to the Rainforest Alliance standard since 2000, in spite of increasingly stringent requirements in annual third-party audits. In 2004, 100 percent of the company’s owned farms in Latin America were certified to the Social Accountability 8000 social standard, and in 2005, 100 percent achieved certification to the EUREPGAP food safety standard.

BUSINESS SEGMENTS

Since the acquisition of Fresh Express in June 2005, the company has reported three business segments: Bananas, Fresh Select, and Fresh Cut. The Banana segment includes the sourcing (purchase and production), transportation, marketing and distribution of bananas. The Fresh Select segment includes the sourcing, marketing and distribution of whole fresh fruits and vegetables other than bananas. The Fresh Cut segment includes value-added salads, foodservice and fresh-cut fruit operations. Remaining operations, which are reported in “Other,” primarily consist of processed fruit ingredient products, which are produced in Latin America and sold in other parts of the world, and other consumer packaged goods. The company evaluates the performance of its business segments based on operating income.

No individual customer accounted for more than 10% of the company’s net sales during any of the last three years.

Banana Segment

Chiquita sources, distributes and markets bananas sold under the “Chiquita” and other brand names. Banana segment net sales were $1.9 billion in 2006 and 2005 and $1.7 billion for 2004. Banana sales amounted to approximately 43% of Chiquita’s consolidated net sales in 2006, 50% in 2005 and 55% in 2004. In 2006 and 2005, approximately 70% of banana sales were in Europe and other international markets, and the remainder was in North America. Chiquita also markets bananas in the Middle East and in the Far East, primarily through a joint venture that sources its bananas from the Philippines.

Competition

Bananas are distributed and marketed internationally in a highly competitive environment. Although smaller companies, including growers’ cooperatives, are a competitive factor, Chiquita’s primary competitors are a limited number of other international banana importers and exporters, principally Dole Food Company, Inc., Fresh Del Monte Produce, Inc. and Fyffes plc. To compete successfully, Chiquita must be able to source bananas of uniformly high quality at a competitive cost, maintain strong customer relationships, and quickly and reliably transport and distribute products to worldwide markets. In 2006, the company experienced lower pricing in the EU, in part due to regulatory changes that resulted in an increase in competitive volume entering the market.

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Markets, Customers and Distribution

Chiquita’s principal markets are North America and Europe. The company sells approximately one-fourth of all bananas imported into each of these markets. The joint venture through which Chiquita operates in the Far East market sells approximately 15% of bananas imported into Japan. In Europe, the company’s core market is the 25 EU countries plus Norway, Switzerland, and Iceland. The company also sells bananas in other countries in the region, including the remainder of Europe, Russia and the Mediterranean, usually referred to as “trading markets.” The volume of fruit sold into trading markets typically reflects excess banana supplies beyond core market demands, sold on a spot basis. Beginning in 2007, the company anticipates less volume being available to trading markets as a result of recent marketing agreements to provide a year-round supply of bananas to customers in Turkey, which in the future will be included in the company’s core European markets. For information on the impact of recent changes in the EU banana import regime, see “Item 1A – Risk Factors.”

Chiquita’s customers are primarily retailers and wholesalers. To a significant extent in North America, and increasingly in Europe, the company’s retail customers are large chain stores. Continuing industry consolidation has increased the buying leverage of these major domestic and international grocery retailers. Both retailers and wholesalers are generally seeking fewer suppliers that can provide a wider range of fresh produce.

The company has regional sales organizations to service major retail customers and wholesalers. In most cases, these organizations provide services for both bananas and other fresh produce. The company’s goal is to ensure a consistent supply of premium fruit to satisfy these customers. In addition, the sales organizations provide customer support, including assistance with transportation and logistics, ripening, and banana and produce category management. In both Europe and North America, the company sells “green” (unripened) bananas and “yellow” (ripened) bananas, which are ripened in its own facilities. Many customers have their own facilities to ripen “green” bananas purchased from the company or other sources; in some cases, Chiquita provides technical advice or operates the customers’ ripening facilities. Chiquita also provides retail marketing support services for its customers. These ripening, advisory and support services help the company develop and strengthen long-term supply relationships with customers.

In North America, Chiquita enters into product and service contracts with large retail customers, most often for one year. Approximately 90% of the volume sold in North America is sold under these contracts. The arrangements typically include agreed-upon pricing, although price levels may fluctuate seasonally. An advantage of these contracts is that they stabilize demand and pricing throughout the year and reduce the company’s exposure to volatile spot market prices and supply and demand imbalances. A disadvantage is that the company may not be able to pass on unexpected cost increases when they arise or may not be able to take advantage of short-term, market-driven price increases due to short supply or other factors.

In recent years, the company has been exploring additional distribution channels for bananas. Traditionally, it was not economically feasible to distribute single bananas to quick service restaurants and convenience stores because of the high spoilage rates when bananas are not kept under controlled conditions and when they cannot be delivered frequently. In September 2004, Chiquita signed a Joint Technology Development and Supply Agreement with a subsidiary of Landec Corporation to obtain patented packaging technology which extends the shelf-life of bananas and allows their distribution through these channels. Using this technology, Chiquita currently distributes bananas, in boxes with 40 individual fingers, to approximately 8,000 non-traditional retail outlets and has plans to more than double this business by the end of 2007.

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Pricing

The selling price received for bananas depends on several factors, including their availability and quality in relation to competing produce items. Banana pricing is seasonal because bananas compete against other fresh fruit, a major portion of which comes to market in the summer and fall. As a result, banana prices and Chiquita’s Banana segment results are typically stronger during the first half of the year. Although Chiquita has increased the amount of bananas it sells under fixed-price contracts, even these contracts often include differential pricing, with higher pricing in the first half of the year and lower pricing in the second half. See “Markets, Customers and Distribution.” Because of the strength of the “Chiquita” brand and the company’s reputation for consistent product quality, leadership in consumer marketing and category management, and innovative ripening techniques, Chiquita generally obtains a premium price for its bananas sold in Europe and, to a much lesser extent, in North America.

Sourcing

Bananas grow in tropical climates where the temperature generally does not fall below 50 degrees Fahrenheit. A healthy banana plant can produce fruit for harvest approximately every seven months. After harvest, bananas are washed, and, in most cases, cut into clusters and packed into 40-pound boxes. The boxes of bananas are placed on pallets and loaded into containers for shipment.

During 2006, approximately one-fifth of all bananas sold by Chiquita were sourced from each of Costa Rica and Guatemala. Chiquita also sources bananas from numerous other countries, including Panama, Ecuador, Colombia, Honduras and the Ivory Coast. In 2006, approximately 30% of the bananas sourced by Chiquita were produced by subsidiaries and the remainder were purchased from independent growers under short and long-term fruit supply contracts in which Chiquita takes title to the fruit, either at packing stations or once loaded aboard ships. Chiquita maintains broad geographic diversification in purchased bananas, but relies to a significant extent on long-term relationships with certain large growers. In 2006, Chiquita’s four largest independent growers, which operate in Guatemala, Ecuador, Colombia and Costa Rica, provided approximately 60% of Chiquita’s total volume of purchased bananas from Latin America.

Purchasing bananas allows the company to reduce its financial and operating risks and avoid the substantial capital required to maintain and finance banana farms. Typically, banana purchase agreements have multi-year terms, in some cases as long as 10 years. However, the applicable prices under some of these agreements may be renegotiated annually or every other year and, if new purchase prices cannot be agreed upon, the contracts will terminate. Most of the long-term purchase agreements include provisions relating to agricultural practices, packing and fruit handling, environmental practices, food safety, social responsibility standards, penalties payable by Chiquita if it does not take delivery of contracted fruit due to poor market conditions, penalties payable by the grower for shortages to contracted volumes and provisions common to contracts for the international sale of goods. Normally, the prices paid to suppliers under the contracts are higher in the first half of the year, when market prices are also typically higher. Under some fruit supply arrangements, Chiquita provides the growers with technical assistance related to production and packing of bananas for shipment.

Chiquita believes that its agricultural practices contribute to the quality of the bananas it produces. Since Chiquita specifies many of the same requirements for its growers, many of these practices are followed by them, as well.

The production of bananas is vulnerable to (i) adverse weather conditions, including windstorms, floods, drought and temperature extremes, (ii) natural disasters, such as earthquakes and hurricanes, (iii)

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crop disease, such as the leaf fungus black sigatoka, and (iv) pests. See “Item 1A - Risk Factors” for further information on risks inherent in the production of bananas.

Labor costs in the tropics for the company’s owned production of bananas represented 2% of the company’s total operating costs in 2006. These costs vary depending on the country of origin. To a lesser extent, paper costs are important since bananas are packed in cardboard boxes for shipment.

Logistics

Bananas distributed internationally are transported primarily by refrigerated, ocean-going vessels. Due to their highly perishable nature, bananas must be brought to market and sold generally within 30 to 40 days after harvest. This requires efficient logistics processes in loading, unloading, transporting and delivering fruit from the farm to the outbound port, from the source country to the market country, and from the inbound port to the customer. Chiquita ships its bananas in vessels owned or chartered by the company. These ships are highly specialized, in both size and technology, for international trade in bananas and other refrigerated products. All but one of the company’s owned vessels are equipped with controlled atmosphere technology, which improves product quality and helps suspend the banana ripening process during shipment. Chiquita’s owned ships transported approximately 70% of its aggregate banana volume from Latin America to core markets in North America and Europe in 2006. Its remaining capacity for these activities is operated under contractual arrangements having terms of one to three years. (See also “Item 2 - Properties” and Notes 5 and 6 to the Consolidated Financial Statements included in Exhibit 13.)

In September 2006, the company announced that it is exploring strategic alternatives with respect to the sale and long-term management of its overseas shipping assets and shipping-related logistics activities. Great White Fleet, Ltd., a wholly-owned subsidiary of Chiquita, manages the company’s global ocean transportation and logistics operations. Great White Fleet operates 12 owned refrigerated cargo vessels and charters additional vessels. The owned vessels, consisting of eight reefer ships and four container ships, are included in the Banana segment. The company will consider various structures, including the sale and leaseback of the company’s owned ocean-going shipping fleet, the sale and/or outsourcing of related ocean-shipping assets and container operations, and entry into a long-term strategic partnership to meet all Chiquita’s international cargo transportation needs. Proceeds from a sale would be used primarily to repay debt, including $101 million of shipping-related debt outstanding at December 31, 2006 and up to $80 million of term loans outstanding under the company’s credit facility.

From time to time, the company has experienced interruptions in its shipping, for reasons such as mechanical breakdown or damage to a ship, strikes at ports, and port damage due to weather. For example, in 2005, the company suffered severe damage to its port facilities in Gulfport, Mississippi as a result of Hurricane Katrina. Although the company believes it carries adequate insurance and attempts to transport products by alternative means in the event of an interruption, an extended interruption could have a significant adverse impact on the company.

Although Chiquita believes it has a cost-efficient transportation system, transportation costs are significant in Chiquita’s business. The price of bunker fuel used in shipping operations is an important variable component of transportation costs. Historically, fuel oil prices have been volatile, and over the last few years there have been significant price increases. Chiquita enters into hedge contracts which permit it to lock in fuel purchase prices for up to three years, and thereby minimize the volatility that fuel prices could have on its operating results. However, these hedging strategies cannot fully protect against continually rising fuel prices, and result in hedging losses when market fuel prices decline. Total logistics costs increased to $350 million in 2006 from $305 million in 2005 and $275 million in 2004. In order to

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reduce ocean transportation costs, the company transports third-party cargo, primarily from North America and Europe, to Latin America. The company also has implemented surcharges to offset weather-related and other rising industry costs; however, it does not recoup all of its increased costs.

Chiquita operates loading and unloading facilities that it owns or leases in Central and South America and various ports of destination in Europe and North America. Most of the ports utilized by the company service relatively large geographic regions for production or distribution. If a port becomes unavailable, the company has to access alternate port facilities and reconfigure its distribution, which can increase its costs. To transport bananas overland to ports in Central and South America and from the ports of destination to the customers, the company uses common carriers. Title to the bananas passes to the customer upon delivery, which is either at the port of destination or the customer’s inland facilities. In certain locations in Latin America, the company operates port facilities for all cargo entering or leaving the port, not just for its own products.

Most of Chiquita’s tropical banana shipments into the North American and core European markets are delivered using containers and pallets. To the extent possible, once the bananas are loaded into containers, they remain in the same containers for transportation from the port of loading through ocean transport, port of arrival, discharge and delivery to customers. This minimizes damage to the bananas by eliminating the need to handle individual boxes or pallets and makes it easier to maintain the bananas at a constant temperature. However, in some cases, particularly in Europe, pallets are unloaded from containers and are loaded into the cargo holds of ships for transport to market.

Bananas are harvested while still green and subsequently ripened. To control quality, bananas are normally ripened under controlled conditions. The company operates pressurized ripening rooms in Europe and North America to manage the ripening process. The company has a proprietary Low-Temperature Ripening process, a state-of-the-art banana ripening technique. The company’s ripening technology enables bananas to be ripened in shipping containers during transit. The company believes this service provides value to customers through improved fruit quality, longer shelf life, lower inventory levels and lower required investment.

Fresh Select Segment

The company distributes and markets an extensive line of fresh fruits and vegetables other than bananas in Europe, North America and the Far East. The major items sold are citrus fruit, stonefruit, apples, grapes, melons, pineapples, kiwi and tomatoes. For the year ended December 31, 2006, sales of the Fresh Select segment were approximately $1.4 billion, with 80% of those sales in Europe. Fresh Select net sales were $1.4 billion and $1.3 billion in 2005 and 2004, respectively.

Competition

Chiquita’s primary competitors in the Fresh Select segment are other wholesalers and distributors of fresh produce, which may be local or national. As the company’s customer base continues to consolidate, more retail customers are seeking fewer distributors who can supply larger geographic areas, offer a broad variety of produce items year-round and provide more logistical and other support services.

Markets, Customers and Distribution

Most Fresh Select sales are in Germany and Austria, where the company operates 20 distribution centers through its Atlanta AG subsidiary. At these locations, daily shipments of a variety of fresh produce are delivered from a variety of producers and importers; the company then recombines these

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items to fill customer orders, in some cases repackaging produce into consumer packaging. The company provides other value-added services, including product sourcing, ripening and logistics. Most of the Fresh Select items sold by Atlanta carry third-party labels. Compared to North America, in Europe the company provides a particularly wide selection of Fresh Select products.

The Atlanta business continuously evaluates its distribution network and closes and/or sells operations, simplifies legal and organizational structures and implements cost reduction programs as necessary. The company’s focus in this business is to continue to centralize and standardize, as well as to continue adding value-added services for customers, such as category management for retailers’ produce departments.

Aside from the Atlanta business, the Fresh Select operations in North America and Europe primarily market produce items under the “Chiquita” brand name. These operations strive to market premium-quality items with a consumer focus. In North America, Chiquita continues to focus on customer service and category management. The European operations are conducted throughout western and southern Europe. As European retailers expand into eastern Europe, there will be a greater opportunity for Chiquita to expand its Fresh Select operations there as well. Substantially all of the Far East operations are currently conducted through a joint venture. The company is investigating opportunities to leverage the brand in Asia and the Middle East in pursuit of profitable growth.

A significant number of the company’s retail customers are large organizations with multiple stores. Continuing industry consolidation has increased the buying leverage of major domestic and international grocery retailers. In certain key European countries, discounters are gaining an increasing share of the market, resulting in continuing pricing pressure.

Sourcing

Sourcing commitments with growers for non-banana fresh produce are generally for one year or less. However, the company sources with many of the same growers year after year and, in some cases, provides financial assistance to certain growers in the form of short-term advances which are repaid when the produce is harvested and sold. The company purchases more than 150 different types of fresh produce from growers and importers around the world. Chiquita sources certain seasonal produce items in both the northern and southern hemispheres in order to increase availability of a wider variety of fresh produce throughout the year. The company tries to procure fresh produce directly from growers wherever possible. This is more difficult with certain produce items in Europe, in which case the company purchases from other distributors; in addition, the company may resort to spot market purchases in local markets to meet customer demand. Other sources are exporters from the country of origin and importers or wholesalers in the country of sale. The company is not heavily dependent on any single grower for Fresh Select products.

Chiquita owns a subsidiary in Chile that sources fresh produce items from that country for marketing in North America, Europe, Asia and Latin America. The primary products sold by Chiquita Chile are grapes, stonefruit, apples, pears, kiwis and avocados. Fruit harvested in Chile, in the southern hemisphere, can be shipped to the northern hemisphere during the winter off-season for fruit. In addition to third-party suppliers, Chiquita Chile leases approximately 5,000 acres in Chile for cultivation of grapes, apples and stonefruit, which produced approximately 45% of its total exported volume in 2006.

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Logistics

Fresh produce is highly perishable and must be brought to market and sold generally within 30 to 60 days after harvest. Some items, such as vegetables, melons and berries, must be sold more quickly, while other items, such as apples and pears, can be held in cold storage for longer periods of time.

The company’s shipping infrastructure for its banana operations in Central and South America provides synergies to permit other fresh produce sourced from the region to be shipped in company-owned or controlled equipment; however, the company generally uses common carriers to transport this fresh produce, and in some cases, particularly in Europe, purchases and takes title to the produce in the local market where it will be sold.

Fresh Cut Segment

The company’s Fresh Cut segment includes value-added salads, foodservice and fresh-cut fruit operations. Net sales of the Fresh Cut segment were approximately $1.1 billion in 2006, $539 million in 2005 and $10 million in 2004. The increase was due to the June 2005 acquisition of the Fresh Express packaged salad and fresh-cut fruit business from Performance Food Group.

Fresh Express is a leading purchaser, processor, packager and distributor of a variety of packaged, ready-to-eat salads and other fresh-cut produce in North America. Fresh Express distributes approximately 300 different Fresh Express branded products nationwide to food retailers as well as foodservice distributors and operators and quick-service restaurants. Fresh Express also distributes over 400 fresh produce foodservice offerings, primarily to third-party distributors for resale mainly to quick-service restaurants located throughout the United States. Fresh Express holds the number one market share in the retail packaged salad sector in North America, with a 48% retail market share as of December 2006. Fresh Express ships an average of 15 million fresh, ready-to-eat branded salad bags to markets across the United States every week. Based upon consumption patterns, volume and corresponding profitability are somewhat higher during the second and third quarters of the year. In addition to its wide variety of salad products, Fresh Express is also a supplier of fresh-cut fruit. Fresh Express is a leader in freshness-extending, controlled and modified atmosphere packaging systems.

Competition

Fresh Express competes with a variety of branded and private label sellers of packaged, ready-to-eat salads. Competitors in the retail market include Dole Food Company, Ready Pac Produce, Earthbound Farms and River Ranch Fresh Foods. Competitors in the foodservice area are predominately national, regional and local processors. There is intense competition from national and large regional processors when selling produce to chain restaurants and independent foodservice distributors, as a result of which Fresh Express may need to market its services to a particular customer over a long period of time before it is even invited to bid. In addition, there are many other processed food and other food and produce sellers who could begin producing packaged salads and other fresh-cut products. Fresh Express believes it distinguishes itself in the area of food safety – see “Health, Environmental and Social Responsibility” below.

Markets, Customers and Distribution

Fresh Express generally serves two customer types, grocery retailers and foodservice customers. The retail packaged salad business is supported by a dedicated sales and marketing organization that includes regional business managers who are responsible for sales to retail grocery accounts within their geographic regions and sales managers who work with a network of brokers across the country to sell

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products, gain business with new retail accounts and introduce new products to existing retail accounts. Fresh Express also provides fresh-cut products, such as lettuce, tomatoes, spinach, cabbage, broccoli, cauliflower, onions and peppers, to foodservice distributors who resell these products to foodservice operators. Customer sales representatives and account managers service these foodservice customers.

Grocery Retailers. Fresh Express distributes packaged ready-to-eat salads and fresh-cut produce products under the Fresh Express brand to retailers. The following table presents information about the Fresh Express retail product lines that represent 10% or more of retail sales:

Name	Description
Blends	Romaine and other fancier lettuce-based salads reflecting in some instances international themes
Tender Leaf Blends	Spring mix and baby spinach blends
Kits	Salads that contain toppings and dressings
Garden	Shredded or chopped iceberg lettuce with portions of shredded red cabbage and shredded carrots
Garden Plus	Iceberg and romaine combinations with additions such as carrots, cabbage or green leaf lettuce

Fresh Express supplies several of the nation’s top retailers. Overall, Fresh Express sells its retail products to a diverse base of customers throughout the United States. Most of its retail accounts are currently under multi-year contracts.

Foodservice. Fresh Express provides value-added produce items to foodservice distributors nationwide for resale mainly to quick service restaurants, including McDonald’s, SUBWAY, Chipotle, Burger King, Domino’s Pizza, Yum! Brands (KFC, Pizza Hut, Long John Silver’s, A&W and Taco Bell), and others. This market currently consists mainly of shredded lettuce; however, Fresh Express has introduced new, higher-margin products into this market, such as premium tender leaf salads. Fresh Express markets to foodservice customers by focusing on large, strategic accounts that provide reliable business at attractive margins, under contracts that typically adjust pricing weekly and allow for the pass-through of raw product and other cost increases.

Sourcing

Fresh Express sources all of its raw products from third-party growers primarily located in California, Arizona and Mexico. Often, Fresh Express enters into contracts with these farmers to help mitigate supply risk and manage exposure to cost fluctuations. Fresh Express works with the growers to develop safe, innovative, quality-enhancing and cost-effective production techniques. These techniques include removing the core of the lettuce in the field, which reduces transportation costs, production costs and processing time, and developing larger crop beds to increase yield. Fresh Express earns royalties from the use of patented technologies it owns associated with certain of these techniques.

Logistics

Once harvested, the produce is typically cooled and shipped by temperature-controlled trucks to a Fresh Express facility where it is inspected, processed, packaged and boxed for shipment. Fresh Express

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has six processing/distribution plants and two distribution facilities. These facilities are located in California, Georgia, Illinois, Pennsylvania and Texas. Orders for packaged, ready-to-eat salads and other fresh-cut produce are generally shipped within 24 hours from the time of processing, primarily to customer distribution centers or third-party distributors for further redistribution. Deliveries are made in temperature-controlled trucks that are contracted for hire by Fresh Express. This distribution network allows for nationwide daily delivery capability and provides consistently fresh products to customers. Furthermore, Fresh Express believes more frequent deliveries allow retailers to better manage their inventory and reduce product spoilage, which helps boost the retailers’ margins.

Fresh-cut Fruit

The fresh-cut fruit business involves purchasing, processing, packaging and distributing a variety of fresh-cut fruit products, including apples, grapes, pineapple, watermelon, cantaloupe and honeydew melon in Chiquita-branded consumer-friendly packaging, in a variety of sizes from single servings and snacks to party trays. The company sources fruit from North and South America, depending on the season, and cuts and packages the fruit in sealed packages. It makes frequent deliveries to customers, which include retailers, such as large grocery chains, and distributors, as well as foodservice customers, primarily quick service restaurants. Its primary competitors are regional producers of branded and private label fresh-cut fruit selections, although many grocery retailers also compete with produce cut and packaged on their premises.

The company’s fresh-cut fruit operations, the products of which are marketed under the “Chiquita” brand and include the “Chiquita Fruit Bites” sliced apple snacks, are sold throughout most of the U.S. The company has fresh-cut fruit processing facilities in Chicago, Atlanta, and Salinas, California. In a growing and rapidly evolving category, the company is continuing to focus on technology, pricing, product mix, marketing and packaging.

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For further information on factors affecting Chiquita’s results of operations, including results by business segment, liquidity and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14 to the Consolidated Financial Statements, both included in Exhibit 13, and “Item 1A - Risk Factors.”

INTELLECTUAL PROPERTY

The Chiquita brand is recognized in North America and many parts of Europe and Asia, and the Chiquita^® trademark is registered in approximately 100 countries. The company believes it is associated with healthy, fresh and high-quality produce items. More than 90% of the bananas sold by the company during 2006 were sold under the Chiquita brand name. The company generally obtains a premium price for its Chiquita branded bananas. The company also owns hundreds of other trademarks, registered throughout the world, used on its second-quality bananas and on a wide variety of other fresh and prepared food products. Fresh Express^® is a trademark owned by Fresh Express and registered in the U.S., Canada and several countries in Europe and the Far East. Fresh Express also owns registrations for a variety of other marks used in its packaged salads business.

To a limited extent, the company licenses its trademarks to other companies for use in prepared processed food products, for example, baby food, fruit juices and drinks, and baked goods containing processed bananas. One of Chiquita’s business strategies is to leverage the Chiquita brand into new profitable businesses.

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Fresh Express and its affiliates have patents covering a number of proprietary technologies, including atmospheres used in packaging salads to preserve freshness and methods of harvesting and maintaining produce products. These patents expire at various times from 2007 through 2023, including renewals. No material or significant patents expire before 2010; in the food preparation field, new technology may be developed before existing patents and proprietary rights expire. Fresh Express also relies heavily on certain proprietary machinery and processes that are used to prepare some of its products.

HEALTH, ENVIRONMENTAL AND SOCIAL RESPONSIBILITY

The company’s worldwide operations and products are subject to inspections by environmental, food safety, health and customs authorities and to numerous governmental regulations, including those relating to the use and disposal of agrichemicals, the documentation of food shipments and the traceability of food products. The company believes it is substantially in compliance with applicable regulations.

Beginning in the early 1990s, the company invested significant capital to improve its production and logistics efficiency and environmental performance related to banana production. The company has undertaken a significant effort to achieve certification under the standards of the Rainforest Alliance, an independent non-governmental organization. This independent certification program for banana producers is aimed at improving and managing environmental impacts and improving conditions for workers. All of Chiquita’s owned banana farms in Latin America have achieved annual certification under this program since 2000. The company also works with its third-party suppliers to achieve compliance with these standards and, as of December 2006, 84% of the independent grower hectares that supply Chiquita had achieved this certification. Certification requires that farms meet pre-defined performance criteria as judged by annual audits conducted by the Sustainable Agriculture Network, a coalition of third-party environmental groups coordinated by the Rainforest Alliance. In late 2005, the company launched an award-winning marketing campaign featuring its Rainforest Alliance certification, which the company believes strengthened its brand equity and reinforced its reputation for environmental and social responsibility in Europe, where Chiquita is the market leader and generally obtains a premium price for its Chiquita-branded bananas.

Similarly, by 2004, Chiquita achieved certification of 100% of its owned banana farms in Latin America to the Social Accountability 8000 labor standard, which is based on the core International Labor Organization conventions. The company’s Costa Rica division earned SA8000 certification in 2002, and Chiquita’s operations in Bocas, Panama and Colombia received this certification in late 2003 (prior to Chiquita’s sale of the Colombian operation in June 2004). Chiquita’s operations in Honduras and Guatemala became certified in 2004. In each case, Chiquita was the first major agricultural operator in these countries to earn this certification.

In addition, as of December 2006, 100% of the company’s owned banana farms had achieved certification to EUREPGAP, an international food safety standard. More details about the Rainforest Alliance, SA8000, EUREPGAP and the company’s performance in meeting high social and environmental standards are available on the company’s website at www.chiquita.com.

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Fresh Express believes that it maintains extremely high standards in the area of food safety. Its safety specifications apply to both growers from which it purchases lettuce and other salad greens and its own processing operations. As a general rule, Fresh Express harvests, cools, processes and ships its salad products within 24 hours, and products are delivered to customers within 36 to 72 hours of harvest. Its food safety practices include (i) monitoring the proximity of fields where purchased lettuce is grown to livestock feedlots and pastures, (ii) practices that limit exposure of growing crops to contamination and (iii) ensuring cool temperatures, frequent washing and limited contact with possible contaminants during processing.

EMPLOYEES

As of December 31, 2006, the company had approximately 25,000 employees. Approximately 18,000 of these employees work in Central and South America, including approximately 11,000 workers covered by 18 labor contracts. Approximately 1,500 of Fresh Express’s 4,000 employees are covered by four labor contracts. Labor contracts typically have terms of two to four years. Eight labor contracts covering approximately 9,000 employees in Central America are currently being negotiated or expire during 2007, as do two contracts covering fewer than 100 Fresh Express employees.

INTERNATIONAL OPERATIONS

For information on certain risks of international operations, see “Item 1A - Risk Factors.”

The company’s operations in some Central and South American countries are dependent upon leases and other agreements with the governments of these countries. Chiquita leases the land for its Bocas division, on the Caribbean coast of Panama, from the Republic of Panama. The initial 20-year lease term expires at the end of 2017 and has two consecutive 12-year extension periods. The lease can be cancelled by Chiquita at any time on three years’ prior notice; the Republic of Panama has the right not to renew the lease at the end of the initial term or any extension period, provided that it gives four years’ prior notice.

In some parts of Europe, in accordance with local practice, the company obtains credit insurance against the risk of receivable losses due to customer financial problems. Particularly in the area of fresh produce, when it is impractical to seek to recover the goods that were sold, credit insurance is considered a valuable tool. By contrast, in the United States, the Perishable Agricultural Commodities Act affords producers or sellers of fresh agricultural produce, such as the company, special rights in seeking to collect payment from customers, including those that are insolvent or bankrupt.

The company’s operations involve transactions in a variety of currencies. Sale transactions denominated in foreign currencies primarily involve the euro, and costs denominated in foreign currencies primarily involve several Latin American currencies and the euro. Accordingly, Chiquita’s operating results may be significantly affected by fluctuations in currency exchange rates. This is particularly true for the company’s Banana segment operations in Europe. In the Fresh Select segment, many of the non-U.S. dollar sales are of produce items which are purchased in the same currencies. Currency fluctuations affect Chiquita’s operations because its financial results are reported in U.S. dollars, and the U.S. dollar equivalent of Chiquita’s non-U.S. dollar revenues and costs depends on applicable exchange rates at the time the revenues are recognized or the costs are incurred. This is especially true with respect to the euro-U.S. dollar exchange rate. Chiquita’s policy is to exchange local currencies for dollars promptly upon receipt, thus reducing exchange risk. Chiquita also engages in various hedging activities to mitigate the effect of foreign exchange volatility on its financial results. For information with respect to currency

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exchange, see Notes 1 and 8 to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 13.

ADDITIONAL INFORMATION

Through its website www.chiquita.com, Chiquita makes available, free of charge, its reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after they are filed with the SEC. To access these documents on the website, click on “Investors” and “SEC Filings.” The company’s corporate governance policies, board committee charters and Code of Conduct are also available on the website listed above, free of charge, by clicking on “Investors” and “Governance.” A copy of any of these documents will be provided to any shareholder upon request to the Corporate Secretary, Chiquita Brands International, Inc., 250 East Fifth St., Cincinnati, Ohio, 45202 or by calling (513) 784-8100. The documents available on Chiquita’s website, including those relating to environmental and social responsibility, are not incorporated by reference into this report.

ITEM 1A - RISK FACTORS

In evaluating and understanding the company and its business, you should carefully consider (1) all of the information set forth in this 10-K report, including the consolidated financial statements and notes thereto and management’s discussion and analysis included in Exhibit 13, (2) information in our other filings with the SEC, including any future 10-Q and 8-K and (3) the risks described below. These are not the only risks facing us. Additional risks not presently known or which we currently deem immaterial may also impact our business operations, and even the risks identified below may adversely affect our business in ways we do not currently anticipate. Our business, financial condition or results of operations could be materially adversely affected by any of these risks.

The changes in the European Union (“EU”) banana import regime implemented in 2006 have adversely affected our European business and our operating results, and will continue to do so.

In January 2006, the European Commission (“EC”), the governing body of the EU, implemented a new regulation relating to the importation of bananas into the EU. It eliminated the quota that previously applied to the import of Latin American bananas and imposed a significantly higher tariff (€176/metric ton compared to €75/metric ton under the prior regulation) on Latin American bananas. At the same time, it gave a tariff preference to certain African, Caribbean and Pacific (“ACP”) sources (which in many cases are former EU colonies), by exempting 775,000 metric tons of ACP banana volume from any tariff at all.

For Chiquita, the tariff increase alone resulted in approximately $116 million of higher tariff costs in 2006 compared to 2005, partially offset by $41 million in savings resulting from the elimination of the need to purchase banana import licenses, which are no longer required. However, without quotas, increased volumes of bananas were sold into the EU in 2006, both by Latin American banana producers which had not traditionally sold bananas into the EU and by ACP and EU producers. Partially as a result, average banana prices in our core European markets, which primarily consist of the 25 member countries of the EU, fell 11% on a local currency basis in 2006 compared to 2005.

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To date, neither we as a company nor the industry have been able to pass on tariff cost increases to customers or consumers. Although we continue to sell bananas at a price premium to our competition in the EU, there can be no assurance that we will be able to maintain this premium.

Certain Latin American producing countries have taken steps to challenge the banana import regime as noncompliant with the EU’s World Trade Organization obligations not to discriminate among supplying countries. In February 2007, Ecuador requested arbitration under WTO rules. Other countries are also expected to join these proceedings. Under the applicable arbitration procedures, a decision would not be expected before late fall 2007. There can be no assurance that any challenges will result in changes to the EC’s regime.

It is still too early to determine the long-term impact of this new regime on industry volume and prices, including the level at which banana volume imported into the EU may stabilize and the prevailing prices that will result. However, the overall negative impact of the new regime on us has been and is expected to remain substantial, despite our intent to maintain our price premium in the European market.

Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions can impose significant costs and losses on our business.

The production of fresh produce is vulnerable to adverse weather conditions, which commonly occur but are difficult to predict. Our results of operations have in the past been significantly impacted by a variety of weather-related events. Lettuce, bananas and other produce can be affected by drought, temperature extremes, windstorms and floods; floods in particular may affect bananas, which are typically grown in tropical lowland areas. In 2007, Fresh Cut segment results for the first quarter are expected to be impacted by up to $4 million from a record January freeze in Arizona which affected lettuce sourcing. Fresh produce is also vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of agricultural production at the time of infection or infestation, the type of treatment applied and climatic conditions. In the past, crop diseases have caused certain produce industries to replant entire areas and to change plant varieties, all at considerable costs in both capital investment and temporary lack of available supply.

Unfavorable growing conditions caused by these factors can reduce both crop size and crop quality. In extreme cases, entire harvests may be lost. These factors may result in lower sales volume and, in the case of farms we own or manage, increased costs to us due to expenditures for additional agricultural techniques or agrichemicals, the repair of infrastructure and replanting to replace damaged or destroyed crops. If banana plantings are destroyed, approximately nine months are required from replanting to first harvest. In the event lettuce crops are damaged, the next harvest on the same acreage would be delayed at least 90 days. Incremental costs may also be incurred if we need to find alternate short-term supplies of bananas, lettuce or other produce from other growers, and we may be required to bear additional transportation costs to meet our obligations to customers.

Competitors may be affected differently by these factors. If adverse conditions are widespread in the industry, they may restrict supplies and lead to an increase in spot market prices for the produce. This increase in spot market prices, however, may not impact customers that have fixed contract prices. Our geographic diversity in banana production and sourcing locations increases the risk that we could be exposed to weather or crop-related events that may impact our operations at any given time, but lessens the risk that any single major event would have a material adverse effect on us. Although we maintain insurance to cover weather-related losses and we attempt to pass on some of the incremental costs to customers through contract price increases or temporary price surcharges, there is no assurance that we will be able to do so in the future.

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We operate in a highly competitive environment and the pricing of our products is substantially dependent on market forces.

Our customers are primarily retailers and wholesalers seeking multi-year contracts with suppliers that can provide a wide range of fresh produce. Continuing industry consolidation has increased the buying leverage of the major domestic and international grocery retailers. Average prices paid by our retail customers for bananas in North America declined throughout the prior decade by approximately 1.5% per year until 2005, when the company began to achieve higher year-on-year prices, through surcharges to cover higher fuel and other industry costs as well as negotiated contract price increases. There can be no assurance that we will be able to pass on future cost increases to our customers. Bidding for contracts or arrangements with retailers, particularly large chain stores and other large customers, can be highly competitive, and we may lose prior business or not be invited to bid for new business with some customers.

Where we do not have fixed price contracts, the selling price received for each type of produce depends on several factors, including the availability and quality of the produce item in the market and the availability and quality of competing types of produce. Excess industry supply of any produce item is unpredictable and may result in increased price competition. Produce items which are ready to be, or have been, harvested must typically be brought to market promptly in order to maximize recovery.

Approximately 21% of Fresh Express’s 2006 revenues were derived from the foodservice distribution industry, which is characterized by a high volume of sales with relatively low profit margins. Certain of Fresh Express’s sales are at prices that are based on product cost plus a percentage markup. Therefore, Fresh Express’s results may be negatively impacted when the price of food goes down, even if its percentage markup remains constant. The industry also may be sensitive to national and regional economic conditions, and the demand for Fresh Express’s products has been adversely affected from time to time by economic downturns.

From time to time, our large retail customers may impose new or revised requirements upon their suppliers, including us. These business demands may relate to food safety, inventory practices, logistics or other aspects of the customer-supplier relationship. Some of our customers have indicated a desire to utilize radio frequency identification technology in an effort to improve tracking and management of product in their supply chain. In its current stage of development and usage, large-scale implementation of this technology could significantly increase our product distribution costs. Compliance with requirements imposed by customers may be costly and may have an adverse effect on our results of operations. However, if we fail to meet a significant customer’s demands, we could lose that customer’s business, which could have a material adverse effect on our results of operations.

Increases in commodity or raw product costs, such as fuel, paper, plastics and resins, could adversely affect our operating results.

A significant portion of the fresh produce that we market is purchased from independent producers and importers around the globe under arrangements ranging from formal long-term purchase contracts to informal market trading with unrelated suppliers. In 2006, approximately 70% of the bananas, all of the lettuce and almost all of the other produce sourced by us were purchased from independent growers. Many factors may affect the cost and supply of fresh produce, including external conditions, commodity market fluctuations, currency fluctuations, changes in governmental regulations, agricultural programs, and severe and prolonged weather conditions and natural disasters. Increased costs for purchased fruit and vegetables have in the past negatively impacted our operating results, and there can be no assurance that they will not adversely affect our operating results in the future.

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We use chartered ships to transport more than 30% of our total banana shipments, and charter rates have been increasing in recent years. The price of bunker fuel used in shipping operations is also an important variable component of transportation costs. Our fuel costs have increased substantially since 2003, and there can be no assurance that there will not be further increases in the future. In addition, fuel and transportation cost is a significant component of much of the produce that we purchase from growers or distributors, and there can be no assurance that we will be able to pass on to our customers the increased costs we incur in these respects.

The cost of paper is also significant to us because bananas and some other produce items are packed in cardboard boxes for shipment. If the price of paper increases, or the price of the fresh produce that we purchase increases due to paper cost increases, and we are not able to effectively pass these price increases along to our customers, then our operating income will decrease. Increased costs for paper have in the past negatively impacted our operating income, and there can be no assurance that these costs will not adversely affect our operating results in the future.

Our substantial level of indebtedness and the financial covenants in our debt agreements could adversely affect our ability to execute our growth strategy or to react to changes in our business, and we may be limited in our ability to use debt to fund future capital needs. Additionally, a significant amount of our indebtedness bears interest at floating rates, which could increase our interest expense.

As of December 31, 2006, our indebtedness was approximately $1 billion (including approximately $550 million of subsidiary debt). Our high level of indebtedness limits our ability to borrow additional funds and requires us to dedicate a substantial portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate expenditures. This, in turn:

• increases our vulnerability to adverse general economic or industry conditions;

• limits our flexibility in planning for, or reacting to, changes in our business or our industry;

• limits our ability to make strategic acquisitions and investments, introduce new products or services, or exploit business opportunities; and

• places us at a competitive disadvantage relative to competitors that have less debt or greater financial resources.

Moreover, most of our indebtedness is issued under debt agreements that require continuing compliance with financial and other covenants. In June 2006, we obtained prospective covenant relief from our lenders and, as a consequence of our financial results through the end of the third quarter, we were required to and did obtain further covenant relief from our lenders in November 2006. The amendments provided further flexibility under the financial covenants, but increased the cost of our borrowings and further limited our ability to incur debt, sell assets, and make capital expenditures and acquisitions. In March 2007, we obtained further prospective covenant relief with respect to a proposed financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and other related costs. If we were to experience a significant decline in financial performance compared to lender expectations, we may be required to seek further covenant relief or to restructure or replace our credit facility, which could further increase the cost of our borrowings and/or further restrict our financial flexibility and access to capital.

As of December 31, 2006 we had drawn $44 million under our $200 million revolving credit

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facility and used an additional $31 million of capacity to issue letters of credit, including a $7 million letter of credit issued to preserve our right to appeal certain customs claims in Italy. During 2007, we may be required to issue up to an additional $25 million of letters of credit for appeal bonds relating to litigation of additional customs claims in Italy. As a result of our lower operating cash flow in 2006 compared to prior years, as well as working capital requirements to support volume growth in 2007, we began to draw under the revolving credit facility in November 2006. As of February 28, 2007, we had made cash draws against the facility of $84 million, and expect to make additional draws to fund peak seasonal working capital needs through March or April 2007. We believe that operating cash flow, including the collection of receivables from high season banana sales, should permit us to significantly reduce the revolving credit balance during the second quarter and to fully repay it during the third quarter; however, there can be no assurance in this regard. In order to ensure adequate liquidity, in the event that we experience shortfalls in operating performance or unanticipated contingencies which require the use of significant amounts of cash, we may be limited in our ability to fund discretionary market or brand-support activities, innovation spending, capital investments and/or acquisitions that had been planned as part of the execution of our long-term growth strategy.

Currently, approximately $500 million of our indebtedness bears interest at rates that fluctuate with prevailing interest rates. As a result, a 1% increase in interest rates would result in an increase to interest expense of approximately $5 million annually.

Our growth strategies may not be successful; future acquisitions, strategic alliances and investments and other innovations may be costly and not achieve their intended goals, and they could distract our management, increase our expenses and adversely affect our business.

We have stated a goal of growing our business through innovation, new products, acquisitions and geographic expansion. Our ability to execute successfully in these areas will determine the extent to which we are able to grow existing sales and volume profitably. If we are unsuccessful in these efforts, it may adversely affect our financial condition, results of operations and ability to grow our business or otherwise achieve our financial or strategic objectives. The following risks, in particular, may be applicable:

Risks relating to acquisitions and investments

• Suitable acquisitions or investments may not be found or completed on terms that are satisfactory to us;

• We may not be able to obtain financing, or we may have limitations under our credit agreement on our ability to make acquisitions and investments;

• We may be unable to successfully integrate an acquired company’s personnel, assets, management systems and technology into our business, and integration may require substantial expense and management time and require greater capital resources than originally anticipated;

• The benefits expected to be derived from an acquisition may not materialize and could be affected by numerous factors, such as regulatory developments, industry events, general economic conditions, increased competition and the loss of existing key personnel or customers; and

• An acquisition of a foreign business or expansion in a new geographic area may involve additional risks, including, but not limited to, foreign currency exposure, liability under foreign laws or regulations, and inability to successfully assimilate differences in foreign business practices or overcome language or cultural barriers.

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Risks relating to innovation

In the area of innovation, we must be able to develop new products and enhance existing products that appeal to consumers and our retail trade customers. This depends, in part, on the technological and creative skills of our personnel and on our intellectual property rights in both proprietary technology and protection of our brands. We may not be successful in the introduction, marketing and sourcing of any new products or product innovations, and we may not be able to develop and introduce in a timely manner innovations to our existing products that satisfy customer needs or achieve market acceptance.

We rely upon a combination of trade secret, copyright, patent and trademark law, contractual arrangements and technical means to protect our intellectual property rights. We also enter into confidentiality agreements with our employees, consultants, joint venture and alliance partners, customers and other third parties that are granted access to our proprietary information, and we limit access to and distribution of our proprietary information. There can be no assurance that we have protected or will be able to protect our proprietary technology and information adequately, that the unauthorized disclosure or use of our proprietary information will be prevented, or that others have not or will not develop similar technology or information independently.

Risks relating to joint ventures and strategic alliances

We currently operate parts of our business, notably our Asian banana production and sales, through joint ventures with other companies, and we may enter into additional joint ventures and strategic alliances in the future. Joint venture investments may involve risks not otherwise present for investments made solely by us. For example, we may not control the joint ventures; joint venture partners may not agree to distributions that we believe are appropriate; joint venture partners may not observe their commitments; joint venture partners may have different interests than we have and may take action contrary to our interests; and it may be difficult for us to exit a joint venture after an impasse or if we desire to sell our interest.

Our international operations subject us to numerous risks, including U.S. and foreign governmental investigations and claims.

We have international operations in many foreign countries, including in Central and South America, the Philippines and the Ivory Coast. These activities are subject to risks inherent in operating in those countries, including government regulation, currency restrictions and other restraints, burdensome taxes, risks of expropriation, threats to employees, political instability, terrorist activities, including extortion, and risks of U.S. and foreign governmental action in relation to us. Should such circumstances occur, we might need to curtail, cease or alter our activities in a particular region or country, and we may be subject to fines or other penalties. Our ability to deal with these issues may be affected by applicable U.S. or other applicable law. See “Item 3 – Legal Proceedings” for a description of, among other things, (i) a $25 million financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and relating to payments made by our former banana producing subsidiary in Colombia to certain groups in that country which had been designated under United States law as a foreign terrorist organization, (ii) an investigation by EU competition authorities relating to prior information sharing in Europe and (iii) customs proceedings in Italy.

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We have a substantial amount of goodwill and other intangible assets on our balance sheet; a substantial impairment of our goodwill or other intangible assets may adversely affect our operating results.

As of December 31, 2006, we had approximately $1.1 billion of intangible assets such as goodwill and trademarks, the value of which depend on a variety of factors, including the success of our business and earnings growth. This represents over 40% of the total assets on our balance sheet. Of that, $542 million, or 20% of total assets at December 31, 2006, was goodwill, which represents the excess of the total purchase price of our acquisitions over the fair value of the net assets acquired. Almost all of our goodwill is associated with the Fresh Express acquisition. Accounting standards require us to review goodwill at least annually for impairment. In 2006, due to a decline in Atlanta AG’s business performance in the period following the implementation of the new EU banana import regime as of January 1, 2006, we recorded an impairment charge for the full $43 million of goodwill relating to that business. There can be no assurance that further reviews of our goodwill will not result in additional impairment charges in the future. Although it does not affect cash flow, an impairment charge has the effect of decreasing our earnings and shareholders’ equity.

Our operations and products are regulated in the areas of food safety and protection of human health and the environment.

Our worldwide operations and products are subject to inspections by environmental, food safety, health and customs authorities and to numerous governmental regulations, including those relating to the use and disposal of agrichemicals, the documentation of food shipments and the traceability of food products. As these regulations continue to be revised and new laws enacted, they generally become more stringent and the cost to comply with them increases. We believe we are substantially in compliance with applicable regulations. However, actions by regulators in the past have required, and in the future may require, operational modifications or capital improvements at various locations. In addition, if violations occur, regulators can impose fines, penalties and other sanctions. The costs of these modifications, improvements, fines and penalties could be substantial.

We could be adversely affected by actions of regulators or if consumers lose confidence in the safety and quality of certain food products or ingredients, even if our practices and procedures are not implicated. For example, industry concerns regarding the safety of fresh spinach in the United States adversely impacted our Fresh Express operations in the third and fourth quarters of 2006 and continue to result in lower sales and unforeseen costs, even though Fresh Express products were not implicated in these issues. We may also elect or be required to incur additional costs aimed at restoring consumer confidence in the safety of our products. The actual effect on us may depend on a number of factors, including the nature and extent of any issues giving rise to regulators’ actions or consumer concerns, the company’s involvement, if any, and specific actions taken or conclusions reached by regulators.

We are subject to the risk of product liability claims; claims or other events or rumors relating to the “Chiquita” or “Fresh Express” brands could significantly impact our business.

The sale of food products for human consumption involves the risk of injury to consumers. While we believe we have implemented practices and procedures in our operations to promote high-quality and safe food products, we cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to such matters. In addition to packaged salads, our fresh-cut fruit operations in the United States and fresh juice bars in Europe subject us to risks relating to food safety and product liability.

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Although we maintain product liability insurance in an amount which we believe to be adequate, claims or liabilities of this nature might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others or they might exceed the amount of our insurance coverage. In addition, large retail customers often require us to indemnify them for claims made by consumers who have purchased our products, regardless of whether the claim arises from our handling of the product.

Consumer and institutional recognition of the “Chiquita” and “Fresh Express” trademarks and related brands and the association of these brands with high-quality and safe food products, as well as responsible business practices, are an integral part of our business. The occurrence of any events, rumors or negative publicity regarding the quality and safety of our food products or our business practices, even if baseless, may adversely affect the value of our brand names and the demand for our products.

Our announced plan to sell and outsource our shipping and logistics function may not be completed and, if completed, may not result in the benefits we anticipate.

In September 2006, we announced that we are seeking to enter a long-term strategic partnership with respect to the sale and management of our overseas shipping assets and shipping-related logistics activities. Great White Fleet, our wholly-owned subsidiary which manages our global ocean transportation and logistics operations, operates 12 owned refrigerated cargo vessels and charters additional vessels for use principally in the long-haul transportation of our fresh fruit products from Latin America to North America and Europe. We may not be successful in completing a transaction.

Even if we do complete a transaction, we may not achieve the level of service we are seeking, or we may be further exposed to increasing charter rates. There can be no assurance that a third-party contractor will be successful in meeting our standards for quality and reliability or will partner creatively with us in the future as our business and logistics needs evolve. Operating this aspect of our business under contract with a third-party service provider carries the risk that it may be more difficult to resolve any problems that may occur, which could result in damage to our customer relationships. Although we are seeking a partner to commit to provide these services to us on a long-term basis, if our relationship with the partner and our satisfaction with its service suffer, we may have to negotiate contracts with alternate providers on terms that may not be as desirable as the provisions we initially negotiate.

An extended interruption in our ability to ship our products could materially affect our operating results.

We ship our bananas and some of our other fresh produce in vessels owned or chartered by us. The remainder of our fresh produce is shipped by third parties. From time to time, we have experienced interruptions in our shipping, for reasons such as mechanical breakdown or damage to a ship, strikes at ports, port damage and weather-related disruptions. Terrorist activities could also lead to damage to ports, ships or shipping routes. While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption, an extended interruption in our ability to ship and distribute our products could have a material adverse effect on us.

Labor issues can increase our costs or disrupt our operations; pressure to increase union representation could adversely affect our operations, and changes in immigration laws or enforcement of such laws could impact the availability of produce purchased from third-party suppliers.

Approximately 11,000 of our employees working in Central and South America are covered by 18 labor contracts. Approximately 1,500 of our Fresh Express employees, all of whom work in the United States, are covered by four labor contracts. Eight of these contracts covering approximately 9,000

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employees in Latin America are currently being negotiated or expire during 2007, as do two contracts covering fewer than 100 Fresh Express employees. There can be no assurance that we will be able to successfully renegotiate these contracts on commercially reasonable terms.

Strikes or other labor-related actions sometimes occur upon expiration of labor contracts or during the term of the contracts. In the past, we have experienced labor stoppages and strikes. These have in the past and may in the future result in increased costs and, in the case of agricultural workers, decreased crop quality. When prolonged strikes or other labor actions occur in agricultural production, growing crops may be significantly damaged or rendered un-harvestable as a result of the disruption of irrigation, disease and pest control and other agricultural practices. In addition, our non-union workforce, particularly at Fresh Express in the United States, has been subject to union organization efforts from time to time, and we could be subject to future unionization efforts. Increased unionization of our workforce could increase our operating costs or constrain our operating flexibility.

Fresh Express purchases lettuce and other salad ingredients from many third parties that grow these products in the United States. The personnel engaged by these companies for harvesting operations typically include significant numbers of immigrants. The availability and number of these workers is subject to decrease if there are changes in the U.S. immigration laws. The scarcity of available personnel to harvest the agricultural products purchased by Fresh Express in the U.S. could increase our costs for those products or could lead to product shortages.

Fluctuations in currency exchange rates may adversely impact our financial results.

Our operations involve transactions in a variety of currencies. Sales denominated in foreign currencies primarily involve the euro, and costs denominated in foreign currencies primarily involve several Latin American currencies and the euro. Accordingly, our operating results may be significantly affected by fluctuations in currency exchange rates. Approximately 55%, 65% and 70% of our total sales were in Europe in 2006, 2005 and 2004, respectively. Should the euro weaken against the U.S. dollar, there can be no assurance that we will be able to offset any unfavorable currency movement with an increase to our euro pricing for bananas and other fresh produce. Our inability to do so could have a substantial negative impact on our operating results and cash flow.

ITEM 1B - UNRESOLVED STAFF COMMENTS

None.

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ITEM 2 - PROPERTIES

As of December 31, 2006, Chiquita owned approximately 40,000 acres and leased approximately 25,000 acres of improved land, principally in Costa Rica, Panama, Honduras, Chile and Guatemala, primarily for the cultivation of bananas and support activities. The company also owns warehouses, power plants, packing stations, irrigation systems and port loading and unloading facilities used in connection with its banana operations.

Chiquita owned eight conventional refrigerated vessels and four refrigerated container vessels as of December 31, 2006. The container ships are highly specialized to the company’s operations; they would be difficult to replace on short notice. The company also had seven conventional refrigerated vessels under time charters with commitment periods of up to three years. Under a time charter, the third-party ship owner provides the ship complete with crew and technical support. In addition, when necessary, the company enters into spot charters and freight contracts to supplement its transportation resources. From time to time, excess capacity in the company’s ships may be utilized by transporting cargo for third parties. Chiquita’s fleet was built through a substantial investment program during the late 1980s and early 1990s. These refrigerated transport vessels have economic lives in excess of 25 years. The owned ships are pledged as collateral for related financings. See Note 9 to the Consolidated Financial Statements in Exhibit 13 for further description of indebtedness secured by the company’s ships. Chiquita also owns or leases other related equipment, including refrigerated container units, used to transport fresh produce.

In the company’s Fresh Cut segment, the company operates six processing/distribution facilities and two additional distribution facilities, all in the United States. These are strategically located to ensure rapid delivery to customers and to maximize product freshness. The following table presents information about these manufacturing/distribution facilities:

Location	Owned/Leased (Expiration date if leased)	Function
Morrow, GA	Leased1	Processing/Distribution
Carrollton, GA	Owned	Processing/Distribution
Chicago, IL	Owned	Processing/Distribution
Franklin Park, IL	Leased (2010 and 2011)	Processing/Distribution
Grand Prairie, TX	Leased (2024)	Processing/Distribution
Salinas, CA	Owned	Processing/Distribution
Geneva, IL	Leased (2007)	Distribution
Greencastle, PA	Owned	Distribution

¹ Fresh Express has the right to purchase this facility for $10.00 from the Clayton County Development Authority

Chiquita leases the space for its headquarters in Cincinnati, Ohio. The company’s subsidiaries also own and lease warehouses, ripening facilities, distribution facilities, office space and other properties in connection with their operations, principally in Europe and the United States.

The company’s main operating subsidiary, Chiquita Brands L.L.C. (“CBL”), owns directly or indirectly substantially all the business operations and assets of the company; it owns directly substantially all of the company’s trademarks. Substantially all U.S. assets of CBL and its subsidiaries are pledged to secure CBL’s credit facility. The credit facility is also secured by liens on CBL’s trademarks, a guarantee by CBII secured by a pledge of CBL’s equity, and pledges of stock of and guarantees by

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various CBL subsidiaries worldwide. See Note 9 to the Consolidated Financial Statements for a more complete description of the CBL credit facility.

Chiquita believes its property and equipment are generally well maintained, in good operating condition and adequate for its present needs. The company typically insures its assets against standard risks with third-party insurers, with the exception of banana cultivations. The company self-insures its banana cultivations because of the high cost of third-party insurance and the risk reduction achieved through its geographic diversity of banana sources.

For further information with respect to the company’s physical properties, see the descriptions under “Item 1—Business” above, and Notes 5 and 6 to the Consolidated Financial Statements included in Exhibit 13.

ITEM 3 - LEGAL PROCEEDINGS

Justice Department Investigation. As previously disclosed, in April 2003 the company’s management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice (the “Justice Department”) that its former banana-producing subsidiary in Colombia, which was sold in June 2004, had made payments to certain groups in that country which had been designated under United States law as foreign terrorist organizations. Following the voluntary disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. In March 2004, the Justice Department advised that, as part of its criminal investigation, it would be evaluating the role and conduct of the company and some of its officers in the matter. In September and October 2005, the company was advised that the investigation was continuing and that the conduct of the company and some of its officers and directors was within the scope of the investigation. For the years ended December 31, 2006, 2005 and 2004, the company incurred legal fees and other expenses in response to the continuing investigation and related issues of $8 million, $2 million and $8 million, respectively.

During the fourth quarter of 2006, the company commenced discussions with the Justice Department about the possibility of reaching a plea agreement. As a result of these discussions, and in accordance with the guidelines set forth in SFAS No. 5, “Accounting for Contingencies,” the company recorded a charge of $25 million in its financial statements for the quarter and year ended December 31, 2006. This amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. The $25 million would be paid out in five equal annual installments, with interest, beginning on the date judgment is entered. The Justice Department has indicated that it is prepared to accept both the amount and the payment terms of the proposed $25 million sanction. In addition to the financial sanction, the company anticipates the potential plea agreement would contain customary provisions that prohibit such future conduct or other violations of law and require the company to implement and/or maintain certain business processes and compliance programs, the violation of which could result in setting aside the principal terms of the plea agreement.

Negotiations are ongoing, and there can be no assurance that a plea agreement will be reached or that the financial impacts of any such agreement, if reached, will not exceed the amounts currently accrued in the financial statements. Furthermore, such an agreement would not affect the scope or outcome of any continuing investigation involving any individuals.

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In the event an acceptable plea agreement between the company and the Justice Department is not reached, the company believes the Justice Department is likely to file charges, against which the company would aggressively defend itself. The Justice Department has a broad range of civil and criminal sanctions under potentially applicable laws which it may seek to impose against corporations and individuals, including but not limited to injunctive relief, disgorgement of profits, fines, penalties and modifications to business practices and compliance programs. The company is unable to predict all of the financial or other potential impacts that could result from an indictment or conviction of the company or any individual, or from any related litigation, including the materiality of such events. Considering the sanctions that may be pursued by the Justice Department and the company’s defenses against potential claims, the company estimates that the range of financial outcomes upon final adjudication of a criminal proceeding could be between $0 and $150 million.

Italian Customs Cases. There are multiple pending proceedings involving potential liability of the company’s Italian subsidiary, Chiquita Italia S.p.A. (“Chiquita Italia”), for additional customs duties on the import of bananas by Socoba S.r.l. (“Socoba”) into Italy during the years 1998 to 2000 for sale to Chiquita Italia. The duties are alleged to be due because these imports were made with licenses that were purportedly issued by the Spanish Ministry of Foreign Trade but were subsequently determined to have been forged. The amount of potential liability is based on the difference between the tariff rate for Latin American bananas imported with valid licenses (€75 per metric ton) and the tariff rate for Latin American bananas imported without valid licenses (€850 per metric ton), plus related taxes and interest. The authorities contend that Chiquita Italia should be jointly liable with Socoba because (a) Socoba was controlled by the former general manager of Chiquita Italia and allegedly managed for the benefit of Chiquita Italia and (b) the import transactions benefited Chiquita Italia, which arranged for Socoba to purchase the bananas from another Chiquita subsidiary and, after customs clearance, sell them to Chiquita Italia. In the first of these proceedings, Chiquita Italia received a notice of assessment in 2004 from customs authorities in Trento, Italy stating that Chiquita Italia, Socoba, the former managing director of Chiquita Italia and the managing director of Socoba are jointly and severally liable for approximately €4.6 million of duties and taxes, plus interest, related to imports cleared in Trento. Subsequently, in May 2005 Chiquita Italia received notice of an investigation underway by customs authorities in Genoa, Italy into the possible joint liability of Chiquita Italia and Socoba for approximately €26.9 million of duties and taxes, plus interest (an estimated €15.0 million of interest having accrued to date). The scope of the Genoa investigation includes all banana imports into Italy by Socoba for sale to Chiquita Italia that used the purported Spanish licenses, including imports cleared by customs authorities in Genoa, Trento and other Italian jurisdictions. Therefore, any amounts ultimately paid by Chiquita Italia in the Trento proceeding, or any similar proceedings in other jurisdictions, should reduce any ultimate liability of Chiquita Italia arising out of the Genoa investigation. In addition to the Trento assessment, Chiquita has thus far received assessments from customs authorities in Genoa and another jurisdiction totaling approximately €9.2 million. Chiquita Italia has appealed the Trento assessment to the Tax Commission in Trento and will appeal all other assessments, through appropriate procedures, on the bases that (a) Chiquita Italia had a good faith belief at the time the import licenses were obtained and used, that they were valid and (b) no Chiquita entity has ever had an ownership interest in Socoba, and Chiquita Italia should therefore not be held responsible for the acts of Socoba. In addition, Chiquita Italia has intervened in a judicial action filed by Socoba in Genoa, now in Rome, in March 2005 for a declaratory judgment that the Spanish licenses in question should be regarded as genuine. Chiquita Italia is requesting suspension of payment, pending appeal, of the approximately €13.8 million formally assessed thus far in these cases, and intends to request suspension of payment, when appropriate, of additional assessments as they are received. In October 2006, Chiquita Italia received notice in the Trento proceeding in the court of first instance, that the court had determined that Chiquita Italia was jointly liable for a claim of €4.7 million plus interest accrued from November 2004. Chiquita Italia intends to appeal this finding; the applicable appeal would involve de novo review of the entire factual record of the case as well as all the legal arguments, including those

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presented during the appeals process, and the appellate court can render a decision on the case that disregards or substantially modifies the lower court’s opinion. Pending appeal, Chiquita Italia issued a letter of credit to allow a bank guarantee to be posted in the amount of approximately €5 million (approximately $7 million), and may in the future be required to post bank guarantees for up to the full amounts claimed.

Personal Injury Cases. In 1998, the company settled for $4.7 million virtually all of a number of cases that had been brought against it and other defendants in U.S. and foreign courts during the 1990’s. The approximately 26,000 plaintiffs alleged sterility and other injuries as a result of exposure to an agricultural chemical known as DBCP. Defendants included manufacturers of DBCP as well as three banana-producing companies that had used the chemical. The vast majority of the claims against Chiquita were discontinued voluntarily because the claimants could not establish that they were exposed to DBCP used by Chiquita, given Chiquita’s limited use of the product from 1973-1977. Chiquita settled with approximately 4,000 plaintiffs in Panama, the Philippines and Costa Rica in lieu of lengthy litigation. At the time these cases were settled, the company believed that these settlements covered the great preponderance of workers who could have had claims against the company.

Between October 2004 and May 2005, four lawsuits were filed in Superior Court of California, Los Angeles County against two manufacturers of DBCP, as well as three banana producing companies, including the company, that used DBCP. The approximately 4,800 plaintiffs in these lawsuits claim to have been workers on banana farms in Costa Rica, Panama, Guatemala and Honduras owned or managed by the defendant banana companies and allege sterility and other injuries as a result of exposure to DBCP. These California cases are in the early stages of discovery and do not quantify the alleged damages. In April 2005, a lawsuit was filed against the same defendants, including the company, in civil court in the City of David, Panama on behalf of approximately 400 persons who allegedly suffered a variety of injuries and illnesses, mostly other than sterility, resulting from exposure to DBCP. The Panamanian case alleges a total of $85 million in damages, but no evidence has yet been offered to support the plaintiffs’ alleged exposure to DBCP or the allegations of injury or illness. A purported DBCP class action in Hawaii state court that had identified 11 named claimants against DBCP manufacturers and the three banana producing companies, including Chiquita, and alleged an indeterminate number of other claimants who were agricultural workers in various Central American countries has been pending since the late 1990’s and was not part of the 1998 settlement. That case is still in the pleading stage. There has been no substantive discovery and no substantive evidence of exposure or damages has been presented. None of the suits pending in California, Panama and Hawaii identify how many of the approximately 5,210 total named plaintiffs purport to have claims against Chiquita, as opposed to other banana company and manufacturer defendants, and it is too early in the proceedings to determine whether any of the plaintiffs may have been covered by the 1998 settlement. Although the company has little information with which to evaluate these lawsuits, it believes it has meritorious defenses, including (i) the fact that the company used DBCP commercially only from 1973 to 1977 while it was registered for use by the U.S. Environmental Protection Agency and (ii) to its knowledge, the company never used DBCP commercially in either Guatemala or Honduras. The EPA did not revoke DBCP’s registration for use until 1979.

A number of claimants from the Philippines who were part of the 1998 settlement, represented by new counsel, have challenged in Philippine courts whether the settlement funds were properly distributed to these claimants. The company believes it will be able to establish, to the satisfaction of the Philippine courts, that the settlement funds were paid by Chiquita.

Over the last 19 years, a number of claims have been filed against the company on behalf of merchant seamen or their personal representatives alleging injury or illness from exposure to asbestos while employed as seamen on company-owned ships at various times from the mid-1940s until the mid-

26

1970s. The claims are based on allegations of negligence and unseaworthiness. In these cases, the company is typically one of many defendants, including manufacturers and suppliers of products containing asbestos, as well as other ship owners. Six of these cases are pending in state courts in various stages of activity. Over the past eight years, 25 state court cases have been settled and 36 have been resolved without any payment. In addition to the state court cases, there are approximately 5,300 federal court cases that are currently inactive (known as the “MARDOC” cases). The MARDOC cases are managed under the supervision of the U.S. District Court for the Eastern District of Pennsylvania (the “Federal Court”). In 1996, the Federal Court administratively dismissed all then-pending MARDOC cases without prejudice for failure to provide evidence of asbestos-related disease or exposure to asbestos. Under this order, all MARDOC cases subsequently filed against the company have also been administratively dismissed. The MARDOC cases are subject to reinstatement by the Federal Court upon a showing of some evidence of asbestos-related disease, exposure to asbestos and service on the company’s ships. While six MARDOC cases have been reinstated against the company, one of the cases has been dismissed and there has been little activity in the remaining five reinstated cases to date. As a matter of law, punitive damages are not recoverable in seamen’s asbestos cases. Although the company has very little factual information with which to evaluate these maritime asbestos claims, management does not believe, based on information currently available to it and advice of counsel, that these claims will, individually or in the aggregate, have a material adverse effect on the financial statements of the company.

Competition Law Proceedings. In June 2005, Chiquita announced that its management had recently become aware that certain of its employees had shared pricing and volume information with competitors in Europe over many years in violation of European competition laws and company policies, and may have engaged in several instances of other conduct which did not comply with European competition laws or applicable company policies. The company promptly stopped the conduct and notified the European Commission (“EC”) and other regulatory authorities of these matters; the company is cooperating with the related investigation subsequently commenced by the EC. Based on the company’s voluntary notification and cooperation with the investigation, the EC notified Chiquita that it would be granted immunity from any fines related to the conduct, subject to customary conditions, including the company’s continuing cooperation with the investigation and a continued determination of its eligibility for immunity. Accordingly, Chiquita does not expect to be subject to any fines by the EC. However, if at the conclusion of its investigation, which could continue through 2007 or later, the EC were to determine, among other things, that Chiquita did not continue to cooperate or was not otherwise eligible for immunity, then the company could be subject to fines, which, if imposed, could be substantial. The company does not believe that the reporting of these matters or the cessation of the conduct has had, or should in the future have, any material adverse effect on the regulatory or competitive environment in which it operates, although there can be no assurance in this regard.

In July through November 2005, eight class action lawsuits were filed in the U.S. District Court for the Southern District of Florida against the company and three of its competitors on behalf of entities that purchased bananas in the United States either directly (6 cases) or indirectly (2 cases) from the defendants from May 1999 to December 2005. The complaints allege that the defendants engaged in a conspiracy to artificially raise or maintain prices and control and restrict output of bananas in the United States. The plaintiffs seek treble damages for violation of Section 1 of the Sherman Antitrust Act. The complaints provide no specific information regarding the allegations. One of the cases involving the indirect purchasers has been dismissed and one is still pending; the defendants’ motion to dismiss this case is pending. The cases involving the direct purchaser defendants have been consolidated into one case and are pending before a different judge; the defendants’ motion to dismiss these cases was denied and discovery is proceeding. The company believes that the lawsuits are without merit.

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A number of other legal actions are pending against the company. Based on information currently available to the company and on advice of counsel, management does not believe these other legal actions will, individually or in the aggregate, have a material adverse effect on the financial statements of the company.

Regardless of the outcomes, the company will incur legal and other fees to defend itself in all of these proceedings, which in the aggregate may have a significant impact on the company’s financial statements.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of February 15, 2007, there were 1,342 common shareholders of record. The company’s common stock is traded on the New York Stock Exchange. Information concerning restrictions on the company’s ability to declare and pay dividends on the common stock, the amount of common stock dividends declared, and price information for the common stock is contained in Notes 9, 12 and 16, respectively, to the Consolidated Financial Statements included in Exhibit 13. This information is incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

This information is included in the table entitled “Selected Financial Data” of Exhibit 13 and is incorporated herein by reference.

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This information is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 13 and is incorporated herein by reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Management – Financial Instruments” included in Exhibit 13 and is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of Chiquita Brands International, Inc., included in Exhibit 13 and including “Quarterly Financial Data” in Note 16 to the Consolidated Financial Statements, are incorporated herein by reference.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A - CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Chiquita maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its periodic filings with the SEC is (a) accumulated and communicated to the company’s management in a timely manner and (b) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of December 31, 2006, an evaluation was carried out by Chiquita’s management, with the participation of the company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based upon that evaluation, the company’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of that date.

Management’s report on internal control over financial reporting

The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. As a result of this assessment, management believes that, as of December 31, 2006, the company’s internal control over financial reporting was effective based on the criteria in Internal Control – Integrated Framework. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report which is included in Exhibit 13.

Changes in internal control over financial reporting

During the quarter ended December 31, 2006, there were no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Chiquita’s internal control over financial reporting.

ITEM 9B - OTHER INFORMATION

None.

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PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except for the information relating to the company’s executive officers below, which is as of February 28, 2007, the information required by this Item 10 is incorporated herein by reference from the applicable information set forth in “Election of Directors,” “Information About the Board of Directors and Its Committees” and “Security Ownership of Directors and Executive Officers – Section 16(a) Beneficial Ownership Reporting Compliance” which will be included in Chiquita’s definitive Proxy Statement to be filed with the SEC in connection with the 2007 Annual Meeting of Shareholders, and “Item 1 – Business – Additional Information.”

Executive Officers of the Registrant

Fernando Aguirre (age 49) has been Chiquita’s President and Chief Executive Officer and a director since January 2004 and Chairman since May 2004. From July 2002 to January 2004 he served as President, Special Projects for The Procter & Gamble Company (“P&G”), a manufacturer and distributor of consumer products, and from July 2000 to June 2002 he was President of the Global Feminine Care business unit of P&G. From July 1999 to June 2000 he was Vice President of P&G’s Global Snacks and U.S. Food Products business units. Prior to that, Mr. Aguirre had served P&G in various capacities since 1980. Mr. Aguirre is also a director of Coca-Cola Enterprises Inc.

Michael J. Holcomb (age 47) has been Vice President, Corporate Sales and Customer Development of the company since February 2007. From November 2006 to February 2007 he was Vice President and General Manager – International of The Kao Brands Company (formerly The Andrew Jergens Company), a leading manufacturer of beauty care products, and from September 2003 to October 2006 he served as Kao’s Vice President of U.S. Sales. He had previously been employed by Information Resources, Inc., a leading provider of strategic sales and marketing information and analysis for the consumer packaged goods industry, from September 2000 to August 2003, most recently as its Executive Vice President/General Manager Client Service.

Kevin R. Holland (age 45) has been Senior Vice President, Human Resources of the company since October 2005. Prior to joining Chiquita, he served as Chief People Officer of Coors Brewing Company, the primary U.S. operating subsidiary of Molson Coors Brewing Co., from February 2003 to June 2005. Prior to his service with Coors, Mr. Holland served as Vice President, Human Resources of FedEx Corp.’s FedEx Kinkos Office & Print Center from 1999 to February 2003.

Robert F. Kistinger (age 54) has been President and Chief Operating Officer of the company’s Chiquita Fresh Group since 2000. He has served the company in various capacities since 1980.

Manuel Rodriguez (age 57) has been Senior Vice President, Government and International Affairs and Corporate Responsibility Officer since March 2005. He was Senior Vice President, Government and International Affairs from August 2004 to March 2005 and Vice President, Government Affairs and Associate General Counsel from January 2003 to August 2004. From November 1998 to December 2002 he served as Associate General Counsel and Vice President of the Chiquita Fresh Group. He has served the company in various legal, government affairs and labor relations capacities since 1980.

Manjit Singh (age 37) has been Vice President and Chief Information Officer since September 2006. From April 2006 to September 2006, Mr. Singh was Chiquita’s Vice President, Corporate and Commercial IT. From May 2002 to April 2006, Mr. Singh was Director, Asia Pacific Business Systems

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and Regional Chief Information Officer in Singapore for The Gillette Company (which was acquired in October 2005 by the Procter & Gamble Company). He had previously been employed by Broadwing Corp, a telecommunications company, from February 2001 to January 2002 as Director, Strategic Alliances.

James E. Thompson (age 46) has been Senior Vice President, General Counsel and Secretary and Chief Compliance Officer of the company since July 2006. From April 2006 to June 2006 Mr. Thompson served as the company’s Senior Vice President and Chief Compliance Officer. From December 2002 to April 2006, Mr. Thompson was Group Vice President, General Counsel and Secretary at McLeodUSA, Inc., a telecommunications service provider. He had previously been employed from 1995 by Alticor, Inc., a manufacturer and distributor of consumer products, most recently as its Associate General Counsel—International Legal, and Chief Legal Officer, Innovations Business Unit.

Tanios Viviani (age 45) has been President of Fresh Express since July 2005. He was Vice President, Fresh Cut Fruit of the company from October 2004 to July 2005. He was Global Consortium Manager of P&G from August 2003 to October 2004 and from January 2001 to July 2003 was General Manager of P&G’s Juvian Fabric Care Services. From January 1999 to December 2000 Mr. Viviani was P&G’s Marketing Director for Global Strategic Planning and Design. Prior to that Mr. Viviani had served P&G in various capacities and locations since 1989.

Jeffrey M. Zalla (age 41) has been Senior Vice President and Chief Financial Officer since June 2005. From April 2005 to June 2005 he served as Vice President, Finance for the Chiquita Fresh Group-North America. He served the company as Vice President, Treasurer, and Corporate Responsibility Officer from April 2003 to April 2005, as Corporate Responsibility Officer and Vice President, Corporate Communications from September 2001 to April 2003 and as Vice President and Corporate Responsibility Officer from October 2000 to September 2001. Mr. Zalla has served the company in various positions since 1990.

Waheed Zaman (age 46) has been Senior Vice President, Supply Chain and Procurement since September 2006. From December 2005 to September 2006 Mr. Zaman was Senior Vice President, Supply Chain, Procurement and Chief Information Officer. From February 2004 to December 2005 he served as Vice President and Chief Information Officer of the company. He was Associate Director of P&G’s global business services from May 2001 to February 2004. From July 1998 to May 2001 he was Associate Director, Corporate IT at P&G, but was on special assignment as Associate Director, IT North America Market Development Organization from January to September 2000. Prior to that, Mr. Zaman had served P&G in various information technology capacities since 1988.

ITEM 11 - EXECUTIVE COMPENSATION

The information required by this Item 11 is incorporated herein by reference from the applicable information set forth in “Compensation of Executive Officers” and “Compensation of Directors” which will be included in Chiquita’s definitive Proxy Statement to be filed with the SEC in connection with the 2007 Annual Meeting of Shareholders.

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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is incorporated herein by reference from the applicable information set forth in “Security Ownership of Chiquita’s Principal Shareholders,” “Security Ownership of Directors and Executive Officers” and “Equity Compensation Plan Information” which will be included in Chiquita’s definitive Proxy Statement to be filed with the SEC in connection with the 2007 Annual Meeting of Shareholders.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 is incorporated herein by reference from the applicable information set forth in “Other Information – Related Person Transactions” and “Information About the Board of Directors and Its Committees” which will be included in Chiquita’s definitive Proxy Statement to be filed with the SEC in connection with the 2007 Annual Meeting of Shareholders.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 is incorporated herein by reference from the applicable information set forth in “Other Information – Chiquita’s Independent Registered Public Accounting Firm” which will be included in Chiquita’s definitive Proxy Statement to be filed with the SEC in connection with the 2007 Annual Meeting of Shareholders.

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PART IV

ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements. The following consolidated financial statements of the company and accompanying Reports of Independent Registered Public Accounting Firm are included in Exhibit 13:

	Page of Exhibit 13
Report of Independent Registered Public Accounting Firm	25
Report of Independent Registered Public Accounting Firm	26
Consolidated Statement of Income for the years ended 2006, 2005 and 2004	27
Consolidated Balance Sheet at December 31, 2006 and 2005	28
Consolidated Statement of Shareholders’ Equity for the years ended 2006, 2005 and 2004	29
Consolidated Statement of Cash Flow for the years ended 2006, 2005 and 2004	31
Notes to Consolidated Financial Statements	32

2. Financial Statement Schedules. Financial Statement Schedules I - Condensed Financial Information of Registrant and II - Consolidated Allowance for Doubtful Accounts Receivable and Consolidated Change in Tax Valuation Allowance are included on pages 37 through 39 and pages 40 through 41, respectively, of this Annual Report on Form 10-K. All other schedules are not required under the related instructions or are not applicable. The report of the independent auditors on these financial statement schedules is included in their consent attached as Exhibit 23.

3. Exhibits. See Index of Exhibits (pages 42 through 47) for a listing of all exhibits to this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 7, 2007.

CHIQUITA BRANDS INTERNATIONAL, INC.
By	/s/ Fernando Aguirre
	Fernando Aguirre
	Chairman of the Board, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below as of March 7, 2007:

/s/ Fernando Aguirre	Chairman of the Board, President and Chief
Fernando Aguirre	Executive Officer (Principal Executive Officer)
Morten Arntzen*	Director
Morten Arntzen
Robert W. Fisher*	Director
Robert W. Fisher
Dr. Clare M. Hasler*	Director
Dr. Clare M. Hasler
Roderick M. Hills*	Director
Roderick M. Hills

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Durk I. Jager*	Director
Durk I. Jager
Jaime Serra*	Director
Jaime Serra
Steven P. Stanbrook*	Director
Steven P. Stanbrook
/s/ Jeffrey M. Zalla	Senior Vice President and Chief Financial
Jeffrey M. Zalla	Officer (Principal Financial Officer)
/s/ Brian W. Kocher	Vice President, Controller and Chief Accounting
Brian W. Kocher	Officer (Principal Accounting Officer)

*By	/s/ Brian W. Kocher
	Attorney-in-Fact**

** By authority of powers of attorney filed with this Annual Report on Form 10-K.

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CHIQUITA BRANDS INTERNATIONAL, INC. – PARENT COMPANY ONLY

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

Condensed Balance Sheet

	December 31,
	2006		2005
ASSETS
Current assets
Cash and equivalents	$	—	$	—
Other current assets		2,207		2,472
Total current assets		2,207		2,472
Investments in and accounts with subsidiaries		1,381,061		1,485,793
Other assets		24,886		23,177
Total assets	$	1,408,154	$	1,511,442
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Long-term debt due within one year	$	—	$	—
Accounts payable and accrued liabilities		13,879		19,919
Total current liabilities		13,879		19,919
Long-term debt		475,000		475,000
Commitments and contingent liabilities		25,000		—
Other liabilities		23,448		23,022
Total liabilities		537,327		517,941
Shareholders’ equity		870,827		993,501
Total liabilities and shareholders’ equity	$	1,408,154	$	1,511,442

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CHIQUITA BRANDS INTERNATIONAL, INC. – PARENT COMPANY ONLY

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

Condensed Statement of Operations

	2006			2005			2004
Net sales	$	—		$	—		$	—
Cost of sales		—			—			—
Selling, general and administrative		(52,240	)		(46,771	)		(56,485	)
Equity in earnings of subsidiaries		19,371			211,262			162,533
Charge for contingent liabilities		(25,000	)		—			—
Operating income (loss)		(57,869	)		164,491			106,048
Interest income		—			—			347
Interest expense		(40,165	)		(30,259	)		(26,165	)
Other income (expense), net		—			308			(19,428	)
Income (loss) before income taxes		(98,034	)		134,540			60,802
Income taxes		2,100			(3,100	)		(5,400	)
Net income (loss)	$	(95,934	)	$	131,440		$	55,402

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CHIQUITA BRANDS INTERNATIONAL, INC. – PARENT COMPANY ONLY

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(In thousands)

Condensed Statement of Cash Flow

	2006			2005			2004
Cash flow from operations	$	11,450		$	(5,947	)	$	25,575
Investing
Long-term investments		—			(218,647	)		(3,500	)
Proceeds from sale of property, plant and equipment		—			—			856
Cash flow from investing		—			(218,647	)		(2,644	)
Financing
Issuances of long-term debt		—			218,647			245,934
Repayments of long-term debt		—			—			(271,737	)
Proceeds from exercise of stock options/warrants		1,159			22,527			12,498
Dividends on common stock		(12,609	)		(16,580	)		—
Repurchase of common stock		—			—			(9,626	)
Cash flow from financing		(11,450	)		224,594			(22,931	)
Change in cash and equivalents		—			—			—
Balance at beginning of period		—			—			—
Balance at end of period	$	—		$	—		$	—

Notes to Condensed Financial Information

1. All cash is owned and managed by CBL, acting as agent for CBII.

2. For purposes of these condensed financial statements, CBII’s investments in its subsidiaries are accounted for by the equity method.

3. CBII paid a quarterly cash dividend of $0.10 per share on the outstanding shares of common stock in the first three quarters of 2006. In the third quarter, the company announced the suspension of its dividend, beginning with the payment that would have been paid in October 2006. Quarterly cash dividends were paid in each of the four quarters of 2005.

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CHIQUITA BRANDS INTERNATIONAL, INC.

SCHEDULE II—CONSOLIDATED ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

(In thousands)

	2006			2005		2004
Balance at beginning of period	$	12,746		$	12,241	$	13,066
Additions:
Acquisition of Fresh Express		—			201		—
Charged to costs and expenses		2,221			3,157		7,621
		2,221			3,358		7,621
Deductions:
Write-offs		3,596			1,623		8,108
Other, net		(2,228	)		1,230		338
		1,368			2,853		8,446
Balance at end of period	$	13,599		$	12,746	$	12,241

40

CHIQUITA BRANDS INTERNATIONAL, INC.

SCHEDULE II—CONSOLIDATED CHANGE IN TAX VALUATION ALLOWANCE

(In thousands)

	2006		2005		2004
Balance at beginning of period	$	200,325	$	176,676	$	128,795
Additions:
U.S. net deferred tax assets		21,743		30,187		29,425
Prior year U.S. NOL adjustments		—		—		6,253
Foreign net deferred tax assets		13,555		18,843		11,948
Other, net		2,450		—		1,158
		37,748		49,030		48,784
Deductions:
Acquisition of Fresh Express		—		2,153		—
Prior year U.S. NOL adjustments		167		5,431		—
Closure of U.S. tax audit		13,218		—		—
Prior year foreign NOL adjustments		12,779		17,797		903
		26,164		25,381		903
Balance at end of period	$	211,909	$	200,325	$	176,676

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CHIQUITA BRANDS INTERNATIONAL, INC.

Index of Exhibits

Exhibit Number	Description
*  2.1	Order Confirming Second Amended Plan of Reorganization of Chiquita Brands International, Inc. under Chapter 11 of the Bankruptcy Code, with attached Second Amended Plan of Reorganization of Chiquita Brands International, Inc. under Chapter 11 of the Bankruptcy Code (Exhibit 2.1 to Current Report on Form 8-K filed March 12, 2002)
*  2.2	Stock Purchase Agreement, dated February 22, 2005, by and between Chiquita Brands International, Inc. and Performance Food Group Company (Exhibit 2.1 to Current Report on Form 8-K filed February 23, 2005)
*  3.1	Third Restated Certificate of Incorporation (Exhibit 1 to Form 8-A filed March 12, 2002)
*  3.2	Restated By-Laws, as amended through April 9, 2002 (Exhibit 3.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)
*  4.1	Warrant Agreement dated as of March 19, 2002 between Chiquita Brands International, Inc. and American Security Transfer Company Limited Partnership, as Warrant Agent (Exhibit 4-b to Annual Report on Form 10-K for the year ended December 31, 2002)
*  4.2	Acceptance of Appointment as successor Warrant Agent by Wells Fargo Bank, National Association, and Amendment No. 2, dated as of March 27, 2006, between Chiquita Brands International, Inc. and Wells Fargo Bank, National Association, to Warrant Agreement dated as of March 19, 2002 (as previously amended). (Exhibit 4.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2006)
*  4.3	Indenture, dated as of September 28, 2004, between Chiquita Brands International, Inc. and LaSalle Bank National Association, as trustee, relating to $250 million aggregate principal amount of 7 1/2% Senior Notes due 2014. (Exhibit 4.1 to Current Report on Form 8-K filed September 30, 2004)
*  4.4	Registration Rights Agreement, dated as of September 28, 2004, between Chiquita Brands International, Inc. and Morgan Stanley & Co. Incorporated, Wachovia Capital Markets LLC, Wells Fargo Securities, LLC, ABN Amro Incorporated and ING Financial Markets LLC, as placement agents of the company’s 7 1/2% Senior Notes due 2014. (Exhibit 4.2 to Current Report on Form 8-K filed September 30, 2004)
*  4.5	Indenture, dated as June 28, 2005, between Chiquita Brands International, Inc. and LaSalle Bank National Association, as trustee, relating to $225 million aggregate principal amount of 8 7/8% Senior Notes due 2015 (Exhibit 4.1 to Current Report on Form 8-K filed July 1, 2005)

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*  4.6	Registration Rights Agreement, dated as of June 28, 2005 between Chiquita Brands International, Inc. and Morgan Stanley and Co. Incorporated, Wachovia Capital Markets, LLC, Goldman Sachs & Co., BB&T Capital Markets, a division of Scott & Stringfellow, Inc., ABN AMRO Incorporated and Rabo Securities USA, Inc., as placement agents of the company’s 8 7/8% Senior Notes due 2015 (Exhibit 4.2 to Current Report on Form 8-K filed July 1, 2005)
*10.1	Operating contract dated February 18, 1998 between the Republic of Panama and Chiriqui Land Company (n/k/a Bocas Fruit Company) consisting of Contract of Operations (Bocas del Toro), Amendment and Extension of the Lease Land Contract, and related documents as published in the Republic of Panama Official Gazette No. 23,485 (included as part of Exhibit 10-b to Annual Report on Form 10-K for the year ended December 31, 1997)
*10.2	Framework Agreement signed April 25, 2003 among the Republic of Panama, Sindicato Industrial de Trabajadores de Chiriqui Land Company y Empresas Afines (“Sitrachilco”), the local banana workers union at Chiquita’s Armuelles, Panama division, Cooperativa de Servicios Multiples de Puerto Armuelles, R.L. (“Coosemupar”), a worker cooperative led by members of Sitrachilco, and Puerto Armuelles Fruit Co., Ltd. (“PAFCO”), relating to the sale by PAFCO of its assets to Coosemupar (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2003)
*10.3	Stock Purchase Agreement dated June 10, 2004, among Chiquita International Limited, Chiquita Brands L.L.C. and Invesmar Limited. (Exhibit 99.2 to Current Report on Form 8-K filed June 14, 2004)
*10.4	International Banana Purchase Agreement F.O.B. (Port Of Shipment) between Chiquita International Limited and Banana International Corporation. English translation of original document, which is in Spanish. (Exhibit 99.3 to Current Report on Form 8-K filed June 14, 2004)
*10.5	International Gold Pineapple Purchase Agreement D.D.P. (Port Of Destination), between Chiquita Frupac, Inc. and Banana International Corporation. English translation of original document, which is in Spanish. (Exhibit 99.4 to Current Report on Form 8-K filed June 14, 2004)
*10.6	Form of Banana Purchase Indemnity Letter Agreement between Banana International Corporation and Chiquita International Limited. (Exhibit 99.5 to Current Report on Form 8-K filed June 14, 2004)
*10.7	Strike Indemnity Letter Agreement dated June 10, 2004 among Chiquita Brands L.L.C., Chiquita International Limited and Invesmar Limited. (Exhibit 99.6 to Current Report on Form 8-K filed June 14, 2004)
*10.8	Amended and Restated Credit Agreement dated as of June 28, 2005, among Chiquita Brands International, Inc., Chiquita Brands L.L.C., certain financial institutions as lenders, and Wachovia Bank, National Association as administrative agent, letter of credit issuer and swing line lender, Wells Fargo Bank, National Association as letter of credit issuer, Morgan Stanley Senior Funding, Inc., as syndication agent and co-lead

43

	arranger and Goldman Sachs Credit Partners L.P. as documentation agent (Exhibit 10.1 to Current Report on Form 8-K filed July 1, 2005)
*10.9	Amendment No. 1 to Amended and Restated Credit Agreement effective November 18, 2005, among Chiquita Brands L.L.C., Chiquita Brands International, Inc., certain financial institutions as lenders and Wachovia Bank, National Association as administrative agent (Exhibit 10.1 to Current Report on Form 8-K filed November 23, 2005)
*10.10	Amendment No. 2 to Amended and Restated Credit Agreement effective February 10, 2006, among Chiquita Brands L.L.C., Chiquita Brands International, Inc., certain financial institutions as lenders and Wachovia Bank, National Association as administrative agent (Exhibit 10.11 to Annual Report on Form 10-K for the year ended December 31, 2005)
*10.11	Amendment No. 3 to Credit Agreement, effective June 7, 2006, among Chiquita Brands L.L.C., Chiquita Brands International, Inc., certain financial institutions as lenders, and Wachovia Bank, National Association, as administrative agent (Exhibit 10.1 to Current Report on Form 8-K filed June 9, 2006)
*10.12	Amendment No. 4 to the Credit Agreement, effective November 8, 2006, among Chiquita Brands L.L.C., Chiquita Brands International, Inc., certain financial institutions as lenders, and Wachovia Bank, National Association, as administrative agent (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)
*10.13	Amendment No. 5 to the Credit Agreement, effective March 7, 2007, among Chiquita Brands L.L.C., Chiquita Brands International, Inc., certain financial institutions as lenders, and Wachovia Bank, National Association, as administrative agent (Exhibit 10.1 to Current Report on Form 8-K filed March 7, 2007)
*10.14	Revolving Credit Agreement dated as of April 22, 2005 by and among Great White Fleet Ltd., as Borrower, and BVS Ltd., CDV Ltd., and CDY Ltd., as Guarantors, and Nordea Bank Finland Plc, acting through its New York Branch, as Agent, and Nordea Bank Norge ASA, acting through its Grand Cayman Branch, as Lender (Exhibit 10.1 to Current Report on Form 8-K filed April 26, 2005)
Executive Compensation Plans and Agreements
*10.15	Chiquita Brands International, Inc. 1997 Amended and Restated Deferred Compensation Plan, conformed to include amendments effective through January 1, 2001 (Exhibit 10-f to Annual Report on Form 10-K for the year ended December 31, 2000)
*10.16	Chiquita Brands International, Inc. Capital Accumulation Plan, conformed to include amendments through January 1, 2004 (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)
*10.17	Guaranty, dated March 12, 2001, by Chiquita Brands, Inc. (n/k/a Chiquita Brands L.L.C.) of obligations of Chiquita Brands International, Inc., under its Deferred Compensation and Capital Accumulation Plans, included as Exhibits 10.10 and 10.11

44

	above (Exhibit 10-i to Annual Report on Form 10-K for the year ended December 31, 2000)
10.18	Chiquita Brands International, Inc. Chiquita Stock and Incentive Plan, conformed to include amendments through November 16, 2006
*10.19	Long-Term Incentive Program 2006-2008 Terms (Exhibit 10.1 to Current Report on Form 8-K filed March 31, 2006)
10.20	Long-Term Incentive Program 2007-2009 Terms
*10.21	Amended and Restated Directors Deferred Compensation Program approved November 17, 2005 (Exhibit 10.2 to Current Report on Form 8-K filed November 23, 2005)
10.22	Summary of director compensation for non-management directors of Chiquita Brands International, Inc.
*10.23	Form of Stock Option Agreement with non-management directors of the company (Exhibit 10-p to Annual Report on Form 10-K for the year ended December 31, 2002)
*10.24	Form of Restricted Share Agreement with non-management directors (Exhibit 10-u to Annual Report on Form 10-K for the year ended December 31, 2002)
*10.25	Form of Restricted Share Agreement with newly elected non-management directors (Exhibit 10.1 to Current Report on Form 8-K filed October 14, 2005)
*10.26	Employment Agreement dated and effective January 12, 2004 between Chiquita Brands International, Inc. and Fernando Aguirre, including Form of Restricted Share Agreement for 110,000 shares of Common Stock (time vesting) (Exhibit A), Form of Restricted Share Agreement for 150,000 shares of Common Stock (performance vesting) (Exhibit B) and Form of Non-Qualified Stock Option Agreement with respect to an aggregate of 325,000 shares of Common Stock (Exhibit C) (Exhibit 10.1 to Current Report on Form 8-K filed on January 14, 2004)
*10.27	Form of Stock Option Agreement with all other employees, including executive officers (Exhibit 10-r to Annual Report on Form10-K for the year ended December 31, 2002)
*10.28	Form of Stock Appreciation Right Agreement with certain non-U.S. employees, which may include executive officers (Exhibit 10-b to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002)
*10.29	Form of Restricted Share Agreement with all other employees, including executive officers, for grants under the Long Term Incentive Program and otherwise under the Stock Option and Incentive Plan [used prior to September 27, 2004] (Exhibit 10-y to Annual Report on Form 10-K for the year ended December 31, 2003)
*10.30	Form of Restricted Share Agreement for use with employees, including executive

45

	officers, for grants under the Long Term Incentive Program and otherwise under the Company’s Stock Option and Incentive Plan [used between September 27, 2004 and May 24, 2005] (Exhibit 10.28 to Annual Report on Form 10-K for the year ended December 31, 2004)
*10.31	Form of Restricted Share Agreement for use with employees, including executive officers, for grants under the Long Term Incentive Program and otherwise under the Company’s Stock Option and Incentive Plan [used between May 24, 2005 and November 22, 2005] (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)
*10.32	Form of Restricted Share Agreement for use with employees, including executive officers, for grants under the Long Term Incentive Program and otherwise under the Company’s Stock Option and Incentive Plan [used between November 22, 2005 and July 6, 2006] (Exhibit 10.3 to Current Report on Form 8-K filed November 23, 2005)
*10.33	Form of Restricted Stock Award and Agreement for employees, including executive officers, approved on July 6, 2006, applicable to grantees who may attain “Retirement” prior to issuance of the shares. (Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
*10.34	Form of Restricted Stock Award and Agreement for employees, including executive officers, approved on July 6, 2006, applicable to grantees who will not attain “Retirement” prior to issuance of the shares. (Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
*10.35	Retirement Agreement between Chiquita Brands International, Inc. and Robert W. Olson, dated August 3, 2006. (Exhibit 10.5 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
*10.36	Form of Change in Control Severance Agreement entered into with those executive officers of the company who were appointed on or before December 31, 2006. (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)
10.37	Executive Officer Severance Pay Plan, adopted March 27, 2006, conformed to reflect amendments through January 12, 2007
13	Chiquita Brands International, Inc. consolidated financial statements, management’s discussion and analysis of financial condition and results of operations, and selected financial data to be included in its 2006 Annual Report to Shareholders
21	Chiquita Brands International, Inc. Subsidiaries
23	Consent of Independent Registered Public Accounting Firm
24	Powers of Attorney
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

46

31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32	Section 1350 Certifications

* Incorporated by reference.

47

EX-10.18

Exhibit 10.18

CHIQUITA STOCK AND INCENTIVE PLAN

(Adopted March 19, 2002, as amended through November 16, 2006)

CHIQUITA STOCK AND INCENTIVE PLAN

SECTION I.

PURPOSE

The purpose of the Chiquita Stock and Incentive Plan (the “Plan”) is to promote the long-term growth and financial success of Chiquita Brands International, Inc. (the “Company”) and its subsidiaries by enabling the Company to compete successfully in attracting and retaining employees and directors (and consultants and advisors) of outstanding ability, stimulating the efforts of such persons to achieve the Company’s long-range performance goals and objectives, and encouraging the identification of their interests with those of the Company’s shareholders.

SECTION II.

DEFINITIONS

For purposes of this Plan, the following terms shall have the following meanings:

2.1 “Advisor” means a person who provides bona fide advisory or consulting services to the Company or a Subsidiary and whose Shares subject to an Award are eligible for registration on Form S-8 under the Securities Act of 1933.

2.2 “Award” means any form of Stock Option, Restricted Stock Award, Unrestricted Stock Award, Performance Award, or Stock Appreciation Right granted under this Plan.

2.3 “Award Agreement” means a written agreement setting forth the terms of an Award.

2.4 “Award Date” or “Grant Date” means the date designated by the Committee as the date upon which an Award is granted.

2.5 “Award Period” or “Term” means the period beginning on an Award Date and ending on the expiration date of such Award.

2.6 “Board” means the Board of Directors of the Company.

1

2.7 “Cause” means, unless otherwise defined in an Award Agreement, a Participant’s engaging in any of the following acts:

(i) any type of disloyalty to the Company or a Subsidiary, including, without limitation, fraud, embezzlement, theft, or dishonesty in the course of a Participant’s employment or business relationship with the Company or Subsidiary; or

(ii) conviction of a felony or other crime involving a breach of trust or fiduciary duty owed to the Company or a Subsidiary; or

(iii) unauthorized disclosure of trade secrets or confidential information of the Company or a Subsidiary; or

(iv) a material breach of any agreement with the Company or a Subsidiary in respect of confidentiality, non-disclosure, non-competition or otherwise; or

(v) any serious violation of a policy of the Company or a Subsidiary that is materially damaging to the interests of the Company or Subsidiary.

2.8 “Change in Control” means the occurrence after the Effective Date of any of the following events:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than an Exempt Entity, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 30% or more of the total voting power of all of the Company’s voting securities then outstanding (“Voting Shares”);

(ii) on any date, the individuals who constituted the Company’s Board at the beginning of the two-year period immediately preceding such date (together with any new directors whose election by the Company’s Board, or whose nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or

(iii) immediately after a merger or consolidation of the Company or any Subsidiary of the Company with or into, or the sale or other disposition of all or substantially all of the Company’s assets to, any other corporation (where pursuant to the terms of such transaction outstanding Awards are assumed by the

2

surviving, resulting or acquiring corporation or new Awards are substituted therefor), the Voting Shares of the Company outstanding immediately prior to such transaction do not represent (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity or any parent thereof) more than 50% of the total voting power of the voting securities of the Company or surviving or acquiring entity or any parent thereof outstanding immediately after such merger or consolidation.

2.9 “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations and rulings thereunder. References to any particular section of the Code include references to any successor amendments or replacements of such section.

2.10 “Committee” means the committee appointed by the Board and consisting of two or more Directors of the Company, each of whom shall be a “non-employee director” as defined in Rule 16b-3 and an “outside director” as defined in the regulations under Section 162(m) of the Code.

2.11 “Common Stock” means the Company’s Common Stock, par value $.01 per share, and any successor security.

2.12 “Company” means Chiquita Brands International, Inc.

2.13 “Designated Payment Date” has the meaning set forth in Section 8.2(a).

2.14 “Director” means any person serving on the Board of Directors of the Company or any of its Subsidiaries who is not an Officer (or officer) or Employee of the Company or any Subsidiary.

2.15 “Disability” means (i) a “permanent and total disability” within the meaning of Section 22(e)(3) of the Code as determined by the Committee in good faith upon receipt of medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice, or (ii) in the case of an Employee, a disability that qualifies as a long-term disability under the Company’s or a Subsidiary’s Long Term Disability insurance, or (iii) any other definition of disability set forth in an Award Agreement.

2.16 “Effective Date” means March 19, 2002.

2.17 “Eligible Person” means any person who is either an Employee, Director or Advisor.

2.18 “Employee” means (i) any officer or employee of the Company or a Subsidiary (including those employees on military leave, sick leave, or other bona fide leave of absence approved by the Company or a Subsidiary) or (ii) any person who has received and accepted an offer of employment from the Company or a Subsidiary.

3

2.19 “Exchange Act” means the Securities Exchange Act of 1934.

2.20 “Exempt Entity” means (i) an underwriter temporarily holding securities pursuant to an offering of such securities and (ii) the Company, any of its Subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries.

2.21 “Fair Market Value” means, as of any date, the closing price of a Share on a specified date as reported on the New York Stock Exchange Composite Tape (or such other consolidated transaction reporting system on which the Shares are primarily traded) or, if the Shares were not traded on such day, then the next preceding day on which the Shares were traded, all as reported by such source as the Committee may select. If the Shares are not traded on a national securities exchange or other market system, Fair Market Value shall be determined by the Committee in accordance with Section 409A of the Code.

2.22 “Immediate Family” means any child, stepchild, grandchild, spouse, son-in-law or daughter-in-law and shall include adoptive relationships; provided, however, that if the Committee adopts a different definition of “immediate family” (or similar term) in connection with the transferability of Stock Options and SARs awarded under this Plan, such definition shall apply, without further action of the Board.

2.23 “Incentive Stock Option” means any Stock Option awarded under Section VII of this Plan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

2.24 “Non-Qualified Stock Option” means any Stock Option awarded under Section VII of this Plan that is not an Incentive Stock Option.

2.25 “Officer” means a person who has been determined to be an officer of the Company under Rule 16a-1(f) in a resolution adopted by the Board.

2.26 “Option Price” or “Exercise Price” means the price per share at which Common Stock may be purchased upon the exercise of an Option or an Award.

2.27 “Participant” means an Eligible Person to whom an Award has been made pursuant to this Plan.

2.28 “Performance Award” means an Award granted pursuant to Section IX.

2.29 “Performance-Based Compensation” means compensation intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code and the Treasury Regulations thereunder.

2.30 “Performance Measures” means any one or more of the following, as selected by the Committee and applied to the Company as a whole or individual units

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thereof, and measured either absolutely or relative to a designated group of comparable companies: (i) earnings before interest, taxes, depreciation, and amortization (“EBITDA”); (ii) appreciation in the Fair Market Value, book value or other measure of value of the Common Stock; (iii) cash flow; (iv) earnings (including, without limitation, earnings per share); (v) return on equity; (vi) return on investment; (vii) total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) revenue; (xi) income (including, without limitation, net income); (xii) operating income (including, without limitation, net operating income); (xiii) operating profit (including, without limitation, net operating profit); (xiv) operating margin; (xv) return on operating revenue; and (xvi) market share.

2.31 “Reference Price” with respect to a SAR means a dollar amount determined by the Committee at the time of Grant.

2.32 “Replacement Option” means a Non-Qualified Stock Option granted pursuant to Section 7.4 upon the exercise of a Stock Option granted pursuant to the Plan where the Option Price is paid with previously owned shares of Common Stock.

2.33 “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award which are subject to the restrictions set forth in the related Award Agreement.

2.34 “Restricted Stock Award” means an award of a fixed number of Shares to a Participant which is subject to forfeiture provisions and other conditions set forth in the Award Agreement.

2.35 “Retirement” means an Employee’s or Director’s Separation from Service (in each case other than by reason of death or Disability or for Cause) on or after (i) attainment of age 65 or (ii) attainment of age 55 with 10 years of employment with, or service on the Board of, the Company or a Subsidiary.

2.36 “Rule 16b-3” and “Rule 16a-1(f)” mean Rules 16b-3 and 16a-1(f) under the Exchange Act or any corresponding successor rules or regulations.

2.37 “Separation from Service” or “Separates from Service” has the meaning ascribed to such term in Section 409A of the Code.

2.38 “Share” means one share of the Company’s Common Stock.

2.39 “Short-term Deferral Deadline” means the later of the 15th day of the third month following the Participant’s first taxable year in which an Award is no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code) or the 15th day of the third month following the end of the Company’s first taxable year in which an Award is no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code). Notwithstanding the foregoing, if it is administratively impracticable for the Company to make a payment or to deliver Shares

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by the end of the applicable 2 ¹/2 month period, or if making the payment or delivering the Shares by the end of the applicable 2 ¹/2 month period would jeopardized the solvency of the Company, and, as of the Grant Date, such impracticability or insolvency was unforeseeable, the payment or delivery shall be made as soon as reasonably practicable after the applicable 2 ¹/2 month period and shall be considered as having been made prior to the Short-term Deferral Deadline. For purposes of this definition, an action or failure to act of the Participant or a person under the Participant’s control, such as a failure to provide necessary information or documentation, is not an unforeseeable event.

2.40 “Specified Employee Delayed Payment Date” has the meaning set forth in Section 8.2(a).

2.41 “Stock Appreciation Right” or “SAR” means the right to receive, for each unit of the SAR, an amount of cash, a number of Shares or a combination thereof equal in value to, the excess of the Fair Market Value of one Share on the date of exercise of the SAR over the Reference Price of the SAR.

2.42 “Stock Option” or “Option” means the right to purchase shares of Common Stock (including a Replacement Option) granted pursuant to Section VII of this Plan.

2.43 “Subsidiary” means, with respect to grants of Awards (other than Incentive Stock Options), any entity directly or indirectly controlled by the Company or any entity, including an acquired entity, in which the Company has a significant equity interest, as determined by the Committee, in its sole discretion, provided such entity is considered a service recipient (within the meaning of Section 409A) that may be aggregated with the Company.

With respect to grants of Incentive Stock Options, the term “Subsidiary” means any corporation and any other entity considered a subsidiary as defined in Section 424(f) of the Code.

2.44 “Transfer” means alienation, attachment, sale, assignment, pledge, encumbrance, charge or other disposition; and the terms “Transferred” or “Transferable” have corresponding meanings.

2.45 “Unrestricted Stock Award” means an Award granted pursuant to Section 8.3.

2.46 “Vest” means, in the case of any Award, to become exercisable or become free of restrictions solely as a result of either (i) the passage of required time periods specified under the terms of the Award (“Passage of Time Criteria”) or (ii) the inapplicability of Passage of Time Criteria due to a Change of Control or a Separation from Service pursuant to the provisions of Section XI. For purposes of this Plan, “Vest” does not refer to an Award becoming exercisable or free of restrictions due to the attainment of performance criteria or any other criteria not solely related to the passage of time (“Other Criteria”). An Award whose terms specify Other Criteria that have not

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been fully satisfied at the time of a Change of Control or Separation from Service will not Vest (unless otherwise determined by the Committee or specifically provided by such terms) as a result of such Change of Control or Separation from Service (even if the terms of such Award contain Passage of Time Criteria in addition to, in combination with, or as an alternative to such Other Criteria).

SECTION III.

ADMINISTRATION

3.1 The Committee. This Plan shall be administered and interpreted by the Committee. Except as provided in Section 3.4, any function of the Committee also may be performed by the Board. Actions of the Committee may be taken by a majority of its members at a meeting or by the unanimous written consent of all of its members without a meeting.

3.2 Powers of the Committee. The Committee shall have the power and authority to operate, manage and administer the Plan on behalf of the Company, which includes, but is not limited to, the power and authority:

(i) to grant to Eligible Persons one or more Awards consisting of any or a combination of Stock Options, Restricted Stock, Unrestricted Stock, Performance Awards, and Stock Appreciation Rights;

(ii) to select the Eligible Persons to whom Awards may be granted;

(iii) to determine the types and combinations of Awards to be granted to Eligible Persons;

(iv) to determine the number of Shares or units which may be subject to each Award;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award (including, but not limited to, the term, price, exercisability, method of exercise and payment, any restriction or limitation on transfer, any applicable performance measures or contingencies, any vesting schedule or acceleration, or any forfeiture provisions or waiver, regarding any Award) and the related Shares, based on such factors as the Committee shall determine; and

(vi) to modify or waive any restrictions, contingencies or limitations contained in, and grant extensions to the terms or exercise periods of, or accelerate the vesting of, any outstanding Awards, as long as such modifications, waivers, extensions or accelerations would not either cause the Award to be treated as the granting of a new Award under Code Section 409A that is not

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exempt from, or compliant with, the requirements of Section 409A or be inconsistent with the terms of the Plan, but no such changes shall impair the rights of any Participant without his or her consent unless required by law or integrally related to a requirement of law.

3.3 Guidelines. The Committee will have the authority and discretion to interpret the Plan and any Awards granted under the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any related Award Agreement in the manner and to the extent it deems necessary to carry the Plan into effect.

3.4 Delegation of Authority. The Committee may delegate to one or more of the Company’s Officers or (in the case of ministerial duties only) other employees all or any portion of the Committee’s authority, powers, responsibilities and administrative duties under the Plan, with such conditions and limitations as the Committee shall prescribe in writing; provided, however, that only the Committee is authorized to grant Awards to, or make any decisions with respect to Awards granted to, Officers. A record of all actions taken by any Officer to whom the Committee has delegated a portion of its powers or responsibilities shall be filed with the minutes of the meetings of the Committee and shall be made available for review by the Committee upon request.

3.5 Decisions Final. Any action, decision, interpretation or determination by or at the direction of the Committee (or of any person acting under a delegation pursuant to Section 3.4) concerning the application or administration of the Plan or any Award(s) shall be final and binding upon all persons and need not be uniform with respect to its determination of recipients, amount, timing, form, terms or provisions of Awards.

3.6 Award Agreements. Each Award under the Plan shall be evidenced by an Award Agreement substantially in the form approved by the Committee from time to time.

SECTION IV.

SHARES SUBJECT TO PLAN

4.1 Shares Available for Issuance of Awards. Subject to adjustment as provided in Section 4.4, the aggregate number of Shares which may be issued under this Plan shall not exceed 9,425,926 Shares. As determined from time to time by the Committee, the Shares available under this Plan for grants of Awards may consist either in whole or in part of authorized but unissued Shares or Shares which have been reacquired by the Company following original issuance. The aggregate number of Stock Appreciation Right units granted under this Plan shall not exceed 500,000, and the

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maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall be 9,425,926.

4.2 Maximum Awards Per Participant. The number of shares covered by Options, together with the number of SAR units, granted to any one individual shall not exceed 2,000,000 during any one calendar-year period.

No more than 500,000 Shares of Common Stock may be issued in payment of Performance Awards denominated in Shares of Common Stock, and no more than $5,000,000 in cash (or Fair Market Value if paid in Shares of Common Stock) may be paid pursuant to Performance Awards denominated in dollars, granted in each case to any one individual during any one calendar-year period that are intended to be Performance-Based Compensation. If delivery of Shares earned under a Performance Award is delayed, any additional Shares attributable to dividends paid during such period of delayed delivery shall be disregarded for purposes of this paragraph.

4.3 Re-Use of Shares. If any Award granted under this Plan shall expire, terminate or be forfeited or canceled for any reason before it has vested or been exercised in full, the number of unissued or undelivered Shares subject to such Award shall again be available for future grants. The Committee may make such other determinations regarding the counting of Shares issued pursuant to this Plan as it deems necessary or advisable, provided that such determinations shall be permitted by law. Notwithstanding the foregoing, Shares that are tendered to or withheld by the Company as full or partial payment in connection with any Award under the Plan, as well as any Shares tendered to or withheld by the Company to satisfy the tax withholding obligations related to any Award, shall not be available for subsequent Awards under the Plan. In addition, a SAR settled in Shares of Common Stock shall be considered settled in full against the number of Shares available for award.

4.4 Adjustment Provisions.

(a) Adjustment for Change in Capitalization. If the Company shall at any time change the number of issued Shares without new consideration to the Company (such as by stock dividend, stock split, recapitalization, reorganization, exchange of shares, liquidation, combination or other change in corporate structure affecting the Shares) or make a distribution to shareholders of cash or property which, has an impact on the value of outstanding Shares, then the numbers of Shares and SAR units specified in Sections 4.1 and 4.2, the specified or fixed numbers of Shares or SAR units covered by each outstanding Award, and, if applicable, the Option Price, Reference Price, or performance goals for each outstanding Award shall be proportionately adjusted; provided that (i) any adjustments made in the number of Shares with respect to which Incentive Stock Options may be or have been granted shall be made in accordance with Code Section 424, (ii) the numbers of Shares or SAR units covered by each outstanding Award shall be made in accordance with Section 409A of the Code, and (iii) fractions of a Share will not be issued but either will be replaced by a cash payment equal to Fair

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Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee.

(b) Other Equitable Adjustments. Notwithstanding any other provision of the Plan, and without affecting the number of Shares or SAR units reserved or available hereunder, the Committee may authorize the issuance, continuation or assumption of Awards or provide for equitable adjustments or changes in the terms of Awards, in connection with any merger, consolidation, sale of assets, acquisition of property or stock, recapitalization, reorganization or similar occurrence in which the Company is the continuing or surviving corporation, upon such terms and conditions as it may deem equitable and appropriate; provided, that the numbers and types of Shares or SAR units covered by each outstanding Award shall be made in accordance with Section 409A of the Code.

SECTION V.

CHANGE IN CONTROL; MERGER, CONSOLIDATION, ETC.

5.1 Effect of Change in Control On Outstanding Awards. In the event of, and upon a Change in Control, all Awards outstanding on the date of such Change in Control shall become fully (100%) Vested.

5.2 Separation from Service After Change in Control. In the event that an Employee has a Separation from Service as a result of the Company or a Subsidiary terminating such Employee’s service for any reason other than for Cause within one (1) year after a Change in Control, all of the outstanding Vested Stock Options and SARs held by such Employee on the date of Separation from Service shall be exercisable for a period ending on the earlier to occur of the first anniversary of the date of Separation from Service or the respective Expiration Dates of such Stock Options and SARs.

5.3 Merger, Consolidation, Etc. In the event that the Company shall, pursuant to action by its Board of Directors, propose to (i) merge into, consolidate with, sell or otherwise dispose of all or substantially all of its assets, to another corporation or other entity and provision is not made pursuant to the terms of such transaction for the assumption by the surviving, resulting or acquiring corporation of outstanding Awards under the Plan, or the substitution of new Awards therefor, or (ii) dissolve or liquidate, then (A) the Committee shall cause written notice of such proposed transaction to be given to each Participant not less than 30 days prior to the anticipated date on which such proposed transaction is to be consummated, and (B) all outstanding Awards that are not so assumed or substituted for shall become fully (100%) Vested immediately prior, but subject, to actual consummation of the transaction. Prior to a date specified in the notice, which shall not be more than 3 days prior to the consummation of such transaction, each Participant shall have the right to exercise all Stock Options and SARs held by such Participant that are not so assumed or substituted for on the following basis: (x) such

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exercise shall be conditioned on consummation of such transaction, (y) such exercise shall be effective immediately prior to the consummation of such transaction, and (z) the Option Price for any such Stock Options shall not be required to be paid until 7 days after written notice by the Company to the Participant that such transaction has been consummated. If such transaction is consummated, each Stock Option and SAR, to the extent not previously exercised prior to the date specified in the foregoing notice of proposed transaction, shall terminate upon the consummation of such transaction. If such transaction is abandoned, (a) any and all conditional exercises of Stock Options and SARs in accordance with this Section 5.3 shall be deemed annulled and of no force or effect and (b) to the extent that any Award shall have Vested solely by operation of this Section 5.3, such Vesting shall be deemed annulled and of no force or effect and the Vesting provisions of such Award shall be reinstated.

5.4 Applicability of Section V. The provisions of Section V shall apply to all Awards granted under the Plan, unless and to the extent that the Committee expressly provides otherwise in the terms of an Award at the time it is granted.

SECTION VI.

EFFECTIVE DATE AND DURATION OF PLAN

6.1 Effective Date. This Plan was originally effective on the Effective Date. This amended Plan was adopted by the Board of Directors on April 6, 2006 and shall be effective, as amended, as of such date, except that the amendment approved by the Board of Directors increasing the maximum aggregated number of Shares available for issuance under the Plan (including issuance through Incentive Stock Options) from 5,925,926 shares to 9,425,926 shares shall become effective only upon its approval by the shareholders of the Company at the 2006 Annual Meeting.

6.2 Duration of Plan. The Plan shall continue in effect indefinitely until terminated by the Board pursuant to Section XII. Notwithstanding the continued effectiveness of this Plan, no Incentive Stock Option shall be granted under this Plan on or after the tenth anniversary of the Effective Date.

SECTION VII.

STOCK OPTIONS

7.1 Grants. Stock Options may be granted alone or in addition to other Awards granted under this Plan. Each Option granted shall be designated as either a Non-Qualified Stock Option or an Incentive Stock Option. One or more Stock Options may be granted to any Eligible Person, except that only Non-Qualified Stock Options may be granted to any Director of or Advisor to the Company.

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7.2 Terms of Options. Except as otherwise required by Sections 7.3 and 7.4, Options granted under this Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem desirable:

(a) Option Price. The Option Price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant, except that in no event shall the Option Price be less than 100% of Fair Market Value on the Grant Date.

(b) Option Term. The Term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten (10) years after its Award Date.

(c) Exercisability. A Stock Option shall be exercisable at such time or times and subject to such terms and conditions as shall be specified in the Award Agreement; provided, however, that an Option may not be exercised as to less than one hundred (100) Shares at any time unless the number of Shares for which the Option is exercised is the total number available for exercise at that time under the terms of the Option.

(d) Method of Exercise. A Stock Option may be exercised in whole or in part at any time during its Term by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice shall be accompanied by payment in full of the Option Price in cash unless some other form of consideration is approved by the Committee at or after the grant. Payment in full or in part also may be made in the form of Shares of Common Stock owned by the Participant for at least six (6) months prior to exercise, which Shares shall be valued at the Fair Market Value of the Common Stock on the date of exercise.

(e) Cashless Exercise. A Participant may elect to pay the Exercise Price upon the exercise of an Option by authorizing a broker to sell all or a portion of the Shares acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.

(f) Non-Transferability of Options. Stock Options shall be Transferable only to the extent provided in Section 13.3 of this Plan.

(g) Termination. Stock Options shall terminate in accordance with Section XI of this Plan.

(h) No Right to Defer. In no event shall a Stock Option awarded under this Plan include any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of the Stock Option under

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Treas. Reg. § 1.83-7, or the time the Shares acquired pursuant to the exercise of the Stock Option first become substantially vested (as defined in Treas. Reg. § 1.83-3(b)).

(i) Fixed Number of Shares. The number of Shares subject to a Stock Option shall be fixed on the Grant Date.

7.3 Incentive Stock Options. Incentive Stock Options shall be subject to the following terms and conditions:

(a) Award Agreement. Any Award Agreement relating to an Incentive Stock Option shall contain such terms and conditions as are required for the Option to be an “incentive stock option” as that term is defined in Section 422 of the Code.

(b) Ten Percent Shareholder. An Incentive Stock Option shall not be awarded to any person who, at the time of the Award, owns or is deemed to own (by reason of attribution rules of Section 424(d) of the Code) Shares possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its parent corporation (as defined in Section 424(e) of the Code), if any, and its subsidiary corporations (as defined in Section 424(f) of the Code).

(c) Qualification under the Code. Notwithstanding anything in this Plan to the contrary, no term of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code, or, without the consent of an affected Participant, to disqualify any Incentive Stock Option under Section 422 of the Code, except as may result in the event of a Change of Control.

(d) Notification of Disqualifying Disposition. Each Award Agreement with respect to an Incentive Stock Option shall require the Participant to notify the Company of any disposition of Shares of Common Stock issued pursuant to the exercise of such Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within ten (10) days of such disposition.

7.4 Replacement Options. The Committee may provide at the time of grant that an Option shall include the right to acquire a Replacement Option upon the exercise of such Option (in whole or in part) prior to an Employee’s Separation from Service if the payment of the Option Price is paid in Shares. In addition to any other terms and conditions the Committee deems appropriate, the Replacement Option shall be subject to the following terms:

(a) Number of Shares. The number of Shares subject to the Replacement Option shall not exceed the sum of the number of whole Shares used to satisfy the Option Price (whether by delivery of Shares to the Company or by reduction of Shares otherwise deliverable to the Participant on exercise) of the original Option and the number of whole Shares, if any, used to satisfy the payment for withholding taxes (whether by such delivery or such reduction) in accordance with Section 13.6.

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(b) Grant Date. The Replacement Option Grant Date will be the date of the exercise of the original Option.

(c) Option Price. The Option Price per share of Common Stock purchasable under a Replacement Option shall be determined by the Committee at the time of grant, except that in no event shall the Option Price be less than 100% of Fair Market Value on the Replacement Option Grant Date.

(d) Vesting. The Replacement Option shall be exercisable no earlier than one (1) year after the Replacement Option Grant Date.

(e) Term. The Term of the Replacement Option will not extend beyond the Term of the original Option to which the Replacement Option relates.

(f) Non-Qualified. The Replacement Option shall be a Non-Qualified Stock Option.

SECTION VIII.

RESTRICTED AND UNRESTRICTED STOCK AWARDS

8.1 Grants of Restricted Stock Awards. The Committee may, in its discretion, grant one or more Restricted Stock Awards to any Eligible Person. Each Restricted Stock Award shall specify the number of Shares to be issued to the Participant, the date of such issuance, the price, if any, to be paid for such Shares by the Participant and the restrictions imposed on such Shares. The Committee may grant Awards of Restricted Stock subject to the attainment of specified performance goals, continued employment or such other limitations or restrictions as the Committee may determine. Such conditions may, but need not, be conditions that cause the Award to be treated as subject to a substantial risk of forfeiture (within the meaning of Sections 83 or 409A of the Code).

8.2 Terms and Conditions of Restricted Awards. Restricted Stock Awards shall be subject to the following provisions:

(a) Issuance of Shares. Shares of Restricted Stock may be issued immediately upon grant or upon vesting, as determined by the Committee. If Shares are to be issued upon vesting, such Shares shall be delivered on or before the Short-term Deferral Deadline, except that Shares that vest on account of the Participant’s Separation from Service by reason of Retirement in accordance with Section 11.1(a) shall be delivered on the first payroll date following the date of Separation from Service (the “Designated Payment Date”). If the Shares cannot be delivered on the Designated Payment Date because it is administratively impracticable, the Shares will be delivered as soon as administratively practicable, but in no event later than a date within the same

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calendar year as the Designated Payment Date or, if later, by the 15th day of the third calendar month following the Designated Payment Date. Notwithstanding the forgoing, (i) if it is reasonably determined that Section 409A of the Code will result in the imposition of additional tax on account of the delivery of the Shares before the expiration of the 6-month period described in Section 409A(a)(2)(B)(i) (relating to the required delay in payment to a specified employee pursuant to a Separation from Service), such delivery will in lieu thereof be made on the date that is six (6) months and one (1) day following the date of the Participant’s Separation from Service (or, if earlier, the date of death of the Participant) (the “Specified Employee Delayed Payment Date”), and (ii) a Participant may defer delivery of the Shares subject to a Restricted Stock Award to a date or dates after the Restricted Stock Award is no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code) if the terms of the Restricted Stock Award and any deferral election comply with the requirements of Section 409A of the Code.

(b) Stock Powers and Custody. If shares of Restricted Stock are issued immediately upon grant, the Committee may require the Participant to deliver a duly signed stock power, endorsed in blank, relating to the Restricted Stock covered by such an Award. The Committee may also require that the stock certificates evidencing such Shares be held in custody by the Company until the restrictions on them shall have lapsed.

(c) Shareholder Rights. Participants receiving Restricted Stock Awards that provide for issuance of the Shares upon vesting (including Shares that vest on account of the Participant’s Separation from Service by reason of Retirement in accordance with Section 11.1(a)) shall not be entitled to dividend or voting rights in respect of any such Shares until they are fully vested and issued.

8.3 Unrestricted Stock Awards. The Committee may make Awards of unrestricted Common Stock to (i) Eligible Persons in recognition of outstanding achievements or contributions by such persons or (ii) Directors for service on the Board. Unrestricted Shares issued under this Section 8.3 may be issued for no cash consideration. In the event an Unrestricted Stock Award is granted, the Shares subject to such Award shall be issued immediately upon (or as promptly as is administratively practicable after) grant; provided that a Participant may defer delivery of the Shares subject to an Unrestricted Stock Award to a later date or dates if the terms of the Unrestricted Stock Award and any deferral election comply with the requirements of Section 409A of the Code.

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SECTION IX.

PERFORMANCE AWARDS

9.1 Performance Awards. The Committee may, in its discretion, grant Performance Awards to Eligible Persons in accordance with the following terms and conditions:

(a) Grant. A Performance Award shall consist of the right to receive either (i) Common Stock or cash of an equivalent value, or a combination of both, at the end of a specified Performance Period (defined below) or (ii) a fixed-dollar amount payable in cash or Shares, or a combination of both, at the end of a specified Performance Period. The Committee shall determine the Eligible Persons to whom and the time or times at which Performance Awards shall be granted, the number of Shares or the amount of cash to be awarded to any person, the duration of the period (the “Performance Period”) during which, and the conditions under which, a Participant’s Performance Award will vest, and the other terms and conditions of the Performance Award in addition to those set forth in Section 9.2.

(b) Performance Criteria and Performance-Based Compensation. The Committee shall designate any Performance Award granted to a Participant that is intended to be Performance-Based Compensation. Any Performance Award designated as intended to be Performance-Based Compensation shall be conditioned on the achievement of one or more objective performance goals, based on one or more Performance Measures, to the extent required by Code Section 162(m). Any Performance Award under this Section 9.1 not designated as intended to be Performance-Based Compensation may be conditioned on such performance goals, factors, or criteria as the Committee shall determine. Such conditions may, but need not, be conditions that cause the Performance Award to be treated as subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code).

9.2 Terms and Conditions of Performance Awards. Performance Awards granted pursuant to this Section IX shall be subject to the following terms and conditions:

(a) Shareholder Rights. A Participant receiving a Performance Award shall not be entitled to dividend or voting rights in respect of the Shares covered by the Performance Award until the Award has vested in whole or part and any Shares earned have been issued.

(b) Payment. Subject to the provisions of the Award Agreement and this Plan, at the expiration of the Performance Period, share certificates, cash or both (as the Committee may determine) shall be delivered to the Participant, or his or her legal representative or guardian, in a number or an amount equal to the vested portion of the Performance Award. In no event shall the shares certificates, cash or both be delivered later than the Short-term Deferral Deadline, except that shares certificates, cash or both that are payable on account of the Participant’s Separation from Service by reason of Retirement in accordance with Section 11.1(a) shall be delivered on the Designated

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Payment Date unless it is reasonably determined that Code Section 409A will result in the imposition of additional tax on account of such payment before the expiration of the 6-month period described in Section 409A(a)(2)(B)(i), in which case such payment will be made on the Specified Employee Delayed Payment Date; provided that a Participant may defer payment under a Performance Award to a date or dates after the Performance Award is no longer subject to a substantial risk of forfeiture if the terms of the Performance Award and any deferral election comply with the requirements of Section 409A of the Code.

(c) Non-Transferability. Performance Awards shall not be Transferable except in accordance with the provisions of Section 13.3 of this Plan.

(d) Termination of Employment. Subject to the applicable provisions of the Award Agreement and this Plan, upon a Participant’s Separation from Service for any reason during the Performance Period for a given Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee.

SECTION X.

STOCK APPRECIATION RIGHTS

10.1 Stock Appreciation Rights. The Committee may, in its discretion, grant Stock Appreciation Rights. Any Stock Appreciation Right granted shall be for a specified number of units and have such terms and conditions, not inconsistent with this Plan, as are established by the Committee in connection with the Award. Unless otherwise determined by the Committee, Stock Appreciation Rights may be granted only to Eligible Persons residing in jurisdictions outside the United States to whom, in the Committee’s judgment, it is not practicable to grant Stock Options due to the tax and other laws and regulations of such jurisdictions.

10.2 Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights granted pursuant to this Section X shall be subject to the following terms and conditions:

(a) Reference Price. The Reference Price per Share unit subject to a SAR shall be determined by the Committee at the time of grant, except that in no event shall the Reference Price be less than 100% of Fair Market Value on the Award Date.

(b) Term. The term of each Stock Appreciation Right shall be fixed by the Committee, but no Stock Appreciation Right shall be exercisable more than ten (10) years after its Award Date.

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(c) Exercise. A Stock Appreciation Right shall be exercisable at such time or times and subject to such terms and conditions as shall be specified in the Award Agreement.

(d) Distribution. The Committee shall determine in its sole discretion, at or after the Award Date, whether Shares, cash or a combination thereof shall be delivered to the holder upon exercise of a SAR. Shares so delivered shall be valued at their Fair Market Value on the date of the SAR’s exercise.

(e) Non-Transferability and Termination. SARs shall be Transferable only to the extent provided in Section 13.3 of this Plan and shall terminate in accordance with Section XI of this Plan.

(f) No Right to Defer. In no event shall a SAR awarded under this Plan include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the SAR.

(g) Fixed Number of Shares. The number of Shares subject to a SAR shall be fixed on the Award Date.

SECTION XI.

TERMINATION OF AWARDS

11.1 Termination of Awards to Employees and Directors. Subject to the provisions of Section 11.2, all Awards issued to Employees and Directors under this Plan shall terminate as follows:

(a) Termination by Death, Disability or Retirement. Unless otherwise determined by the Committee at the time of grant, if such a Participant Separates from Service by reason of his or her death, Disability or Retirement, any Awards held by the Participant shall become fully Vested and, in the case of Stock Options and SARs, may thereafter be exercised by the Participant or by the Participant’s beneficiary or legal representative for a period of three (3) years after the date of such Separation from Service or until the expiration of the stated term of such Award, whichever period is shorter.

(b) Termination For Cause. If such a Participant Separates from Service for Cause, or if after such separation the Participant engages in any act which would have warranted a Separation from Service for Cause, the Participant shall forfeit all of his or her rights to any outstanding Awards which have not been exercised and all of such unexercised Awards shall terminate upon the earlier to occur of the date of Separation from Service or the date upon which the Participant has engaged in any of the conduct described as justifying such a separation for Cause.

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(c) Other Termination. Unless otherwise determined by the Committee at the time of grant, if such a Participant Separates from Service for any reason other than death, Disability, Retirement or Cause, all of the Participant’s Vested or otherwise exercisable Stock Options and SARs will terminate on the earlier to occur of the stated expiration date of the Awards or ninety (90) calendar days after such Separation from Service. If a Participant dies during the ninety (90) day period following the Separation from Service, any unexercised Award held by the Participant shall be exercisable, to the full extent that such Award was exercisable at the time of death, for a period of one (1) year from the date of death or until the expiration of the stated term of the Award, whichever occurs first.

11.2 Awards to Advisors. An Award granted to an Advisor shall terminate as provided in the Award Agreement.

11.3 Acceleration of Vesting Upon Termination. Upon a Participant’s Separation from Service, excluding, however, any Participant who has been terminated for Cause, either the Committee or, unless the Committee determines otherwise, the Chief Executive Officer may, in its or his sole discretion, accelerate the Vesting of, or otherwise cause to be exercisable or free of restrictions, all or part of any Awards held by the Participant so that such Awards will be fully or partially exercisable as of the date of Separation from Service or such other date as the Committee or Chief Executive Officer may choose; provided, however, that (i) no person or entity other than the Committee shall have the authority or discretion to accelerate the Vesting of, otherwise cause to be exercisable or free of restrictions or conditions, any Award granted to an Officer or Director of the Company, and (ii) such acceleration or waivers shall not cause the Award to be treated as the granting of a new Award under Section 409A of the Code that is not exempt from, or compliant with, the requirements of Section 409A.

11.4 Repricing, Exchange and Repurchase of Awards. Notwithstanding any other provisions of this Plan, without shareholder approval and the consent of each affected Participant, this Plan does not permit (i) any decrease in the Exercise Price, Reference Price or other purchase price of an Award or any other decrease in the pricing of an outstanding Award, (ii) the issuance of any substitute Option or SAR with a lower Exercise Price or Reference Price than an existing Option or SAR which is forfeited or cancelled in exchange for the substitute Option or SAR, or (iii) the repurchase by the Company of any Option or SAR with an Exercise Price or Reference Price above Fair Market Value at the time of such repurchase. Additionally, in no event shall any offer to reprice, exchange or repurchase an Award cause the original Award, the newly granted Award or the consideration to be paid upon repurchase to be treated as the granting of a new award under Section 409A of the Code that is not exempt from, or compliant with, the requirements of Section 409A.

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SECTION XII.

TERMINATION OR AMENDMENT OF THIS PLAN

12.1 Termination or Amendment. The Board may at any time, amend, in whole or in part, any or all of the provisions of this Plan, or suspend or terminate it entirely; provided, however, that, unless otherwise required by law or integrally related to a requirement of law, the rights of a Participant with respect to any Awards granted prior to such amendment, suspension or termination may not be impaired without the consent of such Participant. In addition, no amendment may be made without first obtaining shareholder approval if such amendment would increase the maximum number of Shares or amount of cash which may be granted to any individual Participant, or increase the total number of Shares available for issuance under this Plan, or if such approval is required pursuant to applicable requirements of the Code, the Exchange Act or the listing requirements of any stock exchange on which the Common Stock is traded. Notwithstanding anything in this Plan to the contrary, the Board, in its discretion, may amend the Plan or any Award to cause the Plan and such Award to remain beyond the scope of the types of compensatory arrangements that are subject to the requirements of Section 409A of the Code or to otherwise comply with the requirements of Section 409A. If any amendment to the Plan or any provision of an Award would cause the Participant to be subject to a tax penalty under Section 409A of the Code, such amendment or provision shall be deemed modified in such manner as to render the Plan or Award exempt from, or compliant with, the requirements of Section 409A and to effectuate as nearly as possible the original intention of the Board.

SECTION XIII.

GENERAL PROVISIONS

13.1 No Right to Continued Employment. The adoption of this Plan and the granting of Awards hereunder shall not confer upon any Employee the right to continued employment nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any Employee at any time.

13.2 Awards to Persons Outside the United States. To the extent necessary or appropriate to comply with foreign law or practice, the Committee may, without amending this Plan: (i) establish special rules applicable to Awards granted to Eligible Persons who are either or both foreign nationals or employed outside the United States, including rules that differ from those set forth in this Plan, and (ii) grant Awards to such Eligible Persons in accordance with those rules; provided that such special rules and provisions of the Award Agreements evidencing such Awards do not cause the Plan or such Awards to be considered to be compensatory arrangements subject to the requirements of Section 409A of the Code in violation of the exemption for foreign arrangements contained in any guidance issued thereunder.

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13.3 Non-Transferability of Awards. Except as provided in the following sentence, no Award or benefit payable under this Plan shall be Transferable by the Participant during his or her lifetime, nor may it be assigned, exchanged, pledged, transferred or otherwise encumbered or disposed of except by will or the laws of descent and distribution; and no Award shall be exercisable by anyone other than the Participant or the Participant’s guardian or legal representative during such Participant’s lifetime. The Committee may in its sole discretion, at the time of grant, permit a Participant to transfer a Non-Qualified Stock Option, SAR, Restricted Stock Award or Performance Award for no consideration to a member of, or for the benefit of, the Participant’s Immediate Family (including, without limitation, to a trust in which members of the Immediate Family have more than a 50% beneficial interest, to a partnership or limited liability company for one or more members of the Immediate Family, or to a foundation in which members of the Immediate Family hold more than 50% of the voting interests), subject to such limits as the Committee may establish and so long as the transferee remains subject to all the terms and conditions applicable to such Award. The following shall be considered transfers for no consideration: (i) a transfer under a domestic relations order in settlement of marital property rights; and (ii) a transfer to an entity in which more than 50% of the voting interests are owned by the Participant or members of the Immediate Family, in exchange for an interest in that entity.

13.4 Other Plans. In no event shall the value of, or income arising from, any Awards issued under this Plan be treated as compensation for purposes of any pension, profit sharing, life insurance, disability or other retirement or welfare benefit plan now maintained or hereafter adopted by the Company or any Subsidiary, unless such plan specifically provides to the contrary.

13.5 Unfunded Plan. For purposes of the Employee Retirement Income Security Act of 1974, this Plan is intended to constitute an unfunded plan of incentive compensation, and it is not intended to provide retirement income, to result in a deferral of income for periods extending to the termination of employment or beyond, or to provide welfare benefits. This Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. This Plan shall not establish any fiduciary relationship between the Company or any of its Subsidiaries and any Participant or any other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights shall be no greater than the rights of an unsecured general creditor of the Company.

13.6 Withholding of Taxes. The Company shall have the right to deduct from any payment to be made pursuant to this Plan, or to otherwise require, prior to the issuance or delivery of any Shares or the payment of any cash to a Participant, payment by the Participant of any Federal, state, local or foreign taxes which the Company reasonably believes are required by law to be withheld. The Committee may permit all or a portion of any such withholding obligation (not exceeding the minimum amount required to be so withheld) to be satisfied by reducing the number of shares otherwise deliverable or by accepting the delivery of Shares previously owned by the Participant, which Shares shall be valued at the Fair Market Value of the Common Stock on the

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exercise date in the case of a Stock Option and on the vesting date in the case of a Restricted Stock Award. Any fraction of a Share required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant. The Company or a Subsidiary may also withhold from any future earnings of salary, bonus or any other payment due to the Participant the amount necessary to satisfy any outstanding tax obligations related to the grant or exercise of any Award granted pursuant to this Plan.

13.7 Reimbursement of Taxes. The Committee may provide in its discretion that the Company or a Subsidiary may reimburse a Participant for Federal, state, local and foreign tax obligations incurred as a result of the grant or exercise of an Award issued under this Plan. In no event shall such reimbursement occur later than the Short-term Deferral Deadline.

13.8 Governing Law. This Plan and all actions taken in connection with it shall be governed by the laws of the State of Ohio, without regard to the principles of conflict of laws.

13.9 Liability. No employee of the Company or a Subsidiary nor member of the Committee or the Board shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award granted hereunder and, to the fullest extent permitted by law, all employees and members of the Committee and the Board shall be indemnified by the Company and its Subsidiaries for any liability and expenses which they may incur through any claim or cause of action arising under or in connection with this Plan or any Awards granted under this Plan.

13.10 Successors. All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.

13.11 Transactions Involving Common Stock. Under no circumstances shall the Shares issued under this Plan include or be subject to a permanent mandatory repurchase obligation or put or call right that is based on a purchase price other than a purchase price equal to the Fair Market Value of such Shares.

13.12 Exemption from, or Compliance with, Section 409A. For federal income tax purposes, the Plan and the Awards granted hereunder are intended to be either exempt from, or compliant with, Section 409A of the Code. This Plan and all Awards granted hereunder shall be interpreted, operated and administered in a manner consistent with these intentions.

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Supplement A to Plan

CHIQUITA BRANDS INTERNATIONAL, INC.

ANNUAL BONUS PROGRAM

SECTION A-1

GENERAL

Chiquita Brands International, Inc. (the “Company”) maintains the Chiquita Stock and Incentive Plan (the “Plan”) which provides, inter alia, for certain incentive compensation to Employees of the Company and its Subsidiaries. This Chiquita Annual Bonus Program (the “Program”) is established under Section IX of the Plan and is subject to all of the terms, conditions and limitations of the Plan, which shall be considered a part hereof. Capitalized terms in this Program not defined herein shall have the meanings given in the Plan.

SECTION A-2

BONUS AWARDS

A-2.1. Designation. The Committee, from time to time in its discretion, may designate those Employees who will have an opportunity to receive Bonus Awards under this Program for any Performance Period, together with the applicable performance goals established in accordance with Section A-2.3 for the Performance Period, and the amounts to be distributable in accordance with Section A-3 at levels of achievement of the performance goals. Any Bonus Award, or portion thereof, designated as intended to be Performance-Based Compensation shall comply with the requirements of this Section A-2 to the extent such compliance is determined by the Committee to be required for the award to be treated as Performance-Based Compensation.

A-2.2. Award Limit. No more than $5,000,000 in cash (or Fair Market Value if paid in Shares of Common Stock) may be paid pursuant to Bonus Award(s), or portions(s) thereof, intended to be Performance-Based Compensation that are granted to any one individual during any one calendar-year period.

A-2.3. Performance Goals. For any Bonus Award, or portion thereof, that is designated as intended to be Performance-Based Compensation:

(a) The performance goals established for the Performance Period shall be objective (as that term is described in the Treasury Regulations under Code Section 162(m)).

(b) The performance goals used by the Committee shall be based on one or more of the Performance Measures set forth in Section 2.30 of the Plan.

(c) The Committee, in its discretion, may provide that receipt of a specified level of payment or distribution of a Bonus Award is contingent on achievement of performance goals satisfying paragraph (b) above, with

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such level subject to reduction unless other performance goals not set forth in paragraph (b) above also are satisfied.

Any Bonus Award, or portion thereof, not intended to be Performance-Based Compensation may be conditioned on such designated performance goals, factors or criteria as the Committee shall determine.

A-2.4. Attainment of Performance Goals. Subject to Section A-2.5, a Participant otherwise entitled to receive a Bonus Award, or portion thereof, that is designated as intended to be Performance-Based Compensation shall not receive a settlement of the award or portion until the Committee has determined that the applicable performance goal(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this Section A-2.4, such exercise of discretion may not result in an increase in the amount of the Award.

A-2.5. Exceptions to Performance Goal Requirement. If a Participant is not employed by the Company or a Subsidiary on the last day of the Performance Period, the Participant shall not be entitled to any Bonus Award for that period; provided, however, that if a Participant’s Separation from Service is for any reason other than Cause, the Participant’s Bonus Award shall be determined in accordance with the terms of the Program as though the Participant had been employed on the last day of the Performance Period, with such amount distributable at the time distributable to other Participants who are actively employed, but subject to such reduction as the Committee, in its absolute discretion, determines to be appropriate.

SECTION A-3

DISTRIBUTIONS

Subject to Section A-2.4, a Participant’s Bonus Award shall be distributed to the Participant in cash or in Shares at such time and in such form as is determined by the Committee, but in no event later than the Short-term Deferral Deadline; provided that a Participant may defer payment of a Bonus Award to a date or dates after such time if the terms of the Bonus Award and any deferral election comply with the requirements of Section 409A of the Code; and further provided that, to the extent that distribution is made in Shares of Common Stock, the Shares shall be subject to such vesting or other restrictions as the Committee may establish.

SECTION A-4

OPERATION AND ADMINISTRATION

A-4.1. Effective Date. The “Effective Date” of this Program shall be April 3, 2003.

A-4.2. Benefits May Not Be Assigned. The interests of a Participant under the Program are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or the Participant’s beneficiary. The Participant’s rights under the Program

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are not transferable other than as designated by the Participant by will or by the laws of descent and distribution.

A-4.3. Benefits Under Other Plans. Amounts distributable to any Participant under the Program shall not be taken into account for purposes of determining the benefits under any plan that is intended to be qualified under Section 401(a) of the Code and any other plan or arrangement maintained by the Company or any Subsidiary, except as otherwise provided to the contrary by the Committee or in such other plan or arrangement.

SECTION A-5

COMMITTEE

The Committee’s administration of the Program shall be subject to the provisions of the Plan and the requirements of Code Section 162(m). Subject to the foregoing:

(a) The Committee will have the authority and discretion to interpret the Program, to establish, amend and rescind any rules and regulations relating to the Program, and to make all other determinations that may be necessary or advisable for the administration of the Program.

(b) Any interpretation of the Program by the Committee and any decision made by it under the Program is final and binding on all persons.

SECTION A-6

AMENDMENT AND TERMINATION

The Board may, at any time, amend or terminate the Program, provided that, without the consent of an affected Participant or beneficiary, no amendment or termination may materially adversely affect the rights of such Participant or beneficiary under the Program with respect to Performance Periods that have ended prior to the date on which such amendment or termination is adopted by the Board.

SECTION A-7

DEFINED TERMS

In addition to the other definitions contained herein and in the Plan, the following definitions shall apply:

(a) Bonus Award. The term “Bonus Award” means an award determined in accordance with Section A-2 and distributable in accordance with Section A-3.

(b) Participant. The term “Participant” means an Employee who has been selected by the Committee to participate in this Program.

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(c) Performance Period. The term “Performance Period” means any calendar year after 2003, or such other period beginning after December 31, 2003 that is established by the Committee as a Performance Period for this Program.

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Supplement B to Plan

CHIQUITA BRANDS INTERNATIONAL, INC.

LONG-TERM INCENTIVE PROGRAM

SECTION B-1

GENERAL

Chiquita Brands International, Inc. (the “Company”) maintains the Chiquita Stock and Incentive Plan (the “Plan”) which provides, inter alia, for certain incentive compensation to Employees of the Company and its Subsidiaries. This Chiquita Long-Term Incentive Program (the “Program”) is established under Section IX of the Plan and is subject to all the terms, conditions and limitations of the Plan, which shall be considered a part hereof. Capitalized terms in this Program not defined herein shall have the meanings given in the Plan.

SECTION B-2

LONG-TERM INCENTIVE AWARDS

B-2.1. Designation. The Committee, from time to time in its discretion, may designate those Employees who will have an opportunity to receive Long-Term Incentive Awards under this Program for any Performance Period, together with the applicable performance goals established in accordance with Section B-2.3 for the Performance Period, and the amounts to be distributable in accordance with Section B-3 at levels of achievement of the performance goals. Any Long-Term Incentive Award, or portion thereof, designated as intended to be Performance-Based Compensation shall comply with the requirements of this Section B-2 to the extent such compliance is determined by the Committee to be required for the award to be treated as Performance-Based Compensation.

B-2.2. Award Limit. Long-Term Incentive Award(s), or portion(s) thereof, intended to be Performance-Based Compensation that are granted to any one individual during any one calendar-year period shall be subject to the limitations set forth in Section 4.2 of the Plan.

B-2.3. Performance Goals. For any Long-Term Incentive Award, or portion thereof, that is designated as intended to be Performance-Based Compensation:

(a) The performance goals established for the Performance Period shall be objective (as that term is described in the Treasury Regulations under Code Section 162(m)).

(b) The performance goals used by the Committee shall be based on one or more of the Performance Measures set forth in Section 2.30 of the Plan.

(c) The Committee, in its discretion, may provide that receipt of a specified level of payment or distribution of a Long-Term Incentive Award is

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contingent on achievement of performance goals satisfying paragraph (b) above, with such level subject to reduction unless other performance goals not set forth in paragraph (b) above are also satisfied.

Any Long-Term Incentive Award, or portion thereof, not designated as intended to be Performance-Based Compensation may be conditioned on such performance goals, factors or criteria as the Committee shall determine.

B-2.4. Attainment of Performance Goals. Subject to Section B-2.5, a Participant otherwise entitled to receive a Long-Term Incentive Award, or portion thereof, that is designated as intended to be Performance-Based Compensation shall not receive a settlement of the award or portion until the Committee has determined that the applicable performance goal(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this Section B-2.4, such exercise of discretion may not result in an increase in the amount of the Award.

B-2.5. Exceptions to Performance Goal Requirement. If a Participant is not employed by the Company or a Subsidiary on the last day of the Performance Period, the Participant shall not be entitled to any Long-Term Incentive Award for that period; provided, however, that if a Participant’s Separation from Service is for any reason other than Cause and as of such date of separation the performance goals, factors or criteria on which payment of the Award are conditioned (other than any Passage of Time Criteria) cause the Award to be continue to be treated as subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code), the Participant’s Long-Term Incentive Award shall be determined in accordance with the terms of the Program as though the Participant had been employed on the last day of the Performance Period, with such amount distributable at the time distributable to other Participants who are actively employed, and subject to such reduction as the Committee, in its absolute discretion, determines to be appropriate.

SECTION B-3

DISTRIBUTIONS

Subject to Section B-2.4, a Participant’s Long-Term Incentive Award shall be distributed to the Participant in cash or in Shares at such time and in such form as is determined by the Committee, but in no event later than the Short-term Deferral Deadline; provided that a Participant may defer payment of the Long-Term Incentive Award to a date or dates after such time if the terms of the Long-Term Incentive Award and any deferral election comply with the requirements of Section 409A of the Code; and further provided that, to the extent that distribution is made in Shares of Common Stock, the Shares shall be subject to such vesting or other restrictions as the Committee may establish.

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SECTION B-4

OPERATION AND ADMINISTRATION

B-4.1. Effective Date. The “Effective Date” of this Program shall be April 3, 2003.

B-4-2. Benefits May Not Be Assigned. The interests of a Participant under the Program are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or the Participant’s beneficiary. The Participant’s rights under the Program are not transferable other than as designated by the Participant by will or by the laws of descent and distribution.

B-4-3. Benefits Under Other Plans. Amounts distributable to any Participant under the Program shall not be taken into account for purposes of determining the benefits under any plan that is intended to be qualified under Section 401(a) of the Code and any other plan or arrangement maintained by the Company or any Subsidiary, except as otherwise provided to the contrary by the Committee or in such other plan or arrangement.

SECTION B-5

COMMITTEE

The Committee’s administration of the Program shall be subject to the provisions of the Plan and the requirements of Code Section 162(m). Subject to the foregoing:

(a) The Committee will have the authority and discretion to interpret the Program, to establish, amend and rescind any rules and regulations relating to the Program, and to make all other determinations that may be necessary or advisable for the administration of the Program.

(b) Any interpretation of the Program by the Committee and any decision made by it under the Program is final and binding on all persons.

SECTION B-6

AMENDMENT AND TERMINATION

The Board may, at any time, amend or terminate the Program, provided that, without the consent of an affected Participant or beneficiary, no amendment or termination may materially adversely affect the rights of such Participant or beneficiary under the Program with respect to Performance Periods that have ended prior to the date on which such amendment or termination is adopted by the Board.

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SECTION B-7

DEFINED TERMS

In addition to the other definitions contained herein and in the Plan, the following definitions shall apply:

(a) Long-Term Incentive Award. The term “Long-Term Incentive Award” means an award determined in accordance with Section B-2 and distributable in accordance with Section B-3.

(b) Participant. The term “Participant” means an Employee who has been selected by the Committee to participate in this Program.

(c) Performance Period. The term “Performance Period” means any period beginning after December 31, 2003 that is established by the Committee as a Performance Period for this Program.

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EX-10.20

Exhibit 10.20

CHIQUITA BRANDS INTERNATIONAL, INC.

LONG-TERM INCENTIVE PROGRAM

2007–2009 TERMS

1. General. Chiquita Brands International, Inc. (the “Company”) has established a Long-Term Incentive Program (the “LTIP”) under the Company’s Stock and Incentive Plan (the “Stock Plan”). These 2007-2009 Terms (the “Terms”) set forth the terms of Awards to be granted for the three-year period 2007-09 under the LTIP. Awards so granted are intended to be “performance-based compensation” for purposes of Section 162 (m) of the Internal Revenue Code. Except as otherwise provided in these Terms, all Awards shall be subject to, and entitled to all applicable rights and benefits provided in, the LTIP and the Stock Plan. All capitalized terms not otherwise defined in these Terms shall be as defined in the LTIP and the Stock Plan.

2. Eligibility for Awards.

a. Each Participant listed on Schedule A shall be eligible for an Award under these Terms (an “Award”) for the period commencing January 1, 2007 and ending December 31, 2009 (the “Performance Period”). Such Awards shall be determined in accordance with Schedule B based on achievement of the applicable Performance Measures set forth therein.

b. If a Participant’s employment is terminated for Cause during the Performance Period, the Participant shall not be entitled to any Award for that Performance Period. If a Participant’s employment terminates during the Performance Period for any reason other than for Cause, the Participant’s Award shall be payable as though the Participant was employed on the last day of the Performance Period, but subject to such reduction or voiding of the Award as the Compensation Committee of the Company’s Board of Directors (the “Committee”), in its absolute discretion, determines to be appropriate. Subject to paragraph 3, any portion of an Award not so voided shall be deliverable to the Participant at such time and on such terms as the Committee shall determine.

3. Performance Measures. A Participant shall be entitled to receive an Award only if the Committee has determined that the applicable Performance Measures for the Performance Period have been achieved. Such determination shall be made as soon as practicable after the end of the Performance Period. To the extent that the Committee exercises discretion in making such determination, such exercise of discretion may not result in an increase in the amount of any Award.

4. Determination And Distribution of Awards.

a. All Awards shall be paid in Shares of Common Stock of the Company. The number of Shares of Common Stock granted to each such Participant, if any, shall be determined as follows: First, a Financial Performance Award Opportunity shall be established, which shall be equal to (A) the number of Target Award Shares set forth opposite such Participant’s name on Exhibit A, multiplied by (B) the applicable Percent of Target Award set forth in Exhibit B that corresponds to the Performance Measure achievement determined by the Committee in accordance with paragraph 3 above. The actual Award shall then be fixed at 150% of the Financial Award Opportunity; provided, that the Committee shall have the discretion to reduce the actual Award based on such performance and other factors as it determines to be appropriate.

b. Awards of Shares of Common Stock shall be delivered to Participants as soon as practicable after the date on which the determination described in paragraph 3 above has been made.

5. Additional Participants. Each person who becomes an “executive officer” (as such term is defined Rule 3b-7 under the Securities Exchange Act of 1934, or any successor provision) of the Company after February 14, 2007 and prior to July 1, 2009 shall become a Participant eligible for an Award under the Plan. The Committee shall establish a number of Target Award Shares applicable to such Participant within 30 days after he or she becomes an “executive officer” on the following basis:

• For a Participant who becomes an “executive officer” prior to July 1, 2007, the number of Target Award Shares shall be determined as if he or she was an eligible Participant at the beginning of the Performance Period.

• For a Participant who becomes an “executive officer” on or after July 1, 2007 and prior to July 1, 2009, the number of Target Award Shares shall be (a) the number determined as if he or she was an eligible Participant at the beginning of the Performance Period, reduced by (b) 1/36^th for each full month that elapsed from the beginning of the Performance Period until such Participant became an “executive officer.”

The Committee shall also have the discretion to add additional Participants who are not “executive officers” on the same basis as applies to “executive officers.”

6. Amendment. The Committee may amend the provisions of these Terms and the attached Schedules to reflect corporate transactions involving the Company (including, without limitation, any acquisition, divestiture, stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares); provided that such amendment may not be adopted on a date or in a manner which would adversely affect the treatment of the Award as Performance-Based Compensation.

7. Committee and Shareholder Approval. The provisions included in these 2007-2009 Terms were approved by the Committee on November 21, 2006.

EX-10.22

Exhibit 10.22

Chiquita Brands International, Inc.

Summary of Director Compensation:

As in Effect Since January 1, 2007

As approved by the Board of Directors of Chiquita Brands International, Inc. (the “Company”) on February 15, 2007, effective as of January 1, 2007, compensation for directors of the Company will consist of the following:

Annual Compensation (directors fees) - $160,000, consisting of

• $80,000 annual cash compensation, payable quarterly in arrears, and

• a number of shares of the Company’s common stock having an aggregate fair market value of $80,000, determined based on the closing price of the common stock on the third trading day following release of the Company’s annual earnings results and payable annually as of such date.

Compensation for Certain Committee Chairs – payable quarterly in arrears

• The Audit Committee and Compensation & Organization Development Committee chairs each will receive an annual fee of $20,000, and

• the Nominating & Governance Committee chair will receive an annual fee of $15,000.

Initial Equity Grant for New Directors – In addition, upon initial election to the Board, each non-employee director will receive an equity award of restricted stock having an aggregate fair market value of $160,000, determined based on the price of the common stock on the date of election, to vest on the date that the director ceases to be a non-employee director of the Company.

The director fee for any non-employee director whose service commences or ceases at any time of the year will be prorated to reflect the portion of the quarter or year during which the individual served as a director.

Directors continue to be subject to the share ownership guidelines (See last paragraph of Current Report on Form 8-K filed February 28, 2006).

EX-10.37

Exhibit 10.37

CHIQUITA BRANDS INTERNATIONAL, INC.

EXECUTIVE OFFICER SEVERANCE PAY PLAN

Effective—March 27, 2006

(As amended through January 12, 2007)

CHIQUITA BRANDS INTERNATIONAL, INC.

EXECUTIVE OFFICER SEVERANCE PAY PLAN

Chiquita Brands International, Inc. and certain of its subsidiaries (individually and collectively, the “Company”) have adopted this Plan to provide Severance Benefits as delineated herein to any executive officer of the Company whose employment is terminated by the Company for reasons other than “Cause”, or by the executive officer for “Good Reason”. The Plan is administered by the Company’s Benefits Committee, which is the Plan Administrator. The Plan’s “Plan Year” is the 12-month period ending December 31.

1. Eligibility

(a) In General

You are eligible for this Plan if you are an executive officer (as defined in Rule 3b-7 under the Securities Exchange Act of 1934) of the Company reporting directly to the Chief Executive Officer, you are employed in the United States on a payroll maintained in the United States, you have been employed for one year or more and you are not excluded by subsection (b).

(b) Exclusions

You are not eligible for this Plan if you are on a leave of absence, except as otherwise required by applicable law.

2. Participation

If you are eligible for the Plan, you will become entitled to Plan benefits if you meet all of the following requirements, except as provided in Section 3.

(a) Termination Requirement

Your employment must be terminated by the Company for reasons other than “Cause” or by you for “Good Reason.”

“Cause” means any one or more of the following:

(i) the willful and continued failure by you to substantially perform your duties that is not cured within 30 days after specific notice by the Chief Executive Officer of the Company,

(ii) the willful engaging by you in conduct demonstrably and materially injurious to the Company or its subsidiaries or

(iii) your refusal to cooperate with any legal proceeding or investigation if so requested to do so by the Company.

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To be “willful,” your conduct must be not in good faith and without reasonable belief that you acted in the best interest of the Company.

“Good Reason” means

• a substantial adverse alteration in the nature or status of your responsibilities; or

• a reduction in your annual salary or target annual bonus opportunity, or a failure to provide you with participation in any stock option or other equity-based compensation plan in which other employees of the Company (and any parent, surviving or acquiring company) participate; unless such reduction or failure does not unreasonably discriminate against you, as compared to such other employees who have similar levels of responsibility and compensation.

The Chief Executive Officer of the Company will determine whether your employment was terminated by the Company for reasons other than “Cause” or by you for “Good Reason.” Notwithstanding the foregoing, any resignation by you shall not be considered to have been for “Good Reason” unless it occurs within six months after your becoming aware of the act or acts constituting “Good Reason.”

(b) Release Requirements

(i) You must sign Separation Agreement and Release prescribed by the Plan Administrator, which will contain a customary release and your agreement (as appropriate under applicable law) (A) to refrain from disclosure of confidential information or disparaging the Company and to assist the Company in any litigation matters and (B) for one year after termination of your employment, not to directly or indirectly (x) solicit customers, suppliers or employees of the Company or any of its subsidiaries or (y) compete with the Company or work for specified competitors and (ii) the Separation Agreement and Release must become irrevocable.

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3. Ineligibility for Benefits

(a) Resignation or Discharge

You will not be eligible for benefits under this Plan if the Plan Administrator determines, in its sole discretion, that your employment was terminated by retirement, resignation without “Good Reason”, death, disability, or any other reason except by the Company for reasons other than “Cause” or by you for “Good Reason”.

(b) Changed Decisions

If your employment is terminated by the Company, it has the right to cancel or reschedule your separation before you terminate employment. You will not be eligible for Severance Benefits under this Plan if your separation is canceled.

(c) Substitute Employment

You will not be entitled to Severance Benefits under this Plan, if the Plan Administrator determines, in its sole discretion, that you have been offered substantially equivalent substitute employment, whether you accept the position or not, and that the substitute employment would not constitute or result in there being “Good Reason”. Substitute Employment is:

(1) an offer of substantially equivalent employment by any entity that assumes operations or functions formerly carried out by the Company (such as the buyer of a facility or any entity to which a Company operation or function has been outsourced);

(2) an offer of substantially equivalent employment by any affiliate of the Company;

(3) an offer of substantially equivalent employment by any entity making the job offer at the request of the Company (such as a joint venture of which the Company or an affiliate is a member); or

(4) an offer of substantially equivalent employment by the Company.

(d) Transition Assistance

You will not be entitled to benefits under this Plan unless you satisfy all transition assistance requests of the Company to the Company’s satisfaction, such as aiding in the location of files, preparing accounting records, returning all Company property in your possession, or repaying any amounts you owe the Company and stay until officially released by the Company.

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4. Cash Benefit

If you are entitled to Plan benefits, you will receive aggregate cash severance payments (your “Cash Benefit”) equal to the sum of your then current annual base salary and annual bonus target. You will also receive a pro-rata cash bonus (your “Pro Rata Bonus”) for year of termination based on your annual bonus target. Such payments will be made as set forth in Section 5.

5. Payment

(a) Cash Benefit

(i) Except as otherwise provided in clause (ii) below, your Cash Benefit under this Plan will be paid over the first twelve months following the date your Separation Agreement and Release has become irrevocable (the “Effective Date”) in equal bi-weekly installments, beginning with the first payroll date after the Effective Date, in accordance with the Company’s customary payroll practices.

(ii) if Section 409A(a)(2) of the Internal Revenue Code applies to the Plan and you are a “key employee” as defined by Internal Revenue Code Section 416(i), your Cash Benefit under this Plan will be paid as follows: (A) any portion of your Cash Benefit that would otherwise be payable during the first six months following your termination of employment will instead be paid in a lump sum on the first business day after six months have elapsed following your termination of employment (the “Six-Month Anniversary”) and (B) the remainder of your Cash Benefit will be paid in equal bi-weekly installments, beginning with the first payroll date after the Six-Month Anniversary.

(b) Pro Rata Bonus Payment

Your Pro Rata Bonus will be paid on later of (i) the date when annual bonuses for other executives are normally paid or (ii) ) if Section 409A(a)(2) of the Internal Revenue Code applies to the Plan and you are a “key employee” as defined by Internal Revenue Code Section 416(i), the first business day after the Six-Month Anniversary.

6. Additional Benefits

You also may continue your health benefits under the normal COBRA rules, but the Company will pay the full premium for COBRA coverage for twelve (12) months. Thereafter, you will be charged the full COBRA premium.

You will receive accelerated vesting of restricted shares awarded under the Company’s Long-Term Incentive Program (LTIP). You will also receive one additional year of vesting for purposes of Company employee stock options and non-LTIP restricted stock. If and as permissible under Internal Revenue Code Section 409A regulations, and not withstanding any other agreement related thereto, your vested stock options or other equity awards, as applicable, shall remain exercisable for one year following termination or for such longer period as may be

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applicable pursuant to the provisions of the Chiquita Stock and Incentive Plan or the terms of the respective award agreements for your options or other equity awards.

You will receive outplacement services, the level and duration of which is determined by job category, provided that you begin using those services within 30 days of your separation date.

7. Integration With Other Payments

Benefits under this Plan are not intended to duplicate such benefits as workers’ compensation wage replacement benefits, disability benefits, pay-in-lieu-of-notice, severance pay, or similar benefits under other benefit plans, severance programs, employment contracts, or applicable laws, such as the WARN Act. Should such other benefits be payable, your benefits under this Plan will be reduced accordingly or, alternatively, benefits previously paid under this Plan will be treated as having been paid to satisfy such other benefit obligations. U.S. citizens or green card holders working outside the United States and subject to locally mandated separation or severance payments by the host country will receive the greater of the benefits according to such laws in their host country or this Plan. If you have an Employment Contract, you will not receive any benefits under this Plan unless you waive all benefits of any kind or nature owed to you under the Employment Contract. In any case, the Plan Administrator, in its sole discretion, will determine how to apply this provision and may override other provisions in this Plan in doing so.

8. Reemployment

If you are reemployed by the Company or have been offered Substitute Employment while benefits are still payable under the Plan, all such benefits will cease, except as otherwise specified by the Plan Administrator, in its sole discretion.

9. Taxes

Taxes will be withheld from benefits under the Plan to the extent required by law.

10. Relation to Other Plans

Any prior severance or similar plan of the Company that might apply to you is hereby revoked as to you while you are eligible for Plan benefits. Benefits under this Plan will not be counted as “compensation” for purposes of determining benefits under any other benefit plan, pension plan, non-qualified plan or similar arrangement. All such plans or similar arrangements, to the extent inconsistent with this Plan, are hereby so amended. No benefits that would constitute “excess parachute payments” within the meaning of Internal Revenue Code Section 280G, or cause any other amounts to be excess parachute payments, will be paid by this Plan.

11. Amendment or Termination

The Company, acting through the Compensation & Organization Development Committee or its chief executive officer, has the right, in its nonfiduciary settlor capacity, to

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amend the Plan or to terminate it at any time, prospectively or retroactively, for any reason, without notice and even if currently payable benefits are reduced or eliminated. The Plan Administrator also has the right to amend the Plan, as elsewhere provided in the Plan. No person has any vested right to benefits under this Plan. The Company may amend the Plan to provide greater or lesser benefits to particular employees by sending affected employees a letter setting forth the applicable benefit modification.

12. Claims Procedures

(a) Claims Normally Not Required

Normally, you do not need to present a formal claim to receive benefits payable under this Plan.

(b) Disputes

If any person (Claimant) believes that benefits are being denied improperly, that the Plan is not being operated properly, that fiduciaries of the Plan have breached their duties, or that the Claimant’s legal rights are being violated with respect to the Plan, the Claimant must file a formal claim with the Plan Administrator. This requirement applies to all claims that any Claimant has with respect to the Plan, including claims against fiduciaries and former fiduciaries, except to the extent the Plan Administrator determines, in its sole discretion, that it does not have the power to grant all relief reasonably being sought by the Claimant.

(c) Time for Filing Claims

A formal claim must be filed within 90 days after the date the Claimant first knew or should have known of the facts on which the claim is based, unless the Plan Administrator in writing consents otherwise. The Plan Administrator shall provide a Claimant, on request, with a copy of the claims procedures established under subsection (d).

(d) Procedures

The Plan Administrator has adopted the procedures for considering claims which are contained in the Appendix and which it may amend from time to time as it sees fit. These procedures provide that final and binding arbitration shall be the ultimate means of contesting a denied claim (even if the Plan Administrator or its delegates have failed to follow the prescribed procedures with respect to the claim). The right to receive benefits under this Plan is contingent on a Claimant using the prescribed claims and arbitration procedures to resolve any claim.

13. Plan Administration

(a) Discretion

The Plan Administrator is responsible for the general administration and management of the Plan and shall have all powers and duties necessary to fulfill its responsibilities, including, but not limited to, the discretion to interpret and apply the Plan and to

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determine all questions relating to eligibility for benefits. The Plan shall be interpreted in accordance with its terms and their intended meanings. However, the Plan Administrator and all Plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion they deem to be appropriate in their sole discretion, and to make any findings of fact needed in the administration of the Plan. The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.

(b) Finality of Determinations

All actions taken and all determinations made in good faith by the Plan Administrator or by Plan fiduciaries will be final and binding on all persons claiming any interest in or under the Plan. To the extent the Plan Administrator or any Plan fiduciary has been granted discretionary authority under the Plan, the Plan Administrator’s or Plan fiduciary’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter.

(c) Drafting Errors

If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Plan Administrator in its sole discretion, the provision shall be considered ambiguous and shall be interpreted by the Plan Administrator and all Plan fiduciaries in a fashion consistent with its intent, as determined in the sole discretion of the Plan Administrator. The Plan Administrator shall amend the Plan retroactively to cure any such ambiguity.

(d) Scope

This Section may not be invoked by any person to require the Plan to be interpreted in a manner inconsistent with its interpretation by the Plan Administrator or other Plan fiduciaries.

14. Costs and Indemnification

All costs of administering the Plan and providing Plan benefits will be paid by the Company, with one exception: Any expenses (other than arbitrator fees) incurred in resolving disputes with multiple Claimants concerning their entitlement to the same benefit may be charged against the benefit, which will be reduced accordingly. To the extent permitted by applicable law and in addition to any other indemnities or insurance provided by the Company, the Company shall indemnify and hold harmless its (and its affiliates’) current and former officers, directors, and employees against all expenses, liabilities, and claims (including legal fees incurred to defend against such liabilities and claims) arising out of their discharge in good faith of their administrative and fiduciary responsibilities with respect to the Plan. Expenses and liabilities arising out of willful misconduct will not be covered under this indemnity.

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15. Limitation on Employee Rights

This Plan shall not give any employee the right to be retained in the service of the Company or interfere with or restrict the right of the Company to discharge or retire the employee.

16. Governing Law

This Plan is a welfare plan subject to the Employee Retirement Income Security Act of 1974 and it shall be interpreted, administered, and enforced in accordance with that law. This Plan is intended to comply with Section 409A of the Code and shall be considered and interpreted in accordance with such intent. To the extent that the Severance Benefits are subject to Section 409A of the Code, they shall be provided in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto (the “Guidance”). Any provision of this Plan that would cause the payment of the Severance Benefits to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section 409A, which amendment may be retroactive to the extent permitted by the Guidance. To the extent that state law is applicable, the statutes and common law of the State of Ohio (excluding its choice of laws statutes or common law) shall apply.

17. Miscellaneous

Where the context so indicates, the singular will include the plural and vice versa. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. Unless the context clearly indicates to the contrary, a reference to a statute or document shall be construed as referring to any subsequently enacted, adopted, or executed counterpart.

Date Adopted
	Fernando Aguirre
	Chairman, President and Chief Executive Officer

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APPENDIX

Detailed Claim and Arbitration Procedures

1. Claims Procedure

(a) Initial Claims

All claims shall be presented to the Plan Administrator in writing. Within 90 days after receiving a claim, a claims official appointed by the Plan Administrator shall consider the claim and issue his or her determination thereon in writing. The claims official may extend the determination period for up to an additional 90 days by giving the Claimant written notice. The initial claim determination period can be extended further with the consent of the Claimant. Any claims that the Claimant does not pursue in good faith through the initial claims stage shall be treated as having been irrevocably waived.

(b) Claims Decisions

If the claim is granted, the benefits or relief the Claimant seeks shall be provided. If the claim is wholly or partially denied, the claims official shall, within 90 days (or a longer period, as described above), provide the Claimant with written notice of the denial, setting forth, in a manner calculated to be understood by the Claimant: (1) the specific reason or reasons for the denial; (2) specific references to the provisions on which the denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect the claim, together with an explanation of why the material or information is necessary; and (4) an explanation of the procedures for appealing denied claims. If the Claimant can establish that the claims official has failed to respond to the claim in a timely manner, the Claimant may treat the claim as having been denied by the claims official.

(c) Appeals of Denied Claims

Each Claimant shall have the opportunity to appeal the claims official’s denial of a claim in writing to an appeals official appointed by the Plan Administrator (which may be a person, committee, or other entity). A Claimant must appeal a denied claim within 60 days after receipt of written notice of denial of the claim, or within 60 days after it was due if the Claimant did not receive it by its due date. The Claimant (or his or her duly authorized representative) may review pertinent documents in connection with the appeals proceeding and may present issues and comments in writing. The Claimant only may present evidence and theories during the appeal that the Claimant presented during the initial claims stage, except for information the claims official may have requested the Claimant to provide to perfect the claim. Any claims that the Claimant does not pursue in good faith through the appeals stage, such as by failing to file a timely appeal request, shall be treated as having been irrevocably waived.

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(d) Appeals Decisions

The decision by the appeals official shall be made not later than 60 days after the written appeal is received by the Plan Administrator, unless special circumstances require an extension of time, in which case a decision shall be rendered as soon as possible, but not later than 120 days after the appeal was filed, unless the Claimant agrees to a further extension of time. The appeal decision shall be in writing, shall be set forth in a manner calculated to be understood by the Claimant, and shall include specific reasons for the decision, as well as specific references to the provisions on which the decision is based, if applicable. If a Claimant does not receive the appeal decision by the date it is due, the Claimant may deem his or her appeal to have been denied.

(e) Procedures

The Plan Administrator shall adopt procedures by which initial claims shall be considered and appeals shall be resolved; different procedures may be established for different claims. All procedures shall be designed to afford a Claimant full and fair consideration of his or her claim.

(f) Arbitration of Rejected Appeals

If a Claimant has pursued his or her claim through the appeal stage of these claims procedures, the Claimant may contest the actual or deemed denial of that claim through arbitration, as described below. In no event shall any denied claim be subject to resolution by any means (such as in a court of law) other than arbitration in accordance with the following provisions.

2. Arbitration Procedure

(a) Request for Arbitration

A Claimant must submit a request for arbitration to the Plan Administrator within 60 days after receipt of the written denial of his or her appeal (or within 60 days after he or she should have received the determination). The Claimant or the Plan Administrator may bring an action in any court of appropriate jurisdiction to compel arbitration in accordance with these procedures.

(b) Applicable Arbitration Rules

The arbitration shall be held under the auspices of the American Arbitration Association (AAA) in accordance with the AAA’s then-current Employment Dispute Resolution Rules and the Due Process Protocol for Mediation and Arbitration of Statutory Disputes Arising Out of the Employment Relationship.

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(c) Location

The arbitration will take place in Cincinnati, Ohio, or in such other location as may be acceptable to both the Claimant or the Plan Administrator.

Date Adopted
	Name
	Title

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EX-13

Exhibit 13

Statement of Management Responsibility

The financial statements and related financial information presented in this Annual Report are the responsibility of Chiquita Brands International, Inc. management, which believes that they present fairly the company’s consolidated financial position and results of operations in accordance with generally accepted accounting principles.

The company’s management is responsible for establishing and maintaining adequate internal controls. The company has a system of internal accounting controls, which includes internal control over financial reporting and is supported by formal financial and administrative policies. This system is designed to provide reasonable assurance that the company’s financial records can be relied on for preparation of its financial statements and that its assets are safeguarded against loss from unauthorized use or disposition.

The company also has a system of disclosure controls and procedures designed to ensure that material information relating to the company and its consolidated subsidiaries is made known to the company representatives who prepare and are responsible for the company’s financial statements and periodic reports filed with the Securities and Exchange Commission (“SEC”). The effectiveness of these disclosure controls and procedures is reviewed quarterly by management, including the company’s Chief Executive Officer and Chief Financial Officer. Management modifies these disclosure controls and procedures as a result of the quarterly reviews or as changes occur in business conditions, operations or reporting requirements.

The company’s worldwide internal audit function, which reports to the Audit Committee, reviews the adequacy and effectiveness of controls and compliance with the company’s policies.

Chiquita has published its Core Values and Code of Conduct which establish the company’s high standards for corporate responsibility. The company maintains a hotline, administered by an independent company, that employees can use confidentially and anonymously to communicate suspected violations of the company’s Core Values or Code of Conduct, including concerns regarding accounting, internal accounting control or auditing matters. Any reported accounting, internal accounting control or auditing matters are also forwarded directly to the Chairman of the Audit Committee of the Board of Directors.

The Audit Committee of the Board of Directors consists solely of directors who are considered independent under applicable New York Stock Exchange rules. One member of the Audit Committee, Roderick M. Hills, has been determined by the Board of Directors to be an “audit committee financial expert” as defined by SEC rules. The Audit Committee reviews the company’s financial statements and periodic reports filed with the SEC, as well as the company’s internal control over financial reporting including its accounting policies. In performing its reviews, the Committee meets periodically with the independent auditors, management and internal auditors, both together and separately, to discuss these matters.

The Audit Committee engages Ernst & Young, an independent registered accounting firm, to audit the company’s financial statements and its internal control over financial reporting and express opinions thereon. The scope of the audits is set by Ernst & Young, following review and discussion with the Audit Committee. Ernst & Young has full and free access to all company records and personnel in conducting its audits. Representatives of Ernst & Young meet regularly with the Audit Committee, with and without members of management present, to discuss their audit work and any other matters they believe should be brought to the attention of the Committee. Ernst & Young has issued an opinion on the company’s financial statements. This report appears on page 25. Ernst & Young has also issued an audit report on management’s assessment of the company’s internal control over financial reporting. This report appears on page 26.

Management’s Assessment of the Company’s Internal Control over Financial Reporting

The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2006. Based on management’s assessment, management believes that, as of December 31, 2006, the company’s internal control over financial reporting was effective based on the criteria in Internal Control – Integrated Framework, as set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ FERNANDO AGUIRRE	/s/ JEFFREY M. ZALLA	/s/ BRIAN W. KOCHER
Chief Executive Officer	Chief Financial Officer	Chief Accounting Officer

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Chiquita Brands International, Inc. (“CBII”) and its subsidiaries (collectively, “Chiquita” or the company) operate as a leading international marketer and distributor of high-quality fresh and value-added produce, which is sold under the Chiquita^® premium brand, the Fresh Express^® brand and other related trademarks. The company is one of the largest banana producers in the world and a major supplier of bananas in Europe and North America. In June 2005, Chiquita acquired Fresh Express, the U.S. market leader in value-added salads, a fast-growing food category for grocery retailers, foodservice providers and quick-service restaurants. The acquisition of Fresh Express increased Chiquita’s consolidated annual revenues by about $1 billion. The company believes that the acquisition diversified its business, accelerated revenue growth in higher margin value-added products, and provided a more balanced mix of sales between Europe and North America, which makes the company less susceptible to risks unique to Europe, such as the European Union (“EU”) banana import regime and foreign exchange risk. See Note 2 to the Consolidated Financial Statements for further information on the company’s 2005 acquisition of Fresh Express.

Significant financial items in 2006 included the following:

• Net sales for 2006 were $4.5 billion, compared to $3.9 billion for 2005. The increase resulted from the acquisition of Fresh Express in June 2005.

• The operating loss for 2006 was $28 million, compared to $188 million of operating income for 2005. The 2006 results included a $43 million goodwill impairment charge related to Atlanta AG and a $25 million charge related to a potential settlement of a previously disclosed U.S. Department of Justice investigation. Operating income for 2005 included flood costs of $17 million related to Tropical Storm Gamma and a $6 million charge related to the consolidation of fresh-cut fruit facilities in the Midwestern United States.

• Operating cash flow was $15 million in 2006, compared to $223 million in 2005. The decline was primarily due to the significant decline in operating results in 2006.

• The company’s debt at both December 31, 2006 and 2005 was $1 billion. The balance at December 31, 2006 included $44 million of borrowings on the company’s revolving credit facility to fund working capital needs.

• In September 2006, the board of directors suspended the company’s quarterly cash dividend of $0.10 per share on its outstanding shares of common stock.

Operating results in 2006 were significantly affected by regulatory changes in the European banana market, which resulted in lower local pricing and increased tariff costs, and by higher fuel and other industry costs. Neither the company nor the industry has been able to pass on the increased tariff costs to customers or consumers, although the company has been able to maintain its price premium in the European market. Comparisons to 2005 are also affected by the fact that 2005 was an unusually good year for banana pricing in Europe. Additionally, the company recorded a charge in 2006 in its Banana segment related to the U.S. Department of Justice investigation and a goodwill impairment charge related to Atlanta AG that affected both the Banana and Fresh Select segments. The Fresh Cut segment was significantly affected by consumer concerns regarding the safety of packaged salad products, after discovery of E. coli in certain industry spinach products in September 2006 and the resulting investigation

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by the U.S. Food and Drug Administration (“FDA”). Although the FDA investigation linked no cases of illness to the company’s Fresh Express products, the industry issues related to fresh spinach products will likely continue to have a significant impact on Fresh Cut segment results through at least the third quarter of 2007.

In 2006, the company outlined its vision to become a global leader in branded, healthy, fresh foods, and refined its strategic objectives to (i) become a consumer-driven, customer-preferred organization, (ii) be an innovative, high-performance organization, and (iii) deliver leading food industry shareholder returns. The company is continuing to focus on becoming a more consumer-centric organization and launching innovative products to meet consumers’ growing desire for healthy, fresh and convenient food choices. In 2006, the company expanded its distribution of convenient, single “Chiquita-To-Go” bananas into 8,000 non-grocery convenience outlets. “Chiquita Fresh and Ready” was also introduced for testing in late 2006 in traditional grocery stores, as an innovative way to keep bananas fresher four days longer. During the year, Fresh Express added 12 new offerings, including “5-Lettuce Mix” and “Sweet Butter” blends, to its line of ready-to-eat salad kits and premium value-added salads. Chiquita intends to continue providing value-added products and services in ways it believes better satisfy consumers, increase retailer profitability and boost the in-store presence of Chiquita and Fresh Express branded products.

The major risks facing the business include the EU tariff-only regime and related industry and pricing dynamics, weather and agricultural disruptions, consumer concerns regarding the safety of packaged salads, exchange rates, industry cost increases, risks of governmental investigations and other contingencies, and financing.

• In January 2006, the European Commission implemented a new regime for the importation of bananas into the EU. It eliminated the quota that was previously applicable and imposed a higher tariff on bananas imported from Latin America, while imports from certain African, Caribbean and Pacific (“ACP”) sources are assessed zero tariff on the first 775,000 metric tons imported. The new tariff, which increased to €176 from €75 per metric ton, equates to an increase in cost of approximately €1.84 per box for bananas imported by the company into the EU from Latin America, Chiquita’s primary source of bananas. In 2006, the company incurred a net $75 million in higher tariff-related costs, which is the sum of $116 million in incremental tariff costs minus $41 million in lower costs to purchase banana import licenses, which are no longer required. In part due to the elimination of the quota, the volume of bananas imported into the EU increased in 2006, which contributed to a decrease in the company’s average banana prices in core European markets of 11% on a local currency basis compared to 2005. The negative impact of the new regime has been substantial and is expected to continue indefinitely.

• In 2006, the company incurred $25 million of higher sourcing, logistics and other costs for replacement fruit due to banana volume shortfalls caused by Hurricane Stan and Tropical Storm Gamma, which occurred in the fourth quarter of 2005. These storms, along with Hurricane Katrina in 2005, caused significant damage to banana cultivations and port facilities and resulted in increased costs for alternative banana sourcing, logistics and farm rehabilitation, and write-downs of damaged farms. Additionally, in 2007, Fresh Cut segment results for the first quarter are expected to be impacted by up to $4 million from a record January freeze in Arizona which affected lettuce sourcing.

• The company could be adversely affected by actions of regulators or a decline in consumer confidence in the safety and quality of certain food products or ingredients, even if the company’s practices and procedures are not implicated. For example, consumer concerns regarding the safety of packaged salads in the United States, after discovery of E. coli in certain industry spinach products in September 2006, adversely impacted Fresh Express operations in the third

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and fourth quarters of 2006, resulting in lower sales and unforeseen costs, even though Fresh Express products were not implicated in these issues. As a result, the company may also elect or be required to incur additional costs aimed at restoring consumer confidence in the safety of its products. The company incurred $9 million of direct costs in 2006, such as abandoned raw product inventory and non-cancelable purchase commitments, related to this spinach issue. In addition to these direct costs, the company believes that 2006 operating income was approximately $12 million lower than it otherwise would have been, as a result of reduced sales and decreased margins. The company expects this issue will continue to negatively impact Fresh Cut segment results through at least the third quarter of 2007.

• In 2006, the euro strengthened against the dollar, causing the company’s sales and profits to increase as a result of the favorable exchange rate conversion of euro-denominated sales to U.S. dollars. The company’s results are significantly affected by currency changes in Europe and, should the euro weaken against the dollar, it would adversely affect the company’s results. The company seeks to reduce its exposure to adverse effects of euro exchange rate movements by purchasing euro put option contracts. Currently, the company has hedging coverage for approximately 70% of its estimated net euro cash flow in 2007 at average put option strike rates of $1.28 per euro and approximately 65% of its estimated net euro cash flow in the first half of 2008 at average strike rates of $1.27 per euro.

• Transportation costs are significant in the company’s business, and the price of bunker fuel used in shipping operations is an important variable component of transportation costs. The company’s fuel costs have increased substantially since 2003, and may increase further in the future. In addition, fuel and transportation costs are a significant cost component of much of the produce that the company purchases from growers or distributors, and there can be no assurance that the company will be able to pass on such increased costs to its customers. The company enters into hedge contracts which permit it to lock in fuel purchase prices for up to three years on up to 75% of the fuel consumed in its ocean shipping fleet, and thereby minimize the volatility that fuel prices could have on its operating results. However, these hedging strategies cannot fully protect against continually rising fuel rates and entail the risk of loss if market fuel rates decline (see Note 8 to the Consolidated Financial Statements). At December 31, 2006, the company had 55% hedging coverage through the end of 2009 on fuel consumed in its banana shipments to core markets in North America and Europe; in relation to market forward fuel prices at December 31, 2006, these hedge positions entailed losses of $3 million in 2007, $5 million in 2008, and $2 million in 2009.

The cost of paper and plastics are also significant to the company because bananas and some other produce items are packed in cardboard boxes for shipment, and packaged salads are shipped in sealed plastic bags. If the price of paper and/or plastics increases, or results in a higher cost to the company to purchase fresh produce, and the company is not able to effectively pass these price increases along to its customers, then the company’s operating income will decrease. Increased costs of paper and plastics have negatively impacted the company’s operating income in the past, and there can be no assurance that these costs will not adversely affect the company’s operating results in the future.

• The company has international operations in many foreign countries, including in Central and South America, the Philippines and the Ivory Coast. These activities are subject to risks inherent in operating in those countries, including government regulation, currency restrictions and other restraints, burdensome taxes, risks of expropriation, threats to employees, political instability, terrorist activities, including extortion, and risks of U.S. and foreign governmental action in

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relation to the company. Should such circumstances occur, the company might need to curtail, cease or alter activities in a particular region or country and may be subject to fines or other penalties. The company’s ability to deal with these issues may be affected by applicable U.S. or other applicable law. See Note 15 to the Consolidated Financial Statements for a description of (i) a $25 million financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and relating to payments made by the company’s former banana producing subsidiary in Colombia to certain groups in that country which had been designated under United States law as a foreign terrorist organization, (ii) an investigation by EU competition authorities relating to prior information sharing in Europe and (iii) customs proceedings in Italy.

• The company has $1 billion outstanding in total debt, most of which is issued under debt agreements that require continuing compliance with financial covenants. The most restrictive of these covenants are in the company’s bank credit facility, which includes a $200 million revolving credit facility and $394 million of outstanding term loans (the “CBL Facility”). In 2006, after seeking prospective covenant relief in June, the company needed to seek further covenant relief later in the year. In October, the company obtained a temporary waiver, for the period ended September 30, 2006, from compliance with certain financial covenants in the CBL Facility, with which the company otherwise would not have been in compliance. In November, the company obtained a permanent amendment to the CBL Facility to cure the covenant violations that would have otherwise occurred when the temporary waiver expired. In March 2007, the company obtained further prospective covenant relief with respect to a proposed financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and other related costs. If the company’s financial performance were to decline compared to lender expectations, the company could in the future be required to seek further covenant relief from its lenders, or to restructure or replace its credit facility, which would further increase the cost of the company’s borrowings, restrict its access to capital, and/or limit its operating flexibility.

As of February 28, 2007, the company had borrowed $84 million under its revolving credit facility, and expects to make additional draws to fund peak seasonal working capital needs through March or April 2007. Another $29 million of capacity was used to issue letters of credit, including a $7 million letter of credit issued to preserve the right to appeal certain customs claims in Italy. During 2007, the company may be required to issue up to an additional $25 million of letters of credit for appeal bonds relating to litigation of additional customs claims in Italy. The company believes that operating cash flow, including the collection of receivables from high season banana sales, should permit it to significantly reduce the revolving credit balance during the second quarter and to fully repay it during the third quarter; however, there can be no assurance in this regard. In order to ensure adequate liquidity, in the event that the company experiences shortfalls in operating performance or unanticipated contingencies which require the use of significant amounts of cash, the company may be limited in its ability to fund discretionary market or brand-support activities, innovation spending, capital investments and/or acquisitions that had been planned as part of the execution of its long-term growth strategy.

OPERATIONS

The company reports three business segments: Bananas, Fresh Select, and Fresh Cut. The Banana segment includes the sourcing (purchase and production), transportation, marketing and distribution of bananas. The Fresh Select segment includes the sourcing, marketing and distribution of whole fresh fruits and vegetables other than bananas. The Fresh Cut segment includes value-added salads, foodservice and fresh-cut fruit operations. Remaining operations, which are reported in “Other,” primarily consist of

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processed fruit ingredient products, which are produced in Latin America and sold in other parts of the world, and other consumer packaged goods. The company evaluates the performance of its business segments based on operating income. Intercompany transactions between segments are eliminated.

Financial information for each segment follows:

(In thousands)	2006			2005			2004
Net sales
Bananas	$	1,933,866		$	1,950,565		$	1,713,160
Fresh Select		1,355,963			1,353,573			1,289,145
Fresh Cut		1,139,097			538,667			10,437
Other		70,158			61,556			58,714
Total net sales	$	4,499,084		$	3,904,361		$	3,071,456
Segment operating income (loss)
Bananas	$	(20,591	)	$	182,029		$	122,739
Fresh Select		(27,341	)		10,546			440
Fresh Cut		24,823			(3,276	)		(13,422	)
Other		(4,588	)		(1,666	)		3,190
Total operating income (loss)	$	(27,697	)	$	187,633		$	112,947

Banana Segment

Net sales

Banana segment net sales for 2006 decreased 1% versus 2005. The decrease resulted from lower banana pricing in Europe, which was mostly offset by higher volume in Europe and improved pricing in North America.

Net sales for 2005 increased 14% versus 2004. The increase resulted primarily from improved banana pricing in both Europe and North America.

Operating income

2006 compared to 2005. The Banana segment operating loss for 2006 was $21 million, compared to operating income of $182 million for 2005. Banana segment operating results were adversely affected by:

• $110 million from lower European local banana pricing, attributable in part to increased banana volumes that entered the market, encouraged by regulatory changes that expanded the duty preference for African and Caribbean suppliers and eliminated quota limitations for Latin American fruit, as well as reduced consumption driven by unseasonably hot weather in many parts of Europe during the third quarter.

• $75 million of net incremental costs associated with higher banana tariffs in the European Union. This consisted of approximately $116 million of incremental tariff costs, reflecting the duty increase to €176 from €75 per metric ton effective January 1, 2006, offset by

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approximately $41 million of expenses incurred in 2005 to purchase banana import licenses, which are no longer required.

• $54 million of industry cost increases for fuel, fruit, paper and ship charters.

• $25 million of higher sourcing, logistics and other costs for replacement fruit due to banana volume shortfalls caused by Hurricane Stan and Tropical Storm Gamma, which occurred in the fourth quarter 2005.

• $25 million charge for potential settlement of a contingent liability related to the Justice Department investigation related to the company’s former Colombian subsidiary.

• $14 million goodwill impairment charge related to Atlanta AG.

• $12 million in higher professional fees related to previously-reported legal proceedings, including the Justice Department investigation, the EU competition law investigation, and U.S. anti-trust litigation.

These adverse items were offset in part by:

• $23 million of net cost savings in the Banana segment, primarily related to efficiencies in the company’s supply chain and tropical production operations.

• $21 million from higher pricing in North America.

• $20 million from lower marketing costs, primarily in Europe.

• $17 million impact from 2005 flooding in Honduras as a result of Tropical Storm Gamma, which did not recur in 2006.

• $13 million benefit from the impact of European currency, consisting of a $23 million favorable variance from balance sheet translation and a $1 million increase in revenue, partially offset by $9 million of increased hedging costs and $2 million of higher European costs due to a stronger euro.

• $11 million of costs related to flooding in Costa Rica and Panama in the first half of 2005 that did not repeat in 2006.

• $10 million from lower accruals for performance-based compensation due to lower operating results relative to targets.

The company’s banana sales volumes of 40-pound boxes were as follows:

(In millions, except percentages)	2006	2005	% Change
Core European Markets1	53.8	54.0	(0.4	)%
Trading Markets2	12.5	6.9	81.2	%
North America	56.9	58.4	(2.6	)%
Asia and the Middle East3	20.9	19.2	8.9	%
Total	144.1	138.5	4.0	%

The volume of fruit sold into trading markets typically reflects excess banana supplies beyond core market demands, sold on a spot basis. Beginning in 2007, the company anticipates less volume being available to trading markets on a spot basis as a result of recent marketing agreements to provide a year-round supply of bananas to customers in Turkey, which in the future will be included in the company’s core European markets.

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The following table presents the 2006 percentage change compared to 2005 for the company’s banana prices and banana volume:

	Q1		Q2		Q3		Q4		Year
Banana Prices
Core European Markets1
U.S. Dollars4	(6	)%	(14	)%	(14	)%	(6	)%	(10	)%
Local Currency	2	%	(13	)%	(18	)%	(13	)%	(11	)%
Trading Markets2
U.S. Dollars	27	%	18	%	(16	)%	6	%	(4	)%
North America	0	%	9	%	8	%	4	%	5	%
Asia and the Middle East3
U.S. Dollars	(7	)%	(2	)%	(2	)%	18	%	4	%
Banana Volume
Core European Markets1	(9	)%	(1	)%	8	%	4	%	(0	)%
Trading Markets2	150	%	(42	)%	219	%	83	%	81	%
North America	(6	)%	(8	)%	0	%	5	%	(3	)%
Asia and the Middle East3	33	%	12	%	18	%	(9	)%	9	%

¹ The 25 countries of the EU, Norway, Iceland and Switzerland; beginning in 2007, core European markets will also include Bulgaria and Romania (two new EU member states) as well as Turkey

² Other European and Mediterranean countries not included in Core Markets

³ The company primarily operates through joint ventures in this region.

⁴ Prices on a U.S. dollar basis do not include the impact of hedging.

The average spot and hedged euro exchange rates for 2006 and 2005 were as follows:

(Dollars per euro)	2006		2005		% Change
Euro average exchange rate, spot	$	1.25	$	1.25	0.0	%
Euro average exchange rate, hedged		1.21		1.23	(1.6	)%

The company has entered into put option contracts to hedge its risks associated with euro exchange rate movements. Put options require an upfront premium payment. These put options can reduce the negative earnings and cash flow impact on the company of a significant future decline in the value of the euro, without limiting the benefit the company would receive from a stronger euro. Foreign currency hedging costs charged to the Consolidated Statement of Income were $17 million in 2006, compared to $8 million in 2005. These costs relate primarily to hedging the company’s net cash flow exposure to fluctuations in the U.S. dollar value of its euro-denominated sales. The lower 2005 costs primarily resulted from gains recognized in late 2005 on put option contracts expiring at that time. At December 31, 2006, unrealized losses of $19 million on the company’s currency option contracts were included in “Accumulated other comprehensive income,” of which $15 million is expected to be reclassified to net income during the next 12 months.

The company also enters into forward contracts for fuel oil for its shipping operations, to minimize the volatility that changes in fuel prices could have on its operating results. Unrealized losses of $10 million on the fuel oil forward contracts were also included in “Accumulated other comprehensive

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income” at December 31, 2006, of which $3 million is expected to be reclassified to net income during the next 12 months.

2005 compared to 2004. Banana segment operating income for 2005 was $182 million, compared to $123 million for 2004. Banana segment operating results were favorably affected by:

• $151 million benefit from improved local European pricing.

• $15 million from improved pricing in North America, due principally to temporary contract price increases to offset costs from flooding in Costa Rica and Panama in January 2005, and implementation late in the year of surcharges to offset rising industry costs, including fuel-related products and transportation.

• $9 million before-tax loss on the sale of the company’s former Colombian banana production division in 2004.

• $4 million increase from the impact of European currency, consisting of an $8 million increase in revenue and a $22 million decrease in hedging costs, partially offset by a $26 million adverse impact of balance sheet translation.

• $4 million charge in 2004 relating to stock options and restricted stock granted to the company’s former chairman and CEO that vested upon his retirement in May 2004.

These items were offset in part by:

• $34 million of cost increases from higher fuel, paper and ship charter costs.

• $27 million of higher costs for advertising, marketing and innovation spending, primarily due to consumer brand support efforts in Europe late in the year.

• $24 million of higher license-related banana import costs in Europe.

• $17 million impact from flooding in Honduras caused by Tropical Storm Gamma (included in “Cost of sales” in the Consolidated Statement of Income).

• $11 million primarily from increased costs related to the January flooding in Costa Rica and Panama, including alternative banana sourcing, logistics and farm rehabilitation costs, and write-downs of damaged farms.

• $4 million adverse impact of pricing in Asia.

• $3 million of higher administrative expenses, in part due to accruals for performance-based compensation due to improved year-over-year operating results.

• $3 million due to lower volume of second-label fruit in Europe.

Fresh Select Segment

Net sales

Fresh Select net sales were flat at $1.4 billion in 2006 compared to 2005. Net sales for 2005 increased by 5% compared to 2004, primarily due to higher volume from Atlanta AG.

Operating income

2006 compared to 2005. The Fresh Select segment had an operating loss of $27 million in 2006, compared to operating income of $10 million in 2005. The 2006 operating results included a $29 million charge for goodwill impairment at Atlanta AG. Aside from the impairment charge, year-over-year improvements in the company’s North American Fresh Select operations were more than offset by a decline in profitability at Atlanta AG, and lower pricing and currency-related declines in the company’s Chilean operations. The decline in profitability of Atlanta AG resulted from intense price competition in

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its primary market of Germany, as well as $3 million of charges late in 2006 related to rationalization of its distribution network, including the closure of one facility.

During the 2006 third quarter, due to the decline in Atlanta AG’s business performance in the period following the implementation of the new EU banana import regime as of January 1, 2006, the company accelerated the testing of Atlanta’s goodwill and fixed assets for impairment. As a result, the company recorded a goodwill impairment charge in the 2006 third quarter for the full amount, of which $29 million was included in the Fresh Select segment and $14 million in the Banana segment.

2005 compared to 2004. The Fresh Select segment had operating income of $10 million in 2005, compared to breakeven results for 2004. The improvement resulted primarily from a restructured melon program and other improvements in North America, and operational improvement at Atlanta, partially offset by weather and currency-related declines in the company’s Chilean operations.

Fresh Cut Segment

Net sales

Net sales in 2006 for the company’s Fresh Cut segment were $1.1 billion, up from $539 million in 2005 due to the Fresh Express acquisition in mid-2005. Substantially all of the revenue in this segment is from Fresh Express.

Operating income

2006 compared to 2005. The Fresh Cut segment had operating income of $25 million in 2006, compared to an operating loss of $3 million for 2005. Fresh Cut segment results were favorably affected by:

• $31 million increase in operating income from Fresh Express, as a result of Chiquita owning Fresh Express for a full year in 2006 versus a half year in 2005, as well as normal operating improvements.

• $6 million of mostly non-cash charges in 2005 from the shut-down of Chiquita’s fresh-cut fruit facility in Manteno, Illinois following the acquisition of Fresh Express, which had a facility servicing the same Midwestern area.

These items were offset in part by:

• $9 million of direct costs in 2006, including lost raw product inventory and non-cancelable purchase commitments, related to consumer concerns about the safety of packaged salads after discovery of E. coli in certain industry spinach products in September 2006 and the resulting investigation by the U.S. Food and Drug Administration.

In addition to the direct costs resulting from the fresh spinach issue, the company believes that 2006 operating income was at least $12 million lower than it otherwise would have been as a result of reduced sales and decreased margins during the final four months of 2006. Although the FDA investigation linked no cases of illness to the company’s Fresh Express products, consumer concerns are likely to continue to have an impact on Fresh Cut segment results through at least the third quarter of 2007.

On a pro forma basis, as if the company had completed the acquisition of Fresh Express on December 31, 2004, there was a $12 million improvement in Fresh Cut segment operating income compared to

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2005. The improvement in pro forma results was driven by a 10 percent increase in volume and a 2 percent increase in net revenue per case in retail value-added salads, continuing improvements in fresh-cut fruit operations, the achievement of acquisition synergies and other cost savings, and the absence of $6 million of non-cash charges in 2005 from the shut-down of the fresh-cut fruit facility noted above. These improvements were partially offset by the spinach impact mentioned above, as well as higher industry costs and increased marketing and innovation spending. The pro forma segment results may not be indicative of what the actual results would have been had the acquisition been completed on the date assumed or the results that may be achieved in the future.

The Fresh Cut segment operating income reflects approximately $18 million of depreciation and $5 million of amortization for Fresh Express in the first half of 2006, which explains the increase in consolidated depreciation and amortization expense from 2005, since the acquisition of Fresh Express was completed in mid-2005.

2005 compared to 2004. The Fresh Cut segment had an operating loss of $3 million in 2005, compared to an operating loss of $13 million for 2004. Fresh Cut segment results were favorably affected by:

• $14 million in operating income at Fresh Express from the June 28, 2005 acquisition date to the end of the year. On a pro forma basis as if the company had completed its acquisition of Fresh Express on June 30, 2004, this represents a $5 million improvement in operating income compared to the same period in 2004, driven by a 7 percent increase in volume, a 3 percent increase in net revenue per case in retail value-added salads on a full-year basis and a reduction in corporate overhead and insurance costs, partially offset by increases in cost of goods sold and innovation spending.

• $2 million of improvements in the operating results of Chiquita’s fresh-cut fruit facility.

This was partially offset by:

• $6 million of charges from the shut-down of Chiquita’s fresh-cut fruit facility in Manteno, Illinois. These costs were primarily included in “Cost of sales” in the Consolidated Statement of Income.

On a pro forma basis, as if the company had completed its acquisition of Fresh Express on June 30, 2004, Fresh Cut segment revenue for the six months ended December 31, 2005 was $515 million, up 6 percent from $484 million in the same period in 2004, and operating income for the six months ended December 31, 2005 was $8 million before plant shut-down costs, compared to $3 million in the same period in 2004. The pro forma segment results for the second half of 2004 do not purport to be indicative of what the actual results would have been had the acquisition been completed on the date assumed or the results that may be achieved in the future.

Interest and Other Income (Expense)

Interest income in 2006 was $9 million, compared to $10 million in 2005. Interest expense in 2006 was $86 million, compared to $60 million in 2005. The increase in interest expense was due to the full-year impact of the Fresh Express acquisition financing.

Other income (expense) in 2006 included a $6 million gain from the sale of the company’s 10% ownership in Chiquita Brands South Pacific, an Australian fresh produce distributor. In 2005, other income (expense) included $3 million of financing fees, primarily related to the write-off of unamortized

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debt issue costs for a prior credit facility and $2 million of charges for settlement of an indemnification claim relating to prior periods, partially offset by a $1 million gain on the sale of Seneca preferred stock and a $1 million gain from an insurance settlement. Other income (expense) in 2004 included a loss of $22 million from the premium associated with the refinancing of the company’s then-outstanding 10.56% Senior Notes, partially offset by a $2 million gain related to proceeds received as a result of the demutualization of a company with which Chiquita held pension annuity contracts.

Income Taxes

The company’s effective tax rate varies from period to period due to the level and mix of income among various domestic and foreign jurisdictions in which the company operates. The company currently does not generate U.S. federal taxable income. The company’s taxable earnings are substantially from foreign operations being taxed in jurisdictions at a net effective rate lower than the U.S. statutory rate. No U.S. taxes have been accrued on foreign earnings because such earnings have been or are expected to be permanently invested in foreign operating assets.

Income taxes were a $2 million benefit for 2006, compared to expense of $3 million in 2005 and expense of $5 million in 2004. Income taxes for 2006 include benefits of $10 million primarily from the resolution of tax contingencies in various jurisdictions and a reduction in valuation allowance. In addition, the company recorded a tax benefit of $5 million as a result of a change in German tax law. Income taxes for 2005 included benefits of $8 million primarily from the resolution of tax contingencies and reduction in the valuation allowance of a foreign subsidiary due to the execution of tax planning initiatives. Income taxes in 2004 included a benefit of $5.7 million from the release to income, upon the sale of the Colombian banana production division, of a deferred tax liability related to growing crops in Colombia.

See Note 13 to the Consolidated Financial Statements for further information about the company’s income taxes.

Strategic Alternative for Shipping and Logistics

In September 2006, the company announced that it is exploring strategic alternatives with respect to the sale and long-term management of its overseas shipping assets and shipping-related logistics activities. Great White Fleet, Ltd. (“GWF”), a wholly-owned subsidiary of Chiquita, manages the company’s global ocean transportation and logistics operations. GWF operates 12 owned refrigerated cargo vessels and charters additional vessels for use primarily for the long-haul transportation of Chiquita’s fresh fruit products from Latin America to North America and Europe. The owned vessels, consisting of eight reefer ships and four container ships, are included in the Banana segment. The company will consider various structures, including the sale and leaseback of the company’s owned ocean-going shipping fleet, the sale and/or outsourcing of related ocean-shipping assets and container operations, and entry into a long-term strategic partnership to meet all of Chiquita’s international cargo transportation needs. Proceeds from a sale would be used primarily to repay debt, including $101 million of shipping-related debt outstanding at December 31, 2006 and up to $80 million of term loans outstanding under the CBL Facility.

Sale of Investment

In December 2006, the company sold its 10% ownership in Chiquita Brands South Pacific, an Australian fresh produce distributor. The company received $9 million in cash and realized a $6 million gain on the sale of the shares, which was included in “Other income (expense), net” in the Consolidated Statement of Income.

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Seneca Stock

In April 2005, the company sold approximately 968,000 shares of Seneca Foods Corporation preferred stock, which had been received as part of the May 2003 sale of the company’s Chiquita Processed Foods division to Seneca. The company received proceeds of approximately $14 million from the sale of the preferred stock and recorded a $1 million gain on the transaction in the 2005 second quarter in “Other income (expense), net” in the Consolidated Statement of Income.

Sale of Colombian Division

In June 2004, the company sold its former banana-producing and port operations in Colombia to Invesmar Ltd. (“Invesmar”), the holding company of C.I. Banacol S.A., a Colombian-based producer and exporter of bananas and other fruit products. In exchange for these operations, the company received $28.5 million in cash; $15 million face amount of notes and deferred payments; and the assumption by the buyer of approximately $7 million of pension liabilities.

In connection with the sale, Chiquita entered into eight-year agreements to purchase bananas and pineapples from affiliates of the buyer. Under the banana purchase agreement, Chiquita purchases approximately 11 million boxes of Colombian bananas per year at above-market prices. This resulted in a liability of $33 million at the sale date ($26 million at December 31, 2006), which represents the estimated net present value of the above-market premium to be paid for the purchase of bananas over the term of the contract. Substantially all of this liability is included in “Other liabilities” in the Consolidated Balance Sheet. Under the pineapple purchase agreement, Chiquita purchases approximately 2.5 million boxes of Costa Rican golden pineapples per year at below-market prices. This resulted in a receivable of $25 million at the sale date ($20 million at December 31, 2006), which represents the estimated net present value of the discount to be received for the purchase of pineapples over the term of the contract. Substantially all of this receivable is included in “Investments and other assets, net” in the Consolidated Balance Sheet. Together, the two long-term fruit purchase agreements commit Chiquita to approximately $80 million in annual purchases.

Also in connection with the sale, Chiquita agreed that, in the event that it becomes unable to perform its obligations under the banana purchase agreement due to a conflict with U.S. law, Chiquita will indemnify Invesmar primarily for the lost premium on the banana purchases.

The net book value of the assets and liabilities transferred in the transaction was $36 million. The company recognized a before-tax loss of $9 million and an after-tax loss of $4 million on the transaction, which takes into account the net $8 million loss from the two long-term fruit purchase agreements.

LIQUIDITY AND CAPITAL RESOURCES

The company’s cash balance was $65 million at December 31, 2006, compared to $89 million at December 31, 2005.

Operating cash flow was $15 million in 2006, $223 million in 2005 and $94 million in 2004. The decrease in operating cash flow for 2006 was primarily due to a significant decline in operating results. The operating cash flow increase in 2005 was primarily due to significantly improved operating results and was partially used to fund a portion of the Fresh Express acquisition.

Capital expenditures were $61 million for 2006 and $43 million for both 2005 and 2004. The increase in 2006 was partially due to the full year impact of the acquisition of Fresh Express, which

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occurred in June 2005. The 2005 capital expenditures included $12 million related to Fresh Express subsequent to the acquisition. In 2004, capital expenditures included $10 million for implementation of a global business transaction processing system.

The following table summarizes the company’s contractual obligations for future cash payments at December 31, 2006, which are primarily associated with debt service payments, operating leases, pension and severance obligations and long-term purchase contracts:

(In thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt
Parent company	$	475,000	$	—	$	—	$	—	$	475,000
Subsidiaries		498,475		22,588		43,565		218,875		213,447
Notes and loans payable		55,042		55,042		—		—		—
Interest on debt		500,000		80,000		150,000		145,000		125,000
Operating leases		250,938		87,590		68,795		36,248		58,305
Pension and severance obligations		92,950		12,159		20,385		18,017		42,389
Purchase commitments		1,696,478		632,655		491,404		393,102		179,317
	$	3,568,883	$	890,034	$	774,149	$	811,242	$	1,093,458

Estimating future cash payments for interest on debt requires significant assumptions. The figures in the table reflect a LIBOR rate of 5.375% and an interest rate of LIBOR plus a margin of 3.00% on the term loans under the CBL Facility for all future periods. No debt principal repayments were assumed, other than normal maturities. The table does not include interest on any borrowings under the revolving credit facility to fund working capital needs.

The company’s purchase commitments consist primarily of long-term contracts to purchase bananas, lettuce and other produce from third-party producers. The terms of these contracts, which set the price for the committed produce to be purchased, range primarily from one to ten years. However, many of these contracts are subject to price renegotiations every one to two years. Therefore, the company is only committed to purchase bananas, lettuce and other produce at the contract price until the renegotiation date. The purchase obligations included in the table are based on the current contract price and the estimated production volume the company is committed to purchase until the renegotiation date. The banana and lettuce purchase commitments reflected in the table above represent normal and customary operating commitments in the industry. Most of the 2007 banana volume to be purchased is reflected above, as the company has secured and committed to its sources for the upcoming year. Substantially all of the contracts provide for minimum penalty payments, which are less than the amounts included in the table, to be paid if the company were to purchase less than the committed volume of bananas or lettuce.

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Total debt at both December 31, 2006 and 2005 was $1 billion. The following table provides detail of the company’s debt balances:

	December 31,
(In thousands)	2006		2005
Parent Company
7 1/2% Senior Notes, due 2014	$	250,000	$	250,000
8 7/8% Senior Notes, due 2015		225,000		225,000
Subsidiaries
CBL credit facility
Term Loan B		24,341		24,588
Term Loan C		369,375		373,125
Revolver		44,000		—
Shipping		100,581		111,413
Other		15,220		12,982
Total debt	$	1,028,517	$	997,108

The company and Chiquita Brands L.L.C. (“CBL”), the main operating subsidiary of the company, are parties to an amended and restated credit agreement with a syndicate of bank lenders for a senior secured credit facility (the “CBL Facility”), which consists of a $200 million revolving credit facility (the “Revolving Credit Facility”), a $125 million term loan (“Term Loan B”), and a $375 million term loan (“Term Loan C”). Total fees of approximately $18 million were paid to obtain the CBL Facility in June 2005. The company made $100 million of discretionary principal payments on Term Loan B in the second half of 2005. The letter of credit sublimit under the Revolving Credit Facility is $100 million.

At December 31, 2006, $44 million of borrowings were outstanding under the Revolving Credit Facility and $31 million of credit availability was used to support issued letters of credit (including a $7 million letter of credit issued to preserve the right to appeal certain customs claims in Italy), leaving $125 million of credit available. The company borrowed an additional $40 million under the Revolving Credit Facility in January and February 2007, and expects to borrow more to fund peak seasonal working capital needs through March or April 2007. Additionally, as more fully described in Note 15 to the Consolidated Financial Statements, the company may be required to issue letters of credit of up to approximately $50 million in connection with its appeal of certain claims of Italian customs authorities, although the company does not expect to issue letters of credit in 2007 in excess of $25 million for this matter. The company believes that operating cash flow, including the collection of receivables from high season banana sales, should permit it to significantly reduce the revolving credit balance during the second quarter and to fully repay it during the third quarter; however, there can be no assurance in this regard. The company also believes that its cash level, cash flow generated by operating subsidiaries and borrowing capacity will provide sufficient cash reserves and liquidity to fund the company’s working capital needs, capital expenditures and debt service requirements. However, in the event that the company experiences shortfalls in operating performance compared to lender expectations or unanticipated contingencies which require the use of significant amounts of cash, the company may be required to seek further covenant relief or to restructure or replace its credit facility and may be limited in its ability to fund discretionary market or brand-support activities, innovation spending, capital investments and/or acquisitions that had been planned as part of the execution of its long-term growth strategy.

In October 2006, even after obtaining covenant relief in June, the company was required to obtain a temporary waiver, for the period ended September 30, 2006, from compliance with certain financial covenants in the CBL Facility, with which the company otherwise would not have been in compliance. In November 2006, the company obtained a permanent amendment to the CBL Facility to cure the covenant

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violations that would have otherwise occurred when the temporary waiver expired. The amendment revised certain covenant calculations relating to financial ratios for leverage and fixed charge coverage, established new levels for compliance with those covenants to provide additional financial flexibility, and established new interest rates. Total fees of approximately $2 million were paid to amend the CBL Facility. In March 2007, the company obtained further prospective covenant relief with respect to a proposed financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and other related costs.

The term loans bear interest at LIBOR plus a margin of 2.00% to 3.00%, depending on the company’s consolidated leverage ratio. At December 31, 2006 and 2005, the interest rate on the term loans was LIBOR plus 3.00% and LIBOR plus 2.00%, respectively. The Revolving Credit Facility bears interest at LIBOR plus a margin of 1.25% to 3.00%. At December 31, 2006, the interest rate on the Revolving Credit Facility was LIBOR plus 3.00%. Substantially all U.S. assets of CBL and its subsidiaries are pledged to secure the CBL Facility. The Revolving Credit Facility and Term Loan B are principally secured by the U.S. assets of CBL and its subsidiaries other than Fresh Express and its subsidiaries. The Term Loan C is principally secured by the assets of Fresh Express and its subsidiaries. The CBL Facility is also secured by liens on CBL’s trademarks as well as pledges of equity and guarantees by various subsidiaries worldwide. The CBL Facility is guaranteed by CBII and secured by a pledge of CBL’s equity.

Under the amended CBL Facility, CBL may distribute cash to CBII for routine CBII operating expenses, interest payments on CBII’s 7 ¹/2% and 8 ⁷/8% Senior Notes and payment of certain other specified CBII liabilities. Until Chiquita meets certain financial ratios and elects to become subject to a reduced maximum CBL leverage ratio, (i) CBL’s distributions to CBII for other purposes, such as dividend payments to Chiquita shareholders and repurchases of CBII’s common stock, warrants and senior notes, are prohibited, and (ii) the ability of CBL and its subsidiaries to incur debt, dispose of assets, carry out mergers and acquisitions, and make capital expenditures is further limited than under the original CBL Facility.

In June 2005, the company issued $225 million of 8 ⁷/8% Senior Notes due 2015, for net proceeds of $219 million. The proceeds were used to finance a portion of the acquisition of Fresh Express. The 8 ⁷/8% Senior Notes are callable on or after June 1, 2010, in whole or from time to time in part, at 104.438% of face value declining to face value in 2013. Before June 1, 2010, the company may redeem some or all of the 8 ⁷/8% Senior Notes at a specified treasury make-whole rate. In addition, before June 1, 2008, the company may redeem up to 35% of the notes at a redemption price of 108.75% of their principal amount using proceeds from sales of certain kinds of company stock.

In September 2004, the company issued $250 million of 7 ¹/2% Senior Notes due 2014, for net proceeds of $246 million. The proceeds from this offering, together with available cash, were used to repurchase and redeem the company’s then-outstanding 10.56% Senior Notes due 2009. As a result of the premiums associated with the repurchase of the 10.56% Senior Notes, the company recognized a $22 million loss in the 2004 third quarter, which is included in “Other income (expense), net” on the Consolidated Statement of Income. The 7 ¹/2% Senior Notes are callable on or after November 1, 2009, in whole or from time to time in part, at 103.75% of face value declining to face value in 2012. Before November 1, 2009, the company may redeem some or all of the 7 ¹/2% Senior Notes at a specified treasury make-whole rate. In addition, before November 1, 2007, the company may redeem up to 35% of the notes at a redemption price of 107.5% of their principal amount using proceeds from sales of certain kinds of company stock. The company is recognizing annual interest savings of approximately $7 million from having replaced the 10.56% Senior Notes with the 7 ¹/2% Senior Notes.

The indentures for the 7 ¹/2% and 8 ⁷/8% Senior Notes contain covenants that limit the ability of the company and its subsidiaries to incur debt and issue preferred stock, dispose of assets, make investments,

17

pay dividends or make distributions in respect of the company’s capital stock, create liens, merge or consolidate, issue or sell stock of subsidiaries, enter into transactions with certain stockholders or affiliates, and guarantee company debt. These covenants are generally less restrictive than the covenants under the CBL Facility.

In April 2005, GWF entered into a seven-year secured revolving credit facility for $80 million. The full proceeds from this facility were drawn, of which approximately $30 million was used to exercise buyout options under then-existing capital leases for four vessels, and approximately $50 million was used to finance a portion of the acquisition of Fresh Express. The loan requires GWF to maintain certain financial covenants related to tangible net worth and total debt ratios. GWF may elect to draw parts of or the entire amount of credit available in either U.S. dollars or euro. Euro denominated loans hedge against the potential balance sheet translation impact of the company’s euro net asset exposure.

The company had approximately $500 million of variable-rate debt at December 31, 2006. A 1% change in interest rates would result in a change to interest expense of approximately $5 million annually.

See Note 9 to the Consolidated Financial Statements for additional information regarding the company’s debt.

The company paid a quarterly cash dividend of $0.10 per share on the company’s outstanding shares of stock in the first three quarters of 2006. In the third quarter, the company announced the suspension of its dividend, beginning with the payment that would have been paid in October 2006. Quarterly cash dividends were paid in each of the four quarters of 2005. The payment of dividends is currently prohibited under the CBL Facility; see Note 9 to the Consolidated Financial Statements. If and when permitted in the future, dividends must be approved by the board of directors.

A subsidiary of the company has a €25 million uncommitted credit line and a €17 million committed credit line for bank guarantees to be used primarily to guarantee the company’s payments for licenses and duties in European Union countries. At December 31, 2006, the bank counterparties had provided €15 million of guarantees under these lines.

OFF-BALANCE SHEET ARRANGEMENTS

Other than operating leases entered in the normal course of business, the company does not have any off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The company’s significant accounting policies are summarized in Note 1 to the Consolidated Financial Statements. The additional discussion below addresses major judgments used in:

• reviewing the carrying values of intangibles;

• reviewing the carrying values of property, plant and equipment;

• accounting for pension and tropical severance plans;

• accounting for income taxes; and

• accounting for contingent liabilities.

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Review of Carrying Values of Intangibles

Trademarks

At December 31, 2006, the company’s Chiquita trademark had a carrying value of $388 million. The year-end 2006 carrying value was supported by an independent appraisal using the relief-from-royalty method. The relief-from-royalty valuation method estimates the royalty expense that could be avoided in the operating business as a result of owning the respective asset or technology. The royalty savings are measured, tax-affected and, thereafter, converted to present value with a discount rate that considers the risk associated with owning the intangible assets. No impairment was present and no write-down was required. A revenue growth rate of 2.6%, reflecting estimates of long-term U.S. inflation, was used in the appraisal. Other assumptions include a royalty rate of 3.5%, a discount rate of 16.6%, and an income tax rate of 37% applied to the royalty cash flows. The valuation is most sensitive to the royalty rate assumption, which considers market share, market recognition and profitability of products bearing the trademark, as well as license agreements for the trademark. A one-half percentage point change to the royalty rate could impact the appraisal by up to $75 million.

In conjunction with the Fresh Express acquisition in June 2005, the company recorded the Fresh Express trademark, which had a carrying value of $62 million at December 31, 2006. The carrying value of the Fresh Express trademark was also supported by an independent appraisal using the relief-from-royalty method. No impairment was present at December 31, 2006, and no write-down was required.

Goodwill

The company’s $542 million of goodwill at December 31, 2006 consists almost entirely of the goodwill resulting from the Fresh Express acquisition in June 2005. Through the work of an independent appraiser, the company estimated the fair value of Fresh Express based on expected future cash flows generated by Fresh Express discounted at 9.4%. Based on this calculation, there was no indication of impairment at December 31, 2006, and as such, no write-down of the goodwill carrying value was required. A change to the discount rate of one-half percentage point would affect the calculated fair value of Fresh Express by approximately $80 million. Also, a $1 million change per year in the expected future cash flows would affect the calculated fair value of Fresh Express by approximately $9 million.

During the 2006 third quarter, due to a decline in Atlanta AG’s business performance in the period following the implementation of the new EU banana import regime as of January 1, 2006, the company accelerated its testing of the Atlanta AG goodwill and fixed assets for impairment. As a result of this analysis, the company recorded a goodwill impairment charge in the 2006 third quarter for the entire goodwill balance of $43 million.

The goodwill impairment review is highly judgmental and involves the use of significant estimates and assumptions, which have a significant impact on the amount of any impairment charge recorded. Estimates of fair value are primarily determined using discounted cash flow methods and are dependent upon assumptions of future sales trends, market conditions and cash flow over several years. Actual cash flow in the future may differ significantly from those assumed. Other significant assumptions include growth rates and the discount rate applicable to future cash flow.

Other Intangible Assets

At December 31, 2006, the company had a carrying value of $155 million of intangible assets subject to amortization, consisting of $102 million in customer relationships and $53 million in patented technology related to Fresh Express. The carrying value of these assets will be tested for impairment if and when impairment indicators are noted.

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Review of Carrying Values of Property, Plant and Equipment

The company also reviews the carrying value of its property, plant and equipment when impairment indicators are noted, as prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” by comparing estimates of undiscounted future cash flows, before interest charges, included in the company’s operating plans with the carrying values of the related assets. These reviews at December 31, 2006 and 2005 did not reveal any instances in which an impairment charge was required.

Accounting for Pension and Tropical Severance Plans

Significant assumptions used in the actuarial calculation of the company’s defined benefit pension and foreign pension and severance plans include the discount rate, long-term rate of compensation increase, and the long-term rate of return on plan assets. The weighted average discount rate assumptions were 5.75% and 5.5% at December 31, 2006 and 2005, respectively, for domestic pension plans, which represents the rate on high quality, fixed income investments in the U.S., such as Moody’s Aa rated corporate bonds. The discount rate assumptions for the foreign pension and severance plans were 7.0% and 8.0% at December 31, 2006 and 2005, respectively, which represents the 10-year U.S. Treasury rate adjusted to reflect higher inflation in these countries. The long-term rate of compensation increase for domestic plans was 5.0% in 2006 and 2005. The long-term rate of compensation increase assumed for foreign pension and severance plans was 4.5% in 2006 and 2005. The long-term rate of return on plan assets was assumed to be 8.0% for domestic plans for each of the last two years. The long-term rate of return on plan assets for foreign plans was assumed to be 2.5% for 2006 and 3.25% for 2005. Actual rates of return can differ from the assumed rates, as annual returns under this long-term rate assumption are inherently subject to year-to-year variability.

A one percentage point change to the discount rate, long-term rate of compensation increase, or long-term rate of return on plan assets each affects pension expense by less than $1 million annually.

Accounting for Income Taxes

The company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities are determined based on the enacted tax rates expected to apply in the periods in which the deferred tax assets or liabilities are expected to be settled or realized.

The company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of positive and negative evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and the company’s tax methods of accounting.

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The company constantly reviews its tax positions and records an accrual for estimated losses when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required in evaluating tax positions and determining the company’s provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes and interest will be due. These reserves are established when, despite the belief that the tax return positions are fully supportable, the company believes that certain positions are likely to be challenged and may not be sustained on review by tax authorities. The reserves are adjusted in light of changing facts and circumstances, such as the resolution of outstanding tax audits or contingencies in various jurisdictions and expiration of statue of limitations. The provision for income taxes includes the impact of current tax provisions and changes to the reserves that are considered appropriate, as well as the related net interest and penalties.

Effective January 1, 2007, the company adopted FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Interest and penalties are included in “Income taxes” in the Consolidated Statement of Income under the company’s current accounting procedures, and the company will continue this practice under FIN 48. See Note 1 to the Consolidated Financial Statements for a description of the expected impact of FIN 48.

Accounting for Contingent Liabilities

On a quarterly basis, the company reviews the status of each claim and legal proceeding and assesses the potential financial exposure. This is coordinated from information obtained through external and internal counsel. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the company accrues a liability for the estimated loss, in accordance with SFAS No. 5, “Accounting for Contingencies.” To the extent the amount of a probable loss is estimable only by reference to a range of equally likely outcomes, and no amount within the range appears to be a better estimate than any other amount, the company accrues the low end of the range. Management draws judgments related to accruals based on the best information available to it at the time, which may be based on estimates and assumptions, including those that depend on external factors beyond the company’s control. As additional information becomes available, the company reassesses the potential liabilities related to pending claims and litigation, and may revise estimates. Such revisions could have a significant impact on the company’s results of operations and financial position.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 to the Consolidated Financial Statements for information regarding the company’s adoption of new accounting pronouncements.

RISKS OF INTERNATIONAL OPERATIONS

The company conducts operations in many foreign countries. Information about the company’s operations by geographic area is in Note 14 to the Consolidated Financial Statements. The company’s foreign operations are subject to a variety of risks inherent in doing business abroad.

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In 2001, the European Commission (“EC”) amended the quota and licensing regime for the importation of bananas into the EU. In connection with this amendment, it was agreed that the EU banana tariff rate quota system would be followed by a tariff-only system no later than 2006. In order to remain consistent with World Trade Organization (“WTO”) principles, any new EU banana tariff was required under a 2001 WTO decision to “result in at least maintaining total market access” for Latin American suppliers.

In January 2006, the EC implemented the new regulation. The new regime eliminated the quota that was previously applicable and imposed a higher tariff on bananas imported from Latin America, while imports from certain ACP sources are assessed zero tariff on 775,000 metric tons. The new tariff, which increased to €176 from €75 per metric ton, equates to an increase in cost of approximately €1.84 per box for bananas imported by the company into the EU from Latin America, Chiquita’s primary source of bananas. In 2006, the company incurred incremental tariff costs of approximately $116 million. However, the company no longer incurred costs, which totaled $41 million in 2005, to purchase banana import licenses, which are no longer required.

Average banana prices in the company’s core European markets, which primarily consist of the 25 member countries of the EU, fell 11% on a local currency basis in 2006 compared to 2005. Neither the company nor the industry has been able to pass on tariff cost increases to customers or consumers. The overall negative impact of the new regime on the company has been and is expected to remain substantial, despite the company’s ability to maintain its price premium in the European market.

Certain Latin American producing countries have taken steps to challenge this regime as noncompliant with the EU’s World Trade Organization obligations not to discriminate among supplying countries. In February 2007, Ecuador requested arbitration under WTO rules. Other countries are also expected to join these proceedings. Under the applicable arbitration procedures, a decision would not be expected before late fall 2007. There can be no assurance that any challenges will result in changes to the EC’s regime.

The company has international operations in many foreign countries, including those in Central and South America, the Philippines and the Ivory Coast. The company’s activities are subject to risks inherent in operating in these countries, including government regulation, currency restrictions and other restraints, burdensome taxes, risks of expropriation, threats to employees, political instability, terrorist activities, including extortion, and risks of U.S. and foreign governmental action in relation to the company. Should such circumstances occur, the company might need to curtail, cease or alter its activities in a particular region or country.

As previously disclosed, in April 2003 the company’s management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice (the “Justice Department”) that its banana-producing subsidiary in Colombia, which was sold in June 2004, had made payments to certain groups in that country which had been designated under United States law as foreign terrorist organizations. Following the voluntary disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. In March 2004, the Justice Department advised that, as part of its criminal investigation, it would be evaluating the role and conduct of the company and some of its officers in the matter. In September and October 2005, the company was advised that the investigation was continuing and that the conduct of the company and some of its officers and directors was within the scope of the investigation. For the years ended December 31, 2006, 2005 and 2004, the company incurred legal fees and other expenses in response to the continuing investigation and related issues of $8 million, $2 million and $8 million, respectively.

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During the fourth quarter of 2006, the company commenced discussions with the Justice Department about the possibility of reaching a plea agreement. As a result of these discussions, and in accordance with the guidelines set forth in SFAS No. 5, “Accounting for Contingencies,” the company recorded a charge of $25 million in its financial statements for the quarter and year ended December 31, 2006. This amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. The $25 million would be paid out in five equal annual installments, with interest, beginning on the date judgment is entered. The Justice Department has indicated that it is prepared to accept both the amount and the payment terms of the proposed $25 million sanction. In addition to the financial sanction, the company anticipates the potential plea agreement would contain customary provisions that prohibit such future conduct or other violations of law and require the company to implement and/or maintain certain business processes and compliance programs, the violation of which could result in setting aside the principal terms of the plea agreement.

Negotiations are ongoing, and there can be no assurance that a plea agreement will be reached or that the financial impacts of any such agreement, if reached, will not exceed the amounts currently accrued in the financial statements. Furthermore, such an agreement would not affect the scope or outcome of any continuing investigation involving any individuals.

In the event an acceptable plea agreement between the company and the Justice Department is not reached, the company believes the Justice Department is likely to file charges, against which the company would aggressively defend itself. The Justice Department has a broad range of civil and criminal sanctions under potentially applicable laws which it may seek to impose against corporations and individuals, including but not limited to injunctive relief, disgorgement of profits, fines, penalties and modifications to business practices and compliance programs. The company is unable to predict all of the financial or other potential impacts that could result from an indictment or conviction of the company or any individual, or from any related litigation, including the materiality of such events. Considering the sanctions that may be pursued by the Justice Department and the company’s defenses against potential claims, the company estimates that the range of financial outcomes upon final adjudication of a criminal proceeding could be between $0 and $150 million.

See “Item 1A – Risk Factors” and “Item 3 – Legal Proceedings” in the Annual Report on Form 10-K for a further description of legal proceedings and other risks.

MARKET RISK MANAGEMENT—FINANCIAL INSTRUMENTS

Chiquita’s products are distributed in approximately 80 countries. Its international sales are made primarily in U.S. dollars and major European currencies. The company reduces currency exchange risk from sales originating in currencies other than the U.S. dollar by exchanging local currencies for dollars promptly upon receipt. The company further reduces its exposure to exchange rate fluctuations by purchasing foreign currency hedging instruments (principally euro put option contracts) to hedge sales denominated in foreign currencies. Currently, the company has such hedging coverage for approximately 70% of its estimated net euro cash flow in 2007 at average put option strike rates of $1.28 per euro and approximately 65% of its estimated net euro cash flow in the first half of 2008 at average strike rates of $1.27 per euro. The company also has €270 million notional amount of sold call options with a strike rate of $1.40 per euro outstanding for the first nine months of 2007. The potential loss on the put and call options from a hypothetical 10% increase in euro currency rates would have been approximately $20 million at December 31, 2006 and $15 million at December 31, 2005. However, the company expects that any loss on these contracts would tend to be more than offset by an increase in the dollar realization of the underlying sales denominated in foreign currencies. The loss on purchased put options is limited to the amount of the put option premium paid.

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Chiquita’s interest rate risk arises from its fixed and variable rate debt (see Note 9 to the Consolidated Financial Statements). Of the $1 billion total debt at December 31, 2006, approximately 50% was fixed-rate debt, which was primarily comprised of the company’s $250 million of 7 ¹/2% Senior Notes and $225 million of 8 ⁷/8% Senior Notes. The adverse change in fair value of the company’s fixed-rate debt from a hypothetical decline in interest rates of 0.5% would have been approximately $14 million at December 31, 2006 and 2005. The company had approximately $500 million of variable-rate debt at December 31, 2006, and as a result, a 1% change in interest rates would result in a change to interest expense of approximately $5 million annually.

The company’s transportation costs are exposed to the risk of rising fuel prices. To reduce this risk, the company enters into fuel oil forward contracts that would offset potential increases in market fuel prices. At December 31, 2006, the company had hedging coverage for approximately 55% of its expected fuel purchases through 2009. The potential loss on these forward contracts from a hypothetical 10% decrease in fuel oil prices would have been approximately $16 million at December 31, 2006 and $6 million at December 31, 2005. However, the company expects that any decline in the fair value of these contracts would be offset by a decrease in the cost of underlying fuel purchases.

See Note 8 to the Consolidated Financial Statements for additional discussion of the company’s hedging activities.

*******

This Annual Report 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 impact of the 2006 conversion to a tariff-only banana import regime in the European Union; unusual weather conditions; industry and competitive conditions; financing; product recalls and other events affecting the industry and consumer confidence in the company’s products; the customary risks experienced by global food companies, such as the impact of product and commodity prices, food safety, currency exchange rate fluctuations, government regulations, labor relations, taxes, crop risks, political instability and terrorism; and the outcome of pending governmental investigations and claims involving the company.

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.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Chiquita Brands International, Inc.

We have audited the accompanying consolidated balance sheets of Chiquita Brands International, Inc. as of December 31, 2006 and 2005, and the related consolidated statements of income, shareholders’ equity, and cash flow for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Chiquita Brands International, Inc. at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flow for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

As described in Note 1 to the Consolidated Financial Statements, in 2006, the company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised), “Share-Based Payment,” and Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).”

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Chiquita Brands International, Inc.’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 7, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Cincinnati, Ohio

March 7, 2007

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Chiquita Brands International, Inc.

We have audited management’s assessment, included in the Annual Report on Form 10-K as of December 31, 2006 of Chiquita Brands International, Inc. (the company), Item 9A – Controls and Procedures – Management’s report on internal control over financial reporting, that the company maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Chiquita Brands International, Inc. maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, the company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2006 and 2005, and the related consolidated statements of income, shareholders’ equity, and cash flow for each of the three years in the period ended December 31, 2006 of Chiquita Brands International, Inc. and our report dated March 7, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Cincinnati, Ohio

March 7, 2007

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Chiquita Brands International, Inc.

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)	2006			2005			2004
Net sales	$	4,499,084		$	3,904,361		$	3,071,456
Operating expenses
Cost of sales		3,960,903			3,268,128			2,616,900
Selling, general and administrative		416,480			384,184			304,106
Depreciation		77,812			59,763			41,583
Amortization		9,730			5,253			—
Equity in earnings of investees		(5,937	)		(600	)		(11,173	)
Goodwill impairment charge		42,793			—			—
Charge for contingent liabilities		25,000			—			—
Loss on sale of Colombian division		—			—			9,289
Gain on sale of Armuelles division		—			—			(2,196	)
		4,526,781			3,716,728			2,958,509
Operating income (loss)		(27,697	)		187,633			112,947
Interest income		9,006			10,255			6,167
Interest expense		(85,663	)		(60,294	)		(38,884	)
Other income (expense), net		6,320			(3,054	)		(19,428	)
Income (loss) before income taxes		(98,034	)		134,540			60,802
Income taxes		2,100			(3,100	)		(5,400	)
Net income (loss)	$	(95,934	)	$	131,440		$	55,402
Net income (loss) per common share—basic	$	(2.28	)	$	3.16		$	1.36
Net income (loss) per common share—diluted	$	(2.28	)	$	2.92		$	1.33
Dividends declared per common share	$	0.20		$	0.40		$	0.10

See Notes to Consolidated Financial Statements.

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Chiquita Brands International, Inc.

CONSOLIDATED BALANCE SHEET

	December 31,
(In thousands, except share amounts)	2006		2005
ASSETS
Current assets
Cash and equivalents	$	64,915	$	89,020
Trade receivables, less allowances of $13,599 and $12,746, respectively		432,327		417,758
Other receivables, net		94,146		96,330
Inventories		240,967		240,496
Prepaid expenses		38,488		25,083
Other current assets		5,650		31,388
Total current assets		876,493		900,075
Property, plant and equipment, net		573,316		592,083
Investments and other assets, net		142,986		148,755
Trademarks		449,085		449,085
Goodwill		541,898		577,543
Other intangible assets, net		154,766		165,558
Total assets	$	2,738,544	$	2,833,099
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	55,042	$	10,600
Long-term debt of subsidiaries due within one year		22,588		20,609
Accounts payable		415,082		426,767
Accrued liabilities		136,906		142,881
Total current liabilities		629,618		600,857
Long-term debt of parent company		475,000		475,000
Long-term debt of subsidiaries		475,887		490,899
Accrued pension and other employee benefits		73,541		78,900
Net deferred tax liability		112,228		115,404
Commitments and contingent liabilities (see Note 15)		25,000		—
Other liabilities		76,443		78,538
Total liabilities		1,867,717		1,839,598
Shareholders’ equity
Common stock, $.01 par value (42,156,833 and 41,930,326 shares outstanding, respectively)		422		419
Capital surplus		686,566		675,710
Retained earnings		172,740		277,090
Accumulated other comprehensive income		11,099		40,282
Total shareholders’ equity		870,827		993,501
Total liabilities and shareholders’ equity	$	2,738,544	$	2,833,099

See Notes to Consolidated Financial Statements.

28

Chiquita Brands International, Inc.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(In thousands)	Common shares		Common stock			Capital surplus			Retained earnings			Accumulated other com- prehensive income			Total share- holders’ equity
DECEMBER 31, 2003	40,037		$	400		$	630,868		$	112,401		$	13,677		$	757,346
Net income	—			—			—			55,402			—			55,402
Unrealized translation gain	—			—			—			—			15,470			15,470
Change in minimum pension liability	—			—			—			—			(2,855	)		(2,855	)
Change in fair value of cost investments available for sale	—			—			—			—			(574	)		(574	)
Change in fair value of derivatives	—			—			—			—			(19,910	)		(19,910	)
Losses reclassified from OCI into net income	—			—			—			—			24,871			24,871
Comprehensive income																72,404
Exercises of stock options and warrants	802			8			12,490			—			—			12,498
Stock-based compensation	156			2			10,388			—			—			10,390
Share repurchase and retirements	(517	)		(5	)		(8,241	)		(1,380	)		—			(9,626	)
Share cancellations	(2	)		—			(140	)		—			—			(140	)
Dividends on common stock	—			—			—			(4,048	)		—			(4,048	)

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(In thousands)	Common shares		Common stock		Capital surplus			Retained earnings			Accumulated other com- prehensive income			Total share- holders’ equity
DECEMBER 31, 2004	40,476			405		645,365			162,375			30,679			838,824
Net income	—			—		—			131,440			—			131,440
Unrealized translation loss	—			—		—			—			(19,248	)		(19,248	)
Change in minimum pension liability	—			—		—			—			(3,318	)		(3,318	)
Change in fair value of cost investments available for sale	—			—		—			—			(2,320	)		(2,320	)
Change in fair value of derivatives	—			—		—			—			39,033			39,033
Gains reclassified from OCI into net income	—			—		—			—			(4,544	)		(4,544	)
Comprehensive income															141,043
Exercises of stock options and warrants	1,348			13		22,514			—			—			22,527
Stock-based compensation	107			1		8,018			—			—			8,019
Share retirements	(1	)		—		(187	)		—			—			(187	)
Dividends on common stock	—			—		—			(16,725	)		—			(16,725	)
DECEMBER 31, 2005	41,930			419		675,710			277,090			40,282			993,501
Net loss	—			—		—			(95,934	)		—			(95,934	)
Unrealized translation gain	—			—		—			—			13,392			13,392
Change in minimum pension liability	—			—		—			—			1,739			1,739
Sale of cost investment	—			—		—			—			(6,320	)		(6,320	)
Change in fair value of cost investments available for sale	—			—		—			—			3,679			3,679
Change in fair value of derivatives	—			—		—			—			(39,505	)		(39,505	)
Losses reclassified from OCI into net income	—			—		—			—			656			656
Comprehensive loss															(122,293	)
Adoption of SFAS No. 158 (see Note 10)	—			—		—			—			(2,824	)		(2,824	)
Exercises of stock options and warrants	70			1		1,158			—			—			1,159
Stock-based compensation	157			2		9,698			—			—			9,700
Dividends on common stock	—			—		—			(8,416	)		—			(8,416	)
DECEMBER 31, 2006	42,157		$	422	$	686,566		$	172,740		$	11,099		$	870,827

See Notes to Consolidated Financial Statements.

30

Chiquita Brands International, Inc.

CONSOLIDATED STATEMENT OF CASH FLOW

(In thousands)	2006			2005			2004
CASH PROVIDED (USED) BY:
OPERATIONS
Net income (loss)	$	(95,934	)	$	131,440		$	55,402
Depreciation and amortization		87,542			65,016			41,583
Equity in earnings of investees		(5,937	)		(600	)		(11,173	)
Goodwill impairment charge		42,793			—			—
Charge for contingent liabilities		25,000			—			—
Gain on sale of Chiquita Brands South Pacific investment		(6,320	)		—			—
Pre-tax loss on sale of tropical divisions		—			—			7,093
Income tax benefits		(15,186	)		(8,012	)		(5,700	)
Loss on extinguishment of debt		—			—			21,737
Non-cash charges for Tropical Storm Gamma and fresh-cut fruit consolidation		—			15,460			—
Stock-based compensation		10,381			8,712			10,390
Changes in current assets and liabilities
Trade receivables		(677	)		104			(46,236	)
Other receivables		(7,833	)		(21,118	)		7,610
Inventories		(471	)		(24,063	)		(16,256	)
Prepaid expenses and other current assets		(10,898	)		7,854			(7,474	)
Accounts payable and accrued liabilities		(12,605	)		51,697			42,165
Other		5,406			(3,360	)		(5,072	)
CASH FLOW FROM OPERATIONS		15,261			223,130			94,069
INVESTING
Capital expenditures		(61,240	)		(42,656	)		(43,442	)
Acquisition of businesses		(6,464	)		(891,671	)		(5,527	)
Proceeds from sale of:
Chiquita Brands South Pacific investment		9,172			—			—
Colombian division		—			—			28,500
Seneca preferred stock		—			14,467			—
Other property, plant and equipment		9,080			4,544			10,736
Hurricane Katrina insurance proceeds		5,803			6,950			—
Other		(216	)		1,538			(756	)
CASH FLOW FROM INVESTING		(43,865	)		(906,828	)		(10,489	)
FINANCING
Issuances of long-term debt		—			781,101			259,394
Repayments of long-term debt		(23,878	)		(153,901	)		(337,908	)
Costs for CBL revolving credit facility and other fees		(3,356	)		(4,003	)		(743	)
Borrowings of notes and loans payable		71,000			783			1,300
Repayments of notes and loans payable		(27,817	)		—			—
Proceeds from exercise of stock options/warrants		1,159			22,527			12,498
Dividends on common stock		(12,609	)		(16,580	)		—
Repurchase of common stock		—			—			(9,626	)
CASH FLOW FROM FINANCING		4,499			629,927			(75,085	)
Increase (decrease) in cash and equivalents		(24,105	)		(53,771	)		8,495
Balance at beginning of period		89,020			142,791			134,296
Balance at end of period	$	64,915		$	89,020		$	142,791

See Notes to Consolidated Financial Statements.

31

Chiquita Brands International, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Summary of Significant Accounting Policies

CONSOLIDATION—The Consolidated Financial Statements include the accounts of Chiquita Brands International, Inc. (“CBII”), controlled majority-owned subsidiaries and any entities that are not controlled but require consolidation in accordance with FASB Interpretation No. 46, “Consolidation of Variable Interest Entities—an interpretation of ARB No. 51,” (collectively, “Chiquita” or the company). Intercompany balances and transactions have been eliminated.

USE OF ESTIMATES—The financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying financial statements include allowance for doubtful accounts, business combinations, intangible asset valuations, pension and severance plans, income taxes and contingencies. Actual results could differ from these estimates.

CASH AND EQUIVALENTS—Cash and equivalents include cash and highly liquid investments with a maturity when purchased of three months or less.

TRADE RECEIVABLES—Trade receivables less allowances reflect the net realizable value of the receivables, and approximate fair value. The company generally does not require collateral or other security to support trade receivables subject to credit risk. To reduce credit risk, the company performs credit investigations prior to establishing customer credit limits and reviews customer credit profiles on an ongoing basis. In Europe, the company purchases credit insurance to further mitigate collections risk. An allowance against the trade receivables is established based on the company’s knowledge of customers’ financial condition, historical loss experience and account past due status compared to invoice payment terms. An allowance is recorded and charged to expense when an account is deemed to be uncollectible. Recoveries of trade receivables previously reserved in the allowance are credited to income.

INVENTORIES—Inventories are valued at the lower of cost or market. Cost for banana growing crops and certain banana inventories is determined on the “last-in, first-out” (LIFO) basis. Cost for other inventory categories, including other fresh produce and value-added salads, is determined on the “first-in, first-out” (FIFO) or average cost basis. Banana and other fresh produce inventories represent costs associated with boxed bananas and other fresh produce not yet sold. Growing crop inventories primarily represent the costs associated with growing banana plants on company-owned farms or growing lettuce on third-party farms where the company bears substantially all of the growing risk. Materials and supplies primarily represent growing and packaging supplies maintained on company-owned farms. Inventory costs are comprised of the purchase cost of materials and, in addition, for bananas and other fresh produce grown on company farms, tropical production labor and overhead.

INVESTMENTS—Investments representing minority interests are accounted for by the equity method when Chiquita has the ability to exercise significant influence over the investees’ operations. Investments that are not publicly traded and that the company does not have the ability to significantly influence are valued at cost. Publicly traded investments that the company does not have the ability to significantly influence are accounted for as available-for-sale securities at fair value. Unrealized holding gains or losses on available-for-sale securities are excluded from operating results and are recognized in shareholders’ equity (accumulated other comprehensive income) until realized. The company assesses

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declines in the fair value of individual investments to determine whether such declines are other-than-temporary and the investments are impaired.

PROPERTY, PLANT AND EQUIPMENT—Property, plant and equipment are stated at cost, and except for land, are depreciated on a straight-line basis over their estimated remaining useful lives. The company generally uses 25 years to depreciate ships, 30 years for cultivations, 10 to 40 years for buildings and improvements, and 3 to 20 years for machinery and equipment. Cultivations represent the costs to plant and care for the banana plant until such time that the root system can support commercial quantities of fruit, as well as the costs to build levees, drainage canals, and other farm infrastructure to support the banana plants. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts. The difference between the net book value of the asset and proceeds from disposition is recognized as a gain or loss. Routine maintenance and repairs are charged to expense as incurred, while costs of betterments and renewals are capitalized. The company reviews the carrying value of its property, plant and equipment when impairment indicators are noted. No impairment charges were required during 2006 or 2005.

INTANGIBLES—Goodwill and other intangible assets with an indefinite life, such as the company’s trademarks, are reviewed at least annually for impairment. During the 2006 third quarter, due to a decline in Atlanta AG’s business performance in the period following the implementation of the new EU banana import regime as of January 1, 2006, the company accelerated its testing of the Atlanta AG goodwill and fixed assets for impairment. As a result of this analysis, the company recorded a goodwill impairment charge in the 2006 third quarter for $43 million.

The goodwill impairment review is highly judgmental and involves the use of significant estimates and assumptions, which have a significant impact on the amount of any impairment charge recorded. Estimates of fair value are primarily determined using discounted cash flow methods and are dependent upon assumptions of future sales trends, market conditions and cash flow over several years. Actual cash flow in the future may differ significantly from those assumed. Other significant assumptions include growth rates and the discount rate applicable to future cash flow. The company utilizes an independent appraiser to assist with the Fresh Express goodwill impairment analysis.

The company tests the carrying amounts of its trademarks for impairment by obtaining an independent appraisal using a “relief-from-royalty” method. Reviews for impairment at December 31, 2006 of the Fresh Express goodwill and the Chiquita and Fresh Express trademarks indicated that no impairment charges were necessary.

The company’s intangible assets with a definite life consist of customer relationships and patented technology related to Fresh Express. These assets are subject to the amortization provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142 and are amortized on a straight-line basis over their estimated remaining lives. The weighted average remaining life of the Fresh Express customer relationships and patented technology is 18 years and 15 years, respectively.

REVENUE RECOGNITION—The company records revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed or determinable, and collectibility is reasonably assured. For the company, this point occurs when the product is delivered to, and title to the product passes to, the customer.

SALES INCENTIVES—The company, primarily through its Fresh Cut segment, offers sales incentives and promotions to its customers (resellers) and to consumers. These incentives primarily include volume and growth rebates, exclusivity and placement fees (fees paid to retailers for product display), consumer coupons and promotional discounts. The company follows the requirements of Emerging Issues Task Force (“EITF”) No. 01-9, “Accounting for Consideration Given by a Vendor to a

33

Customer (including a Reseller of the Vendor’s Products).” Consideration given to customers and consumers related to sales incentives is recorded as a reduction of sales. Changes in the estimated amount of incentives to be paid are treated as changes in estimates and are recognized in the period of change.

SHIPPING AND HANDLING FEES AND COSTS—Shipping and handling fees billed to customers are included in net sales. Shipping and handling costs are recorded in cost of sales.

LEASES—The company leases land and fixed assets for use in operations. The company’s leases are evaluated at inception or at any subsequent material modification and, depending on the lease terms, are classified as either capital leases or operating leases, as appropriate under SFAS No. 13, “Accounting for Leases.” For operating leases that contain built-in pre-determined rent escalations, rent holidays or rent concessions, rent expense is recognized on a straight-line basis over the life of the lease.

STOCK-BASED COMPENSATION—Effective January 1, 2003, on a prospective basis, the company began using the fair value method under SFAS No. 123, “Accounting for Stock-Based Compensation,” to recognize stock option expense in its results of operations for new stock options granted on or after January 1, 2003. For grants prior to that date (the “2002 Grants”), the company accounted for stock options using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Expense relating to the 2002 Grants has been included in pro forma disclosures rather than the Consolidated Statement of Income. See “New Accounting Pronouncements” below for information on the company’s adoption of SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). SFAS 123(R) did not have an impact on pre-tax income as it relates to the 2002 Grants, which were fully vested as of the company’s January 1, 2006 adoption date of this standard.

Since 2004, the company’s share-based awards have primarily consisted of restricted stock awards. These awards generally vest over 1-4 years. Prior to vesting, grantees are not eligible to vote or receive dividends on the restricted shares. The fair value of the awards is determined at the grant date and expensed over the period from the grant date to the date the employee is no longer required to provide service to earn the award, which could be immediately in the case of retirement-eligible employees.

34

The table below illustrates the effect of stock compensation expense on all periods as if the company had always applied the fair value method:

(In thousands, except per share amounts)	2006			2005			2004
Stock compensation expense included in net income (loss) (1)	$	10,381		$	8,712		$	10,390
Net income (loss)	$	(95,934	)	$	131,440		$	55,402
Pro forma stock compensation expense (2)		—			(6,052	)		(6,657	)
Pro forma net income (loss)	$	(95,934	)	$	125,388		$	48,745
Basic earnings per common share:
Stock compensation expense included in net income (loss)	$	0.25		$	0.21		$	0.26
Net income (loss)	$	(2.28	)	$	3.16		$	1.36
Pro forma stock compensation expense (2)		—			(0.15	)		(0.16	)
Pro forma net income (loss)	$	(2.28	)	$	3.01		$	1.20
Diluted earnings per common share:
Stock compensation expense included in net income (loss)	$	0.25		$	0.19		$	0.25
Net income (loss)	$	(2.28	)	$	2.92		$	1.33
Pro forma stock compensation expense (2)		—			(0.14	)		(0.16	)
Pro forma net income (loss)	$	(2.28	)	$	2.78		$	1.17

⁽¹⁾ Represents expense from stock options of $1.2 million, $1.2 million and $4.6 million in 2006, 2005 and 2004, respectively. Also represents expense from restricted stock awards and LTIP of $9.2 million, $7.5 million and $5.8 million in 2006, 2005 and 2004, respectively. Expense for 2004 includes a charge of $3.6 million for awards granted to the company’s former chairman and chief executive officer that vested upon his retirement as chairman on May 25, 2004.

⁽²⁾ Represents the additional amount of stock compensation expense that would have been included in net income had the company applied the fair value method under SFAS No. 123 for awards issued prior to 2003, when the company first began expensing options.

CONTINGENT LIABILITIES—On a quarterly basis, the company reviews the status of each claim and legal proceeding and assesses the potential financial exposure. This is coordinated from information obtained through external and internal counsel. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the company accrues a liability for the estimated loss, in accordance with SFAS No. 5, “Accounting for Contingencies.” To the extent the amount of a probable loss is estimable only by reference to a range of equally likely outcomes, and no amount within the range appears to be a better estimate than any other amount, the company accrues the low end of the range. Management draws judgments related to accruals based on the best information available to it at the time, which may be based on estimates and assumptions, including those that depend on external factors beyond the company’s control. As additional information becomes available, the company reassesses the potential liabilities related to pending claims and litigation, and may revise

35

estimates. Such revisions could have a significant impact on the company’s results of operations and financial position.

INCOME TAXES—The company is subject to income taxes in both the United States and numerous foreign jurisdictions. Income tax expense (benefit) is provided for using the asset and liability method. Deferred income taxes are recognized at currently enacted tax rates for the expected future tax consequences attributable to temporary differences between amounts reported for income tax purposes and financial reporting purposes. Deferred taxes are not provided on the undistributed earnings of subsidiaries operating outside the U.S. that have been permanently reinvested. The company records an appropriate valuation allowance to reduce deferred tax assets to the amount that is “more likely than not” to be realized. The company establishes reserves for tax-related uncertainties based on the estimates of whether, and the extent to which, additional taxes and interest will be due. The impact of reserve provisions and changes to the reserves that are considered appropriate, as well as the related net interest and penalties, are included in “Income taxes” in the Consolidated Statement of Income. See “New Accounting Pronouncements” below for a description of the company’s adoption of FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes.”

EARNINGS PER SHARE—Basic earnings per share is calculated on the basis of the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated on the basis of the sum of the weighted average number of common shares outstanding during the year and the dilutive effect of the assumed conversion to common stock from the exercise or vesting of options, warrants and other stock awards using the treasury stock method. The assumed conversion to common stock of securities that would, on an individual basis, have an anti-dilutive effect on diluted earnings per share is not included in the diluted earnings per share computation.

FOREIGN EXCHANGE AND HEDGING—Chiquita utilizes the U.S. dollar as its functional currency, except for its Atlanta AG operations and operations in France and the Ivory Coast, which use the euro as their functional currency.

The company recognizes all derivatives on the balance sheet at fair value and recognizes the resulting gains or losses as adjustments to net income if the derivative does not qualify for hedge accounting or other comprehensive income (“OCI”) if the derivative does qualify for hedge accounting.

The company is exposed to currency exchange risk on foreign sales and price risk on purchases of fuel oil used in the company’s ships. The company reduces these exposures by purchasing option and forward contracts. These options and forwards qualify for hedge accounting as cash flow hedges. The company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. To the extent that these hedges are effective in offsetting the company’s underlying risk exposure, gains and losses are deferred in accumulated OCI until the underlying transaction is recognized in net income. Gains or losses on effective hedges that have been terminated prior to maturity are also deferred in accumulated OCI until the underlying transaction is recognized in net income. For the ineffective portion of the hedge, gains or losses are reflected in net income in the current period. The earnings impact of the option and forward contracts is recorded in net sales for currency hedges, and in cost of sales for fuel oil hedges. The company does not hold or issue derivative financial instruments for speculative purposes. See Note 8 for additional description of the company’s hedging activities.

NEW ACCOUNTING PRONOUNCEMENTS—On January 1, 2006, the company adopted SFAS 123(R), which is a revision of SFAS No. 123, using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 included (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date

36

fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted on or after January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). With the adoption of SFAS 123(R), stock-based awards granted on or after January 1, 2006 are being recognized as stock-based compensation expense over the period from the grant date to the date the employee is no longer required to provide service to earn the award, which could be immediately in the case of retirement-eligible employees.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The company is currently assessing the impact of SFAS No. 157 on its financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158 requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position, recognize through comprehensive income changes in that funded status in the year in which the changes occur, and measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year. On December 31, 2006, the company adopted the provisions of SFAS No. 158. See Note 10 for a further description of the effect of adopting SFAS No. 158.

In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This interpretation is effective for the company beginning January 1, 2007. The company is required to record any FIN 48 adjustments as of January 1, 2007 to beginning retained earnings rather than the Consolidated Statement of Income. The company currently estimates that a cumulative effect adjustment between $19 million and $24 million will be charged to retained earnings on January 1, 2007, to increase reserves for uncertain tax positions. The transition adjustment reflects the maximum statutory amounts of the tax positions, including interest and penalties, without regard to the potential for settlement. The company will continue to include interest and penalties in “Income taxes” in the Consolidated Statement of Income.

In September 2006, the FASB issued FASB Staff Position (“FSP”) No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities.” This FSP eliminates the accrue-in-advance method of accounting for planned major maintenance activities, which the company previously used to account for maintenance of its 12 owned shipping vessels. Upon adoption of this FSP on January 1, 2007, the company will adjust beginning retained earnings for the cumulative effect of this change in accounting principle. Thereafter, the company will defer expenses incurred for major maintenance activities and amortize them over the five-year maintenance interval. The liability at December 31, 2006 related to planned major maintenance activities was approximately $2 million. Adoption of FSP No. AUG AIR-1 is not expected to have a material impact on the company’s Consolidated Statement of Income.

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Note 2—Acquisitions and Divestitures

Acquisition of Fresh Express

In June 2005, the company acquired the Fresh Express packaged salad and fresh-cut fruit division of Performance Food Group (“PFG”). Fresh Express is the retail market leader of value-added packaged salads in the United States. The acquisition added about $1 billion to Chiquita’s consolidated annual revenues. The company believes that this acquisition diversified its business, accelerated revenue growth in higher margin value-added products, and provided a more balanced mix of sales between Europe and North America, which makes the company less susceptible to risks unique to Europe, such as recent changes to the European Union banana import regime and foreign exchange risk.

The company paid PFG $855 million in consideration and incurred transaction expenses of $8 million. In addition, the company transferred $35 million to PFG ($6 million in 2006) primarily corresponding to the estimated amount of cash at Fresh Express and outstanding checks (issued by PFG in payment of Fresh Express obligations) in excess of deposits. Additionally, the company incurred approximately $24 million of fees related to the financing of the acquisition, which are being amortized over the effective life of the respective loans, the prepayment of which will result in accelerated amortization. The total payments were funded with $775 million in debt and approximately $145 million in cash.

In conjunction with the purchase price allocation for this transaction, the company recorded the following values for the identifiable tangible and intangible assets and liabilities of Fresh Express (in millions):

Fair value of fixed assets acquired	$	211
Intangible assets subject to amortization		170
Intangible assets not subject to amortization		62
Other assets		122
Deferred tax effect of acquisition		(112	)
Fair value of liabilities acquired		(95	)
Goodwill		540
	$	898

The fair value of fixed assets and intangible assets acquired was based on independent appraisals. The other assets and liabilities, which primarily represented trade receivables, trade payables and accrued liabilities, were based on historical values and were assumed to be stated at fair market values. Goodwill represents the excess purchase price above the fair market value of the identifiable tangible and intangible assets and liabilities acquired.

Amortization expense of intangible assets totaled $10 million in 2006 and $5 million in 2005 subsequent to the acquisition date of June 28, 2005. The estimated amortization expense in each of the next five years associated with the intangible assets acquired is as follows:

(In thousands)	Amount
2007	$	9,800
2008		9,800
2009		9,800
2010		9,400
2011		8,900

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With the completion of the acquisition, the company prepared a formal integration plan, the details of which are now complete. Management’s plans included exiting or consolidating certain activities of Fresh Express and included costs such as lease and contract termination, severance and certain other exit costs. As a significant component of the integration plan, the company closed processing facilities in Manteno, Illinois and Kansas City, Missouri as part of a supply chain optimization plan. This plan eliminated redundancies in fresh-cut fruit processing capacity in the Midwestern United States, improved plant utilization and reduced costs. As a result of the closure of the pre-acquisition Chiquita plant at Manteno, the company incurred mostly non-cash charges of $6 million in the fourth quarter of 2005 and $2 million in the first quarter of 2006. Substantially all of these costs were included in “Cost of sales” in the Consolidated Statement of Income. The closure of the pre-acquisition Fresh Express plant at Kansas City and related asset disposals resulted in a $5 million increase to goodwill through purchase price accounting.

Starting with the June 28, 2005 acquisition date, the company’s Consolidated Statement of Income includes the operations of Fresh Express and interest expense on the acquisition financing. Set forth below is summary consolidated pro forma information for the company, giving effect to the acquisition of Fresh Express as though it had been completed on the first day of each period presented. The summary consolidated pro forma information below is based on the purchase price allocation and does not reflect any adjustments related to integration synergies or certain expenses previously allocated to Fresh Express by PFG.

(In millions, except per share amounts)	2006			2005
	(Actual)			(Pro Forma)
Net sales	$	4,499.1		$	4,421.4
Net income (loss)		(95.9	)		121.7
Earnings per share—basic	$	(2.28	)	$	2.93
Earnings per share—diluted		(2.28	)		2.70

Other Acquisitions and Divestitures

Darex

In January 2005, the company acquired Darex S.A., a distributor of bananas in Poland, for approximately $5 million in cash, assumption of approximately $5 million of debt and forgiveness of certain receivables.

Chiquita Brands South Pacific

In December 2006, the company sold its 10% ownership in Chiquita Brands South Pacific, an Australian fresh produce distributor. The company received approximately $9 million in cash and realized a $6 million gain on the sale of the shares, which was included in “Other income (expense), net” in the Consolidated Statement of Income.

Seneca Stock

In April 2005, the company sold approximately 968,000 shares of Seneca Foods Corporation preferred stock, which had been received as part of the May 2003 sale of the company’s Chiquita Processed Foods division to Seneca. The company received proceeds of approximately $14 million from the sale of the preferred stock and recorded a $1 million gain on the transaction in the 2005 second quarter in “Other income (expense), net” in the Consolidated Statement of Income.

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Colombian Division

In June 2004, the company sold its former banana-producing and port operations in Colombia to Invesmar Ltd. (“Invesmar”), the holding company of C.I. Banacol S.A., a Colombian-based producer and exporter of bananas and other fresh products. In exchange for these operations, the company received $28.5 million in cash; $15 million face amount of notes and deferred payments; and the assumption by the buyer of approximately $7 million of pension liabilities.

In connection with the sale, Chiquita entered into eight-year agreements to purchase bananas and pineapples from affiliates of the buyer. Under the banana purchase agreement, Chiquita purchases approximately 11 million boxes of Colombian bananas per year at above-market prices. This resulted in a liability of $33 million at the sale date ($26 million at December 31, 2006), which represents the estimated net present value of the above-market premium to be paid for the purchase of bananas over the term of the contract. Substantially all of this liability is included in “Other liabilities” in the Consolidated Balance Sheet. Under the pineapple purchase agreement, Chiquita purchases approximately 2.5 million boxes of Costa Rican golden pineapples per year at below-market prices. This resulted in a receivable of $25 million at the sale date ($20 million at December 31, 2006), which represents the estimated net present value of the discount to be received for the purchase of pineapples over the term of the contract. Substantially all of this receivable is included in “Investments and other assets, net” in the Consolidated Balance Sheet.

Also in connection with the sale, Chiquita agreed that, in the event that it becomes unable to perform its obligations under the banana purchase agreement due to a conflict with U.S. law, Chiquita will indemnify Invesmar primarily for the lost premium on the banana purchases.

The net book value of the assets and liabilities transferred in the transaction was $36 million, primarily comprised of $25 million of property, plant and equipment; $19 million of growing crop inventory; $5 million of materials and supplies inventory; $6 million of deferred tax liabilities; and $7 million of pension liabilities. The company recognized a before-tax loss of $9 million and an after-tax loss of $4 million on the transaction, which takes into account the net $8 million loss from the two long-term fruit purchase agreements.

Note 3—Earnings Per Share

Basic and diluted earnings per common share (“EPS”) are calculated as follows:

(In thousands, except per share amounts)	2006			2005		2004
Net income (loss)	$	(95,934	)	$	131,440	$	55,402
Weighted average common shares outstanding (used to calculate basic EPS)		42,084			41,601		40,694
Stock options, warrants and other stock awards		—			3,470		1,047
Shares used to calculate diluted EPS		42,084			45,071		41,741
Basic earnings per common share	$	(2.28	)	$	3.16	$	1.36
Diluted earnings per common share	$	(2.28	)	$	2.92	$	1.33

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The assumed conversions to common stock of the company’s outstanding warrants, stock options and other stock awards, are excluded from the diluted EPS computations for periods in which these items, on an individual basis, have an anti-dilutive effect on diluted EPS. For 2006, the shares used to calculate diluted EPS would have been 42.7 million if the company had generated net income in each quarter during the year.

Note 4—Inventories

Inventories consist of the following:

	December 31,
(In thousands)	2006		2005
Bananas	$	45,972	$	41,589
Salads		9,296		9,954
Other fresh produce		14,147		12,567
Processed food products		10,989		8,511
Growing crops		101,424		100,658
Materials, supplies and other		59,139		67,217
	$	240,967	$	240,496

The carrying value of inventories valued by the LIFO method was approximately $91 million at December 31, 2006 and $89 million at December 31, 2005. At current costs, these inventories would have been approximately $14 million and $11 million higher than the LIFO values at December 31, 2006 and 2005, respectively.

Note 5—Property, Plant and Equipment

Property, plant and equipment consist of the following:

	December 31,
(In thousands)	2006			2005
Land	$	54,466		$	54,734
Buildings and improvements		192,790			179,231
Machinery, equipment and other		357,491			345,525
Ships and containers		177,528			171,714
Cultivations		52,251			44,827
		834,526			796,031
Accumulated depreciation		(261,210	)		(203,948	)
	$	573,316		$	592,083

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Note 6—Leases

Total rental expense consists of the following:

(In thousands)	2006			2005			2004
Gross rentals
Ships and containers	$	101,383		$	90,279		$	64,707
Other		48,325			43,400			30,874
		149,708			133,679			95,581
Sublease rentals		(5,938	)		(3,390	)		(804	)
	$	143,770		$	130,289		$	94,777

No purchase options exist on ships under operating leases.

Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 2006 are as follows:

(In thousands)	Ships and containers		Other		Total
2007	$	52,826	$	34,764	$	87,590
2008		8,210		30,115		38,325
2009		7,760		22,710		30,470
2010		4,725		16,892		21,617
2011		2,283		12,348		14,631
Later years		230		58,075		58,305

Portions of the minimum rental payments for ships constitute reimbursement for ship operating costs paid by the lessor.

Note 7—Equity Method Investments

The company has investments in a number of affiliates which are accounted for using the equity method. These affiliates are primarily engaged in the distribution of fresh produce and are primarily comprised of a number of companies (collectively, the “Chiquita-Unifrutti JV”) that purchase and produce bananas and pineapples in the Philippines and market and distribute these products in Japan and other parts of Asia. The Chiquita-Unifrutti JV is 50%-owned by Chiquita.

Chiquita’s share of the income of these affiliates was $6 million in 2006, $1 million in 2005 and $11 million in 2004, and its investment in these companies totaled $48 million at December 31, 2006 and $41 million at December 31, 2005. The company’s share of undistributed earnings from equity method investments totaled $34 million at December 31, 2006 and $29 million at December 31, 2005. The company’s carrying value of equity method investments was approximately $22 million and $21 million less than the company’s proportionate share of the investees’ underlying net assets at December 31, 2006 and December 31, 2005, respectively. The amount associated with the property, plant and equipment of the underlying investees was not significant.

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Summarized unaudited financial information of the Chiquita-Unifrutti JV and other equity method investments owned by the company at December 31, 2006 follows:

(In thousands)	2006		2005		2004
Revenue	$	658,383	$	568,117	$	501,704
Gross profit		63,209		54,085		66,115
Net income		11,242		1,170		22,006
	December 31,
(In thousands)	2006		2005
Current assets	$	106,170	$	100,577
Total assets		222,620		199,846
Current liabilities		68,203		62,402
Total liabilities		82,338		73,841

Sales by Chiquita to equity method investees were approximately $16 million in 2006, $20 million in 2005 and $15 million in 2004. There were no purchases from equity method investees in 2006, 2005 and 2004. Receivable amounts from equity method investees were not significant at December 31, 2006 and 2005.

Note 8—Financial Instruments

The company enters into contracts to hedge its risks associated with euro exchange rate movements, primarily to reduce the negative earnings and cash flow impact that any significant decline in the value of the euro would have on the conversion of euro-based revenue into U.S. dollars. The company primarily purchases put options to hedge this risk. Purchased put options, which require an upfront premium payment, can reduce the negative earnings impact on the company of a significant future decline in the value of the euro, without limiting the benefit received from a stronger euro. The company also enters into hedge contracts for fuel oil for its shipping operations, which permit it to lock in fuel purchase prices for up to three years and thereby minimize the volatility that changes in fuel prices could have on its operating results.

Foreign currency hedging costs charged to the Consolidated Statement of Income were $17 million in 2006 and $8 million in 2005. These costs reduce any favorable impact of the exchange rate on U.S. dollar realizations of euro-denominated sales. At December 31, 2006, unrealized losses of $19 million on the company’s currency option contracts were included in “Accumulated other comprehensive income,” of which $15 million is expected to be reclassified to net income during the next 12 months. Unrealized losses of $10 million on the fuel forward contracts were also included in “Accumulated other comprehensive income” at December 31, 2006, $3 million of which is expected to be reclassified to net income during the next 12 months.

In late October 2006, the company re-optimized its currency hedge portfolio for the first nine months of 2007. The company invested a net $4.5 million to replace €290 million of euro put options expiring in the first nine months of 2007 at an average rate of $1.20 per euro, with collars for €270 million notional amount, comprised of put options with an average strike price of $1.28 per euro and call options with an average strike price of $1.40 per euro. Gains or losses on the new collars, as well as the losses incurred on the original set of put options, will be deferred in accumulated OCI until the underlying transactions are recognized in net income.

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At December 31, 2006, the company’s hedge portfolio was comprised of the following:

Hedge Instrument	Notional Amount	Average Rate/Price	Settlement Year
Currency Hedges
Euro Put Options	€ 340 million	$1.28 / €	2007
Euro Call Options	€ 270 million	$1.40 / €	2007
Euro Put Options	€ 190 million	$1.27 / €	2008
Fuel Hedges
3.5% Rotterdam Barge
Fuel Oil Forward Contracts	140,000 metric tons (mt)	$289 /mt	2007
Fuel Oil Forward Contracts	140,000 mt	$343 /mt	2008
Fuel Oil Forward Contracts	125,000 mt	$343 /mt	2009
Singapore/New York Harbor
Fuel Oil Forward Contracts	30,000 mt	$318 /mt	2007
Fuel Oil Forward Contracts	30,000 mt	$376 / mt	2008
Fuel Oil Forward Contracts	30,000 mt	$373 / mt	2009

At December 31, 2006, the fair value of the foreign currency option and fuel oil forward contracts was a net liability of $6 million, substantially all of which is included in “Other liabilities.” The amount included in net income (loss) for the change in fair value of the fuel oil forward contracts relating to hedge ineffectiveness was not material in 2006 and 2004, and was a gain of $3 million in 2005.

The carrying values and estimated fair values of the company’s debt, fuel oil forward contracts and foreign currency option contracts are summarized below:

	December 31, 2006						December 31, 2005
(Assets (liabilities), in thousands)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Parent company debt
7 1/2% Senior Notes	$	(250,000	)	$	(230,000	)	$	(250,000	)	$	(220,000	)
8 7/8% Senior Notes		(225,000	)		(216,000	)		(225,000	)		(210,000	)
Subsidiary debt
Term Loan B		(24,341	)		(24,000	)		(24,588	)		(25,000	)
Term Loan C		(369,375	)		(374,000	)		(373,125	)		(376,000	)
Other		(159,801	)		(160,000	)		(124,395	)		(124,300	)
Fuel oil forward contracts		(10,040	)		(10,040	)		19,150			19,150
Foreign currency option contracts		4,098			4,098			18,603			18,603

The fair value of the company’s publicly-traded debt is based on quoted market prices. The term loans are traded between institutional investors on the secondary loan market, and the fair values of the term loans are based on the last available trading price. Fair values for the foreign currency option and fuel oil forward contracts are based on estimated amounts that the company would pay or receive upon termination of the contracts at December 31, 2006 and 2005. Fair value for other debt is estimated based on the current rates offered to the company for debt of similar maturities.

The company is exposed to credit risk on its hedging instruments in the event of nonperformance by counterparties. However, because the company’s hedging activities are transacted only with highly rated

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institutions, Chiquita does not anticipate nonperformance by any of these counterparties. Additionally, the company has entered into agreements which limit its credit exposure to the amount of unrealized gains on the option and forward contracts. The company does not require collateral from its counterparties.

Excluding the effect of the company’s foreign currency option contracts, net foreign exchange gains (losses) were $3 million in 2006, $(21) million in 2005 and $8 million in 2004.

Note 9—Debt

Long-term debt consists of the following:

	December 31,
(In thousands)	2006			2005
Parent Company
7 1/2% Senior Notes, due 2014	$	250,000		$	250,000
8 7/8% Senior Notes, due 2015		225,000			225,000
Long-term debt of parent company	$	475,000		$	475,000
Subsidiaries
Loans secured by ships, due in installments from 2007 to 2012 - weighted average interest rate of 5.1% (4.5% in 2005)	$	100,581		$	111,413
Loans secured by substantially all U.S. assets, due in installments from 2007 to 2012 - variable interest rate of 8.4% (6.2% in 2005)		393,716			397,713
Other loans		4,178			2,382
Less current maturities		(22,588	)		(20,609	)
Long-term debt of subsidiaries	$	475,887		$	490,899

Maturities on subsidiary long-term debt during the next five years are as follows:

(In thousands)
2007	$	22,588
2008		21,312
2009		22,253
2010		20,212
2011		198,663

In June 2005, the company and Chiquita Brands L.L.C. (“CBL”), the main operating subsidiary of the company, entered into an amended and restated credit agreement with a syndicate of bank lenders for a $650 million senior secured credit facility (the “CBL Facility”) that replaced the credit agreement entered into by CBL in January 2005. Total fees of approximately $18 million were paid to obtain the CBL Facility. In June 2006, the revolver portion of the CBL Facility was increased by $50 million. In October 2006, even after obtaining covenant relief in June 2006, the company was required to obtain a temporary waiver, for the period ended September 30, 2006, from compliance with certain financial covenants in the CBL Facility, with which the company otherwise would not have been in compliance. In November 2006, the company obtained a permanent amendment to the CBL Facility to cure the covenant violations that would have otherwise occurred when the temporary waiver expired. The amendment revised certain covenant calculations relating to financial ratios for leverage and fixed charge coverage, established new

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levels for compliance with those covenants to provide additional financial flexibility, and established new interest rates. Total fees of approximately $2 million were paid to amend the CBL Facility. In March 2007, the company obtained further prospective covenant relief with respect to a proposed financial sanction contained in a plea agreement offer made by the company to the U.S. Department of Justice and other related costs (see Note 15). The amended CBL Facility consists of:

• A five-year $200 million revolving credit facility (the “Revolving Credit Facility”). At December 31, 2006, $44 million of borrowings were outstanding and $31 million of credit availability was used to support issued letters of credit, leaving $125 million of credit available under the Revolving Credit Facility. The company borrowed an additional $40 million under the Revolving Credit Facility in January and February 2007. The Revolving Credit Facility bears interest at LIBOR plus a margin of 1.25% to 3.00%, and CBL is required to pay a fee on the daily unused portion of the Revolving Credit Facility of 0.25% to 0.50% per annum, depending in each case on the company’s consolidated leverage ratio. At December 31, 2006, the interest rate on the Revolving Credit Facility was LIBOR plus 3.00%; and

• Two seven-year term loans, one for $125 million (the “Term Loan B”) and one for $375 million (the “Term Loan C”) (collectively, the “Term Loans”), the proceeds of which were used to finance a portion of the acquisition of Fresh Express. At December 31, 2006, $24 million was outstanding under the Term Loan B and $369 million was outstanding under the Term Loan C. The company made $100 million of principal prepayments on the Term Loan B in 2005. The Term Loans cannot be re-borrowed and each requires quarterly payments, which began in September 2005, amounting to 1% per year of the initial principal amount less any prepayments, for the first six years, with the remaining balance to be paid quarterly in the seventh year. The Term Loans bear interest at LIBOR plus a margin of 2.00% to 3.00%, depending on the company’s consolidated leverage ratio. At December 31, 2006 and 2005, the interest rate on the Term Loans was LIBOR plus 3.00% and LIBOR plus 2.00%, respectively.

Substantially all U.S. assets of CBL and its subsidiaries are pledged to secure the CBL Facility. The Revolving Credit Facility and Term Loan B are principally secured by the U.S. assets of CBL and its subsidiaries other than Fresh Express and its subsidiaries. The Term Loan C is principally secured by the assets of Fresh Express and its subsidiaries. The CBL Facility is also secured by liens on CBL’s trademarks as well as pledges of equity and guarantees by various subsidiaries worldwide. The CBL Facility is guaranteed by CBII and secured by a pledge of CBL’s equity.

Under the amended CBL Facility, CBL may distribute cash to CBII for routine CBII operating expenses, interest payments on CBII’s 7 ¹/2% and 8 ⁷/8% Senior Notes and payment of certain other specified CBII liabilities. Until Chiquita meets certain financial ratios and elects to become subject to a reduced maximum CBL leverage ratio, (i) CBL’s distributions to CBII for other purposes, such as dividend payments to Chiquita shareholders and repurchases of CBII’s common stock, warrants and senior notes, are prohibited, and (ii) the ability of CBL and its subsidiaries to incur debt, dispose of assets, carry out mergers and acquisitions, and make capital expenditures is further limited than under the original CBL Facility.

In June 2005, the company issued $225 million of 8 ⁷/8% Senior Notes due 2015, for net proceeds of $219 million. The proceeds were used to finance a portion of the acquisition of Fresh Express. The 8 ⁷/8% Senior Notes are callable on or after June 1, 2010, in whole or from time to time in part, at 104.438% of face value declining to face value in 2013. Before June 1, 2010, the company may redeem some or all of the 8 ⁷/8% Senior Notes at a specified treasury make-whole rate. In addition, before June 1, 2008, the company may redeem up to 35% of the notes at a redemption price of 108.75% of their principal amount using proceeds from sales of certain kinds of company stock.

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In September 2004, the company issued $250 million of 7 ¹/2% Senior Notes due 2014, for net proceeds of $246 million. The proceeds from this offering, together with available cash, were used to repurchase and redeem the company’s then-outstanding 10.56% Senior Notes due 2009. As a result of the premiums associated with the repurchase of the 10.56% Senior Notes, the company recognized a $22 million loss in the 2004 third quarter, which is included in “Other income (expense), net” on the Consolidated Statement of Income. The 7 ¹/2% Senior Notes are callable on or after November 1, 2009, in whole or from time to time in part, at 103.75% of face value declining to face value in 2012. Before November 1, 2009, the company may redeem some or all of the 7 ¹/2% Senior Notes at a specified treasury make-whole rate. In addition, before November 1, 2007, the company may redeem up to 35% of the notes at a redemption price of 107.5% of their principal amount using proceeds from sales of certain kinds of company stock.

The indentures for the 7 ¹/2% and 8 ⁷/8% Senior Notes contain covenants that limit the ability of the company and its subsidiaries to incur debt and issue preferred stock, dispose of assets, make investments, pay dividends or make distributions in respect of the company’s capital stock, create liens, merge or consolidate, issue or sell stock of subsidiaries, enter into transactions with certain stockholders or affiliates, and guarantee company debt. These covenants are generally less restrictive than the covenants under the CBL Facility.

In April 2005, Great White Fleet Ltd. (“GWF”), the company’s shipping subsidiary, entered into a seven-year secured revolving credit facility for $80 million (the “GWF Facility”). The full proceeds from this facility were drawn, of which approximately $30 million was used to exercise buyout options under then-existing capital leases for four vessels, and approximately $50 million was used to finance a portion of the acquisition of Fresh Express. The loan requires GWF to maintain certain financial covenants related to tangible net worth and total debt ratios.

GWF may elect to draw parts of or the entire amount of credit available in either U.S. dollars or euro, at interest rates of LIBOR plus 1.25% for dollar loans and EURIBOR plus 1.25% for euro loans. The GWF Facility requires 13 consecutive semi-annual principal payments, each representing an approximate $4 million reduction in availability, plus a balloon payment at the end of the seven-year term. Amounts available under the GWF Facility may be borrowed, repaid and re-borrowed prior to the final maturity date, subject to the semi-annual payments and corresponding reductions in availability.

The company’s loans secured by its shipping assets are comprised of the following: (i) $63 million are euro denominated with variable rates based on prevailing EURIBOR rates; (ii) $16 million are U.S. dollar denominated with average fixed rates of 5.4%; (iii) $15 million are euro denominated with average fixed interest rates of 5.5%; and (iv) the remaining $7 million are U.S. dollar denominated with variable rates based on prevailing LIBOR rates. Euro denominated loans hedge against the potential balance sheet translation impact of the company’s euro net asset exposure.

As more fully described in Note 15 to the Consolidated Financial Statements, the company may be required to pay, or post bank guarantees for, up to approximately $50 million in connection with its appeal of certain claims of Italian customs authorities. The company issued a letter of credit in the fourth quarter 2006 to allow a bank guarantee to be posted in the amount of approximately €5 million (approximately $7 million), and may in the future be required to post bank guarantees of up to the full amounts claimed. In February 2006, the company increased the letter of credit sublimit under its Revolving Credit Facility from $50 million to $100 million in anticipation of such a contingency.

A subsidiary of the company has a €25 million uncommitted credit line and a €17 million committed credit line for bank guarantees to be used primarily to guarantee the company’s payments for licenses and

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duties in European Union countries. At December 31, 2006, the bank counterparties had provided €15 million of guarantees under these lines.

The company also borrows funds on a short-term basis. The average interest rates for all short-term notes and loans payable outstanding, excluding borrowings under the Revolving Credit Facility, were 5.1% at December 31, 2006 and 3.4% at December 31, 2005.

Cash payments relating to interest expense were $86 million in 2006, $60 million in 2005 and $42 million in 2004.

Note 10—Pension and Severance Benefits

The company and its subsidiaries have several defined benefit and defined contribution pension plans covering domestic and foreign employees and have severance plans covering Central American employees. Pension plans covering eligible salaried and hourly employees and Central American severance plans for all employees call for benefits to be based upon years of service and compensation rates. The company uses a December 31 measurement date for all of its plans.

On December 31, 2006, the company adopted the provisions of SFAS No. 158 (see Note 1). The incremental effects of adopting the provisions of SFAS No. 158 on the company’s Consolidated Balance Sheet are presented in the following table. The adoption of SFAS No. 158 had no effect on the company’s Consolidated Statement of Income.

	At December 31, 2006
(In thousands)	Prior to Adopting SFAS No. 158		Effect of Adopting SFAS No. 158			As Reported at December 31, 2006
Other intangible assets, net	$	155,589	$	(823	)	$	154,766
Accrued liabilities		129,234		7,672			136,906
Accrued pension and other employee benefits		79,212		(5,671	)		73,541
Accumulated other comprehensive income		13,923		(2,824	)		11,099

Included in accumulated other comprehensive income at December 31, 2006 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service costs of $1 million and unrecognized actuarial losses of $11 million. The prior service costs and actuarial losses included in accumulated other comprehensive income and expected to be included in net periodic pension cost during the year ended December 31, 2007 are approximately $300,000 and $800,000, respectively.

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Pension and severance expense consists of the following:

	Domestic Plans
(In thousands)	2006			2005			2004
Defined benefit and severance plans:
Service cost	$	401		$	444		$	431
Interest on projected benefit obligation		1,501			1,509			1,529
Expected return on plan assets		(1,730	)		(1,667	)		(1,622	)
Recognized actuarial loss		381			234			133
		553			520			471
Defined contribution plans		9,385			5,933			2,803
Total pension and severance plan expense	$	9,938		$	6,453		$	3,274
	Foreign Plans
(In thousands)	2006			2005			2004
Defined benefit and severance plans:
Service cost	$	6,518		$	4,182		$	4,341
Interest on projected benefit obligation		4,126			4,308			4,562
Expected return on plan assets		(223	)		(289	)		(384	)
Recognized actuarial (gain) loss		443			(194	)		1,567
Amortization of prior service cost		874			933			717
		11,738			8,940			10,803
Curtailment loss		—			625			—
Settlement gain		(905	)		(1,669	)		(573	)
		10,833			7,896			10,230
Defined contribution plans		409			403			384
Total pension and severance plan expense	$	11,242		$	8,299		$	10,614

The company’s pension and severance benefit obligations relate primarily to Central American benefits which, in accordance with local government regulations, are generally not funded until benefits are paid. Domestic pension plans are funded in accordance with the requirements of the Employee Retirement Income Security Act.

The increase in expense in 2006 and 2005 for the domestic defined contribution plan was primarily due to the June 28, 2005 acquisition of Fresh Express.

Primarily as a result of significant flooding to the company’s farms in Panama and Honduras during 2005, the company terminated a significant number of employees and recognized a net settlement gain of $1 million in 2006 and a net curtailment and settlement gain of $1 million in 2005 related to Central American employee benefit plans.

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Financial information with respect to the company’s domestic and foreign defined benefit pension and severance plans is as follows:

	Domestic Plans
	Year Ended December 31,
(In thousands)	2006			2005
Fair value of plan assets at beginning of year	$	21,972		$	21,866
Actual return on plan assets		2,223			608
Employer contributions		1,685			1,424
Benefits paid		(1,768	)		(1,926	)
Fair value of plan assets at end of year	$	24,112		$	21,972
Projected benefit obligation at beginning of year	$	27,435		$	27,155
Service and interest cost		1,902			1,953
Actuarial (gain) loss		(125	)		253
Benefits paid		(1,768	)		(1,926	)
Projected benefit obligation at end of year	$	27,444		$	27,435
Plan assets less than projected benefit obligation	$	(3,332	)	$	(5,463	)
Unrecognized actuarial loss					4,776
Adjustment to recognize minimum pension and severance liability					(4,392	)
Accrued pension and severance plan liability				$	(5,079	)

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	Foreign Plans
	Year Ended December 31,
(In thousands)	2006			2005
Fair value of plan assets at beginning of year	$	8,507		$	9,676
Actual return on plan assets		317			89
Employer contributions		9,301			10,393
Benefits paid		(9,697	)		(10,845	)
Foreign exchange		582			(806	)
Fair value of plan assets at end of year	$	9,010		$	8,507
Projected benefit obligation at beginning of year	$	52,374		$	55,260
Service and interest cost		10,644			8,490
Actuarial loss		4,426			2,095
Benefits paid		(9,697	)		(10,845	)
Curtailment loss		—			21
Foreign exchange		2,027			(2,647	)
Projected benefit obligation at end of year	$	59,774		$	52,374
Plan assets less than projected benefit obligation	$	(50,764	)	$	(43,867	)
Unrecognized actuarial loss					1,862
Unrecognized prior service cost					1,802
Adjustment to recognize minimum pension and severance liability					(7,232	)
Accrued pension and severance plan liability				$	(47,435	)

The accumulated benefit obligation was $80 million and $74 million as of December 31, 2006 and December 31, 2005, respectively.

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The following weighted-average assumptions were used to determine the projected benefit obligations for the company’s domestic pension plans and foreign pension and severance plans:

	Domestic Plans				Foreign Plans
	Dec. 31, 2006		Dec. 31, 2005		Dec. 31, 2006		Dec. 31, 2005
Discount rate	5.75	%	5.50	%	7.00	%	8.00	%
Long-term rate of compensation increase	5.00	%	5.00	%	4.50	%	4.50	%
Long-term rate of return on plan assets	8.00	%	8.00	%	2.50	%	3.25	%

The company’s long-term rate of return on plan assets is based on the strategic asset allocation and future expected returns on plan assets.

The weighted-average asset allocations of the company’s domestic pension plans and foreign pension and severance plans by asset category are as follows:

	Domestic Plans				Foreign Plans
	Dec. 31, 2006		Dec. 31, 2005		Dec. 31, 2006		Dec. 31, 2005
Asset Category
Equity securities	73	%	74	%	—		—
Fixed income securities	23	%	24	%	61	%	62	%
Cash and equivalents	4	%	2	%	39	%	38	%

The primary investment objective for the domestic plan’s fund is preservation of capital with a reasonable amount of long-term growth and income without undue exposure to risk. This is provided by a balanced strategy using fixed income, equities and cash equivalents. The target allocation of the overall fund is 75% equities and 25% fixed income. The cash position is maintained at a level sufficient to provide for the liquidity needs of the fund. For the funds covering the foreign plans, the asset allocations are primarily mandated by the applicable governments, with an investment objective of minimal risk exposure.

The company expects to contribute $2 million to its domestic defined benefit pension plans and $10 million to its foreign pension and severance plans in 2007.

Expected benefit payments for the company’s domestic defined benefit pension plans and foreign pension and severance plans are as follows (in thousands):

	Domestic Plans		Foreign Plans
2007	$	2,234	$	9,925
2008		2,235		8,398
2009		2,246		7,506
2010		2,284		6,981
2011		2,264		6,488
2012-2016		11,193		31,196

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Note 11—Stock-Based Compensation

The company may issue up to an aggregate of 9.4 million shares of common stock as stock options, stock awards (including restricted stock awards), performance awards and stock appreciation rights (“SARs”) under its stock option plan; at December 31, 2006, 3.0 million shares were available for future grants. The awards may be granted to directors, officers, other key employees and consultants. Stock options provide for the purchase of shares of common stock at fair market value at the date of grant. The company issues new shares when options are exercised under the stock plan.

Stock Options

Options for approximately 2 million shares were outstanding at December 31, 2006 under this plan. These options generally vest over four years and are exercisable for a period not in excess of 10 years. In addition to the options granted under the plan, the table below also includes an inducement stock option grant for 325,000 shares made to the company’s chief executive officer in January 2004 in accordance with New York Stock Exchange rules. Additionally, but not included in the table below, there were 22,000 SARs granted to certain non-U.S. employees outstanding at December 31, 2006.

A summary of the activity and related information for the company’s stock options follows:

	2006				2005				2004
(In thousands, except per share amounts)	Shares		Weighted average exercise price		Shares		Weighted average exercise price		Shares		Weighted average exercise price
Under option at beginning of year	2,418		$	17.48	3,783		$	17.20	4,326		$	16.47
Options granted	—			—	—			—	335			23.17
Options exercised	(70	)		16.48	(1,330	)		16.70	(649	)		15.57
Options forfeited or expired	(105	)		17.03	(35	)		17.09	(229	)		16.74
Under option at end of year	2,243		$	17.53	2,418		$	17.48	3,783		$	17.20
Options exercisable at end of year	2,048		$	17.10	1,454		$	16.97	1,987		$	16.67

Options outstanding as of December 31, 2006 had a weighted average remaining contractual life of 6 years and had exercise prices ranging from $11.73 to $23.43. The following table provides further information on the range of exercise prices:

	Options Outstanding				Options Exercisable
(In thousands, except per share amounts)	Shares	Weighted average exercise price		Weighted average remaining life	Shares	Weighted average exercise price
Exercise Price
$11.73 - $15.15	210	$	13.27	6 years	186	$	13.04
16.92 -   16.97	1,684		16.95	5 years	1,684		16.95
17.20 -   17.32	14		17.23	7 years	11		17.23
23.16 -   23.43	335		23.17	7 years	167		23.17

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The estimated weighted average fair value per option share granted was $12.47 for 2004 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of option grant: weighted average risk-free interest rate of 3.0%, dividend yield of 0%, volatility factor for the company’s common stock price of 60%, and a weighted average expected life of five years for options not forfeited.

At December 31, 2006, there was $1 million of total unrecognized pre-tax compensation cost related to unvested stock options. This cost is expected to be recognized in 2007.

Restricted Stock

Since 2004, the company’s share-based awards have primarily consisted of restricted stock awards. These awards generally vest over 1-4 years, and the fair value of the awards at the grant date is expensed over the period from the grant date to the date the employee is no longer required to provide service to earn the award. Prior to vesting, grantees are not eligible to vote or receive dividends on the restricted shares.

A summary of the activity and related information for the company’s restricted stock awards follows:

	2006				2005				2004
(In thousands, except per share amounts)	Shares		Weighted average grant date price		Shares		Weighted average grant date price		Shares		Weighted average grant date price
Unvested shares at beginning of year	654		$	23.84	457		$	22.07	53		$	12.74
Shares granted	1,197			14.92	363			25.14	606			22.31
Shares vested	(531	)		19.20	(142	)		22.00	(189	)		20.29
Shares forfeited	(39	)		21.70	(24	)		20.92	(13	)		21.40
Unvested shares at end of year	1,281		$	17.49	654		$	23.84	457		$	22.07

At December 31, 2006, there was $15 million of total unrecognized pre-tax compensation cost related to unvested restricted stock awards. This cost is expected to be recognized over a weighted-average period of approximately 3 years.

Long-Term Incentive Program

The company has established a Long-Term Incentive Program (LTIP) for certain executive level employees. Awards are intended to be performance-based compensation as defined in Section 162(m) of the Internal Revenue Code. For the three year period of 2006-2008, the program allows for awards to be issued at the end of 2008 based upon the cumulative earnings per share of the company for that time period. Awards are expensed over the three-year vesting period. Based on cumulative earnings per share estimates for the three-year period, the company does not currently expect to achieve target levels under the program to allow awards to be issued at the end of 2008. As a result, no expense was recognized in 2006 relating to this program, although the company will continue to evaluate its earnings per share performance for the purpose of determining expense for this program.

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Note 12—Shareholders’ Equity

The company’s Certificate of Incorporation authorizes 20 million shares of preferred stock and 150 million shares of common stock. Warrants representing the right to purchase 13.3 million shares of common stock were issued in 2002. The warrants have an exercise price of $19.23 per share and are exercisable through March 19, 2009.

At December 31, 2006, shares of common stock were reserved for the following purposes:

Issuance upon exercise of stock options and other stock awards (see Note 11)	6.6 million
Issuance upon exercise of warrants	13.3 million

The company’s shareholders’ equity includes accumulated other comprehensive income at December 31, 2006 comprised of unrealized losses on derivatives of $29 million, unrealized translation gains of $50 million, a $2 million adjustment to increase the fair value of a cost investment, and unrecognized prior service costs and actuarial losses of $12 million. The accumulated other comprehensive income balance at December 31, 2005 included unrealized gains on derivatives of $10 million, unrealized translation gains of $36 million, a $4 million adjustment to increase the fair value of cost investments and a minimum pension liability adjustment of $10 million.

In late 2004, Chiquita initiated a quarterly cash dividend of $0.10 per share on the company’s outstanding shares of common stock. In September 2006, the board of directors suspended the dividend. The payment of dividends is currently prohibited under the CBL Facility; see Note 9 to the Consolidated Financial Statements. If and when permitted in the future, dividends must be approved by the board of directors.

The company purchased approximately $10 million of its shares of common stock in 2004 (approximately 517,000 shares at an average price of $18.62 per share).

Note 13—Income Taxes

Income taxes consist of the following:

(In thousands)	U.S. Federal			U.S. State			Foreign			Total
2006
Current tax expense (benefit)	$	(2,548	)	$	(435	)	$	4,537		$	1,554
Deferred tax benefit		—			(1,661	)		(1,993	)		(3,654	)
	$	(2,548	)	$	(2,096	)	$	2,544		$	(2,100	)
2005
Current tax expense (benefit)	$	(836	)	$	1,932		$	5,524		$	6,620
Deferred tax benefit		—			(1,865	)		(1,655	)		(3,520	)
	$	(836	)	$	67		$	3,869		$	3,100
2004
Current tax expense (benefit)	$	(1,057	)	$	692		$	11,299		$	10,934
Deferred tax expense (benefit)		—			107			(5,641	)		(5,534	)
	$	(1,057	)	$	799		$	5,658		$	5,400

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Income tax expense differs from income taxes computed at the U.S. federal statutory rate for the following reasons:

(In thousands)	2006			2005			2004
Income tax expense (benefit) computed at U.S. federal statutory rate	$	(34,312	)	$	47,089		$	21,281
State income taxes, net of federal benefit		(848	)		(760	)		164
Impact of foreign operations		(1,607	)		(84,371	)		(56,468	)
Change in valuation allowance		35,298			41,029			42,529
Non-deductible charge for contingent liability		8,750			—			—
Benefit from change in German tax law		(5,061	)		—			—
Benefit from sale of Colombian division		—			—			(5,700	)
Tax contingencies		(6,252	)		(4,258	)		685
Other		1,932			4,371			2,909
Income tax expense (benefit)	$	(2,100	)	$	3,100		$	5,400

Income taxes for 2006 include benefits of $10 million primarily from the resolution of tax contingencies in various jurisdictions and a reduction in valuation allowance. In addition, the company recorded a tax benefit of $5 million as a result of a change in German tax law. Income taxes for 2005 included benefits of $8 million primarily from the resolution of tax contingencies and reduction in the valuation allowance of a foreign subsidiary due to the execution of tax planning initiatives. Income tax expense in 2004 included a benefit of $5.7 million from the release to income, upon the sale of the Colombian banana production division, of a deferred tax liability related to growing crops in Colombia.

The components of deferred income taxes included on the balance sheet are as follows:

	December 31,
(In thousands)	2006			2005
Deferred tax benefits
Net operating loss carryforwards	$	230,004		$	215,674
Other tax carryforwards		1,269			1,103
Employee benefits		31,915			26,351
Accrued expenses		12,437			11,498
Depreciation and amortization		8,268			10,384
Other		12,532			15,563
		296,425			280,573
Deferred tax liabilities
Growing crops		(21,085	)		(21,419	)
Trademarks		(172,313	)		(170,988	)
Other		(3,346	)		(3,245	)
		(196,744	)		(195,652	)
		99,681			84,921
Valuation allowance		(211,909	)		(200,325	)
Net deferred tax liability	$	(112,228	)	$	(115,404	)

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U.S. net operating loss carryforwards (“NOLs”) were $328 million as of December 31, 2006 and $313 million as of December 31, 2005. The U.S. NOLs existing at December 31, 2006 will expire between 2024 and 2027. Foreign NOLs were $293 million in 2006 and $279 million in 2005. $165 million of the foreign NOLs existing at December 31, 2006 will expire between 2007 and 2017. The remaining $128 million of NOLs existing at December 31, 2006 have an indefinite carryforward period.

A valuation allowance has been established against the deferred tax assets described above due to the company’s history of tax losses in specific tax jurisdictions as well as the fact that the deferred tax assets are subject to challenge under audit.

The change in the valuation allowance of $12 million reflected in the above table is due to the net effect of changes in deferred tax assets in U.S. and foreign jurisdictions. An increase of $35 million was primarily due to the net effect of the creation of new NOLs and the use of NOLs to offset taxable income in the current year, partially offset by a reduction of $23 million primarily due to a reduction in U.S. NOLs in conjunction with the closure of a tax audit and foreign NOLs that expired in 2006.

Income before taxes attributable to foreign operations was $16 million in 2006, $230 million in 2005, and $173 million in 2004. Undistributed earnings of foreign subsidiaries, approximately $1.2 billion at December 31, 2006, have been permanently reinvested in foreign operating assets. Accordingly, no provision for U.S. federal and state income taxes has been provided on these earnings.

Cash payments for income taxes were $15 million in 2006, $10 million in 2005, and $13 million in 2004. No income tax expense is associated with any of the items included in other comprehensive income.

In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” This interpretation is effective for the company beginning January 1, 2007. See Note 1 to the Consolidated Financial Statements for a further description of FIN 48 and its expected impact on the company’s financial statements.

Note 14—Segment Information

Since the acquisition of Fresh Express in June 2005, the company has reported three business segments: Bananas, Fresh Select, and Fresh Cut. The Banana segment includes the sourcing (purchase and production), transportation, marketing and distribution of bananas. The Fresh Select segment includes the sourcing, marketing and distribution of whole fresh fruits and vegetables other than bananas. The Fresh Cut segment includes value-added salads, foodservice and fresh-cut fruit operations. Remaining operations, which are reported in “Other,” primarily consist of processed fruit ingredient products, which are produced in Latin America and sold in other parts of the world, and other consumer packaged goods. The company evaluates the performance of its business segments based on operating income. Intercompany transactions between segments are eliminated.

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Financial information for each segment follows:

(In thousands)	Bananas			Fresh Select			Fresh Cut			Other			Consolidated
2006
Net sales	$	1,933,866		$	1,355,963		$	1,139,097		$	70,158		$	4,499,084
Segment operating income (loss)1		(20,591	)		(27,341	)		24,823			(4,588	)		(27,697	)
Depreciation and amortization		32,890			6,095			47,692			865			87,542
Equity in earnings of investees2		2,369			3,166			—			402			5,937
Total assets3		1,225,540			388,331			1,083,549			41,124			2,738,544
Investment in equity affiliates2		33,167			13,922			—			648			47,737
Expenditures for long-lived assets		30,635			3,832			30,588			2,649			67,704
Net operating assets		757,375			200,111			848,107			28,836			1,834,429
2005
Net sales	$	1,950,565		$	1,353,573		$	538,667		$	61,556		$	3,904,361
Segment operating income (loss)		182,029			10,546			(3,276	)		(1,666	)		187,633
Depreciation and amortization		34,130			6,272			23,788			826			65,016
Equity in earnings of investees2		(656	)		2,057			—			(801	)		600
Total assets3		1,305,888			384,204			1,109,868			33,139			2,833,099
Investment in equity affiliates2		31,276			9,888			—			245			41,409
Expenditures for long-lived assets		28,420			3,547			899,149			3,211			934,327
Net operating assets		804,005			199,495			878,837			19,252			1,901,589
2004
Net sales	$	1,713,160		$	1,289,145		$	10,437		$	58,714		$	3,071,456
Segment operating income (loss)		122,739			440			(13,422	)		3,190			112,947
Depreciation		32,850			7,507			579			647			41,583
Equity in earnings of investees2		9,754			1,420			—			(1	)		11,173
Total assets		1,324,579			419,790			9,501			26,168			1,780,038
Investment in equity affiliates2		32,302			8,225			—			1,046			41,573
Expenditures for long-lived assets		40,135			6,926			379			1,529			48,969
Net operating assets		797,626			220,580			7,155			20,139			1,045,500

¹ The Fresh Select and Banana segment results include $29 million and $14 million, respectively, of goodwill impairment charges in 2006 from the Atlanta AG business. The Banana segment also includes a $25 million charge for a potential settlement related to the U.S. Department of Justice investigation of the company.

² See Note 7 for further information related to investments in and income from equity method investments.

³ At December 31, 2006, goodwill of $542 million is primarily related to Fresh Express and included in the Fresh Cut segment. At December 31, 2005, goodwill of $536 million, $28 million and $14 million, respectively, were allocated to the Fresh Cut, Fresh Select and Banana segments.

The reconciliation of Consolidated Statement of Cash Flow captions to expenditures for long-lived assets follows:

(In thousands)	2006		2005		2004
Per Consolidated Statement of Cash Flow:
Capital expenditures	$	61,240	$	42,656	$	43,442
Acquisition of businesses		6,464		891,671		5,527
Expenditures for long-lived assets	$	67,704	$	934,327	$	48,969

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The reconciliation of the Consolidated Balance Sheet total assets to net operating assets follows:

	December 31,
(In thousands)	2006			2005
Total assets	$	2,738,544		$	2,833,099
Less:
Cash		(64,915	)		(89,020	)
Accounts payable		(415,082	)		(426,767	)
Accrued liabilities		(136,906	)		(142,881	)
Accrued pension and other employee benefits		(73,541	)		(78,900	)
Net deferred tax liability		(112,228	)		(115,404	)
Commitments and contingent liabilities		(25,000	)		—
Other liabilities		(76,443	)		(78,538	)
Net operating assets	$	1,834,429		$	1,901,589

Financial information by geographic area is as follows:

(In thousands)	2006		2005		2004
Net sales
United States	$	1,864,421	$	1,261,246	$	715,846
Italy		218,623		253,170		214,301
Germany		1,188,003		1,228,326		1,090,381
Other international		1,228,037		1,161,619		1,050,928
	$	4,499,084	$	3,904,361	$	3,071,456

	December 31,
(In thousands)	2006		2005
Long-lived assets
United States	$	1,240,065	$	1,264,440
Central and South America		143,173		138,755
Germany		94,523		124,611
Other international		258,508		270,118
Shipping operations		125,782		135,100
	$	1,862,051	$	1,933,024

The company’s products are sold throughout the world and its principal production and processing operations are conducted in Central and South America. Chiquita’s earnings are heavily dependent upon products grown and purchased in Central and South America. These activities, a significant factor in the economies of the countries where Chiquita produces bananas and related products, are subject to the risks that are inherent in operating in such foreign countries, including government regulation, currency restrictions and other restraints, risk of expropriation, risk of political instability and burdensome taxes. Certain of these operations are substantially dependent upon leases and other agreements with these governments.

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The company is also subject to a variety of government regulations in most countries where it markets bananas and other fresh products, including health, food safety and customs requirements, import tariffs, currency exchange controls and taxes.

Note 15—Contingencies

As previously disclosed, in April 2003 the company’s management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice (the “Justice Department”) that its banana-producing subsidiary in Colombia, which was sold in June 2004, had made payments to certain groups in that country which had been designated under United States law as foreign terrorist organizations. Following the voluntary disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. In March 2004, the Justice Department advised that, as part of its criminal investigation, it would be evaluating the role and conduct of the company and some of its officers in the matter. In September and October 2005, the company was advised that the investigation was continuing and that the conduct of the company and some of its officers and directors was within the scope of the investigation. For the years ended December 31, 2006, 2005 and 2004, the company incurred legal fees and other expenses in response to the continuing investigation and related issues of $8 million, $2 million and $8 million, respectively.

During the fourth quarter of 2006, the company commenced discussions with the Justice Department about the possibility of reaching a plea agreement. As a result of these discussions, and in accordance with the guidelines set forth in SFAS No. 5, “Accounting for Contingencies,” the company recorded a charge of $25 million in its financial statements for the quarter and year ended December 31, 2006. This amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. The $25 million would be paid out in five equal annual installments, with interest, beginning on the date judgment is entered. The Justice Department has indicated that it is prepared to accept both the amount and the payment terms of the proposed $25 million sanction. In addition to the financial sanction, the company anticipates the potential plea agreement would contain customary provisions that prohibit such future conduct or other violations of law and require the company to implement and/or maintain certain business processes and compliance programs, the violation of which could result in setting aside the principal terms of the plea agreement.

Negotiations are ongoing, and there can be no assurance that a plea agreement will be reached or that the financial impacts of any such agreement, if reached, will not exceed the amounts currently accrued in the financial statements. Furthermore, such an agreement would not affect the scope or outcome of any continuing investigation involving any individuals.

In the event an acceptable plea agreement between the company and the Justice Department is not reached, the company believes the Justice Department is likely to file charges, against which the company would aggressively defend itself. The Justice Department has a broad range of civil and criminal sanctions under potentially applicable laws which it may seek to impose against corporations and individuals, including but not limited to injunctive relief, disgorgement of profits, fines, penalties and modifications to business practices and compliance programs. The company is unable to predict all of the financial or other potential impacts that could result from an indictment or conviction of the company or any individual, or from any related litigation, including the materiality of such events. Considering the sanctions that may be pursued by the Justice Department and the company’s defenses against potential claims, the company estimates that the range of financial outcomes upon final adjudication of a criminal proceeding could be between $0 and $150 million.

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In October 2004 and May 2005, the company’s Italian subsidiary received separate notices from various customs authorities in Italy stating that this subsidiary is potentially liable for an aggregate of approximately €26.9 million of additional duties and taxes on the import of certain bananas into the European Union from 1998 to 2000, plus interest currently estimated at approximately €15.0 million. The customs authorities claim that these amounts are due because the bananas were imported with licenses that were subsequently determined to have been forged. The company is contesting these claims through appropriate proceedings, principally on the basis of its good faith belief at the time the import licenses were obtained and used that they were valid. The company’s Italian subsidiary is requesting suspension of payment, pending appeal, of the approximately €13.8 million formally assessed thus far in these cases, and intends to request suspension of payment, when appropriate, of additional assessments as they are received. In October 2006, the Italian subsidiary received notice in one proceeding in a court of first instance, that the court had determined that Chiquita Italia was jointly liable for a claim of €4.7 million plus interest accrued from November 2004. Chiquita Italia intends to appeal this finding; the applicable appeal would involve a review of the entire factual record of the case as well as all the legal arguments, including those presented during the appeals process, and the appellate court can render a decision on the case that disregards or substantially modifies the lower court’s opinion. Pending appeal, Chiquita Italia issued a letter of credit to allow a bank guarantee to be posted in the amount of approximately €5 million (approximately $7 million), and may in the future be required to post bank guarantees for up to the full amounts claimed.

In June 2005, Chiquita announced that its management had recently become aware that certain of its employees had shared pricing and volume information with competitors in Europe over many years in violation of European competition laws and company policies, and may have engaged in several instances of other conduct which did not comply with European competition laws or applicable company policies. The company promptly stopped the conduct and notified the European Commission (“EC”) and other regulatory authorities of these matters; the company is cooperating with the related investigation subsequently commenced by the EC. Based on the company’s voluntary notification and cooperation with the investigation, the EC notified Chiquita that it would be granted immunity from any fines related to the conduct, subject to customary conditions, including the company’s continuing cooperation with the investigation and a continued determination of its eligibility for immunity. Accordingly, Chiquita does not expect to be subject to any fines by the EC. However, if at the conclusion of its investigation, which could continue through 2007 or later, the EC were to determine, among other things, that Chiquita did not continue to cooperate or was not otherwise eligible for immunity, then the company could be subject to fines, which, if imposed, could be substantial. The company does not believe that the reporting of these matters or the cessation of the conduct has had or should in the future have any material adverse effect on the regulatory or competitive environment in which it operates.

Other than the $25 million accrual noted above for potential liability related to the Justice Department investigation at December 31, 2006, the Consolidated Balance Sheet does not reflect a liability for these contingencies for any of the periods presented.

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Note 16—Quarterly Financial Data (Unaudited)

The following quarterly financial data are unaudited, but in the opinion of management include all necessary adjustments for a fair presentation of the interim results, which are subject to significant seasonal variations.

2006
(In thousands, except per share amounts)	March 31			June 30			Sept. 30			Dec. 31
Net sales	$	1,153,652		$	1,228,676		$	1,032,004		$	1,084,752
Cost of sales		(992,695	)		(1,060,536	)		(951,945	)		(955,727	)
Operating income (loss)		39,259			45,399			(78,508	)		(33,847	)
Net income (loss)		19,506			22,868			(96,439	)		(41,869	)
Basic earnings (loss) per share		0.46			0.54			(2.29	)		(0.99	)
Diluted earnings (loss) per share		0.46			0.54			(2.29	)		(0.99	)
Common stock market price
High		20.34			16.82			17.47			16.16
Low		16.73			12.99			12.78			12.64
2005
(In thousands, except per share amounts)	March 31			June 30			Sept. 30			Dec. 31
Net sales	$	931,829		$	1,019,444		$	954,006		$	999,082
Cost of sales		(751,386	)		(854,259	)		(810,541	)		(851,942	)
Operating income (loss)		93,698			74,624			20,041			(730	)
Net income (loss)		86,541			63,613			301			(19,015	)
Basic earnings (loss) per share		2.12			1.52			0.01			(0.45	)
Diluted earnings (loss) per share		1.94			1.36			0.01			(0.45	)
Common stock market price
High		27.56			30.15			30.73			27.61
Low		20.62			23.83			23.94			19.65

The operating loss in the fourth quarter of 2006 included a charge of $25 million for potential settlement of a contingent liability related to the Justice Department investigation of the company. The operating loss in the third quarter of 2006 included a goodwill impairment charge of $43 million related to Atlanta AG. Operating losses in the 2005 fourth quarter included flood costs of $17 million relating to Tropical Storm Gamma and a $6 million charge related to the consolidation of fresh-cut fruit facilities in the Midwestern United States.

Per share results include the effect, if dilutive, of the assumed conversion of options, warrants and other stock awards into common stock during the period presented. The effects of assumed conversions are determined independently for each respective quarter and year and may not be dilutive during every period due to variations in operating results. Therefore, the sum of quarterly per share results will not necessarily equal the per share results for the full year. For the quarters ended December 31, 2006 and 2005, the shares used to calculate diluted EPS would have been 43.0 million and 44.9 million, respectively, if the company had generated net income. For the quarter ended September 30, 2006, the shares used to calculate diluted EPS would have been 42.7 million if the company had generated net income.

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Chiquita Brands International, Inc.

SELECTED FINANCIAL DATA

	Reorganized Company												Predecessor Company
(In thousands, except per share amounts)	Year Ended December 31,									Nine Months Ended December 31,			Three Months Ended March 31,
	2006			2005		2004		2003		2002			2002
FINANCIAL CONDITION
Working capital	$	246,875		$	299,218	$	331,217	$	281,277	$	243,960		$	256,844
Capital expenditures		61,240			42,656		43,442		51,044		31,925			2,561
Total assets		2,738,544			2,833,099		1,780,038		1,706,719		1,642,241			1,779,019
Capitalization
Short-term debt		77,630			31,209		34,201		48,070		41,701			64,930
Long-term debt		950,887			965,899		315,266		346,490		394,796			467,315
Shareholders’ equity		870,827			993,501		838,824		757,346		629,289			612,753
OPERATIONS
Net sales	$	4,499,084		$	3,904,361	$	3,071,456	$	2,613,548	$	1,140,024		$	446,146
Operating income (loss)		(27,697	)		187,633		112,947		140,386		25,501			40,578
Income (loss) from continuing operations before cumulative effect of a change in method of accounting		(95,934	)		131,440		55,402		95,863		(6,622	)		(189,694	)
Discontinued operations		—			—		—		3,343		19,817			(63,606	)
Income (loss) before cumulative effect of a change in method of accounting		(95,934	)		131,440		55,402		99,206		13,195			(253,300	)
Cumulative effect of a change in method of accounting		—			—		—		—		—			(144,523	)
Net income (loss)		(95,934	)		131,440		55,402		99,206		13,195			(397,823	)
SHARE DATA
Shares used to calculate diluted earnings (loss) per common share		42,084			45,071		41,741		40,399		39,967			78,273
Diluted earnings (loss) per common share:
Continuing operations	$	(2.28	)	$	2.92	$	1.33	$	2.38	$	(0.17	)	$	(2.42	)
Discontinued operations		—			—		—		0.08		0.50			(0.81	)
Before cumulative effect of a change in method of accounting		(2.28	)		2.92		1.33		2.46		0.33			(3.23	)
Cumulative effect of a change in method of accounting		—			—		—		—		—			(1.85	)
Net income (loss)		(2.28	)		2.92		1.33		2.46		0.33			(5.08	)
Dividends declared per common share		0.20			0.40		0.10		—		—			—
Market price per common share:
Reorganized Company:
High		20.34			30.73		24.33		22.90		18.60			—
Low		12.64			19.65		15.70		8.77		11.10			—
End of period		15.97			20.01		22.21		22.53		13.26			—
Predecessor Company:
High		—			—		—		—		—			0.87
Low		—			—		—		—		—			0.63
End of period		—			—		—		—		—			0.71

In the Notes to the Consolidated Financial Statements, see Note 2 for information on acquisitions and divestitures. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information related to significant items affecting operating income (loss) for 2006, 2005 and 2004.

63

EX-21

Exhibit 21

CHIQUITA BRANDS INTERNATIONAL, INC.

SUBSIDIARIES

As of February 15, 2007, the major subsidiaries of the company, the jurisdiction in which organized and the percent of voting securities owned by the immediate parent corporation were as follows:

	Organized Under Laws of	Percent of Voting Securities Owned by Immediate Parent
Chiquita Brands L.L.C.	Delaware	100%
Chiquita Banana Company B.V.	Netherlands	100%
Hameico Fruit Trade GmbH	Germany	100%
Atlanta Aktiengesllschaft	Germany	100%
Atlanta World Trade GmbH	Germany	100%
Josef Ahorner GmbH	Austria	100%
Chiquita Italia, S.p.A.	Italy	100%
Chiquita Compagnie des Bananes	France	100%
Chiquita Fresh North America L.L.C.	Delaware	100%
CB Containers, Inc.	Delaware	100%
Chiquita International Trading Company	Delaware	100%
Chiquita Far East Holdings B.V.	Netherlands	100%
Chiquita International Limited	Bermuda	100%
Bocas Fruit Co. L.L.C.	Delaware	100%
Exportadora Chiquita Chile Limitada	Chile	100%
Servicios Chiquita Chile Limitada	Chile	100%
Compania Bananera Atlantica Limitada	Costa Rica	100%
Compania Bananera Guatemalteca Independiente, S.A.	Guatemala	100%
Great White Fleet Ltd.	Bermuda	100%
BVS Ltd.	Bermuda	100%
CDV Ltd.	Bermuda	100%
CDY Ltd.	Bermuda	100%
CRH Shipping Ltd.	Bermuda	100%
Danop Ltd.	Bermuda	100%
GPH Ltd.	Bermuda	100%
Great White Fleet (US) Ltd.	Bermuda	100%
GWF Management Services Ltd.	Bermuda	100%
Tela Railroad Company Ltd.	Bermuda	100%
Chiriqui Land Company	Delaware	100%
Compania Agricola del Guayas	Delaware	100%
Compania Mundimar, S.A.	Costa Rica	100%
Fresh International Corp.	Delaware	100%
Fresh Express Incorporated	Delaware	100%

The names of approximately 150 subsidiaries have been omitted. In the aggregate these subsidiaries, after excluding approximately 110 foreign subsidiaries whose immediate parents are listed above and that are involved in fresh foods operations, do not constitute a significant subsidiary. The consolidated financial statements include the accounts of CBII, controlled majority-owned subsidiaries and any entities that are not controlled but require consolidation in accordance with FASB Interpretation No. 46, “Consolidation of Variable Interest Entities—an interpretation of ARB No. 51.”

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report on Form 10-K of Chiquita Brands International, Inc. (the company) of our reports dated March 7, 2007, with respect to the consolidated financial statements of the company, the company management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of the company, included in the 2006 Annual Report to Shareholders of Chiquita Brands International, Inc.

Our audits also included the financial statement schedules of Chiquita Brands International, Inc. listed in Item 15(a). These schedules are the responsibility of the company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We consent to the incorporation by reference in the following Registration Statements and related prospectuses of Chiquita Brands International, Inc. of our reports dated March 7, 2007 with respect to the consolidated financial statements of the company, the company management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of the company, included in the 2006 Annual Report to Shareholders of Chiquita Brands International, Inc., and our report included in the preceding paragraph with respect to the financial statement schedules of the company included in this Annual Report on Form 10-K of Chiquita Brands International, Inc.

Form	Registration No.	Description
S-8	333-135522	Stock and Incentive Plan
S-8	333-115675	Chiquita Savings and Investment Plan
S-8	333-115673	Aguirre Individual Plan
S-8	333-115671	Employee Stock Purchase Plan
S-8	333-88514	2002 Stock Option and Incentive Plan
S-3	333-123181	Debt Securities, Preferred Stock, Common Stock, Stock Purchase Contracts, Stock Purchase Units

Cincinnati, Ohio

March 7, 2007

EX-24

Exhibit 24

POWER OF ATTORNEY

We, the undersigned officers and directors of Chiquita Brands International, Inc. (the company), hereby severally constitute and appoint Brian W. Kocher and James E. Thompson, and each of them singly, our true and lawful attorneys and agents with full power to them and each of them to do any and all acts and things in connection with the preparation and filing of the company’s Annual Report on Form 10-K for the year ended December 31, 2006 (the Report) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission thereunder including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name of the company and the names of the undersigned directors and officers in the capacities indicated below the Report, any and all amendments and supplements thereto and any and all other instruments and documents which said attorneys and agents or any of them may deem necessary or advisable in connection therewith.

Signature	Title	Date
/s/ Fernando Aguirre	Chairman of the Board, President and	February 22, 2007
Fernando Aguirre	Chief Executive Officer
/s/ Morten Arntzen	Director	February 19, 2007
Morten Arntzen
/s/ Robert W. Fisher	Director	February 19, 2007
Robert W. Fisher
/s/ Dr. Clare M. Hasler	Director	February 19, 2007
Dr. Clare M. Hasler

/s/ Roderick M. Hills	Director	February 19, 2007
Roderick M. Hills
/s/ Durk I. Jager	Director	February 20, 2007
Durk I. Jager
/s/ Jaime Serra	Director	February 23, 2007
Jaime Serra
/s/ Steven P. Stanbrook	Director	February 19, 2007
Steven P. Stanbrook

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Fernando Aguirre, certify that:

1. I have reviewed this annual report on Form 10-K of Chiquita Brands International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2007	/s/ Fernando Aguirre
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Jeffrey M. Zalla, certify that:

1. I have reviewed this annual report on Form 10-K of Chiquita Brands International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2007	/s/ Jeffrey M. Zalla
	Title:	Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Chiquita Brands International, Inc. (the “company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the year ended December 31, 2006 of the company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the company.

Dated: March 7, 2007
	/s/ Fernando Aguirre
	Name:	Fernando Aguirre
	Title:	Chief Executive Officer
Dated: March 7, 2007
	/s/ Jeffrey M. Zalla
	Name:	Jeffrey M. Zalla
	Title:	Chief Financial Officer