Imperial Sugar Company Announces Third Fiscal Quarter 2008 Results

Sugar Land, Texas - The Imperial Sugar Company today reported a net loss for the third fiscal quarter ended June 30, 2008, of $12.5 million, or $1.07 per share, compared to income from continuing operations of $11.4 million, or $0.95 per share, for the same period last year.

Results for the recent quarter include a pre-tax charge of $5.2 million related to the company’s Port Wentworth refinery explosion and fire that occurred in February, 2008. Last year’s third quarter results include a pre-tax gain of $6.8 million related to the settlement of certain arbitration claims.

Imperial’s board of directors also declared a regular quarterly dividend of $0.07 per share, payable August 22, 2008, to shareholders of record August 12, 2008.

The Company’s performance during the quarter continued to be affected by the reduced sales volumes at the Port Wentworth refinery along with lower prices deriving from overall industry conditions. In addition, higher energy, freight and manufacturing costs contributed to the lower results.

For the third fiscal quarter, net sales were $106.9 million, compared to $216.4 million for the same period last year. Gross margin for the third quarter was a negative 4.7% compared with a positive 9.0% for the prior year quarter. The operating loss for the third quarter ended June 30, 2008, was $21.2 million, which also includes the $5.2 million charge related to the Port Wentworth accident, compared with operating income of $14.3 million for third quarter ended June 30, 2007.

The third quarter Port Wentworth charge includes amounts for property impairment, inventory write-offs, demolition and costs related to the accident totaling $13.9 million, offset by $8.7 million of insurance recoveries recognized under the company’s property insurance coverage.

“As a result of the Port Wentworth incident and depressed industry conditions, we are faced with challenging circumstances that have affected our financial results,” stated John Sheptor, president and CEO of Imperial Sugar. “However, our employees and customers remain committed to supporting Imperial during this time, and we expect our financial resources and insurance coverage will also provide the necessary backstop needed to progress in the coming months.

“The engineering reports that were commissioned last quarter have now been received, and we are encouraged that the majority of the rebuild costs are now confirmed. Principal construction contracts should be signed within the next 30 to 60 days, and we expect this will enable us remain on schedule to begin bulk sugar production later this year and complete restoration of our packaging capabilities by mid-summer of 2009.”

For the nine month period ended June 30, 2008, the Company reported a net loss of $15.8 million, or $1.35 per share, compared with income from continuing operations of $35.8 million, or $3.06 per share, for the same period last year. Included in the recent nine-month period are $17.3 million of pre-tax charges related to the refinery accident and an $11.2 million first quarter gain from a limited partnership investment distribution. Last year’s nine month results include pre-tax gains of $6.8 million related to the settlement of certain arbitration gains and $4.3 million related to commodity exchange seats and asset dispositions. Advances received thus far on property insurance claims total $35 million.

Net sales for the nine month period declined to $467.6 million compared to $656.0 million last year. Gross margin declined to 2.4% compared with 11.8%. Factors affecting year-to-date performance included lower sales volumes due to the Port Worth incident, lower refined sugar pricing, and higher energy and transportation costs somewhat offset by lower domestic raw sugar pricing and lower selling, general and administrative expenses.

IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
		Three Months Ended June 30,								Nine Months Ended June 30,
		2008				2007				2008				2007
Net Sales		$	106,887			$	216,356			$	467,614			$	655,964
Cost of Sales 1			(111,893	)			(196,952	)			(456,208	)			(578,605	)
Gross Margin			(5,006	)			19,404				11,406				77,359
Selling, General and Administrative Expense 2			(11,022	)			(11,820	)			(33,714	)			(39,333	)
Refinery Explosion Related Charges			(5,207	)			-				(17,272	)			-
Gain on Arbitration Settlement			-				6,752			-					6,752
Gain on Commodity Exchange Seats			-				-				-				3,654
Gain on Operating Asset Dispositions			-				-				-				659
Operating Income (Loss)			(21,235	)			14,336				(39,580	)			49,091
Interest Expense			(289	)			(595	)			(1,144	)			(1,538	)
Interest Income			596				1,283				2,240				2,955
Loss on Auction Rate Security			-				-				(388	)			-
Other Income, Net			819				579				13,618				1,498
Income (Loss) From Continuing Operations Before Income Taxes			(20,109	)			15,603				(25,254	)			52,006
(Provision) Credit for Income Taxes			7,593				(4,224	)			9,470				(16,225	)
Income (Loss) from Continuing Operations			(12,516	)			11,379				(15,784	)			35,781
Income (Loss) from Discontinued Operations			-				(3,776	)		-					(3,776	)
Net Income (Loss)		$	(12,516	)		$	7,603			$	(15,784	)		$	32,005
Basic Earnings
Per Share of Common Stock:
Income (Loss) from Continuing Operations		$	(1.07	)		$	0.98			$	(1.35	)		$	3.14
Loss from Discontinued Operations			-				(0.32	)			-				(0.33	)
Net Income (Loss)		$	(1.07	)		$	0.66			$	(1.35	)		$	2.81
Diluted Earnings
Per Share of Common Stock:
Income (Loss) from Continuing Operations		$	(1.07	)		$	0.95			$	(1.35	)		$	3.06
Loss from Discontinued Operations			-				(0.31	)			-				(0.32	)
Net Income (Loss)		$	(1.07	)		$	0.64			$	(1.35	)		$	2.74
1 includes depreciation of $2,822,000 and $2,845,000 for the three months and $8,598,000 and $8,406,000 for the nine months ended June 30, 2008 and 2007, respectively
2 includes depreciation of $725,000 and $652,000 for the three months and $2,157,000 and $2,013,000 for the nine months ended June 30, 2008 and 2007, respectively

IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(Unaudited)
		June 30,			September 30,
		2008			2007
Cash and Temporary Investments		$	73,491		$	74,229
Marketable Securities			311			20,693
Accounts Receivable, Net			28,311			49,409
Inventory			80,930			100,120
Income Tax Receivable			12,581			-
Other Current Assets			4,604			7,342
Current Assets			200,228			251,793
Property, Plant & Equipment, Net			74,428			88,649
Deferred Income Taxes, Net			13,756			13,226
Other Assets			15,242			6,397
Total		$	303,654		$	360,065
Accounts Payable, Trade		$	44,364		$	69,057
Other Current Liabilities			28,719			20,991
Current Liabilities			73,083			90,048
Long-Term Debt			-			1,500
Other Liabilities			71,462			68,426
Shareholders' Equity			159,109			200,091
Total		$	303,654		$	360,065
Shares of Common Stock Outstanding			11,903,075			11,808,743