Imperial Sugar Company Announces Third Fiscal Quarter 2008 Results and Declares Quarterly Dividend

SUGAR LAND, Texas--(BUSINESS WIRE)--The Imperial Sugar Company (NASDAQ:IPSU) 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.

“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.”

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.

Conference Call Details

The Company will conduct a conference call today at 8:00 a.m. CDT (9:00 a.m. EDT). Imperial Sugar’s President and CEO John Sheptor and Senior Vice President and CFO Hal Mechler will discuss the company’s operating results for its fiscal third quarter ended June 30, 2008, its current financial position and its business strategies.

Participants wishing to listen and participate in a brief question-and-answer session can dial 1-800-510-0146 and enter the Participant Passcode: 86114472. The conference call can also be accessed via live audio webcast by visiting Imperial Sugar’s investor relations Web site at http://www.imperialsugarcompany.com/fw/main/home-771.html and clicking on the “Q3 2008 Imperial Sugar Earnings Conference Call” icon under “Investor Relations.” For those who are unable to listen to the call during its live broadcast, a replay of the entire presentation will be available on the company’s web site beginning one hour following the conclusion of the call.

In addition to the webcast replay, a telephone replay will also be available beginning one hour following the conclusion of the call that can be accessed by dialing 1-888-286-8010 and entering the Passcode: 75547075. Both replays will be available through August 29, 2008.

Participants planning to listen to the call via the Internet may need to download Windows Media Player®, to hear the call if this feature has not been previously installed on their computers.

About Imperial

Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and foodservice distributors. The Company markets products nationally under the Imperial®, Dixie Crystals® and Holly® brands. For more information about Imperial Sugar, visit www.imperialsugar.com.

Statements regarding future market prices and margins, future Port Wentworth construction costs, timelines and operational restart dates, future expenses and liabilities arising from the Port Wentworth refinery incident, future insurance recoveries, future import and export levels, future government and legislative action, future operating results, future availability of raw sugar, operating efficiencies, future investments and initiatives, future cost savings, future product innovations, future energy costs, our liquidity and ability to finance our operations and capital investment programs, future pension plan contributions and other statements that are not historical facts contained in this release are forward-looking statements that involve certain risks, uncertainties and assumptions. These include, but are not limited to, results of damaged equipment inspections, unforeseen engineering and equipment delays, results of insurance negotiations, market factors, farm and trade policy, our ability to realize planned cost savings and other improvements, the available supply of sugar, energy costs, the effect of weather and economic conditions, results of actuarial assumptions, actual or threatened acts of terrorism or armed hostilities, legislative, administrative and judicial actions and other factors detailed in the Company’s Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

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