Sugar Land, Texas, Dec. 15, 2008 - The Imperial Sugar Company today reported a loss from continuing operations for the fiscal fourth quarter ended Sept. 30, 2008 of $5.4 million, or $0.46 per share, compared to income from continuing operations of $7.8 million, or $0.65 per share, for the same period last year.
The recent quarter also includes a pre-tax charge of $10.0 million related to the company's Port Wentworth refinery accident that occurred in February, 2008. Last year's fourth quarter included a $1.4 million pre-tax gain from operating asset dispositions.
Net sales and gross margin for the fiscal fourth quarter declined to $124.8 million and a negative 3.9%, compared to $219.6 million and a positive 7.4%, respectively, for the same period last year. Loss of production capability due to the Port Wentworth incident, and higher freight, manufacturing and energy costs were the primary reasons for the lower overall results, slightly offset by higher domestic and world refined sugar prices and lower selling, general and administrative expenses.
"We are encouraged by recent improvements in sugar prices as we enter the new year," stated John Sheptor, president and CEO of Imperial Sugar. "Our liquidity, lack of debt and capital resource position strengthens our ability to effectively manage our business through industry cycles. And while fiscal 2008 was a challenging period due to unforeseen events, we expect that our Port Wentworth rebuild and refocus on various business initiatives will bring improved future results."
"When completed, our state-of-the-art Port Wentworth packaging facility will operate more efficiently and reliably while offering enhanced product quality and service. We are very excited about the opportunities provided by our increased investment in Wholesome Sweeteners, as that company continues to achieve growth in sales and profits and the successful first year of operations of our Mexican joint venture, Comercializadora Santos Imperial ("CSI"). Negotiations with the Louisiana sugar growers and millers cooperative and Cargill continue to make progress toward a definitive agreement premised on the construction of a new one million ton refinery on the Gramercy site. The new refinery would be built and operated by LSR, a 3-way joint venture including Imperial."
The Company's Port Wentworth rebuild continues to progress with current construction estimates between $200 and $220 million. Demolition has been completed and groundbreaking for the new packaging facility was celebrated in November. Limited production of liquid sugar and some specialty sugars began in the fall. We expect to begin producing bulk granulated sugar in early 2009, and complete restoration of packaging facilities capabilities in the fall of 2009.
Fiscal Year Ended Sept. 30, 2008
Summary results for the Company include a net loss from continuing operations of $21.2 million, or $1.81 per share, compared to income from continuing operations of $43.6 million, or $3.71 per share, for the same period last year. Included in the recent twelve-month period are $27.2 million of net pre-tax charges related to the refinery incident and an $11.2 million first quarter gain from a limited partnership investment. Last year's fiscal 2007 results included pre-tax gains of $12.5 million from an arbitration settlement, a gain on its commodity exchange seats and asset dispositions.
Port Wentworth charges include amounts for property impairment, inventory write-offs, demolition and costs related to the accident totaling $63.3 million, offset by $36.1 million of insurance recoveries recognized under the company's property insurance coverage.
Net sales for fiscal 2008 declined to $592.4 million compared to $875.6 million last year while gross margin declined to 1.1% from 10.7%. Factors affecting overall performance included lower sales volumes due to the Port Worth incident, lower refined sugar pricing during the first two quarters, 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 September 30, Year Ended June 30,
2008 2007 2008 2007
Net Sales $ 124,809 $ 219,563 $ 592,423 $ 875,527
Cost of Sales 1 (129,711 ) (203,385 ) (585,919 ) (781,990 )
Gross Margin (4,902 ) 16,178 6,504 93,537
Selling, General
and Administrative (11,716 ) (12,973 ) (45,430 ) (52,306 )
Expense 2
Refinery Explosion (9,955 ) - (27,227 ) -
Related Charges
Gain on Arbitration - - 6,752
Settlement
Gain on Commodity - - - 3,654
Exchange Seats
Gain on Operating - 1,446 - 2,105
Asset Dispositions
Operating Income (26,573 ) 4,651 (66,153 ) 53,742
(Loss)
Interest Expense (523 ) (311 ) (1,667 ) (1,849 )
Interest Income 422 996 2,662 3,951
Other Income, Net 125 (34 ) 13,355 1,464
Income (Loss) From
Continuing
Operations
Before Income Taxes (26,549 ) 5,302 (51,803 ) 57,308
(Provision) Credit 21,152 2,472 30,622 (13,753 )
for Income Taxes
Income (Loss) from
Continuing (5,397 ) 7,774 (21,181 ) 43,555
Operations
Income (Loss) from
Discontinued 260 460 260 (3,316 )
Operations
Net Income (Loss) $ (5,137 ) $ 8,234 $ (20,921 ) $ 40,239
Basic Earnings
Per Share of Common
Stock:
Income (Loss) from
Continuing $ (0.46 ) $ 0.67 $ (1.81 ) $ 3.81
Operations
Loss from
Discontinued 0.02 0.04 0.02 (0.29 )
Operations
Net Income (Loss) $ (0.44 ) $ 0.71 $ (1.79 ) $ 3.52
Diluted Earnings
Per Share of Common
Stock:
Income (Loss) from
Continuing $ (0.46 ) $ 0.65 $ (1.81 ) $ 3.71
Operations
Loss from
Discontinued 0.02 0.04 0.02 (0.28 )
Operations
Net Income (Loss) $ (0.44 ) $ 0.69 $ (1.79 ) $ 3.43
1 includes depreciation of $2,461,000 and $3,011,000 for the three months and
$11,059,000 and $11,417,000 for the year ended September 30, 2008 and 2007,
respectively
2 includes depreciation of $714,000 and $697,000 for the three months and
$2,871,000 and $2,710,000 for the year ended September 30, 2008 and 2007,
respectively
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(Unaudited)
September 30, September 30,
2008 2007
Cash and Temporary Investments $ 74,723 $ 74,229
Marketable Securities 7,425 20,693
Accounts Receivable, Net 28,464 49,409
Inventory 99,948 100,120
Income Tax Receivable 12,704 -
Other Current Assets 11,711 7,342
Current Assets 234,975 251,793
Property, Plant & Equipment, Net 78,185 88,649
Deferred Income Taxes, Net 34,062 13,226
Other Assets 11,543 6,397
Total $ 358,765 $ 360,065
Accounts Payable, Trade $ 48,079 $ 69,057
Other Current Liabilities 24,278 20,991
Insurance Advances, Net 63,879 -
Current Liabilities 136,236 90,048
Long-Term Debt - 1,500
Other Liabilities 78,459 68,426
Shareholders' Equity 144,070 200,091
Total $ 358,765 $ 360,065
Shares of Common Stock Outstanding 11,964,927 11,808,743