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SUGAR LAND, Texas--(BUSINESS WIRE)--Aug. 1, 2000--Imperial Sugar
Company (AMEX:IHK - news) today announced results for the fiscal
2000 third quarter ended June 30, 2000.
Net sales for the third quarter were $466.3 million, compared
with net sales of $500.0 million for the year-ago period. The
Company reported a net loss of $6.5 million for the quarter, or
$(0.20) per diluted share, compared to net income of $6.7 million,
or $0.21 per diluted share, for the same period last year.
Net sales in the Company's sugar segment decreased year over
year, primarily as a result of lower sales prices for refined sugar.
Third quarter 2000 net sales in the sugar segment included $31.2
million for the tender of refined sugar to the government under a
U.S. Department of Agriculture program. Foodservice net sales
declined primarily as a result of lower sales prices received for
refined sugar sold in foodservice markets.
Gross margin in the recent quarter decreased to $38.5 million, or
8.3% of net sales, from $58.6 million, or 11.7% of net sales,
reported in the same period a year ago. The decrease was primarily
attributable to significantly lower sales prices for refined sugar
in both the sugar and foodservice segments, which more than offset
benefits from lower raw sugar costs during the fiscal 2000 third
quarter. In addition, gross margin was negatively impacted by the
tender of refined sugar to the government, which was sold at a loss
of $2.4 million.
Selling, General & Administrative (SG&A) expenses in the
third quarter of 2000 were $18.1 million, compared with $21.5
million in the same period last year. SG&A expenses were lower
this year by approximately $5.0 million, excluding the $1.6 million
of expense in this year's quarterly results related to the Company's
accounts receivable securitization program. The savings arose
principally from reduced sales-related, administrative and
promotional costs in the sugar segment, lower fixed and other
overhead costs in the foodservice segment resulting from previously
announced plant closures and from other expense reductions achieved
across the Company's operations.
For the fiscal 2000 nine-month period, the Company reported net
sales of $1.4 billion, approximating those recorded in the first
nine months of fiscal 1999. Net income for the nine months ended
June 30, 2000 was $2.4 million, or $0.08 per diluted share, versus a
net loss of $9.5 million, or $(0.30) per diluted share, in the
year-ago period. Excluding a gain of $23.3 million after tax, or
$0.72 per diluted share, related to the sales of the Company's
marketable securities portfolio, the Company would have reported a
net loss of $20.9 million, or $(0.65) per diluted share, in the
fiscal 2000 nine-month period. Excluding a non-recurring, non-cash
charge of $10.9 million after tax, or $(0.34) per diluted share, to
write off its investment in a limited partnership, and a gain on
sales of securities of $3.0 million after tax, or $0.10 per diluted
share, the Company would have reported a net loss of $1.7 million,
or $(0.05) per diluted share, in the fiscal 1999 nine-month period.
Gross margin in the first nine months of fiscal 2000 was $119.3
million compared to $144.4 million in the comparable period of
fiscal 1999. SG&A expenses in the first nine months of fiscal
2000 were $57.3 million, excluding costs of $4.8 million incurred
this year in respect of the Company's accounts receivable
securitization program, versus $60.2 million in the same period last
year. Operating income for the nine months ended June 30, 2000, was
$15.8 million compared to $45.2 million last year.
The Company indicated that it was in compliance with all
covenants under its credit agreements at June 30, 2000. Certain
financial and other covenants become more restrictive beginning with
the quarter ending September 30, 2000. Absent substantial
improvement in the domestic sugar market in the fourth quarter that
would significantly improve operating results, the Company may need
to seek relief from certain covenants for the quarter ending
September 30, 2000. In that case, the Company will work with its
lenders to reach a solution that is in the collective best interests
of all parties.
Mark Q. Huggins, Chief Financial Officer, commented, ``The
Company continues to focus on improving liquidity, including the
reduction of working capital needs. Our liquidity position improved
in the third quarter as seasonal sales of sugar outpaced production,
which is expected to continue through the fourth quarter. Proceeds
received from the tender of sugar to the government contributed to
an improvement in liquidity. Our intended participation in the
fiscal fourth quarter in permitted forfeitures of sugar under loan
with the Commodity Credit Corporation (''CCC``) would further reduce
our working capital needs.''
Mr. Huggins went on to state, ``We have engaged Wasserstein
Perella & Co. to provide the Company with restructuring and
recapitalization advice. As previously announced, Credit Suisse
First Boston will continue to work with us in raising equity
capital.''
Commenting on the domestic sugar industry, James C. Kempner,
Chief Executive Officer, stated, ``This industry has not seen the
disarray and uncertainty which confronts it today in the memory of
any of our senior executives, several of whom have been in the
business over 30 years. In the space of months, bulk refined sugar
prices as reported in trade publications have plummeted from $27 per
hundredweight to $20 and under. The decline in the same period of
raw cane sugar prices, although substantial enough to cause distress
in the raw cane sector of the industry, has been significantly less
than the decline in the refined sugar price, resulting in a
financially debilitating squeeze in the operating margins of
independent cane sugar refiners such as Imperial.''
Mr. Kempner went on to state, ``The principal cause of the
industry distress is oversupply in turn caused by aggressive
expansion in production through acreage additions, chiefly in the
beet sugar sector, far in excess of the normal rate of increase in
demand for refined sugar, compounded by unusually good growing
conditions. Responding to over capacity in our industry, we have
taken actions to reduce Imperial's production capacity, first by
ceasing to process sugarbeets later this year at our two northern
California sugarbeet factories, which will remove 5.0 million
hundredweights of capacity from the market, and secondly by
discontinuing the refining operation in our Clewiston, Florida
plant, which will remove 4.0 million hundredweights, when
accomplished. As a result of these actions, we expect to take a
charge in fiscal fourth quarter 2000 of approximately $25.0 million,
of which approximately $13.0 million is related to impairment
costs.''
Mr. Kempner continued, ``We believe that it's important that
domestic supply and demand be in balance. Between now and September
30, we plan to forfeit the sugar we have under loan with the CCC in
lieu of repaying those loans, because the price at which we can
forfeit substantially exceeds the price achievable in the market
today. There is enough of both refined and raw cane sugar under loan
in the industry as a whole that if a substantial portion is
forfeited to the CCC, and if the government acts responsibly by
holding the forfeited and previously tendered sugar off the market
until more balanced conditions are achieved, some measure of balance
could be achieved in the short term.''
Concluding his remarks, Mr. Kempner stated, ``We are not standing
by waiting for a turnaround in the industry. Although we, like most
companies, are having to deal with higher energy, packaging and
benefit costs, we have taken and continue to take major steps to
reduce our operating and administrative costs. Beginning in July, we
instituted the $15 million cost-reduction program that we have
previously announced. Additionally, we have instituted new
procurement procedures using third-party procurement groups which
have the potential of reducing our procurement costs in excess of
$10 million annually beginning in fiscal 2001. We are engaging
consultants to examine our supply chain operations and working
capital reduction programs to see if we can further enhance our
efficiency and cost savings in those areas. The approximately 1,800
acres of real estate surrounding the facilities located in the
Sacramento and the San Francisco Bay areas that we will be selling
should generate proceeds in excess of $30 million according to
independent appraisals. The closing of the refinery portion of our
plant in Clewiston is expected to give rise to significant cost
efficiencies by concentrating our production in the southeastern
United States in our large refinery in Savannah, Georgia. In
summary, we are adjusting our Company to industry realities, while
attempting to utilize our operating assets in the most efficient
manner possible. Our most valuable asset, our extraordinarily
capable employee group, will continue to make the difference.''
Imperial Sugar Company is the largest processor and marketer of
refined sugar in the United States and a major distributor to the
foodservice market. The Company markets its products nationally
under the Imperial(TM), Dixie Crystals(TM), Spreckels(TM),
Pioneer(TM), Holly(TM), Diamond Crystal(TM) and Wholesome
Sweeteners(TM) brands. Additional information about Imperial Sugar
may be found on its web site at www.imperialsugar.com.
Statements regarding future market prices, operating results,
synergies, sugarbeet acreage, future operating efficiencies, cost
savings and other statements which 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, market factors, the effect of weather and
economic conditions, farm and trade policy, the ability of the
Company to realize planned cost savings, the available supply of
sugar, available quantity and quality of sugarbeets 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
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- ----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------Net Sales $ 466,313 $ 499,977 $1,364,077 $1,400,735
Cost of Sales 427,820 441,421 1,244,768 1,256,298
---------- ---------- ---------- ----------
Gross Margin 38,493 58,556 119,309 144,437Selling, General &
Administrative 18,111 21,480 62,115 60,177
Depreciation &
Amortization 13,711 14,017 41,378 39,077
---------- ---------- ---------- ----------
Operating Income 6,671 23,059 15,816 45,183Interest Expense (15,087) (14,532) (43,502) (44,999)
Securities Gains -- 2,379 35,874 4,671
Loss on Equity
Investment in
Partnership -- -- -- (16,706)
Other Income
(Expense) - Net (11) 1,306 807 2,120
---------- ---------- ---------- ----------
Income (Loss) Before
Income Tax (8,427) 12,212 8,995 (9,731)
Income Tax Expense
(Benefit) (1,962) 5,558 6,569 (191)
---------- ---------- ---------- ----------Net Income (Loss) $ (6,465) $ 6,654 $ 2,426 $ (9,540)
---------- ---------- ---------- ----------Earnings (Loss) Per Share
of Common Stock:
Basic $ (0.20) $ 0.21 $ 0.08 $ (0.30)
========== ========== ========== ==========
Diluted $ (0.20) $ 0.21 $ 0.08 $ (0.30)
========== ========== ========== ==========Weighted Average Shares
Outstanding 32,329 32,190 32,271 31,548
========== ========== ========== ==========Note: Includes the results of Diamond Crystal from November 2, 1998.
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
June 30, September 30, June 30,
------- ------------ -------
2000 1999 1999
---- ---- ----Current Assets $ 381,156 $ 440,404 $ 452,731
Plant, Property & Equipment
- net 379,579 402,364 412,241
Goodwill and other Intangibles
- net 398,544 406,627 397,208
Other Assets 31,357 31,388 37,230
----------- ----------- -----------
Total $ 1,190,636 $ 1,280,783 $ 1,299,410
=========== =========== ===========Current Liabilities $ 207,566 $ 238,315 $ 244,789
Long-term Debt 516,137 553,577 546,813
Other 111,287 115,467 121,962
Shareholders' Equity 355,646 373,424 385,846
----------- ----------- -----------
Total $ 1,190,636 $ 1,280,783 $ 1,299,410
=========== =========== ===========
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Contact:
Imperial Sugar Company, Sugar Land
Mark Q. Huggins, 281/490-9587
Managing Director and Chief Financial Officer
or
Investor Relations:
Morgen-Walke Associates, New York
Gordon McCoun, Eric Boyriven
Media Contact: Jennifer Kirksey
212/850-5600 |