Specialty Foods Group Income Fund Announces Financial Results for the Second Quarter of 2008



    TORONTO, Aug. 26 /CNW/ - Specialty Foods Group Income Fund (the "Fund")
(NEX: HAM.UN.H) today announced financial results for the quarter ended
June 28, 2008. The Fund indirectly holds an interest in Specialty Foods Group,
Inc. ("SFG" or the "Company").
    EBITDA from Continuing Operations for the second quarter of 2008 was
$4.9 million compared with $5.5 million in the second quarter of 2007.
    Operating income from Continuing Operations for the second quarter of
2008 was $2.7 million compared with $3.0 million for second quarter of 2007.
Net sales for the quarter were $71.1 million compared with $71.3 million in
the second quarter of 2007. Sales volume decreased by 0.8 million pounds in
the same period. This decline was due primarily to a reduction in private
label business, which was partially offset by higher net sales and volume in
other product lines. Average selling price increased by $0.03 per pound.
However, cost of goods sold increased by $0.02 per pound, and selling,
general, and administrative expenses increased by $0.02 per pound. Operating
income decreased from $0.08 per pound for the second quarter of 2007 to
$0.07 per pound for the second quarter of 2008.
    Nathans and SMG have reached an agreement regarding SMG's Motion for
Preliminary Injunction filed on March 26, 2008 asking the Court to order
Nathan's not to terminate the Agreement until after a trial on the merits.
After several months of negotiation, Nathan's agreed not to terminate the
Agreement until a date within six months after a trial on the merits and any
appeal period has run. The parties filed, and the Court entered, a stipulation
formalizing this agreement, which prevented Nathan's termination from taking
effect on July 31, 2008. By the parties' agreement and Order of the Court, the
Agreement remains in effect. We continue to abide by the existing contract
with Nathan's Famous Systems Inc. ("NFSI") and are taking the appropriate
steps to protect our rights within this agreement.
    A recap of the selected financial and operating information follows.

    
    Selected Financial Data

    Results of Operations for the Quarter Ended June 28, 2008 and June 30,
    2007.
                                             Quarter Ended     Quarter Ended
    (in thousands of U.S. dollars)           June 28, 2008     June 30, 2007
    -------------------------------------------------------------------------
    Net Sales                                $      71,095     $      71,266
    Cost of Goods Sold                              58,454            58,854
    -------------------------------------------------------------------------
      Gross Profit                                  12,641            12,412
    Selling, General and Administrative
     Expenses                                        7,695             6,957
    Amortization                                     1,172             1,167
    Restructuring                                    1,034             1,291
    -------------------------------------------------------------------------
      Operating Income                               2,740             2,997
    Loss on Sale of Fixed Assets                         -                 -
    Gain/(Loss) on Foreign Currency
     Translation & Transactions                       (614)           (7,131)
    Amortization of Deferred Financing
     Fees and Debt Discount                           (731)             (743)
    Interest Expense                                (3,528)           (3,434)
    -------------------------------------------------------------------------
      Income/(Loss) from Continuing
       Operations before Income Taxes               (2,133)           (8,311)
    Income Taxes                                        18                 -
    -------------------------------------------------------------------------
      Income/(Loss) from Continuing
       Operations before Non-Controlling
       Interest                                     (2,151)           (8,311)
    Non-Controlling Interest in Continuing
     Operations                                        (91)             (830)
    -------------------------------------------------------------------------
    Income/(Loss) from Continuing
     Operations                              $      (2,060)    $      (7,481)
      Income from Discontinued Operations
       before Non-Controlling Interest                 (79)            1,180
    Non-Controlling Interest in Discontinued
     Operations                                        (21)              447
    -------------------------------------------------------------------------
    Income from Discontinued Operations      $         (58)    $         733
    -------------------------------------------------------------------------
      Net Income/(Loss)                      $      (2,118)    $      (6,748)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Calculation of EBITDA from Continuing
    -------------------------------------
     Operations:
     ----------
    Net Income/(Loss) from Continuing
     Operations                              $       (2,060)   $      (7,481)
    Non-Controlling Interest in Continuing
     Operations                                         (91)            (830)
    Amortization                                      1,172            1,167
    Loss on Sale of Fixed Assets                          -                -
    (Gain)/Loss on Foreign Currency
     Translation & Transactions                         614            7,131
    Restructuring                                     1,034            1,291
    Amortization of Deferred Financing Fees
     and Debt Discount                                  731              743
    Income Taxes                                         18                -
    Interest Expense                                  3,528            3,434
    -------------------------------------------------------------------------
    EBITDA from Continuing Operations
     - U.S. $                                $        4,946    $       5,455
    EBITDA from Continuing Operations
     - Cdn $                                 $        4,997    $       5,991
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The full report for the Fund has been filed with the Canadian securities
regulatory authorities and is available on the internet at the System for
Electronic Document Analysis and Retrieval (SEDAR) website (www.sedar.com) and
may be downloaded from the company's website (www.sfgtrust.com).

    Specialty Foods Group Income Fund is an open-ended, limited purpose trust
established under the laws of the Province of Ontario, which indirectly holds
an interest in SFG. SFG is a leading independent U.S. producer and marketer of
premium branded and private-label processed meat products. SFG sells a wide
variety of products such as franks, hams, bacon, luncheon meats, and
delicatessen meats. These products are sold to a diverse customer base in the
retail (e.g. supermarkets) and foodservice (e.g., restaurants) sectors. SFG
sells products under a number of leading national and regional brands, such as
Nathan's, Field, Fischer's, Mickelberry's, and Scott Petersen as well as on a
private-label basis.

    This news release contains forward-looking statements. Such statements
involve known and unknown risks, uncertainties and other factors outside of
management's control. The Fund does not assume responsibility for the accuracy
and completeness of those forward-looking statements and does not undertake
the obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances.

    
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.
    

    %SEDAR: 00018733E




For further information:

For further information: Steve Wright, Chief Financial Officer, Tel:
(757) 952-1200, Email: investorrelations@sfgtrust.com, Website:
www.sfgtrust.com

Organization Profile

SPECIALTY FOODS GROUP INCOME FUND

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