Rogers Sugar Income Fund
TSX : RSI.UN

Rogers Sugar Income Fund

July 29, 2009 16:01 ET

Rogers Sugar Income Fund: Interim Report for the 3rd Quarter 2009 Results

MONTREAL, QUEBEC--(Marketwire - July 29, 2009) - Rogers Sugar Income Fund (TSX:RSI.UN)

ADJUSTED EBIT OF $16.5 MILLION FOR THE QUARTER, $3.8 MILLION HIGHER THAN
THE 2008 COMPARABLE QUARTER.

ADJUSTED GROSS MARGIN OF $146.96 PER METRIC TONNE FOR THE QUARTER, HIGHER BY ALMOST $26.00 PER METRIC TONNE FROM LAST YEAR'S COMPARABLE QUARTER.


Message to Unitholders: On behalf of the Board of Trustees, I am pleased to present the unaudited consolidated financial results of Rogers Sugar Income Fund (the "Fund") for the three months ended June 30, 2009.

Volume for the third quarter was 167,612 metric tonnes, as opposed to 176,062 metric tonnes in the comparable quarter of last year, a decrease of approximately 8,500 metric tonnes. Year-to-date volume of 513,044 metric tonnes is approximately 10,400 metric tonnes above last year. The decrease in the quarter is due mainly to lower liquid and export volume, partially offset by an increase in industrial volume. Liquid volume decreased by approximately 6,800 metric tonnes for the quarter, as one major HFCS substitutable account was lost earlier this year. Year-to-date liquid volume is up by 8,900 metric tonnes due to shipments earlier in the year towards HFCS substitutable accounts. For the quarter, industrial volume was up by 1,500 metric tonnes, but down 1,800 metric tonnes year-to-date due mainly to timing in deliveries. Export volume was lower by 3,000 metric tonnes for the quarter, but higher by 10,100 year-to-date. The decrease during the quarter is due to no shipments to Mexico in fiscal 2009, while 6,000 metric tonnes were shipped in the comparable quarter in fiscal 2008. Year-to-date increase of 10,100 metric tonnes is due to shipments against special quotas opened by the United States Department of Agriculture (the "USDA") from August 2008 to December 31, 2008, net of a decrease of 12,000 metric tonnes to Mexico, as Taber's beet sugar was kept for the higher margin export sales against the U.S. Quotas. For the quarter, consumer volume was comparable to the previous year's volume. Year-to-date consumer volume is lower by 6,900 metric tonnes due to competitive market activities.

With the adoption of new accounting policies October 1, 2006 for derivative financial instruments, the Fund's operating results may now be subject to significant fluctuations. These fluctuations are due to the mark-to-market of all derivative financial instruments and embedded derivatives in non-financial instruments at the end of the reporting period. This accounting income does not represent a complete understanding of factors and trends affecting the business. We therefore prepared adjusted gross margin and adjusted earnings results to reflect the performance of the Fund during the reporting period. These adjusted results are comparable to the earnings reported in previous periods. All these non-GAAP adjustments are explained in detail in the Management's Discussion and Analysis prepared for the quarter ended June 30, 2009. In this press release, and future press releases, we will discuss adjusted gross margins, which reflect the operating income without the impact of the mark-to-market of derivative financial instruments and embedded derivatives in non-financial instruments. The Fund enters into long-term natural gas contracts and interest swap agreements to protect itself from the wide fluctuations that may occur in the marketplace, and to ensure adjusted financial results are more stable. At the end of the third quarter, a mark-to-market gain of $6.1 million before income taxes was recorded, thus increasing earnings before income taxes by that amount. Year-to-date, a mark-to-market expense of $19.8 million was recorded before income taxes. Most of this exposure relates to natural gas as a result of the overall decrease in energy prices and to the mark-to-market of the interest swap as a result of movement in interest rates. In addition, these mark-to-market charges are mostly non-cash amounts and have therefore little impact on distributable cash.

For the quarter, adjusted gross margin increased by approximately $3.3 million, when compared to the same quarter of last year. On a per metric tonne basis, adjusted gross margin was $146.96 compared to $121.01 for the comparable quarter of last year. The increase in both the adjusted gross margin and the adjusted gross margin rate is due to a favourable sales mix, with lower volume of low margin liquid sales and a decrease in energy costs from the comparable quarter last year. Year-to-date adjusted gross margin rate was $135.03 compared to $141.37 in fiscal 2008, the decrease due mainly to unfavourable sales mix and lower by-product revenues.

With the adoption of the new accounting policy for inventory, the earnings before interest, income taxes, and depreciation and amortization ("EBITDA") is no longer representative as most of the depreciation is now charged to cost of sales. As such, we will now be discussing adjusted results on our earnings before interest and income taxes ("EBIT") to be more consistent with prior years' presentation.

Adjusted EBIT of $16.5 million was $3.8 million higher when compared to the same quarter last year, due mainly to higher adjusted gross margin in fiscal 2009. Year-to-date EBIT is lower by $4.1 million from last year due mainly to higher distribution costs related to export sales to the U.S. and transfers of refined sugar from Vancouver to Taber, and to lower by-product revenues in Taber due to the small crop.

For the quarter, adjusted distributable cash was $15.0 million, as compared to $11.0 million in fiscal 2008. The increase was due to the higher profitability at the operational level. During the third quarter, the Fund distributed $10.0 million, for a total of $30.2 million year-to-date.

The price of #11 world raw sugar has been steadily increasing over the last few months, due mainly to a shortage in world sugar production versus world consumption for this year. A higher price of raw sugar benefits the Taber operation, but due to low beet crop achieved in 2009, most of this benefit will only be realized in fiscal 2010 with the new beet crop, if such higher prices prevail.


FOR THE BOARD OF TRUSTEES,

(signed)

Edward Y. Baker,

Vancouver, British Columbia - July 29, 2009


MANAGEMENTS' DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited financial statements and notes thereto in this quarterly report. The quarterly consolidated financial statements and any amounts shown in this MD&A were not reviewed or audited by our external auditors.

In analyzing our results, we supplement our use of financial measures that are calculated and presented in accordance with generally accepted accounting principles (GAAP), with a number of non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's historical performance, financial position or cash flow that excludes (includes) amounts, or is subject to adjustments that have the effect of excluding (including) amounts, that are included (excluded) in most directly comparable measures calculated and presented in accordance with GAAP. Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar businesses. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We use these non-GAAP financial measures in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting our business.

In the MD&A, we discuss the non-GAAP financial measures, including the reasons that we believe that these measures provide useful information regarding our financial condition, results of operations, cash flows and financial position, as applicable and, to the extent material, the additional purposes, if any, for which these measures are used. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in the MD&A.

With the adoption of the new accounting policy for inventory, the earnings before interest, income taxes, depreciation and amortization ("EBITDA") is no longer representative as most of the depreciation is now charged to cost of sales. As such, we will now be discussing adjusted results on our earnings before interest and income taxes ("EBIT") to be more consistent with prior years' presentation.

This report contains certain forward-looking statements which reflect the current expectations of the Fund and Lantic Inc., (collectively the "Company") with respect to future events and performance. Wherever used, the words "may," "will," "anticipate," "intend," "expect," "plan," "believe," and similar expressions identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved. Forward-looking statements are based on information available at the time they are made, assumptions made by management, and management's good faith belief with respect to future events, and are subject to the risks and uncertainties outlined in this report that could cause actual performance or results to differ materially from those reflected in the forward-looking statements, historical results or current expectations.

Additional information relating to the Fund and Lantic Inc., including the Annual Information Form, Quarterly and Annual reports and supplementary information is available on SEDAR at www.sedar.com.

This Management's Discussion and Analysis is dated July 29, 2009.

Internal disclosure controls

In accordance with Regulation 52-109 respecting certification of disclosure in issuers' interim filings, the Chief Executive Officer and Chief Financial Officer have designed or caused it to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that (i) information required to be disclosed by the Company in its quarterly filings or other reports filed or submitted by it under applicable securities legislation is recorded, processed, summarized and reported within the prescribed time periods, and (ii) material information regarding the Company is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer in a timely manner.

In addition, the Chief Executive Officer and Chief Financial Officer have designed or caused it to be designed under their supervision internal controls over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. The control framework the Chief Executive Officer and the Chief Financial Officer used to design the Company's ICFR is recognized by the Committee of Sponsoring Organizations of the Treadway Commission.

The Chief Executive Officer and the Chief Financial Officer have evaluated whether or not there were changes to its ICFR during the three-month period ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect the Company's ICFR. No such changes were identified through their evaluation.

Results of operations



-------------------------------------------------------------------------
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For the three For the nine
months ended months ended
Consolidated Results June 30 June 30
-------------------------------------------------------------------------
(In thousands of
dollars, except for
volume and per
trust unit 2009 (i)2008 (ii)2009 (i)2008
information) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Volume (metric
tonnes) 167,612 176,062 513,044 502,614
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Revenues $128,478 $115,686 $388,724 $332,636
Gross margin 28,548 21,961 53,171 76,315
Administration
and selling 5,306 5,599 14,800 14,945
Distribution 2,381 2,499 10,912 8,388
Depreciation and
amortization 414 430 1,237 1,291
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Earnings before
interest and
provision for
income taxes (EBIT) $20,447 $13,433 $26,222 $51,691
Interest, net of
interest income
and other charges 1,084 3,702 13,652 11,151
Provision for
(recovery of)
income taxes 2,411 117 (5,963) 3,149
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Net earnings $16,952 $9,614 $18,533 $37,391
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Net earnings per
trust unit - basic $0.19 $0.11 $0.21 $0.43
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-------------------------------------------------------------------------

(i) Results were restated to reflect the adoption of new inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard adjusted in the 2nd quarter. See Accounting Policies and
Critical Accounting Estimates.


In the normal course of business, the Fund uses derivative financial instruments consisting of sugar futures, foreign exchange forward contracts, natural gas futures and interest rate swaps. The Fund's operating company sells refined sugar to some clients in US dollars. These sales contracts are viewed as having an embedded derivative if the functional currency of the customer is not US dollars, the embedded derivative being the source currency of the transaction, U.S. dollars. Derivative financial instruments and embedded derivatives are marked-to-market at each reporting date, with the unrealized gains/losses charged to the consolidated statement of operations with a corresponding offsetting amount charged to the balance sheet.

Management believes that the Fund's financial results are more meaningful to management, investors, analysts and any other interested parties when financial results are adjusted by the gains/losses from financial derivative instruments and from embedded derivatives for which adjusted financial results provide a more complete understanding of factors and trends affecting our business. This measurement is a non-GAAP measurement.

Management uses the non-GAAP adjusted results of the operating company to measure and evaluate the performance of the business through its adjusted gross margin, adjusted EBIT and adjusted net earnings. In addition, management believes that these measures are important to our investors and parties evaluating our performance and comparing such performances to our past results. Management also uses adjusted gross margin, adjusted EBIT and adjusted net earnings when discussing results with the operating Board of Directors, the Fund's Board of Trustees, analysts, investors, banks and other interested parties.

The results of operations would therefore need to be adjusted by the following:



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For the three For the nine
months ended months ended
Income (loss) June 30 June 30
(In thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Mark-to-market
adjustment
(excluding interest
swap) $2,988 $4,102 $(19,559) $6,676
Timing in
recognition of
liquidation income
(loss) for sugar
inventories, sales
and purchase
contracts, natural
gas futures swaps
and options and
foreign exchange
futures 928 (3,447) 3,453 (1,416)
-------------------------------------------------------------------------
Total adjustment
to cost of sales $3,916 $655 $(16,106) $5,260
-------------------------------------------------------------------------
-------------------------------------------------------------------------


A significant part of the above mark-to-market adjustment relates to natural gas. The Fund has hedged a substantial portion of its natural gas needs for fiscal 2009, as well as for fiscals 2010 to 2013, following the decline in natural gas prices in the last 6 months of calendar 2008. As a result of further continued decline in that commodity, a mark-to-market loss of $12.5 million was recorded on a year-to-date basis. For the quarter, a gain of $8.6 million was recorded for natural gas, as long term rate increased slightly during the quarter from the previous quarter's level. These natural gas contracts will be used in our day to day operations over the next several quarters.

In addition, the Fund recorded a mark-to-market gain of $2.2 million for the quarter, and a loss of $3.7 million year-to-date on the mark-to-market of an interest swap under short-term interest expense, as a result of movement in overall interest rates.

Therefore, the total adjustment to net earnings before income taxes and distributable cash for the quarter was a gain of $6.1 million and a loss of $19.8 million year-to-date.



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-------------------------------------------------------------------------
Adjusted financial information (non-GAAP reconciliation):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three For the nine
months ended months ended
Consolidated Results June 30 June 30
2009 (i)2008 (ii)2009 (i)2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Gross margin as
per financial
statements $28,548 $21,961 $53,171 $76,315
Adjustment as per
above (3,916) (655) 16,106 (5,260)
-------------------------------------------------------------------------
Adjusted gross
margin 24,632 21,306 69,277 71,055
-------------------------------------------------------------------------
EBIT as per
financial
statements 20,447 13,433 26,222 51,691
Adjustment as
per above (3,916) (655) 16,106 (5,260)
-------------------------------------------------------------------------
Adjusted EBIT 16,531 12,778 42,328 46,431
-------------------------------------------------------------------------
Net earnings as
per financial
statements 16,952 9,614 18,533 37,391
Adjustment as
per above (3,916) (655) 16,106 (5,260)
Adjustment for
mark-to-market
of interest swap (2,216) - 3,649 -
Future taxes on
above 1,758 277 (5,627) 1,793
-------------------------------------------------------------------------
Adjusted net
earnings $12,578 $9,236 $32,661 $33,924
-------------------------------------------------------------------------
Net earnings per
trust unit basic,
as per financial
statements $0.19 $0.11 $0.21 $0.43
Adjustment for
the above (0.05) - 0.16 (0.03)
-------------------------------------------------------------------------
Adjusted net
earnings per trust
unit basic $0.14 $0.11 $0.37 $0.40
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(i) Results were restated to reflect the adoption of new inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard adjusted in the 2nd quarter. See Accounting Policies and
Critical Accounting Estimates.


Third quarter volume decreased by approximately 8,500 metric tonnes from the comparable quarter in fiscal 2008. The decrease is due mainly to lower liquid and export volume partially offset by higher industrial volume. Liquid volume decreased by approximately 6,800 metric tonnes due to the loss of a large HFCS substitutable account earlier this year. The decrease in export volume of approximately 3,000 metric tonnes is due to no shipments to Mexico in fiscal 2009, while 6,000 metric tonnes had been shipped in the comparable quarter in fiscal 2008. There were no sales to Mexico in fiscal 2009 as Taber's beet sugar was kept for the higher margin export sales against the U.S. quotas. Industrial volume was higher by 1,500 metric tonnes due mainly to timing in deliveries. Consumer volume during the quarter was comparable to last year.

Year-to-date volume increased by approximately 10,400 metric tonnes due mainly to higher export volume of 10,100 metric tonnes and higher liquid volume of 8,900 metric tonnes, partially offset by lower consumer volume of 6,900 metric tonnes and lower industrial volume of 1,800 metric tonnes for the reasons mentioned above. In August 2008, due to a potential shortage of refined sugar following severe damages to a major U.S. cane refinery, the United States Department of Agriculture ("USDA") announced an increase of 272,155 metric tonnes in its refined sugar quota. Of that amount, 40,000 metric tonnes was allocated specifically to Canada, which can only be supplied by beet sugar from Taber, 68,278 metric tonnes to Mexico, and the remaining 163,877 metric tonnes to a global quota to be filled on a first come first served basis. On October 27, 2008, the USDA announced that the Government of Mexico had informed the USDA that Mexico would continue to export sugar to the U.S. under the duty-free access provided by the North American Free Trade Agreement ("NAFTA") and therefore the portion allocated to Mexico will not be used and was available for re-allocation by the USDA. As a result, the 68,278 metric tonnes which were initially allocated to Mexico were re-allocated by the USDA to a global refined sugar quota to be supplied on a first-come-first-served basis. The USDA reallocated this global quota under five tranches, the first being of 28,278 metric tonnes which opened October 30, 2008, and four other tranches of 10,000 metric tonnes opening every two weeks thereafter, the last one being opened on December 29, 2008. As a result, Lantic was able to enter approximately 34,000 metric tonnes against the Canada Specific and Global quotas by December 31, 2008. This was partially offset with no shipments to Mexico in fiscal 2009 as opposed to 12,000 metric tonnes in fiscal 2008, and timing in deliveries of Canada U.S. Specific quota of 10,300 metric tonnes.

Revenues for the quarter were $12.8 million higher than the previous year's comparable quarter due to the higher price of world raw sugar in fiscal 2009 than in the comparable quarter of fiscal 2008.

As previously mentioned, gross margin of $28.5 million for the quarter does not reflect the economic margin of the Fund, as it includes a gain of $3.9 million for the mark-to-market of derivative financial instruments explained earlier. We will therefore comment on adjusted gross margin results.

For the quarter, adjusted gross margin increased by $3.3 million, when compared to the same quarter of last year. On a per metric tonne basis, adjusted gross margins were $146.96 compared to $121.01 for the comparable quarter of last year. The increase is due mainly to a favourable sales mix with lower margin liquid HFCS substitutable volume and lower energy costs. Year-to-date adjusted gross margin rate is $135.03 compared to $141.37 in fiscal 2008. The decrease is due to unfavourable sales mix due to higher liquid volume and lower consumer volume, combined with lower by-products revenue of approximately $1.8 million due to the lower beet crop in Taber.

Distribution, administration and selling costs were slightly lower than the comparable quarter of fiscal 2008 due to timing. The higher year-to-date distribution cost of $2.5 million is due mainly to the large volume of sugar shipped and entered in the U.S. against the Canada U.S. Specific and Global quotas and to refined sugar shipped from Vancouver to Taber as a result of the lower beet crop and U.S. sales opportunities for Taber beet sugar.

Interest expense for the quarter includes a mark-to-market gain of $2.2 million and a year-to-date mark-to-market loss of $3.7 million applied on the 5-year, $70.0 million interest swap entered into in July 2008. Without this mark-to-market adjustment, interest expense for the quarter was lower by approximately $0.4 million and by $1.1 million year-to-date, as a result of the refinancing of the debt in June 2008, following the merger of Lantic Sugar Limited and Rogers Sugar Ltd., and to lower overall short-term interest rates.

Statement of quarterly results

The following is a summary of selected financial information of the consolidated financial statements and non-GAAP measures of the Fund for the last eight quarters.



-------------------------------------------------------------------------
-------------------------------------------------------------------------
QUARTERS
(In thousands of dollars, 2009
except for volume, (Unaudited)
margin rate and per
trust unit information)
3-Q 2-Q (ii)1-Q
-------------------------------------------------------------------------
Volume (MT) 167,612 159,700 185,732
-------------------------------------------------------------------------
Total revenues 128,478 121,849 138,397
Gross margin 28,548 9,642 14,981
EBIT (loss) 20,447 (116) 5,891
Net earnings 16,952 727 854
Gross margin rate per MT 170.32 60.38 80.66

Per trust unit
Net earnings
Basic 0.19 0.01 0.01
Diluted 0.17 0.01 0.01

Non-GAAP Measures
Adjusted gross margin 24,632 16,298 28,347
Adjusted EBIT 16,531 6,540 19,257
Adjusted net earnings 12,578 5,732 14,351
Adjusted gross margin rate per MT 146.96 102.05 152.62

Adjusted net earnings per
trust unit
Basic 0.14 0.07 0.16
Diluted 0.13 0.07 0.15
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-------------------------------------------------------------------------


--------------------------------------------------------------------------
--------------------------------------------------------------------------
QUARTERS
(In thousands of dollars, 2008 2007
except for volume, (Unaudited) (Unaudited)
margin rate and per
trust unit information) (i)4-Q (i)3-Q (i)2-Q (i)1-Q 4-Q
--------------------------------------------------------------------------
Volume (MT) 190,516 176,062 153,507 173,045 177,382
--------------------------------------------------------------------------
Total revenues 130,472 115,686 101,834 115,116 117,669
Gross margin 19,985 21,961 20,668 33,686 19,542
EBIT (loss) 11,494 13,433 12,044 26,214 8,127
Net earnings 10,743 9,614 9,235 18,542 7,568
Gross margin rate per MT 104.90 124.73 134.64 194.67 110.17

Per trust unit
Net earnings
Basic 0.12 0.11 0.11 0.21 0.09
Diluted 0.11 0.10 0.10 0.18 0.09

Non-GAAP Measures
Adjusted gross margin 26,061 21,306 19,445 30,304 28,408
Adjusted EBIT 17,570 12,778 10,821 22,832 16,993
Adjusted net earnings 15,857 9,236 8,424 16,264 13,591
Adjusted gross margin
rate per MT 136.79 121.01 126.67 175.12 160.15

Adjusted net earnings
per trust unit
Basic 0.18 0.11 0.10 0.19 0.15
Diluted 0.16 0.10 0.09 0.16 0.14
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(i) Results were restated to reflect the adoption of new Inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard. See Accounting Policies and Critical Accounting Estimates.


Historically the first quarter (October to December) of the fiscal year is the best quarter for adjusted gross margins and adjusted net earnings due to the favourable sales mix of products sold. This is due to the increased sales of baked goods during that period of the year. At the same time, the second quarter (January to March) is historically the lowest volume quarter, resulting in lower revenues, adjusted gross margins and adjusted net earnings.

Liquidity

The distributable cash generated by the operating company, Lantic, is paid to the Fund by way of dividends and return of capital on the common shares of Lantic, and by the payment of interest on the subordinated notes of Lantic held by the Fund, after having taken reasonable reserve for capital expenditures and working capital. The cash received by the Fund is used to pay distributions to its Unitholders.

Standardized Distributable Cash, as per the Interpretive Release issued in July 2007 by the Canadian Institute of Chartered Accountants ("CICA") is defined as the GAAP measure of cash from operating activities after adjusting for capital expenditures, restrictions on distributions arising from compliance with financial covenants, restrictive at the time of reporting, and minority interests.



Standardized distributable cash is as follows:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cumulative
amounts
for last
5 fiscal
years,
For the three For the nine ended
months ended months ended September
June 30 June 30 30
--------------------------------------------------------------------------
(In thousands 2009 2008 (ii)2009 2008 (i)2008
of dollars) (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
--------------------------------------------------------------------------
Cash flow from
operating
activities $20,603 $19,802 $30,535 $14,001 $261,976
Capital expenditures
net of sales
proceeds (1,669) (1,607) (4,155) (5,405) (38,791)

Financing restrictions - - - - -
--------------------------------------------------------------------------
Standardized
distributable cash $18,934 $18,195 $26,380 $8,596 $223,185
--------------------------------------------------------------------------
--------------------------------------------------------------------------

(i) Results were restated to reflect the adoption of new Inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard adjusted in the 2nd quarter. See Accounting Policies and
Critical Accounting Estimates.


There were no restrictions on distributions arising from the compliance of financial covenants for the periods shown above.

Cash flow from operations was $20.6 million in the third quarter of 2009, as opposed to $19.8 million in the comparable quarter of fiscal 2008. The major reason for the positive cash flow balance is the increase in net earnings. Year-to-date cash flow from operating activities increased by $16.5 million due mainly to a lesser increase in total inventory when compared to the same period last year.

Total capital expenditures were lower than the previous year, due mainly to timing in projects when compared to fiscal 2008.

Standardized Distributable Cash does not constitute available cash for distribution due mainly to timing factors in the movement of non-cash working capital items, to mark-to-market derivative timing adjustment, to non-cash financial instruments, and to other financing items.

In order to provide additional information that the Fund's administrators believe is appropriate for the determination of levels of cash distribution, the Interpretive Release also allows a measure that includes additional items beyond those included in Standardized Distributable Cash. These additional measures may affect the Fund's distributions and are therefore forming a basis for the actual amount of cash available for distribution. All of these additional measures are separately identified and explained and result in Adjusted Distributable Cash.



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--------------------------------------------------------------------------
Adjusted distributable cash is as follows:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cumulative
amounts
for last
5 fiscal
years,
For the three For the nine ended
months ended months ended September
June 30 June 30 30
--------------------------------------------------------------------------
(In thousands 2009 (i)2008 (ii)2009 (i)2008 (i)2008
of dollars) (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
--------------------------------------------------------------------------
Standardized
distributable cash
as per above $18,934 $18,195 $26,380 $8,596 $223,185
Adjustments:
Changes in non-cash
working capital (127) (7,608) 8,521 28,915 28,479
Mark-to-market and
derivative timing
adjustment (6,132) (655) 19,755 (5,260) $(3,381)
Financial
instruments
non-cash amount 2,336 759 (16,565) 5,796 265
Investment capital
expenditures - 271 39 271 7,637
Net (repurchase)
issuance of
trust units - - (690) 780 (5,430)
Interest expense
on equity portion
of convertible
unsecured debentures - - - - (15,286)
Deferred financing
charges - - - - (8,191)
--------------------------------------------------------------------------
Adjusted distributable
cash $15,011 $10,962 $37,440 $39,098 $227,278
--------------------------------------------------------------------------
Declared
distributions $10,041 $10,111 $30,171 $29,986 $184,845
--------------------------------------------------------------------------
--------------------------------------------------------------------------

(i) Results were restated to reflect the adoption of new Inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard adjusted in the 2nd quarter. See Accounting Policies and
Critical Accounting Estimates.


Adjusted distributable cash was $4.0 million higher than the comparable quarter in fiscal 2008, but $1.7 million lower year-to-date. The increase in the quarter is due to higher operating income during the quarter. On a year-to-date basis, adjusted net earnings are $1.3 million lower, which accounts for most of the unfavourable variance.

Changes in non-cash operating working capital represents quarter-over-quarter movement in current assets such as accounts receivables and inventories, and current liabilities like accounts payable. Movements in these accounts are due mainly to timing in the collection of receivables, receipts of raw sugar and payment of liabilities. Increases or decreases in such accounts do not therefore constitute available cash for distribution. Such increases or decreases are financed from available cash or from the Company's available credit facilities of $200.0 million. Increases or decreases in short-term bank indebtedness are also due to timing issues from the above, and therefore do not constitute available cash for distribution.

Mark-to-market and financial instruments adjustments are due mainly to unrealized gain or loss on financial derivative instruments and are therefore non-cash amounts except for margin calls on net sugar positions and natural gas contracts.

Investment capital expenditures are added back to standardized distributable cash as these capital projects are not necessary for the operation of the plants, but are undertaken due to their substantial operational savings to be realized once these projects are completed.

Earlier in fiscal 2009, some trust units were repurchased and cancelled under the Normal Course Issuer Bid in place, while in fiscal 2008 some trust units were issued as two executives exercised some options under the Stock Option Plan.

Excess cash flow and net income on distributions paid

Cash flow from operating activities includes year-over-year movement in current assets such as inventories and accounts receivable, and current liabilities, like accounts payable. Movements in these accounts are due to, in large part, timing and therefore do not constitute available cash for distribution.

The following table presents excess cash flows from operating activities and net income on distributions paid for the last three years ended September 30, and for the quarters and nine months ended June 30, 2009 and 2008:



-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three For the nine
months ended months ended
June 30 June 30
-------------------------------------------------------------------------
(In thousands 2009 (i)2008 (ii)2009 (i)2008
of dollars) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Cash flow from
operating
activities $20,603 $19,802 $30,535 $14,001
Net earnings 16,952 9,614 18,533 37,391
Distributions paid 10,041 10,111 30,171 29,986
Excess (shortfall)
of cash flows
from operating
activities over
cash distributions
paid 10,562 9,691 364 (15,985)
Excess (shortfall)
of net earnings
over cash
distributions paid $6,911 $(497) $(11,638) $7,405
-------------------------------------------------------------------------
-------------------------------------------------------------------------


-------------------------------------------------------------------------
-------------------------------------------------------------------------
Years ended
September 30
-------------------------------------------------------------------------
(In thousands (i)2008 2007 2006
of dollars) (Audited) (Audited) (Audited)
-------------------------------------------------------------------------
Cash flow from operating
activities $23,372 $88,607 $30,833
Net earnings 48,134 45,127 40,922
Distributions paid 40,082 37,728 35,869
Excess (shortfall) of cash flows
from operating activities over
cash distributions paid (16,710) 50,879 (5,036)
Excess (shortfall) of net earnings
over cash distributions paid $8,052 $7,399 $5,053
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(i) Results were restated to reflect the adoption of new Inventory
standard. See Accounting Policies and Critical Accounting Estimates.
(ii) Results were restated to reflect the adoption of new fair value
standard adjusted in the 2nd quarter. See Accounting Policies and
Critical Accounting Estimates.


The year-to-date shortfall was financed from available cash balances and short-term borrowings. In addition, a year-to-date mark-to-market loss before taxes of $16.6 million was recorded, which explains the shortfall of the net earnings over cash distributions paid. This is a non-cash item.

Contractual obligations

There are no significant changes in the contractual obligations table disclosed in the Management's Discussion and Analysis of the September 30, 2008 Annual Report.

At June 30, 2009, the operating companies had commitments to purchase a total of 1,099,000 metric tonnes of raw sugar, of which only 91,000 metric tonnes had been priced, for a total dollar commitment of $41.6 million.

Capital resources

The current worldwide economic crisis has resulted in disruptions in the availability of credit on commercially acceptable terms. In light of this situation, we have undertaken a thorough review of our liquidity and capital sources, as well as our exposure to counterparties and have concluded that our capital resources are sufficient to meet our ongoing short, medium and long-term commitments. Specifically, we believe that our internally generated cash flow from operations, augmented by our hedging program and existing credit facilities, will provide sufficient liquidity to sustain our operations for the foreseeable future. Further, we believe that our counterparties currently have the financial capacities to honour outstanding obligations to us in the normal course of business.

Lantic has $200.0 million as authorized lines of credit available to finance its operation. At quarter's end, $94.0 million had been drawn from the working capital facility.

Cash requirements for working capital and other capital expenditures are expected to be paid from available credit resources and from funds generated from operations.

Outstanding securities

Year-to-date, the Fund purchased and cancelled 225,100 trust units under its Normal Course Issuer Bid. As at July 29, 2009, there were 87,327,887 trust units outstanding.

Changes in accounting policies and critical accounting estimates

Our accounting policies and critical accounting estimates remain substantially unchanged from those that were disclosed in our Management's Discussion and Analysis of the Annual Report for the year ended September 30, 2008, except for the following:

i) Inventories:

Effective October 1, 2008, the Company implemented, on a retrospective basis with restatement, the new Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3031, Inventories.

The new standard introduced significant changes to the measurement and disclosure of inventories. For the Fund, the measurement changes include:

- The allocation of additional factory overhead to inventory, based on normal capacity;

- The allocation of depreciation of factory buildings and equipment to inventory, which resulted in the related depreciation expenses forming part of cost of sales; and

- The recognition of certain spare parts and stand-by equipment as capital assets rather than inventories.

As a result of the retrospective implementation of this new standard, the impact on previously reported financial information is as follows:



-------------------------------------------------------------------------
-------------------------------------------------------------------------
(In thousands, except per
trust unit amounts or per For the periods ended
metric tonne amounts) June 30, 2008
-------------------------------------------------------------------------
Quarter Year-to-date Quarter Year-to-date
-------------------------------------------------------------------------
Restated Amount Previously Reported

Opening deficit $n/a $307,829 $n/a $309,443
Closing deficit 300,424 300,424 303,050 303,050
Inventories 76,392 76,392 73,017 73,017
Capital assets 196,786 196,786 196,355 196,355
Current future
income taxes asset 230 230 1,409 1,409
Cost of sales 93,725 256,321 89,993 249,509
Gross margin 21,961 76,315 25,693 83,127
Depreciation and
amortization 430 1,291 3,191 9,572
EBIT 13,433 51,691 14,404 50,222
Current income tax
expense - 127 - 6
Future income tax
expense (income) 117 3,022 411 2,686
Net earnings 9,614 37,391 10,291 36,379
Net earnings per
trust unit (basic) 0.11 0.43 0.12 0.41
Adjusted gross margin 21,306 71,055 25,038 77,867
Adjusted EBIT 12,778 46,431 13,749 44,962
Adjusted net earnings 9,236 33,924 9,913 32,912
Adjusted gross
margin rate per
metric tonne 121.01 141.37 142.19 154.92
Adjusted net
earnings per trust
unit (basic) 0.11 0.40 0.11 0.38
-------------------------------------------------------------------------
-------------------------------------------------------------------------


-------------------------------------------------------------------------
-------------------------------------------------------------------------
(In thousands, except per
trust unit amounts or per Year ended
metric tonne amounts) September 30 2008
-------------------------------------------------------------------------
Restated Previously
Amount Reported

Opening deficit $307,829 $309,443
Closing deficit 299,777 301,710
Inventories 70,649 68,679
Capital assets 195,123 194,332
Current future income taxes asset 746 1,574
Cost of sales 366,808 355,998
Gross margin 96,300 107,110
Depreciation and amortization 1,695 12,929
EBIT 63,185 62,761
Current income tax expense - -
Future income tax expense (income) (2,204) (2,309)
Net earnings 48,134 47,815
Net earnings per trust unit (basic) 0.55 0.54
Adjusted gross margin 97,116 107,926
Adjusted EBIT 64,001 63,577
Adjusted net earnings 49,781 49,462
Adjusted gross margin rate per metric tonne 140.11 155.71
Adjusted net earnings per trust unit (basic) 0.57 0.56
-------------------------------------------------------------------------
-------------------------------------------------------------------------


ii) Goodwill and intangible assets:

Effective October 1, 2008, the Fund implemented the new CICA Handbook, Section 3064 "Goodwill and Intangible Assets". This section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The adoption of Section 3064 did not have any impact on the Funds financial statements or results of operations.

iii) Credit risk and the fair value of financial assets and financial liabilities:

On January 20, 2009, the Emerging Issues Committee (EIC) of the Canadian Accounting Standards Board (AcSB) issued EIC Abstract 173, Credit Risk and Fair Value of Financial Assets and Financial Liabilities, which establishes that an entity's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments. EIC 173 should be applied retrospectively without restatement of prior years to all financial assets and liabilities measured at fair value in interim and annual financial statements for periods ending on or after January 20, 2009. During the second quarter, the Fund implemented EIC 173 without restatement of prior years. The impact of EIC 173 was not material as of October 1, 2008. For the period ended December 31, 2008, the Fund recorded a decrease to cost of sales of $0.7 million and a decrease in short-term interest of $0.4 million, for a net adjustment before income taxes of $1.1 million. This adjustment is reflected in the year-to-date results of the second quarter.

Risk factors

Risk factors in the Fund's business and operations are discussed in the Management's Discussion and Analysis of our Annual Report for the year ended September 30, 2008. This document is available on SEDAR at www.sedar.com or on one of our websites at www.lantic.ca or www.rogerssugar.com.

OUTLOOK

Over the last several quarters, the Fund experienced some losses in volume and market share due mainly to increased competition, specifically in the consumer segment. As a consequence, a more aggressive marketing plan was put in place, allowing the Fund to re-establish its historical market share and volume, starting in fiscal 2010. As a result, adjusted gross margin rate per metric tonne will be negatively impacted over the next few quarters.

In Taber, the thick juice campaign was completed in February 2009, and total sugar production for this year's beet crop was almost 57,000 metric tonnes. As a result, the Vancouver and Montreal cane refineries will ship refined sugar to the prairie markets to replace the shortfall of Taber's beet sugar, and as a consequence distribution costs will increase accordingly.

The price of the # 11 world raw sugar has been steadily increasing over the last few months due mainly to a shortage in world sugar production versus consumption this year. A higher price of raw sugar benefits the Taber operation, but due to fiscal 2009 low beet crop, such benefits will only be realized in fiscal 2010 with the new beet crop, if such higher prices prevail.

A total of approximately 30,000 acres was planted this Spring by the Alberta Sugar Beet Growers for fiscal 2010, which should derive approximately 100,000 metric tonnes of beet sugar under normal growing and processing conditions.

Most of the natural gas forecast for fiscal 2009 has been hedged at average prices lower than the previous year. In addition, substantial futures positions for fiscal 2010 to 2013 have been taken. These positions are at prices higher than the current market values but are at the same or at better levels than what was achieved in fiscal 2008, which will provide more stability in our adjusted financial results. We will continue to monitor natural gas market dynamics with the objective of minimizing our natural gas costs.

In the current volatile financial environment, return on pension plan assets may vary from historical plan performance. This, combined with the discount rate used in assessing the plan liabilities, may impact the pension plan expenses in future years. The next actuarial valuations of our pension plans are not required to be completed until December 2009 and December 2010, and therefore the Fund's cash contribution levels are not expected to change materially until then. However, in the event that an extended period of depressed capital markets and low interest rates were to continue, the Fund could be required to make contributions to these plans in excess of those currently done.



Rogers Sugar Income Fund
Consolidated Balance Sheet
June 30, 2009 and 2008
(In thousands of dollars)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
June 30 September 30 June 30
2009 2008 2008
-------------------------------------------------------------------------
(restated- (restated-
see Note 2) see Note 2)
ASSETS
Current assets:
Cash and cash equivalents $2,276 $5,757 $8,208
Accounts receivable 44,190 54,783 41,588
Inventories (Notes 2 and 3) 78,960 70,649 76,392
Prepaid expenses 3,508 2,074 2,495
Future income taxes 5,413 746 230
Derivative financial instruments
(Note 4) - 1,433 2,502
-------------------------------------------------------------------------
134,347 135,442 131,415
Capital assets (Note 2) 189,526 195,123 196,786
Defined benefits pension plan
assets 20,241 16,204 14,821
Derivative financial instruments
(Note 4) 95 1,068 5,090
Other assets 932 1,251 433
Goodwill 229,952 229,952 229,952
-------------------------------------------------------------------------
$575,093 $579,040 $578,497
-------------------------------------------------------------------------

LIABILITIES AND UNITHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings $94,000 $93,000 $90,000
Accounts payable and accrued
liabilities 32,101 41,517 37,723
Derivative financial
instruments (Note 4) 7,131 497 3,168
-------------------------------------------------------------------------
133,232 135,014 130,891
Employee future benefits 31,513 28,250 27,912
Derivative financial instruments
(Note 4) 9,264 1,739 88
Convertible unsecured subordinated
debentures 131,166 130,503 130,282
Future income taxes 16,960 18,256 23,085
-------------------------------------------------------------------------
322,135 313,762 312,258
UNITHOLDERS' EQUITY
Trust units (Note 5) 559,662 561,105 563,510
Contributed surplus 4,711 3,950 3,153
Deficit (Note 2) (311,415) (299,777) (300,424)
-------------------------------------------------------------------------
252,958 265,278 266,239
-------------------------------------------------------------------------
$575,093 $579,040 $578,497
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Rogers Sugar Income Fund
Unaudited Consolidated Statements of Operations
For the periods ended June 30, 2009 and 2008
(In thousands of dollars - except per trust unit amounts)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three For the nine
months ended months ended
June 30 June 30
-------------------------------------------------------------------------
2009 2008 2009 2008
(restated- (restated-
see Note 2) see Note 2)

Revenues $128,478 $115,686 $388,724 $332,636
Cost of sales 99,930 93,725 335,553 256,321
-------------------------------------------------------------------------
Gross margin 28,548 21,961 53,171 76,315

Expenses:
Administration
and selling 5,306 5,599 14,800 14,945
Distribution 2,381 2,499 10,912 8,388
Depreciation and
amortization 414 430 1,237 1,291
-------------------------------------------------------------------------
8,101 8,528 26,949 24,624
-------------------------------------------------------------------------
Earnings before
interest and
provision for
income taxes 20,447 13,433 26,222 51,691

Interest on
long-term debt
and convertible
debentures 1,992 3,348 5,978 10,961
Amortization of
deferred financing
costs 267 344 801 936
Short-term interest
(income) (1,175) 10 6,873 (746)
-------------------------------------------------------------------------
1,084 3,702 13,652 11,151
-------------------------------------------------------------------------
Earnings before
provision for
income taxes 19,363 9,731 12,570 40,540

Provision for
(recovery of)
income taxes:
Current - - - 127
Future 2,411 117 (5,963) 3,022
-------------------------------------------------------------------------
2,411 117 (5,963) 3,149
-------------------------------------------------------------------------
Net earnings and
other comprehensive
income $16,952 $9,614 $18,533 $37,391
-------------------------------------------------------------------------

Net earnings per
trust unit:
Basic $0.19 $0.11 $0.21 $0.43
Diluted $0.17 $0.10 $0.21 $0.38
-------------------------------------------------------------------------

Supplemental
disclosure:
Employee future
benefits expense $873 $456 $2,623 $1,309
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Rogers Sugar Income Fund
Unaudited Consolidated Statements of Unitholders' Equity
For the periods ended June 30, 2009 and 2008
(In thousands of dollars - except per trust unit amounts)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
For the nine months ended
(Unaudited) June 30, 2009
--------------------------------------------------------------------------
Number of
Trust Trust Contributed
Units Units Surplus Deficit Total
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance, beginning
of period 87,552,987 $561,105 $3,950 $(299,777) $265,278
Distributions - - - (30,171) (30,171)
Stock-based
compensation - - 8 - 8
Repurchase of
trust units
(Note 5) (225,100) (1,443) 753 - (690)
Net earnings - - - 18,533 18,533
--------------------------------------------------------------------------
Balance,
end of period 87,327,887 $559,662 $4,711 $(311,415) $252,958
--------------------------------------------------------------------------
--------------------------------------------------------------------------


--------------------------------------------------------------------------
--------------------------------------------------------------------------
For the nine months ended
(Unaudited) June 30, 2008
--------------------------------------------------------------------------
Number of
Trust Trust Contributed
Units Units Surplus Deficit Total
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance, beginning
of period 87,582,791 $561,966 $3,162 $(309,443) $255,685
Impact, adoption
of new accounting
standards (Note 2) - - - 1,614 1,614
--------------------------------------------------------------------------
Restated balance,
beginning of
period 87,582,791 561,966 3,162 (307,829) 257,299

Distributions - - - (29,986) (29,986)
Stock-based
compensation - - 15 - 15
Issue of trust
units (Note 5) 200,000 804 (24) - 780
Conversion of
convertible
debentures into
trust units 145,096 740 - - 740
Net earnings - - - 37,391 37,391
--------------------------------------------------------------------------
Balance, end of
period 87,927,887 $563,510 $3,153 $(300,424) $266,239
--------------------------------------------------------------------------
--------------------------------------------------------------------------



Rogers Sugar Income Fund
Unaudited Consolidated Statements of Cash Flows
For the periods ended June 30, 2009 and 2008
(In thousands of dollars)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three For the nine
months ended months ended
June 30 June 30
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Cash flows from
operating
activities:
Net earnings $16,952 $9,614 $18,533 $37,391
Adjustments for
items not
involving cash:
Depreciation and
amortization 3,332 3,199 9,983 9,595
Amortization of
deferred
financing costs 267 344 801 936
Future income
taxes 2,411 117 (5,963) 3,022
Employee future
benefits (239) (438) (774) (2,362)
Change in
derivative
financial
instruments (2,336) (759) 16,565 (5,796)
Stock based
compensation
expenses 3 5 8 15
Gain on sale of
capital assets - - (278) -
Other 86 112 181 115
-------------------------------------------------------------------------
20,476 12,194 39,056 42,916
-------------------------------------------------------------------------
Changes in non-cash
working capital:
Accounts
receivable 4,247 (5,690) 10,593 (246)
Inventories 284 13,331 (8,311) (25,641)
Prepaid expense (1,278) (473) (1,434) (12)
Accounts payable
and accrued
liabilities (3,126) 440 (9,369) (3,016)
-------------------------------------------------------------------------
127 7,608 (8,521) (28,915)
-------------------------------------------------------------------------
20,603 19,802 30,535 14,001
Cash flows from
financing activities:
Short-term
(repayments)
borrowings (11,000) 90,000 1,000 90,000
Repayment of term
debt - (115,000) - (115,000)
Distributions to
Unitholders (10,041) (10,111) (30,171) (29,986)
(Repurchase) issue
of trust units
(Note 5) - - (690) 780
-------------------------------------------------------------------------
(21,041) (35,111) (29,861) (54,206)
-------------------------------------------------------------------------
Cash flows from
investing activities:
Additions to
capital assets net
of proceeds
on sale of capital
assets (1,669) (1,607) (4,155) (5,405)
-------------------------------------------------------------------------
Net change in cash
and cash equivalents (2,107) (16,916) (3,481) (45,610)
Cash and cash
equivalents,
beginning of period $4,383 $25,124 $5,757 $53,818
-------------------------------------------------------------------------
Cash and cash
equivalents, end
of period $2,276 $8,208 $2,276 $8,208
-------------------------------------------------------------------------
Supplemental
disclosure:
Interest paid on
the debt 4,855 5,524 10,585 12,114
Income taxes paid 7 19 1,562 53
Capital assets
included in
accounts payable
and accrued
liabilities 609 796 609 796
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Rogers Sugar Income Fund
Notes to Interim Unaudited Consolidated Financial Statements
For the periods ended June 30, 2009 and 2008
(In thousands of dollars unless otherwise noted)


Rogers Sugar Income Fund (the "Fund") is an open-ended, limited purpose trust created under the laws of Ontario by an amended and restated declaration of trust dated February 3, 2005 (the "Declaration of Trust"). An unlimited number of trust units may be issued pursuant to the Declaration of Trust.

Note 1: Basis of presentation

These interim unaudited consolidated financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). These interim unaudited consolidated financial statements do not include all disclosures required by the Canadian GAAP and therefore should be read in conjunction with the consolidated financial statements and the notes thereto for the most recently prepared annual financial statements for the year ended September 30, 2008. These quarterly consolidated financial statements were not reviewed or audited by our external auditors.

Note 2: Change in accounting policies

These financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements for the year ended September 30, 2008, except for the following:

i) Inventories:

Effective October 1, 2008, the Fund implemented, on a retrospective basis, with restatement, the new Canadian Institute of Chartered Accountants (the "CICA") Handbook Section 3031 "Inventories", which is effective for interim and annual financial statements for fiscal years beginning on or after January 1, 2008.

This new standard provides guidance on the determination of costs to inventories which will include the allocation of additional factory overhead and the allocation of depreciation of factory buildings and equipment to inventory and cost of sales. It also provides guidance on classification of certain major spare parts and standby equipment from inventory to capital assets.

The application of this new standard on a retrospective basis resulted in the following adjustments:

- Decrease of the opening deficit of October 1, 2008 of $1.6 million;

- Increase in the September 30, 2008 and December 31, 2007 inventories of approximately $2.0 and $3.9 million respectively;

- Increase in the September 30, 2008 and December 31, 2007 capital assets of approximately $0.8 and $0.9 million respectively; and

- Increase of $0.01 for both the basic and diluted earnings per share results at December 31, 2007.

ii) Goodwill and intangible assets:

Effective October 1, 2008, the Fund implemented the new CICA Handbook Section 3064 "Goodwill and Intangible Assets". This Section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The adoption of Section 3064 did not have any impact on the Fund's financial statements or results of operations.

iii) Risks and the fair value of financial assets and financial liabilities:

The Emerging Issues Committee (the "EIC") of the CICA issued on January 20, 2009, the EIC-173, "Risks and the Fair Value of Financial Assets and Financial Liabilities", which states that the credit risk of the counterparties should be taken into account in determining the fair value of derivative financial instruments. The accounting treatment of this new release was applied retrospectively to October 1, 2008. No adjustment was required to the opening retained earnings, as the adjustment that would have been required at October 1, 2008 was not material.

The impact of the first quarter results, an increase of $1.1 million to net earnings before income taxes being a reduction of $0.7 million in cost of sales, and of $0.4 million in short-term interest, was adjusted in the year-to-date results.

Note 3: Inventories



-------------------------------------------------------------------------
-------------------------------------------------------------------------
June 30 September 30 June 30
2009 2008 2008
-------------------------------------------------------------------------
Raw sugar $37,534 $28,691 $21,578
Work-in-process 4,776 4,300 10,738
Refined sugar 24,881 26,051 31,885
-------------------------------------------------------------------------
Sugar inventories 67,191 59,042 64,201
Packaging supplies 3,285 3,037 2,851
Other 8,484 8,570 9,340
-------------------------------------------------------------------------
$78,960 $70,649 $76,392
-------------------------------------------------------------------------
-------------------------------------------------------------------------

All cost of sales expensed during the period were all inventoriable items.


Note 4: Financial Instruments

Details of recorded gains/losses for the quarter, in marking-to-market all derivative financial instruments and embedded derivatives are noted below. For sugar and natural gas futures contracts (derivative financial instruments), the amounts noted below are netted with the variation margins paid or received to/from brokers at the end of the reporting period. Natural gas forwards and sugar futures have been marked-to-market using published quoted values for these commodities, while foreign exchange forward contracts have been marked-to-market using rates published by the financial institution which is counter-party to these contracts.



-------------------------------------------------------------------------
-------------------------------------------------------------------------
Financial Instrument Financial Instrument
Assets Liabilities
-------------------------------------------------------------------------
MARK-TO-MARKET Short-term Long-term Short-term Long-term
-------------------------------------------------------------------------

Sugar futures
contracts $- $- $14 $38
Natural gas
futures
contracts - - 4,427 6,344
Foreign exchange
forward contracts - - 278 110
Embedded
derivatives - 95 141 -
Interest swap - - 2,271 2,772
-------------------------------------------------------------------------
Total $- $95 $7,131 $9,264
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Charged to:
Cost of sales
Interest expense
Total


-------------------------------------------------------------------------
-------------------------------------------------------------------------
Gain/(Loss)
-------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
MARK-TO-MARKET June 30 June 30 June 30 June 30
-------------------------------------------------------------------------
2009 2008 2009 2008

Sugar futures
contracts $1,691 $(1,784) $(6,317) $(3,931)
Natural gas futures
contracts 8,558 6,612 (12,522) 11,307
Foreign exchange
forward contracts (6,226) (1,005) (892) 185
Embedded
derivatives (1,035) 279 172 (885)
Interest swap 2,216 - (3,649) -
-------------------------------------------------------------------------
Total $5,204 $4,102 $(23,208) $6,676
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Charged to:
Cost of sales 2,988 4,102 (19,559) 6,676
Interest expense 2,216 - (3,649) -
-------------------------------------------------------------------------
Total $5,204 $4,102 $(23,208) $6,676
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Note 5: Trust units

Year-to-date, a total of 225,100 trust units were purchased and cancelled under the Normal Course Issuer Bid. The capital amount of the trust unit was credited at the average value of the trust unit at the start of the year. At June 30, 2009, 87,327,887 trust units were issued and outstanding.

During the third quarter of 2008, $720,000 of the Third Series Convertible Unsecured Subordinated Debentures was converted by holders of the securities for a total number of 141,175 trust units. Year-to-date, a total of $740,000 of the Third Series Convertible Unsecured Debentures was converted for a total number of 145,096 trust units. In addition, earlier in fiscal 2008 a total of 200,000 trust units were exercised under the Stock Option Plan.

Note 6: Segmented information

Revenues were derived from customers in the following geographic areas:



-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the three For the nine
months ended months ended
June 30 June 30
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada $124,591 $111,985 $358,024 $315,140
United States and
Other 3,887 3,701 30,700 17,496
-------------------------------------------------------------------------
$128,478 $115,686 $388,724 $332,636
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Note 7: Comparative figures

Certain of the 2008 comparative figures have been reclassified to conform with the presentation adopted for the current quarter.

Contact Information