Second Quarter Report To Our Shareholders.

ATLANTA--(BUSINESS WIRE)--April 24, 1997--Your Company achieved the highest March quarter earnings in its 80-year history this quarter.

We earned net income of $8,829,000, or $.34 per share, on revenues of $276,489,000 for the second fiscal quarter. This compares to a loss for the second quarter last year of ($2,043,000), or ($.08) per share, on revenues of $250,804,000.

Earnings for the first six months of fiscal 1997 are $17,977,000, or $.69 per share, on revenues of $579,610,000. This compares to earnings of $1,500,000, or $.06 per share, on revenues of $555,213,000 for the same period last year.

Because of the dramatic improvement in earnings, your Board of Directors at its meeting on April 17, 1997 voted to raise the dividend 50% to $.15 per share annually.

We would like to express our appreciation to all of the employees of Savannah Foods, each of whom contributes to our success. While the turn around in earnings is due in part to improved business fundamentals, it is also due to the hard work of reducing costs, improving efficiency, improving sales of higher value-added products, reducing inventory, and the many other activities that improve our business and focus on our customers.

We expect that the improvement in the cane refining part of our business will continue for the balance of this fiscal year. Our refineries are running well and margins are at much improved levels compared to the last few years. The quantity of sugar produced from sugarbeets nationally is about 4 million tons for the second year in a row while consumption has continued to increase about 2% per year, or 200,000 tons. In addition, the USDA is operating the raw sugar quota according to a formula that has greatly reduced political influence in the operation of the program with the result that raw sugar prices have stabilized.

As reported earlier, we continue to reduce our long-term debt. Long-term debt is down to $37 million from $60 million at the beginning of the year and $140 million at the beginning of fiscal 1995. We remain focused on the efficient use of our assets.

Due to flooding in the Red River Valley and other factors, it appears that national sugar production from beets will not increase significantly in 1998, and therefore current market conditions should continue into our next fiscal year.

Contracted sugarbeet acreage for Michigan Sugar Company, our beet sugar subsidiary, is expected to be around 100,000 acres compared to 85,000 acres harvested last year. Spring planting has begun and is progressing nicely. Assuming that we have reasonable weather, Michigan should have a better crop, produce more sugar, and therefore make more money in the coming fiscal year.

Because we have so many shareholders spread across the United States, many of you were not able to attend the Annual Meeting. We have included a copy of the President's address to shareholders so that you may gain a better understanding of our accomplishments and our direction for the future. -0- Sincerely,

R. Eugene Cartledge Chairman of the Board

&

William W. Sprague III President and Chief Executive Officer -0-

                  Savannah Foods & Industries, Inc.
                                (SFI)

      Interim Report For The Second Quarter Ended March 30, 1997
                             (Unaudited)
    (Amounts in thousands except for shares and per share amounts)

        Consolidated Condensed Income Statement Information


                     Quarter Ended              Two Quarters Ended

                  March 30,    March 31,       March 30,   March 31,
                    1997         1996            1997        1996
                 ----------   ----------      ----------  ----------

Net sales         $276,489     $250,804        $579,610    $555,213
                  ========     ========        ========    ========

Income from
 operations       $ 16,354     $    162        $ 32,762    $  8,712

Other income
 & expense              43            2             115         261

Interest expense    (1,922)      (3,306)         (3,882)     (6,665)

(Provision for)
 benefit from
 income taxes       (5,646)       1,099         (11,018)       (808)
                  ---------    ---------       --------    --------

Net income (loss) $  8,829     $ (2,043)      $  17,977    $  1,500
                  ========     ========        ========    ========

Earnings per
 share              $0.34        $(0.08)          $0.69       $0.06
                  ========     ========           =====       =====

Dividends per
 share             $0.025        $0.025           $0.05       $0.05
                   ======        ======           =====       =====
Weighted avg
 shares
 outstanding    26,238,196   26,238,196      26,238,196  26,238,196
                ==========   ==========      ==========  ==========


          Consolidated Condensed Balance Sheet Information


                                 March 30,          September 29,
                                   1997                 1996
                                ------------        -------------

Working capital                  $ 92,356              $94,606

Property, plant and
 equipment                        177,918              186,546

Other assets                       29,630               31,163
                                 --------              -------

                                 $299,904             $312,315
                                 ========             ========

Long-term debt                    $36,683              $59,754

Deferred employee
 benefits                          72,331               78,834

Stockholders' equity              190,890              173,727
                                 --------             --------

                                 $299,904             $312,315
                                 ========             ========

Note 1: This condensed financial statement information is presented as supplemental information to the Company's Quarterly Report on Form 10-Q which will be filed with the Securities and Exchange Commission. The statements made by the Company that are forward looking involve risks and uncertainties that include, but are not limited to, market factors, the effects of weather on domestic U.S. sugarbeet and cane crops, U.S. Government farm and trade policy and other factors detailed in the Company's filings with the Securities and Exchange Commission.

Note 2: Certain prior year amounts have been reclassified to conform to current year presentation.

ANNUAL MEETING SPEECH OF FEBRUARY 20, 1997

WILLIAM W. SPRAGUE III, PRESIDENT AND CEO 

Happy Birthday! Savannah Foods celebrates its 80th birthday this year. Your Company started here in Savannah with one refinery in 1917.

Imagine with me for a moment what it must have been like in 1915 when a group of 300 employees, and their families, under the leadership of Benjamin Oxnard and Richard Sprague, moved from Adeline, Louisiana to Savannah, Georgia. At the time, there was no television, no radios, no electric lights, no indoor plumbing, and most people did not travel more than five miles away from home--a trip to New Orleans was a major event.

Imagine the vision, ambition, courage, and drive it took to move to a new city, a new place, that most had never seen and had never heard about. Once they arrived, they then started the hard work of building houses, establishing a village, building a refinery, and creating a new life. After the refinery was completed, total sales our first year were less than $50 million.

We stand here eighty years later--the world has changed dramatically, and your Company has changed dramatically. Today we are a $1.2 billion company, operating three refineries, four beet factories, four packaging facilities, selling products across the United States in many different market segments. That vision, courage, and determination that started this Company in 1917 has carried us through eighty years of some very good times, and some very tough times, and that courage, vision, and determination is still here today.

We have identified a bold vision. We want to build a multi-billion dollar food and food related products company. We have established an aggressive goal--20% return on equity. We have determined our strategy to get us there.

First, we are maximizing the value of our existing sugar business. Our existing business is our foundation from which we are building the Company for the future. Secondly, we will acquire food and food related product companies that meet our objectives.

Our sales last year were almost $1.2 billion. Our market share of the sugar business in the United States is about 20%. However, dollars spent on food in the United States last year were $685 billion. Growth in spending on food between now and the year 2005 is expected to be an additional $100 billion. Our sales are less than two tenths of one percent of the total market in food in the United States. To put it another way, there is 99.8% of the United States food market that we don't have. I present it this way to demonstrate that there is a tremendous amount of opportunity in our business. Our job over the next eighty years is to capture as much of that opportunity as possible.

Let me briefly review what we have accomplished last year. Sales increased 4% to $1,146,000. Income from operations increased 195% to almost $22 million from $7.5 million. Net income increased to a profit of just under $6 million from a loss of ($3.5) million last year. Debt decreased by 60% over the last two years from $140 million to just under $60 million. Our balance sheet is in very strong condition.

As I have said in previous meetings, three keys to our success for the future are: (1) focus on the customer; (2) reduce costs and improve efficiency; (3) improve quality.

We need to focus on the customer for the very fundamental reason that that's where the money comes from. We need to reduce costs and improve efficiency because we are in world-wide competition to make our products better, faster, and cheaper. We need to improve quality because the customers demand it, and quality (particularly in a commodity based business) is one of the most effective ways to differentiate ourselves from our competitors.

In order to better focus on our customers, we continued the reorganization we started a few years ago. We are now organized with our customer and our customer's needs firmly in view.

Under the new organization we now have a division focused on our industrial customers, Savannah Foods Industrial. We have a separate division focused on our consumer and foodservice customers, Dixie Crystals Brands.

Dave Roche was formerly President of Michigan Sugar, our beet division. He now has thading our efforts, including beet and cane opel and foodservice customers.

Sugar is fun a commodity. Adding value means that the consumer gets a benefit that he wants and is willing to pay for, and we in turn improve our profitability.

We add value to sugar by putting our Dixie Crystals brand name on it. The consumer is willing to pay more for the Dixie Crystals brand because she knows that when she bakes grandmother's birthday cake, she is using the brand of sugar that she can trust.

We add value through packaging. The consumer is willing to pay more for a canister of sugar, or for a resealable package of brown sugar, because she values the convenience.

One of our newest products is Quick'n Sweet Sugar for Iced Tea. The consumer values the instant dissolving capability, the fact that the product has half the calories of sugar, and the ability to flavor iced tea with lemon, peach or raspberry.

We are focused on cost reduction. As reported to you earlier, we reduced costs last year by $8 million and we expect to reduce costs by another $11 million this year, or about $.25 per share.

We are focused on quality. Reduction in costs does not mean reduction in quality. I am proud to report that we have won the Keebler Sugar Supplier of the Year award for the fifth year in a row. We continue to upgrade the quality of our product, packaging, and procedures.

Your Company is very focused on improvement of shareholder value. I believe that it is important that all employees act like, think like, and be paid like owners. There should be no differences between the way that we behave as managers and the way that we behave as owners.

Your management team and the majority of the employees of this Company are shareholders, either through the ESOP, 401(k), or personal holdings. In order to more strongly link the pay and performance of the management team and all Savannah Foods' employees with your interests as owners of the enterprise, we have instituted several steps.

First, your Board of Directors' compensation is tied directly to the value of the stock. Secondly, all employees at Savannah Foods have a short-term incentive plan that is linked to return on equity goals and return on asset goals in order to encourage and reward good stewardship of capital. Thirdly, you have approved a long-term incentive plan of stock options for the managers of your Company. Approximately 300 managers at different levels participate in the stock option plan. The stock option plan directly links part of the compensation of your management to the value of the stock.

As a result of our past efforts and because of fundamental changes in the underlying sugar business, 1997 will be a good year for you year. Our volumes and margins will increase substantially this year over last year. We are off to a stre is to make our Company less vulnerable to inWe have developed new products, extended our mae vision, the drive, and the courage of all the employees at Savannah Foods.

Your Company has a very bright future, and I want to thank the directors, the employees, and the shareholders for helping us make that future become a reality. We hope to truly "Sweeten Your Life With Dixie Crystals."

CONTACT: Savannah Foods & Industries, Inc.

2 E. Bryan Street

P.O. Box 339

Savannah, GA 31402

F. Sprague Exley, 912/234-1261

FAX: [phone]

or

Gregory H. Smith, 912/234-1261

FAX: [phone]