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Marine Log

July 30, 2008

ACL reports increased revenues

American Commercial Lines Inc. (Nasdaq: ACLI) has reported results for the three and six months ended June 30, 2008 that saw revenues for the quarter of $322.7 million, a 23.5% increase compared with $261.2 million for the second quarter of 2007.

Net income from continuing operations for the quarter was $3.4 million or $0.06 per diluted share, compared to net income of $5.9 million or $0.09 per diluted share for the second quarter of 2007. Results of the quarter ended June 30, 2008 included after-tax debt retirement expenses of $1.5 million or $0.03 per diluted share on the amendment of the company's credit facility. Results for the quarter ended June 30, 2007 included after-tax debt retirement expenses of $1.4 million on the replacement of the Company's previous revolving credit facility which reduced earnings per share by $0.02.

Michael P. Ryan, President and Chief Executive Officer, stated, "The second quarter presented us with the dual challenges of inclement weather and continued cost inflation. Despite these obstacles, we were able to progress our strategy of building a better book of business and controlling our costs to improve profitability. While we understand that the results of one quarter do not represent a trend, and we continue to face industry volatility, we are pleased to have achieved some performance highlights in the second quarter. Our manufacturing segment's second quarter operating performance was the strongest in several years. In Transportation, we achieved revenue growth in our liquids business for the fifth consecutive quarter. We continue to experience steady demand and pricing strength across both liquid and dry businesses, realizing approximately 13% fuel-neutral rate increases. We are advancing our cost control efforts, with further reductions in SG&A expenses this quarter which, combined with our first quarter actions, will result in over $5.5 million of annualized savings."

"In the second quarter, we also completed a modification of our credit facility which increased the allowable debt to EBITDA ratio through March 2009," he noted. "We are strategically reviewing our capital needs, and we intend to have a new facility in place before the expiration of our current credit agreement in March 2009.

Transportation Results

The transportation segment's revenues were $217.2 million in the second quarter 2008, an increase of 16.8% over the second quarter of the prior year. The revenue increase was driven by 27.9% higher pricing on affreightment contracts, higher outside towing and charter/day rate revenues and higher revenue from scrapping barges, partially offset by lower ton-mile volumes. Slightly over half of the affreightment rate increases were driven by fuel escalations under the company's contracts, and the remainder was attributable to higher fuel-neutral pricing. On average, compared to the second quarter of 2007, the fuel-neutral rate on the dry freight business increased 12.9% and the liquid freight business increased 13.2% in 2008. Total volume measured in ton-miles declined in the second quarter of 2008 to 9.6 billion from 10.8 billion in the same period of the prior year, a decrease of 10.7%. More than one-half of the volume declines in the quarter were attributable to lower grain volumes combined with lower bulk and coal volumes, all of which were adversely affected by flooding conditions throughout much of the inland waterway system. On average, 4.1% or 117 fewer barges operated in the second quarter of this year compared to the second quarter of last year.

Year-to-date, the 16.6% revenue increase over 2007 was driven by increases in outside towing and charter/day rate revenues and increased revenue from scrapping barges, combined with a 21.9% increase on affreightment contracts, partially offset by lower ton-mile volumes. Almost 60% of the affreightment rate increases were driven by fuel escalations and the remainder was attributable to higher fuel-neutral pricing. On average, compared to the six months ended June 30, 2007, the fuel neutral rate on the dry freight business increased 8.9% and it increased 9.8% on the liquid freight business. Year-to- date total volume measured in ton-miles declined in the first six months of 2008 to 19.7 billion from 21.0 billion in the same period of the prior year, a decrease of 6.4%, much of it attributable to inclement weather conditions and severe flooding. On average, 4.9% or 142 fewer barges operated in the first six months of this year compared to the first six months of the prior year.

Operating income in the transportation segment decreased 33.2% or $3.3 million to $6.7 million in the quarter ended June 30, 2008 compared to the same period of the prior year. This decline was due primarily to unfavorable weather-related operating conditions and significant increases in fuel prices. Continuing high-water conditions resulted in more than 16,000 idle barge days in the quarter, an increase of 287% or more than 12,000 days over the prior year. The Company estimates this negatively impacted the transportation segment's operating margin by approximately $6 million in the quarter. Fuel prices increased 72% over second quarter 2007, with an average cost of $3.44 per gallon. The Company estimates it had approximately $8.6 million in direct and indirect unrecovered fuel price increases during the quarter. These were partially offset by the higher fuel-neutral pricing and a $3.5 million increase in income from scrapping and disposal of barges.

Year-to-date operating income in the transportation segment decreased 56.4%, or $16.9 million, to $13.1 million in the six months ended June 30, 2008 compared to the same period of the prior year. This decline was also due to significant increases in fuel prices and unfavorable weather-related operating conditions. The company estimates it had approximately $18.0 million in direct and indirect unrecovered fuel price increases. During the past six months high-water conditions caused by abnormally high precipitation levels along the inland waterway increased idle barge days 155% (more than 16,000 days) and drove additional cost inefficiencies of approximately $11 million. These were partially offset by the higher fuel-neutral pricing and a $3.1 million increase in income from scrapping and disposal of barges.

Manufacturing Results

ACL's manufacturing business, Jeffboat, completed 112 barges during the quarter ended June 30, 2008 compared to 101 barges in the second quarter of 2007. Jeffboat sold 93 dry hopper barges in the second quarters of 2008 and 2007. Jeffboat also sold 17 liquid tank barges and two special vessels during the second quarter, an increase of nine tank barges and two special vessels over the second quarter of 2007. Two liquid barges were built during the second quarter of 2007 for internal use by ACL in 2007 and none were built in the current year.

On a year-to-date basis Jeffboat sold 201 barges, 11 more barges than in the prior year. This included three fewer dry hopper barges, 11 more liquid tank barges and three additional special vessels. The two liquid barges built for internal use in the second quarter of 2007 were the only internal builds in the six months ended June 30, 2007.

Manufacturing revenues were $95.6 million in the second quarter of 2008 compared to $75.3 million during the same period last year. This increase was driven by the additional tank barge sales. Manufacturing operating margin increased quarter-over-quarter from 5.2% to 7.0%, an increase of $2.7 million to $6.7 million, primarily driven by improved labor utilization in the shipyard and the reduction in build hours per barge. Manufacturing lost five weather-related production days during the quarter, two more than second quarter 2007.

On a year-to-date basis, manufacturing revenues were $159.7 million for the six months ended June 30, 2008 compared to $127.5 million for the six months ended June 30, 2007. This increase was also driven by the additional liquid barge sales, despite 24 production days lost year-to-date due to weather, over twice as many as the 10 days lost in the first six months of 2007. Manufacturing operating margin increased on year-to-date basis from 4.7% to 6.3% compared to the six months ended June 30, 2007, an increase of $4.1 million to $10.0 million, primarily driven by improved labor utilization in the shipyard and the reduction in build-hours per barge

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