Constar International Inc Announces 2008 Second Quarter and First

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June 30, 2008.

Highlights include: -- Credit Agreement EBITDA, excluding restructuring charges, was $14.9 million as compared to $15.7 million in the second quarter of 2007; -- Custom unit volume increased 16.9 percent in the second quarter of 2008 compared to the second quarter of 2007 and represented 27 percent of consolidated net sales in the second quarter of 2008; and -- At June 30, 2008, the total of cash and borrowing availability under the Company's Credit Agreement was $43.7 million.

"The second quarter results were disappointing primarily due to the unprecedented increase in energy costs and the weaker than expected demand for carbonated soft drinks. To offset the impact of these issues, we implemented price increases and cost reduction programs which were only in effect for part of the quarter and will have a more meaningful impact on the balance of the year. Our custom unit volume increased 16.9 percent during the quarter which helped to partially offset the decline in conventional volume. We expect our custom unit volume to increase by 28 percent for the balance of the year compared to the same period in 2007. Lastly, we ended the quarter with availability under our credit agreement of $43.7 million," said Michael Hoffman, President and CEO of Constar.

Second Quarter Results:

Consolidated net sales were $244.3 million in the second quarter of 2008 compared to $240.2 million in the second quarter of 2007.

In the U.S., net sales were $190.3 million in the second quarter of 2008 compared to $182.9 million in the second quarter of 2007. The increase in U.S. net sales was principally driven by the pass-through of resin costs to customers, along with an increase in price, offset by a decrease in unit volume. Total U.S. unit volume decreased 8.3 percent from the second quarter of 2007. Custom unit volume increased 16.9 percent, while conventional unit volume declined 17.7 percent compared to the second quarter of 2007. Approximately 60 percent of the conventional unit volume decline in the U.S. was due to the expected continued shift of water bottlers to self-manufacturing and an additional 15.5 percent of the decline resulted from the previously disclosed loss of a conventional customer contract. In addition, the Company's customers experienced a decrease in demand for carbonated soft drink packages especially in the convenience store and gas station distribution channels.

In Europe, net sales were $54.0 million in the second quarter of 2008 compared to $57.3 million in the second quarter of 2007. The decrease in European net sales in the second quarter of 2008 was primarily due to lower unit volume, offset by the pass-through of resin costs to customers and a positive impact of foreign currency translations. Total European unit volume decreased by 19.8 percent compared to the second quarter of 2007 due to the previously disclosed loss of a customer in the Company's Holland operations.

Gross profit, excluding depreciation expense, decreased $1.9 million, or 8.4 percent, in the second quarter of 2008 compared to the second quarter of 2007. Gross profit, excluding depreciation expense, as a percentage of net sales decreased to 8.5 percent in the second quarter of 2008 from 9.4 percent in the second quarter of 2007. The decrease was the result of lower unit volumes and increases in energy costs, offset in part by increases in price.

Selling and administrative and research and technology expenses were $7.1 million in the second quarter of 2008, an increase of $0.2 million from the second quarter of 2007.

Operating income was $4.3 million in the second quarter of 2008 compared to $5.0 million in the second quarter of 2007. This decrease in operating income primarily reflects the lower unit volume and increases in energy, partially offset by a reduction in restructuring costs.

Interest expense decreased $0.8 million to $9.5 million in the second quarter of 2008 from $10.3 million in the second quarter of 2007 as a result of lower effective interest rates, partially offset by higher average borrowings.

Other net expense was zero in the second quarter of 2008 compared to other income of $0.6 million in the second quarter of 2007. The decrease in the second quarter of 2008 primarily resulted from the negative impact of foreign currency on the translation of intra-company balances.

Net loss in the second quarter of 2008 was $5.0 million, or $0.41 loss per basic and diluted share, compared to a net loss in the second quarter of 2007 of $4.8 million, or $0.39 loss per basic and diluted share.

Credit Agreement EBITDA excluding restructuring charges in the second quarter of 2008 decreased by $0.8 million, or 5.0 percent, to $14.9 million from $15.7 million in the second quarter of 2007.

First Six Month Results:

Consolidated net sales were $457.6 million in the first six months of 2008 compared to $452.9 million in the first six months of 2007.

In the U.S., net sales were $360.0 million in the first six months of 2008 compared to $348.2 million in the first six months of 2007. The increase in U.S. net sales was principally driven by the pass-through of resin costs to customers, the impact of contractual price increases and the increase in custom unit volume, offset in part by lower conventional unit volume. Total U.S. unit volume decreased 6.4 percent from the first six months of 2007. Custom unit volume increased 18.5 percent, while conventional unit volume declined 14.3 percent compared to the first six months of 2007.

In Europe, net sales were $97.6 million in the first six months of 2008 compared to $104.7 million in the first six months of 2007. The decrease in European net sales in the first six months of 2008 was primarily due to lower unit volume, offset by the pass-through of resin costs to customers and a positive impact of foreign currency translations. Total European unit volume decreased by 14.0 percent compared to the first six months of 2007.

Gross profit, excluding depreciation expense, decreased $2.9 million, or 6.9 percent, in the first six months of 2008 compared to the first six months of 2007. Gross profit, excluding depreciation expense, as a percentage of net sales decreased to 8.7 percent in the first six months of 2008 from 9.5 percent in the first six months of 2007. The decrease was the result of lower unit volumes and higher energy costs, offset in part by increases in price.

Selling and administrative and research and technology expenses of $15.9 million in the first six months of 2008 increased by $0.3 million from the first six months of 2007.

Operating income was $7.4 million in the first six months of 2008 compared to $8.6 million in the first six months of 2007. This decrease in operating income primarily relates to the lower unit volume and increases in energy costs as described above, partially offset by a reduction in restructuring costs.

Interest expense decreased $1.0 million to $19.4 million in the first six months of 2008 from $20.4 million in the first six months of 2007 as a result of lower effective interest rates, partially offset by higher average borrowings.

Other expense was $0.6 million in the first six months of 2008 compared to other income of $0.9 million in the first six months of 2007. The change from prior year primarily resulted from the negative impact of foreign currency on the translation of intra-company balances.

Net loss for the first six months ended June 30, 2008 was $12.5 million, or $1.01 loss per basic and diluted share, compared to a net loss for the first six months of 2007 of $11.0 million, or $0.89 loss per basic and diluted share.

Free cash flow was negative $24.0 million for the first six months in 2008 compared to negative free cash flow of $9.9 million for the same period in 2007. The decrease in free cash flow was driven by cash flow from operating activities, principally higher working capital requirements due to timing of cash receipts and disbursements.

Credit Agreement EBITDA, excluding restructuring charges, in the first six months of 2008 decreased by $3.1 million, or 10.9 percent, to $25.5 million from $28.6 million in the first six months of 2007.

Non-GAAP Measures

EBITDA is defined by the Company as net income (loss) before interest expense, provision for income taxes, depreciation and amortization. The Company's Credit Agreement formerly contained a definition of EBITDA that made adjustments for certain items. This definition was deleted and not replaced as part of the previously reported amendments to the Credit Agreement made in the first quarter of 2007. In the second quarter of 2008 and the first six months of 2008, these adjustments would have amounted to $1.2 million and $2.1 million, respectively. In the second quarter of 2007 and the first six months of 2007, the adjustments would have amounted to ($0.5) million and $0.5 million, respectively. For consistency, the Company is reporting EBITDA on the same Credit Agreement basis, but excluding restructuring charges.

Credit Agreement EBITDA excluding restructuring charges is not a GAAP-defined measure and may not be comparable to credit agreement or adjusted EBITDA as defined by other companies. Management believes that investors, analysts and other interested parties view our ability to generate Credit Agreement EBITDA as an important indicator of the Company's operating performance. Management also believes that Credit Agreement EBITDA excluding restructuring charges is a useful measure in understanding trends because it eliminates various non-operational and non-recurring items. In addition, Credit Agreement EBITDA facilitates comparisons to operating performance in prior periods and is used by the Company in setting incentive plan targets. Investors are urged to take into account GAAP measures in evaluating the Company and to review the reconciliation of Credit Agreement EBITDA excluding restructuring charges to net income (loss) in the attached unaudited consolidated statements of operations.

Gross profit, excluding depreciation expense, is not a GAAP-defined measure and may not be comparable to gross profit as defined by other companies. The Company believes that gross profit, excluding depreciation expense, is a useful measure in understanding trends because it eliminates non-cash charges related to depreciation. Investors are urged to take into account GAAP measures in evaluating the Company, and to review the reconciliation of gross profit to gross profit, excluding depreciation expense in the attached unaudited consolidated statements of operations.

Free cash flow is derived from the Company's consolidated statement of cash flows and is defined as net cash provided by operating activities less net cash used in investing activities. Free cash flow is not a GAAP-defined measure and may not be comparable to free cash flow as defined by other companies. The Company uses free cash flow to evaluate performance and the Company's ability to incur and service debt. Investors are urged to take into account GAAP measures in evaluating the Company, and to review the separate line items for net cash provided by operating activities and net cash used in investing activities in the attached unaudited consolidated statements of cash flow.

Conference Call, Web Cast Information

The Company will hold a conference call on Thursday, August 14, 2008 at 9:00 a.m. ET to discuss this news release. Forward-looking and other material information will be discussed on this conference call. The dial-in numbers for the conference call are (877) 419-6593 (domestic callers) or (719) 325-4860 (international callers). Please dial in at approximately ten minutes prior to the scheduled start time in order to give the operators time to connect you. The conference call will also be broadcast live over the internet and can be accessed via the Company's website: www.constar.net

Please log on approximately 15 minutes prior to the call to register and download any necessary audio software.

A replay of the conference call will be available from 12 noon ET that day through midnight ET, Thursday, August 21, 2008 and can be accessed by calling (888) 203-1112 (domestic callers) or (719) 457-0820 (international callers) and entering pass code 8399413. The replay will also be accessible via the web at www.constar.net

Additional information:

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