Imperial Sugar Company Reports Fourth Quarter and Fiscal Year 2010 Results

Imperial Sugar Company (NASDAQ:IPSU) today reported a net loss for the fiscal fourth quarter ended September 30, 2010 of $2.3 million, or $0.19 per share, compared to a net loss from continuing operations of $0.2 million, or $0.02 per share, for the same period in fiscal 2009. For the year, the Company reported net income of $136.9 million, or $11.33 per share, compared to a loss from continuing operations of $23.8 million, or $2.03 per share, for fiscal 2009. The current year results include pretax gains resulting from the settlement of insurance claims totaling $278.5 million.

Results for both fiscal 2010 and 2009 were impacted by the absence of a fully operational Port Wentworth refinery, which normally comprises approximately 60% of the Company’s refining capacity.

"Imperial Sugar Company took important strategic steps in fiscal 2010 while managing the challenges associated with restoring full production at the Port Wentworth refinery,” stated John Sheptor, president and CEO of Imperial Sugar. "As production rates at the Port Wentworth refinery increased during the year, we identified facility and process modifications necessary to return the refinery to historical operating levels. We completed the last major modification in October 2010, and output improved significantly. While production days and fixed costs had a negative impact on fiscal 2010 results, the improvements that we have made should lead to sustained results at higher rates in 2011.”

Sheptor continued, "Other important steps were taken in 2010 to strengthen our business and provide a path to a stronger future. Construction of the new refinery in Louisiana by our recently formed joint venture is well under way, with completion targeted for the summer of 2011. Our Natural Sweet Ventures initiative provides an exciting opportunity to expand our portfolio of all natural sweeteners. Customer interest in our stevia/sucrose products under the Steviacane™ brand name has been encouraging. The continued success of our strategic Mexican alliance was invaluable in dealing with the increasing complexities arising in the NAFTA sugar region, while Wholesome Sweeteners experienced significant top line and earnings growth from their organic and fair trade portfolio of sweeteners.”

Net sales for the fourth quarter of fiscal 2010 increased to $264.4 million compared to $147.3 million for the same period in fiscal 2009. The increased revenues were due to 53% higher sales volumes owing to increased Port Wentworth refinery production, as well as 18% higher refined prices. Gross margin as a percent of sales was 2.7% in the current quarter compared to 13.3% last year as a result of higher raw sugar costs, which more than offset the higher sales prices.

Domestic raw sugar prices increased rapidly during the past 18 months, in part in response to significantly higher world raw sugar prices. The gains recognized on raw sugar futures contracts entered into to hedge raw sugar purchases in later periods, which did not qualify for deferral accounting, totaled $30.6 million in the current quarter compared to $27.9 million in the fourth quarter of fiscal 2009.

The Company reported that at September 30, 2010, it had cash balances of $22.8 million and available, undrawn revolving credit capacity of $72 million, after deducting $22 million of borrowings and $6 million of letters of credit outstanding under that facility.

Fiscal Year Ended September 30, 2010

For the year, the Company reported net income of $136.9 million, or $11.33 per share, compared to a loss from continuing operations of $23.8 million, or $2.03 per share, for fiscal 2009. Included in the current year’s results are $278.5 million of pre-tax gains associated with settlement of insurance claims related to the February 2008 Port Wentworth accident, $33.2 million of pretax gains on derivatives entered into to hedge raw sugar purchases in later periods, and $8.6 million of pretax charges related to the refinery accident. Last year’s results include pretax insurance recoveries of $30.4 million, $53.8 million of refinery related pretax charges and a $16.1 million first quarter pretax gain from a litigation settlement.

Net sales for fiscal 2010 rose 74% to $908.0 million compared to $522.6 million in fiscal 2009 on higher sales volumes and prices. Gross margin as a percent of sales for fiscal 2010 declined to a negative 2.1% from a positive 2.1% last year, primarily due to higher raw sugar costs offset partially by higher sales prices

Other income, which includes equity investment earnings and distributions from cost basis investments, increased significantly for the year to $5.5 million as compared to $3.0 million last year due primarily to a significant improvement in Wholesome Sweeteners' earnings.

Capital expenditures during fiscal 2010 were $72.3 million, including spending related to the Port Wentworth rebuild project.

Conference Call Details

Company officials will conduct a conference call starting at 10:00 a.m. Eastern, Thursday, December 30, 2010. Imperial Sugar President and CEO, John Sheptor and Senior Vice President and CFO, Hal Mechler, will discuss the Company’s operating results for its fiscal fourth quarter and year ended September 30, 2010, its current financial position and its business strategies.

Participants wishing to listen and participate in a brief question-and-answer session after the presentation can dial 1-866-713-8395 and enter the Participant Passcode: 66290119. The conference call can also be accessed via live audio webcast by visiting Imperial Sugar’s web site at http://www.imperialsugarcompany.com/Investor-Relations/Investor-Home-1072.html and clicking on the "Q4 2010 Imperial Sugar Earnings Conference Call” icon under "Investor Relations”.

For those who are unable to listen to the call during its live broadcast, a replay of the entire presentation will be available on the company’s web site beginning one hour following the conclusion of the call. In addition to the webcast replay, a telephone replay will also be available beginning one hour following the conclusion of the call that can be accessed by dialing 1-888-286-8010 and entering the Passcode: 63409237. Both replays will be available through January 30, 2011.

Please note: Participants planning to listen to the call via the Internet may need to download Windows Media Player(R) to hear the call if this feature has not been previously installed on their computers.

About Imperial

Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and foodservice distributors. The Company markets products nationally under the Imperial®, Dixie Crystals® and Holly® brands. For more information about Imperial Sugar, visit www.imperialsugarcompany.com and www.iscnewsroom.com.

Statements regarding future market prices and margins, future expenses and liabilities arising from the Port Wentworth refinery incident, refinery construction costs, timelines and operational dates, future costs and liabilities arising from the Louisiana Sugar Refining LLC venture, future import and export levels, future government and legislative action, future environmental regulatory and compliance costs, future operating results, future availability and cost of raw sugar, our liquidity and ability to finance our operations and capital investment programs, operating efficiencies, results of future investments and initiatives, future cost savings, future product innovations, future energy costs, future pension plan contributions and other statements that are not historical facts contained in this release are forward-looking statements that involve certain risks, uncertainties and assumptions. These risks, uncertainties and assumptions include, but are not limited to, market factors, farm and trade policy, unforeseen engineering and equipment delays, our ability to obtain financing and the terms of any such financing, our ability to realize planned cost savings and other improvements, the available supply of sugar, energy costs, the effect of weather and economic conditions, results of actuarial assumptions, actual or threatened acts of terrorism or armed hostilities, legislative, administrative and judicial actions and other factors detailed in the Company’s filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.