Imperial Sugar Company Announces Second Fiscal Quarter 2011 Results and Declares Quarterly Dividend

Imperial Sugar Company (NASDAQ:IPSU) today reported a net income of $4.2 million, or $0.34 per diluted share, for the second fiscal quarter ended March 31, 2011, compared to a net loss of $33.3 million, or $2.82 per diluted share, for the second fiscal quarter of 2010. The current quarter results include a $3.6 million pretax gain related to the contribution of the Gramercy, Louisiana refinery to Louisiana Sugar Refining, LLC, a previously formed joint venture in which the Company has a one-third interest.

"We are pleased with the progress made in a number of areas during the second quarter,” commented John Sheptor, president and CEO of Imperial Sugar. "We achieved sales price increases during the second quarter and successfully managed raw costs in a volatile price environment, so as to expand margins significantly.”

Sheptor continued, "After a challenging re-start early in the quarter, LSR’s operation of the existing Gramercy refinery is providing a steady flow of bulk sugar for our grocery packaging operation. The reconnection of the silos in Port Wentworth, which was deferred until the first week of April, went smoothly, and the refinery has begun to ramp up production rates again.”

Net sales for the second fiscal quarter were $192.2 million, compared to $208.9 million for the same period last year. The reduction in quarterly sales was principally due to the loss of direct sales volumes from the Gramercy refinery, which commencing January 1, 2011, was operated by LSR. Offsetting these lower volumes, domestic sugar prices in the current quarter increased 20% compared to second fiscal quarter 2010.

Raw sugar costs during the second quarter benefited from the liquidation of LIFO basis inventory at a cost which was $14.3 million lower than current raw sugar costs. Offsetting this benefit was the impact on raw sugar costs of derivative gains totaling $19.1 million recognized in prior years which were intended to hedge current period purchases. Lower manufacturing costs and improved yields at the Port Wentworth refinery contributed to the improved operating results.

For the three months ended March 31, 2011, gross margin as a percent of sales increased to a positive 5.4% compared to a negative 19.6% in the prior year quarter. The prior year’s gross margin percentage was negatively impacted by the timing of the recognition of raw sugar derivative activity; absent the impact of this derivative activity, gross margin as a percent of sales for the quarter ended March 31, 2010 would have been 0.4%.

Other income, which includes equity investment earnings, decreased in the current quarter to $1.3 million as compared to $2.2 million during the same period last year due primarily to a loss from equity earnings in LSR in the current period, which offset gains in the Company’s Wholesome Sweetener and Mexican marketing joint ventures.

Cash and cash equivalents at March 31, 2011 were $2.9 million and the Company had $23 million of outstanding borrowings under its $100 million revolving line of credit.

Six Months Ended March 31, 2010

For the six-month period ended March 31, 2011 the Company reported a net loss of $4.8 million, or $0.40 per diluted share, compared to net income of $144.9 million, or $12.01 per diluted share, for the same period last year. Included in the prior year’s six-month results are $278.5 million of pre-tax gains associated with the settlement of insurance claims related to the February 2008 Port Wentworth accident, $12.9 million of pre-tax losses on derivatives and $6.9 million of pre-tax charges related to the refinery accident.

Net sales for the current six-month period were $419.6 million compared to $382.6 million during the same period last year primarily due to higher domestic sugar prices. A reduction in sales volumes from the contribution of the Gramercy refinery was substantially offset by the ramp up in volumes at the Port Wentworth refinery.

Gross margin as a percent of sales for the six months ended March 31, 2011 improved to 1.6% compared to a negative 7.4% for the same period last year primarily due to higher refined sugar prices.

Dividend

The Company’s Board of Directors declared the regular quarterly dividend of $0.02 per share, payable June 2, 2011, to shareholders of record at the close of business on May 23, 2011.

Conference Call Details

Imperial Sugar's President and CEO John Sheptor and Senior Vice President and CFO Hal Mechler will discuss the Company's operating results for its fiscal second quarter ended March 31, 2011 at 11:00 a.m. EST on Wednesday, May 11, 2011.

Participants wishing to listen and participate in a brief question-and-answer session after management’s remarks can dial 1-866-700-6979 and enter the Participant Passcode: 48348667. The conference call can also be accessed via live audio webcast by visiting Imperial Sugar's web site at http://www.imperialsugarcompany.com and clicking on the "Q2 2011 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 dialing 1-888-286-8010 and entering the Passcode: 63743159. Both replays will be available through June 11, 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

Statements regarding future market prices and margins, refinery timelines and operational dates, future expenses and liabilities arising from the Port Wentworth refinery incident, future costs and actions regarding the LSR venture, future import and export levels, future government and legislative action, future operating results, future availability of raw sugar, operating efficiencies, results of future investments and initiatives, future cost savings, future product innovations, future energy costs, our liquidity and ability to finance our operations and capital investment programs, future pension plan contributions and other statements that are not historical facts contained in this release or discussed on the earnings conference call are forward-looking statements that involve certain risks, uncertainties and assumptions. These include, but are not limited to, market factors, farm and trade policy, unforeseen engineering, construction and equipment delays, 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 Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.