UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2012
OR
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number 000-16674
IMPERIAL SUGAR
COMPANY
(Exact name of registrant as specified in its charter)
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Texas
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74-0704500
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One Imperial Square, P.O. Box 9, Sugar Land, Texas 77487
(Address of principal executive offices, including Zip Code)
(281) 491-9181
(Registrants telephone number, including area code)
Indicate by
check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes.
x
No.
¨
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes.
x
No.
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, see
definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
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¨
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Accelerated Filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
¨
No
x
As of April 30, 2012 there were 12,241,530 shares of common stock, without par value, of the registrant outstanding.
IMPERIAL SUGAR COMPANY
Index
Forward-Looking Statements
Statements regarding completion of the pending Merger Agreement with a subsidiary of Louis Dreyfus Commodities LLC, future market prices
and margins, our liquidity and ability to finance our operations and capital investment programs, future expenses and liabilities arising from the Port Wentworth refinery incident, future liabilities arising from litigation, claims and assessments,
future import and export levels, future government and legislative action, future environmental regulatory and compliance costs, future operating results, future availability and costs of raw sugar, 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 report on Form 10-Q are forward-looking
statements that involve certain risks, uncertainties and assumptions. These risks, uncertainties and assumptions include, but are not limited to, the minimum tender condition of the Merger Agreement being satisfied, legislative, administrative and
judicial actions, market factors, farm and trade policy, 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 and other factors detailed elsewhere in this report and in our other filings with the SEC. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. We identify forward-looking statements in this report by using the following words and similar
expressions:
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expect
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project
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estimate
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believe
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anticipate
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likely
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plan
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intend
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could
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should
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may
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predict
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budget
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possible
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Management cautions against placing undue reliance on forward-looking statements or projecting any future
results based on such statements or present or future earnings levels. All forward-looking statements in this report on Form 10-Q are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this report and
in our other SEC filings.
1
PART I - FINANCIAL INFORMATION
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31,
2012
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September 30,
2011
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(In Thousands of Dollars)
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ASSETS
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Current Assets:
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Cash and Cash Equivalents
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$
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278
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$
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134
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Marketable Securities
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208
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206
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Accounts Receivable, Net
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49,340
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55,622
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Inventories:
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Finished Products
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25,833
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31,268
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Raw and In-Process Materials
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3,095
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21,966
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Supplies
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19,040
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17,355
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Total Inventory
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47,968
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70,589
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Prepaid Expenses and Other Current Assets
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17,044
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59,155
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Total Current Assets
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114,838
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185,706
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Other Investments
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21,193
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38,577
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Property, Plant and Equipment, Net
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249,065
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251,009
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Deferred Income Taxes, Net
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11,223
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11,034
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Other Assets
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4,925
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4,095
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Total
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$
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401,244
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$
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490,421
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current Liabilities:
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Accounts Payable:
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Raw Sugar
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$
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7,157
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$
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23,461
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Other Trade
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14,354
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13,367
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Total Accounts Payable
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21,511
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36,828
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Borrowing under Revolving Credit Line
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69,015
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81,843
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Deferred Income Taxes, Net
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8,313
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8,313
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Other Current Liabilities
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34,158
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74,200
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Total Current Liabilities
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132,997
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201,184
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Deferred Employee Benefits and Other Liabilities
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124,835
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127,783
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Commitments and Contingencies
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Shareholders Equity:
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Preferred Stock, Without Par Value, Issuable in Series; 5,000,000 Shares Authorized, None Issued
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Common Stock, Without Par Value; 50,000,000 Shares Authorized; 12,241,618 and 12,223,978 Shares Issued and Outstanding at
March 31, 2012 and September 30, 2011
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132,076
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131, 572
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Retained Earnings
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99,506
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109,463
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Accumulated Other Comprehensive Loss
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(88,170
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)
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(79,581
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)
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Total Shareholders Equity
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143,412
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161,454
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Total
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$
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401,244
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$
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490,421
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See notes to consolidated financial statements.
2
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
March
31,
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Six Months Ended
March
31,
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2012
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2011
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2012
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2011
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(In Thousands of Dollars, Except per Share Amounts)
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Net Sales
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$
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203,012
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$
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192,166
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$
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430,688
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$
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419,555
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Cost of Sales (includes depreciation of $4,847,000 and $4,954,000 for the three months and $9,415,000 and $10,687,000 for the six
months ended March 31, 2012 and 2011, respectively)
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(200,714
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)
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(181,869
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)
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(421,361
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)
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(412,950
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)
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Selling, General and Administrative Expense (includes depreciation of $157,000 and $212,000 for the three months and $331,000 and
$431,000 for the six months ended March 31, 2012 and 2011, respectively)
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(10,419
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)
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(9,667
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)
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(21,256
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)
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(19,316
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)
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Gain on Contribution of Assets to Joint Venture
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3,598
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3,598
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Operating Income (Loss)
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(8,121
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)
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4,228
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(11,929
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)
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(9,113
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)
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Interest Expense
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(1,033
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)
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(435
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)
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(1,984
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)
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(798
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Interest Income
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1
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386
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1
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399
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Other Income (Loss), Net
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2,653
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1,266
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3,955
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581
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Income (Loss) before Income Taxes
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(6,500
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)
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5,445
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(9,957
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)
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(8,931
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)
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Benefit (Provision) for Income Taxes (includes a Valuation Allowance of $2,413,000 and $3,462,000 for the three months and six
months ended March 31, 2012)
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(1,290
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)
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4,171
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Net Income (Loss)
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$
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(6,500
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)
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$
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4,155
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$
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(9,957
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)
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$
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(4,760
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)
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Basic Earnings (Loss) per Share of Common Stock
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$
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(0.54
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)
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$
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0.35
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$
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(0.83
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)
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$
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(0.40
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)
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Diluted Earnings (Loss) per Share of Common Stock
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$
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(0.54
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)
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$
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0.34
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$
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(0.83
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)
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$
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(0.40
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)
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Weighted Average Shares Outstanding:
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Basic
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12,001,464
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11,896,085
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11,992,970
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11,870,914
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Diluted
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12,001,464
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12,149,210
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11,992,970
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11,870,914
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|
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|
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|
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See notes to consolidated financial statements.
3
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months
Ended
March 31,
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2012
|
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2011
|
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(In Thousands of Dollars)
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Operating Activities:
|
|
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|
|
|
|
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Net Loss
|
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$
|
(9,957
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)
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$
|
(4,760
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)
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Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities:
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Depreciation
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9,746
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11,118
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Deferred Income Taxes
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(4,171
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)
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Non-Cash Stock-Based Compensation
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|
529
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1,802
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Reclassification from Accumulated Other Comprehensive Income (Loss) to Net Loss
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(4,237
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)
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(1,654
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)
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Cash (Paid) Received on Change in Fair Value of Derivative Instruments
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(4,378
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)
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14,201
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Gain on Contribution of Assets to Joint Venture
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|
|
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|
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(3,598
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)
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Equity (Earnings) Loss in Unconsolidated Subsidiaries
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|
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(3,957
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)
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|
85
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Reduction of Fair Value of Guarantee
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(700
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)
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Excess Tax Benefits from Stock-Based Compensation
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|
|
|
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|
|
290
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Other
|
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|
219
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|
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|
114
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Changes in Operating Assets and Liabilities:
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Accounts Receivable
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7,949
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|
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9,645
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Inventories
|
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22,621
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|
41,856
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Prepaid Expenses and Other Assets
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|
858
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|
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14,311
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Accounts PayableRaw Sugar
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(16,304
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)
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|
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(67,728
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)
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Accounts PayableOther Trade
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|
568
|
|
|
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(7,884
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)
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Other Liabilities
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(2,952
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)
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|
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(5,688
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)
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Net Cash Provided by (Used in) Operations
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|
705
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(2,761
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)
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|
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Investing Activities:
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Capital Expenditures
|
|
|
(7,382
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)
|
|
|
(16,801
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)
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Proceeds from Sales of Investments in Unconsolidated Investees
|
|
|
19,737
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|
|
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|
|
Other
|
|
|
(63
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)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
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Net Cash Provided by (Used in) Investing Activities
|
|
|
12,292
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|
|
|
(16,802
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)
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|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
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Borrowings (Repayments) under Revolving Credit Line, Net
|
|
|
(12,828
|
)
|
|
|
1,000
|
|
Cash Dividends
|
|
|
|
|
|
|
(578
|
)
|
Excess Tax Benefits from Stock-Based Compensation
|
|
|
|
|
|
|
(290
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)
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Other
|
|
|
(25
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)
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|
|
(384
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)
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|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
(12,853
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)
|
|
|
(252
|
)
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash and Cash Equivalents
|
|
|
144
|
|
|
|
(19,815
|
)
|
Cash and Cash Equivalents, Beginning of Period
|
|
|
134
|
|
|
|
22,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period
|
|
$
|
278
|
|
|
$
|
2,935
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-Cash Items:
|
|
|
|
|
|
|
|
|
Tax Effect of Deferred Gains and Losses
|
|
$
|
|
|
|
$
|
5,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of Property, Plant and Equipment on Account
|
|
$
|
1,427
|
|
|
$
|
1,221
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
4
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
For the Six Months Ended March 31, 2012
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
Common
Stock
|
|
|
Common
Stock
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
Total
|
|
|
|
(In Thousands of Dollars)
|
|
Balance September 30, 2011
|
|
|
12,223,978
|
|
|
$
|
131,572
|
|
|
$
|
109,463
|
|
|
$
|
(79,581
|
)
|
|
$
|
161,454
|
|
Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
(9,957
|
)
|
|
|
|
|
|
|
(9,957
|
)
|
Change in Derivative Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,378
|
)
|
|
|
(4,378
|
)
|
Reclassification from Accumulated Other Comprehensive Income (Loss) to Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,237
|
)
|
|
|
(4,237
|
)
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,546
|
)
|
Restricted Stock Unit Grants, Net
|
|
|
17,640
|
|
|
|
504
|
|
|
|
|
|
|
|
|
|
|
|
504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2012
|
|
|
12,241,618
|
|
|
$
|
132,076
|
|
|
$
|
99,506
|
|
|
$
|
(88,170
|
)
|
|
$
|
143,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
5
IMPERIAL SUGAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED March 31, 2012 AND 2011
(Unaudited)
1. ACCOUNTING POLICIES
Basis of
Presentation
The unaudited consolidated financial statements included herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission and reflect, in the opinion of management, all adjustments, consisting only of normal recurring accruals, that are necessary for a fair presentation of financial position and results of
operations for the interim periods presented. These financial statements include the accounts of Imperial Sugar Company and its majority-owned subsidiaries (the Company). All significant intercompany balances and transactions have been
eliminated in consolidation. Certain information and footnote disclosures required by accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The financial
statements included herein should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended September 30, 2011. The Company operates its business as one
domestic segmentthe production and sale of refined sugar and related products.
The consolidated financial statements
have been prepared on the going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Operating losses, pension plan contributions and capital expenditures have consumed a
significant amount of the Companys liquidity and the Company fell below the applicable minimum availability level under the credit agreement in January 2012, requiring compliance with a minimum EBITDA covenant. While the Company has remained
in compliance with the applicable financial covenant and other restrictions under the amended credit agreement, disclosure in the Companys Annual Report on Form 10-K for the year ended September 30, 2011 expressed substantial doubt about
the Companys ability to continue as a going concern.
In December 2011 the Company sold its one-third interest in
Louisiana Sugar Refining, LLC (LSR) for $18 million, rather than make additional capital contributions necessitated by the financial condition of the venture. In April 2012, the Company sold its 50% equity interest in Wholesome
Sweeteners, Incorporated (Wholesome) for net proceeds of $60.4 million.
Ultimately, the Companys
continuation as a going concern is dependant upon its ability to generate sufficient cash flows from operations in order to meet its obligations as they become due.
Cost of Sales
The Companys sugar inventories, which are
accounted for on a LIFO basis, are periodically reduced at interim dates to levels below that of the beginning of the fiscal year. When such interim LIFO liquidations are expected to be restored prior to fiscal year-end, the estimated replacement
cost of the liquidated layers is utilized as the basis of the cost of sugar sold from beginning of the year inventory. Accordingly, the cost of sugar utilized in the determination of cost of sales for interim periods includes estimates which may
require adjustment in future fiscal periods. Sugar inventory quantities at March 31, 2012 and 2011 declined below the comparable beginning of the fiscal year levels, resulting in the liquidation of a LIFO inventory layer with costs below the
cost of current purchases of $14.3 million in the quarter ended March 31, 2011 and $4.4 million and $17.1 million for the six month periods ended March 31, 2012 and 2011, respectively.
Recent Accounting Pronouncements
In June 2011, the FASB issued authoritative guidance on the presentation of comprehensive income to require an entity to present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance eliminates the option to present the components of other comprehensive income as
part of the statement of equity. The guidance required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which
other comprehensive income is presented. In December, the FASB issued guidance which indefinitely deferred the guidance related to the presentation of reclassification adjustments. The guidance is effective for the Company in the first quarter of
fiscal 2013 and should be applied retrospectively. The implementation of this guidance will only change the presentation of comprehensive income. It will not have an impact on the Companys financial position or results of operations.
6
2. SUBSEQUENT EVENTS
On May 1, 2012, the Company, LD Commodities Sugar Holdings LLC, a Delaware limited liability company (Parent), and Louis Dreyfus Commodities Subsidiary Inc., a Texas corporation and a
wholly-owned subsidiary of Parent (Merger Sub), entered into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which, among other things, Merger Sub will commence a tender offer (the Tender
Offer) to purchase all of the Companys issued and outstanding shares of common stock, no par value per share, including any associated right to purchase capital stock pursuant to the Rights Agreement, at a price of $6.35 per share
payable net to the seller in cash, without interest (the Offer Price), and subject to deduction for applicable withholding taxes. The Merger Agreement also contemplates that, following completion of the Tender Offer and subject to
the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company (the Merger), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. At the effective time of the Merger,
all remaining outstanding common shares not tendered in the Tender Offer (other than Common Shares owned by Parent, Merger Sub, the Company and any common shares held by stockholders who have properly perfected their statutory rights of dissent and
appraisal pursuant to the applicable provisions of Subchapter H of Chapter 10 of the Texas Business Organizations Code), will be cancelled and converted into the right to receive the Offer Price.
3. CONTINGENCIES
The
Company is party to a number of claims, including five remaining lawsuits brought on behalf of five employees or their families, for injuries and losses suffered as a result of the 2008 Port Wentworth refinery industrial accident. All of the
lawsuits are pending in the State Court of Chatham County, Georgia. None of the lawsuits demand a specific dollar amount of damages sought by the plaintiffs. The Company has workers compensation insurance which provides for coverage equal to the
statutory benefits provided to workers under state law. Additionally, the Companys general liability policy provides for coverage for damages to third parties up to a policy limit of $101 million.
The Company previously resolved forty-three lawsuits related to the accident. On October 19, 2011, the attorneys representing the
plaintiffs in the lawsuits remaining at that time submitted a time-limited global settlement offer to resolve these lawsuits for a sum within the Companys remaining limits of insurance. Two of the three insurers who issued the insurance
policies representing the Companys remaining limits of insurance, American Guarantee & Liability Insurance Company (AGLIC) and St. Paul Fire & Marine Insurance Company (St. Paul), elected not to
respond to this settlement offer by its deadline. The Company has notified AGLIC and St. Paul that due to their failure to settle the remaining lawsuits within the Companys available limits of insurance pursuant to the global settlement offer,
the Company will seek to hold them responsible for damages due to their negligent failure to settle and bad faith in the event verdicts or settlements in the remaining lawsuits are in excess of the Companys limits of insurance.
While the Company believes, based on the facts of these cases, that claims by employees and certain contractors are limited to benefits
provided under Georgia workers compensation law, the ultimate resolution of these matters could result in liability in excess of the amount accrued. The Company believes the likelihood of the aggregate liability, including the amounts paid in the
previous settlements, exceeding the $101 million policy limit is remote.
The Company was named as a defendant in a lawsuit
filed by one of its excess general liability insurers, AGLIC, in the U.S. District Court for the Northern District of Georgia on August 19, 2011, and styled as
American Guarantee & Liability Insurance Company v. Imperial Sugar
Company, et al.
, Civil Action No. 1:11-CV-2778-WSD (the Georgia Lawsuit). On January 10, 2012, AGLIC filed an amended complaint in the Georgia Lawsuit seeking : (1) a judicial declaration that the AGLIC policy does not
cover the Companys defense expenses incurred defending various claims arising from the industrial accident that occurred in 2008 at its plant located in Port Wentworth, Georgia (the Port Wentworth Claims), (2) an equitable
accounting of the settlements of certain of the Port Wentworth Claims that were settled using proceeds provided by the primary and umbrella layers of liability policies and the workers compensation policy issued by Chartis-affiliated insurers,
(3) a judicial declaration that the limits of liability of the underlying primary and umbrella liability policies were improperly exhausted as a result of such settlements, (4) a judicial declaration that the Company breached the AGLIC
policy by failing to cooperate and, as a result, coverage under the policy should be voided and (5) recoupment from the Company of amounts paid by AGLIC to settle Port Wentworth Claims in excess of its obligations under the AGLIC policy.
AGLIC shares on a 50/50 pro-rata basis with St. Paul the final $50 million layer of excess liability coverage available to
the Company for the Port Wentworth Claims. St. Paul was also named as a defendant in the Georgia Lawsuit and has asserted an amended cross claim against the Company seeking (1) a judicial declaration regarding whether the underlying primary and
umbrella policies have been exhausted properly in connection with the settlement of certain Port Wentworth Claims and if they have not been exhausted properly, a judicial declaration that St. Paul is entitled to recoup all sums paid in excess of its
obligations under the St. Paul policy and (2) a judicial declaration that St. Paul is not obligated to defend the Company or pay or reimburse the Companys defense expenses incurred in connection with the Port Wentworth Claims. On
January 31, 2012, the Company filed its answer to the amended complaint
7
and asserted amended counterclaims and cross claims against AGLIC and St. Paul, respectively, alleging, among other things that (1) AGLIC and St. Paul have breached their insurance policies
by wrongfully denying coverage for the Companys defense expenses incurred as a result of the Port Wentworth Claims and (2) AGLICs and St. Pauls breaches and other conduct amount to bad faith.
In December 2010, the Louisiana Department of Environmental Quality (LDEQ) issued a Consolidated Compliance Order and Notice
of Potential Penalty to the Company alleging violations of state environmental regulations and the terms of the wastewater discharge permit for the Companys Gramercy, Louisiana refinery. The alleged violations relate to the release of foam
into waters of the state and exceedances of applicable criteria for dissolved oxygen and pH. The Company investigated the alleged violations, took measures to cease and contain the foam discharge, and coordinated with the LDEQ to develop and
implement a plan to remove and dispose of the foamy material and achieve and maintain compliance with applicable legal requirements. Without admitting liability, the Company entered into an agreement with LDEQ in April 2012 settling the allegations
of violation of environmental regulations and paid a settlement amount of $10,770, including LDEQ response costs.
In March
2011, the Company filed suit in the United States District Court for the Southern District of Texas against Southern Systems, Inc. (SSI), the contractor who constructed the conditioning silos at the Companys Port Wentworth
refinery, for breach of contract. The lawsuit, styled as
Imperial Sugar Company v. Southern Systems, Inc., No. 4:11-cv-00970
, seeks damages for deficiencies in construction of the conditioning silos. In June 2011, SSI filed a
counterclaim against the Company for $3.5 million for work it allegedly performed and was not paid. The lawsuit is in discovery. In April 2012, the parties entered into an agreement to arbitrate their claims and counterclaims and to stay the federal
court lawsuit.
In May 2011, the Company joined seven cane and beet sugar producers and two sugar industry trade associations
as plaintiffs in a lawsuit filed against six producers of high fructose corn syrup (the Member Companies) and the Corn Refiners Association (the CRA) (collectively, the HFCS Defendants) in the United States
District Court for the Central District of California regarding advertising and marketing of high fructose corn syrup. The lawsuit, styled as
Western Sugar Cooperative v. Archer-Daniels, Midland Company, No. CV11-3473 CBM (MANx),
initially
alleged violations of the federal Lanham Act and state law by the HFCS Defendants in marketing and advertising high fructose corn syrup as a natural product equivalent to cane and beet sugar. The lawsuit seeks money damages and injunctive relief. On
October 21, 2011, the court issued an order on the first motion to dismiss the amended complaint filed by the HFCS Defendants, denying the motion as to the CRA, granting the motion as to the Member Companies, and giving plaintiffs leave to
amend their complaint to set forth additional allegations regarding the Member Companies. On the same day, the court issued a separate order on a motion filed only by the CRA, dismissing the state law claim for unfair competition. On
November 18, 2011, the plaintiffs filed a second amended complaint naming the Member Companies as defendants on the federal Lanham Act claim to which the CRA answered and the Member Companies filed another motion to dismiss. That motion to
dismiss has been fully briefed and was argued before the court on March 21, 2012.
On August 30, 2011, a shareholder
of the Company filed a putative class action lawsuit in the United States District Court for the Southern District of Texas, styled as
Dawes v. Imperial Sugar Company, et al.,
Civil Action No. 4:11-cv-03250, alleging that the Company,
its current President and Chief Executive Officer, and its current Senior Vice President and Chief Financial Officer, violated the federal securities laws. On September 22, 2011, another shareholder filed a nearly identical putative class
action lawsuit against the Company, its current President and Chief Executive Officer and its current Senior Vice President and Chief Financial Officer in the United States District Court for the Southern District of Texas styled as
Hassan v.
Imperial Sugar Company, et al.,
Civil Action No 4:11-cv-03457. On October 28, 2011, these cases were consolidated by the court. The complaints assert fraud claims under Sections 10 and 20 of the Securities Exchange Act of 1934, and allege
that the defendants made misleading statements and/or omissions about the Companys sales and business prospects, which purportedly were disclosed on August 5, 2011 when the Company announced its third fiscal quarter results.
On October 31, 2011, Carpenters Pension Fund of Illinois moved for appointment as lead plaintiff. On January 16, 2012,
plaintiff Hassan filed a motion to dismiss his individual claims without prejudice on the basis that his interests are adequately represented in the class action. At an initial pre-trial conference held on January 31, 2012, the court
entered an order appointing Carpenters Pension Fund of Illinois as lead plaintiff and dismissing plaintiff Hassans individual action. Pursuant to the court-ordered schedule, on March 22, 2012, the lead plaintiff filed an amended
consolidated complaint (the Complaint). On May 7, 2012, the defendants filed a motion to dismiss the Complaint.
On September 27, 2011, the Board of Directors of the Company received a letter from counsel for a shareholder of the Company requesting, among other things, that the Board cause an independent
investigation to be made and a legal action commenced with respect to alleged mismanagement and breaches of fiduciary duty by the Companys officers and directors relating to the August 5, 2011 announcement of the Companys third
fiscal quarter results. On October 12, 2011, the Board received a similar letter on behalf of another shareholder. The Board of Directors established a committee of independent and disinterested directors on October 5, 2011 with full
authority to investigate and address the allegations contained in such shareholder letters (Special Committee). That investigation remains on-going.
8
On February 2, 2012, one of the shareholders referenced in the immediately preceding
paragraph filed a derivative lawsuit in the District Court of Fort Bend County, Texas, styled as
Piszko v. Imperial Sugar Company, et al.,
Cause No. 12-DCV-195994, alleging that the Companys current President and Chief Executive
Officer, its current Senior Vice President and Chief Financial Officer, the current directors and a former director breached their fiduciary duties, were unjustly enriched and engaged in the waste of corporate assets. On February 3, 2012, the
other shareholder referenced in the immediately preceding paragraph filed a nearly identical derivative lawsuit against the Companys current President and Chief Executive Officer, its current Senior Vice President and Chief Financial Officer,
its current directors and a former director in the District Court of Fort Bend County, Texas styled as
Cinotto v. Imperial Sugar Company, et al.,
Cause No. 12-DCV-196013. The complaints allege, among other things, that the defendants
failed to establish and maintain adequate internal controls over the Port Wentworth refinery, made improper statements in press releases, SEC filings and other public disclosures and failed to establish and maintain disclosure controls in order to
prevent the allegedly improper statements from being made. The complaints further allege that the defendants engaged in a conspiracy to aid and assist each other in masking the alleged breaches of duty, unjust enrichment and the waste of corporate
assets. On February 22, 2012, plaintiffs filed an unopposed motion to consolidate the two derivative lawsuits. On March 2, 2012, the Company and director and officer defendants filed an unopposed motion to stay the lawsuits pending the
completion of the Special Committees investigation. Both motions remain pending before the court. On May 8, 2012, the Piszko and Cinotto plaintiffs filed a First Amended Shareholder Derivative Petition. In addition to the allegations asserted
in its predecessor, this pleading claims that in connection with the recently-announced transaction with Louis Dreyfus Commodities LLC, the directors and officers breached their fiduciary duties to ensure the fairness of the transaction to
shareholders, including by attempting to eliminate personal liability arising from the original petition by negotiating the sale of the Company.
Between May 2, 2012 and the date of this filing, a number of Imperial Sugar shareholders filed derivative lawsuits in the Texas state district courts, including
Oshea
v.
Imperial Sugar
Company
, et
al.
(Fort Bend Dist. Ct.);
Smith
v.
Gaffney, et al.
(Fort Bend Dist. Ct.);
Del Parigi
v.
Imperial Sugar Company, et al.
(Fort Bend Dist. Ct.); and
Gruber
v.
Coan, et al.
(Harris
Dist. Ct.) In addition, the Company is aware of at least one shareholder action that purports to be a shareholder class action lawsuit,
Kahn
v.
Gaffney, et al.
(Fort Bend Dist. Ct.).
The lawsuits assert claims for breach of fiduciary duty and abuse of control against the Company and its directors, as well as aiding and
abetting claims against Louis Dreyfus Commodities LLC and its affiliates, in connection with the proposed merger announced on May 1, 2012. The shareholders challenge the fairness of various provisions of the proposed transaction, including the price
that Company shareholders will be offered to tender their shares, and the provisions of the Merger Agreement relating to the possible termination of the transaction, the no solicitation provision, and the top-up option
provision. Plaintiffs also allege that defendants breached their duty of candor to Company shareholders by failing to disclose all material information about the Transaction, and request certain disclosures under Texas law. Plaintiffs requests
for relief include injunctive and declaratory relief, as well as rescission, costs, attorneys fees, and disbursements.
Additionally, between May 3, 2012 and the date of this filing, the Board of Directors received demand letters from counsel for
shareholders, including Shmuel and Abvohom Zaks and the Farish Trust, containing similar assertions and requesting that the Company terminate the proposed transaction. Among other things, the Zaks demand letter contends that the Companys
directors are motivated by prospects for personal economic benefit and therefore cannot be considered disinterested.
The
Company is party to other litigation and claims which are normal in the course of its operations. While the results of such litigation and claims cannot be predicted with certainty, the Company believes the final outcome of such matters will not
have a material effect on its consolidated results of operations, financial position or cash flows. In connection with the sales of certain businesses, the Company made customary representations and warranties, and undertook indemnification
obligations with regard to certain of these representations and warranties including financial statements, environmental and tax matters, and the conduct of the businesses prior to the sale. These indemnification obligations are subject to certain
deductibles, caps and expiration dates.
In connection with the sale of a subsidiary in 2002, the buyer assumed
$9.5 million of industrial revenue bonds, with final maturity in 2025. The Company remains contingently liable for repayment of the bonds under a guaranty arrangement and does not believe that a liability is probable. The Company has recorded a
non-current liability for the $1.3 million fair value of the guarantee.
4. SALE OF JOINT VENTURE INTERESTS
We sold our 50% joint venture interest in Comercializadora Santos Imperial S. de R.L. de C.V. for $5.1 million and terminated our mutually
exclusive supply agreements with the Santos group in October 2011.
Operating losses incurred by LSR through November 2011,
plus additional working capital requirements caused by high sugar prices, strained the joint ventures financial capabilities necessitating a capital injection by the partners. Rather than make this additional capital contribution, the Company
chose to sell its equity stake in LSR and certain idle Louisiana real estate parcels to its former partners in December 2011 for $18 million, including $14.2 million at closing, with the remainder payable over 21 months. In connection with the sale,
the Company contributed the remaining refinery land to LSR and remains obligated to complete the Voluntary Remediation Program. We continue to package sugar at Gramercy under a revised sugar supply agreement with a minimum term of five years.
In April 2012, we sold our 50% equity interest in Wholesome which had a book value of $20.8 million to an affiliate of Arlon
Group, a private investment group focused on food and agriculture. We received net proceeds of $60.4 million in cash at the closing of the transaction, which were used to reduce borrowings under the Companys revolving credit facility. Final
proceeds are subject to adjustment upon determination of Wholesomes closing date working capital.
9
5. DEBT
In December 2011, the Companys $140 million (subject to a borrowing base) senior secured revolving credit facility (Revolver) was amended to include a provision to modify the minimum
EBITDA financial covenant subject to an availability trigger, until the earlier of April 15, 2012 or such time as availability exceeds $50 million. The amendment includes an additional provision which has the effect of reducing the amount
available to borrow under the borrowing base formula by $10 million while the modified EBITDA covenant is in effect. The amendment also prohibits the payment of dividends while the modified EBITDA covenant is in effect. After the earlier of
April 15, 2012 or such time as the availability exceeds $50 million, the financial covenant and availability trigger revert to the terms on the Revolver prior to the amendment. At March 31, 2012 the Company had $69.0 million outstanding
under the Revolver and unused availability of $12.7 million.
The Company fell below the availability trigger in the amended
Revolver in January 2012 and was in compliance with the amended EBITDA covenant during the quarter ended March 31, 2012. With the receipt of proceeds from the Wholesome Sweeteners sale in April 2012, availability exceeded $50 million and the
availability trigger and financial covenant reverted to the terms on the Revolver prior to the amendment. Additionally, concurrent with the sale of the Companys equity interest in Wholesome, the fixed asset component of the borrowing base was
reduced by $15 million. As of May 8, 2012, the Company had $44.3 million outstanding under the Revolver and unused availability of $36.4 million.
Although the final maturity of the Revolver is December 31, 2015, the Company classifies debt under the Revolver as current, as the agreement contains a subjective acceleration clause which can be
exercised, if, in the opinion of the lender, there is a material adverse effect, and provides the lenders direct access to our cash receipts.
6. STOCK-BASED COMPENSATION
During the six months ended March 31, 2011, the Company granted 146,440 shares of restricted stock to employees with a weighted average grant date fair value of $13.22 per share. No comparable
restricted stock grants were made during the six months ended March 31, 2012.
During the six months ended March 31,
2012, the Company granted 56,036 restricted stock units (RSUs) to non-employee directors with a weighted average grant date fair value of $6.87 per unit. During the six months ended March 31, 2011, the Company granted 38,441
RSUs to non-employee directors with a weighted average grant date fair value of $11.45 per unit. The RSUs vest six months following termination of board service.
7. EARNINGS PER SHARE
The following table presents information necessary
to calculate diluted earnings per share (in thousands of dollars, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March
31,
|
|
|
Six Months Ended
March
31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net Income (Loss)
|
|
$
|
(6,500
|
)
|
|
$
|
4,155
|
|
|
$
|
(9,957
|
)
|
|
$
|
(4,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Shares Outstanding
|
|
|
12,001,464
|
|
|
|
11,896,085
|
|
|
|
11,992,970
|
|
|
|
11,870,914
|
|
Effect of Incremental Shares Issuable from Assumed Exercise of Stock Options and Nonvested Restricted Stock Under the Treasury
Stock Method (1)
|
|
|
|
|
|
|
253,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Average Shares
|
|
|
12,001,464
|
|
|
|
12,149,210
|
|
|
|
11,992,970
|
|
|
|
11,870,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Net Income (Loss)
|
|
$
|
(0.54
|
)
|
|
$
|
0.34
|
|
|
$
|
(0.83
|
)
|
|
$
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
No assumed restricted stock share issuances or option exercises were included in the computation of diluted EPS for the three and six months ended March 31, 2012
and the six months ended March 31, 2011, because doing so would have an antidilutive effect on the computation of diluted earnings per share. Includes 211,541 shares of restricted stock and 41,584 stock options for the three months ended
March 31, 2011. Excludes 449,868 antidilutive securities for the three and six months ended March 31, 2012, and excludes 1,085 and 549,108 antidilutive securities for the three and six months ended March 31, 2011.
|
10
8. PENSION AND OTHER POSTRETIREMENT BENEFITS
The components of net periodic benefit costs for the three months and six months ended March 31, 2012 and 2011 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March
31,
|
|
|
Six Months Ended
March
31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
305
|
|
|
$
|
252
|
|
|
$
|
611
|
|
|
$
|
549
|
|
Interest Cost
|
|
|
2,594
|
|
|
|
2,699
|
|
|
|
5,187
|
|
|
|
5,357
|
|
Expected Return on Plan Assets
|
|
|
(2,615
|
)
|
|
|
(2,597
|
)
|
|
|
(5,230
|
)
|
|
|
(5,195
|
)
|
Amortization of Prior Service Cost
|
|
|
13
|
|
|
|
16
|
|
|
|
25
|
|
|
|
35
|
|
Recognized Actuarial Loss
|
|
|
1,274
|
|
|
|
934
|
|
|
|
2,549
|
|
|
|
2,014
|
|
Curtailment Loss
|
|
|
|
|
|
|
169
|
|
|
|
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Periodic Benefit Costs
|
|
$
|
1,571
|
|
|
$
|
1,473
|
|
|
$
|
3,142
|
|
|
$
|
2,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Benefits Other than
Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
8
|
|
Interest Cost
|
|
|
88
|
|
|
|
104
|
|
|
|
177
|
|
|
|
204
|
|
Amortization of Prior Service Cost
|
|
|
(398
|
)
|
|
|
(398
|
)
|
|
|
(797
|
)
|
|
|
(797
|
)
|
Recognized Actuarial Loss
|
|
|
138
|
|
|
|
160
|
|
|
|
276
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Periodic Benefit Costs (Income)
|
|
$
|
(170
|
)
|
|
$
|
(130
|
)
|
|
$
|
(339
|
)
|
|
$
|
(266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension plan contributions, which are based on regulatory requirements, were $6.6 million for the
six months ended March 31, 2012 and $6.0 million for the six months ended March 31, 2011. Contributions during the remainder of fiscal 2012 are expected to be approximately $9.6 million. During the three months ended March 31, 2011 a
curtailment loss of $169 thousand was recognized for the Colonial Union Pension Plan due to a reduction in headcount associated with the contribution of the Gramercy refinery assets to LSR. As a result of the revaluation of the Colonial Union
Pension Plan liability triggered by the curtailment, accrued pension liabilities were reduced by $2.9 million and Accumulated Other Comprehensive Income increased $1.9 million net of tax.
9. OTHER INCOME
Other income included the following (in thousands of
dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March
31,
|
|
|
Six Months Ended
March
31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Equity Earnings in investment in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesome Sweeteners, Inc.
|
|
$
|
2,638
|
|
|
|
1,222
|
|
|
$
|
4,019
|
|
|
|
30
|
|
Comercializadora Santos Imperial S. de R.L. de C.V.
|
|
|
|
|
|
$
|
1,303
|
|
|
|
|
|
|
$
|
1,480
|
|
Louisiana Sugar Refining, LLC
|
|
|
|
|
|
|
(1,913
|
)
|
|
|
|
|
|
|
(1,507
|
)
|
Other
|
|
|
(39
|
)
|
|
|
|
|
|
|
(62
|
)
|
|
|
|
|
Reduction of fair value of guarantee
|
|
|
|
|
|
|
700
|
|
|
|
|
|
|
|
700
|
|
Other
|
|
|
54
|
|
|
|
(46
|
)
|
|
|
(2
|
)
|
|
|
(122
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,653
|
|
|
$
|
1,266
|
|
|
$
|
3,955
|
|
|
$
|
581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company reports its share of earnings in these investees on the equity method. The Company sold its
investment in Comercializadora Santos Imperial S. de R.L. de C.V. and LSR during the six months ended March 31, 2012, and sold its investment in Wholesome in April 2012. Equity earnings in Wholesome for the quarter ended December 31, 2010
included a $2.4 million adjustment to the carrying value of Imperials investment to reflect the increased value of
11
Wholesomes management incentive shares. Summarized combined financial information for Wholesome for
the quarter and six months ended March 31, 2012 and 2011 includes the following (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
Year to Date
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net Sales
|
|
$
|
50,455
|
|
|
$
|
26,321
|
|
|
|
|
|
91,483
|
|
|
|
57,052
|
|
Gross Profit
|
|
$
|
13,067
|
|
|
$
|
6,543
|
|
|
|
|
|
23,212
|
|
|
|
13,904
|
|
Operating Income
|
|
$
|
8,535
|
|
|
$
|
4,148
|
|
|
|
|
|
15,331
|
|
|
|
8,693
|
|
Net Income
|
|
$
|
5,515
|
|
|
$
|
2,628
|
|
|
|
|
|
9,891
|
|
|
|
5,247
|
|
10. FAIR VALUE
The Company determines the fair value of natural gas and raw sugar futures contracts and marketable securities using quoted market prices for the individual securities. The following table presents the
Companys assets and liabilities measured and recognized at fair value on a recurring basis classified at the appropriate level of the fair value hierarchy as of March 31, 2012 and September 30, 2011 (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2012
|
|
|
|
Fair Value
|
|
|
Margin
Requirements
Settled in Cash
|
|
|
Balance
Sheet
Total
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
$
|
644
|
|
|
|
|
|
|
|
|
|
|
$
|
(644
|
)
|
|
|
|
|
Marketable Securities
|
|
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
208
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
3,401
|
|
|
|
84
|
|
|
|
|
|
|
|
(3,485
|
)
|
|
|
|
|
Natural Gas
|
|
|
353
|
|
|
|
|
|
|
|
|
|
|
|
(353
|
)
|
|
|
|
|
Non-Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
|
|
|
|
231
|
|
|
|
|
|
|
|
(231
|
)
|
|
|
|
|
Non-Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
|
|
|
|
83
|
|
|
|
|
|
|
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
Fair Value
|
|
|
Margin
Requirements
Settled in Cash
|
|
|
Balance
Sheet
Total
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
$
|
7,507
|
|
|
|
|
|
|
|
|
|
|
$
|
(7,507
|
)
|
|
|
|
|
Marketable Securities
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
206
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
2,525
|
|
|
|
|
|
|
|
|
|
|
|
(2,525
|
)
|
|
|
|
|
No. 11 World Sugar Futures Contracts
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
Natural Gas
|
|
|
337
|
|
|
|
|
|
|
|
|
|
|
|
(337
|
)
|
|
|
|
|
Non-Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
|
|
|
$
|
190
|
|
|
|
|
|
|
|
(190
|
)
|
|
|
|
|
12
Fair value hierarchy levels are as follows:
|
|
|
Level 1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
|
|
|
Level 2Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable,
either directly or indirectly;
|
|
|
|
Level 3Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. These inputs may be
used with internally developed methodologies that are used to generate managements best estimate of fair value.
|
The Company uses the market approach in determining the fair value of our Level 1 and Level 2 assets and liabilities. Valuation of Level 2 domestic sugar futures contracts is based on the pricing of the
Intercontinental Exchange (ICE) Sugar No. 16 futures contract. The Companys policy for determining when transfers between levels are recognized is to do so at the end of each reporting period. There were no transfers between Level 1 and
Level 2 for the three months ended March 31, 2012. Due to increased activity of trading in certain No. 16 domestic sugar futures contracts, the Company transferred contracts with a December 31, 2011 fair value of $87 thousand from
Level 2 to Level 1 during the three months ended December 31, 2011.
11. DERIVATIVE INSTRUMENTS
We use raw sugar futures and options in our raw sugar purchasing programs and natural gas futures and options to hedge natural gas
purchases used in our manufacturing operations. Additionally, we periodically use derivatives to manage interest rate and foreign currency exchange risk. Our objective in the use of derivative instruments is to mitigate commodity price, interest
rate or foreign currency exchange risk. Our derivatives hedging activity is supervised by a senior risk management committee which monitors and reports compliance with our risk management policy to the Audit Committee of the Board of Directors.
The majority of our industrial channel sales and a portion of our distributor channel sales are made under fixed price,
forward sales contracts. In order to mitigate price risk in raw and refined sugar commitments, we manage the volume of refined sugar sales contracted for future delivery in relation to the volume of raw cane sugar purchased for future delivery by
entering into forward purchase contracts to buy raw cane sugar at fixed prices and by using raw sugar futures contracts. Historically, substantially all of our purchases of domestic raw sugar and quota raw sugar imports are priced based on the
Intercontinental Exchange (ICE) Sugar No. 16 futures contract. We use these futures contracts to price our physical domestic and quota raw sugar purchase commitments. Certain of these derivative instruments qualify as cash flow hedges and are
designated as hedges for accounting purposes. To the extent that derivative instruments do not qualify for hedge accounting treatment, the Company records the effect of those instruments in current earnings. Non-quota imports under the re-export
program, which constitutes less than 10% of our raw sugar purchases, are priced based on the ICE Sugar No. 11 futures contract. We use these futures contracts to price our world raw purchase commitments, however, these derivative instruments
are not designated as cash flow hedges. Additionally we receive short raw sugar futures contracts from certain raw sugar suppliers that are used as pricing mechanisms which are not designated as hedges. We have purchased domestic raw sugar futures
contracts up to 18 months in advance of the physical purchase.
The pricing of our physical natural gas purchases generally is
indexed to a spot market index and we use natural gas futures contracts traded on the New York Mercantile Exchange to hedge the cost of natural gas purchased under these physical contracts. These derivative instruments have qualified as cash flow
hedges and have been designated as hedges for accounting purposes in prior periods, although none were designated as hedges for accounting purposes during or as of the end of the current period. Additionally, we utilize natural gas futures which are
not designated as cash flow hedges to manage the remaining commodity price risk above the volume of derivatives designated as cash flow hedges. We have purchased natural gas futures contracts up to 6 months in advance of the physical purchase of
natural gas.
For derivative instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the
derivative is reported as a component of other comprehensive income and reclassified to earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses that result from the discontinuance of cash flow
hedges because it is probable that the original forecasted transaction will not occur are recognized in current earnings. Gains and losses on derivatives representing hedge ineffectiveness are recognized in current earnings. Gains and losses on
derivatives not designated as hedges are recognized in current earnings.
13
At March 31, 2012 we had the following net futures positions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Designation
|
|
Domestic
Sugar
(cwt)
|
|
|
World
Sugar (cwt)
|
|
|
Natural
Gas (mmbtu)
|
|
Cash Flow
|
|
|
66,080
|
|
|
|
|
|
|
|
|
|
Not Designated
|
|
|
3,156,160
|
|
|
|
|
|
|
|
250,000
|
|
All of our futures contracts are settled in cash daily with the respective futures exchanges and
therefore do not contain credit-risk-related contingent features. The Company has $7.6 million recorded on the balance sheet for cash held on deposit in margin accounts at March 31, 2012 for the futures positions above. At March 31, 2012
there were no derivative positions to mitigate the risk of interest rates or foreign currency exchange. For the six-month period ended March 31, 2012, we did not engage in trading activity with derivatives.
The table below shows the location and amounts in the consolidated balance sheets for derivative instruments (in thousands):
As of March 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Designation
|
|
|
Fair
Value
|
|
|
Margin
Requirements
Settled in Cash
|
|
|
Balance Sheet
Total
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
$
|
512
|
|
|
$
|
(512
|
)
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Cash Flow
|
|
|
|
132
|
|
|
|
(132
|
)
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
|
3,287
|
|
|
|
(3,287
|
)
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Cash Flow
|
|
|
|
198
|
|
|
|
(198
|
)
|
|
|
|
|
Natural Gas
|
|
|
Not Designated
|
|
|
|
353
|
|
|
|
(353
|
)
|
|
|
|
|
Non-Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
|
231
|
|
|
|
(231
|
)
|
|
|
|
|
Non-Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
|
83
|
|
|
|
(83
|
)
|
|
|
|
|
As of September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Designation
|
|
|
Fair
Value
|
|
|
Margin
Requirements
Settled in Cash
|
|
|
Balance Sheet
Total
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Cash Flow
|
|
|
$
|
7,507
|
|
|
$
|
(7,507
|
)
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 11 World Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
|
10
|
|
|
|
(10
|
)
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Cash Flow
|
|
|
|
1,458
|
|
|
|
(1,458
|
)
|
|
|
|
|
Natural Gas
|
|
|
Not Designated
|
|
|
|
337
|
|
|
|
(337
|
)
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Not Designated
|
|
|
|
1,067
|
|
|
|
(1,067
|
)
|
|
|
|
|
Non-Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. 16 Domestic Sugar Futures Contracts
|
|
|
Cash Flow
|
|
|
|
190
|
|
|
|
(190
|
)
|
|
|
|
|
The impact of futures contracts on the consolidated income statement for the three and six months ended
March 31, 2012 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Designation
|
|
Income Statement
Line Item
|
|
Three Months Ended March 31, 2012
|
|
|
Six Months Ended March 31, 2012
|
|
|
|
Domestic
Sugar
|
|
|
World
Sugar
|
|
|
Natural
Gas
|
|
|
Domestic
Sugar
|
|
|
World
Sugar
|
|
|
Natural
Gas
|
|
Cash Flow
|
|
Cost of Sales
(1)
|
|
$
|
194
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(4,237
|
)
|
|
$
|
|
|
|
$
|
|
|
Cash Flow
|
|
Accumulated other comprehensive loss
|
|
|
3,238
|
|
|
|
|
|
|
|
|
|
|
|
4,378
|
|
|
|
|
|
|
|
|
|
Not Designated
|
|
Cost of Sales (credit)
|
|
|
1,844
|
|
|
|
|
|
|
|
320
|
|
|
|
2,658
|
|
|
|
347
|
|
|
|
851
|
|
(1)
|
Amounts were reclassified from accumulated other comprehensive income.
|
14
The impact of futures contracts on the consolidated income statement for the three and six
months ended March 31, 2011 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Designation
|
|
Income Statement
Line Item
|
|
Three Months Ended March 31, 2011
|
|
|
Six Months Ended March 31, 2011
|
|
|
|
Domestic
Sugar
|
|
|
World
Sugar
|
|
|
Natural
Gas
|
|
|
Domestic
Sugar
|
|
|
World
Sugar
|
|
|
Natural
Gas
|
|
Cash Flow
|
|
Cost of Sales
(1)
|
|
$
|
(1,186
|
)
|
|
$
|
|
|
|
$
|
142
|
|
|
$
|
(2,248
|
)
|
|
$
|
|
|
|
$
|
594
|
|
Cash Flow
|
|
Accumulated other comprehensive loss
|
|
|
(1,565
|
)
|
|
|
|
|
|
|
|
|
|
|
(14,248
|
)
|
|
|
|
|
|
|
47
|
|
Not Designated
|
|
Cost of Sales (credit)
|
|
|
126
|
|
|
|
(327
|
)
|
|
|
48
|
|
|
|
(1,895
|
)
|
|
|
(4,390
|
)
|
|
|
11
|
|
(1)
|
Amounts were reclassified from accumulated other comprehensive income.
|
There were no gains or losses recognized on cash flow hedges for ineffectiveness, nor were there any portion of derivatives excluded from the effectiveness assessment. Approximately $1.5 million of gains
on cash flow hedges for raw sugar is expected to be reclassified to earnings over the next twelve months.
12. COMPONENTS OF ACCUMULATED
OTHER COMPREHENSIVE INCOME (LOSS)
Changes in Accumulated Other Comprehensive Income for the six months ended
March 31, 2012 are as follows (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Unrealized
Gains (Losses)
on Derivatives
|
|
|
Net Unrealized
Gains
(Losses) on
Pension and Other
Post Retirement
Medical Benefits
|
|
|
Foreign
Currency
Translation
Adjustments
and Other
|
|
|
Total
|
|
Balance September 30, 2011
|
|
$
|
10,239
|
|
|
$
|
(89,794
|
)
|
|
$
|
(26
|
)
|
|
$
|
(79,581
|
)
|
Change in Derivative Fair Value
|
|
|
(4,378
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,378
|
)
|
Reclassification from Accumulated Other
Comprehensive Income (Loss) to Net Income
|
|
|
(4,237
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,237
|
)
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2012
|
|
$
|
1,624
|
|
|
$
|
(89,794
|
)
|
|
$
|
|
|
|
$
|
(88,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Item 2.
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
This discussion should be read in conjunction with information contained in the Consolidated Financial Statements and the notes thereto
and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.
Pending Merger Agreement
On May 1, 2012, the Company, LD Commodities Sugar Holdings LLC, a Delaware limited liability company (Parent), and Louis
Dreyfus Commodities Subsidiary Inc., a Texas corporation and a wholly-owned subsidiary of Parent (Merger Sub), entered into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which, among other things, Merger
Sub will commence a tender offer (the Tender Offer) to purchase all of the Companys issued and outstanding shares of common stock, no par value per share, including any associated right to purchase capital stock pursuant to the
Rights Agreement, at a price of $6.35 per share payable net to the seller in cash, without interest (the Offer Price), and subject to deduction for applicable withholding taxes. The Merger Agreement also contemplates that, following
completion of the Tender Offer and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company (the Merger), with the Company surviving the Merger as a wholly-owned subsidiary of
Parent. At the effective time of the Merger, all remaining outstanding common shares not tendered in the Tender Offer (other than Common Shares owned by Parent, Merger Sub, the Company and any common shares held by stockholders who have
properly perfected their statutory rights of dissent and appraisal pursuant to the applicable provisions of Subchapter H of Chapter 10 of the Texas Business Organizations Code), will be cancelled and converted into the right to receive the
Offer Price.
Overview
We operate in a single domestic business segment, the production and sale of refined sugar and related products. Our results of operations substantially depend on market factors, including the demand for
and price of refined sugar, the price of raw cane sugar and the availability and price of energy and other resources. These factors are influenced by a variety of external forces that we are unable to predict, including the number of domestic acres
contracted to grow sugar cane and sugar beets, prices of competing crops, supply and price of raw cane sugar, dietary trends, competing sweeteners, weather conditions, production outages at key industry facilities and the United States and Mexican
farm and trade policies. The domestic sugar industry is subject to substantial influence by legislative and regulatory actions. The 2008 Farm Bill limits the importation of raw cane sugar and the marketing of domestically produced refined beet and
raw cane sugar, potentially affecting refined sugar sales prices and volumes as well as the supply and cost of raw material available to our cane refineries.
On January 1, 2011, the Company contributed the equipment and personal property of its then-existing Gramercy refinery (other than its small bag packaging assets) to LSR in accordance with the terms
of the LSR joint venture agreement. We continue to operate the small bag packaging facility in Gramercy with refined bulk sugar purchased from LSR under a long term supply agreement with market-based pricing provisions. Sales derived from the
Gramercy operations since this contribution are lower, as only sales from the small bag packaging facility are consolidated in our results. In December 2011, we sold our one third interest in LSR for $18 million, including $14.2 million at closing,
with the remainder payable over 21 months.
In October 2011, we sold our 50% joint venture interest in Comercializadora Santos
Imperial S. de R.L. de C.V. for $5.1 million and terminated our mutually exclusive supply agreements with the Santos group.
In April 2012, we sold our 50% equity interest in Wholesome to an affiliate of Arlon Group, a private investment group focused on food
and agriculture. We received net proceeds of $60.4 million in cash at the closing of the transaction, which were used to reduce borrowings under the Companys revolving credit facility. Final proceeds are subject to adjustment upon
determination of Wholesomes closing date working capital.
Results of Operations
Three and Six Months Ended March 31, 2012 compared to Three and Six Months Ended March 31, 2011
For the three months ended March 31, 2012, we reported a loss of $6.5 million or $0.54 per diluted share, compared to net income of
$4.2 million or $0.34 per diluted share during the second fiscal quarter of the prior year. For the six months ended March 31, 2012, we reported a net loss of $10.0 million or $0.83 per diluted share, compared to a net loss of $4.8 million or
$0.40 per diluted share for the same period in the prior year. The lower operating results in the current periods are primarily due to higher raw sugar costs, which were not fully recovered by higher sales prices. Additionally, the prior years
second quarter included the effect of liquidating lower cost beginning LIFO inventory layers.
16
Sugar sales comprised approximately 98% of our net sales in the three-month period ended
March 31, 2012 and 97% in the corresponding three-month period of the prior year. Sugar sales comprised approximately 97% of net sales in the six month periods of the current and prior year. Sugar sales volumes and prices were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Six Months Ended March 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
|
(000 cwt)
|
|
|
(per cwt)
|
|
|
(000 cwt)
|
|
|
(per cwt)
|
|
|
(000 cwt)
|
|
|
(per cwt)
|
|
|
(000 cwt)
|
|
|
(per cwt)
|
|
Sugar Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
|
2,040
|
|
|
$
|
49.79
|
|
|
|
2,090
|
|
|
$
|
43.37
|
|
|
|
4,006
|
|
|
$
|
48.84
|
|
|
|
4,483
|
|
|
$
|
40.83
|
|
Consumer
|
|
|
1,167
|
|
|
|
53.25
|
|
|
|
1,314
|
|
|
|
50.19
|
|
|
|
2,844
|
|
|
|
53.81
|
|
|
|
3,141
|
|
|
|
48.88
|
|
Distributor
|
|
|
650
|
|
|
|
52.46
|
|
|
|
549
|
|
|
|
48.90
|
|
|
|
1,306
|
|
|
|
52.94
|
|
|
|
1,253
|
|
|
|
47.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Sales
|
|
|
3,857
|
|
|
|
51.29
|
|
|
|
3,953
|
|
|
|
46.41
|
|
|
|
8,156
|
|
|
|
51.23
|
|
|
|
8,877
|
|
|
|
44.62
|
|
World Sales
|
|
|
15
|
|
|
|
21.15
|
|
|
|
40
|
|
|
|
44.93
|
|
|
|
99
|
|
|
|
19.46
|
|
|
|
321
|
|
|
|
36.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sugar Sales
|
|
|
3,872
|
|
|
|
51.17
|
|
|
|
3,993
|
|
|
$
|
46.39
|
|
|
|
8,255
|
|
|
$
|
50.85
|
|
|
|
9,198
|
|
|
$
|
44.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales increased 5.6% for the three months ended March 31, 2012, compared to the same period in
the prior year. Domestic sales prices increased $4.88 per cwt or 10.5% for the quarter as refined sugar prices continue at levels much higher than historical norms due to tighter domestic supply conditions, as well as higher raw sugar prices which
has placed upward pressure on refined prices. Domestic sugar volumes decreased 2.4% for the quarter. Net sales increased 2.7% for the six months ended March 31, 2012 compared to the same period in the prior year. Domestic sugar volumes
decreased 8.1% for the six months ended March 31, 2012 compared to the same period in the prior year primarily as a result of the contribution of the Gramercy refinery to the LSR partnership in the first quarter of the prior fiscal year.
Domestic sales prices increased 14.8% for the current six month period. The current USDA projections for fiscal 2012 indicate reductions in imports from Mexico from the comparable fiscal 2011 levels, which are partially offset by somewhat higher
domestic sugar production. Overall these factors are expected to continue to keep US sugar supplies tight for the remainder of the fiscal year.
The majority of industrial channel sales and a portion of distributor channel sales are made under fixed price contracts which generally extend up to a year, many of which are on a calendar year basis. As
a result, realized sales prices tend to lag market trends.
For the three months ended March 31, 2012, gross margin as a
percentage of sales decreased to 1.1% compared to 5.4% in the prior year quarter. The decrease in gross margin percentage is primarily due to higher raw sugar costs and a LIFO inventory liquidation recognized in the prior year, which were not fully
offset by higher sales prices. Gross margin as a percentage of sales for the six months ended March 31, 2012 improved to 2.2% as compared to 1.6% in the same prior year period. Raw sugar prices remain at historically high levels. The Company
has attempted to offset the increase in raw sugar cost by adjusting its sales prices, however competitive pressures have limited the effectiveness of these efforts. There can be no assurance that we will be successful in achieving sales price
increases sufficient to offset these higher raw sugar costs. Our cost of domestic raw cane sugar before LIFO increased $2.74 per cwt to $36.61 per cwt (on a raw market basis) for the current year quarter as compared to $33.87 per cwt for the quarter
ended March 31, 2011. Sugar inventory quantities at March 31, 2011 declined below the beginning of the fiscal period levels resulting in the liquidation of beginning LIFO inventory layers with a cost approximately $14.3 million or $3.62 per cwt
of domestic sales in last years second quarter, while no such LIFO liquidation was recognized in the current quarter. The unit cost of refined sugar purchased from LSR for Gramercys packaging operation during the quarter ended
March 31, 2012 was higher than the quarter ended March 31, 2011, reducing gross margin as a percentage of sales by 1.2%.
Manufacturing costs per cwt in Port Wentworth increased in the current quarter compared to the prior year quarter, principally from higher repairs and maintenance costs and higher property taxes and sales
and use taxes, resulting in a 1.0% decrease in gross margin as a percentage of sales. For the six month period ended March 31, 2012, Port Wentworths manufacturing costs per cwt were higher than in the same prior year period, resulting in
a negative gross margin impact of 0.1% primarily a result of higher property and sales and use taxes. In January 2012, the Port Wentworth refinery experienced difficulties affecting the transfer of sugar from the bulk silos to the packaging
operations. A work around solution was ultimately devised, which diverted a portion of the bulk sugar flow from the bulk loading station to the packaging operations and a capital project to begin to restore the original transfer capabilities is
planned to commence in June 2012. The refinerys melt rate was restricted and customer service was impacted during the first several weeks of the second fiscal quarter until the work around could be implemented. Additionally, bulk loading
capacity could be impacted in the future until the completion of the capital project. Average daily melt was 4.4 million pounds per day in the quarter
17
ended March 31, 2012, compared to 4.2 million pounds per day in the quarter ended March 31, 2011. Average daily melt in April 2012 was 4.9 million pounds per day. The average daily
melt remains below historical levels achieved before the February 2008 accident. Gramercys packaging costs per cwt decreased in the current quarter as compared to the prior year quarter as higher production volumes from an improved refined
sugar supply from LSR positively impacted fixed cost absorption, increasing gross margin as a percentage of sales by 0.7%. For the six months ended March 31, 2012, Gramercys packaging costs per cwt decreased, increasing gross margin by
0.2% as compared to the prior year period primarily due to higher production and resulting improved fixed cost absorption.
Energy costs per cwt in the current quarter and six months decreased from the same periods in the prior year, due to lower natural gas
prices, partially offset by higher coal prices. Our average NYMEX basis cost of natural gas after applying gains and losses from hedging activity decreased to $3.56 per mmbtu in the current quarter and $3.98 for the current six months as compared to
$4.45 and $4.31 in the same periods last year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Six Months Ended March 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
Volume
|
|
|
Price
|
|
|
|
(000 mmbtu)
|
|
|
(per mmbtu)
|
|
|
(000 mmbtu)
|
|
|
(per mmbtu)
|
|
|
(000 mmbtu)
|
|
|
(per mmbtu)
|
|
|
(000 mmbtu)
|
|
|
(per mmbtu)
|
|
Natural Gas
|
|
|
617
|
|
|
$
|
3.56
|
|
|
|
575
|
|
|
$
|
4.45
|
|
|
|
1,166
|
|
|
$
|
3.98
|
|
|
|
1,462
|
|
|
$
|
4.31
|
|
Coal
|
|
|
144
|
|
|
|
6.22
|
|
|
|
197
|
|
|
|
5.22
|
|
|
|
374
|
|
|
|
5.58
|
|
|
|
505
|
|
|
|
5.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
761
|
|
|
$
|
4.06
|
|
|
|
773
|
|
|
$
|
4.65
|
|
|
|
1,540
|
|
|
$
|
4.37
|
|
|
|
1,967
|
|
|
$
|
4.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The capital project in our annual capital plan to replace a significant portion of the tubing in the Port
Wentworth coal fired boiler is scheduled for approximately six weeks in May and June of 2012. During this period, the refinerys daily melt rate is expected to be limited to less than 5 million pounds per day and the remaining boilers will
be fueled exclusively on natural gas. During April and early May 2012, the Company has experienced approximately 22 days of gas curtailments, due to demand on the interstate gas pipeline which services the refinery. During periods of curtailment,
natural gas costs increase, and the refinery is at risk of reduced availability of natural gas which could impact production. Natural gas costs increased $0.52 per mmbtu in April as a result of curtailments.
Selling, general and administrative expense increased $0.8 million for the quarter ended March 31, 2012 compared to the prior
year second quarter primarily due to $1.3 million higher legal and consulting fees for litigation and the pending merger transaction, partially offset by lower compensation and benefits costs, including life insurance, of $0.4 million. Selling,
general and administrative expenses for the six months ended March 31, 2012 increased $1.9 million over the prior year primarily due to $4.3 million higher legal and consulting fees for litigation and merger-related work. Offsetting the higher
legal and consulting fees were $1.8 million of lower compensation costs and $0.5 million of lower marketing costs.
Other
income, which includes equity investment earnings, increased in the current quarter and six month period, primarily the result of increased equity in earnings of Wholesome.
The Company has not recorded a benefit for income taxes in the quarter or six months ended March 31, 2012 because of uncertainty concerning the sufficiency of future taxable income in future periods
to realize such benefit. We estimated a combined federal and state income tax rate of 46.7% for the six months ended March 31, 2011.
Liquidity and Capital Resources
In May 2011, the Company entered into a Second Amended and Restated Loan and Security Agreement with certain financial institutions as lenders and Bank of America, N.A. as agent (the Credit
Agreement). The Credit Agreement provides for a $140 million revolving credit facility maturing December 31, 2015, to refinance and replace the Companys previous credit facility and for various ongoing capital needs of the Company
as well as for other general corporate purposes.
At March 31, 2012, the Company had $69.0 million of outstanding
borrowings under the Credit Agreement and had the capacity under the borrowing base formula to borrow an additional $12.7 million, after deducting outstanding letters of credit totaling $6.9 million and after consideration of the $10 million
reduction in borrowing base described below.
The Credit Agreement entered into in May 2011 had no financial covenants unless
availability (defined as the borrowing base, less actual borrowings and letters of credit) was less than $20 million at any time or less than $25 million for a period of five consecutive business days, in which case a minimum $20 million trailing
four quarter earnings before interest, taxes, depreciation and amortization (EBITDA) test would apply until availability has been greater than $30 million for each day during three consecutive months. The Company maintained availability
above these minimum thresholds throughout fiscal 2011 and fiscal 2012 until the December amendment described below, and thus the EBITDA covenant was not applicable. Had this financial covenant applied as of March 31, 2011, EBITDA for the
trailing four quarter period would have been negative $24.7 million and the Company would not have been in compliance with the EBITDA covenant.
18
In December 2011, the Company and the lenders agreed to an amendment of the Credit Agreement
which modified the minimum EBITDA financial covenant subject to an availability trigger, until the earlier of April 15, 2012 or such time as availability exceeds $50 million. The amendment includes an additional provision which has the effect
of reducing the amount available to borrow under the borrowing base formula by $10 million while the modified EBITDA covenant is in effect. After the earlier of April 15, 2012 or such time as availability exceeds $50 million, the financial
covenant and availability trigger revert to the terms of the Credit Agreement prior to the amendment. The Company fell below the availability trigger in the amended Credit Agreement in January 2012, and restored availability above the $50 million
level in April 2012, upon the closing of the sale of our Wholesome investment. The Company was in compliance with the amended minimum EBITDA throughout the period that it was applicable. Pursuant to the December 2011 amendment, the fixed asset
component of the borrowing base formula was reduced by $15 million coincident with the sale of the Companys equity interest in Wholesome. As of May 8, 2012, the Company had $44.3 million of outstanding borrowings, $7.5 million of outstanding
letters of credit and had the capacity to borrow an additional $36.4 million.
The Company has taken a number of recent steps
to improve its liquidity, including asset sales and a consignment agreement with a raw sugar supplier. In December 2011 the Company sold its one third interest in LSR rather than make additional capital contributions necessitated by the financial
condition of the venture. The sales price for the Companys one-third interest and certain other assets was $18.0 million with $14.2 million received at closing and the balance payable over the next 21 months. On April 6, 2012, we sold our
50% equity voting interest in Wholesome to a third party for net proceeds, subject to adjustment based on Wholesomes closing date working capital, of $60.4 million. Additionally, in February 2012 the Company entered into a consignment
agreement with a raw sugar supplier whereby the supplier owns raw sugar stored in Company warehouses, which we purchase on a daily basis as required for refinery operations. The agreement continues into May 2012, at which time the Company will be
required to purchase cargos of raw sugar and finance those purchases under the Credit Agreement.
As a result of the
Companys future cash needs, including for inventory purchases, capital expenditures, pension contributions and margin requirements of the commodity futures program, as well as the need to fund possible future operating losses in the event
current margin pressures continue, the Companys borrowing availability in fiscal 2012 under the Credit Agreement could continue to be restricted, and the Company could be subject to applicable financial covenants in the Credit Agreement.
Advances under the Credit Agreement are subject to a borrowing base which specifies advance rates against eligible
receivables and inventory, as well as advances against property, plant and equipment. The facility is secured by the cash and cash equivalents, accounts receivable, inventory, substantially all property, plant and equipment and certain investments
of the Company and its domestic subsidiaries. All domestic subsidiaries of the Company are borrowers or guarantors under the new facility. Interest rates under the amended Credit Agreement are LIBOR plus a margin that varies (with availability as
defined) from 2.25% to 3.25%, or the base rate (Bank of America prime rate) plus a margin of 1.00% to 2.00%. Although the final maturity of the new facility is December 31, 2015, the Company classifies debt under the facility as current, as the
Credit Agreement contains a subjective acceleration clause which can be exercised, if, in the opinion of the lender, there is a material adverse effect, and provides the lenders direct access to the Companys cash receipts.
The Credit Agreement contains covenants limiting the Companys ability to, among other things:
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incur other indebtedness;
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undergo any fundamental changes;
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engage in transactions with affiliates;
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change its fiscal periods;
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enter into mergers or consolidations;
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19
The Credit Agreement also includes customary events of default, including a change of
control which, absent a waiver, would result in termination of the Credit Agreement if the tender offer contemplated by the Louis Dreyfus merger agreement is completed. Louis Dreyfus has indicated that they expect to provide financing support to the
Company after closing on the tender offer.
The Credit Agreement limits the Companys ability to pay dividends or
repurchase stock if availability, after adjustment on a pro forma basis for such transaction, is less than $30 million. Notwithstanding this limitation, the Company may pay cash dividends up to $2 million per year. The Board of Directors of the
Company suspended its payment of a quarterly dividend in November 2011. The December 2011 amendment to the Credit Agreement prohibited the payment of dividends so long as the modified EBITDA covenant was in effect. The Louis Dreyfus merger agreement
prohibits the payment of dividends while the agreement is in effect.
Borrowings under the Credit Agreement will generally be
available subject to a borrowing base and to the accuracy of all representations and warranties, including the absence of a material adverse change and the absence of any default or event of default.
Our capital expenditures during the first six months of fiscal 2012 were $7.4 million related primarily to safety, environmental and
equipment replacement. Capital expenditures in fiscal 2012 are expected to total between $18 and $20 million, related primarily to safety, environmental, process improvement and equipment replacement projects.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimate methodologies since the filing of our Annual Report on Form 10-K for the year ended September 30, 2011.
20
Item 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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We use raw sugar futures and options in our raw sugar purchasing programs and natural gas futures and options to hedge natural gas purchases used in our manufacturing operations. Our derivatives hedging
activity is supervised by a senior risk management committee which monitors and reports compliance with our risk management policy to the Audit Committee of the Board of Directors.
The information in the table below presents our domestic raw sugar futures positions outstanding as of March 31, 2012. There
were no world raw sugar futures positions outstanding at March 31, 2012.
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Expected Maturity
Fiscal
2012
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Expected Maturity
Fiscal
2013
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Domestic Futures Contracts (net long positions):
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Contract Volumes (cwt)
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2,352000
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870,000
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Weighted Average Contract Price (per cwt)
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$
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35.91
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$
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34.30
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Contract Amount
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$
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84,460,000
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$
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29,849,000
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Weighted Average Fair Value (per cwt)
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$
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34.91
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$
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33.91
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Fair Value
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$
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82,102,000
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$
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29,508,000
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The above information does not include either our physical inventory or our fixed price purchase
commitments for raw sugar. At March 31, 2011, our domestic futures position was a net long position of 1,671,000 cwt at an average contract price of $35.60 and an average fair value price of $37.39. The Company did not have any world futures
positions at March 31, 2011.
The information in the table below presents our natural gas futures positions outstanding
as of March 31, 2012.
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Expected Maturity
Fiscal
2012
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Futures Contracts (long positions):
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Contract Volumes (mmbtu)
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250,000
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Weighted Average Contract Price (per mmbtu)
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$
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3.76
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Contract Amount
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$
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940,000
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Weighted Average Fair Value (per mmbtu)
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$
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2.35
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Fair Value
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$
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586,000
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At March 31, 2011, our natural gas futures position was a long position of 150,000 mmbtu with an
average contract price of $4.41 and an average fair value price of $4.50.
At March 31, 2012 and 2011, we had no interest
rate derivatives which were sensitive to interest rate changes.
Item 4.
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CONTROLS AND PROCEDURES
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In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of
management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on
that evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2012, to provide reasonable assurance that
information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms and that
such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There has been no change in our internal controls over financial reporting that occurred during the three months ended March 31,
2012, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
21
PART II - OTHER INFORMATION
Item 1.
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Legal Proceedings
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The
Company is party to a number of claims, including five remaining lawsuits brought on behalf of five employees or their families, for injuries and losses suffered as a result of the 2008 Port Wentworth refinery industrial accident. All of the
lawsuits are pending in the State Court of Chatham County, Georgia. None of the lawsuits demand a specific dollar amount of damages sought by the plaintiffs. The Company has workers compensation insurance which provides for coverage equal to the
statutory benefits provided to workers under state law. Additionally, the Companys general liability policy provides for coverage for damages to third parties up to a policy limit of $101 million.
The Company previously resolved forty-three lawsuits related to the accident. On October 19, 2011, the attorneys representing the
plaintiffs in the lawsuits remaining at that time submitted a time-limited global settlement offer to resolve these lawsuits for a sum within the Companys remaining limits of insurance. Two of the three insurers who issued the insurance
policies representing the Companys remaining limits of insurance, American Guarantee & Liability Insurance Company (AGLIC) and St. Paul Fire & Marine Insurance Company (St. Paul), elected not to
respond to this settlement offer by its deadline. The Company has notified AGLIC and St. Paul that due to their failure to settle the remaining lawsuits within the Companys available limits of insurance pursuant to the global settlement offer,
the Company will seek to hold them responsible for damages due to their negligent failure to settle and bad faith in the event verdicts or settlements in the remaining lawsuits are in excess of the Companys limits of insurance.
While the Company believes, based on the facts of these cases, that claims by employees and certain contractors are limited to benefits
provided under Georgia workers compensation law, the ultimate resolution of these matters could result in liability in excess of the amount accrued. The Company believes the likelihood of the aggregate liability, including the amounts paid in the
previous settlements, exceeding the $101 million policy limit is remote.
The Company was named as a defendant in a lawsuit
filed by one of its excess general liability insurers, AGLIC, in the U.S. District Court for the Northern District of Georgia on August 19, 2011, and styled as
American Guarantee & Liability Insurance Company v. Imperial Sugar
Company, et al.
, Civil Action No. 1:11-CV-2778-WSD (the Georgia Lawsuit). On January 10, 2012, AGLIC filed an amended complaint in the Georgia Lawsuit seeking : (1) a judicial declaration that the AGLIC policy does not
cover the Companys defense expenses incurred defending various claims arising from the industrial accident that occurred in 2008 at its plant located in Port Wentworth, Georgia (the Port Wentworth Claims), (2) an equitable
accounting of the settlements of certain of the Port Wentworth Claims that were settled using proceeds provided by the primary and umbrella layers of liability policies and the workers compensation policy issued by Chartis-affiliated insurers,
(3) a judicial declaration that the limits of liability of the underlying primary and umbrella liability policies were improperly exhausted as a result of such settlements, (4) a judicial declaration that the Company breached the AGLIC
policy by failing to cooperate and, as a result, coverage under the policy should be voided and (5) recoupment from the Company of amounts paid by AGLIC to settle Port Wentworth Claims in excess of its obligations under the AGLIC policy.
AGLIC shares on a 50/50 pro-rata basis with St. Paul the final $50 million layer of excess liability coverage available to
the Company for the Port Wentworth Claims. St. Paul was also named as a defendant in the Georgia Lawsuit and has asserted an amended cross claim against the Company seeking (1) a judicial declaration regarding whether the underlying primary and
umbrella policies have been exhausted properly in connection with the settlement of certain Port Wentworth Claims and if they have not been exhausted properly, a judicial declaration that St. Paul is entitled to recoup all sums paid in excess of its
obligations under the St. Paul policy and (2) a judicial declaration that St. Paul is not obligated to defend the Company or pay or reimburse the Companys defense expenses incurred in connection with the Port Wentworth Claims. On
January 31, 2012, the Company filed its answer to the amended complaint and asserted amended counterclaims and cross claims against AGLIC and St. Paul, respectively, alleging, among other things that (1) AGLIC and St. Paul have breached
their insurance policies by wrongfully denying coverage for the Companys defense expenses incurred as a result of the Port Wentworth Claims and (2) AGLICs and St. Pauls breaches and other conduct amount to bad faith.
In December 2010, the Louisiana Department of Environmental Quality (LDEQ) issued a Consolidated Compliance Order
and Notice of Potential Penalty to the Company alleging violations of state environmental regulations and the terms of the wastewater discharge permit for the Companys Gramercy, Louisiana refinery. The alleged violations relate to the release
of foam into waters of the state and exceedances of applicable criteria for dissolved oxygen and pH. The Company investigated the alleged violations, took measures to cease and contain the foam discharge, and coordinated with the LDEQ to develop and
implement a plan to remove and dispose of the foamy material and achieve and maintain compliance with applicable legal requirements. Without admitting liability, the Company entered into an agreement with LDEQ in April 2012 settling the allegations
of violation of environmental regulations and paid a settlement amount of $10,770, including LDEQ response costs.
22
In March 2011, the Company filed suit in the United States District Court for the Southern
District of Texas against Southern Systems, Inc. (SSI), the contractor who constructed the conditioning silos at the Companys Port Wentworth refinery, for breach of contract. The lawsuit, styled as
Imperial Sugar Company v.
Southern Systems, Inc., No. 4:11-cv-00970
, seeks damages for deficiencies in construction of the conditioning silos. In June 2011, SSI filed a counterclaim against the Company for $3.5 million for work it allegedly performed and was not
paid. The lawsuit is in discovery. In April 2012, the parties entered into an agreement to arbitrate their claims and counterclaims and to stay the federal court lawsuit.
In May 2011, the Company joined seven cane and beet sugar producers and two sugar industry trade associations as plaintiffs in a lawsuit filed against six producers of high fructose corn syrup (the
Member Companies) and the Corn Refiners Association (the CRA) (collectively, the HFCS Defendants) in the United States District Court for the Central District of California regarding advertising and marketing of
high fructose corn syrup. The lawsuit, styled as
Western Sugar Cooperative v. Archer-Daniels, Midland Company, No. CV11-3473 CBM (MANx),
initially alleged violations of the federal Lanham Act and state law by the HFCS Defendants in marketing
and advertising high fructose corn syrup as a natural product equivalent to cane and beet sugar. The lawsuit seeks money damages and injunctive relief. On October 21, 2011, the court issued an order on the first motion to dismiss the amended
complaint filed by the HFCS Defendants, denying the motion as to the CRA, granting the motion as to the Member Companies, and giving plaintiffs leave to amend their complaint to set forth additional allegations regarding the Member Companies. On the
same day, the court issued a separate order on a motion filed only by the CRA, dismissing the state law claim for unfair competition. On November 18, 2011, the plaintiffs filed a second amended complaint naming the Member Companies as
defendants on the federal Lanham Act claim to which the CRA answered and the Member Companies filed another motion to dismiss. That motion to dismiss has been fully briefed and was argued before the court on March 21, 2012.
On August 30, 2011, a shareholder of the Company filed a putative class action lawsuit in the United States District Court for the
Southern District of Texas, styled as
Dawes v. Imperial Sugar Company, et al.,
Civil Action No. 4:11-cv-03250, alleging that the Company, its current President and Chief Executive Officer, and its current Senior Vice President and Chief
Financial Officer, violated the federal securities laws. On September 22, 2011, another shareholder filed a nearly identical putative class action lawsuit against the Company, its current President and Chief Executive Officer and its current
Senior Vice President and Chief Financial Officer in the United States District Court for the Southern District of Texas styled as
Hassan v. Imperial Sugar Company, et al.,
Civil Action No 4:11-cv-03457. On October 28, 2011, these cases
were consolidated by the court. The complaints assert fraud claims under Sections 10 and 20 of the Securities Exchange Act of 1934, and allege that the defendants made misleading statements and/or omissions about the Companys sales and
business prospects, which purportedly were disclosed on August 5, 2011 when the Company announced its third fiscal quarter results.
On October 31, 2011, Carpenters Pension Fund of Illinois moved for appointment as lead plaintiff. On January 16, 2012, plaintiff Hassan filed a motion to dismiss his individual claims
without prejudice on the basis that his interests are adequately represented in the class action. At an initial pre-trial conference held on January 31, 2012, the court entered an order appointing Carpenters Pension Fund of Illinois
as lead plaintiff and dismissing plaintiff Hassans individual action. Pursuant to the court-ordered schedule, on March 22, 2012, the lead plaintiff filed an amended consolidated complaint (the Complaint). On May 7, 2012,
the defendants filed a motion to dismiss the Complaint.
On September 27, 2011, the Board of Directors of the Company
received a letter from counsel for a shareholder of the Company requesting, among other things, that the Board cause an independent investigation to be made and a legal action commenced with respect to alleged mismanagement and breaches of fiduciary
duty by the Companys officers and directors relating to the August 5, 2011 announcement of the Companys third fiscal quarter results. On October 12, 2011, the Board received a similar letter on behalf of another shareholder.
The Board of Directors established a committee of independent and disinterested directors on October 5, 2011 with full authority to investigate and address the allegations contained in such shareholder letters (Special Committee).
That investigation remains on-going.
On February 2, 2012, one of the shareholders referenced in the immediately
preceding paragraph filed a derivative lawsuit in the District Court of Fort Bend County, Texas, styled as
Piszko v. Imperial Sugar Company, et al.,
Cause No. 12-DCV-195994, alleging that the Companys current President and Chief
Executive Officer, its current Senior Vice President and Chief Financial Officer, the current directors and a former director breached their fiduciary duties, were unjustly enriched and engaged in the waste of corporate assets. On February 3,
2012, the other shareholder referenced in the immediately preceding paragraph filed a nearly identical derivative lawsuit against the Companys current President and Chief Executive Officer, its current Senior Vice President and Chief Financial
Officer, its current directors and a former director in the District Court of Fort Bend County, Texas styled as
Cinotto v. Imperial Sugar Company, et al.,
Cause No. 12-DCV-196013. The complaints allege, among other things, that the
defendants failed to establish and maintain adequate internal controls over the Port Wentworth refinery, made improper statements in press releases, SEC filings and other public disclosures and failed to establish and maintain disclosure controls in
order to prevent the allegedly improper statements from being made. The complaints further allege that the defendants engaged in a conspiracy to aid and assist each other in masking the alleged breaches of duty, unjust enrichment and the waste of
corporate assets. On February 22, 2012, plaintiffs filed an unopposed motion to consolidate the two derivative lawsuits. On March 2, 2012, the Company and director and officer defendants filed an unopposed motion to stay the lawsuits
pending the completion of the Special Committees investigation. Both motions remain pending before the court. On May 8, 2012, the Piszko and Cinotto plaintiffs filed a First Amended Shareholder Derivative Petition. In addition to the
allegations asserted in its predecessor, this pleading claims that in connection with the recently-announced transaction with Louis Dreyfus Commodities LLC, the directors and officers breached their fiduciary duties to ensure the fairness of the
transaction to shareholders, including by attempting to eliminate personal liability arising from the original petition by negotiating the sale of the Company.
23
Between May 2, 2012 and the date of this filing, a number of Imperial Sugar shareholders
filed derivative lawsuits in the Texas state district courts, including
Oshea
v.
Imperial Sugar Company
, et
al.
(Fort Bend Dist. Ct.);
Smith
v.
Gaffney, et al.
(Fort Bend Dist. Ct.);
Del Parigi
v.
Imperial Sugar Company, et al.
(Fort Bend Dist. Ct.); and
Gruber
v.
Coan, et al.
(Harris Dist. Ct.) In addition, the Company is aware of at least one shareholder action that purports to be a shareholder class action lawsuit,
Kahn
v.
Gaffney, et al.
(Fort Bend Dist. Ct.).
The lawsuits assert claims for breach of fiduciary duty and
abuse of control against the Company and its directors, as well as aiding and abetting claims against Louis Dreyfus Commodities LLC and its affiliates, in connection with the proposed merger announced on May 1, 2012. The shareholders challenge the
fairness of various provisions of the proposed transaction, including the price that Company shareholders will be offered to tender their shares, and the provisions of the Merger Agreement relating to the possible termination of the transaction, the
no solicitation provision, and the top-up option provision. Plaintiffs also allege that defendants breached their duty of candor to Company shareholders by failing to disclose all material information about the Transaction,
and request certain disclosures under Texas law. Plaintiffs requests for relief include injunctive and declaratory relief, as well as rescission, costs, attorneys fees, and disbursements.
Additionally, between May 3, 2012 and the date of this filing, the Board of Directors received demand letters from counsel for
shareholders, including Shmuel and Abvohom Zaks and the Farish Trust, containing similar assertions and requesting that the Company terminate the proposed transaction. Among other things, the Zaks demand letter contends that the Companys
directors are motivated by prospects for personal economic benefit and therefore cannot be considered disinterested.
The
Company is party to other litigation and claims which are normal in the course of its operations. While the results of such litigation and claims cannot be predicted with certainty, the Company believes the final outcome of such matters will not
have a material effect on its consolidated results of operations, financial position or cash flows. In connection with the sales of certain businesses, the Company made customary representations and warranties, and undertook indemnification
obligations with regard to certain of these representations and warranties including financial statements, environmental and tax matters, and the conduct of the businesses prior to the sale. These indemnification obligations are subject to certain
deductibles, caps and expiration dates.
24
There have
been no material changes from the risk factors disclosed in Part I, Item 1A, of the Companys Annual Report on Form 10-K for the year ended September 30, 2011.
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10.1
|
|
Sale and Purchase Agreement by and among Edward Billington and Son, Limited, Imperial Sugar Company and WSO Investments, Inc. dated March 7, 2012.
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10.2
|
|
Agreement and Plan of Merger among LD Commodities Sugar Holdings LLC, Louis Dreyfus Commodities Subsidiary, Inc. and Imperial Sugar Company (previously filed as Exhibit 2.1 to the
Companys Form 8-K dated May 1, 2012 and incorporated herein by reference).
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10.3
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|
Second Amendment to Rights Agreement, dated as of May 1, 2012, by and among Imperial Sugar Company and The Computershare Shareholder Services LLC, as right agent (previously filed
as Exhibit 4.1 to the Companys Form 8-K dated May 1, 2012 and incorporated herein by reference).
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31.1
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|
Chief Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
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31.2
|
|
Chief Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
|
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32
|
|
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
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|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of March 31, 2012 and September 30, 2011; (ii) Consolidated Statements of
Operations for the three and six months ended March 31, 2012 and 2011; (iii) Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and 2011; and (iv) Consolidated Statements of Changes in Shareholders Equity for the six
months ended March 31, 2012.
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25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
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IMPERIAL SUGAR COMPANY
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(Registrant)
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Dated: May 9, 2012
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By:
|
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/s/ H. P. Mechler
|
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H. P. Mechler
|
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Senior Vice President and Chief Financial Officer
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26
Exhibit Index
|
|
|
Exhibit
No.
|
|
Document
|
|
|
10.1
|
|
Sale and Purchase Agreement by and among Edward Billington and Son, Limited, Imperial Sugar Company and WSO Investments, Inc. dated March 7, 2012.
|
|
|
10.2
|
|
Agreement and Plan of Merger among LD Commodities Sugar Holdings LLC, Louis Dreyfus Commodities Subsidiary, Inc. and Imperial Sugar Company (previously filed as Exhibit 2.1 to the
Companys Form 8-K dated May 1, 2012 and incorporated herein by reference).
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10.3
|
|
Second Amendment to Rights Agreement, dated as of May 1, 2012, by and among Imperial Sugar Company and The Computershare Shareholder Services LLC, as right agent (previously filed
as Exhibit 4.1 to the Companys Form 8-K dated May 1, 2012 and incorporated herein by reference).
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31.1
|
|
Chief Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
31.2
|
|
Chief Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
32
|
|
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
|
|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of March 31, 2012 and September 30, 2011; (ii) Consolidated Statements of
Operations for the three months and six months ended March 31, 2012 and 2011; (iii) Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and 2011; and (iv) Consolidated Statements of Changes in Shareholders Equity for
the six months ended March 31, 2012.
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27
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