2010 Annual Report Imperial Sugar Company The oldest continuously operating company in Texas, Imperial Sugar Company’s proud heritage began in Sugar Land, Texas, in 1843. Today, Imperial Sugar is one of the largest producers and marketers of refined sugar in the NAFTA region. The Company markets sugar and sweetener products under the Dixie Crystals®, Holly®, Imperial® and Wholesome Sweeteners® brands and under private labels. It also sells a variety of sugar products to industrial and foodservice customers. The Company’s stock is traded on the NASDAQ Stock Market under the ticker symbol “IPSU.” Financial Highlights Fiscal Year Ended September 30 (in Millions, except Per Share Data) 2010 2009 2008 RESULTS OF CONTINUING OPERATIONS Net Sales . $ 908.0 $ 522.6 $ 592.4 Income (Loss) from Continuing Operations . 136.9 (23.8) (21.2) Diluted Earnings Per Share from Continuing Operations . 11.33 (2.03) (1.81) FINANCIAL CONDITION Total Assets . $ 541.6 $ 615.9 $ 358.8 Shareholders’ Equity. 218.7 86.4 144.1 Imperial Sugar Company took important strategic steps in fiscal 2010 to fortify the Company’s future John C. Sheptor President and Chief Executive Officer prospects. To Our Shareholders Imperial Sugar Company took important strategic steps A volatile industry in fiscal 2010 to fortify the Company’s future prospects while Fiscal 2010 was the sugar industry’s most volatile year in managing the challenges associated with restoring full production three decades as a global shortfall of sugar production coupled at our Port Wentworth facility. Thanks to the creativity and hard with growing demand led to a doubling of sugar prices. work of our people, we overcame many obstacles and emerged Throughout this period, our experienced team successfully with an optimistic outlook for fiscal 2011. managed commodity risks, sustained margins and secured adequate supplies of raw sugar. Port Wentworth’s improved production Increased consumption of high-fructose corn syrup in Following the start-up of the Port Wentworth facility in the Mexico raises the prospect of additional sugar exports to the U.S. summer of 2009, production rates steadily increased; however, U.S. consumer preference for sugar over high-fructose corn syrup along the way, we found that additional facility and process continues to grow absorbing increased sugar supplies from modifications would be necessary to return the facility to Mexico; however, it may take several years to fully offset higher historical operating levels. We completed the last of the major Mexican imports without impact to U.S. production. Imperial is modifications in October 2010. As these projects were completed prepared to participate in increased exports from Mexico and we gained experience in operating the reconstructed through Comercializadora Imperial Santos (CSI), our 50/50 refinery, output improved significantly. While additional marketing joint venture with the Ingenios Santos Group, both production days and fixed costs had a negative impact on our through the Santos Group’s production and, potentially, 2010 financial results, these efforts should result in sustained third-party purchases. higher production rates in 2011. The Genetically Modified Organism (GMO) sugar beet trial emerged in 2010 as a potential threat to future U.S. beet sugar A proactive role in safety production. A ruling against GMO varieties may restrict sugar Throughout fiscal 2010, we continued to take a proactive beet production for up to two years. Reduction of sugar beet acres industry leadership role in safety. Our refineries made due to a ruling against GMO varieties or due to historically high significant progress in implementing worker safety and asset corn prices would be expected to have a positive impact on the risk management initiatives, and we completed a number of Company, increasing demand upon our facilities. While volatility safety projects that further enhanced our operations. In addition, from world raw sugar market influences and shifting supply agreements settling the Port Wentworth and Gramercy citations relationships with Mexico are creating increased uncertainty, were finalized with the Occupational Health and Safety Adminis- our experienced management team is prepared to anticipate tration incorporating our shared objective of modeling best industry trends and execute our business plan successfully. practice safety management. New growth platforms CSI produced improved marketing results for cane sugar Strategic partnerships are enabling Imperial to participate sales in Mexico and the U.S. Logistics and export transaction in expanded geography, new technologies and products. We costs are expected to improve following completion of CSI’s expect to continue to utilize this approach to create promising bulk-bag transfer station this fall. Forecasts call for a 10% new growth platforms and sustainable competitive advantages increase in the 2011 Mexican sugar cane harvest. for the Company. In February 2010, we strengthened our natural sweetener Looking ahead portfolio with the formation of Natural Sweet Ventures™, a 50/50 As we look to fiscal 2011, we are enthusiastic about the joint venture with PureCircle®, a world-wide leader in stevia prospects that lie ahead. In the coming year, we will focus on production. The venture was formed to develop and commercial- the formation of new strategic relationships that enhance access ize blends of cane sugar and stevia extract in North America. to emerging natural sweeteners and specialty sugars marketed Steviacane™, our first stevia-sucrose based product is an in other regions of the world. We will also act quickly to meet the all-natural product combining the benefits of sugar and stevia, needs of customers who have unique sweetener requirements. offering the taste and application properties of sugar with fewer Most importantly, we will continue to execute our strategy. calories. A viable alternative to sucrolose, aspartame and Our mission is to create superior value for our customers, stock- high-fructose corn syrup in baking and beverages, samples holders and employees through an unwavering commitment to: have been provided to a variety of prospective customers. The Company has also produced molasses, honey and maple . Maximizing the profitability of our base sugar business within flavored steviacane™ for retail, baking and cereal customers. the U.S. and Mexico through operational excellence, renewal of Wholesome Sweeteners® reported strong growth in fiscal refining technology, and geographical partnerships; 2010, increasing EBITDA by 43%. Sales of agave syrup . Expansion of our sweetener and specialty sugar portfolio while accelerated Wholesome’s retail growth, transforming the sales developing strategic relationships with our customers, partners mix to 55% retail and 45% industrial. During the fourth quarter, and suppliers through collaborative product development; and Wholesome’s management completed negotiation of a long-term . Maximizing value creation through joint ventures and alliances supply agreement for organic fair trade sugar, securing a to accelerate access to new products, an expanded presence in high-quality supply in adequate volumes to support continued North America, and new technologies. growth. Imperial has an option to acquire Edward Billingtons & Sons’ 50% share of Wholesome in fiscal 2011. We have made significant progress in 2010, and as I look Work began in December 2009 on the new refinery being to the future, I am confident that Imperial Sugar’s best days are constructed in Gramercy by Louisiana Sugar Refining (LSR), the still ahead. I thank our employees for their dedication and joint venture between Imperial, Cargill and Sugar Growers and hard work and our shareholders and board of directors for their Refiners, Inc. (a cane growing and milling cooperative). The support and confidence. new refinery is expected to be completed in mid-2011 and will replace Imperial’s existing facility, providing an estimated 50% increase in capacity. Imperial’s current refinery will be contributed to LSR on January 1, 2011. After that time, we will operate our Gramercy retail packaging lines with sugar sourced through a long-term bulk refined sugar agreement with LSR. John C. Sheptor The new refinery is expected to reach capacity in 2012. President and Chief Executive Officer Wholesome Sweeteners® broadens Imperial takes another step forward the organic sweetener category by introducing steviacane™, which by introducing Cinnamon, Maple, combines natural stevia and pure Strawberry and Vanilla flavored cane sugar for a new blue agave nectars. and innovative low calorie sweetener that tastes like sugar. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 2010 Commission File No. 000-16674 IMPERIAL SUGAR COMPANY (Exact name of registrant as specified in its charter) Texas 74-0704500 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 8016 Highway 90-A, P.O. Box 9, Sugar Land, Texas 77487-0009 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (281) 491-9181 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, without par value The NASDAQ Stock Market LLC Rights to Purchase Preferred Stock The NASDAQ Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: (Title of class) None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No È Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È 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.