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Imperial Sugar Company (IPSU) filed Annual Report for the period ended 2011-09-30.
Imperial Sugar Company has a market cap of $43.1 million; its shares were traded at around $3.52 with and P/S ratio of 0.1.
This is the annual revenues and earnings per share of IPSU over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of IPSU.
Highlight of Business Operations:
Gross margin as a percentage of sales was negative 1.6% for fiscal 2011 as compared to negative 2.1% for fiscal 2010. On a hedge accounting basis excluding the effects of LIFO inventory liquidations, gross margin as a percentage of sales for the current year was a negative 1.2%, compared to a negative 3.1% for fiscal 2010.The Company provided a valuation allowance for the realization of future tax benefits, principally net operating loss carryforwards, reducing the tax benefit recognized from fiscal 2011 pre-tax loss. The ultimate realization of such benefits is dependent on future taxable income, including potential taxable gains on the sales of assets. The Company sold its interest in LSR for $18 million and is investigating strategic alternatives, including the potential sale of its investment in Wholesome Sweeteners. As of September 30, 2011, the Company’s tax basis in LSR and Wholesome was approximately $10 million and $4 million, respectively. To the extent the Company generates future taxable income from operations or asset sales sufficient to utilize some or all of the future tax benefits, the valuation allowance would be reversed, reducing future income tax provisions. Detail of our provision for income taxes, including reconciliation to the statutory federal rates, is provided in Note 9 to the Consolidated Financial Statements.
Energy costs per cwt for fiscal 2010 were lower than the prior year due to lower natural gas prices and the resumption of coal usage in Port Wentworth. Lower energy costs increased gross margin as a percent of sales by 1.3%. The Port Wentworth refinery has the ability to utilize traditionally lower priced coal as its primary energy source, while the Gramercy refinery exclusively used natural gas. Natural gas usage was 87% of our energy usage in fiscal 2010, compared to 100% in the prior year. Our average NYMEX basis cost of natural gas after applying gains and losses from hedging activity decreased to $5.04 per mmbtu in the current year as compared to $7.43 per mmbtu for last year.
The Credit Agreement has no financial covenants unless availability (defined as the borrowing base, less actual borrowings and letters of credit) is 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 three consecutive months. The
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. The Company is reviewing opportunities to improve its liquidity, including potential asset sales. 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 Company’s 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. The Company is exploring with its partner the potential of selling their interests in Wholesome Sweeteners to a third party. Pursuant to the Wholesome joint venture agreement, if a third party agrees to pay a specified minimum price for Wholesome, subject to certain conditions, both the Company and its joint venture partner could be required to sell their interests. There can be no assurance that any transaction to sell the Company’s interest in Wholesome will occur.
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