10-Q

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

For the quarterly period ended March 31, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                

Commission file number 1-10307

IMPERIAL SUGAR COMPANY

(Exact name of registrant as specified in its charter)

Texas	74-0704500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Imperial Square, P.O. Box 9, Sugar Land, Texas 77487

(Address of principal executive offices, including Zip Code)

(281) 491-9181

(Registrant’s 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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  x    No  ¨

As of May 10, 2004 there were 10,329,700 shares of common stock, without par value, of the registrant outstanding.

IMPERIAL SUGAR COMPANY

Index

			Page
PART I - FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets	3
		Consolidated Statements of Operations	4
		Consolidated Statements of Cash Flows	5
		Consolidated Statements of Changes in Shareholders’ Equity	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosure About Market Risk	18
	Item 4.	Controls and Procedures	20
PART II - OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K	21

________________________

Forward-Looking Statements

Statements regarding future market prices and margins, future operating results, sugarbeet acreage, operating efficiencies, future government and legislative action, future cost savings, future pension costs, our liquidity and ability to finance our operations, and other statements that are not historical facts contained in this report on Form 10-Q are forward-looking statements. We identify forward-looking statements in this report by using the following words and similar expressions:

•      expect	•      project	•      estimate
•      believe	•      anticipate	•      likely
•      plan	•      intend	•      could
•      should	•      may	•      predict
•      budget

Forward-looking statements involve risks, uncertainties and assumptions, including, without limitation, market factors, energy costs, the effect of weather and economic conditions, farm and trade policy, our ability to realize planned cost savings, the available supply of sugar, available quantity and quality of sugarbeets, actual or threatened acts of terrorism or armed hostilities, legislative, administrative and judicial actions and other factors detailed elsewhere in this report and in our other filings with the SEC. Many of such factors are beyond our ability to control or predict. 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. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All forward-looking statements in this Form 10-Q are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this report.

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PART I - FINANCIAL INFORMATION

IMPERIAL SUGAR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2004			September 30, 2003
	(In Thousands of Dollars)
ASSETS
Current Assets:
Cash and Temporary Investments	$	44,496		$	6,246
Marketable Securities		2,247			2,280
Accounts Receivable, Net		61,512			66,074
Inventories:
Finished Products		42,455			89,558
Raw and In-Process Materials		52,921			70,125
Supplies		10,347			9,398
Total Inventory		105,723			169,081
Deferred Costs and Prepaid Expenses		17,608			9,813
Assets Held for Sale		1,688			3,783
Total Current Assets		233,274			257,277
Other Investments		2,058			10,455
Property, Plant and Equipment, Net		135,814			134,931
Other Assets		5,487			15,503
Total	$	376,633		$	418,166
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable, Trade	$	69,226		$	86,671
Short-Term Borrowings		571			3,097
Current Maturities of Long-Term Debt		1,989			26,525
Other Current Liabilities		33,523			40,516
Total Current Liabilities		105,309			156,809
Long-Term Debt, Net of Current Maturities		7,799			10,975
Deferred Income Taxes, Net		—			—
Deferred Employee Benefits and Other Liabilities		131,281			128,969
Commitments and Contingencies
Shareholders’ Equity:
Preferred Stock, Without Par Value, Issuable in Series; 5,000,000 Shares Authorized, None Issued		—			—
Common Stock, Without Par Value; 50,000,000 Shares Authorized; 10,329,700 and 10,047,500 Shares Issued and Outstanding at March 31, 2004 and September 30, 2003		100,471			96,414
Retained Earnings		91,760			86,610
Accumulated Other Comprehensive Loss		(59,987	)		(61,611	)
Total Shareholders’ Equity		132,244			121,413
Total	$	376,633		$	418,166

See notes to consolidated financial statements.

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IMPERIAL SUGAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
	(In Thousands of Dollars, Except per Share Amounts)
Net Sales	$	209,615		$	251,911		$	465,613		$	540,905
Cost of Sales		192,820			238,330			427,660			506,566
Selling, General and Administrative Expense		9,750			13,221			21,198			28,229
Discount on Receivables Sold to Securitization Affiliate		—			—			—			1,930
Depreciation and Amortization		3,436			5,292			6,738			8,647
Loss (Gain) on Asset Sales, Impairment and Other Costs		(81	)		(314	)		37			1,045
Total		205,925			256,529			455,633			546,417
Operating Income (Loss)		3,690			(4,618	)		9,980			(5,512	)
Interest Expense, Net		(1,696	)		(1,447	)		(2,946	)		(2,031	)
Change in Fair Value of Interest Rate Swaps		(11	)		(295	)		138			(610	)
Costs Associated with Debt Repaid		—			—			—			(4,617	)
Other Income, Net		544			353			748			1,215
Income (Loss) from Continuing Operations Before Income Taxes		2,527			(6,007	)		7,920			(11,555	)
Provision for Income Taxes		890			—			2,770			—
Income (Loss) from Continuing Operations		1,637			(6,007	)		5,150			(11,555	)
Income from Discontinued Operations		—			5,683			—			74,690
Net Income (Loss)	$	1,637		$	(324	)	$	5,150		$	63,135
Basic Earnings (Loss) per Share of Common Stock:
Income (Loss) from Continuing Operations	$	0.16		$	(0.60	)	$	0.51		$	(1.16	)
Income from Discontinued Operations		—			0.57			—			7.47
Net Income (Loss)	$	0.16		$	(0.03	)	$	0.51		$	6.31
Diluted Earnings (Loss) per Share of Common Stock:
Income (Loss) from Continuing Operations	$	0.15		$	(0.60	)	$	0.48		$	(1.16	)
Income from Discontinued Operations		—			0.57			—			7.47
Net Income (Loss)	$	0.15		$	(0.03	)	$	0.48		$	6.31
Weighted Average Shares Outstanding		10,173,357			10,000,000			10,110,085			10,000,000

See notes to consolidated financial statements.

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IMPERIAL SUGAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

	Six Months Ended March 31,
	2004			2003
	(In Thousands of Dollars)
Operating Activities:
Net Income	$	5,150		$	63,135
Adjustments for Non-Cash and Non-Operating Items:
Reclassification Adjustment from Accumulated Other Comprehensive Income to Net Income		1,614			(1,907	)
Change in Fair Value of Interest Rate Swaps		(138	)		610
Inventory Impairment		—			2,393
Write Off of Deferred Debt Costs		—			2,420
Cash Settlements on Derivative Instruments		22			3,492
Depreciation and Amortization		6,738			8,647
Loss (Gain) on Sale of Assets		37			(1,645	)
Gain on Sale of Discontinued Operations		—			(69,824	)
Income from Discontinued Operations		—			(4,866	)
Deferred Income Taxes		2,770			—
Other		1,023			(254	)
Changes in Operating Assets and Liabilities:
Accounts Receivables		11,259			2,337
Inventories		63,358			55,361
Deferred Costs and Prepaid Expenses		(7,656	)		(7,269	)
Accounts Payable, Trade		(17,445	)		(4,644	)
Other Current Liabilities		(7,646	)		182
Net Cash Provided by Continuing Operations		59,086			48,168
Net Cash Provided by Discontinued Operations		—			5,693
Net Cash Provided by Operating Activities		59,086			53,861
Investing Activities:
Capital Expenditures - Discontinued Operations		—			(155	)
Capital Expenditures - Continuing Operations		(7,959	)		(4,714	)
Proceeds from Sale of Assets		2,362			6,766
Proceeds from Sale of Discontinued Operations		—			139,992
Proceeds from Collection of Notes Receivable		13,081			—
Other		631			(2,826	)
Investing Cash Flow		8,115			139,063
Financing Activities:
Issuance of Common Stock		1,287			—
Short-Term Borrowings, Net		(2,526	)		(2,281	)
Long-Term Debt Borrowings		—			32,403
Revolving Credit Repayment, Net		—			(25,040	)
Repayment of Long-Term Debt		(27,712	)		(116,679	)
Repurchase Accounts Receivable		—			(37,268	)
Financing Cash Flow		(28,951	)		(148,865	)
Increase in Cash and Temporary Investments		38,250			44,059
Cash and Temporary Investments, Beginning of Period		6,246			5,885
Cash and Temporary Investments, End of Period	$	44,496		$	49,944

See notes to consolidated financial statements.

5

IMPERIAL SUGAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Six Months Ended March 31, 2004

(Unaudited)

	Shares of Common Stock	Common Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
		(In Thousands of Dollars)
Balance September 30, 2003	10,047,500	$	96,414	$	86,610	$	(61,611	)	$	121,413
Comprehensive Income:
Net Income	—		—		5,150		—			5,150
Change in Derivative Fair Value (1)	—		—		—		22			22
Change in Unrealized Securities Gains (1)	—		—		—		(12	)		(12	)
Recognition of Deferred Losses in Net Income (1)	—		—		—		1,614			1,614
Total Comprehensive Income	—		—		—		—			6,774
Tax Benefit Realized from Net Operating Loss Carryforwards	—		2,770		—		—			2,770
Stock Options Exercised	282,200		1,287		—		—			1,287
Balance March 31, 2004	10,329,700	$	100,471	$	91,760	$	(59,987	)	$	132,244

(1) Tax effect of these items was zero.

See notes to consolidated financial statements.

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IMPERIAL SUGAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED MARCH 31, 2004 AND 2003

1. ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed 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 Company’s Annual Report on Form 10-K for the year ended September 30, 2003.

Cost of Sales

Payments to growers for sugarbeets are based in part upon the Company’s average net selling price for sugar sold (as defined in the participating contracts with growers) during the grower contract years, ending the last day of either February or June. The contracts provide for a variable purchase price which effectively results in the sharing of the net selling price (gross sales price less certain marketing costs, including packaging costs, brokerage, freight expense and amortization of costs for certain facilities used in connection with marketing) with growers. Sugarbeet purchases are recorded upon receipt, and a liability is established for estimated additional amounts to be paid to growers based on the average net return realized to date for sugar sold in each of the contract years through the end of the fiscal period. The final cost of sugarbeets cannot be determined until the end of the contract year for each growing area. Manufacturing costs incurred prior to production are deferred and allocated to production costs based on estimated production for each sugar manufacturing campaign. Additionally, the Company’s 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.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires estimates and assumptions, including those described above, that affect the reported amounts as well as certain disclosures. The Company’s financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates.

Reportable Segments

The Company operates its business as one domestic segment - the production and sale of refined sugar and related products. The Company sold the majority of its foodservice division in December 2002, as discussed in Note 6 and has reported the results of that business as discontinued operations.

Accounting Pronouncements

In 2003, the Financial Accounting Standards Board revised Financial Accounting Standard No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits (“SFAS 132”). The revised statement

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requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans and provides for later effective dates for certain provisions in the statement. The interim-period disclosures required by this statement are effective for interim periods beginning after December 15, 2003, however the Company has adopted this revised statement effective October 1, 2003, and has provided the additional interim disclosures required by SFAS 132 in Note 8 to the financial statements.

Earnings Per Share

As permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS 148, the Company measures compensation cost using the intrinsic value method prescribed in by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” The Company’s reported net income and net income per share would have been different had compensation cost for the Company’s stock-based compensation plans been determined using the fair value method of accounting as shown in the pro forma amounts below (in thousands of dollars, except per share amounts):

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
Net income (loss), as reported	$	1,637		$	(324	)	$	5,150		$	63,135
Deduct: Total stock-based employee compensation expense determined under fair value based method		(107	)		(134	)		(195	)		(214	)
Pro forma net income (loss)		1,530			(458	)		4,955			62,921
Net income (loss) per share, Basic:
As reported	$	0.16		$	(0.03	)	$	0.51		$	6.31
Pro forma		0.15			(0.05	)		0.49			6.29
Net income (loss) per share, Diluted:
As reported	$	0.15		$	(0.03	)	$	0.48		$	6.31
Pro forma		0.14			(0.05	)		0.46			6.29

For purpose of estimating the fair value of options on their date of grant, the Black-Scholes option-pricing model was used with the following assumptions:

Expected stock price volatility	3.8 - 6.5%
Risk-free interest rate	2.5 - 4.2%
Expected life of options	5.0 years

Reclassifications

Certain amounts in the prior year presentation have been reclassified to be consistent with fiscal 2004.

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2. LONG-TERM DEBT

Long-term debt was as follows (in thousands of dollars):

	March 31, 2004		September 30, 2003
Senior bank debt:
Revolving credit facility	$	—	$	—
Term loan		—		24,667
Industrial revenue bonds		1,500		3,680
Non-interest bearing notes		8,288		9,153
Total long-term debt		9,788		37,500
Less current maturities		1,989		26,525
Long-term debt, net	$	7,799	$	10,975

The senior bank debt is secured by substantially all of the Company’s assets and all subsidiaries of the Company are borrowers or guarantors under the facility. The agreement contains a financial covenant which requires maintenance of a minimum EBITDA level defined in the agreement. The Company is in compliance with this covenant as of March 31, 2004.

In the six months ended March 31, 2004, the Company repaid in full the Term Loan portion of the Senior Debt. In addition, on February 26, 2004, the Company entered into the First Amendment to the Credit Agreement which, among other things, eliminated the minimum fixed charge coverage ratio and provided additional capital structure flexibility.

The revolving credit facility matures December 31, 2005. Although the maturity date is December 31, 2005, the Company classifies any outstanding borrowings under the senior bank facility as current, pursuant to Emerging Issues Task Force Issue 95-22, as the agreement contains a subjective acceleration clause if, in the opinion of the lender, there is a material adverse effect, and provides the lenders direct access to our cash receipts.

3. GAIN (LOSS) ON ASSET SALES, IMPAIRMENT AND OTHER COSTS

The Company had gains (losses) on asset sales, impairment and other costs, as follows (in thousands of dollars):

	Three Months Ended March 31,					Six Months Ended March 31,
	2004		2003			2004			2003
Gain (Loss) on Asset Sales:
Surplus Real Estate and Equipment	$	81	$	221		$	(37	)	$	1,645
Impairment and Other Charges:
Impairment of Supplies Inventory - Sugar Land		—		(473	)		—			(2,393	)
Sugar Land Severance		—		(276	)		—			(869	)
Lease Obligations and Other		—		842			—			572
Total Gains (Losses) on Asset Sales, Impairment, and Other Costs	$	81	$	314		$	(37	)	$	(1,045	)

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Changes in the accrued balance for future cash expenditures in conjunction with closing production facilities are summarized below (in thousands of dollars):

	Accrued Balance September 30, 2003		Six Months Ended March 31, 2004			Accrued Balance at March 31, 2004
			Amounts Paid
Accrual for Cash Charges:
Severance	$	90	$	(36	)	$	54
Environmental Costs		1,439		(81	)		1,358
Total	$	1,529	$	(117	)	$	1,412

4. CONTINGENCIES

The Company is party to 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 materially adverse effect on its consolidated results of operations, financial position, or cash flows.

In conjunction with the cessation of refining operations in Sugar Land in December 2002, the Company offered its affected bargaining unit employees severance of $2.3 million, even though not required by the collective bargaining agreement, in return for certain changes to the agreement. The union leadership rejected the Company’s offer and filed a grievance in February 2003 alleging the Company owed unspecified severance and other benefits pursuant to the existing contract. The union filed similar grievances in April and June 2003 when other union members were separated from the Company. The Company estimated that severance and other benefits calculated pursuant to the methodology stated in the grievance would be between $4 million and $5 million. The Company believes that its interpretation of the collective bargaining agreement is correct and contested the grievances. The arbitrator’s decision on the first grievance, announced in December 2003, agreed with the Company’s position and denied the grievance. The union may appeal the arbitrator’s decision, but the Company believes a reversal of the decision on appeal is unlikely. The Company believes that the two open severance grievances are without merit and subject to the same contractual interpretation as the February 2003 grievance and that those grievances will either be withdrawn by the union or denied in the arbitration process.

In May 2003, sugarbeet growers from the Torrington, Wyoming area filed a complaint for unspecified damages alleging breach of contract, anticipatory repudiation and breach of an implied covenant of fair dealing in connection with the Company’s sale of a beet processing facility to a third party in 2002. In September 2003, the Wyoming Federal District Court granted the Company’s motion to dismiss all counts of the plaintiffs’ complaint and overruled the growers’ motion for a rehearing. The growers have since filed an appeal of the court’s decision. The Company believes these claims are without merit and that a reversal of the trial court decision is unlikely.

In connection with the sales of DCB and the beet factories described above, the Company made customary representations and warranties, and undertook indemnification obligations with regard to certain of these representations and warranties. These indemnification obligations are subject to certain deductibles, caps and expiration dates and, in some cases, may be deducted from the related escrow balance. To date, no significant indemnity claims have been asserted and the Company does not believe any future claim, if asserted, would be material to the Company’s consolidated financial position, results of operations or cash flows.

In February 2002, the Company sold its Michigan Sugar subsidiary for cash and notes. Additionally, the buyer assumed $18.5 million of industrial revenue bonds, with final maturity in 2025, issued by Michigan Sugar. 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 obligation under the guaranty was cross collateralized with a seller note receivable that provided the Company with a claim to substantially all Michigan Sugar’s production assets should the Company have to perform under the guaranty. In December 2003, the Company received $13.3 million in

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principal and interest from Michigan Sugar in full satisfaction of the seller note and released the collateral. The Company’s obligation pursuant to the guarantee is now unsecured. The Company accounted for this release of collateral as a modification of the guarantee and recorded a non-current liability for its fair value in the first quarter of fiscal 2004, pursuant to Financial Interpretation No. 45. The loss on recording the fair value of the guarantee was substantially offset by the gain from the early repayment of the seller note.

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5. EARNINGS PER SHARE

The following table presents information necessary to calculate basic and diluted earnings per share (in thousands of dollars, except per share amounts):

	Three Months Ended March 31,					Six Months Ended March 31,
	2004		2003			2004		2003
	Income (Loss)		Income (Loss)			Income (Loss)		Income (Loss)
Income (loss) from continuing operations	$	1,637	$	(6,007	)	$	5,150	$	(11,555	)
Effect of assumed conversions		—		—			—		—
Adjusted income (loss) from continuing operations		1,637		(6,007	)		5,150		(11,555	)
Average shares outstanding		10,173,357		10,000,000			10,110,085		10,000,000
Effect of incremental shares issuable from assumed exercise of stock options under the treasury stock method (1)		639,527		—			616,150		—
Adjusted average shares		10,812,884		10,000,000			10,726,235		10,000,000
Basic EPS from continuing operations	$	0.16	$	(0.60	)	$	0.51	$	(1.16	)
Diluted EPS from continuing operations	$	0.15	$	(0.60	)	$	0.48	$	(1.16	)
Income from discontinued operations		—		5,683			—		74,690
Effect of assumed conversions		—		—			—		—
Adjusted income from discontinued operations		—		5,683			—		74,690
Average shares outstanding		10,173,357		10,000,000			10,110,085		10,000,000
Effect of incremental shares issuable from assumed exercise of stock options under the treasury stock method (1)		639,527		—			616,150		—
Adjusted average shares		10,812,884		10,000,000			10,726,235		10,000,000
Basic EPS from discontinued operations	$	—	$	0.57		$	—	$	7.47
Diluted EPS from discontinued operations	$	—	$	0.57		$	—	$	7.47
Basic net income (loss)		1,637		(324	)		5,150		63,135
Effect of assumed conversions		—		—			—		—
Adjusted net income (loss)		1,637		(324	)		5,150		63,135
Average shares outstanding		10,173,357		10,000,000			10,110,085		10,000,000
Effect of incremental shares issuable from assumed exercise of stock options under the treasury stock method (1)		639,527		—			616,150		—
Adjusted average shares		10,812,884		10,000,000			10,726,235		10,000,000
Basic EPS from net income (loss)	$	0.16	$	(0.03	)	$	0.51	$	6.31
Diluted EPS from net income (loss)	$	0.15	$	(0.03	)	$	0.48	$	6.31

(1) There were 44,000 securities excluded from the computation of diluted EPS for the three and six months ended March 31, 2004 as they were anti-dilutive.

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During the six months ended March 31, 2004, the Company granted options to purchase 51,000 shares of common stock at a weighted average price of $13.52 per share. The options vest over a three-year period and expire ten years after the date of grant. Options to purchase 282,200 shares of common stock with an average price of $4.56, were exercised during the six months ended March 31, 2004, including options for 119,000 shares held by former employees.

6. DISCONTINUED OPERATIONS

The financial statements reflect the operating results of the Diamond Crystal Brands (“DCB”) foodservice business and the operating results of beet processing facilities in Sidney, Montana, Torrington, Wyoming and Hereford, Texas, each of which were sold during fiscal 2003, as discontinued operations. No provision for income taxes on discontinued operations was recorded because of differences in the book and tax basis of the stock of DCB that was sold in December 2002.

In conjunction with the sale of Sidney, Torrington, and Hereford, $0.9 million was placed in escrow for a period of time after the sale. In January 2004, this escrow was released and the proceeds were used to repay debt.

Summary operating results of discontinued operations are as follows (in thousands of dollars):

	Three Months Ended March 31, 2003		Six Months Ended March 31, 2003
Net Sales			$	54,342
Cost and Expenses				(48,981	)
Depreciation				(794	)
Operating Income from Discontinued Operations				4,567
Other Income				303
Loss on Sale of Assets				(4	)
Provision for Income Taxes				—
Income from Discontinued Operations Before Gain				4,866
Gain on Disposal	$	5,683		69,824
Income from Discontinued Operations	$	5,683	$	74,690

7. DERIVATIVES

The Company recognized gains of approximately $0.9 million in the three months and $1.3 million in the six months ended March 31, 2004, on natural gas hedge positions which no longer qualified for deferral accounting as “highly effective” under Statement of Financial Accounting Standards No. 133. As a result, these hedge gains will not be available to offset higher physical gas costs in the remainder of the year. Similarly, in March 2003, the Company recognized $0.9 million of gains on derivatives which no longer qualified for deferral accounting.

In the past, the Company had material amounts of debt with interest rates that floated with market rates, exposing the Company to interest rate risk. The Company’s policy was to reduce interest rate risk on its variable rate debt by entering into interest rate swap agreements for a portion of such floating rate debt. The Company had an interest rate swap agreement with a major financial institution under which the Company paid a fixed rate of 2.465% and received a floating interest payment based on 3 month LIBOR.

Since the Company had the ability to change the interest rate index of the debt, the interest rate swap agreements were not designated as hedging instruments under SFAS 133. Therefore, changes in the fair value of the interest rate swaps were recognized in earnings. In conjunction with the repayment of the Term Debt, the swap was terminated in March 2004.

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8. PENSION AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic benefit costs for the three and six months ended March 31, 2004 and 2003 were (in thousands):

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
Pension Plans
Service Cost	$	325		$	800		$	650		$	2,405
Interest Cost		3,579			2,821			7,158			8,213
Expected Return on Plan Assets		(3,710	)		(3,083	)		(7,420	)		(9,026	)
Amortization of Prior Service Cost		26			3			52			6
Recognized Actuarial Loss		115			1			229			3
Total Net Periodic Benefit Costs	$	335		$	542		$	669		$	1,601
Postretirement Benefits Other than Pension Plans
Service Cost	$	2		$	29		$	8		$	58
Interest Cost		96			416			392			833
Amortization of Prior Service Cost		(91	)		—			(250	)		—
Recognized Actuarial Loss		33			5			108			9
Total Net Periodic Benefit Costs	$	40		$	450		$	258		$	900

Pension plan contributions, which are based on regulatory requirements, totaled $0.2 million and $0.4 million during the three and six months ended March 31, 2004; required contributions during fiscal 2004 are expected to be approximately $1.9 million.

Plan assets of the Company sponsored defined benefit pension plans at June 30, 2003 (the most recent actuarial valuation date), were invested in marketable large cap equity investments. In September 2003, the Company re-allocated plan assets to a target allocation of marketable securities in the following:

High Grade Debt	20	%
Large Cap Equity	40	%
Mid Cap Equity	20	%
Small Cap Equity	20	%

The Company expects to re-allocate a total of 10% of plan assets between real estate and hedge funds during the second half of fiscal 2004.

The assumed rate of return is based on the results of historical statistical return studies conducted by the Company’s advisors. As a result of the re-allocation discussed above, the Company reduced its assumed long-term rate of return on plan assets from 9% to 8% for fiscal 2004.

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Item 2. MANAGEMENT’S 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, 2003.

Overview

We operate in a single domestic business segment, which produces and sells refined sugar and related products. Revenues, volumes, costs and expenses of discontinued operations have been segregated from continuing operations in the Consolidated Statements of Operations and in the following discussion and analysis of results of operations.

Our results of operations substantially depend on market factors, including the demand for and price of refined sugar, the price of raw cane sugar, the quantity and quality of sugarbeets available to us and the availability and price of energy and other resources. These market 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 sugarbeets, prices of competing crops, domestic health and eating trends, competing sweeteners, weather conditions and United States farm and trade policy. The domestic sugar industry is subject to substantial influence by legislative and regulatory actions. The current farm bill limits the importation of raw cane sugar and the marketing of 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.

Weather conditions during the growing, harvesting and processing seasons, the availability of acreage to contract for sugarbeets, as well as the effects of crop diseases and insects, may materially affect the quality and quantity of sugarbeets available for purchase as well as the costs of raw materials and processing.

Results of Operations

Three and Six Months Ended March 31, 2004

Our results of operations primarily depend on our success in achieving appropriate spreads of sugar sales prices over raw material costs and our ability to control our manufacturing, distribution and administrative costs. Sugar sales comprised approximately 95% of our net revenues.

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in Millions of Dollars)
Net Revenues:
Sugar Sales	$	199	$	241	$	446	$	522
By-product Sales		6		5		14		12
Beet Seed Sales and Other Revenue		5		6		6		7
Net Revenues	$	210	$	252	$	466	$	541

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Sugar sales volumes and prices were:

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
	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	4,189	$	25.49	5,256	$	26.57	8,938	$	26.09	10,612	$	26.10
Consumer	2,020		31.79	2,067		31.68	4,840		32.57	5,480		31.87
Foodservice	876		31.96	1,153		30.81	1,717		32.07	2,270		30.91
Sugar Sales	7,085	$	28.09	8,476	$	28.39	15,495	$	28.78	18,362	$	28.41

Net revenues decreased 16.8% and 13.9% for the three and six month periods ended March 31, 2004 compared to those same periods ended March 31, 2003, almost entirely as a result of overall decreased sales volumes. Sugar sales volume decreases of 16.4% and 15.6% for the three and six month periods ended March 31, 2004 compared to those same periods in 2003 are primarily due to softness in an oversupplied market, due in part to reduced domestic sugar consumption, leading to increased competitive pressures, especially in the southeast consumer branded and industrial markets. Additionally, we rationalized our sales after the closure of the Sugar Land refinery in fiscal 2003. Partially offsetting the decrease in volume for the current six-month period is a slight increase in price compared to the prior year. However, large domestic sugarbeet crops, along with lower domestic sugar consumption has resulted in a surplus of sugar in the market, putting downward pressure on current industrial prices, as seen starting in the second fiscal quarter. A shift in the mix of domestic and world sales also contributed to the decrease in average industrial sales price for the quarter.

Gross margin as a percentage of sales increased to 8.0% from 5.4% for the quarter ended March 31, 2004 versus 2003. The year-to-date periods for fiscal 2004 versus 2003 reflected a similar increase, with the gross margin improving to 8.2% from 6.3%. The increase in margin for these periods is primarily a result of lower raw materials costs, efficiencies gained as a result of the Sugar Land refinery closure, and recognition of sales tax credits. Raw cane sugar costs were $21.04 versus $21.72 per cwt for the quarter ended March 31, 2004 compared to 2003 and $21.27 versus $21.42 for the year-to-date periods. Additionally, the Company benefited from the recognition of a $0.6 million sales tax credit under an economic incentive agreement negotiated last year. These cost savings were partially offset by increases in natural gas costs. Our average cost of natural gas, after applying gains and losses from hedging activity for the relevant gas delivery periods, increased to $5.96 per mmbtu from $3.60 per mmbtu in the quarter and to $5.33 from $3.73 in the year-to-date period. In an effort to mitigate energy costs from continued increases, we have maximized our use of coal and fuel oil and have purchased natural gas futures for approximately 80% of our expected natural gas needs for the remainder of the fiscal year at an average cost of $4.82 per mmbtu.

Selling, general and administrative expense decreased $3.5 million or 26.3% in the quarter and $7.0 million or 24.9% for the year-to-date period ended March 31, 2004, compared to the same periods for 2003. These decreases in the current year are related to a number of factors, including cost savings initiatives started by the Company last year, decreased medical costs, and decreased professional fees and consulting costs in fiscal 2004. As part of our cost savings initiatives, there were severance charges incurred of $0.7 million in the current year and $0.8 million in the prior year. These cost savings initiatives also contributed to a decrease in employee costs for the current year. In addition to decreased medical costs for the year, the Company has also experienced a decrease in pension costs resulting from plan modifications. Finally, professional services fees, including trailing bankruptcy costs, were lower in the current year due to initiatives in the prior year to rationalize our businesses and restructure our capital requirements. Partially offsetting these cost savings are increased marketing and advertising costs for the current year.

In connection with the decision to discontinue packaging and distribution in Sugar Land in 2003, we reduced the estimated remaining useful lives of certain facilities and equipment and recorded an additional $2 million of depreciation and amortization during the three months ended March 31, 2003. There was no such charge in the same period ending March 31, 2004.

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As a result of the items discussed above, operating income improved from a loss of $4.6 million for the quarter ended March 31, 2003 to income of $3.7 million for the quarter ended March 31, 2004. Operating income for the year-to-date period improved from a loss of $5.5 million in fiscal 2003 to income of $10.0 million in fiscal 2004. Operating income includes charges (credits) which affect comparability between periods as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004		2003
Charges (Credits) Included in Operating Income
(Gain)/Loss on Asset Sales, Impairment and Other Costs:
(Gain)/Loss on Asset Sales	$	(0.1	)	$	(0.2	)	$	—	$	(1.6	)
Impairment and Other Costs		—			(0.1	)		—		2.7
Discount on Receivables Sold (1)		—			—			—		1.9
Selling, General and Administrative Expense:
Severance Costs - Headquarters		—			0.8			0.7		0.8
Professional Fees and Expenses for Restructuring		0.2			0.7			0.2		2.8
Additional Depreciation		—			2.0			—		2.0

(1) Discounts on receivables sold were incurred in connection with the Company’s accounts receivable securitization facility, which was terminated in December 2002 in connection with the refinancing of the senior bank debt.

Interest expense has increased during fiscal 2004 due to a refund of approximately $2.1 million in the first quarter of the prior year from refinancing of the bank debt which was recorded as a reduction to interest expense; there was no such credit in the current year. In the current year, the Company recorded an additional $0.7 million of interest expense ($0.5 million in the current quarter) related to a change in estimate of the remaining term of deferred debt costs due to the early payoff of the term debt.

The increase in other income for the three months ended March 31, 2004 compared to 2003 relates to income from an equity investment and to proceeds from the de-mutualization of life insurance contracts. For the year-to-date period the decrease in other income was driven by a credit related to the securitization facility, as well as sale of surplus operating supplies in the first quarter of 2003, which more than offset the items noted above.

We are not currently paying federal income taxes on our earnings as a result of net operating loss carryforwards from prior periods. However, we expect to begin paying cash taxes in the second half of fiscal 2004.

In connection with the sales of DCB and the beet factories described above, the Company made customary representations and warranties, and undertook indemnification obligations with regard to certain of these representations and warranties. These indemnification obligations are subject to certain deductibles, caps and expiration dates and, in some cases, may be deducted from the related escrow balance. To date, no significant indemnity claims have been asserted and the Company does not believe any future claim, if asserted, would be material to the Company’s consolidated financial position, results of operations or cash flows.

Liquidity and Capital Resources

We fund our liquidity and capital requirements from cash generated from operations, supplemented as necessary with a $140 million (subject to a borrowing base calculation) three-year revolving credit facility, including a $50 million sub-limit for letters of credit. At March 31, 2004 we had no outstanding borrowings under the revolving credit facility and had borrowing capacity of $45 million, after deducting outstanding letters of credit totaling $28 million. The Company also had $44.5 million of cash and temporary investments at March 31, 2004.

The facility is secured by substantially all of our assets and each of our subsidiaries is either a borrower or a guarantor under the facility. The agreement contains covenants limiting our ability to, among other things:

17

• incur other indebtedness

• incur other liens

• undergo any fundamental changes

• declare or pay dividends

• engage in transactions with affiliates

• enter into sale and leaseback transactions

• change our fiscal periods

• enter into mergers or consolidations

• sell assets

• prepay other debt

In addition, the agreement requires that we comply with a quarterly covenant which establishes a minimum level of earnings before interest, taxes, depreciation and amortization, as defined (“EBITDA”) of $26 million for the twelve months ended March 31, 2004, increasing to $29 million for the year ending September 30, 2004 and $37 million for the year ending September 30, 2005.

The facility also includes customary events of default, including a change of control. Borrowings 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. Although the facility has a final maturity date of December 31, 2005, we would classify any debt under the new credit facility as current, pursuant to Emerging Issues Task Force Issue 95-22, as the agreement contains a subjective acceleration clause if in the opinion of the lenders there is a material adverse effect, and provides the lenders direct access to our cash receipts. We are in compliance with all requirements of the agreement at March 31, 2004.

In March 2004, the Company repaid the Term Debt under the facility in full. In addition, on February 26, 2004, the Company entered into the First Amendment to the Credit Agreement which, among other things, eliminated the minimum fixed charge coverage ratio and provided additional flexibility to our capital structure.

Our capital expenditures for the six months ended March 31, 2004 were $8.0 million, primarily for technology and productivity improvements. Capital expenditures in fiscal 2004 are not expected to exceed $18 million, including $4 million of technology investments (primarily an Enterprise Resource Planning system), with $4 million of expenditures related to normal replacement of factory equipment and $10 million related to productivity and packaging improvements.

Our sugar production operations require seasonal working capital. Our seasonal requirements are expected to peak during our fourth fiscal quarter when inventory levels are high, and a substantial portion of the payments to raw material suppliers have been made. Management believes that the credit facility and cash flow from operations will provide sufficient capital to meet anticipated working capital and operational needs for at least the next twelve months.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimate methodologies since the filing of our Form 10-K September 30, 2003.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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 ability to effectively hedge raw sugar purchases is somewhat limited by the illiquidity in the domestic raw sugar futures market. Gains and losses on raw sugar futures and options are matched to inventory purchases and charged or credited to cost of sales as such inventory is sold. Gains and losses on natural gas futures are matched to the natural gas purchases and charged to cost of sales in the period of the purchase.

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The information in the table below presents our domestic and world raw sugar futures positions outstanding as of March 31, 2004.

	Expected Maturity Fiscal 2004		Expected Maturity Fiscal 2005
Domestic Futures Contracts (long positions):
Contract Volumes (cwt.)		1,557,920		98,560
Weighted Average Contract Price (per cwt.)	$	20.90	$	21.23
Contract Amount	$	32,559,000	$	2,092,000
Weighted Average Fair Value (per cwt.)	$	21.01	$	21.15
Fair Value	$	32,739,000	$	2,085,000

	Expected Maturity Fiscal 2005
Domestic Futures Contracts (short positions):
Contract Volumes (cwt.)		135,520
Weighted Average Contract Price (per cwt.)	$	21.17
Contract Amount	$	2,868,000
Weighted Average Fair Value (per cwt.)	$	21.39
Fair Value	$	2,899,000

	Expected Maturity Fiscal 2004		Expected Maturity Fiscal 2005
World Futures Contracts (long positions):
Contract Volumes (cwt.)		183,680		621,600
Weighted Average Contract Price (per cwt.)	$	6.45	$	6.65
Contract Amount	$	1,184,000	$	4,135,000
Weighted Average Fair Value (per cwt.)	$	6.58	$	6.65
Fair Value	$	1,209,000	$	4,131,000

	Expected Maturity Fiscal 2004
World Futures Contracts (short positions):
Contract Volumes (cwt.)		324,800
Weighted Average Contract Price (per cwt.)	$	6.63
Contract Amount	$	2,154,000
Weighted Average Fair Value (per cwt.)	$	6.40
Fair Value	$	2,079,000
World Trading Positions (short positions):
Contract Volumes (cwt.)		224,000
Weighted Average Contract Price (per cwt.)	$	6.30
Contract Amount	$	1,410,000
Weighted Average Fair Value (per cwt.)	$	6.49
Fair Value	$	1,454,000

The above information does not include either our physical inventory or our fixed price purchase commitments for raw sugar.

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The information in the table below presents our natural gas futures positions outstanding as of March 31, 2004.

	Expected Maturity Fiscal 2004		Expected Maturity Fiscal 2005
Futures Contracts (net long positions):
Contract Volumes (mmbtu)		1,900,000		50,000
Weighted Average Contract Price (per mmbtu)	$	4.73	$	4.81
Contract Amount	$	8,988,000	$	241,000
Weighted Average Fair Value (per mmbtu)	$	6.00	$	6.02
Fair Value	$	11,402,000	$	301,000

Item 4. CONTROLS AND PROCEDURES

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, 2004 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 Commission’s rules and forms.

There has been no change in our internal controls over financial reporting that occurred during the three months ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibits
	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.
	32.1	Chief Executive Officer Certification 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.
	32.2	Chief Financial Officer Certification 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.
(b)	Reports on Form 8-K
	The Company filed a current report on Form 8-K on March 5, 2004 in connection with repayment of the Term Loan portion of the Credit Agreement and the First Amendment of the Senior Secured Credit Facility.

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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.

	IMPERIAL SUGAR COMPANY
	(Registrant)
Dated: May 11, 2004	By:	/s/ Darrell D. Swank
		Darrell D. Swank
		Senior Vice President and Chief Financial Officer

22

Exhibit Index

Exhibit No.	Document
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.
32.1	Chief Executive Officer Certification 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.
32.2	Chief Financial Officer Certification 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.

23

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert A. Peiser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Sugar Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 11, 2004	By:	/s/ Robert A. Peiser
		Robert A. Peiser
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Darrell D. Swank, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Imperial Sugar Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 11, 2004	By:	/s/ Darrell D. Swank
		Darrell D. Swank
		Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,

United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Robert A. Peiser, Chief Executive Officer of Imperial Sugar Company, a Texas corporation (the “Company”), hereby certify, to my knowledge, that:

(1) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2004	/s/ Robert A. Peiser
	Robert A. Peiser
	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,

United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Darrell D. Swank, Chief Financial Officer of Imperial Sugar Company, a Texas corporation (the “Company”), hereby certify, to my knowledge, that:

(1) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2004	/s/ Darrell D. Swank
	Darrell D. Swank
	Chief Financial Officer