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Rogers Sugar Inc.: Interim Report for the 1st Quarter 2013 Results

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MONTREAL, QUEBEC -- (Marketwire) -- 01/30/13 -- Rogers Sugar Inc. (TSX: RSI)

Message to Shareholders: On behalf of the Board of Directors, I am pleased to present the unaudited condensed consolidated interim financial results of Rogers Sugar Inc. (the "Company") for the three months ended December 29, 2012.

On January 30, 2013, the Board of Directors has authorized and declared a special dividend of 36 cents per share to be paid to Shareholders of record on February 8, 2013, payable on or before February 28, 2013. This special dividend totalling approximately $33.9 million will be financed through the working capital line of credit and available cash. The payment of the special dividend reflects the distribution of a portion of the previously earned but undistributed free cash flow generated over the five fiscal years from October 2007 to September 2012 which totalled approximately $64.7 million.

Volume for the first quarter was 156,415 metric tonnes, as opposed to 172,754 metric tonnes in the comparable quarter of last year, a decrease of approximately 16,300 metric tonnes. Industrial volume was higher by approximately 4,700 metric tonnes due to the gain of additional volume with existing and new customers. Consumer volume was higher by approximately 500 metric tonnes due mainly to timing in customers' retail promotions. Liquid volume also increased by approximately 300 metric tonnes due mainly to timing in some deliveries and increases in deliveries to existing customers. These increases were offset with lower export volume of approximately 21,800 metric tonnes due to sugar sold under a special quota to the U.S in fiscal 2012. A special quota of 136,078 metric tonnes was opened, effective October 3, 2011 by the U.S. Department of Agriculture, of which 25,000 metric tonnes was allocated specifically to Canada and the balance of 111,078 to global suppliers on a first-come, first-served basis. The Company, through its cane refineries, was able to enter approximately 10,000 metric tonnes against the global quota by the time it closed on October 25, 2011. As the sole producer of Canadian origin sugar in Taber Alberta, the Company was able to enter approximately 17,600 metric tonnes by the time that quota closed on November 30, 2011.

With the mark-to-market of all derivative financial instruments and embedded derivatives in non-financial instruments at the end of each reporting period, our accounting income does not represent a complete understanding of factors and trends affecting the business. Consistent with previous reporting, we therefore prepared adjusted gross margin and adjusted earnings results to reflect the performance of the Company during the period without the impact of the mark-to-market of derivative financial instruments and embedded derivatives in non-financial instruments. At the end of the first quarter the accounting results had a mark-to-market gain of $1.1 million before income taxes, which was deducted to arrive at the adjusted results.

For the quarter, adjusted gross margin decreased by approximately $8.2 million, when compared to the same quarter of last year, due in large part to lower export volume. On a per metric tonne basis, adjusted gross margin was $189.02 compared to $218.74 for the first quarter of last year. The decrease in the adjusted gross margin rate of $29.72 is due mainly to the sales mix, as a higher margin rate was realized on export sales under the special quota in the first quarter of fiscal 2012.

Adjusted EBIT of $22.6 million was $8.3 million lower when compared to the same quarter last year due to the decrease in export volume against U.S. special quotas and to the lower adjusted gross margin rate as discussed above.

For the quarter, free cash flow was $18.1 million, as compared to $21.7 million in fiscal 2012. The decrease was due mainly to the lower adjusted operating results and higher investment in capital expenditures, somewhat offset by the payment of $2.7 million in deferred financing charges on the issue of a new convertible debenture in the comparable quarter of fiscal 2012.

Industrial volume will be higher in fiscal 2013 as additional volume has been contracted with new and existing accounts. In addition the Company was able to contract additional liquid sugar volume with one large bottler in western Canada. Shipments against this new contract are forecast to start in the spring of 2013. Export volume is forecast to be lower this fiscal year as no special U.S. quotas are expected during the year as a result of large crops in the U.S. and Mexico. Overall volume for fiscal 2013 is expected to be higher than fiscal 2012.

The Taber beet sugar slicing campaign is estimated to be completed by mid-February. We are now estimating total sugar beet production at approximately 118,000 metric tonnes, when the thick juice campaign will be completed in the spring of 2013. This total production volume is larger than our current sales estimate for Taber, including the additional liquid sales starting in the spring of 2013. The additional beet refined sugar inventory will be warehoused or sold against additional opportunities that may arise over the balance of the fiscal year.

FOR THE BOARD OF DIRECTORS Signed Stuart Belkin, Chairman Vancouver, British Columbia - January 30, 2013



MANAGEMENTS' DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis ("MD&A") dated January 30, 2013 of Rogers Sugar Inc. ("Rogers") should be read in conjunction with the unaudited condensed consolidated interim financial statements and notes thereto for the period ended December 29, 2012, as well as the audited consolidated financial statements and MD&A for the year ended September 29, 2012. The quarterly condensed consolidated financial statements and any amounts shown in this MD&A were not reviewed nor audited by our external auditors.

Management is responsible for preparing the MD&A. This MD&A has been reviewed and approved by the Audit Committee of Rogers and its Board of Directors.

Non-GAAP measures

In analyzing our results, we supplement our use of financial measures that are calculated and presented in accordance with GAAP, with a number of non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's historical performance, financial position or cash flow that excludes (includes) amounts, or is subject to adjustments that have the effect of excluding (including) amounts, that are included (excluded) in most directly comparable measures calculated and presented in accordance with GAAP. Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar businesses. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We use these non-GAAP financial measures in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting our business.

In the MD&A, we discuss the non-GAAP financial measures, including the reasons that we believe that these measures provide useful information regarding our financial condition, results of operations, cash flows and financial position, as applicable and, to the extent material, the additional purposes, if any, for which these measures are used. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in the MD&A.

Forward-looking statements

This report contains certain forward-looking statements, which reflect the current expectations of Rogers and Lantic Inc. (together referred to as "the Company") with respect to future events and performance. Wherever used, the words "may" "will," "anticipate," "intend," "expect," "plan," "believe," and similar expressions identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although this is not an exhaustive list, the Company cautions investors that statements concerning the following subjects are, or are likely to be, forward-looking statements: future prices of raw sugar, natural gas costs, the opening of special refined sugar quotas in the United States, beet production forecasts, the status of labour contracts and negotiations, the level of future dividends and the status of government regulations and investigations. Forward-looking statements are based on estimates and assumptions made by the Company in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. This could cause actual performance or results to differ materially from those reflected in the forward-looking statements, historical results or current expectations.

Additional information relating to the Company, including the Annual Information Form, Quarterly and Annual reports and supplementary information is available on SEDAR at www.sedar.com.

Internal disclosure controls

In accordance with Regulation 52-109 respecting certification of disclosure in issuers' interim filings, the Chief Executive Officer and Chief Financial Officer have designed or caused it to be designed under their supervision, disclosure controls and procedures.

In addition, the Chief Executive Officer and Chief Financial Officer have designed or caused it to be designed under their supervision internal controls over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

The Chief Executive Officer and the Chief Financial Officer have evaluated whether or not there were any changes to its ICFR during the three month period ended December 29, 2012 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR. No such changes were identified through their evaluation.

Results of operations

--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Results For the three months ended December 29, December 31,(In thousands of dollars, except for volume 2012 2011and per share information) (Unaudited) (Unaudited)--------------------------------------------------------------------------------------------------------------------------------------------------------Volume (metric tonnes) 156,415 172,754--------------------------------------------------------------------------------------------------------------------------------------------------------Revenues $ 142,376 $ 175,805Gross margin 30,639 23,654Administration and selling expenses 4,612 4,578Distribution expenses 2,329 2,307----------------------------------------------------------------------------Earnings before interest and provision for income taxes (EBIT) $ 23,698 $ 16,769Net finance costs 2,202 2,892Provision for income taxes 5,363 3,997----------------------------------------------------------------------------Net earnings $ 16,133 $ 9,880----------------------------------------------------------------------------Net earnings per share - basic $ 0.17 $ 0.11--------------------------------------------------------------------------------------------------------------------------------------------------------



In the normal course of business, the Company uses derivative financial instruments consisting of sugar futures, foreign exchange forward contracts, natural gas futures and interest rate swaps. The Company sells refined sugar to some clients in U.S. dollars. These sales contracts are viewed as having an embedded derivative if the functional currency of the customer is not U.S. dollars, the embedded derivative being the source currency of the transaction, U.S. dollars. Derivative financial instruments and embedded derivatives are marked-to-market at each reporting date, with the unrealized gains/losses charged to the consolidated statement of earnings with a corresponding offsetting amount charged to the statement of financial position.

Management believes that the Company's financial results are more meaningful to management, investors, analysts and any other interested parties when financial results are adjusted by the gains/losses from financial derivative instruments and from embedded derivatives for which adjusted financial results provide a more complete understanding of factors and trends affecting our business. This measurement is a non-GAAP measurement.

Management uses the non-GAAP adjusted results of the operating company to measure and to evaluate the performance of the business through its adjusted gross margin, adjusted EBIT and adjusted net earnings. In addition, management believes that these measures are important to our investors and parties evaluating our performance and comparing such performances to our past results. Management also uses adjusted gross margin, adjusted EBIT and adjusted net earnings when discussing results with the Board of Directors, analysts, investors, banks and other interested parties.

The results of operations would therefore need to be adjusted by the following:

--------------------------------------------------------------------------------------------------------------------------------------------------------Income (loss) For the three months ended December 29, December 31, 2012 2011(In thousands) (Unaudited) (Unaudited)--------------------------------------------------------------------------------------------------------------------------------------------------------Mark-to-market adjustment (excluding interest rate swap) $ (3,262) $ (7,819)Cumulative timing differences 4,334 (6,316)----------------------------------------------------------------------------Total adjustment to cost of sales $ 1,072 $ (14,135)--------------------------------------------------------------------------------------------------------------------------------------------------------



A significant part of the above mark-to-market adjustment relates to the movement in the price of raw sugar, which decreased during the quarter. As a result, a $3.9 million loss was recorded as compared to a $3.8 million loss in the comparable quarter of last year. For natural gas, a mark-to-market loss of $0.3 million was recorded in the first quarter, versus a loss of $2.6 million in the comparable quarter of last year as there was limited movement in the price of natural gas during the quarter. Foreign exchange forward contracts and embedded derivatives, on which foreign exchange movements have an impact, had a combined mark-to-market gain of $1.0 million for the quarter as compared to a mark-to-market loss of $1.4 million in the comparable quarter last year.

The cumulative timing differences are as a result that mark-to-market gains or losses are recognized by the Company only when sugar is sold to a customer and when natural gas is used. The gains or losses on the sugar and related foreign exchange paper transactions are largely offset by corresponding gains or losses from the physical transactions being the sale and purchase contracts with customers and suppliers. This adjustment is added to the mark-to-market results to arrive at the total adjustment to cost of sales. For the first quarter the total cost of sales adjustment is a gain of $1.1 million to be deducted from the consolidated operating results while a total cost of sales loss of $14.1 million was added to the consolidated operating results in fiscal 2012 comparable quarter.

In addition, the Company recorded a mark-to-market gain of $0.5 million for the quarter, as compared to a gain of $0.8 million last year, on the mark-to-market of an interest rate swap under short-term interest expense, as losses recorded in previous quarters are being reversed from the passage of time of the swap.

The following is a table showing the adjusted consolidated results (non-GAAP) without the above mark-to-market results:

--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Results For the three months ended December 29, December 31, 2012 2011(in thousands except per share information) (Unaudited) (Unaudited)----------------------------------------------------------------------------Gross margin as per financial statements $ 30,639 $ 23,654Adjustment as per above (1,072) 14,135----------------------------------------------------------------------------Adjusted gross margin 29,567 37,789----------------------------------------------------------------------------EBIT as per financial statements 23,698 16,769Adjustment as per above (1,072) 14,135----------------------------------------------------------------------------Adjusted EBIT 22,626 30,904----------------------------------------------------------------------------Net earnings as per financial statements 16,133 9,880Adjustment to cost of sales as per above (1,072) 14,135Adjustment for mark-to-market of finance costs (478) (785)Deferred taxes on above adjustments 304 (3,469)----------------------------------------------------------------------------Adjusted net earnings $ 14,887 $ 19,761----------------------------------------------------------------------------Net earnings per share basic, as per financial statements $ 0.17 $ 0.11Adjustment for the above 0.01 0.11----------------------------------------------------------------------------Adjusted net earnings per share basic $ 0.16 $ 0.22--------------------------------------------------------------------------------------------------------------------------------------------------------



Volume for the first quarter was 156,415 metric tonnes, as opposed to 172,754 metric tonnes in the comparable quarter of last year, a decrease of approximately 16,300 metric tonnes. Industrial volume was higher by approximately 4,700 metric tonnes due to the gain of additional volume with existing and new customers. Consumer volume was higher by approximately 500 metric tonnes due mainly to timing in customers' retail promotions. Liquid volume also increased by approximately 300 metric tonnes due mainly to timing in some deliveries and increases in deliveries to existing customers. These increases were offset with lower export volume of approximately 21,800 metric tonnes due to sugar sold under a special quota to the U.S in fiscal 2012. A special quota of 136,078 metric tonnes was opened, effective October 3, 2011 by the U.S. Department of Agriculture, of which 25,000 metric tonnes was allocated specifically to Canada and the balance of 111,078 to global suppliers on a first-come, first-served basis. The Company, through its cane refineries, was able to enter approximately 10,000 metric tonnes against the global quota by the time it closed on October 25, 2011. As the sole producer of Canadian origin sugar in Taber Alberta, the Company was able to enter approximately 17,600 metric tonnes by the time that quota closed on November 30, 2011.

Revenues for the quarter were $33.4 million lower than the previous year's comparable quarter, due to the lower level of sales achieved during the quarter and to an average lower value of raw sugar in fiscal 2013.

As previously mentioned, gross margin of $30.6 million for the quarter does not reflect the economic margin of the Company, as it includes a gain of $1.1 million for the mark-to-market of derivative financial instruments explained earlier. We will therefore comment on adjusted gross margin results.

For the quarter, adjusted gross margin decreased by approximately $8.2 million, when compared to the same quarter of last year, due in large part to lower volume. On a per metric tonne basis, adjusted gross margin was $189.02 compared to $218.74 for the first quarter of last year. The decrease in the adjusted gross margin rate of $29.72 is due mainly to the sales mix, as a higher margin rate was realized on export sales under the special quota in the first quarter of fiscal 2012.

Distribution and administration and selling costs were comparable to the first quarter of fiscal 2012.

Finance costs for the quarter include a mark-to-market gain of $0.5 million as compared to a gain of $0.8 million in fiscal 2012, for the interest rate swap entered into in July 2008. Without the above mark-to-market adjustments, finance expenses for the quarter were lower by approximately $1.0 million due mainly to the write-off of $0.6 million of deferred financing charges as a result of the early redemption of the third series convertible debentures in the first quarter of fiscal 2012 and to lower borrowings.

Provision for income taxes was higher by $1.4 million from the comparable quarter of fiscal 2012, but when adjusted for the variance of net deferred taxes on derivative financial instruments of negative $3.8 million, the provision for income taxes was approximately $2.4 million lower than the comparable quarter of fiscal 2012. The main reason for that decrease is due to the lower profitability at the operating level.

Statement of quarterly results

The following is a summary of selected financial information of the consolidated financial statements and non-GAAP measures of the Company for the last eight quarters.

---------------------------------------------------------------------------- QUARTERS -------------------------------------------------------(In thousands of dollars, except for volume, margin rate and per share 2013 2012 information) (Unaudited) (Unaudited) ------------------------------------------------------- 1-Q 4-Q 3-Q 2-Q 1-Q----------------------------------------------------------------------------Volume (MT) 156,415 164,539 157,786 146,494 172,754 -------------------------------------------------------Revenues 142,376 150,469 147,687 144,132 175,805Gross margin 30,639 18,077 18,207 17,923 23,654EBIT 23,698 11,072 11,180 11,583 16,769Net earnings 16,133 6,944 6,909 6,528 9,880Gross margin rate per MT 195.88 109.86 115.39 122.35 136.92Per shareNet earnings Basic 0.17 0.07 0.07 0.07 0.11 Diluted 0.16 0.07 0.07 0.07 0.10Non-GAAP MeasuresAdjusted gross margin 29,567 21,696 19,642 23,065 37,789Adjusted EBIT 22,626 14,691 12,615 16,725 30,904Adjusted net earnings 14,887 9,782 7,641 9,841 19,761Adjusted gross margin rate per MT 189.02 131.86 124.49 157.45 218.74Adjusted net earnings per share Basic 0.16 0.10 0.08 0.10 0.22 Diluted 0.15 0.10 0.08 0.10 0.19-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- QUARTERS ---------------------------------(In thousands of dollars, except for volume, margin rate and per share 2011 information) (Unaudited) --------------------------------- 4-Q 3-Q 2-Q------------------------------------------------------Volume (MT) 170,880 163,001 155,500 ---------------------------------Revenues 160,866 150,892 149,418Gross margin 33,507 11,637 11,686EBIT 25,679 5,061 4,512Net earnings 16,531 1,249 1,496Gross margin rate per MT 196.08 71.39 75.15Per shareNet earnings Basic 0.19 0.01 0.02 Diluted 0.16 0.01 0.02Non-GAAP MeasuresAdjusted gross margin 25,486 17,637 14,007Adjusted EBIT 17,658 11,061 6,833Adjusted net earnings 10,919 5,847 2,799Adjusted gross margin rate per MT 149.15 108.20 90.08Adjusted net earnings per share Basic 0.12 0.07 0.03 Diluted 0.11 0.07 0.03------------------------------------------------------------------------------------------------------------



Historically the first quarter (October to December) of the fiscal year is the best quarter for adjusted gross margins and adjusted net earnings due to the favourable sales mix of products sold. This is due to the increased sales of baked goods during that period of the year. At the same time, the second quarter (January to March) is historically the lowest volume quarter, resulting in lower revenues, adjusted gross margins and adjusted net earnings.

Liquidity

The cash flow generated by the operating company, Lantic, is paid to Rogers by way of dividends and return of capital on the common shares of Lantic, and by the payment of interest on the subordinated notes of Lantic held by Rogers, after having taken reasonable reserve for capital expenditures and working capital. The cash received by Rogers is used to pay dividends to its shareholders.

Cash flow from operations was negative $5.7 million in the first quarter of 2013, as opposed to negative $23.2 million in the comparable quarter of fiscal 2012. The main reason for the $17.5 million improvement in cash flow from operations from last year's comparable results is related in large part to lower inventories and accounts receivables in fiscal 2013, as well as the lower amount of cash income taxes paid in the first quarter of fiscal 2013 as opposed to fiscal 2012, and to higher deferred income taxes in the first quarter of fiscal 2013. In the first quarter of each year, all sugar beets are harvested and delivered for processing in Taber, which significantly increases inventory volume at the end of the first quarter. As a result, inventory value increased by $32.3 million in the first quarter of fiscal 2013 as opposed to $36.3 million in the comparable quarter of last year. The lower increase is due mainly to the timing of cane sugar receipts.

Total capital expenditures were higher than the previous year, due mainly to timing of projects when compared to fiscal 2012.

In order to provide additional information the Company believes it is appropriate to measure free cash flow, a non-GAAP measure, which is generated by the operations of the Company and can be compared to the level of dividend paid by Rogers. Free cash flow is defined as cash flow from operations excluding changes in non-cash working capital, mark-to-market and derivative timing adjustments, financial instruments non-cash amount and including capital expenditures.

Free cash flow is as follows:

-------------------------------------------------------------------------------------------------------------------------------------------------------- For the three months ended December 29, December 31, 2012 2011(In thousands of dollars) (Unaudited) (Unaudited)--------------------------------------------------------------------------------------------------------------------------------------------------------Cash flow from operations $ (5,669) $ (23,191)Adjustments: Changes in non-cash working capital 18,905 27,493 Changes in non-cash income taxes payable 2,420 5,493 Changes in non-cash interest payable 1,578 1,706 Mark-to-market and derivative timing adjustments (1,550) 13,350 Financial instruments non-cash amount 3,399 147 Capital expenditures (967) (650) Investment capital expenditures - 41 Net repurchase of common shares/convertible debentures - (9) Deferred financing charges - (2,700)----------------------------------------------------------------------------Free cash flow $ 18,116 $ 21,680----------------------------------------------------------------------------Declared dividends $ 8,468 $ 7,989--------------------------------------------------------------------------------------------------------------------------------------------------------



Free cash flow was $3.6 million lower than the comparable quarter in fiscal 2012. The decrease was due mainly to lower adjusted net earnings of approximately $4.9 million and higher net capital investment of approximately $0.4 million somewhat offset by deferred financing costs of $2.7 million incurred in the first quarter of fiscal 2012.

Changes in non-cash operating working capital, income taxes payable and interest payable represent quarter-over-quarter movement in current assets such as accounts receivables and inventories, and current liabilities like accounts payable. Movements in these accounts are due mainly to timing in the collection of receivables, receipts of raw sugar and payment of liabilities. Increases or decreases in such accounts do not therefore constitute available cash for distribution. Such increases or decreases are financed from available cash or from the Company's available credit facilities of $200.0 million. Increases or decreases in short-term bank indebtedness are also due to timing issues from the above, and therefore do not constitute available cash for distribution.

Mark-to-market and financial instruments non-cash amount combined impact of negative $1.6 million does not represent cash items as these contracts will be settled when the physical transactions occur, which is the reason for adjustment to free cash flow.

Capital expenditures, net of investment capital, were higher by $0.4 million in the first quarter of 2013 due mainly to timing of capital projects. Investment capital expenditures are added back as these capital projects are not required for the operation of the refineries, but are undertaken due to their substantial operational savings to be realized when these projects are completed. No such projects were undertaken in the first quarter of fiscal 2013.

In the first quarter of fiscal 2012, $9 thousand of third series convertible unsecured subordinated debentures ("Third series debentures") were repurchased under the normal course issuer bid.

In the first quarter of fiscal 2012, the Company issued fifth series convertible unsecured subordinated debentures ("Fifth series debentures") for which an amount of approximately $2.7 million of deferred financing charges was incurred.

The Company declared a quarterly dividend of 9.0 cents per common share, for a total amount of $8.5 million in the first quarter of 2013, while a dividend of 8.5 cents per share was declared in the first quarter of fiscal 2012.

On January 30, 2013, the Board of Directors has authorized and declared a special dividend of 36 cents per share to be paid to Shareholders of record on February 8, 2013, payable on or before February 28, 2013. The declaration of the special dividend, totalling approximately $33.9 million, reflects the distribution of a portion of the previously earned but undistributed free cash flow generated over the five fiscal years from October 2007 to September 2012 which totalled approximately $64.7 million.

Contractual obligations

There are no significant changes in the contractual obligations table disclosed in the Management's Discussion and Analysis of the September 29, 2012 Annual Report.

At December 29, 2012, the operating companies had commitments to purchase a total of 974,000 metric tonnes of raw sugar, of which 178,000 metric tonnes had been priced for a total dollar commitment of $83.9 million.

Capital resources

Lantic has $200.0 million as an authorized line of credit available to finance its operation. This line of credit expires in June 2013. Management is confident that the line of credit can be renewed at competitive market rates. At quarter's end, $60.0 million had been drawn from the working capital line of credit and $12.8 million in cash was also available.

At quarter's end, inventories are high compared to year-end due mainly to the harvest of the Taber beet crop in the first quarter of the fiscal year.

Cash requirements for working capital, for the funding of the special dividend and other capital expenditures are expected to be paid from available credit resources and from funds generated from operations.

Outstanding securities and dividend declaration

There was no change in outstanding securities for the quarter. As at January 30, 2013 there were 94,090,760 common shares outstanding.

On January 30, 2013, the Board of Directors has authorized and declared a special dividend of 36 cents per share to be paid to Shareholders of record on February 8, 2013, payable on or before February 28, 2013. In addition, the Board of Directors authorized the declaration of a quarterly dividend of 9 cents per share to be paid to Shareholders of record on March 31, 2013, payable on or before April 19, 2013.

Critical accounting estimate and accounting policies

There are no significant changes in the critical estimate and accounting policies disclosed in the Management's Discussion and Analysis of the September 29, 2012 Annual Report.

Future accounting changes

A number of new standards, and amendments to standards and interpretations, are not yet effective and have not been applied in preparing these unaudited condensed consolidated interim financial statements.

IFRS 9 Financial Instruments - This standard will replace IAS 39, Financial Instruments: Recognition and Measurement with a proposed single model for only two classification categories: amortized cost and fair value. The standard is currently required to be adopted for annual periods beginning January 1, 2015. The extent of the impact on the financial statements of the Company has not yet been determined.

IFRS 10 Consolidated Financial Statements - This standard provides additional guidance to determine whether an entity should be included within the consolidated financial statements of the Company. The standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.

IFRS 13 Fair Value Measurement - This standard provides new guidance on fair value measurement and disclosure requirements. This standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.

IAS 19 Employee Benefits - This standard includes the elimination of the option to defer the recognition of gains and losses, enhancing the guidance around measurement of plan assets and defined benefit obligations, streamlining the presentation of changes in assets and liabilities arising from defined benefit plans and the introduction of enhanced disclosures for defined benefit plans. This standard is effective for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.

Risk factors

Risk factors in the Company's business and operations are discussed in the Management's Discussion and Analysis of our Annual Report for the year ended September 29, 2012. This document is available on SEDAR at www.sedar.com or on one of our websites at www.lantic.ca or www.rogerssugar.com.

Outlook

Industrial volume will be higher in fiscal 2013 as additional volume has been contracted for calendar 2013 with new and existing accounts. In addition the Company was able to contract for one year, starting in the spring of 2013, additional liquid sugar with one large bottler in western Canada. This should increase liquid volume in the second half of the fiscal year. Export volume is forecast to be lower this year as no U.S. special quotas are expected during the year as a result of large crops in the U.S. and Mexico. Overall the annual sales volume is forecast to be higher than last year.

The Taber sugar beet slicing campaign is expected to be completed by mid-February. We are now estimating total beet sugar production at approximately the same level of last year of approximately 118,000 metric tonnes, once the thick juice campaign is completed in the spring of 2013. This is higher than the sales forecast for the domestic market normally supplied from Taber and for export sales under the U.S. Canada specific quota and to Mexico. If other export or domestic opportunities do not occur, Taber will have to warehouse, until next year, some beet sugar, which would increase total distribution costs.

Less than half of fiscal 2013's natural gas requirements have been hedged at average prices comparable to those realized in fiscal 2012. Any un-hedged volume should benefit from the current low prices of natural gas and therefore increase the adjusted gross margin rate. In addition, futures positions for fiscal 2014 to 2015 have been taken. Some of these positions are at prices higher than the current market values, but are at the same or better levels than those achieved in fiscal 2012. We will continue to monitor natural gas market dynamics with the objective of minimizing natural gas costs.

Labour negotiations started in December 2012 for the renewal of the labour contracts terminating on February 28, 2013 for the Montreal refinery unionized employees. Negotiations for the Vancouver labour contract, also terminating on February 28, 2013, should start over the next few weeks.

The Financial Statement is available at this address : http://media3.marketwire.com/docs/rsi_fin_e.pdf



Contacts:
Mr. Dan Lafrance
Senior VP Finance, CFO and Secretary
(514) 940-4350
(514) 527-1610 (FAX)
Visit our Websites at www.rogerssugar.com or www.Lantic.ca



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