1
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 April 30, 1995
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 0-1287
STERLING SUGARS, INC.
____________________________________________________________________
Exact name of registrant as specified in its charter
Delaware 72-0327950
_______________________________ ______________________________
State or other jurisdiction of IRS employer identification
incorporation or organization number
P. O. Box 572, Franklin, La. 70538
____________________________________________________________________
Address of principal executive offices Zip Code
Registrant's telephone number including area code 318 828 0620
Not Applicable
____________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether 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 such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirments for the past 90 days.
YES X NO
There were 2,500,000 common shares outstanding at May 31, 1995.
Exhibit index is on page 13
Total number of pages 14
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STERLING SUGARS, INC.
I N D E X
PAGE
NUMBER
PART I: FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Condensed balance sheets April 30, 1995
(unaudited) and January 31, 1995 I-1
Statements of earnings and retained earnings
Three months ended April 30, 1995 and 1994
(unaudited) I-2
Statements of cash flows Three months ended
April 30, 1995 and 1994 (unaudited) I-3
Notes to condensed financial statements
Three months ended April 30, 1995 and 1994 I-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS I-7
PART II. OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K II-1
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STERLING SUGARS, INC.
CONDENSED BALANCE SHEETS
April 30, January 31,
1995 1995
UNAUDITED NOTE
ASSETS: ---------------------------
CURRENT ASSETS:
Cash and short-term investments $ 1,141,205 $ 623,237
Accounts receivable 356,906 2,276,977
Inventories 3,269,657 4,966,260
Expenditures for future crops (Note B) 1,415,055 158,147
Deferred income taxes 562,200 562,200
Other current assets 396,619 186,686
------------- -------------
TOTAL CURRENT ASSETS $ 7,141,642 $ 8,773,507
------------- -------------
Property, plant and equipment - net $ 11,215,774 $ 11,027,196
------------- -------------
Expenditures for future crops $ 485,708 $ 382,938
------------- -------------
Notes receivable - net of allowance $ 711,129 $ 614,284
------------- -------------
Deferred loan acquisition costs $ 78,752 $ 81,706
------------- -------------
$ 19,633,005 $ 20,879,631
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,763,759 $ 4,333,786
------------- -------------
TOTAL CURRENT LIABILITIES $ 2,763,759 $ 4,333,786
------------- -------------
Long-term debt $ 4,208,774 $ 4,371,434
------------- -------------
Deferred income taxes $ 828,000 $ 828,000
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock $ 2,500,000 $ 2,500,000
Additional paid in capital (Note C) 40,455 -
Retained earnings 9,292,017 8,968,456
------------- -------------
$ 11,832,472 $ 11,468,456
Less common stock in treasury (Note C) - (122,045)
------------- -------------
11,832,472 $ 11,346,411
------------- -------------
$ 19,633,005 $ 20,879,631
============= =============
NOTE: The balance sheet at January 31, 1995 has been taken from the
audited financial statements at that date, and condensed.
See notes to condensed financial statements
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STERLING SUGARS, INC.
STATEMENT OF EARNINGS AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED APRIL 30
---------------------------
1995 1994
---- ----
REVENUES:
Sugar and molasses sales $ 1,920,033 $ 9,528,511
Interest earned 39,908 3,366
Mineral leases and royalties 31,495 5,351
Gain on sale of depreciable assets 120,000 -
Other 330,839 37,479
------------ ------------
$ 2,442,275 $ 9,574,707
------------ ------------
COSTS AND EXPENSES:
Cost of products sold $ 1,672,672 $ 9,204,985
General and administrative 146,506 159,522
Interest expense 101,225 134,869
------------ ------------
$ 1,920,403 $ 9,499,376
------------ ------------
NET EARNINGS BEFORE INCOME TAXES $ 521,872 $ 75,331
INCOME TAXES 198,311 28,626
------------ ------------
NET EARNINGS $ 323,561 $ 46,705
RETAINED EARNINGS AT BEGINNING OF PERIOD 8,968,456 8,226,073
------------ ------------
RETAINED EARNINGS AT END OF PERIOD $ 9,292,017 $ 8,272,778
============ ============
NET EARNINGS PER SHARE $ .13 $ .02
============ ============
See notes to condensed financial statements
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STERLING SUGARS, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED APRIL 30
---------------------------
1995 1994
---- ----
OPERATING ACTIVITIES:
Net earnings $ 323,561 $ 46,705
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Amoritization of loan costs 2,954 2,953
Depreciation 356,397 347,894
Gain on sale of depreciable assets ( 120,000) -
Changes in operating assets and liabilities:
Decrease in accounts receivable 1,920,071 382,664
Increase in notes receivable ( 96,845) ( 53,511)
Decrease in inventories 1,696,603 9,201,237
Increase in other current assets ( 209,933) ( 56,958)
Increase in expenditures for future crops (1,256,908) (1,209,812)
Decrease in accounts payable and accrued exp. (1,262,587) (1,093,044)
Other items - net ( 102,770) ( 9,529)
------------ ------------
Net cash provided by operating activities $ 1,250,543 $ 7,558,599
------------ ------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment $( 544,975) $( 251,155)
Proceeds from sale of depreciable assets 120,000 -
----------- ------------
Net cash used in investing activities $( 424,975) $( 251,155)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from long-term debt $ - $ 82,157
Proceeds from short-term debt - 57,050
Payments on short-term debt - (6,916,043)
Payments on long-term debt ( 409,465) ( 187,748)
Proceeds from sale of treasury stock 111,865 -
------------ ------------
Net cash used in financing activities $( 297,600) $(6,964,584)
------------ ------------
Increase in cash and temporary investments $ 517,968 $ 342,860
Cash and temporary investments at the
beginning of the period 623,237 543,963
------------ ------------
Cash and temporary investments at the
end of the period $ 1,141,205 $ 886,823
============ ============
Continued
See notes to condensed financial statements
I-3 -5-
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STERLING SUGARS, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Supplemental information:
Interest paid $ 33,293 $ 96,701
=========== ===========
Income taxes paid $ 350,000 $ -
=========== ===========
Non-cash item:
Accrued management fee paid by
issuance of treasury stock $ 50,635 $ -
=========== ===========
I-4 -6-
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STERLING SUGARS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1995 AND 1994
(UNAUDITED) (CONTINUED)
A. CONDENSED FINANCIAL STATEMENTS:
The condensed balance sheets as of April 30, 1995, the
statements of earnings and retained earnings for the three
months ending April 30, 1995 and 1994, and the condensed
statements of cash flows for the three month period then
ended have been prepared by the Company, without audit. In
the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and
cash flows at April 30, 1995 and for all periods presented
have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these condensed financial
statements be read in conjunction with the 1995 annual report
to stockholders. The results of operations for the period
ending April 30, 1995 are not necessarily indicative of the
operating results expected for the full year.
I-5 -7-
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STERLING SUGARS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1995 AND 1994
(UNAUDITED)
B. EXPENDITURES FOR FUTURE CROPS:
Expenditures incurred and income earned from sugar
operations for the 1995 and 1994 crops have been deferred
in order to properly match revenues and expenses. The
deferred items are as follows:
THREE MONTHS ENDED APRIL 30
---------------------------
1995 1994
---- ----
DEFERRED COSTS: (1995 AND 1994 CROPS)
Factory $ 1,068,840 $ 1,094,538
Plantations 329,157 359,947
------------ ------------
$ 1,397,997 $ 1,454,485
Land preparation and planting costs
1996 and 1995 crops respectively 17,058 12,664
------------ ------------
$ 1,415,055 $ 1,467,149
============ ============
C. ADDITIONAL PAID IN CAPITAL:
As discussed in Form 10-K, filed for the year ended January 31,
1995, the Company entered into a technical service agreement with
M. A. Patout & Son, Ltd. (Patout). The agreement provided an
option for Patout to purchase 50,000 shares of the Company's
treasury stock at a price of $3.25 per share. In April, 1995
Patout exercised its option. For the 1994 quarter, there were no
transactions involving treasury stock.
I-6 -8-
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STERLING SUGARS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Sugar and Molasses Sales:
Sugar and molasses sales for the three months ended April 30, 1995
and 1994 were as follows:
1995 1994
------ ------
Raw sugar sales $ 1,655,343 $ 9,416,130
Molasses sales 264,690 112,381
------------ ------------
$ 1,920,033 $ 9,528,511
============ ============
For the first quarter of the Company's fiscal year ending January
31, 1996 (fiscal 1996), sales of raw sugar (1994 crop) decreased com-
pared to the same quarter ending in fiscal 1995 (1993 crop). This de-
crease is the result of the Company having marketed less sugar during
the current quarter. At January 31, 1995, the Company had on hand
approximately 10,238 tons of raw sugar available for sale to refiners
as compared to 24,209 tons of raw sugar at January 31, 1994. As of
April 30, 1994, the Company had sold and shipped 21,463 tons of raw
sugar and had on hand 2,746 tons. For the quarter ending April 30,
1995, the Company had sold and shipped 3,650 tons of raw sugar and had
on hand approximately 6,588 tons. Although the Company has far less
sugar to market during fiscal 1996, it is uncertain when the Company
will be able to market approximately 4,260 tons of the 6,588 tons held
in inventory. The inability to market the sugar is the result of the
United States Department of Agriculture (USDA) imposing marketing allot-
ments whereby producers are limited on the amount of sugar marketed
during a fiscal quarter. The Company, however, expects all sugar to be
sold and shipped before the start of the 1995 crop. The sugar price
for the 1994 crop increased slightly and is estimated at $21.89 cwt.
For the 1993 crop the average raw sugar price was $21.73 cwt.
As of January 31, 1995, the Company had on hand approximately
691,383 gallons of molasses all of which had been sold as of April 30,
1995. At January 31, 1994, the Company had approximately 394,726
gallons of molasses on hand all of which had been sold as of April 30,
1994. For the 1994 molasses crop, the Company received $.35 per gallon
compared to $.29 per gallon for the sale of the 1993 molasses crop.
Interest Earned:
Interest earned increased to $39,908 for the quarter ended April 30,
1995 compared to $3,366 for the same period in 1994. The increase for
the current period is primarily attributable to the Company receiving
$25,528 in April, 1995 from the Sugarcane Safety Group for its share of
interest earned on workers compensation reserve funds held by the group.
The increase in the current period is also attributable to increases in
short-term investments. At January 31, 1995, the Company had short-
term investments of $437,303 compared to only $155,151 at January 31,
1994.
I-7 -9-
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Mineral Leases and Royalties:
For the quarter ended April 30, 1995, income from mineral leases
and royalties increased to $31,495 compared to $5,351 for the period
ending in 1994. The increase is attributable to an option executed on
February 1, 1995 whereby an oil and gas lease was granted on 555 acres
for $55,461. The lease contains a three year primary term. The in-
crease in the current period is also attributable to the Company
granting another oil and gas lease in February, 1995 on 274 acres for
$20,528. This lease also has a three year primary term. Royalty
income remained consistent for the first quarters of 1995 and 1994.
Gain on the Sale of Depreciable Assets:
The Company recognized a gain on the sale of obsolete machinery and
equipment for the three month period ending April 30, 1995 of $120,000.
For the same period ending in 1994, the Company had no gains from the
sale of depreciable assets.
Other Revenues:
Other revenues, which consist mainly of miscellaneous income items,
were $330,839 for the three month period ending April 30, 1995 and
$37,479 for the same period ending in 1994. These revenues, which can
vary considerably from year to year, generally include amounts received
for the sale of scrap, permitting seismic surveys conducted for oil and
gas exploration on Company owned land and other miscellaneous items.
The sharp increase for the current quarter is the result of the Company
receiving $318,032 in April, 1995 from the Sugarcane Safety Group repre-
senting a return of capital from workers compensation reserve funds for
years that had been closed out.
Cost of Products Sold:
Cost of products sold for the three month periods ended April 30,
1995 and 1994 were $1,672,672 and $9,204,985, respectively. Costs
relating to sales are charged to cost of products sold. Accordingly,
costs have decreased for 1995 as would be expected with the decrease
in sales.
General and Administrative Expenses:
General and administrative expenses for the three months ended
April 30, 1995 were $146,506 compared to $159,522 for the same period
in 1994. The decrease in these expenses during the current period is
primarily the result of reductions in miscellaneous expense items.
I-8 -10-
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Interest Expense:
Interest expense decreased to $101,225 for the period ending
April 30, 1995 from $134,869 for the same period ending in 1994.
Although the Company retired $409,465 of long-term debt during the
current quarter, the decrease in interest expense is primarily the
result of decreases in short-term debt. At January 31, 1994, short-
term debt outstanding totaled $7,529,003 whereas at January 31, 1995
the Company had no outstanding short-term debt.
Income Taxes:
The income taxes for the three month period ending April 30,
1995 and 1994 were recorded at the statutory rate of 38 percent which
reflects the 34 percent federal corporate rate plus 4 percent state
income taxes.
Liquidity and Capital Resources:
At April 30, 1995, the Company had working capital of $4,362,510
compared to $4,439,721 at January 31, 1995. The working capital ratios
were 2.6 to 1 and 2.0 to 1, respectively.
For the 1995 crop, the Company budgeted $1,822,000 for capital
additions of which $1,722,000 is allocated for expansion of the raw
house and an electrical substation. This expansion project is expected
to increase the average daily grinding rate for the 1995 crop from
8,000 tons to an excess of 9,000 tons of cane per day. The expansion
will also decrease lost time during grinding attributable to cleaning.
Management expects to fund the cost of the capital additions from
working capital and short-term borrowings through lines of credit
available to the Company. For the 1995 idle season, the Company
anticipates making short-term loans earlier than normal because of the
imposition of marketing allotments by the USDA effective October 1,
1994. The allotments require the Company to hold approximately 4,260
tons of raw sugar in inventory until a reassignment of allotments is
made by the USDA which is expected before October 1, 1995.
Expenditures for Future Crops - Note B:
Factory Deferred Costs:
Factory deferred costs for the three month period ended April 30,
1995 was $1,068,840. Such costs for the same period in 1994 were
$1,094,538. The decrease for 1995 was primarily the result of the
Company budgeting less for maintenance and repairs in 1995 than it did
for 1994. The budgeted amount for 1995 is $1,534,201 and for 1994 was
$1,649,145.
I-9 -11-
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Plantation Deferred Costs:
Plantation deferred costs decreased to $329,157 for the three
month period ending April 30, 1995 from $359,947 for the same period
in 1994. The decrease primarily results from the Company recognizing
costs (i.e. fertilizing, lay-by) in the 1994 period earlier than in
the 1995 period. For the 1995 crop, rainy weather extended the normal
time for working the crop.
I-10 -12-
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PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits - None
(b) Reports on Form 8K
No reports on Form 8K have been filed during the
quarter for which this report is filed.
II-1 -13-
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
STERLING SUGARS, INC.
---------------------
(REGISTRANT)
DATE June 9, 1995 By /S/ Craig P. Caillier
--------------------------- ---------------------
CRAIG P. CAILLIER
SENIOR VICE PRESIDENT
AND GENERAL MANAGER
DATE June 9, 1995 By /S/ Stanley H. Pipes
---------------------------- ---------------------
STANLEY H. PIPES
VICE PRESIDENT AND TREASURER
II-2 -14-
[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] JAN-31-1995
[PERIOD-END] APR-30-1995
[CASH] 1141205
[SECURITIES] 0
[RECEIVABLES] 356906
[ALLOWANCES] 0
[INVENTORY] 3269657
[CURRENT-ASSETS] 7141642
[PP&E] 11215774
[DEPRECIATION] 356397
[TOTAL-ASSETS] 19633005
[CURRENT-LIABILITIES] 2763759
[BONDS] 0
[COMMON] 2500000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 9332472
[TOTAL-LIABILITY-AND-EQUITY] 19633005
[SALES] 1920033
[TOTAL-REVENUES] 2442275
[CGS] 1672672
[TOTAL-COSTS] 1920403
[OTHER-EXPENSES] 146506
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 101225
[INCOME-PRETAX] 521872
[INCOME-TAX] 198311
[INCOME-CONTINUING] 198311
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 198311
[EPS-PRIMARY] .13
[EPS-DILUTED] .13