STERLING SUGARS, INC.
P. O. BOX 572
Franklin, Louisiana 70538
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Sterling Sugars, Inc. will be
held in the Conference Room, St. Mary Parish Library, 206 Iberia Street,
Franklin, Louisiana, on Thursday, May 16, 1996 at 10:00 a.m. for the
following purposes:
1. Election of directors to serve for one year or until their
successors are elected and qualified.
2. Transaction of such other business as may properly come before
the meeting or any adjournments thereof.
The close of business on April 11, 1996 has been fixed as the record date
in determining stockholders entitled to notice of and to vote at the meeting.
By order of the Board of Directors
/s/ Carl W. Bauer
Carl W. Bauer
Secretary
Franklin, Louisiana
April 26, 1996
YOUR VOTE IS IMPORTANT
Whether or not you expect to attend the meeting, please mark, date, sign
and promptly return the enclosed proxy in the accompanying envelope, which
requires no postage if mailed in the United States. You may, of course, later
revoke your proxy and vote in person.
STERLING SUGARS, INC.
P. O. BOX 572
Franklin, Louisiana 70538
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Sterling
Sugars, Inc. ("the Company") for use at the Annual Meeting of Stockholders
to be held on May 16, 1996 and at any adjournments thereof. If properly and
timely completed and returned, the proxy will be voted in the manner you
specify thereon. If no manner is specified, the proxy will be voted for
election of the nominees for director hereinafter named.
The proxy may be revoked at any time before it is voted and you may vote
in person if you attend the meeting.
The cost of soliciting proxies will be borne by the Company. In addition
to use of the mails, proxies may be solicited by telephone and personal
contacts.
It is expected that this proxy statement and related materials will first
be mailed to stockholders on or about April 26, 1996.
STOCKHOLDERS' PROPOSALS
In order for proposals by stockholders to be considered for inclusion in
the proxy statement relating to the 1997 Annual Meeting of Stockholders, such
proposals must be received at the Company's principal executive office no
later than December 31, 1996.
VOTING SECURITIES
Only stockholders of record as of the close of business on April 11, 1996
are entitled to vote at the meeting. At that time, 2,500,000 shares
of the Company's Common Stock (being the Company's only class of authorized
stock) were outstanding. Each share is entitled to one vote.
The following table provides information as of February 29, 1996
concerning each stockholder known by the Company to be the beneficial owner
(as determined by Rule 13d-3 of the Securities and Exchange Commission) of
more than five percent (5%) of its outstanding stock:
2
Name and address of Shares Percent
Beneficial Owner Beneficially Owned(1) of Class
- -----------------------------------------------------------------------------
M. A. Patout & Son, Ltd. 1,457,491 58.30%
3512 J. Patout Burns Rd.
Jeanerette, La. 70544
Peter V. Guarisco 511,531(2) 20.46%
P. O. Box 2588
Morgan City, La. 70380
Capital Management Consultants, Inc. 204,431(2) 8.18%
P. O. Box 2588
Morgan City, La. 70380
Hellenic, Inc. 143,100(2) 5.72%
P. O. Box 2588
Morgan City, La. 70380
- -----------------------------------------------------------------------------
(1) Based on information furnished by beneficial owners. Includes direct and
indirect ownership and, unless otherwise indicated, also includes sole voting
and investment power with respect to reported holdings.
(2) Includes 143,100 shares owned by Hellenic, Inc. and 204,431 shares owned
of record by Capital Management Consultants, Inc. Mr. Guarisco shares voting
and investment powers with respect to such shares. Mr. Guarisco disclaims
beneficial ownership of these shares.
3
ELECTION OF DIRECTORS
In accordance with the Company's By-laws, seven directors are to be
elected at the Annual Meeting to serve a term of one year from May 16, 1996
or until their successors are elected and qualified. The election of a
director shall be determined by a majority of votes actually cast, and the
abstention or failure of any stockholder to vote will not affect this
determination. Each shareholder is entitled to one vote per share. Unless
you specify otherwise, proxy holders will vote for election of the management
nominees named below. Should any of the nominees become unavailable for
election, which is not anticipated, proxy holders may, in their discretion,
vote for other nominees recommended by the Board.
The following table lists the nominees for election as director, all of
whom currently serve as directors. On February 2, 1996, pursuant to the
Company's by-laws, the Company directors elected Messrs. Boudreaux and
Caillier to serve the unexpired terms of Messrs. Foster and
Roig, Jr. The table shows, as of February 29, 1996, the beneficial ownership
(as determined in accordance with Rule 13d-3 of the Securities and Exchange
Commission) of the Company's outstanding stock by each director and by all
directors and excecutive officers as a group.
______________________________________________________________________________
First Elected Shares Beneficially Percent of
Name Age Director Owned(1) Class
______________________________________________________________________________
Carl W. Bauer 62 1967 0 *
Dr. J. Patout Burns, Jr. 56 1994 1,464,991(2) 58.60%
Peter V. Guarisco 68 1986 511,531(3) 20.46%
Victor Guarisco, II(4) 32 1992 18,990 *
Rivers Patout 31 1994 100 *
Bernard E. Boudreaux, Jr. 58 - 1,000 *
Craig P. Caillier 34 - 2,210 *
All directors and named
executive officers as a group(5) 1,998,822 79.95%
___________________________________________________________________________
* Less than 1%
(1) Based on information furnished by nominees. Includes direct and indirect
ownership and unless otherwise indicated, also includes sole voting and
investment power with respect to reported holdings.
(2) Includes shared voting and investment power with respect to 1,457,491
shares owned by M. A. Patout & Son, Ltd.
(3) Mr. Guarisco's reported holdings reflect shared voting and investment
power with respect to 143,100 shares owned by Hellenic, Inc. and 204,431 shares
owned by Capital Management Consultants, Inc. Mr. Guarisco disclaims
beneficial ownership of such shares.
(4) Peter V. Guarisco is the father of Victor Guarisco, II.
(5) See "Information Concerning Management-Executive Officers".
4
Business Experience of Directors:
The following paragraphs describe all Company offices held by nominees
and their principal occupations for the last five years.
Carl W. Bauer, Vice President Property Development and Secretary of the
Company, is an independent businessman and investor, and also Coordinator,
Government Relations, University of Southwestern Louisiana, Lafayette,
Louisiana.
Dr. James Patout Burns, Jr. is Thomas and Alberta White Professor of
Christian Thought and Chair of the Program in Religious Studies at Washington
University, St. Louis, Missouri.
Peter V. Guarisco is Chairman of Board and President of Hellenic, Inc., a
privately owned company having diverse business interests, Morgan City,
Louisiana.
Victor Guarisco, II is President of Cottonwood, Inc., a privately owned
real estate management and development company, Morgan City, Louisiana.
Rivers Patout is Subsidiary Manager of M. A. Patout & Son, Ltd.,
Jeanerette, Louisiana.
Bernard E. Boudreaux, Jr. is an attorney, general counsel and assistant
Secretary for the Company and District Attorney, Sixteenth Judicial District
of Louisiana.
Craig P. Caillier, President and Chief Executive Officer of the Company,
was Assistant General Manager and Secretary/Treasurer of M. A. Patout & Son,
Ltd., Jeanerette, Louisiana.
INFORMATION CONCERNING MANAGEMENT
Executive Officers:
Former President & CEO of the Company, Murphy J. "Mike" Foster
resigned as President & CEO and a Director of the Company on December 10, 1995
after having been elected Governor of the State of Louisiana in November,
1995. Mr. Craig P. Caillier was elected by the Board of Directors to replace
Mr. Foster as President & CEO.
No executive officer of the Company receives compensation in excess of
$100,000 per year.
The table below sets forth the beneficial ownership of the named
executive officer.
Name Age Shares Beneficially Owned Percent of Shares
-----------------------------------------------------------------------------
Craig P. Caillier 34 2,210 .09%
President and CEO
Business Experience of Executive Officers:
Craig P. Caillier, for five years prior to his association with the
Company, was Assistant General Manager and Secretary/Treasurer of M. A. Patout
& Son, Ltd., Jeanerette, La. Before his election as President & CEO of the
Company he was Senior Vice President and General manager of the Company.
5
Executive Compensation:
Mr. Caillier, the Company's President and Chief Executive Officer, became
an executive officer of the Company in fiscal year 1994. The following table
sets forth information concerning Mr. Caillier's compensation during the
Company's last three fiscal years.
Name and Other Annual
Principal Position Year Salary Bonus Compensation(1)
- -----------------------------------------------------------------------------
Craig P. Caillier, 1996 $71,500 $20,000 $ 2,286
President & CEO 1995 65,000 -0- 135
1994 5,417(2) -0-
------------------------------------------------
(1) Company contributions to 401(k) savings plan.
(2) Consists of one month (January, 1994).
As amended in 1986, the Company's Retirement Plan provides benefits at
retirement to full-time salaried and hourly factory employees and to full-
time agricultural employees (other than those hired at age 60 or older) who
are at least 21 years of age and have at least one year of service.
Contributions to the plan, which are funded entirely by the Company, are
computed on an actuarial basis. The plan classifies employees as agricultural
and factory employees. Benefits for factory employees (a classification that
includes the Company's executive officers) are determined by multiplying the
employee's years of service by the sum of (i) .60 percent times Final Average
Earnings up to Covered Compensation and (ii) 1.20 percent times Final Average
Earnings in excess of Covered Compensation. The term "Covered Compensation"
means the average annual earnings used to calculate a participant's social
security benefit. This average covers his entire employment history (including
employment prior to employment at Sterling Sugars, if any) and assumes
continued employment to age 65. It also assumes that, during each year of
employment, the participant always earned the maximum amount subject to social
security withholding (the Taxable Wage Base). Each year, the plan's
actuaries provide a table that determines the Covered Compensation level for
participants reaching age 65 in each of the succeeding years. The Covered
Compensation level increases over time (generally every year) as the Taxable
Wage Base itself increases. As a result, Covered Compensation is relatively
low for participants nearing average retirement age of 65 and increases for
younger participants. The actual final determination of a participant's
Covered Compensation amount is therefore made at the time of termination of
employment or retirement.
Mr. Caillier, who is 34 years old, has approximately two years of
credited service. Set out below is a table that shows the estimated annual
pension benefits for employees retiring at age 65 with varying years of
credited service and final earnings.
PENSION TABLE
-----------Years of Service------------
Final Earnings 10 15 20 25
--------------------------------------------------------
$ 50,000 $ 4,632 $ 6,948 $ 9,264 $ 11,580
75,000 7,632 11,448 15,264 19,080
100,000 11,632 15,948 21,264 26,580
6
Effective February 1, 1992, the Company established the Sterling Sugars,
Inc. Employee Savings Plan and Trust for the benefit of all eligible full-
time salaried and hourly employees and full-time salaried agricultural
employees who are at least 21 years old and have completed at least one year
of service with the Company. The plan is referred to as a 401(K) retirement
plan, a form of a defined contribution plan. Through elective deferrals,
employees may contribute from one to six percent of their annual gross
compensation into the plan. The Company is obligated to match contributions
to the extent of fifty percent of the first six percent of an employees
elective deferrals. Any additional Company contributions are discretionary.
The Plan was amended effective February 1, 1994 to change eligibility
requirements and investment election dates and to credit service for a related
employer. Newly hired employees are now eligible to participate on the first
day of the calendar month following completion of age and service require-
ments. Investment changes will be made effective April 1 instead of February
1 and October 1 instead of August 1 of each year. Credited service was also
amended to include service with M. A. Patout & Son, Ltd., a related employer.
Directors' Compensation:
Directors receive an annual retainer of $5,000 and an attendance fee of
$500 per meeting plus reimbursement for travel and related expenses incurred
in attending board and committee meetings.
Compensation Policies of the Board of Directors:
The Board of Directors does not have a compensation committee and
executive compensation determinations are made by the entire Board. Mr.
Caillier's compensation is based on his performance and the overall profit-
ability of the Company, as well as the Board's forecasted future performance
as determined in the best judgement of the Board. Mr. Caillier's compensation
is not directly tied to one specific factor such as an increase in the price
of the Company's stock, return on equity or net profit and there is no
specific formulas used in the calculation of compensation.
Stock Performance Graph:
The following graph presents the cumulative total return on the Company's
common stock for the five year period ended January 31, 1996 compared to the
cumulative total return assuming reinvestment of dividends for all stocks
quoted on the NASDAQ Market Value Index. Because there is no published
industry or line of business index comparable to Sterling, a peer group was
selected based on similar publicly traded companies with market capitalization
of $9.5 million to $9.6 million as of January 31, 1996. This peer group
consists of the following eight companies: Bank of South Carolina, Del-Var
Financial Corp., Kahler Realty Corp., Marlton Technologies, Inc., Martin
Lawrence LTD Edit, National Technical Systems, Parallel Petroleum and Plexus
Corp.
7
COMPARISION OF FIVE YEAR TOTAL RETURN
of Sterling, NASDAQ and Peer Group
Year Sterling NASDAQ Peer Group
------------------------------------------------------
1991 $ 100 $ 100 $ 100
1992 100 124 162
1993 97 123 195
1994 111 155 244
1995 125 147 194
1996 141 205 217
Certain Transactions:
Shadyside Co., Ltd. ("Shadyside"), which owns 9.75% of the Company's
stock, leases all of its cultivable lands (approximately 1,448 acres) to the
Company. Rentals for the fiscal year ended January 31, 1996 are estimated
at $156,623. Mr. John R. Browne, a director of the Company, is a director of
Shadyside. The stock ownership of Shadyside is held primarily by Mr. Browne,
by Mr. Foster, former Chief Executive Officer and a director of the Company,
and by members of their respective families.
The Company also leases approximately 1,435 acres for agricultural
purposes from The Maryland Company. Rentals under these leases for the fiscal
year ended January 31, 1996 are estimated at $96,448. Mr. Foster is the
managing partner of The Maryland Company, which is owned by Mr. Foster and
members of his family.
In the opinion of management, the leases entered into with Shadyside,
and with The Maryland Company were made on terms no less favorable to the
Company than would have been obtainable from other sources. The lands covered
by these leases are subleased to independent unaffiliated growers under terms
and conditions that are virtually the same as those contained in the Company's
leases. Arrangements have been made for the Company to process the sugarcane
grown on the subleased premises.
On November 15, 1994, the Company entered into a technical service
contract with M. A. Patout & Son, Ltd. ("Patout"). The contract provides that
Patout will provide technical and engineering services to the Company in
return for a fee equal to ten percent of the Company's net income before
income taxes from the manufacture, production and sale of raw sugar and
molasses each year, provided that net income from the foregoing exceeds
$500,000. The agreement expires on January 31, 1999. The agreement also
provides Patout an option to acquire 50,000 shares of treasury stock owned by
the Company on or before December 31, 1998, at a price of $3.25 per share.
M. A. Patout & Son, Ltd. exercised its option on April 12, 1995 and acquired
50,000 shares of treasury stock for $162,500. The technical service fee for
the year ended January 31, 1996 was $187,350.
The Company also entered into a cane swap agreement with Patout whereby
some shippers of sugarcane to Patout would deliver their cane to Sterling
Sugars, Inc. ("Sterling") because of their proximity to Sterling's factory.
The agreement was reciprocal for some shippers normally having their cane
processed by Sterling. The net effect of this cane swap agreement was that
Sterling ground an additional 33,275 tons of cane. The reimbursement due
Patout at January 31, 1996 for payments made by them to shippers under this
agreement was $62,196.
8
Mr. Bernard E. Boudreaux, Jr., a director of the Company, served in
fiscal 1996 and will serve in fiscal 1997, as general counsel for the Company
on a retainer basis.
Other Information:
Persons who are directors or executive officers of the Company, and
persons who beneficially own more than 10% of the Company's common stock, are
required to file with the Securities and Exchange Commission periodic reports
of changes in their ownership of the Company's stock. Based solely on a
review of the forms furnished to the Company pursuant to the rules of the
Securities and Exchange Commission, such persons complied with the filing
requirements during the last three fiscal years of the Company except Mr.
V. Guarisco was late filing a report covering one transaction, Mr. P. Guarisco
was late file four reports covering five transactions, Patout Burns, Jr. was
late in filing Form 3, Hellenic, Inc. was late filing one report covering one
transaction, M. A. Patout & Son, Ltd. was late filing three reports covering
three transactions and Mr. Caillier was late filing Form 3 and one report
covering one transaction. Mr. Boudreaux was late in filing Form 3.
The Company has no standing nominating or compensation committees or
committees performing similar functions. The Company's Audit and Ethics
Committee is empowered to engage and evaluate the performance of the Company's
public accountants and review year-end and other financial statements when
appropriate. The committee, which consist of Messrs. Bauer, Foster and
V. Guarisco met once during fiscal 1996.
Two meetings of the Board of Directors were held during the last fiscal
year. All directors attended at least 75% of the meetings of the Board of
Directors with the exception of Messrs. Nelson, Foster and Roig, Jr. who
attended 50% of the meetings.
ACCOUNTANTS
It is anticipated that LeGlue & Company will be asked to serve as
the Company's independent public accountants for the fiscal year ending
January 31, 1997. A representative of LeGlue & Company is expected to be
present at the annual meeting and to be available to respond to appropriate
questions. He will have the opportunity to make a statement if he desires.
OTHER MATTERS
The matters to be acted upon at the Annual Meeting of Stockholders are
set forth in the accompanying notice. The Board knows of no other business to
come before the meeting, but if other matters requiring a vote are properly
presented to the meeting or any adjournments thereof, proxy holders will vote,
or abstain from voting thereon in accordance with their best judgement.
By Order of the Board of Directors
/s/ Carl W. Bauer
Carl W. Bauer
Secretary
9
STERLING SUGARS, INC. PROXY
(Solicited by the Board of Directors)
The undersigned hereby appoints Carl W. Bauer, Craig P. Caillier and Peter V.
Guarisco and each of them, proxies with full power of substituion, to
represent and vote all shares of Common Stock of Sterling Sugars, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
said corporation to be held in the Conference Room, St. Mary Parish Library,
206 Iberia Street, Franklin, Louisiana on Thursday, May 16, 1996 at 10:00
a.m. and at any adjournment thereof (1) as hereinafter specified upon the
election of directors and (2) in their discretion upon such other business as
may properly come before the meeting or any adjournment thereof.
A VOTE FOR THE FOLLOWING NOMINEES IS RECOMMENDED BY THE BOARD OF DIRECTORS
Election of Directors:
For all nominees listed below (Except as indicated to the contrary below) /__/
Withhold authority to vote for all nominees listed below /__/
Carl W. Bauer, Bernard E. Boudreaux, Jr., J. Patout Burns Jr., Craig P.
Caillier, Peter V. Guarisco, Victor Guarisco II and Rivers Patout.
INSTRUCTION:
(To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided below)
______________________________________________________________________________
All as set forth in the Notice and Proxy Statement for the meeting, receipt
of which is acknowledged
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
When properly executed and returned, this proxy will be voted in the manner
specified. If no manner is specified, the shares represented hereby will be
voted for election of the nominees named on the reverse hereof.
DATE____________________________,1996
_____________________________________
SIGNATURE OF HOLDER
NOTE: Please sign as your name appears
hereon. When signed as attorney-in-fact
executor, administrator, trustee or
guardian, please give your full title as
such. If a corporation, please sign in
full corporate name by authorized
officer. If a partnership, please sign
in full partnership name by authorized
person.
PLEASE MARK, DATE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES