SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1995
COMMISSION FILE NUMBER 1-9875
(LOGO)
STANDARD COMMERCIAL CORPORATION
Incorporated under the laws of I.R.S. Employer
North Carolina Identification No. 13-1337610
2201 MILLER ROAD, WILSON, NORTH CAROLINA 27893
Telephone Number (919) 291-5507
Former name, former address and former fiscal year, if changed since last
report - Not applicable
On August 10, 1995 the registrant had outstanding 8,857,216 shares of Common
Stock ($.20 par value).
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 and (2) had been subject to such filing
requirements for the past 90 days.
YES X NO
-----
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands; unaudited)
<TABLE>
<CAPTION>
June 30 March 31
----------------------
1995 1994 1995
---- ---- ----
<S> <C> <C> <C>
ASSETS
Cash.......................................... $ 58,668 $ 41,677 $ 46,753
Receivables................................... 185,178 273,954 154,241
Inventories................................... 199,912 351,454 196,037
Net assets of discontinued operations......... 47,342 - 56,027
Prepaid expenses.............................. 5,270 6,230 2,903
Marketable securities at cost (apprx mkt)..... 1,639 933 453
-----------------------------------------------
Current assets............................ 498,009 674,248 456,414
Property, plant and equipment................. 102,505 133,263 99,102
Investment in affiliates...................... 12,152 14,752 11,844
Other assets.................................. 42,413 36,430 41,067
-----------------------------------------------
Total assets.......................... $655,079 $858,693 $608,427
===============================================
LIABILITIES
Short-term borrowings......................... $278,636 $423,657 $275,429
Current portion of long-term debt............. 11,423 34,008 11,216
Accounts payable.............................. 130,162 130,486 79,373
Taxes accrued................................. 16,272 15,698 17,524
-----------------------------------------------
Current liabilities................... 436,493 603,849 383,542
Long-term debt................................ 29,670 30,832 26,927
Convertible subordinated debentures........... 69,000 69,000 69,000
Retirement and other benefits................. 13,167 17,283 13,005
Deferred taxes................................ 8,963 11,141 9,028
Commitments and contingencies................. - - -
-----------------------------------------------
Total liabilities..................... 557,293 732,105 501,502
-----------------------------------------------
MINORITY INTERESTS............................ 32,651 21,119 31,299
-----------------------------------------------
ESOP redeemable preferred stock............... 9,132 9,200 9,132
Unearned ESOP compensation.................... (6,385) (7,613) (6,600)
-----------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1.65 par value;
authorized 1,000,000 shares
Issued 91,319 to ESOP;
(June 94-92,005 ; March 95-91,319)
Common stock, $0.20 par value;
authorized shares 20,000,000
Issued 11,274,067;
(June 94 - 10,915,903; March 95 - 11,160,289). 2,255 2,183 2,232
Additional paid-in capital.................... 39,903 34,925 38,288
Unearned restricted stock plan compensation... (483) (623) (515)
Treasury stock at cost 2,417,412 shares
(June 1994 - 2,346,318; March 1995 - 2,393,478) (1,579) (583) (1,233)
Retained earnings............................. 38,392 82,593 50,530
Cumulative translation adjustments............ (16,100) (14,613) (16,208)
-----------------------------------------------
Total shareholders' equity................ 62,388 103,882 73,094
-----------------------------------------------
Total liabilities and equity.............. $655,079 $858,693 $608,427
===============================================
</TABLE>
The accompanying notes on page 5 are an integral part of these financial
statements.
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousands, except share information; unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30
------------------------
1995 1994
---- ----
<S> <C> <C>
Sales - tobacco.................................. $183,745 $146,470
- other.................................... 2,969 4,509
---------------------------
Total sales................................ 186,714 150,979
Cost of sales...................................... 173,639 141,107
Selling, general and administrative expenses....... 12,954 12,502
Other income (expense) - net....................... (889) (508)
---------------------------
Loss before taxes.............................. (768) (3,138)
Income taxes....................................... (431) 589
---------------------------
Loss after taxes............................... (1,199) (2,549)
Minority interests................................. (1,160) 11
Equity in earnings of affiliates................... 271 169
---------------------------
Loss from continuing operations................ (2,088) (2,369)
Discontinued operations, net of income taxes:
Income (loss) from operations................ (4,167) 1,198
Loss from disposal........................... (4,500) -
---------------------------
Net loss..................................... (10,755) (1,171)
ESOP preferred stock dividends net of tax.......... (121) (121)
---------------------------
Net loss applicable to common stock.......... (10,876) (1,292)
Retained earnings at beginning of period........... 50,530 84,807
Dividends.......................................... (1,262) (922)
---------------------------
Retained earnings at end of period................. $38,392 $82,593
===========================
Earnings (loss) per common share
Primary - from continuing operations......... $(0.25) $(0.29)
- from discontinued operations....... (0.99) 0.14
---------------------------
- net................................ $(1.24) $(0.15)
- average shares outstanding.........8,797,639 8,568,676
Fully diluted - from continuing operations... * *
- from discontinued operations. * *
- net.......................... * *
- average shares outstanding... * *
Dividends paid per common share.................... - $0.10
</TABLE>
*Not applicable because fully diluted calculations include adjustments
which are antidilutive.
The accompanying notes on page 5 are an integral part of these
financial statements.
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands; unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss........................................................... $(10,755) $(1,171)
Depreciation and amortization...................................... 3,648 2,238
Minority interests................................................. 1,160 (11)
Undistributed earnings of affiliates............................... (271) (169)
Gain on disposition of property, plant and equipment............... (8) (24)
Loss on disposal of discontinued operation......................... 4,500 -
Other.............................................................. (3,432) (257)
-------------------------
(5,158) 606
Net changes in working capital
Receivables.................................................... (33,548) (14,973)
Inventories.................................................... (4,200) 9,542
Current payables............................................... 50,265 4,859
Discontinued operation- noncash charges and working capital changes 4,185 19,475
-------------------------
CASH PROVIDED BY OPERATING ACTIVITIES.............................. 11,544 19,509
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment - additions.......................... (5,809) (6,700)
- dispositions....................... 75 62
Investing activities of discontinued operation..................... - (225)
-------------------------
CASH USED FOR INVESTING ACTIVITIES................................. (5,734) (6,863)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings................................. 9,668 2,685
Repayment of long-term borrowings.................................. (6,729) (766)
Net change in short-term borrowings................................ 3,207 (20,329)
Dividends paid..................................................... (125) (1,043)
Other.............................................................. 84 51
Financing activities of discontinued operation..................... - (21,369)
-------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES................... 6,105 (40,771)
-------------------------
Increase (decrease) in cash for period............................. 11,915 (28,125)
Cash at beginning of period........................................ 46,753 69,802
-------------------------
CASH AT END OF PERIOD.............................................. $58,668 $41,677
=========================
</TABLE>
The accompanying notes on page 5 are an integral part of these financial
statements.
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(BULLET)The interim statements presented herein should be read in conjunction
with the financial statements and notes thereto included in the Company's
latest Annual Report on Form 10-K.
(BULLET)The interim period financial statements have been prepared by the
Company without audit and contain all of the adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations. Except for those related to disposal of the wool business, all
such adjustments are of a normal, recurring nature. Because of the nature of
the Company's businesses, fluctuations in results for interim periods are not
necessarily indicative of business trends or results to be expected for a full
year.
(BULLET)Inventories for the periods shown were comprised of tobacco and other
as follows:
<TABLE>
<CAPTION>
June 30 March 31
---------------------
1995 1994 1995
---- ---- ----
<S> <C> <C> <C>
(In thousands)
Tobacco $198,411 $261,063 $194,344
Other 1,501 1,769 1,693
------- ------- -------
Total $199,912 $262,832* $196,037
======= ======= =======
</TABLE>
*Excludes inventories totaling $88,622 for discontinued wool operations.
(BULLET)There were no changes in accounting policies during the period ended
June 30, 1995.
(BULLET)In April 1995, the Company entered into an agreement in principle to
sell its wool operations to Chargeurs of Paris, France. A definitive
agreement is still being negotiated. The Company is also seeking to dispose
of its small specialty fibres unit. Therefore, results of the entire wool
business for the first quarter ended June 30, 1995 have been reported as
discontinued operations and the year-earlier quarter has been restated
accordingly. Because the sales price of the wool business is subject to
certain assumptions, estimates were necessary in arriving at the estimated
loss on disposal shown below.
<TABLE>
<CAPTION>
June 30
-------
1995 1994
---- ----
<S> <C> <C>
(In thousands)
Wool sales $110,250 $102,270
Pretax operating income (loss) (3,605) 1,763
Income taxes (562) (565)
------ ------
Operating income (loss) (4,167) 1,198
Estimated loss on disposal-net (4,500) -
----- ------
Income (loss) from discontinued wool operations $(8,667) $1,198
====== =====
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales from continuing operations of $186.7 million for the June 1995 quarter
increased by 23.7% from $151.0 million for the same prior-year quarter.
Results for the June 1994 quarter have been restated to treat the wool
business as a discontinued operation. Tobacco sales in the current quarter
totaled $183.7 million, up 25.4% from $146.5 million a year earlier. The
increase resulted from volume and average unit price increases of 6.8% and
17.5%, respectively, resulting from improving market conditions and a change
in sales mix. Tobacco sales comprised 98.4% and 97.0% of total sales for the
1995 and 1994 quarters, respectively, and sales by the building supply
business and duty free shops accounted for the remainder.
STANDARD COMMERCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued)
A pretax loss after interest of $0.8 million was incurred in the current
quarter compared to a loss of $3.1 million in the 1994 quarter. Interest
included in cost of sales and other expenses totaled $6.3 million in the
current quarter compared with $6.1 million in the prior year. The operating
improvement was attributable to stronger market conditions for tobacco, which
resulted in improved margins, partly offset by a small loss in other
businesses.
The Company's effective tax rate increased due to profits being earned in
taxable locations, while the losses primarily occured in areas for which there
was no tax relief.
Minority owners' share of income increased by $1.2 million as a result of
profits being earned by the less than 100%-owned subsidiaries against losses
incurred a year earlier.
The quarter-to-quarter change in equity in earnings of affiliates was
immaterial.
The quarterly results for the discontinued wool operations reflect difficult
trading conditions. Wool sales in the 1995 quarter increased 7.8% to $110.3
million from $102.3 million a year earlier, primarily because of increases in
average unit prices and a change in sales mix, which more than offset a 23.7%
decrease in volume. Although sales increased, margins were depressed,
resulting in a pretax operating loss of $3.6 million for the 1995 quarter
compared to a pretax operating profit of $1.8 million for the 1994 quarter.
Despite the pretax operating loss for wool in the June 1995 quarter, income
taxes remained virtually unchanged due to a recently enacted tax increase in
France which resulted in an additional deferred tax provision. A $4.5 million
adjustment was recorded as loss on disposal in the 1995 quarter to reflect
management's current estimate of the net sales proceeds for the wool business.
Negotiations of a definitive agreement for sale of the wool business are
continuing.
Because of the seasonal nature of the Company's business, results for interim
periods are not necessarily indicative of results for a full year.
Financial Condition
Working capital at June 30, 1995 was $61.5 million compared with $70.4 million
at June 30,1994 and $72.9 million at March 31, 1995. The decrease since June
30, 1994 is primarily due to the cumulative net loss of $40.1 million,
partially offset by depreciation and amortization of $12.7 million for the
twelve months and the inclusion of net noncurrent assets of discontinued wool
operations in working capital. The decrease in working capital since March
31, 1995 is primarily due to the net loss of $10.8 million for the quarter,
partially offset by depreciation and amortization of $3.6 million. Net
capital expenditures for continuing operations of $5.7 million for the 1995
quarter were primarily for tobacco facilities in Turkey, Greece and Zimbabwe.
The Company continued its efforts to deleverage its balance sheet by reducing
tobacco inventory levels and its borrowings to finance such inventories.
Tobacco inventories have declined by $62.7 million since June 1994, while
uncommitted tobacco inventories declined from $82.1 million to $68.6 million
during the same period.
The Company's credit facilities are believed by management to be adequate for
its projected level of business in fiscal 1996.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - Not applicable
Item 2. CHANGES IN SECURITIES - Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Not
applicable
Item 5. OTHER INFORMATION - Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 11 Computation of Earnings per Common Share.
b. Exhibit 27 Financial Data Schedule.
c. The Company did not file any reports on Form 8-K during the
quarter.
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.
Dated: August 14, 1995 STANDARD COMMERCIAL CORPORATION
(Registrant)
By /s/ Robert E Harrison
-------------------------------
Robert E Harrison
Senior Vice President and Chief Financial Officer
By /s/ Guy M Ross
-------------------------------
Guy M Ross
Vice President and Chief Accounting Officer
STANDARD COMMERCIAL CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share information; unaudited)
<TABLE>
<CAPTION> First quarter ended
June 30
-------------------
1995* 1994*
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Loss from continuing operations................................... $(2,088) $(2,369)
Less - ESOP preferred stock dividends net of tax.................. 121 121
------------------------
Loss from continuing operations applicable to common stock........ (2,209) (2,490)
Income (loss) from discontinued operations........................ (8,667) 1,198
------------------------
Net loss applicable to common stock............................... $(10,876) $(1,292)
========================
Primary average shares outstanding................................8,797,639 8,568,676
========================
Earnings (loss) per common share
- from continuing operations.................................. $(0.25) $(0.29)
- from discontinued operations................................ (0.99) 0.14
------------------------
- net......................................................... $(1.24) $(0.15)
========================
FULLY DILUTED EARNINGS PER SHARE
Loss from continuing operations
applicable to common stock.................................... $(2,209) $(2,490)
Add - after-tax interest expense on 7 1/4%
convertible subordinated debentures........................... 825 825
- dividends payable to ESOP assuming
conversion to common stock................................ - 26
------------------------
Adjusted loss from continuing operations.......................... (1,384) (1,639)
Income (loss) from discontinued operations........................ (8,667) 1,198
------------------------
Net loss applicable to common stock............................... $(10,051) $(441)
========================
Primary average shares outstanding................................8,797,639 8,568,676
Increase in shares outstanding assuming
- conversion of 7 1/4% convertible subordinated
debentures at November 13, 1991...........................2,169,129 2,126,348
- conversion of ESOP convertible
preferred stock at July 1, 1993........................... 260,911 262,871
------------------------
Fully diluted average shares outstanding.........................11,227,679 10,957,895
========================
Earnings (loss) per common share
- from continuing operations.................................. $(0.13) $(0.15)
- from discontinued operations................................ (0.77) 0.11
------------------------
- net......................................................... $(0.90) $(0.04)
========================
</TABLE>
*The calculations of fully diluted earnings per share for both periods
include adjustments which are antidilutive. Therefore, fully diluted
earnings per share as shown on the face of the income statement are
equal to primary earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND RETAINED
EARNINGS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1995
<CASH> 58,668
<SECURITIES> 1,639
<RECEIVABLES> 185,178<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 199,912
<CURRENT-ASSETS> 498,009
<PP&E> 102,505<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 655,079
<CURRENT-LIABILITIES> 436,493
<BONDS> 98,670
<COMMON> 2,255
9,132
0
<OTHER-SE> 60,133
<TOTAL-LIABILITY-AND-EQUITY> 655,079
<SALES> 186,714
<TOTAL-REVENUES> 186,714
<CGS> 173,639
<TOTAL-COSTS> 173,639
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> (768)
<INCOME-TAX> (431)
<INCOME-CONTINUING> (2,088)
<DISCONTINUED> (8,667)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,755)
<EPS-PRIMARY> (1.24)
<EPS-DILUTED> (1.24)
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS.
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES.
</FN>
</TABLE>
