SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996
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 5, 1996 the registrant had outstanding 9,232,026 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>
June 30 March 31
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS
Cash............................................... $132,188 $ 69,279 $ 78,688
Receivables........................................ 206,344 237,461 252,117
Inventories........................................ 286,453 321,351 259,781
Prepaid expenses................................... 5,521 6,801 3,690
Marketable securities.............................. 1,311 1,656 5,325
-----------------------------
Current assets................................... 631,817 636,548 599,601
Property, plant and equipment...................... 133,055 135,844 134,498
Investment in affiliates........................... 11,657 13,178 11,442
Other assets....................................... 37,849 50,764 37,283
-----------------------------
Total assets..................................... $814,378 $836,334 $782,824
=============================
LIABILITIES
Short-term borrowings.............................. $348,894 $372,991 $373,625
Current portion of long-term debt.................. 10,453 12,045 11,665
Accounts payable................................... 188,160 181,284 133,737
Taxes accrued...................................... 28,528 26,367 24,776
-----------------------------
Current liabilities........................ 576,035 592,687 543,803
Long-term debt..................................... 29,022 35,004 31,818
Convertible subordinated debentures................ 69,000 69,000 69,000
Retirement and other benefits...................... 18,651 17,945 18,498
Deferred taxes..................................... 8,714 12,641 9,632
Commitments and contingencies...................... - - -
-----------------------------
Total liabilities.......................... 701,422 727,277 672,751
-----------------------------
MINORITY INTERESTS................................. 29,342 32,689 27,473
-----------------------------
ESOP redeemable preferred stock.................... 8,748 9,132 8,748
Unearned ESOP compensation......................... (6,320) (6,385) (6,320)
-----------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1.65 par value;
authorized 1,000,000 shares;
Issued 87,477 to ESOP
(June 95 - 91,319; Mar 96 - 87,477)
Common stock, $0.20 par value;
authorized shares 20,000,000
Issued 11,745,872
(June 95 - 11,274,067;
Mar 96 - 11,624,275)........................... 2,349 2,255 2,325
Additional paid-in capital......................... 44,722 39,903 43,660
Unearned restricted stock plan compensation........ (408) (516) (435)
Treasury shares 2,515,567 (June 95 - 2,417,412;
Mar 96 - 2,490,661)............................... (2,633) (1,579) (2,384)
Retained earnings.................................. 47,051 38,392 46,450
Cumulative translation adjustments................. (9,895) (4,834) (9,444)
-----------------------------
Total shareholders' equity....................... 81,186 73,621 80,172
-----------------------------
Total liabilities and equity..................... $814,378 $836,334 $782,824
=============================
</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>
Three months ended
June 30
1996 1995
---- ----
<S> <C> <C>
Sales - tobacco............................................. $215,263 $183,745
- nontobacco.......................................... 95,128 113,219
----------------------
Total sales............................................... 310,391 296,964
Cost of sales............................................... 288,505 282,490
Selling, general and administrative expenses................ 17,996 18,808
Other income (expense) - net................................ 448 (39)
----------------------
Income (loss) before taxes................................ 4,338 (4,373)
Income taxes................................................ (1,112) (993)
----------------------
Income (loss) after taxes................................. 3,226 (5,366)
Minority interests.......................................... (1,936) (1,160)
Equity in earnings of affiliates............................ 218 271
----------------------
Income (loss) from continuing operations.................. 1,508 (6,255)
Loss from discontinued operations........................... - (4,500)
----------------------
Net income (loss)......................................... 1,508 (10,755)
ESOP preferred stock dividends net of tax................... (115) (121)
----------------------
Net income (loss) applicable to common stock.............. 1,393 (10,876)
Retained earnings at beginning of period.................... 46,450 50,530
Dividends................................................... (792) (1,262)
----------------------
Retained earnings at end of period.......................... $47,051 $38,392
======================
Earnings (loss) per common share
Primary - from continuing operations........................ $0.15 $(0.73)
- from discontinued operations...................... - $(0.51)
- net............................................... $0.15 $(1.24)
- average shares outstanding........................ 9,167,642 8,797,639
Fully diluted............................................... * *
</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>
Three months ended
June 30
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)............................................ $1,508 $(10,755)
Depreciation and amortization................................ 4,395 6,259
Minority interests........................................... 1,936 1,160
Undistributed earnings of affiliates......................... (218) (271)
Gain on disposition of property, plant and equipment......... (185) (12)
Loss on disposal of discontinued operations.................. - 4,500
Other........................................................ 2,421 (3,728)
----------------------
9,857 (2,847)
Net changes in working capital
Receivables................................................ 43,114 (31,386)
Inventories................................................ (27,498) 21,567
Current payables........................................... 58,967 35,680
----------------------
CASH PROVIDED BY OPERATING ACTIVITIES........................ 84,440 23,014
----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment - additions.................... (2,265) (6,918)
- dispositions................. 247 143
----------------------
CASH USED FOR INVESTING ACTIVITIES........................... (2,018) (6,775)
----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings........................... - 9,668
Repayment of long-term borrowings............................ (4,076) (6,791)
Net change in short-term borrowings.......................... (24,731) (5,964)
Dividends paid............................................... (115) (125)
Other........................................................ - 38
----------------------
CASH USED FOR FINANCING ACTIVITIES........................... (28,922) (3,174)
----------------------
Increase in cash for period................................. 53,500 13,065
Cash at beginning of period.................................. 78,688 56,214
----------------------
CASH AT END OF PERIOD........................................ $132,188 $69,279
======================
</TABLE>
The accompanying notes on page 5 are an integral part of
these financial statements.
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
*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.
*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. 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.
*Financial statements for the prior year have been restated
to include wool operating results as continuing operations
because the planned sale of the wool business was
terminated in December 1995.
*Inventories for the periods shown were as follows:
June 30 March 31
(In thousands) 1996 1995 1996
---- ---- ----
Tobacco $206,675 $198,411 $160,721
Nontobacco 79,778 122,940 99,060
------- ------- -------
Total $286,453 $321,351 $259,781
======= ======= =======
*During fiscal year ended March 31, 1996 the Company
initiated a reorganization plan for its nontobacco
businesses. It is anticipated that substantially all
accrued but unpaid amounts related to the reorganization
($3.5 million at June 30, 1996) will be expended by the end
of fiscal 1997.
*There were no changes in accounting policies during the
period ended June 30, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales of $310.4 million for the June 1996 quarter increased
by 4.5% from the year-earlier quarter. Continued strong
demand for tobacco resulted in volume increases and higher
prices. Quarter-to-quarter wool volumes were flat and
prices were lower due to soft worldwide market conditions.
Net income was $1.5 million versus a loss of $10.8 million
in the same 1995 quarter.
Tobacco sales totaled $215.3 million, up 17.2% from a year
earlier, as a result of increased volume in the Far East
and Africa and higher average prices in all regions. These
factors and improved margins produced $1.7 million in
earnings compared to a loss of $2.0 million a year earlier.
Wool volume increases in France, Argentina and New Zealand
were offset by declines in other areas, and prices remained
soft due to a lingering recession in Europe and difficult
market conditions. However, improved operating
efficiencies contributed to a much smaller loss from
nontobacco businesses - $152,000 versus $4.3 million a year
earlier which included a $1.1 million deferred tax charge
on prior years' earnings due to an increase in the French
tax rate.
Pretax income was $4.3 million in the current quarter
compared to a loss of $4.4 million in the same 1995
quarter. Interest expensed totaled $10.0 million in the
current quarter compared with $9.1 million a year earlier.
Income tax provisions were required in the prior year
quarter for certain jurisdictions where profits were earned
despite an overall pretax loss. Tax charges or credits vary
as a percentage of pretax income or loss due to differences
in tax rates and relief available in areas where profits
are earned or losses incurred.
Results for the 1995 quarter also included a $4.5 million
loss from discontinued operations related to an adjustment
in the estimated loss on disposal of the wool business.
The wool business was subsequently reinstated as continuing
operations in the December 1995 quarter.
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, 1996 increased to $55.8 million
from $43.9 million at June 30, 1995. The Company's working
capital needs are geared primarily to seasonal crop
financing and are impacted by the timing of purchases and
invoicing customers. Changes in the components of current
assets and liabilities relate to earnings and the
seasonality of the business cycle. Changes in cash relate
to the timing of customer receipts and settlement of
payables and short-term borrowings.
The Company continued to deleverage its balance sheet, and
uncommitted tobacco inventories declined from $46 million
at June 1995 to $29 million at June 1996. The majority of
the $2.0 million net capital expenditures was for tobacco
operations.
The Company's credit facilities for tobacco include $100
million for US operations and $200 million for European
operations expiring in June 1998, and local lines of
approximately $245 million. There are separate credit
facilities for the wool business totaling $145 million.
These facilities are believed by management to be adequate
for its projected level of business in fiscal 1997.
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. The following exhibits are filed as a part of this
report:
11 Computation of Earnings per Common Share.
27 Financial Data Schedule
b. 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 8, 1996 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 EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share information; unaudited)
<TABLE>
First quarter ended
June 30
1996* 1995*
-----------------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Income (loss) from continuing operations................... $1,508 $(6,255)
Less - ESOP preferred stock dividends net of tax .......... 115 121
Income (loss) from -----------------------
continuing operations
applicable to common stock............................... 1,393 (6,376)
Loss from discontinued operations.......................... - (4,500)
-----------------------
Net income (loss) applicable to common stock............... $1,393 $(10,876)
=======================
Primary average shares outstanding......................... 9,167,642 8,797,639
=======================
Earnings (loss) per common share
- from continuing operations............................ $0.15 $(0.73)
- from discontinued operations.......................... - (0.51)
-----------------------
- net................................................... $0.15 $(1.24)
=======================
FULLY DILUTED EARNINGS PER SHARE
Income (loss) from continuing operations
applicable to common stock............................... $1,393 $(6,376)
Add - after-tax interest expense on 7 1/4%
convertible subordinated debentures................ 825 825
- dividends payable to ESOP assuming
conversion to common stock......................... - -
-----------------------
Adjusted income (loss) from continuing operations.......... 2,218 (5,551)
Loss from discontinued operations.......................... - (4,500)
-----------------------
Net income (loss) applicable to common stock............... $2,218 $(10,051)
=======================
Primary average shares outstanding......................... 9,167,642 8,797,639
Increase in shares outstanding assuming
- conversion of 7 1/4% convertible subordinated
debentures at November 13, 1991...................... 2,257,115 2,126,348
- conversion of ESOP convertible
preferred stock at July 1, 1993...................... 257,892 260,911
-----------------------
Fully diluted average shares outstanding................... 11,682,649 11,227,679
=======================
Earnings (loss) per common share
- from continuing operations............................. $0.19 $(0.50)
- from discontinued operations........................... - (0.40)
-----------------------
- net.................................................... $0.19 $(0.90)
=======================
</TABLE>
*Calculation of fully diluted earnings per share includes adjustments
which are antidilutive. Therefore, no fully diluted earnings per
share are shown on the face of the income statement.
<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> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 132,188
<SECURITIES> 1,311
<RECEIVABLES> 206,344<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 286,453
<CURRENT-ASSETS> 631,817
<PP&E> 133,055<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 814,378
<CURRENT-LIABILITIES> 576,035
<BONDS> 98,022
<COMMON> 2,349
8,748
0
<OTHER-SE> 78,837
<TOTAL-LIABILITY-AND-EQUITY> 814,378
<SALES> 310,391
<TOTAL-REVENUES> 310,391
<CGS> 288,505
<TOTAL-COSTS> 288,505
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> 4,338
<INCOME-TAX> 1,112
<INCOME-CONTINUING> 1,508
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,508
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS.
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES.
</FN>
</TABLE>
