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 DECEMBER 31, 1997
COMMISSION FILE NUMBER 1-9875
[GRAPHIC OMITTED]
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 February 12, 1998 the registrant had outstanding 12,804,254 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
---- ----
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands; except share information)
<TABLE>
<CAPTION>
December 31 March 31
1997 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Cash...................................................... $ 76,646 $ 55,849 $ 41,117
Receivables............................................... 248,661 234,205 266,560
Inventories............................................... 417,509 331,594 256,519
Prepaid expenses.......................................... 6,325 8,037 6,285
Marketable securities..................................... 722 971 837
---------------------------------------
Current assets........................................ 749,863 630,656 571,318
Property, plant and equipment............................. 113,079 130,797 122,013
Investment in affiliates.................................. 15,502 11,920 12,533
Other assets.............................................. 46,502 35,136 29,821
---------------------------------------
Total assets.......................................... $924,946 $808,509 $735,685
=======================================
LIABILITIES
Short-term borrowings..................................... $375,961 $402,598 $272,325
Current portion of long-term debt......................... 4,362 8,418 8,985
Accounts payable.......................................... 122,891 125,554 141,145
Taxes accrued............................................. 23,685 27,284 28,758
---------------------------------------
Current liabilities................................... 526,899 563,854 451,213
Long-term debt............................................ 126,752 27,042 70,252
Convertible subordinated debentures....................... 69,000 69,000 69,000
Retirement and other benefits............................. 19,552 19,432 19,127
Deferred taxes............................................ 4,884 8,917 5,819
---------------------------------------
Total liabilities..................................... 747,087 688,245 615,411
---------------------------------------
MINORITY INTERESTS........................................ 30,858 29,706 30,312
---------------------------------------
ESOP redeemable preferred stock........................... - 8,748 -
Unearned ESOP compensation................................ - (6,320) -
---------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $1.65 par value; authorized shares
1,000,000
Issued none (Dec 96 - 87,477 to ESOP).................
Common stock, $0.20 par value; authorized shares 100,000,000
Issued 15,420,796 (Dec 96 - 11,989,564; Mar 97 - 3,084 2,398 2,425
12,126,270)...............................................
Additional paid-in capital................................ 102,166 47,786 50,324
Unearned restricted stock plan compensation............... (1,876) (365) (321)
Treasury shares, 2,617,707 (Dec 96 - 2,566,129; Mar 97 - (4,250) (3,340) (3,799)
2,591,790).................................................
Retained earnings......................................... 71,758 51,900 58,089
Cumulative translation adjustments........................ (23,881) (10,249) (16,756)
---------------------------------------
Total shareholders' equity............................ 147,001 88,130 89,962
---------------------------------------
Total liabilities and equity.......................... $ 924,946 $ 808,509 $ 735,685
=======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousands, except per share information; unaudited)
<TABLE>
<CAPTION>
Third quarter ended Nine months ended
December 31 December 31
----------- -----------
1997 1996* 1997 1996*
---- ----- ---- -----
Sales
<S> <C> <C> <C> <C>
- tobacco............................... $286,230 $284,360 $706,763 $669,252
- nontobacco............................ 80,770 89,770 247,805 264,274
-----------------------------------------
Total sales.............................. 367,000 374,130 954,568 933,526
Cost of sales
- Materials, services and supplies...... 327,645 338,154 854,962 837,929
- Interest.............................. 4,749 8,032 17,429 23,795
-----------------------------------------
Gross profit 34,606 27,944 82,177 71,802
Selling, general and administrative expenses. 18,776 18,288 53,955 54,556
Other interest expense....................... 4,672 2,653 10,843 7,490
Other income (expense) - net................. 746 1,594 5,218 7,158
-----------------------------------------
Income before taxes...................... 11,904 8,597 22,597 16,914
Income taxes................................. (3,360) (3,940) (5,962) (5,996)
-----------------------------------------
Income after taxes....................... 8,544 4,657 16,635 10,918
Minority interests........................... (112) (476) (1,621) (2,680)
Equity in earnings of affiliates............. 176 299 726 661
-----------------------------------------
Net income............................... 8,608 4,480 15,740 8,899
ESOP preferred stock dividends net of tax.... - (116) - (347)
-----------------------------------------
Net income applicable to common stock.... 8,608 4,364 15,740 8,552
Retained earnings at beginning of period..... 63,150 48,787 58,089 46,450
Common stock dividends....................... - (1,251) (2,071) (3,102)
-----------------------------------------
Retained earnings at end of period........... $ 71,758 $ 51,900 $ 71,758 $ 51,900
=========================================
Earnings per common share
Basic
- net................................... $0.67 $0.45 $1.29 $0.89
- average shares outstanding ........... 12,802 9,640 12,234 9,635
Diluted
- net................................... $0.62 $0.42 $1.25 $0.91
- average shares outstanding............ 15,151 12,210 14,583 12,173
</TABLE>
*All prior year average shares outstanding have been adjusted for subsequent
stock dividends.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands; unaudited)
<TABLE>
<CAPTION>
Nine months ended
December 31
-----------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................................ $ 15,740 $ 8,899
Depreciation and amortization......................................... 15,412 14,366
Minority interests.................................................... 1,621 2,680
Undistributed earnings of affiliates net of dividends received........ (726) (514)
Gain on disposition of property, plant and equipment.................. (3,806) (199)
Other................................................................. (2,240) 1,360
--------------------
26,001 26,592
Net changes in working capital other than cash
Receivables....................................................... (3,795) 15,085
Inventories....................................................... (174,348) (73,539)
Current payables.................................................. 5,875 (5,547)
--------------------
CASH USED FOR OPERATING ACTIVITIES.................................... (146,267) (37,409)
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment.........................................
- additions.................................................... (12,278) (9,441)
- dispositions................................................. 5,984 504
Business (acquisitions) dispositions.................................. (6,328) 2,993
--------------------
CASH USED FOR INVESTING ACTIVITIES (12,622) (5,944)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings................................... 56,593 28,973
Proceeds from long-term borrowings.................................... 110,387 10,011
Repayment of long-term borrowings..................................... (16,716) (18,123)
Net proceeds of equity offering....................................... 47,043 -
Dividends paid, net of tax............................................ - (347)
Other................................................................. (2,889) -
--------------------
CASH PROVIDED BY FINANCING ACTIVITIES................................. 194,418 20,514
--------------------
Increase (decrease) in cash for period................................ 35,529 (22,839)
Cash at beginning of period........................................... 41,117 78,688
--------------------
CASH AT END OF PERIOD................................................. $ 76,646 $ 55,849
====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
o 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.
o 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
seasonality of the Company's businesses, fluctuations in results for
interim periods are not necessarily indicative of business trends or
results to be expected for other interim periods or the full year.
o Effective in December 1997, the Company has adopted Statement of Financial
Accounting Standard, (SFAS), 128, Earnings Per Share. SFAS 128 requires the
presentation of both basic and diluted earnings per share, regardless of
materiality, unless per share amounts are equal. Earnings per share amounts
for the prior periods presented have been restated to conform to the
requirements of SFAS 128. Diluted earnings per share include the effect of
the convertible subordinated debentures which if converted would have
increased net income applicable to common stock by $825,000 and $2,475,000
for the current quarter and nine months of 1997, respectively. The average
shares outstanding would have increased 2,348,536 shares. Prior year
periods would have the same increase to net income applicable to common
stock and the average shares outstanding would have increased by 2,570,636
and 2,537,031 shares for the quarter and nine months, respectively,
assuming conversion of the above debentures and ESOP convertible preferred
stock that was redeemed in the fourth quarter of the last fiscal year upon
termination of the ESOP plan.
o Prior period earnings per share and weighted average shares outstanding
have been restated to give effect to the increase in shares outstanding
resulting from subsequent stock dividends.
o Inventories for the periods shown were as follows:
December 31 March 31
(In thousands) 1997 1996 1997
---- ---- ----
Tobacco $330,160 $255,382 $181,349
Nontobacco 87,349 76,212 75,170
-------- -------- ---------
Total $417,509 $331,594 $256,519
======= ======= =======
o There were no changes in accounting policies during the period ended
December 31, 1997.
o On August 1, 1997, the Company completed a $115.0 million private placement
of 8-7/8% Senior Notes due 2005, the net proceeds of which were used to
repay indebtedness under existing bank credit facilities and certain other
long-term debt. The notes were issued by Standard Commercial Tobacco Co.,
Inc. (the "Issuer"), a wholly-owned subsidiary of the Company. The Company
and Standard Wool, Inc., a wholly-owned subsidiary of the Company (the
"Guarantors"), jointly and severally, guarantee on a senior basis, the full
and prompt performance of the Issuer's obligations under the terms of the
indenture. Management has determined that full financial statements of the
Guarantors would not be material to investors and such financial statements
are not provided. The following supplemental combining financial statements
present information regarding the Guarantors and the Issuer.
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEET
December 31, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash $40,097 $ 23,726 $ - $63,823 $ 21 $ 98 $12,704
Receivables 19,929 176,753 - 196,682 3,864 610 47,505
Intercompany receivables 133,142 29,225 (127,519) 34,848 19,727 6 23,240
Inventories 86,592 255,896 5,432 347,920 - 1,596 67,993
Prepaids and other 346 4,729 - 5,075 96 8 1,146
Marketable securities - 708 - 708 1 - 13
------------------------------------------------------------------------------------------
Current assets 280,106 491,037 (122,087) 649,056 23,709 2,318 152,601
Property, plant and 22,309 78,179 - 100,488 - 55 12,536
equipment
Investment in 81,460 62,119 (143,579) - 217,551 38,777 36,977
subsidiaries
Investment in affiliates - 14,473 - 14,473 - - 1,029
Other noncurrent assets 7,225 22,899 - 30,124 13,811 - 2,567
------------------------------------------------------------------------------------------
Total assets $391,100 $668,707 $265,666) $794,141 $255,071 $ 41,150 $205,710
==========================================================================================
Liabilities
Short-term borrowings $35,000 $274,856 $ - $ - $309,856 $ - $ 66,105
Current portion of 336 3,462 - 3,798 - - 564
long-term debt
Accounts payable 19,093 82,654 - 101,747 1,694 154 19,296
Intercompany accounts 21,816 131,828 (137,363) 16,281 34,946 4,680 16,902
payable
Taxes accrued 5,430 12,327 - 17,757 - - 5,928
-----------------------------------------------------------------------------------------
Current liabilities 81,675 505,127 (137,363) 449,439 36,640 4,834 108,795
Long-term debt 120,655 4,061 - 124,716 - - 2,036
Convertible subordinated - - - 69,000 - -
debentures
Retirement and other 8,082 6,979 - 15,061 585 - 3,906
benefits
Deferred taxes 83 3,725 - 3,808 - - 1,076
------------------------------------------------------------------------------------------
Total liabilities 210,495 519,892 (137,363) 593,024 106,225 4,834 115,813
Minority interests - 30,826 - 30,826 - - 32
Shareholders' equity
Common stock 993 30,856 (30,856) 993 3,084 22,604 35,893
Additional paid-in 132,513 13,300 (94,760) 51,053 102,166 - 55,710
capital
Unearned restricted stock
plan compensation (724) (1,102) - (1,826) (31) - (19)
Treasury stock at cost - - - - (4,250) - -
Retained earnings 47,823 100,073 - 147,896 71,758 8,362 (3,789)
Cumulative translation - (25,138) (2,687) (27,825) (23,881) 5,350 2,070
adjustments
-----------------------------------------------------------------------------------------
Total shareholders' 180,605 117,989 (128,303) 170,291 148,846 36,316 89,865
equity -----------------------------------------------------------------------------------------
Total liabilities
and equity $391,100 $668,707 $(265,666) $794,141 $255,071 $ 41,150 $205,710
=========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Assets
Cash $ - $ 76,646
Receivables - 248,661
Intercompany receivables (77,821) -
Inventories - 417,509
Prepaids and other - 6,325
Marketable securities - 722
----------------------
Current assets (77,821) 749,863
Property, plant and - 113,079
equipment
Investment in (293,305) -
subsidiaries
Investment in affiliates - 15,502
Other noncurrent assets - 46,502
----------------------
Total assets $(371,126) $924,946
======================
Liabilities
Short-term borrowings $ 375,961 $ -
Current portion of - 4,362
long-term debt
Accounts payable - 122,891
Intercompany accounts (72,809) -
payable
Taxes accrued - 23,685
-----------------------
Current liabilities (72,809) 526,899
Long-term debt - 126,752
Convertible subordinated - 69,000
debentures
Retirement and other - 19,552
benefits
Deferred taxes - 4,884
-----------------------
Total liabilities (72,809) 747,087
Minority interests - 30,858
Shareholders' equity
Common stock (59,490) 3,084
Additional paid-in (106,763) 102,166
capital
Unearned restricted stock -
plan compensation - (1,876)
Treasury stock at cost - (4,250)
Retained earnings (152,469) 71,758
Cumulative translation 20,405 (23,881)
adjustments ----------------------
Total shareholders' (298,317) 147,001
equity ----------------------
Total liabilities $(371,126) $924,946
and equity ======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Quarter ended December 31, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $110,428 $217,844 $(23,614) $304,658 $ - $ 789 $ 80,764
Cost of sales:
Materials services and 101,717 191,938 (23,614) 270,041 - 722 76,093
supplies
Interest (84) 3,678 - 3,594 - - 1,155
-----------------------------------------------------------------------------------------
Gross profit 8,795 22,228 - 31,023 - 67 3,516
SG&A expenses 3,829 10,878 (93) 14,614 507 69 3,395
Other interest expense 2,939 337 3,276 1,358 - 38
Other income (expense) net 2,641 (2,409) (93) 139 49 (122) 489
-----------------------------------------------------------------------------------------
Income (loss) before taxes 4,668 8,604 - 13,272 (1,816) (124) 572
Income taxes 1,706 2,232 3,938 (618) - 40
-----------------------------------------------------------------------------------------
Income (loss) after taxes 2,962 6,372 - 9,334 (1,198) (124) 532
Minority interests - (112) - (112) - - -
Equity in earnings of - 106 - 106 - - 70
affiliates
Equity in earnings of - - - - 9,806 446 -
subsidiaries ----------------------------------------------------------------------------------------
Net income 2,962 6,366 - 9,328 8,608 322 602
Retained earnings at
beginning of period 44,861 93,707 - 138,568 63,150 8,040 (4,391)
Common stock dividends - - - - - - -
----------------------------------------------------------------------------------------
Retained earnings at $47,823 $100,073 $ - $147,896 $ 71,758 $ 8,362 (3,789)
at end of period ========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Sales $ (19,211) $367,000
Cost of sales:
Materials services
and supplies (19,211) 327,645
Interest - 4,749
----------------------
Gross profit - 34,606
Selling, general &
administrative 191 18,776
expenses
Other interest expense - 4,672
Other income (expense) net 191 746
----------------------
Income (loss) before - 11,904
taxes
Income taxes - 3,360
----------------------
Income (loss) after - 8,544
taxes
Minority interests - (112)
Equity in earnings of - 176
affiliates
Equity in earnings of (10,252) -
subsidiaries
----------------------
Net income (10,252) 8,608
Retained earnings at
beginning of period (142,217) 63,150
Common stock dividends - -
----------------------
Retained earnings at $ (152,469) $ 71,758
end of period ======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Nine Months Ended December 31, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $239,258 $594,142 $(66,654) $766,746 $ - $2,977 $237,733
Cost of sales:
Materials services and 221,189 526,886 (66,654) 681,421 - 2,769 223,660
supplies
Interest 2,040 11,750 - 13,790 - - 3,639
-------------------------------------------------------------------------------------------
Gross profit 16,029 55,506 - 71,535 - 208 10,434
SG&A expenses 9,131 31,820 1,403 42,354 1,790 205 10,637
Other interest expense 5,442 1,149 6,591 4,103 - 149
Other income (expense) 3,717 (2,811) 1,403 2,309 1,494 (275) 2,721
net
-------------------------------------------------------------------------------------------
Income (loss) before taxes 5,173 19,726 - 24,899 (4,399) (272) 2,369
Income taxes 1,877 5,047 - 6,924 (1,496) - 534
-------------------------------------------------------------------------------------------
Income (loss) after taxes 3,296 14,679 - 17,975 (2,903) (272) 1,835
Minority interests - (1,621) - (1,621) - - -
Equity in earnings of - 574 - 574 - - 152
affiliates
Equity in earnings of - - - - 18,643 1,831 -
subsidiaries -------------------------------------------------------------------------------------------
Net income 3,296 13,632 - 16,928 15,740 1,559 1,987
Retained earnings at
beginning of period 44,527 86,441 - 130,968 58,089 6,803 (5,776)
Common stock dividends - - - - (2,071) - -
-------------------------------------------------------------------------------------------
Retained earnings at
end of period $ 47,823 $100,073 $ - $147,896 $71,758 $ 8,362 $(3,789)
===========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Sales $ (52,888) $954,568
Cost of sales:
Materials services
and supplies (52,888) 854,962
Interest - 17,429
-----------------------
Gross profit - 82,177
SG&A expenses (1,031) 53,955
Other interest expense - 10,843
Other income (expense) net (1,031) 5,218
----------------------
Income (loss) before taxes - 22,597
Income taxes - 5,962
----------------------
Income (loss) after taxes - 16,635
Minority interests - (1,621)
Equity in earnings of - 726
affiliates
Equity in earnings of (20,474) -
subsidiaries
----------------------
Net income (20,474) 15,740
Retained earnings at
beginning of period (131,995) 58,089
Common stock dividends - (2,071)
----------------------
Retained earnings at
end of period $ (152,469) $ 71,758
======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Nine Months Ended December 31, 1997
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash provided by (used for)
operating activities $ 71,355 $(211,738) $ 47,043 $ (93,340) $(46,665) $ 12 $ (6,274)
-------------------------------------------------------------------------------------------
Cash flows from investing activities
Property, plant and equipment
- additions (2,680) (7,596) - (10,276) - (33) (1,969)
- disposals 15 2,521 - 2,536 - - 3,448
Minority interests - - - - - - -
Net advances from (to)
group companies (128,548) 128,548 - - - - -
Collections of note - - - - - - -
receivable
Business (acquisitions) - (6,328) - (6,328) - - -
dispositions -----------------------------------------------------------------------------------------
Cash provided by (used for)
investing activities (131,213) 117,145 - (14,068) - (33) 1,479
-----------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term 109,028 185 - 109,213 - - 1,174
borrowings
Repayment of long-term (8,898) (5,266) - (14,164) - - (2,552)
borrowings
Net change in short-term (1,277) 96,539 (47,043) 48,219 - - 8,374
borrowings
Net proceeds of equity - - - - 47,043 - -
offering
Other - (2,095) - (2,095) (684) - (110)
------------------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 98,853 89,363 (47,043) 141,173 46,359 - 6,886
-----------------------------------------------------------------------------------------
Net increase (decrease) 38,995 (5,230) - 33,765 (306) (21) 2,091
in cash
Cash at beginning of 1,102 28,956 - 30,058 327 119 10,613
period -----------------------------------------------------------------------------------------
Cash at end of period 40,097 23,726 - 63,823 21 98 12,704
=========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Cash provided by (used
for)operating activities $ - $ (146,267)
Cash flows from investing activities
Property, plant and equipment
- additions - (12,278)
- disposals - 5,984
Minority interests - -
Net advances from (to)
group companies - -
Collections of note - -
receivable
Business (acquisitions) - (6,328)
dispositions -----------------------
Cash provided by (used for)
investing activities - (12,622)
-----------------------
Cash flows from financing activities:
Proceeds from long-term - 110,387
borrowings
Repayment of long-term - (16,716)
borrowings
Net change in short-term - 56,593
borrowings
Net proceeds of equity - 47,043
offering
Other - (2,889)
----------------------
Cash provided by (used for)
financing activities - 194,418
----------------------
Net increase (decrease) - 35,529
in cash
Cash at beginning of - 41,117
period ----------------------
Cash at end of period $ - $ 76,646
======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEETS
March 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash $ 1,102 $ 28,956 $ - $ 30,058 $ 327 $ 119 $ 10,613
Receivables 35,737 174,535 - 210,272 1,648 1,258 53,382
Intercompany receivables 15,083 35,790 (13,323) 37,550 16,606 - 36,545
Inventories 74,309 128,279 - 202,588 - 1,256 52,675
Prepaids and other 4,190 762 - 4,952 155 5 1,173
Marketable securities - 823 - 823 - - 14
----------------------------------------------------------------
Current assets 130,421 369,145 (13,323) 486,243 18,736 2,638 154,402
Property, plant and 22,513 83,255 - 105,768 - 35 16,210
equipment
Investment in 81,460 86,676 (168,136) - 159,014 36,946 34,261
subsidiaries
Investment in affiliates - 11,321 - 11,321 - - 1,212
Other noncurrent assets 1,878 12,373 - 14,251 12,897 - 2,673
-------------------------------------------------------------------------------------------
Total assets 236,272 562,770 (181,459) 617,583 190,647 39,619 208,758
===========================================================================================
Liabilities
Short-term borrowings $ 36,277 $178,317 $ - $214,594 $ - $ - $ 57,731
Current portion of 2,312 5,633 - 7,945 - - 1,040
long-term debt
Accounts payable 14,123 110,675 - 124,798 982 127 15,238
Intercompany accounts 28,757 15,393 (25,983) 18,167 29,895 4,734 31,740
payable
Taxes accrued 2,470 19,723 - 22,193 - - 6,565
------------------------------------------------------------------------------------------
Current liabilities 83,939 329,741 (25,983) 387,697 30,877 4,861 112,314
Long-term debt 12,576 54,225 - 66,801 - - 3,451
Convertible subordinated - - - 69,000 - -
debentures
Retirement and other 7,797 6,734 - 14,531 499 - 4,097
benefits
Deferred taxes 1,064 3,972 - 5,036 - - 783
------------------------------------------------------------------------------------------
Total liabilities 105,376 394,672 (25,983) 474,065 100,376 4,861 120,645
Minority interests - 30,278 - 30,278 - - 34
Shareholders' equity
Common stock 993 54,643 (54,643) 993 2,425 22,604 35,893
Additional paid-in 85,470 16,893 (98,353) 4,010 50,324 - 55,710
capital
Unearned restricted stock
plan compensation (94) (198) - (292) (12) - (14)
Treasury stock at cost - - - - (3,799) - -
Retained earnings 44,527 86,441 - 130,968 58,089 6,803 (5,776)
Cumulative translation - (19,959) (2,480) (22,439) (16,756) 5,351 2,266
adjustments -----------------------------------------------------------------------------------------
Total shareholders'
equity 130,896 137,820 (155,476) 113,240 90,271 34,758 88,079
------------------------------------------------------------------------------------------
Total liabilities
and equity $236,272 $562,770 $(181,459) $617,583 $190,647 39,619 $208,758
==========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Assets
Cash $ - $ 41,117
Receivables - 266,560
Intercompany receivables (90,701) -
Inventories - 256,519
Prepaids and other - 6,285
Marketable securities - 837
-----------------------
Current assets (90,701) 571,318
Property, plant and - 122,013
equipment
Investment in (230,221) -
subsidiaries
Investment in affiliates - 12,533
Other noncurrent assets - 29,821
----------------------
Total assets $(320,922) $735,685
======================
Liabilities
Short-term borrowings $ $272,325
-
Current portion of - 8,985
long-term debt
Accounts payable - 141,145
Intercompany accounts (84,536) -
payable
Taxes accrued - 28,758
----------------------
Current liabilities (84,536) 451,213
Long-term debt - 70,252
Convertible subordinated - 69,000
debentures
Retirement and other - 19,127
benefits
Deferred taxes - 5,819
----------------------
Total liabilities (84,536) 615,411
Minority interests - 30,312
Shareholders' equity
Common stock (59,490) 2,425
Additional paid-in (59,720) 50,324
capital
Unearned restricted stock
plan compensation (3) (321)
Treasury stock at cost - (3,799)
Retained earnings (131,995) 58,089
Cumulative translation 14,822 (16,756)
adjustments -----------------------
-
Total shareholders' (236,386) 89,962
equity -----------------------
Total liabilities $(320,922) $ 735,685
and equity =======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEET
December 31, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash $ 6,621 $ 27,870 $ - $ 34,491 $ 713 $ 35 $ 20,610
Receivables 27,948 146,440 - 174,388 4,360 1,344 54,113
Intercompany receivables 13,598 37,647 (11,399) 39,846 16,955 - 5,920
Inventories 94,765 175,071 269,836 - 2,011 59,747
Prepaids and other 657 5,110 - 5,767 393 18 1,859
Marketable securities - 959 - 959 - - 12
----------------------------------------------------------------------------------------------
Current assets 143,589 393,097 (11,399) 525,287 22,421 3,408 142,261
Property, plant and 22,242 91,004 - 113,246 - 56 17,495
equipment
Investment in - 61,424 (61,424 - 158,894 35,735 45,093
subsidiaries
Investment in affiliates - 10,690 - 10,690 - - 1,230
Other noncurrent assets 2,243 21,904 - 24,147 9,938 - 1,051
---------------------------------------------------------------------------------------------
Total assets 168,074 578,119 $(72,823) 673,370 191,253 39,199 207,130
=============================================================================================
Liabilities
Short-term borrowings 62,378 280,940 $ - 343,318 $ - $ - 59,280
Current portion of 2,305 5,278 - 7,583 - - 835
long-term debt
Accounts payable 10,647 90,142 - 100,789 2,141 196 22,428
Intercompany accounts 18,921 1,399 (19,729) 591 28,418 5,374 18,246
payable
Taxes accrued 3,997 16,699 - 20,696 - 6,588
--------------------------------------------------------------------------------------------
Current liabilities 98,248 394,458 (19,729) 472,977 30,559 5,570 107,377
Long-term debt 13,157 10,010 - 23,167 - - 3,875
Convertible subordinated - - - 69,000 - -
debentures
Retirement and other 7,618 6,624 - 14,242 784 - 4,406
benefits
Deferred taxes 410 7,482 - 7,892 - 1,025
--------------------------------------------------------------------------------------------
Total liabilities 119,433 418,574 (19,729) 518,278 100,343 5,570 116,683
Minority interests - 29,670 - 29,670 - - 36
ESOP redeemable - - - - 8,748 - -
preferred stock
Unearned ESOP - - - - (6,320) - -
compensation
Shareholders' equity
Common stock 993 47,848 (47,848) 993 2,398 22,604 27,492
Additional paid-in 4,010 16,576 - 20,586 47,786 - 66,716
capital
Unearned restricted stock
plan compensation (102) (228) - (330) (13) - (22)
Treasury stock at cost - - - - (3,340) - -
Retained earnings 43,740 82,037 - 51,900 6,172 (7,400) 125,777
Cumulative translation - (16,358) (5,246) (21,604) (10,249) 4,853 3,625
adjustments -------------------------------------------------------------------------------------------
Total shareholders' 48,641 129,875 (53,094) 125,422 88,482 33,629 90,411
equity ------------------------------------------------------------------------------------------
Total liabilities 168,074 578,119 $(72,823) 673,370 191,253 39,199 207,130
and equity ==========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Assets
Cash $ - $ 55,849
Receivables - 234,205
Intercompany receivables (62,721) -
Inventories - 331,594
Prepaids and other - 8,037
Marketable securities - 971
--------------------
Current assets (62,721) 630,656
Property, plant and - 130,797
equipment
Investment in (239,722) -
subsidiaries
Investment in affiliates - 11,920
Other noncurrent assets - 35,136
--------------------
Total assets $(302,443) $808,509
====================
Liabilities
Short-term borrowings $ - $402,598
Current portion of - 8,418
long-term debt
Accounts payable - 125,554
Intercompany accounts (52,629) -
payable
Taxes accrued - 27,284
-------------------
Current liabilities (52,629) 563,854
Long-term debt - 27,042
Convertible subordinated - 69,000
debentures
Retirement and other - 19,432
benefits
Deferred taxes - 8,917
--------------------
Total liabilities (52,629) 688,245
Minority interests - 29,706
ESOP redeemable - 8,748
preferred stock
Unearned ESOP - (6,320)
compensation
Shareholders' equity
Common stock (51,089) 2,398
Additional paid-in (87,302) 47,786
capital
Unearned restricted stock -
plan compensation - (365)
Treasury stock at cost - (3,340)
Retained earnings (124,549) 51,900
Cumulative translation 13,126 (10,249)
adjustments ---------------------
Total shareholders' (249,814) 88,130
equity --------------------
Total liabilities $(302,443) $808,509
and equity ====================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Quarter Ended December 31, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $166,125 $164,833 $(23,445) $307,513 $ - $ 1,801 $ 85,450
Cost of sales:
Materials services and
supplies 154,275 145,631 (23,445) 276,461 - 1,680 80,842
Interest 588 5,954 - 6,542 - 89 1,401
------------------------------------------------------------------------------------------
Gross profit 11,262 13,248 - 24,510 - 32 3,207
SG&A expenses 3,049 10,157 (603) 12,603 1,004 187 3,946
Other interest expense 376 571 - 947 1,395 - 311
Other income (expense) (5,096) 660 (603) (5,039) 5,133 (16) 968
net ----------------------------------------------------------------------------------------
Income (loss) before 2,741 3,180 - 5,921 2,734 (171) (82)
taxes
Income taxes 932 2,109 - 3,041 989 - (90)
----------------------------------------------------------------------------------------
Income (loss) after 1,809 1,071 - 2,880 1,745 (171) 8
taxes
Minority interests - (476) - (476) - - -
Equity in earnings of - 128 - 128 - - 171
affiliates
Equity in earnings of - - - - 2,735 186 -
subsidiaries ----------------------------------------------------------------------------------------
Net income 1,809 723 - 2,532 4,480 15 179
ESOP preferred stock dividends
net of tax - - - - (116) - -
Net income (loss) applicable to
common stock 1,809 723 - 2,532 4,364 15 179
Retained earnings at beginning
of period 41,931 81,314 - 123,245 48,787 6,157 (7,579)
Common stock dividends - - - - (1,251) - -
---------------------------------------------------------------------------------------
Retained earnings 43,740 82,037 - 125,777 51,900 6,172 (7,400)
at end of period =======================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Sales $ (20,634) $374,130
Cost of sales:
Materials services and (20,829) 338,154
supplies
Interest - 8,032
----------------------
Gross profit 195 27,944
SG&A expenses 548 18,288
Other interest expense - 2,653
Other income (expense) 548 1,594
net ----------------------
Income (loss) before 195 8,597
taxes
Income taxes - 3,940
----------------------
Income (loss) after 195 4,657
taxes
Minority interests - (476)
Equity in earnings of - 299
affiliates
Equity in earnings of (2,921) -
subsidiaries ----------------------
Net income (2,726) 4,480
ESOP preferred stock dividends
net of tax - (116)
Net income (loss)
applicable to
common stock (2,726) 4,364
Retained earnings at
beginning of period (121,823) 48,787
Common stock dividends - (1,251)
----------------------
Retained earnings at $(124,549) $ 51,900
end of period ======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Nine Months Ended December 31, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $256,203 $540,917 $ (66,884) $730,236 $ - $ 6,076 $248,554
Cost of sales:
Materials services and 235,421 479,132 (66,884) 647,669 - 5,721 235,879
supplies
Interest 2,225 16,838 - 19,063 - 264 4,468
-------------------------------------------------------------------------------------------
Gross profit 18,557 44,947 - 63,504 - 91 8,207
SG&A expenses 8,632 31,116 48 39,796 2,597 609 11,194
Other interest expense 718 1,866 - 2,584 4,224 - 682
Other income (expense) net (5,038) 4,195 48 (795) 5,067 (10) 2,536
-------------------------------------------------------------------------------------------
Income (loss) before 4,169 16,160 - 20,329 (1,754) (528) (1,133)
taxes
Income taxes 1,417 5,584 - 7,001 (418) - (587)
--------------------------------------------------------------------------------------------
Income (loss) after 2,752 10,576 - 13,328 (1,336) (528) (546)
taxes
Minority interests - (2,680) - (2,680) - - -
Equity in earnings of - 490 - 490 - - 171
affiliates
Equity in earnings of - - - - 10,235 (375) -
subsidiaries
-------------------------------------------------------------------------------------------
Net income 2,752 8,386 - 11,138 8,899 (903) (375)
ESOP preferred stock dividends
net of tax - - - - (347) - -
Net income (loss) applicable to
common stock 2,752 8,386 - 11,138 8,552 (903) (375)
Retained earnings at beginning
of period 40,988 73,651 - 114,639 46,450 7,075 (7,025)
Common stock dividends - - - - (3,102) - -
--------------------------------------------------------------------------------------------
Retained earnings at 43,740 82,037 - 125,777 51,900 6,172 (7,400)
end of period ============================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Sales $(51,340) $933,526
Cost of sales:
Materials services and (51,340) 837,929
supplies
Interest - 23,795
----------------------
Gross profit - 71,802
SG&A expenses 360 54,556
Other interest expense - 7,490
Other income (expense) 360 7,158
net ----------------------
Income (loss) before - 16,914
taxes
Income taxes - 5,996
----------------------
Income (loss) after - 10,918
taxes
Minority interests - (2,680)
Equity in earnings of - 661
affiliates
Equity in earnings of (9,860) -
subsidiaries ----------------------
Net income (9,860) 8,899
ESOP preferred stock dividends
net of tax - (347)
Net income (loss)
applicable to
common stock (9,860) 8,552
Retained earnings at
beginning of period (114,689) 46,450
Common stock dividends - (3,102)
----------------------
Retained earnings at $(124,549) $51,900
end of period ======================
</TABLE>
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Nine Months Ended December 31, 1996
(In thousands; unaudited)
<TABLE>
<CAPTION>
Standard Other Standard
Commercial Tobacco Commercial Standard Other Wool
Tobacco Co Subsidiaries Tobacco Co Commercial Standard Subsidiaries
Inc (Non- Inc Corporation Wool Inc (Non-
(Issuer) Guarantors) Eliminations (Consolidated (Guarantor) (Guarantor) Guarantor)
--------- ------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash provided by
(used for)
operating activities $(16,302) $(46,992) $ - $(63,294) $ 8,380 $ (13) $ 17,518
-------------------------------------------------------------------------------------------
Cash flows from investing activities
Property, plant and equipment
- additions (1,886) (6,827) - (8,713) - (22) (706)
- disposals 27 365 - 392 - - 112
Minority interests - - - - - - -
Net advances from (to)
group companies (2,158) 2,158 - - - - -
Collections of note - - - - - - -
receivable
Business (acquisitions) - 2,993 - 2,993 - - -
dispositions
-------------------------------------------------------------------------------------------
Cash provided by
(used for)
investing activities (4,017) (1,311) - (5,328) - (22) (594)
-------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term 10,000 4 - 10,004 - - 7
borrowings
Repayment of long-term (1,043) (5,077) - (6,120) (11,171) - (832)
borrowings
Net change in short-term 11,962 30,805 - 42,767 - - (13,794)
borrowings
Dividends paid net of tax - - - - (347) - -
Purchase and retirement of ESOP
preferred stock - - - - - - -
Other - - - - - - -
-------------------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 20,919 25,732 - 46,651 (11,518) - (14,619)
-------------------------------------------------------------------------------------------
Net increase (decrease) 600 (22,571) - (21,971) (3,138) (35) 2,305
in cash
Cash at beginning of 6,021 50,441 - 56,462 3,851 70 18,305
period
-------------------------------------------------------------------------------------------
Cash at end of period 6,621 27,870 - 34,491 713 35 20,610
===========================================================================================
Eliminations Total
------------ -----
<S> <C> <C>
Cash provided by (used
for)operating activities $ - $ (37,409)
----------------------
Cash flows from investing activities
Property, plant and equipment
- additions - (9,441)
- disposals - 504
Minority interests - -
Net advances from (to)
group companies - -
Collections of note - -
receivable
Business (acquisitions) - 2,993
dispositions ----------------------
Cash provided by (used for)
investing activities - (5,944)
----------------------
Cash flows from financing activities:
Proceeds from long-term - 10,011
borrowings
Repayment of long-term - (18,123)
borrowings
Net change in short-term - 28,973
borrowings
Dividends paid net of tax - (347)
Purchase and retirement
of ESOP
preferred stock - -
Other - -
----------------------
Cash provided by (used for)
financing activities - 20,514
----------------------
Net increase (decrease) - (22,839)
in cash
Cash at beginning of - 78,688
period ----------------------
Cash at end of period $ - $55,849
======================
</TABLE>
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Sales for the quarter ended December 31, 1997 were $367.0 million, a decrease
of 1.9% from a year earlier. Sales for the nine months were $954.6 million, up
2.3% from the same period last year. Sales for the tobacco division of $286.2
million and $706.8 million for the third quarter and year to date,
respectively, were up 0.7% and 5.6% from the corresponding periods in 1996.
Tobacco sales for the quarter and year to date from Europe, the Far East and
South America were significantly higher than a year earlier. Overall, tobacco
volume was up 7.4% for the quarter and 1.7% year to date. The sales increases
were the result of higher average prices due to improved market conditions, a
change in mix and the partial year effect of recent acquisitions. Nontobacco
sales were down 10.0% for the quarter and 6.2% for the nine months, primarily
as the result of lower volumes of wool sold. These volume declines were partly
offset by improved mix as the wool business continues to stabilize and the
Company continues to focus on the more profitable processing elements of the
business.
Gross profit of $34.6 million and $82.2 million for the quarter and nine
months, respectively, increased 23.9% and 14.5% from the 1996 comparable
periods due primarily to the increase in sales and reduced interest expenses
resulting from the application of $47.0 million of equity proceeds in the first
quarter and the application of the proceeds of a $115.0 million senior notes
offering in the second quarter to reduce short-term borrowings.
Selling, general and administrative expenses were in line with the prior year
for the quarter and nine months, respectively, as the Company continues to
focus on operating efficiencies. Higher personnel-related expenses and travel
costs related to the expansion of business in new markets were offset by
tighter control of other costs and expenses and favorable foreign exchange.
Other interest expense was higher for both the quarter and year to date and
reflects the impact of the $115.0 million issue of long-term debt. Other income
(expense) - net was lower for both the quarter and year to date due to lower
interest income on short-term deposits as the Company continues to focus on
efficient cash management. Gains on sales of property in Australia and Greece
were slightly higher than the prior year gain on sale of marketable securities.
The effective tax rate for the quarter and the nine months was lower than a
year earlier. The income tax charges or credits can vary as a percentage of
pretax income due to differences in tax rates and relief available in areas
where profits are earned or losses are incurred.
Earnings attributed to minority interests were $0.4 million lower for the
quarter due mostly to seasonal business factors. For the nine months, earnings
attributed to minority interests were down $1.1 million because the 1996 period
included the timing effect of carryover sales from the prior year. Equity in
earnings of affiliates was down $0.1 million for the quarter and up slightly
for the nine months due to seasonal factors.
Net income was $8.6 million for the quarter, or $0.67 per share on 12.8 million
average shares outstanding, versus $4.5 million, or $0.45 per share on 9.6
million shares outstanding for the December 1996 quarter adjusted for
subsequent stock dividends. Net income for the nine months was $15.7 million,
or $1.29 per share on 12.2 million average shares outstanding, versus $8.9
million, or $0.89 per share on 9.6 million average shares outstanding. The
increase in shares outstanding was attributable to the Company's 3.0 million
share public offering during the June 1997 quarter.
Liquidity and Capital Resources
Working capital at December 31,1997 was $223.0 million, compared to $66.8
million a year earlier. Most of the increase was due to applying the $47.0
million net proceeds of the 3.0 million share public offering completed in the
June 1997 quarter and $103.1 million of the net proceeds of the senior notes
offering completed on August 1, 1997 to reduce short-term borrowings. The
remaining increase was due to contributions from operating activities that
further reduced short-term borrowings and the current portion of long-term debt.
Capital expenditures of $12.3 million consisted primarily of routine
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (continued)
expenditures in the tobacco and wool divisions, expansion of warehouse
facilities in Greece and Turkey, and new machinery for the French topmaking
facility. The Company continues to closely monitor its inventory levels, which
fluctuate depending on seasonal factors and business conditions. Total tobacco
inventories increased as a result of recent expansion of business in Africa and
South America.
As a result of the recent equity offering, which appreciably broadened the
Company's shareholder base, the Board of Directors has voted to discontinue
issuing quarterly stock dividends. Certain debt agreements to which the Company
and its subsidiaries are parties contain financial covenants which could
restrict the payment of cash dividends. Under its most restrictive covenant, the
Company had approximately $21.5 million of retained earnings available for
distribution as dividends at December 31, 1997. At this time, it is uncertain
when or if the Board will resume the payment of cash dividends.
On August 1, 1997, the Company completed a $115.0 million Rule 144A private
placement of 8-7/8% Senior Notes due 2005. Concurrently, commitments of $200
million were obtained for a three-year Global Bank Facility, which replaced the
U.S. and certain European bank facilities. These fundings, in combination with
the recent equity offering, have largely accomplished the Company's refinancing
plans. The Company used net proceeds of the funding to repay existing
indebtedness outstanding under certain bank credit facilities and other
long-term debt. The Global Bank Facility, in addition to local bank lines of
approximately $265.0 million for tobacco operations in Africa, Europe and Asia
will be used to finance tobacco operations. Separate bank facilities of
approximately $127.0 million exist to finance wool operations. The Senior Notes
have subsequently been registered with the Securities and Exchange Commission
and the exchange offer was completed on December 31, 1997.
Based on the outlook for the tobacco and wool divisions, and the recent
refinancing activity, management anticipates that it will be able to service the
interest and principal on its indebtedness, maintain adequate working capital
and provide for capital expenditures out of operating cash flow for at least the
next year.
Forward-Looking Statements
Statements in this report that are not purely statements of historical fact may
be deemed to be forward-looking. Readers are cautioned that any such
forward-looking statements are based upon management's current knowledge and
assumptions, and actual results could be affected in a material way by many
factors, including ones over which the Company has little or no control, e.g.
unforeseen changes in shipping schedules; the balance between supply and demand;
and market, economic, political and weather conditions. More information
regarding certain of these factors is contained in the Company's other SEC
filings, copies of which are available upon request from the Company. The
Company assumes no obligation to update any of these forward-looking statements.
<PAGE>
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) No reports on Form 8-K were filed by the Registrant during the
quarter for which this report is filed.
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: February 13, 1997 STANDARD COMMERCIAL CORPORATION
(Registrant)
By /s/ Robert E Harrison
--------------------------------------
Robert E Harrison
President, Chief Executive Officer 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 share information; unaudited)
<TABLE>
<CAPTION>
1997 1996* 1997 1996*
---- ---- ---- ----
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income from continuing operations.............................. $ 8,608 $ 4,480 $ 15,740 $ 8,899
Less - ESOP preferred stock dividends net of tax............... - (116) - (347)
--------------------------------------------------
Net income applicable to common stock.......................... $ 8,608 $ 4,364 $ 15,740 $ 8,552
==================================================
Basic average shares outstanding............................... 12,802,375 9,639,525 12,234,431 9,635,469
==================================================
Earnings per common share - net................................ $0.67 $0.45 $1.29 $0.89
==================================================
DILUTED EARNINGS PER SHARE
Income from continuing operations applicable to
common stock................................................. $ 8,608 $ 4,364 $ 15,740 $ 8,552
Add - after-tax interest expense on 7 1/4%
convertible subordinated debentures.................... 825 825 2,475 2,475
--------------------------------------------------
Net income applicable to common stock.......................... $ 9,433 $ 5,189 $ 8,215 $ 11,027
==================================================
Basic average shares outstanding............................... 12,802,375 9,639,5 12,234,431 9,635,469
Increase in shares outstanding assuming
- conversion of 7 1/4% convertible
subordinated debentures at November 13, 1991............. 2,348,536 2,302,302 2,348,536 2,268,697
- conversion of ESOP convertible preferred stock at
--------------------------------------------------
July 1, 1993............................................. - 268,334 - 268,334
--------------------------------------------------
Diluted average shares outstanding............................. 5,150,911 12,210,161 14,582,967 12,172,500
==================================================
Earnings per common share - net................................ $0.62 $0.42 $1.25 $0.91
</TABLE>
*The prior year periods have been adjusted for the effect of subsequent stock
dividends.
<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> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 76,646
<SECURITIES> 722
<RECEIVABLES> 248,661<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 417,509
<CURRENT-ASSETS> 749,863
<PP&E> 113,079<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 924,946
<CURRENT-LIABILITIES> 526,899
<BONDS> 195,752
<COMMON> 3,084
0
0
<OTHER-SE> 143,940
<TOTAL-LIABILITY-AND-EQUITY> 924,946
<SALES> 954,568
<TOTAL-REVENUES> 954,568
<CGS> 872,391
<TOTAL-COSTS> 872,391
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 22,597
<INCOME-TAX> 5,962
<INCOME-CONTINUING> 15,740
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,740
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.25
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS.
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES.
</FN>
</TABLE>
