<PAGE>
STERLING SUGARS, INC.
P. O. BOX 572
Franklin, Louisiana 70538
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Sterling Sugars, Inc. will be held
in the Conference Room, St. Mary Parish Library, 206 Iberia Street, Franklin,
Louisiana, on Thursday, May 21, 1998 at 10:00 a.m. for the following
purposes:
1. Election of directors to serve for one year or until their
successors are elected and qualified.
2. Transaction of such other business as may properly come
before the meeting or any adjournments thereof.
The close of business on April 9, 1998 has been fixed as the record
date for determining stockholders entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
J. Patout Burns, Jr.
Secretary
Franklin, Louisiana
April 24, 1998
YOUR VOTE IS IMPORTANT
Whether or not you expect to attend the meeting, please mark, date,
sign and promptly return the enclosed proxy in the accompanying envelope,
which requires no postage if mailed in the United States. You may, of
course, later revoke your proxy and vote in person.
<PAGE>
STERLING SUGARS, INC.
P. O. BOX 572
Franklin, Louisiana 70538
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Sterling
Sugars, Inc. ("the Company") for use at the Annual Meeting of Stockholders to
be held on May 21, 1998 and at any adjournments thereof. If properly and
timely completed and returned, the proxy will be voted in the manner you
specify thereon. If no manner is specified, the proxy will be voted for
election of the nominees for director hereinafter named.
The proxy may be revoked at any time before it is voted and you may
vote in person if you attend the meeting.
The cost of soliciting proxies will be borne by the Company. In
addition to use of the mails, proxies may be solicited by telephone and
personal contacts.
It is expected that this proxy statement and related materials will
first be mailed to stockholders on or about April 24, 1998.
STOCKHOLDERS' PROPOSALS
In order for proposals by stockholders to be considered for inclusion
in the proxy and proxy statement relating to the 1999 Annual Meeting of
Stockholders, such proposals must be received at the Company's principal
executive office no later than December 31, 1998.
VOTING SECURITIES
Only stockholders of record as of the close of business on April 9,
1998 are entitled to vote at the meeting. At that time, 2,500,000 shares of
the Company's Common Stock (being the Company's only class of authorized
stock) were outstanding. Each share is entitled to one vote.
The following table provides information as of February 28, 1998
concerning each stockholder known by the Company to be the beneficial owner
(as determined by Rule 13d-3 of the Securities and Exchange Commission) of
more than five percent (5%) of its outstanding stock:
2
<PAGE>
Name and address of Shares Percent
Beneficial Owner Beneficially Owned(1) of Class
- -----------------------------------------------------------------------------
M. A. Patout & Son, Ltd. 1,534,733 61.39%
3512 J. Patout Burns Rd.
Jeanerette, La. 70544
Peter V. Guarisco 511,531(2) 20.46%
P. O. Box 2588
Morgan City, La. 70380
Capital Management Consultants, Inc. 204,431(2) 8.18%
P. O. Box 2588
Morgan City, La. 70380
Hellenic, Inc. 143,100(2) 5.72%
P. O. Box 2588
Morgan City, La. 70380
- --------------------------------------------------------------------------
(1) Based on information furnished by beneficial owners. Includes direct
and indirect ownership and, unless otherwise indicated, also includes sole
voting and investment power with respect to reported holdings.
(2) Includes 143,100 shares owned by Hellenic, Inc. and 204,431 shares
owned of record by Capital Management Consultants, Inc. Mr. Guarisco
shares voting and investment powers with respect to such shares. Mr.
Guarisco disclaims beneficial ownership of these shares.
3
<PAGE>
ELECTION OF DIRECTORS
In accordance with the Company's by-laws, seven directors are to be
elected at the Annual Meeting to serve a term of one year from May 21,
1998 or until their successors are elected and qualified. The election of
directors shall be determined by a majority of the votes actually cast, and
the abstention or failure of any stockholder to vote will not affect this
determination. Each shareholder is entitled to one vote per share. Unless
you specify otherwise, proxy holders will vote for election of the
management nominees named below. Should any of the nominees become
unavailable for election, which is not anticipated, proxy holders may, in their
discretion, vote for other nominees recommended by the Board.
The following table lists the nominees for election as director and
shows as of February 28, 1998, the beneficial ownership (as determined in
accordance with Rule 13d-3 of the Securities and Exchange Commission) of
the Company's outstanding common stock by each nominee and by all
directors and executive officers as a group:
______________________________________________________________________________
First Elected Shares Beneficially Percent of
Name Age Director Owned(1) Class
______________________________________________________________________________
Bernard E. Boudreaux, Jr. 60 1996 1,000 *
James Patout Burns, Jr. 58 1994 1,535,233(2) 61.41%
Craig P. Caillier 36 1996 2,210 *
Peter V. Guarisco 70 1986 511,531(3) 20.46%
Victor Guarisco, II(4) 34 1992 18,990 *
Rivers Patout (5) 32 1994 100 *
William S. Patout, III 65 - 100 *
All directors and named
executive officers as a group(6) 2,069,164 82.77%
___________________________________________________________________________
* Less than 1%
(1) Based on information furnished by nominees. Includes direct and indirect
ownership and unless otherwise indicated includes sole voting and investment
power with respect to reported holdings.
(2) Includes shared voting and investment power with respect to 1,534,733
shares owned by M. A. Patout & Son, Ltd.
(3) Mr. Guarisco's reported holdings reflect shared voting and investment
power with respect to 143,100 shares owned by Hellenic, Inc. and 204,431
shares owned by Capital Management Consultants, Inc. Mr. Guarisco disclaims
beneficial ownership of such shares.
(4) Peter V. Guarisco is the father of Victor Guarisco, II.
(5) William S. Patout, III is the father of Rivers Patout.
(6) See "Information Concerning Management - Executive Officers".
4
<PAGE>
Business Experience of Directors
The following paragraphs describe all Company offices held by nominees and
their principal occupations for the last five years.
Bernard E. Boudreaux, Jr. is Chairman of the Board and general counsel of
the Company and District Attorney, Sixteenth Judicial District of Louisiana.
Dr. James Patout Burns, Jr., Secretary of the Company, is Thomas and
Alberta White Professor of Christian Thought and Chair of the Program in
Religious Studies at Washington University, St. Louis, Missouri.
Craig P. Caillier, President and Chief Executive Officer of the Company,
was Assistant General Manager and Secretary/Treasurer of M. A. Patout & Son,
Ltd., Jeanerette, Louisiana.
Peter V. Guarisco is Chairman of the Board and President of Hellenic,
Inc., a privately owned company having diverse business interests, Morgan
City, Louisiana.
Victor Guarisco, II is President of Cottonwood, Inc., a privately owned
real estate management and development company, Morgan City, Louisiana.
Rivers Patout is Vice President for Property Development of the Company
and Assistant General Manager of M. A. Patout & Son, Ltd., Jeanerette,
Louisiana.
William S. Patout, III is President and Chief Executive Officer of M. A.
Patout & Son, Ltd., Jeanerette, Louisiana
INFORMATION CONCERNING MANAGEMENT
Executive Officers
The table below sets forth the beneficial ownership of the named
executive officers.
Name Age Shares Beneficially Owned Percent of Shares
- -----------------------------------------------------------------------------
Craig P. Caillier 36 2,210 .09%
Chief Executive Officer
and Director
- -----------------------------------------------------------------------------
Willard E. Legendre 37 0 0
Vice President
Plant Operations
- ---------------------------------------------------------------------------
Business Experience of Executive Officers
Craig P. Caillier, for five years prior to his association with the
Company, was Assistant General Manager and Secretary/Treasurer of M. A. Patout
& Son, Ltd., Jeanerette, La. Before his election as President and CEO of the
Company, he was Senior Vice President and General Manager of the Company.
Willard E. Legendre, for five years prior to his association with the
Company, was an Assistant Engineer at M. A. Patout & Son, Ltd. Before his
election as Vice President for Plant Operations, he was plant manager of the
Company. Mr. Legendre resigned fromt the Company on January 31, 1998.
5
<PAGE>
Executive Compensation
Mr. Caillier, the Company's President and Chief Executive Officer,
became an executive officer of the Company in fiscal 1994. Mr. Legendre,
Vice President for Plant Operations, became an Executive Officer of the Company
in fiscal 1997. The following table sets forth information concerning Mr.
Caillier's and Mr. Legendre's compensation during the Company's last three
fiscal years.
Annual Compensation
-------------------
Name and Principal Other Annual
Position Year Salary Bonus Compensation(1)
-----------------------------------------------------------------------
Craig P. Caillier 1998 $79,583 $63,474 $ 4,292
President & CEO 1997 73,833 63,219 4,112
1996 71,500 20,000 2,686
Willard E. Legendre 1998 70,100 47,316 3,522
Vice President, Plant 1997 69,267 47,146 3,297
Operations 1996 67,600 10,000 2,328
-----------------------------------------------------------------------
(1) Company contributions to 401(k) savings plan.
As amended in 1986, the Company's Retirement Plan provides benefits at
retirement to full-time salaried and hourly factory employees and to full-time
agricultural employees (other than those hired at age 60 or older) who are at
least 21 years of age and have at least one year of service. Contributions to
the plan, which are funded entirely by the Company, are computed on an
actuarial basis. The plan classifies employees as agricultural and factory
employees. Benefits for factory employees (a classification that includes the
Company's executive officers) are determined by multiplying the employee's
years of service by the sum of (i) .60 percent times Final Average Earnings up
to Covered Compensation and (ii) 1.20 percent times Final Average Earnings in
excess of Covered Compensation. The term "Covered Compensation" means the
average annual earnings used to calculate the participant's social security
benefit. This average covers his entire employment history (including
employment prior to employment by Sterling Sugars, if any), and assumes
continued employment to age 65. It also assumes that, during each year of
employment, the participant always earned the maximum amount subject to social
security withholding (the Taxable Wage Base). Each year, the Plan's actuaries
provide a table that determines the Covered Compensation level for participants
reaching age 65 in each of the succeeding years. The Covered Compensation
level increases over time (generally every year) as the Taxable Wage Base
itself increases. As a result, Covered Compensation is relatively low for
participants nearing the average retirement age of 65 and increases for
younger participants. The actual final determination of a Participant's
Covered Compensation amount is therefore made at the time of termination of
employment or retirement.
Mr. Caillier is 36 years old and has approximately four years of
credited service. Set out below is a table that shows the estimated annual
pension benefits for employees retiring at age 65
with varying years of credited service and final earnings.
6
<PAGE>
PENSION TABLE
-----------Years of Service------------
Final Earnings 10 15 20 25
--------------------------------------------------------
$ 50,000 $ 4,632 $ 6,948 $ 9,264 $ 11,580
75,000 7,632 11,448 15,264 19,080
100,000 11,632 15,948 21,264 26,580
Effective February 1, 1992 the Company established the Sterling Sugars,
Inc. Employee's Savings Plan and Trust for the benefit of all eligible
full-time salaried and hourly employees and full-time salaried agricultural
employees who are at least 21 years old and have completed at least one year
of service with the Company. The Plan is referred to as a 401(k) retirement
plan, a form of a defined contribution plan. Through elective deferrals,
employees may contribute from one to six percent of their annual gross
compensation into the Plan. The Company is obligated to match contributions
to the extent of fifty percent of the first six percent of an employee's
elective deferrals. Any additional Company contributions are discretionary.
The Plan was amended effective February 1, 1994 to change eligibility
requirements and investment election dates and to credit service for a
related employer. Newly hired employees are now eligible to participate on
the first day of the calendar month following completion of age and service
requirements. Investment changes will be made effective April 1 instead of
February 1 and October 1 instead of August 1 of each year. Credited service
was also amended to include service with M. A. Patout & Son, Ltd., a related
employer.
Directors' Compensation
Directors receive an annual retainer of $5,000 and an attendance fee
of $500 per meeting plus reimbursement for travel and related expenses incurred
in attending board and committee meetings.
Compensation Policies of the Board of Directors
The Board of Directors does not have a compensation committee and
executive compensation determinations are made by the entire Board. Mr.
Caillier's compensation is based on his performance and the overall
profitability of the Company, as well as the Board's forecasted
future performance as determined in the best judgement of the Board. Mr.
Caillier's compensation is not directly tied to one specific factor such as
an increase in the price of the Company's stock, return on equity or net
profit and there is no specific formulas used in the calculation
of compensation.
Stock Performance Graph
The following graph presents the cumulative total return on the
Company's common stock for the five year period ended January 31, 1998 compared
to the cumulative total return assuming reinvestment of dividends for all
stocks quoted on the NASDAQ Market Value Index. Because there is no published
industry or line of business index comparable to Sterling, a peer group was
selected based on similar publicly traded companies with market capitalization
of $17.4 million to $17.5 million as of January 31, 1998. This peer group
consists of the following six companies: Fulcrum Technologies, Inc., Income
7
<PAGE>
Opportunity Realty Investment, Northwest Equity Corp., Silicom, Ltd. and
Starbase Corporation. For the previous fiscal year, the peer group selected
was similar traded companies with market capitalization of $16.2 million to
$16.3 million as of January 31, 1997. For fiscal 1998, because of the
increase in market value of stock, it was necessary to change the market
capitalization of the peer group.
COMPARISION OF FIVE YEAR TOTAL RETURN
of Sterling, NASDAQ and Peer Group
Year Sterling NASDAQ Peer Group
------------------------------------------------------
1993 $ 100 $ 100 $ 100
1994 114 126 216
1995 129 119 200
1996 145 166 358
1997 168 219 187
1998 180 258 139
Certain Transactions
On November 15, 1994, the Company entered into a technical service
contract with M. A. Patout & Son, Ltd. ("Patout"). The contract provides that
Patout will provide technical and engineering services to the Company in
return for a fee equal to ten percent of the Company's net income before
income taxes from the manufacture, production and sale of raw sugar and
molasses each year, provided that net income from the foregoing exceeds
$500,000. The agreement expires on January 31, 1999. The agreement also
provides Patout an option to acquire 50,000 shares of treasury stock owned by
the Company on or before December 31, 1998, at a price of $3.25 per share.
Patout exercised its option on April 12, 1995 and acquired 50,000 shares of
treasury stock for $162,500. The technical service fee for the year ended
January 31, 1998 was $39,111.
The Company also entered into a cane swap agreement with Patout whereby
some shippers of sugarcane to Patout deliver their cane to Sterling Sugars,
Inc. ("Sterling") because of their proximity to Sterling's factory. The
agreement was reciprocal for some shippers normally having their cane
processed by Sterling. The net effect of this cane swap agreement was that
Sterling ground an additional 33,275 tons of cane for fiscal 1996. The
reimbursement due Patout at January 31, 1996 for payments made by Patout to
shippers under this agreement was $62,196. For fiscal 1997, the Company
processed an additional 29,662 tons of cane. The reimbursement due Patout at
January 31, 1997 for payments made by Patout to shippers under this agreement
was $172,409. The Company did not enter into a cane swap agreement for the
year ended January 31, 1998.
Mr. Bernard E. Boudreaux, Jr., Chairman of the Board of the Company,
served in fiscal 1998 and will serve in fiscal 1999, as general counsel for
the Company on a retainer basis.
8
<PAGE>
Other Information
Persons who are directors or executive officers of the Company, and
persons who beneficially own more than 10% of the Company's common stock, are
required to file with the Securities and Exchange Commission periodic reports
of changes in their ownership of the Company's stock. Based solely on a
review of the forms furnished to the Company pursuant to the rules of the
Securities and Exchange Commission, such persons complied with the filing
requirements during the last three fiscal years of the Company except M. A.
Patout & Son, Ltd. was late in filing one report covering two transactions
and Mr. Boudreaux was late in filing Form 3.
The Company has no standing nominating or compensation committees or
committees performing similar functions. The Company's Audit and Ethics
Committee is empowered to engage and evaluate the performance of the Company's
public accountants and review year-end and other financial statements when
appropriate. The Committee, which consisted of Messrs. Boudreaux, R. Patout
and V. Guarisco, met once during fiscal 1998.
Three meetings of the Board of Directors were held during the last fiscal
year. All directors attended at least 75% of the meetings of the Board of
Directors with the exception of Mr. P. Guarisco.
ACCOUNTANTS
It is anticipated that LeGlue & Company, will be asked to serve as the
Company's independent public accountants for the fiscal year ending January 31,
1999. A representative of LeGlue & Company is expected to be present at the
annual meeting and to be available to respond to appropriate questions. He
will have the opportunity to make a statement if he desires.
OTHER MATTERS
The matters to be acted upon at the Annual Meeting of Stockholders are
set forth in the accompanying notice. The Board knows of no other business to
come before the meeting, but if other matters requiring a vote are properly
presented to the meeting or any adjournments thereof, proxy holders will vote,
or abstain from voting thereon in accordance with their best judgement.
By Order of the Board of Directors
J. Patout Burns, Jr.
Secretary
9
<PAGE>
STERLING SUGARS, INC. (Solicited by the Board of Directors)
The undersigned hereby appoints J. Patout Burns, Jr., Craig P. Caillier
and Peter V. Guarisco and each of them, proxies with full power of
substitution, to represent and vote all shares of Common Stock of Sterling
Sugars, Inc. which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of said corportation to be held in the Conference Room, St.
Mary Parish Library, 206 Iberia Street, Franklin, Louisiana on Thursday, May
21, 1998 at 10:00 a.m. and at any adjournment thereof (1) as hereinafter
specified upon the election of directors and (2) in their disretion upon such
other business as may properly come before the meeting or any adjournment
thereof.
A VOTE FOR THE FOLLOWING NOMINEES IS RECOMMENDED BY THE BOARD OF DIRECTORS
Election of Directors
For all nominees listed below Withhold authority to vote for all nominees
listed below
(Except as indicated to the contrary below)
Bernard E. Boudreaux, Jr., Dr. J. Patout Burns, Jr., Craig P. Caillier,
Peter V. Guarisco, Victor Guarisco, II, Rivers Patout and William S.
Patout, III
INSTRUCTION:
(To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided below)
___________________________________________________________________________
All as set forth in the Notice and Proxy Statement for the meeting,
receipt of which is acknowledged
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
10
<PAGE>
When properly executed and returned, this proxy will be voted in the manner
specified. If no manner is specified, the shares represented hereby will be
voted for election of the nominees named on the reverse hereof.
DATE____________________________,1998
_____________________________________
SIGNATURE OF HOLDER
NOTE: Please sign as your name appears
hereon. When signed as attorney-in-fact
executor, administrator, trustee or
guardian, please give your full title as
such. If a corporation, please sign in
full corporate name by authorized
officer. If a partnership, please sign
in full partnership name by authorized
person.
PLEASE MARK, DATE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES
11
