SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________________to__________________
COMMISSION FILE NUMBER 0-1287
STERLING SUGARS, INC.
____________________________________________________________________
Exact name of registrant as specified in its charter
Louisiana 72-0327950
_______________________________ ______________________________
State or other jurisdiction of IRS employer identification
incorporation or organization number
P. O. Box 572, Franklin, La. 70538
____________________________________________________________________
Address of principal executive offices Zip Code
Registrant's telephone number including area code 337 828 0620
Not Applicable
____________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether 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 (or such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirments for the past 90 days.
YES X NO
There were 2,500,000 common shares outstanding at November 30, 2000.
Total number of pages 12
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STERLING SUGARS, INC.
I N D E X
PAGE
NUMBER
PART I: FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Condensed balance sheets October 31, 2000
(unaudited) and July 31, 2000 I-1
Statements of earnings and retained earnings
Three months ended October 31, 2000
(unaudited) and 1999 (unaudited) I-2
Statements of cash flows
Three months ended October 31, 2000
(unaudited) and 1999 (unaudited) I-3
Notes to condensed financial statements
Three months ended October 31, 2000 and 1999 I-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS I-6
PART II. OTHER INFORMATION:
ITEM 5. OTHER INFORMATION II-1
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K II-1
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STERLING SUGARS, INC.
CONDENSED BALANCE SHEETS
October 31, July 31,
2000 2000
UNAUDITED NOTE
ASSETS: ---------------------------
CURRENT ASSETS:
Cash and short-term investments $ 65,593 $ 11,500
Accounts receivable 4,728,745 1,305,409
Notes receivable 60,016 60,016
Inventories 4,964,421 729,213
Deferred income taxes 365,000 365,000
Other current assets 307,868 517,126
------------- -------------
TOTAL CURRENT ASSETS $ 10,491,643 $ 2,988,264
------------- -------------
Property, plant and equipment - net $ 24,917,526 $ 24,953,785
------------- -------------
Expenditures for future crops $ 1,138,963 $ 1,138,963
------------- -------------
Notes receivable - net of allowance $ 480,025 $ 488,162
------------- -------------
Other assets $ 41,206 $ 41,206
------------- -------------
$ 37,069,363 $ 29,610,380
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Notes Payable $ 4,332,000 $ 679,531
Accounts payable and accrued expenses 2,168,592 1,390,249
Due cane growers 3,645,456 648,883
Current portion long-term debt 857,990 932,680
------------- -------------
TOTAL CURRENT LIABILITIES $ 11,004,038 $ 3,651,343
------------- -------------
Long-term debt $ 6,976,388 $ 7,013,888
------------- -------------
Deferred income taxes $ 1,745,000 $ 1,745,000
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock $ 2,500,000 $ 2,500,000
Additional paid in capital (Note C) 40,455 40,455
Retained earnings 14,803,482 14,659,694
------------- -------------
$ 17,343,937 $ 17,200,149
------------- -------------
$ 37,069,363 $ 29,610,380
============= =============
NOTE: The balance sheet at July 31, 2000 has been taken from the
audited financial statements at that date and condensed.
See notes to condensed financial statements
I-1 -3-
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STERLING SUGARS, INC.
STATEMENT OF EARNINGS AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED OCTOBER 31
-----------------------------
2000 1999
------ ------
(Unaudited) (Unaudited)
REVENUES:
Sugar and molasses sales $10,675,862 $ 9,179,725
Interest earned 1,765 62
Mineral leases and royalties 190,134 27,551
Other 557,096 510,983
------------ ------------
$11,424,857 $ 9,718,321
------------ ------------
COSTS AND EXPENSES:
Cost of products sold $10,701,361 $ 8,822,884
General and administrative 255,879 226,017
Interest expense 235,701 268,931
------------ ------------
$11,192,941 $ 9,317,832
------------ ------------
NET EARNINGS (LOSS) BEFORE INCOME TAXES $ 231,916 $ 400,489
INCOME TAX EXPENSE (CREDIT) 88,128 152,186
------------ ------------
NET EARNINGS (LOSS) $ 143,788 $ 248,303
RETAINED EARNINGS AT BEGINNING OF PERIOD 14,659,694 13,743,691
------------ ------------
RETAINED EARNINGS AT END OF PERIOD $14,803,482 $13,991,994
============ ============
NET EARNINGS (LOSS) PER SHARE $ .06 $ .10
============ ============
See notes to condensed financial statements
I-2 -4-
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STERLING SUGARS, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED OCTOBER 31
-----------------------------
2000 1999
------ ------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net earnings (Loss) $ 143,788 $ 248,303
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation 560,223 571,017
Changes in operating assets and liabilities:
Increase in accounts receivable (3,423,336) (6,756,623)
Decrease in notes receivable - 2,783
Increase in inventories (4,235,209) (5,848,220)
Increase (decrease) in other current assets (209,260) (209,209)
Increase in accounts payable, accrued expenses
and due cane growers 3,774,736 1,600,572
Other items - net 82,924 215,195
------------ ------------
Net cash provided by operating activities $(3,306,134)$(10,176,182)
------------ ------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment $( 523,965) $( 291,943)
----------- ------------
Net cash used in investing activities $( 523,965) $( 291,943)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from short-term debt $ 9,613,000 $12,028,009
Payments on short-term debt (5,691,308) (1,942,000)
Proceeds from long-term debt - 160,008
Payments on long-term debt ( 37,500) ( 72,232)
------------ ------------
Net cash provided by (used in) financing
activities $ 3,884,192 $10,173,785
------------ ------------
Increase (decrease) in cash and temporary
investments $ 54,093 $ (294,340)
Cash and temporary investments at the
beginning of the period 11,500 458,050
------------ ------------
Cash and temporary investments at the
end of the period $ 65,593 $ 163,710
============ ============
Continued
See notes to condensed financial statements
I-3 -5-
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STERLING SUGARS, INC.
STATEMENT OF CASH FLOWS
(CONTINUED)
THREE MONTHS ENDED OCTOBER 31
------------------------------
2000 1999
-------- ---------
(Unaudited) (Unaudited)
Supplemental information:
Interest paid $ 167,282 $ 169,233
=========== ===========
Income taxes paid $ 119,120 $ 20,000
=========== ===========
I-4 -6-
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STERLING SUGARS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 2000 AND 1999
(UNAUDITED)
A. CONDENSED FINANCIAL STATEMENTS:
The condensed balance sheet as of October 31, 2000, the
statements of earnings and retained earnings for the three
months ending October 31, 2000 and 1999, and the
condensed statements of cash flows for the three month periods
then ended have been prepared by the Company, without audit. In
the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and
cash flows at October 31, 2000 and for all periods presented
have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these condensed financial
statements be read in conjunction with the July 31, 2000 annual
report to stockholders. The results of operations for the period
ending October 31, 2000 are not necessarily indicative of the
operating results for the full year.
I-5 -7-
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STERLING SUGARS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward -Looking Information
----------------------------
This Form 10-Q contains certain statements that may be deemed
"forward-looking statements." All statements, other than historical
statements, in this Form 10-Q that address activities, events or
developments that the Company intends, expects, projects, believes or
anticipates will or may occur in the future, are forward-looking statements.
Such statements are based on assumptions and analysis made by management of
the Company in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors
it believes are appropriate. The forward-looking statements in the Form
10-Q are also subject to a number of material risks and uncertainties,
including weather conditions in south Louisiana during the sugarcane
growing season, the success of sugarcane pest and disease abatement
procedures, the quality and quantity of the sugarcane crops, mechanical
failures at the Company's sugar mill, and prices for sugar and molasses
produced by the Company. Such forward-looking statements are not guarantees
of future performance and actual results. Development and business
decisions may differ from those envisioned by such forward-looking
statements.
Results of Operations:
----------------------
General Information:
--------------------
The Company began its harvesting and grinding season on September
20, 2000 and had ground 411,772 tons of sugarcane by October 31, 2000.
This tonnage yielded 40,536 tons of raw sugar or 196.9 pounds of raw
sugar per ton of sugarcane. Last season, the Company had ground
378,858 tons of sugarcane which produced 38,261 tons of raw sugar or
202.0 pounds of raw sugar per ton of sugarcane. The South Louisiana
growing area suffered a drought this season which has reduced the crop
in some areas of the state although rains late in the growing season
helped To offset that reduction. The Company expects to grind
approximately 5 to 10 percent less than the record crop ground last year
of 1,139,296 tons. The area experienced unusually good growing weather
last year which resulted in the record crop and a slighly higher yield
of sugar.
The raw sugar price continues to be below that received in prior
years. The basis price paid to farmers for the 1999, 1998
and 1997 crops was $18.65, $20.80 and $21.02, respectively. The price
for the current year (2000 crop) is expected to be slightly below that
paid for the 1999 crop. The lower price reflects a basic oversupply of
sugar in the United States.
I-6 -8-
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Sugar and Molasses Sales:
-------------------------
Sugar and molasses sales for the three months ended October 31,
2000 and 1999 were as follows:
2000 1999
------ ------
Raw sugar sales $10,214,045 $ 9,031,764
Molasses sales 461,817 147,961
------------ -------------
$10,675,862 $ 9,179,725
============ =============
As of October 31, 2000, the Company had shipped 28,711 tons of
raw sugar compared to 22,186 tons shipped as of October 31, 1999.
Shipments of raw sugar are dictated by the refiners based on their
needs and production schedules and the higher shipments in 2000
as compared to the same quarter of 1999 are not necessarily indicative
of higher sales for the entire year.
Molasses production was up slightly at 6.16 gallons per ton of
sugarcane ground compared to 5.72 gallons per ton for the same period
last year. The price of molasses has rebounded from the low of $35
per ton 1999 to $55 per ton in 2000. In 1999, molasses sales
were less than two percent of total sales.
Interest Earned:
----------------
Interest earned was $1,765 for the three months ending October 31,
2000 compared to $62 for the same period last year.
Mineral Leases and Royalties:
-----------------------------
Mineral leases and royalties were $190,134 for the three months
ended October 31, 2000 compared to $27,551 for the three months ended
October 31, 1999. There were no new oil and gas leases granted for
the three month period ended October 31, 2000. In May, 2000, a well was
completed on Company property and is producing approximately 265
barrels of oil per day and 18,500 MCF of gas. The higher royalties
reflect the income received from this well. Proceeds from this well
are being used to pay down the Company's long-term debt.
Other Revenues:
---------------
Other revenues consist mainly of miscellaneous income and cane
land rentals. Cane land rentals for the three months ended October 31,
2000 were $437,428 compared to $478,823 for the same period in the
prior year. The decrease in cane rental income of $41,395 is primarily
because of the lower interim prices paid to farmers this year compared
to last year and to a lesser extent the lower yield of sugar.
I-7 -9-
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Cost of Products Sold:
----------------------
Cost of products sold increased to $10,701,361 for the three month
period ending October 31, 2000 from $8,822,884 for the three months
ended October 31, 1999. Costs relating to sales are charged to cost of
products sold. Accordingly, costs have increased relative to the higher
sales for the current period.
General and Administrative Expenses:
------------------------------------
General and administrative expenses were $255,817 for the current
period and $226,017 for the same period last year. The increase
reflects higher employee costs for pension, hospitalization and
miscellaneous expenses.
Interest Expense:
-----------------
Interest expense decreased slightly to $235,701 for the three
months ended October 31, 2000 from $268,931 for the three months ended
October 31, 1999. Short-term debt outstanding was $4,332,000 on
October 31, 2000 and $10,086,009 on October 31, 1999. The interest rate
for the two years was approximately the same.
Income Taxes:
-------------
The income tax expense (credit) for the three month periods
ending October 31, 2000 and 1999 were recorded at the statutory rate of
38 percent which reflects the 34 percent federal corporate rate plus 4
percent state income taxes.
Liquidity and Capital Resources:
--------------------------------
At October 31, 2000, the Company had negative working capital of
$512,395 compared to negative working capital of $623,814 at October
31, 1999. Working capital ratios were .95:1 and .96:1 respectively.
Typically, the Company begins short-term borrowing during the idle
season to finance company operations and capital additions. At July 31,
2000, short-term debt outstanding was $679,531 and at October 31, 2000
short-term debt had increased to $4,332,000. The Company has a
$12,000,000 line of credit with a bank.
I-8 -10-
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PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits - None
(b) Reports on Form 8K
No reports on Form 8-K have been filed for the period.
II-1 -11-
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
STERLING SUGARS, INC.
---------------------
(REGISTRANT)
DATE December 13, 2000 By /s/ Craig P. Caillier
--------------------------- ------------------------
CRAIG P. CAILLIER
PRESIDENT AND CEO
DATE December 13, 2000 By /s/ Stanley H. Pipes
---------------------------- -------------------------
STANLEY H. PIPES
VICE PRESIDENT AND TREASURER
II-2 -12-
