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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
Form 10K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended July 31, 2001
[ ] 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 number)
incorporation or organization)
P. O. Box 572, Franklin, La. 70538
---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (337) 828 0620
-------------------------
Securities registered pursuant to Section 12d of the Act:
Title of each class Name of each exchange on which registered
None None
-------------------------- -----------------------------------------
Securities registered pursuant to Section 12(G) of the Act:
Common Stock $1 par value
---------------------------
(Title of Class)
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 (or for such shorter period that the
registrant was required to file such reports), and(2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. /__/
The aggregate market value of the registrant's voting stock held on September
30, 2001 by non-affiliates of the registrant was $2,490,000. Such value has
been computed on the basis of the average bid and asked prices of the stock
and by excluding, from the 2,500,000 shares outstanding on that date, all
stock beneficially owned by officers and directors of the registrant and by
beneficial owners of more than five percent of its stock, even though all
such persons may not be affiliates as defined in SEC rule 405.
Page 1 of 32 pages
The number of shares of common stock outstanding as of October 19, 2001 was
2,500,000 shares.
Documents incorporated by reference: Portions of Registrant's Proxy Statement
dated November 16, 2001 are incorporated by reference into Part III.
An exhibit index is located on page 31.
FORM 10-K
PART I
ITEM 1-BUSINESS
Sterling Sugars, Inc. is a grower and processor of sugarcane from which
it produces raw sugar and blackstrap molasses, a by-product. Cane residue
(bagasse), also a by-product, is used as the primary fuel for the Company's
steam boilers. The business is highly seasonal in that the processing
season usually extends from mid/late September to late December or early
January. For the fiscal year ended July 31, 2001 the Company processed
1,063,646 tons of sugarcane and produced 107,177 tons of sugar. The season
began on September 20, 2000 and ended on December 30, 2000. For the fiscal
year ended July 31, 2000, the season began on September 20, 1999 and
continued through January 10, 2000. For fiscal 2000, the factory processed
1,139,296 tons of sugarcane and produced 121,398 tons of sugar. During the
previous year (fiscal 1999), the Company processed a total of 1,031,144
tons of cane and 99,173 tons of sugar.
Historically, the Company has had no difficulty in selling, at
competitive prices, all of its raw sugar production to a few major sugar
refiners and a candy manufacturer and all of its molasses production to a
molasses distributor under sales contracts. The Company expects these
marketing avenues to be open in the future. The United States is a net
importer of sugar. This allows the U. S. Department of Agriculture to
regulate the price of raw sugar in the United States by limiting or
expanding imports. The Federal Agriculture Improvement and Reform Act of
1996 (FAIR) provides regulations allowing raw sugar manufacturers, such as
the Company, to place sugar under loan at the rate of 18 cents per pound if
the sugar price drops below this level. The Company then has the option of
forfeiting the sugar to the government and retaining the proceeds of the
loan or selling the sugar if the price subsequently exceeds the loan rate.
A loss of a major refiner would probably have a negative impact on the
Company's bottom line but any such impact would be cushioned by FAIR.
See also the first paragraph on the next page for a further explanation of
FAIR.
The raw sugar factory operated by the Company is situated on sixty-
five acres of land outside the city of Franklin, Louisiana on Bayou Teche.
The factory is one of the largest and most modern in the state with a
grinding capacity of 11,000 tons of sugarcane per day.
Sugarcane for processing is supplied to the factory from Company
lands and by independent farmers in St. Mary, Iberia and surrounding
parishes. See Item 2, "Properties" for further information concerning
properties owned and leased by the Company.
I-1 -2-
On April 4, 1996 President Clinton signed the new Federal
Agricultural Improvement and Reform Act (FAIR) otherwise known as the
Freedom to Farm Bill. This seven year farm bill, starting with the 1996
crop, is more risky to producers and includes an 18 cent loan rate with
loans not to exceed nine months. The no cost provision to the Federal
Treasury is retained and marketing allotments have been suspended through
the year 2002. Loans become non-recourse if the sugar import quota rises
above 1.5 million short tons. Also, a one cent per pound penalty assessment
is made on sugar pledged as collateral and forfeited to the government for
non-recourse loans. The program requires that a stock-to-use ratio be
maintained of no less than 15.5%. Sugar prices continue to approximate
last year's levels.
The Company does not engage in research activities itself, but
numerous experiments and research activities are conducted for the benefit
of the sugar industry as a whole by the American Sugar Cane League,
Louisiana State University and the United States Department of Agriculuture
Experiment Station in Houma, Louisiana. The Company supports these agencies
by providing land for some of the research and experimentation. The
agencies have released several improved varieties of sugarcane in recent
years which have proved beneficial to the farmers.
Company employment for the year ended July 31, 2001 was as follows:
Factory
---------------
Year round employees 85
Seasonal and temporary employees 90
--------
175
========
Further information respecting the Company's business is given under
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
I-2 -3-
ITEM 2 -PROPERTIES
Land owned by the Company by parishes and suitability of land for
cultivation is as follows:
LaFourche St. Mary Iberia St. Landry Total
-------------------------------------------------------
Cultivable 571 9,544 1,804 - 11,919
Non-cultivable 139 5,738 1,302 121 7,300
Plant site 65 65
--------- -------- -------- ------ --------
710 15,347 3,106 121 19,284
========= ======== ======== ====== ========
The Company no longer has a farming division as all owned cultivable
land has been leased to independent farmers. Approximately 9,188 cultivable
acres in St. Mary Parish, 1,560 cultivable acres in Iberia Parish and 571
cultivable acres in Lafourche Parish are leased to tenants for the growing
of sugarcane. Four of the leases in effect, covering approximately 2,593
cultivable acres expired at the end of the 1999 crop. These leases
were renewed in fiscal 2000 under basically the same terms and conditions.
The Company, in June, 1998, purchased approximately 571 cultivable and
139 non-cultivable acres of land in LaFourche Parish. The Company entered
into lease agreements with two independent farmers in LaFourche Parish. The
lease agreements contain five year terms with an option to renew for an
additional five years. The orginal five year term expires on December 31,
2002.
On January 13, 1999, the Company sold 1,795.31 acres of unimproved land
to the U. S. Corps of Engineers under threat of expropriation. In order to
minimize the tax consequences of the sale, the Company purchased 414.07
acres of like-kind property in Iberia Parish which is leased to an
independent farmer for the production of sugarcane.
In addition to Company owned land, about 789 acres in St. Mary
Parish are leased to the Company for growing sugarcane. The land currently
leased by the Company is subleased to independent growers. Past experience
indicates that small independent growers do a better job of farming than
can be done by a very large agricultural operation. Arrangements have been
made for the Company to process the sugarcane grown from the subleased
property. Over the last three years the Company has made attempts to have
farmers lease land directly from landlords in an effort to minimize the
Company's liability exposures.
The Company's plant site, consisting of a factory compound and main
office, is located on Bayou Teche just outside the city of Franklin,
Louisiana. The factory compound is comprised of the raw sugar mill,
warehouses, shipping and receiving facilities, truck and tractor repair
garage and large areas for the storage of sugarcane.
I-3 -4-
Of the 19,284 acres of land owned by the Company, approximately 1,356
acres are being held by production, primarily from the LGS Sterling No. 1
well and by the new well Zenor A-16 both located in St. Mary Parish.
The Sterling No. 1 well was completed by the Company's lessee, LGS
Exploration, Inc. in December, 1984 and the Zenor A16 well was completed
on May 3, 2000. During September, 1991 Sterling No. 1 experienced
production problems and in January 1992 production was restored but at
significantly reduced rates. On July 31, 1992 the Company entered into a
unitization agreement for the Sterling No. 1 well whereby several individual
units existing at the 6,800' sand Charenton Field would operate as one unit.
As part of the agreement the Company maintained a twenty-five percent
interest in the 34.5 acre unit. The Company also has a twenty-five percent
interest in the new Zenor A-16 466 acre unit.
The Company currently has no oil and gas leases in effect. Leases
are granted solely for the purpose of exploring for, developing and
producing oil, gas and other liquid and hydrocarbon minerals of like nature,
and engaging in any activities in reasonable connection with such
operations. Lease terms are generally three years with lease payments due
annually unless drilling commences during the year. The Company's
activities with respect to oil and gas are limited to the granting of
leases and the collection of bonuses, delay rentals and landowner royalties
thereunder.
See also Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for further information on mineral
operations on Company lands.
ITEM 3 - LEGAL PROCEEDINGS
The Registrant is not a party to, nor are any of its properties subject
to any material pending legal proceedings. No material legal proceedings
are pending or known to be comtemplated by governmental authorities against
the Registrant.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 2001.
I-4 -5-
PART II
ITEM 5 - MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of October 5, 2001 there were approximately 500 holders of record
of the Company's stock which is traded in the over-the-counter market. The
Company acts as its own stock transfer agent and registrar. The Company's
mailing address is P. O. Box 572, Franklin, Louisiana 70538 and its
physical address is 611 Irish Bend Road, Franklin, Lousisana 70538.
The following table shows the range of high and low bid quotations for
the Company's stock for each quarterly period during the last two years, as
quoted by the National Quotation Bureau, Inc. Such quotations reflect inter-
dealer prices, without retail mark-up, mark-down or commissions, and may not
necessarily reflect actual transactions. No dividends were declared by the
Company during the two year period.
Range of Prices
------------------------
Fiscal 2001 High Low
------------- ------ ------
First Quarter $ 6.67 $ 5.75
Second Quarter 6.57 5.81
Third Quarter 6.50 5.84
Fourth Quarter 6.50 5.75
Fiscal 2000
-------------
First Quarter $ 6.75 $ 6.00
Second Quarter 6.75 6.00
Third Quarter 6.01 5.875
Fourth Quarter 6.25 5.50
ITEM 6 - SELECTED FINANCIAL DATA
Year ended July 31
-------------------------------------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ------------ -----------
Revenues $44,466,904 $49,958,679 $45,125,532 $45,202,640 $37,612,326
Net Earnings
(Loss) $ 364,333 $ 916,003 $ 604,964 $ 1,957,197 $ 640,577
Net Earnings
(Loss per
Share) $ .15 $ .37 $ .24 $ .78 $ .26
Cash Dividends
Paid per
Share $ - $ - $ - $ - $ -
II-1 -6-
AT YEAR END:
Total assets $28,805,114 $29,610,380 $29,411,857 $28,842,188 $26,357,728
Long-term
Debt $ 1,927,321 $ 7,013,888 $ 7,883,984 $ 8,777,263 $ 9,291,174
Working
Capital $(4,830,602)$( 544,021)$(1,035,744) $ (411,958) $ (264,444)
Stockholders'
Equity $17,564,482 $17,200,149 $16,284,146 $15,679,182 $13,757,729
ITEM 7-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward -Looking Information
----------------------------
This Form 10-K contains certain statements that may be deemed
"forward-looking statements." All statements, other than historical
statements, in this Form 10-K 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-K 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
---------------------
Net earnings for the last three fiscal years ending July 31, 2001, 2000,
and 1999 (2001, 2000, and 1999, respectively) were $364,333, $916,003 and
$604,964 respectively. Cane ground for 2001 was 1,063,646, for 2000 was
1,139,296 tons, and for 1999 was 1,031,144 tons. Cane processed was down
from the high in 2000 mainly because of a drought experienced during the
growing season in 2001. The lower tonnage processed coupled with a lower
sugar yield and slightly lower prices resulted in a reduction in net earnings
of $551,670 compared to the previous year. Sugar yield was 202 pounds per
ton of cane for 2001, 213.1 pounds for 2000 and 192 pounds for 1999.
The Company received an average of 19.24 cents per pound for raw sugar in
2001, 19.38 cents per pound for raw sugar in 2000, and 21.34 cents in 1999.
II-2 -7-
The Company continued its record setting grinding rates and tonnage for
the sixth consecutive year surpassing the one million ton mark for the first
time in 1999. Average daily grinding rates were 10,568, 10,162 and 10,172
tons of cane per day for 2001, 2000, and 1999, respectively.
Income from mineral leases and royalties was $977,679, $267,423 and
$116,176 for 2001, 2000 and 1999, respectively. The higher amount for 2001
includes oil and gas royalties of $933,960 from a new well on Company
property in St. Mary Parish. Well production continues high. However,
the price received for natural gas has dropped from a high of $10.82 per
mcf in February, 2001 to $3.28 in July, 2001. During those months the
price of oil remained fairly steady with a high of $31.03 in February,
2001 dropping to $27.48 per barrel in July, 2001. At the lower prices, the
Company received royalties of $31,666 in July, 2001 compared to $79,268
received in February, 2001.
The Company recognized gains on the disposition of property and
equipment of $2,600 in 2001, $35,638 in 2000 and $369,470 in 1999. The
gain in 2000 was for the sale of farm equipment and for 1999 was primarily
for the sale of unimproved land to the Corps of Engineers which resulted in
a gain of $299,795. The remainder of the gain in 1999 was for the sale of
farm equipment.
Other revenues consist principally of miscellaneous income items and
cane land rental income. Other revenues were $1,564,481 for 2001, $1,763,419
for 2000 and $1,440,493 for 1999. These amounts included rental income
(substantially all from cane land) of $1,349,073, $1,528,422 and $1,290,752
for 2001, 2000 and 1999, respectively. The decrease in cane land rentals in
2001 over 2000 results from the lower sugar yield for 2001 and to a lesser
extent the lower price received for raw sugar.
Costs of products sold for 2001, 2000, and 1999 were $41,878,444,
$45,958,210 and $42,007,037 respectively. Charges relating to the sale
and manufacture of raw sugar and blackstrap molasses are charged to this
category of accounts. The higher cost relative to sales in 2001 is a
direct result of the lower yield of sugar. It costs approximately the
same to process sugarcane with a yield of 202 pounds as it does for a
yield of 213 pounds.
General and administrative expenses were $1,026,367 for 2001,
$1,164,426 for 2000 and $923,351 for 1999. The $138,059 decrease from 2000
to 2001 was principally due to decreases in bonuses granted, hospitalization
costs and other smaller decreases in miscellaneous accounts in the general
and administrative category.
II-3 -8-
Interest and loan expenses were $986,525 in 2001, $1,344,292 in 2000
and $1,162,980 in 1999. With the lower tonnage ground, the Company's need
for short-term funds decreased as evidenced by the average aggregate short-
term borrowings shown in Footnote 3 to the financial statements. These
amounts were $4,734,800 for 2001, $8,393,220 for 2000 and $5,157,729 for
1999. The weighted average interest rate for those years was 7.35%, 7.24%,
and 7.11%, respectively. For the current crop, which started September 18,
2001, the Company continued the reduced weekly advances to farmers which
began in 2000 because of lower sugar prices.
The Company recorded income tax expense of $211,235 for 2001, $575,748
for 2000 and $427,200 for 1999. Footnote 5 to the financial statements
explains in detail the differences in actual and statutory tax rates,
deferred taxes and carryforwards.
Liquidity and Capital Resources
-------------------------------
The current ratio at July 31, 2001 was .36 to 1 compared to .82
to 1 for the previous year. The calculation of the current ratio includes
$3,363,888 in the Current Portion of Long-Term Debt which is due in January,
2002. In anticipation of this payment, the Company has been using the
proceeds from the new oil well to pay down its' current long-term debt. The
Company believes that short-term or long-term funds will be available to
payoff the note due in January, 2002. Management does not anticipate any
long term adverse affects as a result of refinancing or paying the note
due in January, 2002. The Company continues to reinvest earnings toward the
moderization of the factory believing this to be in it's best long term
interest.
Because of below normal sugar prices, the Company decreased advance payments
to farmers last year and will continue the lower advances this year. This
reduces the short-term borrowings during the processing season. The Company
currently has a line of credit with a bank for $12,000,000.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
II-4 -9-
To the Stockholders and Board of Directors
Sterling Sugars, Inc.
Franklin, Louisiana
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of Sterling Sugars,
Inc. as of July 31, 2001 and 2000, and the related statements of
income and retained earnings and cash flows for each of the three
years in the period ended July 31, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all
material respects, the financial position of Sterling Sugars, Inc. as of
July 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended July 31, 2001, in
conformity with accounting principles generally accepted in the United
States of America.
/s/ Broussard, Poche', Lewis & Breaux, L.L.P.
Lafayette, Louisiana
October 5, 2001
II-5 -10-
STERLING SUGARS, INC.
BALANCE SHEETS
JULY 31, 2001 AND 2000
ASSETS
CURRENT ASSETS:
2001 2000
------------ ------------
Cash $ 33,949 $ 11,500
Temporary cash investments - -
------------ ------------
Total cash and temporary cash investments 33,949 11,500
Accounts receivable, principally sugar and
molasses sales, no allowance for doubtful
accounts considered necessary 989,413 1,305,409
Notes receivable, no allowance for doubtful
accounts considered necessary 60,016 60,016
Operating supplies - at cost 760,647 729,213
Deferred income taxes 357,260 365,000
Prepaid expenses and other assets 471,424 517,126
------------ ------------
TOTAL CURRENT ASSETS 2,672,709 2,988,264
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 8,133,008 8,115,135
Buildings 3,897,101 3,322,617
Machinery and equipment 43,099,638 41,892,093
------------ ------------
55,129,747 53,329,845
Less accumulated depreciation 30,607,135 28,376,060
------------ ------------
24,522,612 24,953,785
------------ ------------
INVESTMENTS AND OTHER ASSETS:
Cash value of officers' life insurance 59,959 41,206
Expenditures for future crops 1,138,963 1,138,963
Notes receivable, no allowance for
doubtful accounts considered necessary 410,871 488,162
------------ ------------
Total investments and other assets 1,609,793 1,668,331
------------ ------------
$28,805,114 $29,610,380
============ ============
See notes to financial statements
II-6 -11-
STERLING SUGARS, INC.
BALANCE SHEETS
JULY 31, 2001 AND 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
2001 2000
-------------- -------------
CURRENT LIABILITIES:
Notes payable $ 2,446,615 $ 679,531
Accounts payable and accrued expenses 965,476 1,390,249
Due to cane growers - 648,883
Current portion of long-term debt
and capital leases 4,091,220 932,680
-------------- --------------
TOTAL CURRENT LIABILITIES 7,503,311 3,651,343
-------------- --------------
LONG-TERM DEBT AND CAPITAL LEASE, less portion
due within one year included in current
liabilities 1,927,321 7,013,888
-------------- --------------
DEFERRED INCOME TAXES 1,810,000 1,745,000
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Note 9) - -
-------------- --------------
STOCKHOLDERS' EQUITY:
Common stock, par value $1 per share:
Authorized and issued 2,500,000 shares 2,500,000 2,500,000
Additional paid-in capital 40,455 40,455
Retained earnings 15,024,027 14,659,694
------------ --------------
17,564,482 17,200,149
------------ --------------
$28,805,114 $29,610,380
============ ==============
See notes to financial statements
II-7 -12-
STERLING SUGARS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED JULY 31,
----------------------------------
2001 2000 1999
---------- ----------- -----------
REVENUES:
Sugar and molasses sales $41,911,155 $47,852,707 $43,186,396
Interest earned 10,989 39,492 12,997
Mineral leases and royalties 977,679 267,423 116,176
Gain (loss) on disposition of property
and equipment 2,600 35,638 369,470
Other 1,564,481 1,763,419 1,440,493
----------- ----------- -----------
44,466,904 49,958,679 45,125,532
----------- ----------- -----------
COST AND EXPENSES:
Cost of products sold 41,878,444 45,958,210 42,007,037
General and administrative 1,026,367 1,164,426 923,351
Interest and loan expenses 986,525 1,344,292 1,162,980
----------- ----------- -----------
43,891,336 48,466,928 44,093,368
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 575,568 1,491,751 1,032,164
INCOME TAXES 211,235 575,748 427,200
----------- ----------- -----------
NET INCOME 364,333 916,003 604,964
RETAINED EARNINGS AT BEGINNING OF YEAR 14,659,694 13,743,691 13,138,727
----------- ----------- -----------
RETAINED EARNINGS AT END OF YEAR $15,024,027 $14,659,694 $13,743,691
=========== =========== ===========
WEIGHTED AVERAGE EARNINGS PER
COMMON SHARE:
Net income $.15 $.37 $.24
=========== ========== ===========
CASH DIVIDENDS PAID $ 0 $ 0 $ 0
=========== =========== ===========
See notes to financial statements
II-8 -13-
STERLING SUGARS, INC.
STATEMENTS OF CASH FLOWS
Years Ended July 31,
--------------------------------------
2001 2000 1999
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 364,333 916,003 $ 604,964
Adjustments to reconcile net income
to net cash provided by (used
in) operating activities:
Depreciation 2,251,299 2,316,163 2,311,398
Deferred income taxes 57,260 380,800 358,300
(Gain) loss on dispositions of property
and equipment ( 2,600) ( 35,638) (369,470)
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable 315,996 (719,855) (209,246)
(Increase) decrease in inventories (31,434) ( 89,317) 15,105
(Increase) decrease in prepaid expenses 45,702 271,917 13,781
Increase (decrease) in accounts payable
and accrued expenses and due to cane
growers (1,073,656) (839,179) 1,742,611
Decrease in expenditures future crops 399,791
Other items - net (202,576) 302,163 175,525
----------- ------------ -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,724,324 2,503,057 5,042,759
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable 10,980 26,868 (77,586)
Collection on notes receivable 88,271 61,021 62,840
Purchases of property, plant and
equipment (1,912,005) (2,511,965) (3,052,896)
Proceeds from dispositions of
property and equipment 2,600 - 299,795
------------ ----------- -----------
NET CASH (USED IN)
INVESTING ACTIVITIES (1,810,154) (2,424,076) (2,767,847)
------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term notes
payable and long-term debt 3,999,039 829,531 117,685
Payments on short-term notes
payable and long-term debt (3,890,760) (1,355,062) (2,098,699)
------------ ------------ -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 108,279 ( 525,531) (1,981,014)
------------ ------------ -----------
INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS 22,449 (446,550) 293,898
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF YEAR 11,500 458,050 164,152
----------- ----------- -----------
(Continued)
II-9 -14-
STERLING SUGARS, INC.
STATEMENTS OF CASH FLOWS
Years Ended July 31,
------------------------------------
2001 2000 1999
------------ ----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF YEAR $ 33,949 $ 11,500 $ 458,050
============ =========== ===========
SUPPLEMENTAL INFORMATION REGARDING
CASH FLOWS:
INTEREST PAID $ 972,274 $1,328,400 $ 1,153,036
============ ============ ==========
INCOME TAXES PAID $ 177,043 $ 214,823 $ 65,000
============ ============ ===========
See notes to financial statements
II-10 -15-
STERLING SUGARS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2001, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allowance for doubtful accounts was based on management's evaluation of
the individual accounts and notes receivable.
Property, plant and equipment are recorded at cost. Depreciation is
computed principally by the declining balance method, and is primarily on
average lives of 40 years for buildings, 15 years for machinery and
equipment, 10 years for furniture and fixtures and 6 years for vehicles.
Income taxes were accounted for using the liability method.
Expenditures for future crops relate to subsequent years' crops and have
been deferred. These costs will be charged against earnings as the income is
received from these crops. The amounts related to land leased to others on
which the leases do not expire within one year of the balance sheet date have
been classified as non-current assets.
Sales are recognized when deliveries are made.
Cash equivalents include all highly liquid temporary cash investments
with a maturity of three months or less at the date of purchase.
2. NATURE OF OPERATIONS, RISK AND UNCERTAINTIES
Sterling Sugars, Inc. is a grower and processor of sugarcane from which
it produces raw sugar and blackstrap molasses in St. Mary Parish, Louisiana.
All sugar produced by the Company is sold to a few major sugar refiners and
candy manufacturers under sales contracts. Molasses is sold to a major
molasses distributor under sales contracts.
The cane supply, which the Company processes into raw sugar and
blackstrap molasses, is provided by approximately fifty growers located
primarily in St. Mary and Iberia Parishes, some of which are on Company
owned land.
The Company maintains, at a regional financial instituion, cash which
may exceed federally insured amounts at times.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
II-11 -16-
3. NOTES PAYABLE
The Company had $2,446,615 short-term outstanding notes payable at
July 31, 2001 and $679,531 short-term notes payable outstanding at
July 31, 2000.
The maximum aggregate short-term borrowings outstanding were $29,417,000
in 2001, $42,448,175 in 2000 and $31,182,200 in 1999. The average aggregate
amount of short-term borrowings and the weighted average interest rate was
approximately $4,734,800 and 7.35% in 2001, $8,393,220 and 7.24% in 2000,
and $5,157,729 and 7.11% in 1999. Short-term borrowings occur primarily
during the months of September through January.
4. LONG-TERM DEBT AND CAPITAL LEASE
Long-term debt and capital lease at July 31, 2001 and 2000 consisted
of the following:
2001 2000
----------- -----------
8.50% mortgage note collateralized by first
mortgage on approximately 10,186 acres of
land owned by the Company; payable in
semi-annual payments of $194,240, including
interest with the balance of $3,360,000 due
January 1, 2002. $ 3,363,888 $ 3,460,252
8.00% mortgage note collateralized by a first
mortgage on 8,519 acres of land and a second
mortgage on 10,186 acres of land owned by the
Company; payable in semi-annual payments of
$325,000, interest payable quarterly, with a
final payment due October, 31, 2006. This mortgage
note provides for additional principal payments
equal to fifty percent of the net income before
depreciation reduced by capital expenditures.
There were no required additional payments of
principal at July 31, 2001 and 2000. An
additional covenant of the loan is that no
dividends are to be paid. 2,496,843 4,225,000
10% capital lease collateralized by equipment,
payable in thirty-six monthly payments of
$7,782, including imputed interest, beginning
November 1, 1997 with a final payment of
$42,500 due October 1, 2000 - 57,172
7.90% note collateralized by equipment payable
in two annual installments of $46,373 including
interest beginning September 6, 2001 82,810 -
6.92% note collateralized by equipment payable
in three annual installments of $33,816 including
interest, beginning March 10, 1999. - 31,627
Non-interest bearing unsecured note payable due
in 4 annual installments of $37,500 each. 75,000 112,500
II-12 -17-
9.5% unsecured note payable due October, 2000. - 60,017
------------ ------------
6,018,541 7,946,568
Less portion due within one year (4,091,220) (932,680)
------------ -------------
$ 1,927,321 $ 7,013,888
============ =============
The aggregate annual principal payments applicable to these notes and
capital leases are payable as follows:
Year ended July 31, 2002 $ 4,091,220
Year ended July 31, 2003 730,478
Year ended July 31, 2004 650,000
Year ended July 31, 2005 546,843
-------------
$ 6,018,541
=============
The Company has a line of credit of $12,000,000 with a bank.
At July 31, 2001, the Company was in compliance with all debt covenants
relating to the line of credit.
5. INCOME TAXES
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes, and (b) operating loss and tax credit carryforwards. The tax
effects of significant items comprising the Company's net deferred tax
liability as of July 31, 2001 and 2000 are as follows:
2001 2000
------------ ------------
Deferred tax assets:
Tax credit carryforwards $ 195,033 $ 189,424
Operating loss carryovers 729,440 729,440
Other 66,527 71,136
------------ -------------
Total 991,000 990,000
Deferred tax liabilities:
Differences between book and tax basis of
property (2,444,000) (2,370,000)
------------ -------------
Net $(1,453,000) $(1,380,000)
============ =============
II-13 -18-
The foregoing net amounts were included in the accompanying balance sheet
as follows:
2001 2000
--------- -----------
Deferred tax assets - Current $ 357,000 $ 365,000
Deferred tax liability - Non-current (1,810,000) (1,745,000)
------------ -----------
Net $(1,453,000)$(1,380,000)
============ ===========
There was no valuation allowance required at July 31, 2001 and 2000.
Income taxes (benefits) consist of the following components:
2001 2000 1999
---------- ---------- -----------
Current tax liability (benefit) $ 138,235 $ 194,948 $ 68,900
Deferred 73,000 380,800 358,300
---------- ---------- -----------
$ 211,235 $ 575,748 $ 427,200
========== ========== ===========
State income taxes included in income tax expense amounted to approximately
$12,000 in 2001, $600 in 2000, and $22,900 in 1999.
Deferred income taxes relate primarily to the following items:
2001 2000 1999
----------- ---------- -----------
Depreciation $ 72,760 60,803 $ 135,100
Gain on sale of assets - 113,800 -
Net operating loss carryforward - 182,300 182,300
Other 240 23,897 40,900
----------- ---------- ------------
$ 73,000 $ 380,800 $ 358,300
=========== ========== ============
Income taxes as a percentage of pretax earnings vary from the effective
Federal statutory rate of 34%. The reasons for these differences are shown
below:
2001 2000 1999
------------ ------------ ---------------
Amount % Amount % Amount %
------------- ------------ ---------------
Income taxes at statutory
rate of pretax earnings $ 195,693 34 $ 507,195 34 $ 401,936 34
Increase (decrease) in taxes
resulting from:
State income taxes 12,000 1 23,907 2 22,900 2
Other items - net 3,542 0 44,646 3 2,364 1
------------- ------------- --------------
Actual income taxes $ 211,235 35 $ 575,748 39 $ 427,200 37
============= ============= =============
II-14 -19-
At July 31, 2001 the Company had alternative minimum tax credit
carryforwards of approximately $194,562 available to reduce future income
taxes payable under certain circumstances. The alternative minimum tax
credit carryover period is unlimited. The Company had a net operating loss
carryover of approximately $1,945,173 which can be utilized ratably over
the next five years and provides for a maximum carryover period of fifteen
years.
6. RETIREMENT PLAN
The Company has a defined benefit non-contributory retirement plan in
force covering eligible salaried and factory hourly employees. The
Company's current policy is to contribute annually the amount that can
be deducted for federal income tax purposes. The benefits are based upon
years of service and employee's compensation during the best five years of
employment. The total pension expense for the years ended July 31,
2001, 2000 and 1999 was $83,841, $61,588, and $53,000, respectively.
Data relative to the Plan were as follows (in thousands):
July 31,
---------------------
2001 2000
--------- ---------
Actuarial present value of benefit obligations:
Vested benefit obligation $ 1,370 $ 1,314
========== =========
Projected benefit obligation for service rendered
to date $ (1,721) $ (1,594)
Plan assets at fair value 1,533 1,460
---------- ---------
Plan assets in excess of projected benefit
obligation (188) (134)
Remaining unrecognized portion of net assets at
February 1, 1987 23 13
Unrecognized net loss from past experience
different from that assumed 136 105
---------- --------
Prepaid pension cost included in other assets $ (29) $ (16)
========== ========
The net pension expense for 2001, 2000 and 1999 included the
following (income) expense components:
2001 2000 1999
--------- ------- -------
Service cost - benefits earned during the period $ 79 $ 67 $ 61
Interest cost on projected benefit obligation 111 105 107
Actual return on plan assets (106) (118) (113)
Net amortization and deferrals ( 10) (10) (10)
--------- ------- -------
NET PENSION EXPENSE $ 74 $ 44 $ 45
========= ======= =======
II-15 -20-
The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7.0% in 2001, 6.5% in 2000 and 7.1% in
1999. The projected rate of increase in future compensation levels used
was 5.5% in 2001, 5.0% in 2000 and 5.5% in 1999. The expected rate of
return on plan assets was 7.5% in 2001 and 8% in 2000 and 1999. The
plan's assets consist primarily of deposits in the general funds of an
insurance company.
7. EMPLOYEE SAVINGS PLAN
The Company established, effective February 1, 1992, an Employee Savings
Plan under Section 401(k) of the Internal Revenue Code. The Plan, which
covers eligible salaried and factory hourly employees, provides that the
Company match up to 50% of the first 6% of employee contributions. The
Company's contribution for the years ended July 31, 2001, 2000 and 1999
was $47,221, $41,000 and $42,000, respectively.
8. REVENUES
Sugar and molasses sales are comprised of the following:
2001 2000 1999
----------- ----------- -----------
Sugar $40,078,858 $47,085,398 $42,330,940
Molasses 1,832,297 767,309 855,456
----------- ----------- -----------
$41,911,155 $47,852,707 $43,186,396
============ =========== ===========
Sugar sales to individual major customers amounted to $19,938,610,
$4,665,396 and $15,474,852 in 2001, $16,285,671, $24,095,486, and
$6,704,241 in 2000 and $18,201,861, $11,409,308, $6,102,583 and
$6,616,917 in 1999.
Income from mineral leases and royalties is comprised of the following:
2001 2000 1999
--------- -------- ---------
Oil and gas royalties $947,258 $181,095 $ 8,730
Mineral leases 30,421 86,329 107,446
--------- -------- ---------
$977,679 $267,424 $116,176
========= ======== =========
A new well was discovered on Company property and production began on May
3, 2000. The Company's share of production from the well as of July 31,
2001 was $933,960 which accounts for the increase in the oil and gas
royalties for fiscal 2001. Oil and gas royalties consist entirely of
landowners overrides which management considers incidental to the
operations of the Company. Reserve information relating to production has
not been made available to the Company.
II-16 -21-
Other income is comprised of the following:
2001 2000 1999
--------- --------- ---------
Rental property $1,380,135 $1,528,422 $1,290,752
Other 184,346 234,997 149,741
--------- ---------- ----------
$1,564,481 $1,763,419 $1,440,493
========== ========== ==========
9. COMMITMENTS AND CONTINGENCIES
The Company has certain lease obligations under which a total of
approximately 789 acres of agricultural land are being leased. At the
present time, substantially all of these properties are being subleased
and resulted in net payments of zero in all years. The subleases have
the same payment and option terms as the Company's leases.
The Company was contingently liable or co-maker of a collateralized
note in the amount of $900,000 for Patout Equipment Co at July 31, 2000.
At that time the outstanding balance of the note was $333,193. As of July
31, 2001, Patout Equipment Co. had paid off the balance of the note.
The Company has an option to purchase approximately 238 acres of
agricultural land in St. Mary Parish for approximately $357,000. As
consideration for this option the Company pledged a certificate of
deposit in the amount of $82,160.
10. RELATED PARTIES
During the years ended July 31, 2001, 2000 and 1999 the Company was
involved in the following related party transactions:
The Company reimbursed M. A. Patout & Son, Ltd. certain expenses paid by
them on behalf of the Company. Reimbursements were $436,951 in 2001,
$89,740 in 2000 and $175,008 in 1999. The Company reimbursed Raceland
Sugars, Inc., a wholly owned subsidiary of M. A. Patout & Son, Ltd.,
certain expenses paid by them on behalf of the Company. These
reimbursements were $0 for 2001, $0 for 2000 and $1,199 for 1999.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimated fair value of the Company's financial instruments were as
follows (in thousands):
July 31, 2001 July 31, 2000
--------------- ---------------
Carrying Fair Carrying Fair
value value value value
--------- ----- -------- ------
Cash and cash equivalents $ 34 $ 34 $ 11 $ 11
Accounts receivable 989 989 1,305 1,305
Notes receivable 411 307 488 332
Short-term debt 2,446 2,446 680 680
Accounts payable 965 965 1,390 1,390
Due to growers - - 649 649
Long-term debt (including current
portion) 6,019 6,019 8,872 8,872
II-17 -22-
The carrying value of cash and cash equivalents, accounts receivable,
short-term debt, accounts payable and due to growers approximate fair
value due to short-term maturities of these assets and liabilities.
The fair value of the Company's notes receivable was estimated based on
discounting the future cash flows using current interest rates at which
similar loans would be made.
The fair value of the Company's long-term debt (including current
maturities) was based on current rates at which the Company could borrow
funds with similar remaining maturities.
9. ITEM 9 -CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
II-18 -23-
PART III
ITEM 10-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors required under this item is contained
in the registrant's Proxy Statement dated November 16, 2001 under the captions
"Election of Directors" and "Information Concerning Management-Business
Experience of Directors," incorporated herein by reference.
The following table sets forth information concerning the Company's
executive officers, including their principal occupation for the past
five years and all positions and offices held with the Company by such
executive officers. The term of each of the below named executive officers,
elected November 30, 2000, expires on November 29, 2001, or when their
successors have been chosen.
NAME CAPACITY AGE
----------------------------------------------------------------------
Craig P. Caillier President and CEO February 2,
1996 to present; Senior Vice
President and General Manager
January 1994 - February 1, 1996. 39
Stanley H. Pipes Vice President from 1977 until August
1989; Senior Vice President from
August 1989 until January 1994; Vice
President since that date; Treasurer
since 1971. 66
Information required under this item as respects compliance with Section 16
(a) of the Securities Exchange Act of 1934 is contained in the registrant's
Proxy Statement dated November 16, 2001 under the caption "Information
Concerning Management-Certain Transactions," incorporated herein by
reference.
ITEM 11-EXECUTIVE COMPENSATION
Information required under this item is contained in the registrant's Proxy
Statement dated November 16, 2001 under the caption "Information Concerning
Management-Executive Compensation," incorporated herein by reference.
ITEM 12-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required under this item is contained in the registrant's Proxy
Statement dated November 16, 2001 under the captions "Voting Securities and
Principal Holders Thereof" and "Election of Directors," incorporated herein
by reference.
III-1 -24-
ITEM 13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this item is contained in the registrant's Proxy
Statement dated November 16, 2001 under the caption "Information Concerning
Management-Certain Transactions," incorporated herein by reference.
III-2 -25-
FORM 10-K
PART IV
ITEM 14-EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8K
(a) 1. Financial Statements
The following financial statements of Sterling Sugars, Inc. are
included in Part II, Item 8:
Independent Auditors Report (Fiscal Years 2001 and 2000)
Balance Sheets as of July 31, 2001 and 2000
Statements of Income and Retained Earnings for years ended
July 31, 2001, 2000, and 1999
Statements of Cash Flows for years ended July 31, 2001,
2000, and 1999
Notes to Financial Statements
(a) 2. Financial Statement Schedules
Not Applicable
All schedules are omitted for the reason that they are not required or are
not applicable, or the required information is shown in the financial
statements or notes thereto.
IV-1 -26-
FORM 10-K
PART IV
(Continued)
(a) 3. Exhibits
Footnote
(a) Articles of Incorporation (a)
(b) By-laws (a)
(c) Amendments to By-laws (b)
(d) Amendments to By-laws (e)
(e) Amended By-laws (e)
(f) Amendment to Certificate of Incorporation (j)
(g) Amended by-laws (p)
(a) Specimen Stock Certificate (b)
(d) Pension Plan (b)
(e) Income Sharing Plan (b)
(f) 1987 employment contract (Fred Y. Clark) (c)
(g) 1986 Peebles lease (f)
(h) Employment contract (Fred Y. Clark) (g)
(j) Lease-West Camperdown (Bolton Cane Company) (i)
(k) Sublease-Katy Plantation (Bolton Cane Company) (i)
(l) Lease-portions of Sterling Plantation
(Baker Plantation, Inc.) (i)
(n) Employment contract (Stanley H. Pipes) (k)
(o) Addendum to employment contract dated January
31, 1987 (Fred Y. Clark) (k)
(q) Lease-Calumet Plantation (Frank Martin Farms) (k)
(t) Lease-Belleview Golf and Country Club (m)
(u) Agricultural lease with option to purchase
(Adeline Plantation) (m)
(v) Amendment to agricultural lease (Adeline Plt.) (m)
(w) Sublease-(Adeline Plantation) (m)
(x) Agricultural lease (Shadyside Plantation) (n)
(y) Sublease-Shadyside (C.J. Hebert) (n)
(z) Sublease-Shadyside (Frank Martin Farms) (n)
(aa) Agriculture lease-Shaffer Plantatin (Teche
Planting Company) (n)
(bb) Agriculture lease-West Belleview (Teche
Planting Company) (n)
(cc) Amendment to employment contract of January 31,
1987 (Fred Y. Clark) (n)
(dd) Techincal Services Agreement-M.A. Patout & Son (o)
(ee) Sublease-Teche Planting Company (o)
(ff) Lease extension-Franklin Realty (o)
(gg) Agricultural lease-Theodore Broussard (o)
(hh) Agricultural lease-Kevin Breaux (o)
(ii) Agricultural lease-Sun Operating Limited P. (o)
IV-2 -27-
FORM 10-K
PART IV
(Continued)
(jj) Agricultural lease - Mildred Buckner (o)
(kk) Sublease - C. J. Hebert (o)
(ll) Sublease - Merrill Smith (o)
(nn) Lease Purchase Agreement-Michael Champagne (o)
(oo) Hunting lease - Richard McGoff (o)
(ss) Agricultural agreement-Advanced Agriculture, Inc. (p)
(tt) Amendment to agriculture agreement-Advanced Ag. (p)
(uu) Agricultural lease renewal-Daniel Gonsoulin (q)
(vv) Agricultural lease renewal-Baker Plantation, Inc. (q)
(ww) Agricultural lease renewal-Bolton Cane Company (r)
(xx) Agricultural lease-Northside Planting (r)
(yy) Agricultural lease-S & S Farms (r)
(zz) Agricultural lease-Breaux Bros. Farms, Inc. (r)
(aaa) Lease Agreement-Myette Point Boat Landing (r)
(bbb) Lease Agreement-Myette Point Dock (r)
(ccc) Agricultural lease - Ellender Farms (s)
(ddd) Agricultural lease - Gravois Farms (s)
Page
(11) Computation of earnings per share (32)
(b) Reports on Form 8-K
None
Footnotes:
(a) Incorporated by reference from registrant's Form 10-K filed May 21,
1965.*
(b) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1981.*
(c) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1982.*
(e) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1984.*
(f) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1986.*
(g) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1987.*
(i) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1989.*
(j) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1990.*
IV-3 -28-
FORM 10-K
PART IV
(Continued)
(k) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1991.*
(m) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1993.*
(n) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1994.*
(o) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1995*
(p) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1996*
(q) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1997*
(r) Incorporated by reference from registrant's Form 10-K for the fiscal year
ended January 31, 1998*
(s) Incorporated by reference from registrant's Transition Form 10-K for the
six months ended July 31, 1998*
* Commission File Number 0-1287
IV-4 -29-
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
STERLING SUGARS, INC.
Date October 19, 2001 BY /s/ Craig P. Caillier
--------------------- ------------------------
Craig P. Caillier
President & CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, which includes the
Chief Executive Officer, the Chief Financial and Accounting Officer and a
majority of the Board of Directors, on behalf of the Registrant and in the
capacities and on the dates indicated:
/s/ Craig P. Caillier President & CEO and October 19, 2001
--------------------- Director
Craig P. Callier
/s/ Stanley H. Pipes Vice President & Treasurer
---------------------- (Principal Financial and
Stanley H. Pipes Accounting Officer) October 19, 2001
/s/ Bernard E. Boudreaux Chairman of Board October 19, 2001
------------------------
/s/ William S. Patout III Director October 19, 2001
------------------------
William S. Patout III
/s/ Peter V. Guarisco Director October 19, 2001
------------------------
Peter V. Guarisco
/s/ J. Patout Burns, Jr. Director October 19, 2001
----------------------
J. Patout Burns, Jr.
/s/ Victor Guarisco, II Director October 19, 2001
-----------------------
Victor Guarisco, II
/s/ Edwin Patout Director October 19, 2001
-----------------------
Edwin Patout
IV-5 -30-
INDEX TO EXHIBITS
(10) Material Contracts
None
(11) Computation of Earnings per Common Share (32)
IV-6 -31-
STERLING SUGARS, INC.
COMPUTATION OF EARNINGS PER SHARE
Years Ended July 31,
---------------------------------
2001 2000 1999
---------------------------------
Primary
Income $ 364,333 $ 916,003 $ 604,964
========== =========== ===========
Shares
Weighted average number of common
shares outstanding 2,500,000 2,500,000 2,500,000
---------- ----------- ----------
Primary earnings per share $.15 $.37 $.24
========== =========== ==========
IV-7 -32-