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, 2002
[ ] 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 $2,250,000. 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 33 pages
The number of shares of common stock outstanding as of October 18, 2002 was
2,500,000 shares.
Documents incorporated by reference: Portions of Registrant's Proxy Statement
dated November 7, 2002 are incorporated by reference into Part III.
An exhibit index is located on page 32.
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, 2002 the Company processed
1,027,182 tons of sugarcane and produced 106,244 tons of sugar. The season
began on September 18, 2001 and ended on December 23, 2001. For the fiscal
year ended July 31, 2001, the season began on September 20, 2000 and
continued through December 30, 2000. For fiscal 2001, the factory processed
1,063,646 tons of sugarcane and produced 107,177 tons of sugar. During the
previous year (fiscal 2000), the Company processed a total of 1,139,296
tons of cane and 121,398 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%.
In May, 2002 President Bush signed the 2002 Farm Bill. The bill
contains essentially the same provisions as the 1996 bill except that the
one cent per pound penalty assessment for forfeited sugar has been
eliminated and marketing allotments have been implemented for the domestic
sugar industry. Sterling Sugars' allotment for the crop starting in
September, 2002 will be 89,881 tons. This means any sugar produced over
that amount will have to be held and marketed in the next year. Sterling
has produced between 106,000 and 121,000 tons of sugar during the last three
years so that it appears a substantial amount of sugar will have to be
carried over into the next year. However, Hurricane Lili and tropical
storm Isidore substantially damaged this year's crop. Estimates of the
crop damage range from 15% to 35%. This damage will almost certainly reduce
the sugar produced this year compared to the previous three years. The
bad weather and marketing allotments combined will have a negative impact
on the Company's bottom line. 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, 2002 was as follows:
Factory
---------------
Year round employees 99
Seasonal and temporary employees 94
--------
193
========
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 5,737 1,302 121 7,299
Plant site 65 65
--------- -------- -------- ------ --------
710 15,346 3,106 121 19,283
========= ======== ======== ====== ========
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 1,300 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 19,283 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 two oil and gas leases in effect covering
370 acres. One lease expires on October 23, 2002 and the other on January
13, 2003. 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 2002.
I-4 -5-
PART II
ITEM 5 - MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of October 4, 2002 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 2002 High Low
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First Quarter $ 6.00 $ 5.75
Second Quarter 5.90 5.75
Third Quarter 6.25 6.25
Fourth Quarter 5.80 5.80
Fiscal 2001
-------------
First Quarter $ 6.67 $ 5.75
Second Quarter 6.57 5.81
Third Quarter 6.50 5.84
Fourth Quarter 6.50 5.75
ITEM 6 - SELECTED FINANCIAL DATA
Year ended July 31
-------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ----------- ----------- ------------ -----------
Revenues $44,466,585 $44,466,904 $49,958,679 $45,125,532 $45,202,640
Net Earnings
(Loss) $ 991,792 $ 364,333 $ 916,003 $ 604,964 $ 1,957,197
Net Earnings
(Loss per
Share) $ .40 $ .15 $ .37 $ .24 $ .78
Cash Dividends
Paid per
Share $ - $ - $ - $ - $ -
II-1 -6-
AT YEAR END:
Total assets $30,401,591 $28,805,114 $29,610,380 $29,411,857 $28,842,188
Long-term
Debt $ 3,830,100 $ 1,927,321 $ 7,013,888 $ 7,883,984 $ 8,777,263
Working
Capital $ (634,899)$(4,830,602)$( 544,021) $(1,035,744) $ (411,958)
Stockholders'
Equity $18,556,274 $17,564,482 $17,200,149 $16,284,146 $15,679,182
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 fiscal year ending July 31, 2002 were $991,792 and
for the two previous years were $364,333 and $916,003, respectively. Cane
ground for the 2001 crop was 1,027,182 tons, for the 2000 crop 1,063,646
tons, and for the 1999 crop 1,139,286 tons. Sugar yield per ton of cane
was 207 pounds per ton for the 2001 crop, 202 pounds per ton in 2000, and
213 pounds per ton in 1999. The lingering effects of the drought in the
spring of 2001 caused the slightly lower amount of tons ground as well as
the lower yield per ton in 2001.
The average price received for raw sugar for the past three (3) years
was 20.45 cents per pound for the 2001 crop, 19.24 cents per pound in 2000,
and 19.38 cents per pound in 1999. The higher prices received for the year
ended July 31, 2002 boosted net earnings by $627,459 over the previous
year's earnings.
II-2 -7-
The company continued record setting grinding rates for the seventh
consecutive year, surpassing the one million (1,000,000) ton mark for the
fourth straight year. Average daily grinding rates increased to 10,727 tons
for the 2001 crop up from 10,568 tons in 2000 and 10,162 tons in 1999.
Income from mineral leases and royalties was $519,857 for year ended
July 31, 2002, $977, $679, and $267,423 for the previous two years,
respectively. The amount for fiscal 2002 includes oil and gas royalties of
$485,185 from the well on Company property in St. Mary parish. This well
continues to maintain its output of oil and natural gas. However, the price
received for natural gas has continued to be on the low side compared to a
high of $10.82 per mcf in February, 2001. The price reached a low of $2.00
per mcf in October of 2001. During this same period the price of oil
remained fairly steady with a high of $35.03 in November of 2000 and a low of
$26.71 in April of 2001.
The company recognized a loss on the disposition of property and
equipment that amounted to $217,621 for the year ended July 31, 2002, a gain
of $2,600 for 2001 and $35,638 in 2000. The loss for the year ending July
31, 2002 was due to write-offs of obsolete equipment.
Other revenues consist primarily of miscellaneous income items and cane
land rental income. Other revenues were $1,702,370 for the year ended July
31, 2002, $1,564,481 for 2001, and $1,763,419 for 2000. These amounts
include rental income (substantially all from cane land) of $1,259,683,
$1,380,135, $1,528,422 for 2002, 2001 and 2000 respectively. The decrease
in cane land rentals in 2002 compared to 2001 and 2000 is directly related
to the lower sugar yield and the lower tons harvested on Company lands. Cane
land rental income is derived from all of the cultivable acres that are
leased to independent farmers.
Cost of products sold for the year ended July 31, 2002, 2001, and 2000
was $41,228,895, $41,878,444, and $45,958,210 respectively. Charges relating
to the sale and manufacture of raw sugar and blackstrap molasses are charged
to this category of accounts.
General and administrative expenses were $959,335 for the year ended
July 31, 2002. For the same period ending the previous two years, general
and administrative expenses were $1,026,367 and $1,164,426, respectively.
The lower cost in 2002 is generally attributable to a reduction in bonuses
granted, hospitalization cost and small decreases in other miscellaneous
accounts in this category.
Interest expenses were $685,800 for the year ended July 31, 2002,
$986,525 in 2001 and $1,344,292.00 in 2000. Even with the slightly lower
tonnage ground, the company's needs for short-term funds were increased, as
evidenced by the average aggregate short-term borrowings shown in foot note
3 to the financial statements. These amounts were $6,942,653.00 for the year
ended July 31, 2002, $4,734,800.00 for 2001 and $8,383,20 for 2000. The
weighted average interest rate for those years was 4.41% for 2002, 7.35% for
2001, and 7.11% for 2000. Because of lower sugar prices, the company
reduced the weekly advances to farmers for the 2001, 2000 and 1999 crops.
The Company recorded tax expenses of $600,763 for the year ended July
31, 2002, $211,235 for 2001, and $575,748 for 2000. Footnote 5 to the
financial statements explains in detail the differences in actual and
statutory tax rates, deferred taxes and tax carry forwards.
II-3 -8-
Liquidity and Capital Resources
-------------------------------
The current ratio at July 31, 2002 was .89 to 1 compared to .36 to 1
for the previous year. The company has continued through this period to use
the proceeds from the new oil well to pay down principal on its long-term
debt. In December of 2001, the Company renegotiated and combined its
long-term debt into one single note totaling $5,500,000. Terms of the new
note require nine semi-annual payments of $275,000 each with interest at the
rate of 7% payable quarterly. The balance of the note is due and payable
on December 31, 2006. The Company continues to reinvest earnings toward the
modernization and expansion of the factory believing this to be in the
company's best interest for the long term. For the period February 1, 2002
to Septmeber 30, 2002, the Company budgeted $3,517,500 for repairs and
$1,427,947 for capital improvements with the majority of these expenditures
financed internally. The Company continues to have in place 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, 2002 and 2001, and the related statements of
income and retained earnings and cash flows for each of the three
years in the period ended July 31, 2002. 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 auditing standards
generally accepted in the United States of America. 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, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years in the period ended July 31, 2002, in
conformity with accounting principles generally accepted in the United
States of America.
/s/ Broussard, Poche', Lewis & Breaux, L.L.P.
Lafayette, Louisiana
September 10, 2002
II-5 -10-
STERLING SUGARS, INC.
BALANCE SHEETS
JULY 31, 2002 AND 2001
ASSETS
CURRENT ASSETS:
2002 2001
------------ ------------
Cash $ 3,866 $ 33,949
Temporary cash investments - -
------------ ------------
Total cash and temporary cash investments 3,866 33,949
Accounts receivable, principally sugar and
molasses sales, no allowance for doubtful
accounts considered necessary 1,281,542 989,413
Notes receivable, no allowance for doubtful
accounts considered necessary - 60,016
Raw sugar inventory - cost 2,414,059 -
Operating supplies - at cost 753,550 760,647
Deferred income taxes 334,000 357,260
Prepaid expenses and other assets 380,301 471,424
------------ ------------
TOTAL CURRENT ASSETS 5,167,318 2,672,709
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 8,145,604 8,133,008
Buildings 3,723,191 3,897,101
Machinery and equipment 41,517,543 43,099,638
------------ ------------
53,386,338 55,129,747
Less accumulated depreciation 29,344,377 30,607,135
------------ ------------
24,041,961 24,522,612
------------ ------------
INVESTMENTS AND OTHER ASSETS:
Cash value of officers' life insurance 56,921 59,959
Expenditures for future crops 759,309 1,138,963
Notes receivable, no allowance for
doubtful accounts considered necessary 376,082 410,871
------------ ------------
Total investments and other assets 1,192,312 1,609,793
------------ ------------
$30,401,591 $28,805,114
============ ============
See notes to financial statements
II-6 -11-
STERLING SUGARS, INC.
BALANCE SHEETS
JULY 31, 2002 AND 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001
-------------- -------------
CURRENT LIABILITIES:
Notes payable $ 3,512,000 $ 2,446,615
Accounts payable and accrued expenses 803,887 965,476
Due to cane growers 857,425 -
Current portion of long-term debt
and capital leases 628,905 4,091,220
-------------- --------------
TOTAL CURRENT LIABILITIES 5,802,217 7,503,311
-------------- --------------
LONG-TERM DEBT AND CAPITAL LEASE, less portion
due within one year included in current
liabilities 3,830,100 1,927,321
-------------- --------------
DEFERRED INCOME TAXES 2,213,000 1,810,000
-------------- --------------
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 16,015,819 15,024,027
------------ --------------
18,556,274 17,564,482
------------ --------------
$30,401,591 $28,805,114
============ ==============
See notes to financial statements
II-7 -12-
STERLING SUGARS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED JULY 31,
----------------------------------
2002 2001 2000
---------- ----------- -----------
REVENUES:
Sugar and molasses sales $42,458,071 $41,911,155 $47,852,707
Interest earned 3,908 10,989 39,492
Mineral leases and royalties 519,857 977,679 267,423
Gain (loss) on disposition of property
and equipment (217,621) 2,600 35,638
Other 1,702,370 1,564,481 1,763,419
----------- ----------- -----------
44,466,585 44,466,904 49,958,679
----------- ----------- -----------
COST AND EXPENSES:
Cost of products sold 41,228,895 41,878,444 45,958,210
General and administrative 959,335 1,026,367 1,164,426
Interest and loan expenses 685,800 986,525 1,344,292
----------- ----------- -----------
42,874,030 43,891,336 48,466,928
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,592,555 575,568 1,491,751
INCOME TAXES 600,763 211,235 575,748
----------- ----------- -----------
NET INCOME 991,792 364,333 916,003
RETAINED EARNINGS AT BEGINNING OF YEAR 15,024,027 14,659,694 13,743,691
----------- ----------- -----------
RETAINED EARNINGS AT END OF YEAR $16,015,819 $15,024,027 $14,659,694
=========== =========== ===========
WEIGHTED AVERAGE EARNINGS PER
COMMON SHARE:
Net income $.40 $.15 $.37
=========== ========== ===========
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,
--------------------------------------
2002 2001 2000
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 991,792 $ 364,333 $ 916,003
Adjustments to reconcile net income
to net cash provided by (used
in) operating activities:
Depreciation 2,043,711 2,251,299 2,316,163
Deferred income taxes 379,740 57,260 380,800
(Gain) loss on dispositions of property
and equipment 217,621 ( 2,600) ( 35,638)
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable (292,129) 315,996 (719,855)
(Increase) decrease in inventories (2,406,962) (31,434) ( 89,317)
(Increase) decrease in prepaid expenses 91,123 45,702 271,917
Increase (decrease) in accounts payable
and accrued expenses and due to cane
growers 695,836 (1,073,656) (839,179)
Decrease in expenditures future crops 379,654 - -
Other items - net 102,230 (180,616) 355,899
----------- ------------ -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 2,202,616 1,746,284 2,556,793
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (53,817) (10,980) (26,868)
Collection on notes receivable 88,605 88,271 61,021
Purchases of property, plant and
equipment (1,843,521) (1,912,005) (2,511,965)
Proceeds from dispositions of
property and equipment 70,185 2,600 -
------------ ----------- -----------
NET CASH (USED IN)
INVESTING ACTIVITIES (1,738,548) (1,832,114) (2,477,812)
------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term notes
payable and long-term debt 9,179,523 3,999,039 829,531
Payments on short-term notes
payable and long-term debt (9,673,674) (3,890,760) (1,355,062)
------------ ------------ -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ( 494,151) 108,279 ( 525,531)
------------ ------------ -----------
INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS ( 30,083) 22,449 (446,550)
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF YEAR 33,949 11,500 458,050
----------- ----------- -----------
(Continued)
II-9 -14-
STERLING SUGARS, INC.
STATEMENTS OF CASH FLOWS
Years Ended July 31,
------------------------------------
2002 2001 2000
------------ ----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF YEAR $ 3,866 $ 33,949 $ 11,500
============ =========== ===========
SUPPLEMENTAL INFORMATION REGARDING
CASH FLOWS:
INTEREST PAID $ 722,519 $ 972,274 $1,328,400
============ ============ ==========
INCOME TAXES PAID $ 132,591 $ 177,043 $ 214,823
============ ============ ===========
See notes to financial statements
II-10 -15-
STERLING SUGARS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2002, 2001 AND 2000
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 $3,512,000 short-term outstanding notes payable at
July 31, 2002 and $2,446,615 short-term notes payable outstanding at
July 31, 2001.
The maximum aggregate short-term borrowings outstanding were $32,005,668
in 2002, $29,417,000 in 2001 and $42,448,175 in 2000. The average aggregate
amount of short-term borrowings and the weighted average interest rate was
approximately $6,942,653 and 4.41% in 2002, $4,734,800 and 7.35% in 2001,
and $8,393,220 and 7.24% in 2000. Short-term borrowings occur primarily
during the months of September through January.
4. LONG-TERM DEBT AND CAPITAL LEASE
Long-term debt at July 31, 2002 and 2001 consisted
of the following:
2002 2001
----------- -----------
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
7.00% mortgage note collateralized by
substantially all assets of the Company;
payable in semi-annual payments of
$275,000, interest payable quarterly, with the
unpaid balance due December, 31, 2006. 4,380,100 2,496,843
7.90% note collateralized by equipment payable
in two annual installments of $46,373 including
interest beginning September 6, 2001 41,405 82,810
Non-interest bearing unsecured note payable due
in 4 annual installments of $37,500 each. 37,500 75,000
------------ ------------
$ 4,459,005 $ 6,018,541
Less portion due within one year (628,905)( 4,091,220)
------------ -------------
$ 3,830,100 $ 1,927,321
============ =============
The aggregate annual principal payments applicable to these notes and
capital leases are payable as follows:
Year ended July 31, 2003 $ 628,905
Year ended July 31, 2004 550,000
Year ended July 31, 2005 550,000
Year ended July 31, 2006 550,000
Year ended July 31, 2007 550,000
Thereafter 1,630,100
-------------
$ 4,459,005
=============
II-12 -17-
The Company has a line of credit of $12,000,000 with a bank.
At July 31, 2002, 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:
2002 2001
------------ ------------
Deferred tax assets:
Tax credit carryforwards $ 153,920 $ 195,033
Operating loss carryovers 357,939 729,440
Other 3,141 66,527
------------ -------------
Total 515,000 991,000
Deferred tax liabilities:
Differences between book and tax basis of
property (2,394,000) (2,444,000)
------------ -------------
Net $(1,879,000) $(1,453,000)
============ =============
The foregoing net amounts were included in the accompanying balance sheet
as follows:
2002 2001
--------- -----------
Deferred tax assets - Current $ 334,000 $ 357,000
Deferred tax liability - Non-current (2,213,000) (1,810,000)
------------ -----------
Net $(1,879,000)$(1,453,000)
============ ===========
There was no valuation allowance required at July 31, 2002 and 2001.
Income taxes (benefits) consist of the following components:
2002 2001 2000
---------- ---------- -----------
Current tax liability $ 174,763 $ 138,235 $ 194,948
Deferred 426,000 73,000 380,800
---------- ---------- -----------
$ 600,763 $ 211,235 $ 575,748
========== ========== ===========
State income taxes included in income tax expense amounted to approximately
$78,550 in 2002, $12,000 in 2001, and $600 in 2000.
II-13 -18-
Deferred income taxes relate primarily to the following items:
2002 2001 2000
----------- ---------- -----------
Depreciation $ 426,000 $ 72,760 60,803
Gain on sale of assets - _ 113,800
Net operating loss carryforward - _ 182,300
Other _ 240 23,897
----------- ---------- ------------
$ 426,000 $ 73,000 $ 380,800
=========== ========== ============
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:
2002 2001 2000
------------ ------------ ---------------
Amount % Amount % Amount %
------------- ------------ ---------------
Income taxes at statutory
rate of pretax earnings $ 522,212 34 $ 195,693 34 $ 507,195 34
Increase (decrease) in taxes
resulting from:
State income taxes 78,551 5 12,000 1 23,907 2
Other items - net 0 0 3,542 0 44,646 3
------------- ------------- --------------
Actual income taxes $ 600,763 39 $ 211,235 35 $ 575,748 39
============= ============= =============
At July 31, 2002 the Company had alternative minimum tax credit
carryforwards of approximately $183,887 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 $1,030,009 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,
2002, 2001 and 2000 was $70,031, $83,841, and $61,588, respectively.
II-14 -19-
Data relative to the Plan were as follows (in thousands):
July 31,
---------------------
2002 2001
--------- ---------
Actuarial present value of benefit obligations:
Vested benefit obligation $ 1,316 $ 1,370
========== =========
Projected benefit obligation for service rendered
to date $ (1,697) $ (1,721)
Plan assets at fair value 1,581 1,533
---------- ---------
Plan assets in excess of projected benefit
obligation (116) (188)
Remaining unrecognized portion of net assets at
February 1, 1987 16 23
Unrecognized net loss from past experience
different from that assumed 74 136
---------- --------
Prepaid pension cost included in other assets $ (26) $ (29)
========== ========
The net pension expense for 2002, 2001 and 2000 included the
following (income) expense components:
2002 2001 2000
--------- ------- -------
Service cost - benefits earned during the period $ 78 $ 79 $ 67
Interest cost on projected benefit obligation 110 111 105
Actual return on plan assets ( 97) (106) (118)
Net amortization and deferrals ( 10) (10) (10)
--------- ------- -------
NET PENSION EXPENSE $ 81 $ 74 $ 44
========= ======= =======
The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7.0% in 2002, 7.0% in 2001 and 6.5% in
2000. The projected rate of increase in future compensation levels used
was 5.5% in 2002, 5.5% in 2001 and 5.0% in 2000. The expected rate of
return on plan assets was 7.0% in 2002 and 7.5% in 2001 and 8% in 2000. 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, 2002, 2001 and 2000
was $42,694, $47,221 and $41,000, respectively.
II-15 -20-
8. REVENUES
Sugar and molasses sales are comprised of the following:
2002 2001 2000
----------- ----------- -----------
Sugar $40,405,488 $40,078,858 $47,085,398
Molasses 2,052,583 1,832,297 767,309
----------- ----------- -----------
$42,458,071 $41,911,155 $47,852,707
============ =========== ===========
Sugar sales to individual major customers were $23,699,550, $10,663,573
and $5,866,641 in 2002, $19,938,610, $4,665,396 and $15,474,852 in 2001,
$16,285,671, $24,095,486 and $6,704,241 in 2000.
Income from mineral leases and royalties is comprised of the following:
2002 2001 2000
--------- -------- ---------
Oil and gas royalties $485,186 $947,258 $181,095
Mineral leases 34,671 30,421 86,329
--------- -------- ---------
$519,857 $977,679 $267,424
========= ======== =========
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,
2002 was $472,462. Production from the well has declined substantially
from the approximately $933,000 collected for the year ended July 31,
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.
Other income is comprised of the following:
2002 2001 2000
--------- --------- ---------
Rental property $1,259,683 $1,380,135 $1,528,422
Other 442,687 184,346 234,997
--------- ---------- ----------
$1,702,370 $1,564,481 $1,763,419
========== ========== ==========
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 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.
II-16 -21-
10. RELATED PARTIES
During the years ended July 31, 2002, 2001 and 2000 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 $40,466 in 2002,
$436,951 in 2001 and $89,740 in 2000.
VALUE OF FINANCIAL INSTRUMENTS
Estimated fair value of the Company's financial instruments were as
follows (in thousands):
July 31, 2002 July 31, 2001
--------------- ---------------
Carrying Fair Carrying Fair
value value value value
--------- ----- -------- ------
Cash and cash equivalents $ 4 4 34 $ 34
Accounts receivable 1,282 1,282 989 989
Notes receivable 376 295 411 307
Short-term debt 3,512 3,512 2,446 2,446
Accounts payable 804 804 965 965
Due to growers 857 857 - -
Long-term debt (including current
portion) 4,459 4,459 6,019 6,019
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-17 -22-
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 7, 2002 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 29, 2001, expires on November 28, 2002, 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. 40
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. 67
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 7, 2002 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 7, 2002 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 7, 2002 under the captions "Voting Securities and
Principal Holders Thereof" and "Election of Directors," incorporated herein
by reference.
III-1 -23-
ITEM 13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this item is contained in the registrant's Proxy
Statement dated November 7, 2002 under the caption "Information Concerning
Management-Certain Transactions," incorporated herein by reference.
III-2 -24-
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 2002 and 2001)
Balance Sheets as of July 31, 2002 and 2001
Statements of Income and Retained Earnings for years ended
July 31, 2002, 2001, and 2000
Statements of Cash Flows for years ended July 31, 2002,
2001, and 2000
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 -25-
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 -26-
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 (33)
(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 -27-
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 -28-
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 18, 2002 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 18, 2002
--------------------- Director
Craig P. Callier
/s/ Stanley H. Pipes Vice President & Treasurer
---------------------- (Principal Financial and
Stanley H. Pipes Accounting Officer) October 18, 2002
/s/ Bernard E. Boudreaux Chairman of Board October 18, 2002
------------------------
Bernard E. Boudreaux
/s/ Mark Patout Director October 18, 2002
------------------------
Mark Patout
/s/ Peter V. Guarisco Director October 18, 2002
------------------------
Peter V. Guarisco
/s/ J. Patout Burns, Jr. Director October 18, 2002
----------------------
J. Patout Burns, Jr.
/s/ Victor Guarisco, II Director October 18, 2002
-----------------------
Victor Guarisco, II
/s/ Edwin Patout Director October 18, 2002
-----------------------
Edwin Patout
IV-5 -29-
CERTIFICATIONS
I, Craig P. Caillier, certify that:
1. I have reviewed this annual report on Form 10-K of Sterling Sugars,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
Date: October 22, 2002
----------------
/s/ Craig P. Caillier
----------------------
Craig P. Caillier
President and Chief Executive Officer
I, Stanley H. Pipes, certify that:
1. I have reviewed this annual report on Form 10-K of Sterling Sugars,
Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report.
Date: October 22, 2002
----------------
/s/ Stanley H. Pipes
--------------------
Stanley H. Pipes
Vice President and Treasurer
(Principal Financial and Accounting Officer)
IV-6 -30-
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Sterling Sugars, Inc.
(the "Company") on Form 10-K for the fiscal year ending July 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Craig P. Caillier, President and Chief Executive Officer
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Craig P. Caillier
Date: October 22, 2002 ---------------------
Craig P. Caillier
President and Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Sterling Sugars, Inc.
(the "Company") on Form 10-K for the fiscal year ending July 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Stanley H. Pipes, Vice President & Treasurer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: October 22, 2002 /s/ Stanley H. Pipes
---------------- -----------------
Stanley H. Pipes
Vice President & Treasurer
IV-7 -31-
INDEX TO EXHIBITS
(10) Material Contracts
None
(11) Computation of Earnings per Common Share (33)
IV-8 -32-
STERLING SUGARS, INC.
COMPUTATION OF EARNINGS PER SHARE
Years Ended July 31,
---------------------------------
2002 2001 2000
---------------------------------
Primary
Income $ 991,792 $ 364,333 $ 916,003
========== =========== ===========
Shares
Weighted average number of common
shares outstanding 2,500,000 2,500,000 2,500,000
---------- ----------- ----------
Primary earnings per share $.40 $.15 $.37
========== =========== ==========
IV-9 -33-