0000916641-01-501464.txt : 20011128 0000916641-01-501464.hdr.sgml : 20011128 ACCESSION NUMBER: 0000916641-01-501464 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD COMMERCIAL CORP CENTRAL INDEX KEY: 0000093319 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [5150] IRS NUMBER: 131337610 STATE OF INCORPORATION: NC FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09875 FILM NUMBER: 1776875 BUSINESS ADDRESS: STREET 1: 2201 MILLER RD CITY: WILSON STATE: NC ZIP: 27893 BUSINESS PHONE: 2522915507 MAIL ADDRESS: STREET 1: 2201 MILLER RD CITY: WILSON STATE: NC ZIP: 27893 FORMER COMPANY: FORMER CONFORMED NAME: STANDARD COMMERCIAL TOBACCO CO INC DATE OF NAME CHANGE: 19880228 10-Q 1 d10q.txt STANDARD COMMERCIAL 10-Q DATED SEPT. 30, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended SEPTEMBER 30, 2001 Commission file number 1-9875 [LOGO] Standard STANDARD COMMERCIAL CORPORATION Incorporated under the laws of I.R.S. Employer North Carolina Identification No. 13-1337610 2201 Miller Road, Wilson, North Carolina 27893 Telephone Number 252-291-5507 On November 1, 2001 the registrant had outstanding 13,340,589 shares of Common Stock ($.20 par value). Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) had been subject to such filing requirements for the past 90 days. YES X NO ______ ----- PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS STANDARD COMMERCIAL CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
September 30 March 31 ------------------- -------- 2001 2000 2001 ---- ---- ---- (unaudited) ASSETS Cash.............................................................. $ 22,609 $ 23,703 $ 38,560 Receivables....................................................... 208,319 195,295 217,153 Inventories....................................................... 294,685 343,731 252,032 Prepaid expenses.................................................. 4,346 9,160 1,778 Marketable securities............................................. 554 535 540 ------------------------------ Current assets.................................................. 530,513 572,424 510,063 Property, plant and equipment..................................... 134,343 142,140 135,166 Investment in affiliates.......................................... 10,115 15,644 9,978 Other assets...................................................... 36,688 45,171 37,723 ------------------------------ Total assets.................................................... $711,659 $775,379 $692,930 ============================== LIABILITIES Short-term borrowings............................................. $149,634 $255,238 $151,602 Current portion of long-term debt................................. 10,269 9,982 9,311 Accounts payable.................................................. 147,513 103,283 140,913 Taxes accrued..................................................... 11,063 10,284 9,213 ------------------------------ Current liabilities............................................. 318,479 378,787 311,039 Long-term debt.................................................... 128,144 127,866 134,752 Convertible subordinated debentures............................... 51,652 66,500 51,652 Retirement and other benefits..................................... 20,010 21,105 19,942 Deferred taxes.................................................... 5,943 5,632 5,298 ------------------------------ Total liabilities............................................... 524,228 599,890 522,683 ------------------------------ MINORITY INTERESTS................................................ 50 26,670 54 ------------------------------ SHAREHOLDERS' EQUITY Preferred stock, $1.65 par value; authorized shares 1,000,000 Issued none Common stock, $0.20 par value; authorized shares 100,000,000 Issued 15,956,745 (Sept. 00 - 15,788,188; Mar. 01 - 15,875,611).. 3,191 3,128 3,175 Additional paid-in capital........................................ 105,444 103,115 104,198 Unearned restricted stock plan compensation....................... (2,451) (1,308) (1,799) Treasury shares, 2,617,707........................................ (4,250) (4,250) (4,250) Retained earnings................................................. 132,735 103,220 117,248 Accumulated other comprehensive income............................ (47,288) (55,086) (48,379) ------------------------------ Total shareholders' equity...................................... 187,381 148,819 170,193 ------------------------------ Total liabilities and equity.................................... $711,659 $775,379 $692,930 ==============================
The accompanying notes are an integral part of these financial statements. STANDARD COMMERCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (In thousands, except per share information; unaudited)
Second quarter ended Six months ended September 30 September 30 ----------------------- ----------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Sales - tobacco............................................ $202,999 $208,179 $373,279 $346,910 - nontobacco......................................... 42,541 44,485 93,439 105,638 -------- -------- -------- -------- Total sales............................................... 245,540 252,664 466,718 452,548 Cost of sales - materials, services and supplies........... 197,733 213,803 386,520 381,670 - interest................................... 5,288 10,747 10,778 16,788 -------- -------- -------- -------- Gross profit.............................................. 42,519 28,114 69,420 54,090 Selling, general and administrative expenses................ 17,174 18,732 36,195 38,282 Other interest expense...................................... 2,717 1,807 4,629 3,651 Other income (expense) - net................................ 871 394 2,062 681 -------- -------- -------- -------- Income before taxes....................................... 23,499 7,969 30,658 12,838 Income taxes................................................ (10,488) (2,956) (13,944) (5,580) -------- -------- -------- -------- Income after taxes........................................ 13,011 5,013 16,714 7,258 Minority interests.......................................... 0 24 0 (644) Equity in earnings of affiliates............................ 106 (20) 120 91 -------- -------- -------- -------- Income before extraordinary (loss)/gain................... 13,117 5,017 16,834 6,705 Extraordinary (loss)/gain due to buyback of Senior notes/ Convertible subordinated debentures, net of income tax of $9 (Sept.00 $329,000)................................. (17) 639 (17) 639 -------- -------- -------- -------- Net income................................................ 13,100 5,656 16,817 7,344 Retained earnings at beginning of period.................... 120,302 98,215 117,248 97,177 Common stock dividends...................................... (667) (651) (1,330) (1,301) -------- -------- -------- -------- Retained earnings at end of period.......................... $132,735 $103,220 $132,735 $103,220 ======== ======== ======== ======== Earnings per common share Basic....................................................... Income before extraordinary gain.......................... $ 0.99 $ 0.38 $ 1.27 $ 0.51 Extraordinary gain........................................ $ 0.00 $ 0.05 $ 0.00 $ 0.05 -------- -------- -------- -------- Net income................................................ $ 0.99 $ 0.43 $ 1.27 $ 0.56 -------- -------- -------- -------- - average shares outstanding........................... 13,313 13,065 13,287 13,032 Diluted..................................................... Income before extraordinary gain.......................... $ 0.91 $ 0.38 $ 1.19 $ 0.51 Extraordinary gain........................................ $ 0.00 $ 0.05 $ 0.00 $ 0.05 -------- -------- -------- -------- Net income................................................ $ 0.91 $ 0.43 $ 1.19 $ 0.56 -------- -------- -------- -------- - average shares outstanding........................... 15,155 15,386 15,126 15,367 Dividends paid per common share $ 0.05 $ 0.05 $ 0.10 $ 0.10
The accompanying notes are an integral part of these financial statements. STANDARD COMMERCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands; unaudited)
Six months ended September 30 ----------------------------------- 2001 2000 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income........................................................... $ 16,817 $ 7,344 Depreciation and amortization...................................... 9,832 10,749 Minority interests................................................. 0 644 Deferred income taxes.............................................. 622 (682) Undistributed earnings of affiliates net of dividends received..... (106) (31) Loss/(gain) on buyback of senior notes/subordinated debentures..... 17 (639) Gain on disposition of property, plant and equipment............... (279) (114) Other.............................................................. (1,384) (82) ----------------------------------- 25,519 17,189 Net changes in working capital other than cash Receivables........................................................ 8,346 18,789 Inventories........................................................ (41,028) (11,202) Current payables................................................... 5,998 (15,122) ----------------------------------- CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES..................... (1,165) 9,654 ----------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Property, plant and equipment - additions............................ (7,197) (7,806) - dispositions......................... 377 254 Business (acquisitions) dispositions................................. 48 12 ----------------------------------- CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES..................... (6,772) (7,540) ----------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term borrowings.................................. (1,968) (6,821) Proceeds from long-term borrowings................................... 4,850 5,491 Repayment of long-term borrowings.................................... (8,810) (12,404) Buyback of senior notes/convertible subordinated debentures.......... (2,017) (1,861) Dividends paid....................................................... (1,330) (1,301) Other................................................................ 1,261 136 ----------------------------------- CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES..................... (8,014) (16,760) ----------------------------------- Decrease in cash for period.......................................... (15,951) (14,646) Cash at beginning of period.......................................... 38,560 38,349 ----------------------------------- CASH AT END OF PERIOD................................................ $ 22,609 $ 23,703 =================================== Cash payments for - interest......................................... $ 13,741 $ 19,387 - income taxes..................................... $ 10,548 $ 5,181
The accompanying notes are an integral part of these financial statements. 4 STANDARD COMMERCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The interim statements presented herein should be read in conjunction with the audited financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. The interim period financial statements have been prepared by the Company without audit and contain all of the adjustments which are, in the opinion of the management, necessary for a fair statement of the results of operations. All such adjustments are of normal, recurring nature and there were no material changes in accounting policies during the period ended September 30, 2001. Because of the nature of the Company's businesses, fluctuations in results for interim periods are not necessarily indicative of business trends or results to be expected for other interim periods or a full year. 2. INVENTORIES
September 30 March 31 --------------------------------- -------- (In thousands) 2001 2000 2001 ---- ---- ---- Tobacco $228,529 $282,744 $183,021 Nontobacco 66,156 60,987 69,011 -------- -------- -------- Total $294,685 $343,731 $252,032 ======== ======== ========
3. COMPREHENSIVE INCOME The components of comprehensive income/(loss) were as follows:
Quarter ended Six months ended September 30 September 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- (In thousands) Net income $ 13,100 $ 5,656 $ 16,817 $ 7,344 Other comprehensive income: Translation adjustment 3,341 (6,745) 1,091 (6,732) Cumulative effect of change in accounting for derivative financial instruments 0 0 (2,067) 0 Derivative financial instruments 290 0 2,308 0 -------- -------- -------- ------- Total comprehensive income (loss) $ 16,731 $ (1,089) $ 18,149 $ 612 ======== ======== ======== =======
4. SEGMENT INFORMATION The company is engaged in purchasing, processing and selling leaf tobacco and wool. Its activities other than these are minimal. Segment revenue and net income/(loss) are as follows:
Quarter ended Six months ended September 30 September 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- (In thousands) Sales Tobacco $202,999 $208,179 $373,279 $346,910 Nontobacco 42,541 44,485 93,439 105,638 -------- -------- -------- -------- $245,540 $252,664 $466,718 $452,548 ======== ======== ======== ======== Net income (loss) Tobacco $ 13,878 $ 5,456 $ 17,477 $ 6,819 Nontobacco (778) 200 (660) 525 -------- -------- -------- -------- $ 13,100 $ 5,656 $ 16,817 $ 7,344 ======== ======== ======== ========
5 STANDARD COMMERCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. EARNINGS PER SHARE Earnings per share has been presented in conformity with Statement of Financial Accounting Standard No.128. The diluted earnings per share include the effect of the convertible subordinated debentures which if converted would have increased the weighted average number of shares and net income applicable to common stock. The weighted number of shares were further increased by the employee stock options. 6. DERIVATIVE FINANCIAL INSTRUMENTS On April 1, 2001 the Company adopted Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 establishes new accounting and disclosure requirements for most derivative instruments and hedge transactions involving derivatives. SFAS No. 133 also requires formal documentation procedures for hedging relationships and effectiveness testing when hedge accounting is to be applied. In accordance with the transition provisions of SFAS No. 133, in the six months ended September 30, 2001 the Company recorded a cumulative effect loss adjustment of $2.1 million, net of applicable taxes, in other comprehensive income to recognize the fair value of all derivatives designated as cash flow hedging instruments. The Company's derivative usage is principally foreign currency forwards. These contracts typically have maturities of less than one year. As a matter of policy, the Company does not use derivative instruments unless there is an underlying exposure. The Company's foreign currency forwards have been designated and qualify as cash flow hedges under the criteria of SFAS No. 133. SFAS No. 133 requires that changes in fair values of derivatives that qualify as cash flow hedges be recognized in other comprehensive income, while the ineffective portion of change in derivatives in fair value be recognized immediately in earnings. The fair value of the Company's foreign currency forward contracts at September 30, 2001 was not material. 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 requires the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 requires that upon adoption, amortization of goodwill cease and instead, the carrying value of goodwill be evaluated for impairment on an annual basis. Identifiable intangible assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121 "Accounting for Impairment of Long-Lived Assets and for Long Lived Assets to be Disposed Of". SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. The Company will be required to adopt SFAS No. 142 on April 1, 2002 and is in the process of evaluating the impact of this pronouncement. 8. SENIOR NOTES The 8 7/8% Senior Notes due 2005 were issued by Standard Commercial Tobacco Co., Inc. (the "Issuer"), a wholly owned subsidiary of the Company. The Company and Standard Wool, Inc., a wholly owned subsidiary of the Company (the "Guarantors"), jointly and severally, guarantee, on a senior basis, the full and prompt performance of the Issuer's obligations under the terms of the indenture. Management has determined that full financial statements of the Guarantors would not be material to investors and such financial statements are not provided. The following supplemental combining financial statements present information regarding the Issuer and the Guarantors. 6 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING BALANCE SHEET September 30, 2001 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ----- -------- -------- ---------- ------------ ----- Assets Cash $ 7,010 $ - $ 78 $ 15,521 $ - 22,609 Receivables 11,657 14 7 196,641 - 208,319 Intercompany receivables 146,183 2,077 35 21,838 (170,133) - Inventories 83,125 - - 211,560 - 294,685 Prepaids and other 109 - 1 4,236 - 4,346 Marketable securities - 1 - 553 - 554 --------------------------------------------------------------------------------------- Current assets 248,084 2,092 121 450,349 (170,133) 530,513 Property, plant and equipment 20,956 - 11 113,376 - 134,343 Investment in subsidiaries 116,520 222,432 28,674 149,260 (516,886) - Investment in affiliates - - - 10,115 - 10,115 Other noncurrent assets 32 9,829 - 26,827 - 36,688 --------------------------------------------------------------------------------------- Total assets $385,592 $234,353 $28,806 $749,927 ($687,019) $711,659 ======================================================================================= Liabilities Short-term borrowings $ - $ 99 $ - $149,535 $ - $149,634 Current portion of long-term debt - - - 10,269 - 10,269 Accounts payable 22,547 800 7 124,159 - 147,513 Intercompany accounts payable 36,440 1,548 1,590 130,555 (170,133) - Taxes accrued 12,850 (8,432) - 6,645 - 11,063 --------------------------------------------------------------------------------------- Current liabilities 71,837 (5,985) 1,597 421,163 (170,133) 318,479 Long-term debt 113,000 - - 15,144 - 128,144 Convertible subordinated debentures - 51,652 - - - 51,652 Retirement and other benefits 9,599 873 - 9,538 - 20,010 Deferred taxes (1,302) (1,619) - 8,864 - 5,943 --------------------------------------------------------------------------------------- Total liabilities 193,134 44,921 1,597 454,709 (170,133) 524,228 Minority interests - - - 50 - 50 Shareholders' equity Common stock 993 3,191 32,404 167,040 (200,437) 3,191 Additional paid-in capital 130,860 105,444 - 58,106 (188,966) 105,444 Unearned restricted stock plan compensation (684) (400) (13) (1,354) - (2,451) Treasury stock at cost - (4,250) - - - (4,250) Retained earnings 82,430 132,735 7,661 118,664 (208,755) 132,735 Accumulated other comprehensive income (21,141) (47,288) (12,843) (47,288) 81,272 (47,288) --------------------------------------------------------------------------------------- Total shareholders' equity 192,458 189,432 27,209 295,168 (516,886) 187,381 --------------------------------------------------------------------------------------- Total liabilities and equity $385,592 $234,353 $28,806 $749,927 ($687,019) $711,659 =======================================================================================
-7- STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS Second quarter ended September 30, 2001 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ----- -------- -------- ---------- ------------ ----- Sales $ 62,065 S - $ 37 $275,405 $(91,967) $245,540 Cost of sales: Materials services and supplies 52,381 - - 237,319 (91,967) 197,733 Interest 837 - - 4,451 - 5,288 -------------------------------------------------------------------------------------- Gross profit 8,847 - 37 33,635 - 42,519 Selling, general & administrative expenses 3,644 1,681 49 11,800 - 17,174 Other interest expense 2,825 978 - (1,086) - 2,717 Other income (expense) net (5,264) 4,001 - 2,134 - 871 -------------------------------------------------------------------------------------- Income (loss) before taxes (2,886) 1,342 (12) 25,055 - 23,499 Income taxes (4,444) 460 - 14,472 - 10,488 -------------------------------------------------------------------------------------- Income (loss) after taxes 1,558 882 (12) 10,583 - 13,011 Minority interests - - - - - - Equity in earnings of affiliates - - - 106 - 106 Equity in earnings of subsidiaries 11,455 12,218 (766) - (22,907) - -------------------------------------------------------------------------------------- Income before extraordinary gain 13,013 13,100 (778) 10,689 (22,907) 13,117 Extaordinary loss due to buyback of Senior notes net of income tax benefit of $9 (17) - - - - (17) -------------------------------------------------------------------------------------- Net income 12,996 13,100 (778) 10,689 (22,907) 13,100 Retained earnings at beginning of period 69,434 120,302 8,439 107,975 (185,848) 120,302 Common stock dividends - (667) - - - (667) -------------------------------------------------------------------------------------- Retained earnings at end of period $ 82,430 $132,735 $7,661 $118,664 ($208,755) $132,735 ======================================================================================
-8- STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS Six months ended September 30, 2001 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total -------- ----------- ----------- ----------- ------------ ---------- Sales $ 109,716 $ - $ 82 $ 514,053 $ (157,133) $ 466,718 Cost of sales: Materials services and supplies 91,827 - - 451,826 (157,133) 386,520 Interest 2,401 - - 8,377 - 10,778 ------------------------------------------------------------------------------------- Gross profit 15,488 - 82 53,850 - 69,420 Selling, general & administrative expenses 6,302 3,112 100 26,681 - 36,195 Other interest expense 4,711 1,983 - (2,065) - 4,629 Other income (expense) net (2,983) 4,390 - 655 - 2,062 ------------------------------------------------------------------------------------- Income (loss) before taxes 1,492 (705) (18) 29,889 - 30,658 Income taxes (2,955) (240) - 17,139 - 13,944 ------------------------------------------------------------------------------------- Income (loss) after taxes 4,447 (465) (18) 12,750 - 16,714 Minority interests - - - - - - Equity in earnings of affiliates - - - 120 - 120 Equity in earnings of subsidiaries 13,512 17,282 (642) - (30,152) - ------------------------------------------------------------------------------------- Income before extraordinary gain 17,959 16,817 (660) 12,870 (30,152) 16,834 Extaordinary gain due to buyback of Senior notes net of income tax benefit of $9 (17) - - - - (17) ------------------------------------------------------------------------------------- Net income 17,942 16,817 (660) 12,870 (30,152) 16,817 Retained earnings at beginning of period 64,488 117,248 8,321 105,794 (178,603) 117,248 Common stock dividends - (1,330) - - - (1,330) ------------------------------------------------------------------------------------- Retained earnings at end of period $ 82,430 $ 132,735 $ 7,661 $ 118,664 (208,755) $ 132,735 =====================================================================================
9 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS Six months ended September 30, 2001 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total -------- ----------- ----------- ----------- ------------ --------- Cash provided by (used in) operating activities $ 11,906 $ - $ 34 $ (13,105) $ - $ (1,165) Cash flows from investing activities Property, plant and equipment - additions (2,778) - - (4,419) - (7,197) - disposals 7 - - 370 - 377 Business (acquisitions) dispositions - - - 48 - 48 ---------------------------------------------------------------------------------- Cash provided by (used in) investing activities (2,771) - - (4,001) (6,772) Cash flows from financing activities: Proceeds from long-term borrowings - - - 4,850 - 4,850 Repayment of long-term borrowings - - - (8,810) - (8,810) Net change in short-term borrowings (656) 66 - (1,378) - (1,968) Buyback of Senior Notes (2,017) - - - - (2,017) Dividends received /( paid) - (1,330) - - - (1,330) Other - 1,264 - (3) - 1,261 ---------------------------------------------------------------------------------- Cash provided by (used in) financing activities (2,673) - - (5,341) - (8,014) Increase (decrease) in cash for year 6,462 - 34 (22,447) - (15,951) Cash at beginning of year 548 - 44 37,968 - 38,560 ---------------------------------------------------------------------------------- Cash at end of year $ 7,010 $ - $ 78 $ 15,521 - $ 22,609 ================================================================================== Interest $ 5,139 $ 1,872 $ - $ 6,730 $ 13,741 Income taxes 650 3,650 - 6,248 10,548
10 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING BALANCE SHEET September 30, 2000 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ------ --------- --------- ---------- ------------ ----- Assets Cash $ 502 $ 20 $ 35 $ 23,146 $ - 23,703 Receivables 24,663 1,523 18 169,091 - 195,295 Intercompany receivables 139,465 12,261 93 17,724 (169,543) - Inventories 92,591 - - 251,140 - 343,731 Prepaids and other 273 254 1 8,632 - 9,160 Marketable securities - 1 - 534 - 535 ----------------------------------------------------------------------------------- Current assets 257,494 14,059 147 470,267 (169,543) 572,424 Property, plant and equipment 21,473 - 16 120,651 - 142,140 Investment in subsidiaries 88,039 184,753 27,706 149,866 (450,364) - Investment in affiliates - - - 15,644 - 15,644 Other noncurrent assets 939 9,615 - 34,617 - 45,171 ----------------------------------------------------------------------------------- Total assets $367,945 $208,427 $ 27,869 $791,045 ($619,907) $775,379 =================================================================================== Liabilities Short-term borrowings $ 7,915 $ - $ - $247,323 $ - $255,238 Current portion of long-term debt - - - 9,982 - 9,982 Accounts payable 18,601 516 - 84,166 - 103,283 Intercompany accounts payable 42,444 167 1,574 125,358 (169,543) - Taxes accrued 15,625 (8,051) - 2,710 - 10,284 ----------------------------------------------------------------------------------- Current liabilities 84,585 (7,368) 1,574 469,539 (169,543) 378,787 Long-term debt 115,000 - - 12,866 - 127,866 Convertible subordinated debentures - 66,500 - - - 66,500 Retirement and other benefits 9,204 743 - 11,158 - 21,105 Deferred taxes (933) (1,557) - 8,122 - 5,632 ----------------------------------------------------------------------------------- Total liabilities 207,856 58,318 1,574 501,685 (169,543) 599,890 Minority interests - - - 26,670 - 26,670 Shareholders' equity Common stock 993 3,128 32,404 155,213 (188,610) 3,128 Additional paid-in capital 130,860 103,115 - 60,435 (191,295) 103,115 Unearned restricted stock plan compensation (464) (18) (5) (821) - (1,308) Treasury stock at cost - (4,250) - - - (4,250) Retained earnings 53,736 103,220 6,473 102,949 (163,158) 103,220 Accumulated other comprehensive income (25,036) (55,086) (12,577) (55,086) 92,699 (55,086) ----------------------------------------------------------------------------------- Total shareholders' equity 160,089 150,109 26,295 262,690 (450,364) 148,819 ----------------------------------------------------------------------------------- Total liabilities and equity $367,945 $208,427 $ 27,869 $791,045 ($619,907) $775,379 ===================================================================================
11 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS Second quarter ended September 30, 2000 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ------ --------- --------- ---------- ------------ ----- Sales $ 83,387 $ - $ 46 $247,368 $ (78,137) $252,664 Cost of sales: Materials services and supplies 70,197 - - 221,743 (78,137) 213,803 Interest 5,904 - - 4,843 - 10,747 ------------------------------------------------------------------------------------- Gross profit 7,286 - 46 20,782 - 28,114 Selling, general & administrative expenses 2,944 936 56 14,796 - 18,732 Other interest expense 149 1,304 - 354 - 1,807 Other income (expense) net 1,077 86 8 (777) - 394 ------------------------------------------------------------------------------------- Income (loss) before taxes 5,270 (2,154) (2) 4,855 - 7,969 Income taxes 1,791 (733) - 1,898 - 2,956 ------------------------------------------------------------------------------------- Income (loss) after taxes 3,479 (1,421) (2) 2,957 - 5,013 Minority interests - - - 24 - 24 Equity in earnings of affiliates - - - (20) - (20) Equity in earnings of subsidiaries 2,871 6,438 90 - (9,399) - ------------------------------------------------------------------------------------- Income before extraordinary gain 6,350 5,017 88 2,961 (9,399) 5,017 Extaordinary gain due to buyback of Convertible subordinated debentures net of income tax charge of $329,000 - 639 - - - 639 ------------------------------------------------------------------------------------- Net income 6,350 5,656 88 2,961 (9,399) 5,656 Retained earnings at beginning of period 47,386 98,215 6,385 99,988 (153,759) 98,215 Common stock dividends - (651) - - - (651) ------------------------------------------------------------------------------------- Retained earnings at end of period $ 53,736 $103,220 $ 6,473 $102,949 $(163,158) $103,220 =====================================================================================
12 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS Six months ended September 30, 2000 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ------ --------- --------- ---------- ------------ ----- Sales $ 126,880 $ - $ 86 $ 456,120 $(130,538) $ 452,548 Cost of sales: Materials services and supplies 104,478 - - 407,730 (130,538) 381,670 Interest 6,755 - - 10,033 - 16,788 ------------------------------------------------------------------------------------- Gross profit 15,647 - 86 38,357 - 54,090 Selling, general & administrative expenses 5,468 1,784 106 30,924 - 38,282 Other interest expense 349 2,623 - 679 - 3,651 Other income (expense) net 1,282 75 8 (684) - 681 ------------------------------------------------------------------------------------- Income (loss) before taxes 11,112 (4,332) (12) 6,070 - 12,838 Income taxes 3,778 (1,473) - 3,275 - 5,580 ------------------------------------------------------------------------------------- Income (loss) after taxes 7,334 (2,859) (12) 2,795 - 7,258 Minority interests - - - (644) - (644) Equity in earnings of affiliates - - - 91 - 91 Equity in earnings of subsidiaries 1,691 9,564 551 - (11,806) - ------------------------------------------------------------------------------------- Income before extraordinary gain 9,025 6,705 539 2,242 (11,806) 6,705 Extaordinary gain due to buyback of Convertible subordinated debentures net of income tax charge of $329,000 - 639 - - - 639 ------------------------------------------------------------------------------------- Net income 9,025 7,344 539 2,242 (11,806) 7,344 Retained earnings at beginning of period 44,711 97,177 5,934 100,707 (151,352) 97,177 Common stock dividends - (1,301) - - - (1,301) ------------------------------------------------------------------------------------- Retained earnings at end of period $ 53,736 $103,220 $ 6,473 $ 102,949 (163,158) $ 103,220 =====================================================================================
13 STANDARD COMMERCIAL CORPORATION SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS Six months ended September 30, 2000 (In thousands.)
Standard Commercial Standard Other Tobacco Co. Commercial Standard Subsidiaries Inc. Corporation Wool Inc. (Non- (Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total ------ --------- --------- ---------- ------------ ----- Cash provided by (used in) operating activities $ 5,611 $ - $ (7) $ 4,050 $ - $ 9,654 Cash flows from investing activities Property, plant and equipment - additions (821) - - (6,985) - (7,806) - disposals 1 - - 253 - 254 Business (acquisitions) dispositions - - - 12 - 12 ----------------------------------------------------------------------------------- Cash provided by (used in) investing activities (820) - - (6,720) (7,540) Cash flows from financing activities: Proceeds from long-term borrowings - - - 5,491 - 5,491 Repayment of long-term borrowings (2,940) - - (9,464) - (12,404) Net change in short-term borrowings (2,297) - - (4,524) - (6,821) Buyback of debentures - (1,861) - - - (1,861) Dividends received /( paid) - (1,301) - - - (1,301) Other 136 3,062 - (3,062) - 136 ----------------------------------------------------------------------------------- Cash provided by (used in) financing activities (5,101) (100) - (11,559) - (16,760) Increase (decrease) in cash for year (310) (100) (7) (14,229) - (14,646) Cash at beginning of year 812 120 42 37,375 - 38,349 ----------------------------------------------------------------------------------- Cash at end of year $ 502 $ 20 $ 35 $ 23,146 - $ 23,703 =================================================================================== Interest $ 5,241 $ 2,486 $ - $ 11,660 $ 19,387 Income taxes 823 1,700 - 2,658 5,181
14 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Sales for the quarter ended September 30, 2001 were $245.5 million, a decrease of 2.8% from a year earlier. Sales for the six-month period were $466.7 million, an increase of 3.1% from same period a year earlier. Tobacco division sales of $203.0 million and $373.3 million for the quarter and six months were down 2.5% and up 7.6%, respectively, from the corresponding periods in the prior year. The average unit price during the quarter was lower than the corresponding period in fiscal 2001. Overall, for the quarter, tobacco volume was up 10.5%, largely due to increased shipments from South America, Africa, Europe and Asia. For the six months, volume was 19.5% higher than the corresponding period in fiscal 2001. Fiscal 2001 period shipments were affected by crop delays in Brazil and Africa. This year's second quarter sales were also impacted by the change to contract buying by cigarette manufacturers in the United States. We expect that this will continue for the remainder of the current fiscal year, which will result in lower sales revenues. However, we continue to receive and process these tobaccos and do not expect income to be impacted by this change. Nontobacco sales of $42.5 million and $93.4 million for the current quarter and six months, respectively, were down 4.4% and 11.5% from the same periods a year earlier. The September quarter is usually weak due to Europe's summer holiday season. Wool sales were also affected by lower demand in Europe, where the spinners reacted to a drop-off in the demand for textile goods as consumers reacted to global economic uncertainty. Gross profit for the quarter and six months of $42.5 million and $69.4 million improved 51.2% and 28.3% from the corresponding periods in fiscal 2001, due to an increase in unit volume, sales mix and the contribution from the new processing line in Brazil. The additional processing capacity has enabled the Company to pack and ship customers' tobacco in a more efficient manner. In the past some of these tobaccos were processed and delivered during the third quarter due to insufficient processing capacity. Total interest expense was $4.5 million and $5.0 million lower than the corresponding quarter and six months periods in fiscal 2001 due to the Company's debt repurchase program, lower inventories and lower rates on short-term borrowings. Selling, general and administrative expenses decreased due to cost saving programs in both divisions. Prior year periods selling, general and adminstrative expenses included our Greek subsidiary company, which was traded for the remaining 49% interest in our Turkish operation during fiscal 2001. The increase in other income (expense)-net for the current six months period was mainly due to insurance recoveries of $0.7 million. The effective tax rate increased to 44.6% and 45.5% in the current second quarter and six months from 37.1% and 43.4% in the corresponding periods a year earlier. This was due to differences in tax rates and credits not utilized in some areas where losses were incurred. For the periods ended September 30, 2001 losses were incurred in the nontobacco segment where tax relief was not available. This segment recorded a small profit during the prior year periods. Net income for the quarter was $13.1 million, or $0.99 and $0.91 per share on a basic and diluted basis, respectively, versus $5.7 million, or $0.43 per share on both a basic and diluted basis for the corresponding prior year period. For the six-month period, net income was $16.8 million, or $1.27 and $1.19 per share on a basic and diluted basis respectively, versus $7.3 million, or $0.56 per share in the prior year period. The prior periods net income included an extraordinary gain of $0.05 per share due to buyback of convertible subordinated debentures. Basic and diluted earnings are the same in the prior year periods because the calculation of diluted earnings per share includes adjustments that are antidilutive. 15 STANDARD COMMERCIAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) Liquidity and Capital Resources Working capital at September 30, 2001 was $212.0 million, compared to $193.6 million a year earlier. Most of the increase was due to contributions from operating activities. During the current six months the Company bought $2.0 million of its Senior Notes using internally generated working capital. Capital expenditures of $7.2 million during the current six months consisted of routine expenditures of $5.9 million in the tobacco division and $1.3 million in wool division. The Company continues to closely monitor its inventory levels, which are down from $343.7 million a year ago to $294.7 million at September 30, 2001. On June 7, 2001 the Company's major tobacco subsidiaries amended their global revolving bank credit facility. The facility was decreased from $250.0 million to $230.0 million. The maturity date has been extended to July 31, 2003 from July 31, 2002. Financial covenants and other terms and conditions are essentially unchanged. Borrowings under the facility continue to be guaranteed by the Company and are secured by substantially all of the assets of the borrowers. Certain debt agreements to which the Company and its subsidiaries are parties contain financial covenants that could restrict the payment of cash dividends. Under its most restrictive covenant, the Company had approximately $15.8 million of retained earnings available for distribution as dividends at September 30, 2001. Based on the outlook for the business for the next twelve months, management anticipates that it will be able to service the interest and principal on its indebtedness, maintain adequate working capital and provide for capital expenditures out of operating cash flow and available borrowings under its credit facilities. Forward-Looking Statements Statements in this report that are not purely statements of historical fact may be deemed to be forward-looking. Readers are cautioned that any such forward- looking statements are based upon management's current knowledge and assumptions, and actual results could be affected in a material way by many factors, including ones over which the Company has little or no control, e.g. unforeseen changes in shipping schedules; the balance between supply and demand; and market, economic, political and weather conditions. More information regarding certain of these factors is contained in the Company's other SEC filings, copies of which are available upon request from the Company. The Company assumes no obligation to update any of these forward-looking statements. 16 PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a. An Annual Meeting of shareholders was held on August 14, 2001. b. Three persons nominated by management were elected as directors for terms expiring in 2003, as follows: Nominee Votes For Votes Withheld ------- --------- -------------- William S Barrack, Jr. 12,084,540 63,510 Charles H. Mullen 12,084,535 63,515 William S. Sheridan 12,081,407 66,643 In addition the following directors remained in office after the meeting: Marvin W. Coghill; Robert E. Harrison; William A. Ziegler; J.Alec G. Murray; Daniel M. Sullivan; B. Clyde Preslar; and Mark W. Kehaya. c. The appointment of Deloitte & Touche LLP as the Company's independent auditors for fiscal 2002 was approved by a vote of 12,107,463 shares in favor, 19,183 shares against and 21,403 shares abstaining. d. The adoption of the 2001 Performance Improvement Compensation Plan and to reserve an additional 750,000 shares was approved by a vote of 9,574,931 shares in favor, 560,848 shares against, 35,210 shares abstaining and 1,977,061 broker non-votes. Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. The following exhibit is filed as a part of this report: 11 Computation of Earnings per Common Share. b. The Company did not file any Current Reports on Form 8-K during the quarter ended September 30, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 7, 2001. STANDARD COMMERCIAL CORPORATION (Registrant) By /s/ Robert E Harrison --------------------------------- Robert E Harrison President, Chief Executive Officer By /s/ Robert A Sheets --------------------------------- Robert A Sheets Vice President and Chief Financial Officer 17 EX-11 3 dex11.txt EXHIBIT 11 - COMPUTATION OF EARNINGS EXHIBIT 11 STANDARD COMMERCIAL CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (In thousands, except share information; unaudited)
Second quarter ended Six months ended September 30 September 30 -------------------------- -------------------------- 2001 2000 2001 2000 ---- ---- ---- ----- BASIC EARNINGS PER SHARE Income before extraordinary gain/(loss)...................... $ 13,117 $ 5,017 $ 16,834 $ 6,705 Extraordinary gain/(loss).................................... $ (17) $ 639 $ (17) $ 639 ----------- ----------- ----------- ----------- Net income applicable to common stock........................ $ 13,100 $ 5,656 $ 16,817 $ 7,344 =========== =========== =========== =========== Basic average shares outstanding............................. 13,313,432 13,065,476 13,287,810 13,032,245 Earnings per common share before extraordinary gain/(loss).. $ 0.99 $ 0.38 $ 1.27 $ 0.51 Extraordinary gain per common share......................... $ 0.00 $ 0.05 $ 0.00 $ 0.05 Net income per common share................................. $ 0.99 $ 0.43 $ 1.27 $ 0.56 DILUTED EARNINGS PER SHARE Net income applicable to common stock before extraordinary gain/(loss).............................................. $ 13,117 $ 5,017 $ 16,834 $ 6,705 Add after tax interest expense on 7 1/4% convertible Subordinated debentures at November 1.................... 618 816 1,236 1,641 ----------- ----------- ----------- ----------- Net income applicable to common stock before extraordinary gain/(loss).............................................. 13,735 5,833 18,070 8,346 Extraordinary gain/(loss).................................... (17) 639 (17) 639 ----------- ----------- ----------- ----------- Net income applicable to common stock after extraordinary gain/(loss).............................................. $ 13,718 $ 6,472 $ 18,053 $ 8,985 =========== =========== =========== =========== Basic average shares outstanding............................. 13,313,432 13,065,476 13,287,810 13,032,245 Increase in shares outstanding assuming - conversion of 7 1/4% convertible subordinated.......... Debentures at November 13, 1991.......................... 1,758,067 2,320,172 1,758,067 2,334,354 Shares applicable to stock options........................... 83,990 0 80,133 0 ----------- ----------- ----------- ----------- Diluted average shares outstanding........................... 15,155,489 15,385,648 15,126,010 15,366,599 ----------- ----------- ----------- ----------- Diluted earnings per common share before extraordinary....... Gain/(loss).................................................. $ 0.91 $ 0.38 $ 1.19 $ 0.51 Extraordinary gain per common share.......................... $ 0.00 $ 0.05 $ 0.00 $ 0.05 Diluted net income per common share.......................... $ 0.91 $ 0.43 $ 1.19 $ 0.56