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 JUNE 30, 1999
COMMISSION FILE NUMBER 1-9875
[STANDARD LOGO]
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
Former name, former address and former fiscal year, if changed since last report
- - Not applicable
On August 2, 1999 the registrant had outstanding 12,942,470 shares of Common
Stock ($.20 par value).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) had been subject to such filing requirements for
the past 90 days.
YES X NO
-------- --------
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
June 30 March 31
------------------ ---------
1999 1998 1999
---- ---- ----
(unaudited)
ASSETS
Cash............................................$ 32,279 $45,138 $ 43,767
Receivables..................................... 269,671 272,966 228,910
Inventories..................................... 386,926 373,244 376,922
Prepaid expenses................................ 5,945 7,190 5,353
Marketable securities........................... 641 1,131 656
-----------------------------
Current assets............................... 695,462 699,669 655,608
Property, plant and equipment................... 151,664 107,310 155,389
Investment in affiliates........................ 15,861 14,751 12,782
Other assets.................................... 53,982 57,247 54,618
-----------------------------
Total assets................................. $916,969 $878,977 $878,397
=============================
LIABILITIES
Short-term borrowings........................... $328,475 $297,842 $280,587
Current portion of long-term debt............... 12,697 4,509 12,646
Accounts payable................................ 147,977 158,960 149,433
Taxes accrued................................... 10,778 20,960 14,159
-----------------------------
Current liabilities.......................... 499,927 482,271 456,825
Long-term debt.................................. 139,522 125,776 144,161
Convertible subordinated debentures............. 69,000 69,000 69,000
Retirement and other benefits................... 20,599 19,577 20,224
Deferred taxes.................................. 8,934 2,502 8,875
-----------------------------
Total liabilities............................ 737,982 699,126 699,085
-----------------------------
MINORITY INTERESTS.............................. 28,426 28,537 28,307
-----------------------------
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 15,554,772
(June 98 - 15,429,220; Mar 99 - 15,540,078)... 3,111 3,086 3,108
Additional paid-in capital...................... 102,755 101,853 102,680
Unearned restricted stock plan compensation..... (2,031) (1,896) (2,177)
Treasury shares, 2,617,707 (June 98 -
2,617,707; Mar 99 - 2,617,707) (4,250) (4,250) (4,250)
Retained earnings............................... 90,045 84,958 89,430
Accumulated other comprehensive income.......... (39,069) (32,437) (37,786)
-------------------------------
Total shareholders' equity................... 150,561 151,314 151,005
-------------------------------
Total liabilities and equity................. $ 916,969 $878,977 $ 878,397
===============================
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (In thousands, except per
share data; unaudited)
Three months ended
June 30
-------
1999 1998
---- ----
Sales - tobacco $196,253 $226,257
- nontobacco..................................... 50,514 64,151
-----------------------
Total sales......................................... 246,767 290,408
Cost of sales
- Materials, services and supplies................. 215,847 260,640
- Interest......................................... 5,430 5,213
-----------------------
Gross profit..................................... 25,490 24,555
Selling, general and administrative expenses.......... 18,637 17,997
Other interest expense................................ 4,631 4,317
Other income (expense) - net.......................... 816 2,640
-----------------------
Income before taxes.............................. 3,038 4,881
Income taxes.......................................... 1,904 2,210
-----------------------
Income after taxes............................... 1,134 2,671
Minority interests.................................... (351) (749)
Equity in earnings of affiliates...................... 479 93
-----------------------
Net income....................................... 1,262 2,015
Retained earnings at beginning of period.............. 89,430 82,943
Common stock dividends ............................... (647) -
-----------------------
Retained earnings at end of period.................... $90,045 $84,958
=======================
Earnings per common share
Basic and dilulted - net............................ $0.10 $0.16
- average shares outstanding..... 12,933 12,810
Dividend declared per common share.................... $0.05 nil
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
STANDARD COMMERCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands; unaudited)
Three months ended
June 30
-------
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................ $1,262 $2,015
Depreciation and amortization....................... 5,533 4,702
Minority interests.................................. 351 749
Deferred income taxes............................... 132 (386)
Undistributed earnings of affiliates net of
dividends received................................ (479) (93)
Gain on disposition of property, plant and
equipment......................................... (157) (1,889)
Other............................................... 2,041 (1,714)
------------------------
8,683 3,384
Net changes in working capital other than cash
Receivables......................................... (43,698) (19,084)
Inventories......................................... (10,941) (15,126)
Current payables.................................... (4,382) 15,505
-----------------------
CASH USED FOR OPERATING ACTIVITIES.................... (50,338) (15,321)
------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment - additions (2,362) (2,422)
- dispositions 252 6,916
Business acquisitions ................................ (2,532) (5,342)
------------------------
Cash used for investing activities.................... (4,642) (848)
-----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings................... 47,889 30,043
Proceeds from long-term borrowings.................... 810 66
Repayment of long-term borrowings..................... (5,285) (2,983)
Other................................................. 78 65
-----------------------
CASH PROVIDED BY FINANCING ACTIVITIES................ 43,492 27,191
-----------------------
Increase (decrease) in cash for period................ (11,488) 11,022
Cash at beginning of period........................... 43,767 34,116
-----------------------
CASH AT END OF PERIOD................................. $ 32,279 $45,138
=======================
Cash payments for - interest.................... $5,963 $6,423
- income taxes................ $4,987 $3,460
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
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
June 30, 1999. 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 a full year.
2.INVENTORIES
June 30 March 31
--------------------------------------- --------
(In thousands) 1999 1998 1999
---- ---- ----
Tobacco $332,176 $311,549 $315,506
Nontobacco 54,750 61,695 61,416
---- -------- --------
Total $386,926 $373,244 $376,922
======== ======== ========
3.COMPREHENSIVE INCOME
The statement on comprehensive income requires that an enterprise (1) classify
items of other comprehensive income by their nature in a financial statement
and (2) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid in capital in the equity
section of the balance sheet.
The components of comprehensive income were as follows:
June 30
-------
1999 1998
---- ----
(In thousands)
Net income $1,262 $2,015
Other comprehensive income:
Translation adjustment (1,283) (497)
------- -----
Total comprehensive income (loss) $ (21) $1,518
------- -------
4.EARNINGS PER SHARE
Earnings per share has been presented in conformity with Statement of Financial
Accounting Standards No.128. In computing the diluted per-share amounts the
incremental shares from assumed conversion of 7 1/4% Convertible Subordinated
Debentures and the exercise of outstanding stock options are not included
because the calculations include adjustments which are antidilutive.
5.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 are as follows:
June 30
-------------------
1999 1998
------ ----
(In thousands
Sales
Tobacco $196,253 $226,257
Nontobacco 50,514 64,151
-------- --------
$246,767 $290,408
-------- --------
Net income
Tobacco $ 1,840 $ 2,533
Nontobacco (578) (518)
------ -------
$ 1,262 $ 2,015
----- -----
-5-
<PAGE>
STANDARD COMMERCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
6.SENIOR NOTES
The 8 7/8 % Senior Notes due 2005 were issued by Stanadard Commecial 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 Guarators.
-6-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEET
June 30, 1999 (In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Assets
Cash $ 48 $ 9 $ 29 $ 32,193 $ - $ 32,279
Receivables 28,082 2,150 133 239,306 - 269,671
Intercompany receivables 141,748 16,440 9 12,338 (170,535) -
Inventories 118,797 - 653 267,476 - 386,926
Prepaid expenses 401 381 14 5,149 - 5,945
Marketable securities - 1 - 640 - 641
---------------------------------------------------------------------------------------
Current assets 289,076 18,981 838 557,102 (170,535) 695,462
Property, plant and equipment 23,975 - 80 127,609 - 151,664
Investment in subsidiaries 81,124 224,095 36,317 150,230 (491,766) -
Investment in affiliates - - - 15,861 - 15,861
Other noncurrent assets 5,421 10,381 - 38,180 - 53,982
---------------------------------------------------------------------------------------
Total assets $399,596 $253,457 $37,235 $888,982 ($662,301) $916,969
=======================================================================================
Liabilities
Short-term borrowings $ 17,415 $ - $ - $ 311,060 $ - $ 328,475
Current portion of long-term debt - - - 12,697 - 12,697
Accounts payable 7,455 2,375 15 138,132 - 147,977
Intercompany accounts payable 49,254 34,724 1,742 84,815 (170,535) -
Taxes accrued 7,462 (4,360) (43) 7,719 - 10,778
---------------------------------------------------------------------------------------
Current liabilities 81,586 32,739 1,714 554,423 (170,535) 499,927
Long-term debt 117,940 - - 21,582 - 139,522
Convertible subordinated debentures - 69,000 - - - 69,000
Retirement and other benefits 8,656 705 - 11,238 - 20,599
Deferred taxes 125 (1,548) - 10,357 - 8,934
---------------------------------------------------------------------------------------
Total liabilities 208,307 100,896 1,714 597,600 (170,535) 737,982
Minority interests - - - 28,426 - 28,426
Shareholders' equity
Common stock 993 3,111 32,404 144,312 (177,709) 3,111
Additional paid-in capital 130,860 102,755 - 60,564 (191,424) 102,755
Unearned restricted stock
plan compensation (685) (31) (8) (1,307) - (2,031)
Treasury stock at cost - (4,250) - - - (4,250)
Retained earnings 77,413 90,045 6,041 98,456 (181,910) 90,045
Accumulated other comprehensive income (17,292) (39,069) (2,916) (39,069) 59,277 (39,069)
---------------------------------------------------------------------------------------
Total shareholders' equity 191,289 152,561 35,521 262,956 (491,766) 150,561
---------------------------------------------------------------------------------------
Total liabilities and equity $399,596 $253,457 $37,235 $888,982 ($662,301) $916,969
=======================================================================================
</TABLE>
-7-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Three months ended June 30, 1999
(In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Sales $ 24,568 $ - $ 302 $ 276,689 $ (54,792) $ 246,767
Cost of sales:
Materials services and supplies 20,725 - 290 249,624 (54,792) 215,847
Interest - - - 5,430 - 5,430
---------------------------------------------------------------------------------
Gross profit 3,843 - 12 21,635 - 25,490
Selling, general &
administrative expenses 2,746 532 94 15,265 - 18,637
Other interest expense 2,819 1,313 - 499 - 4,631
Other income (expense) net 1,657 123 (45) (919) - 816
---------------------------------------------------------------------------------
Income (loss) before taxes (65) (1,722) (127) 4,952 - 3,038
Income taxes (22) (586) (43) 2,555 - 1,904
---------------------------------------------------------------------------------
Income (loss) after taxes (43) (1,136) (84) 2,397 - 1,134
Minority interests - - - (351) - (351)
Equity in earnings of affiliates - - - 479 - 479
Equity in earnings of subsidiaries 3,001 2,398 (476) - (4,923) -
---------------------------------------------------------------------------------
Net income 2,958 1,262 (560) 2,525 (4,923) 1,262
Retained earnings at beginning
of period 81,455 89,430 6,601 95,931 (183,987) 89,430
Common stock dividends (7,000) (647) - - 7,000 (647)
---------------------------------------------------------------------------------
Retained earnings at end of period $ 77,413 $ 90,045 $ 6,041 $ 98,456 $ (181,910) $ 90,045
=================================================================================
</TABLE>
-8-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Three months ended June 30, 1999 (In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Cash provided by (used in)
operating activities $ (17,901) $ - $ (19) $ (32,418) $ - $ (50,338)
---------------------------------------------------------------------------------------
Cash flows from investing activities
Property, plant and equipment
- additions (489) - (4) (1,869) - (2,362)
- disposals 91 - - 161 - 252
Business (acquisitions) dispositions - - - (2,532) - (2,532)
---------------------------------------------------------------------------------------
Cash provided by (used in)
investing activities (398) - (4) (4,240) - (4,642)
---------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in short-term borrowings 17,415 - - 30,474 - 47,889
Proceeds from long-term borrowings - - - 810 - 810
Repayment of long-term borrowings - - - (5,285) - (5,285)
Net proceeds of equity offering - - - - - -
Other 69 9 - - - 78
---------------------------------------------------------------------------------------
Cash provided by (used in)
financing activities 17,484 9 - 25,999 - 43,492
---------------------------------------------------------------------------------------
Increase (decrease) in cash for year (815) 9 (23) (10,659) - (11,488)
Cash at beginning of year 863 - 52 42,852 - 43,767
---------------------------------------------------------------------------------------
Cash at end of year $ 48 $ 9 $ 29 $ 32,193 $ - $ 32,279
=======================================================================================
Interest $ 128 $ - $ - $ 5,835 $ - $ 5,963
Income taxes 274 1,517 - 3,196 - 4,987
</TABLE>
-9-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING BALANCE SHEET
June 30, 1998 (In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Assets
Cash $ 16,796 $ 24 $ 230 $ 28,088 $ - $ 45,138
Receivables 15,020 589 421 256,936 - 272,966
Intercompany receivables 170,572 17,783 37 17,780 (206,172) -
Inventories 53,401 - 1,137 318,706 - 373,244
Prepaid expenses 621 - 15 6,554 - 7,190
Marketable securities - 1 - 1,130 - 1,131
----------------------------------------------------------------------------------
Current assets 256,410 18,397 1,840 629,194 (206,172) 699,669
Property, plant and equipment 21,015 - 71 86,224 - 107,310
Investment in subsidiaries 68,271 223,373 36,318 169,089 (497,051) -
Investment in affiliates 3,527 - - 11,224 - 14,751
Other noncurrent assets 6,755 13,585 - 36,907 - 57,247
----------------------------------------------------------------------------------
Total assets $355,978 $255,355 $38,229 $932,638 ($703,223) $878,977
==================================================================================
Liabilities
Short-term borrowings $ - $ - $ - $ 297,842 $ - $ 297,842
Current portion of long-term debt - - - 4,509 - 4,509
Accounts payable 11,352 1,624 45 145,939 - 158,960
Intercompany accounts payable 21,853 35,691 1,839 146,789 (206,172) -
Taxes accrued 7,063 (2,472) (42) 16,411 - 20,960
----------------------------------------------------------------------------------
Current liabilities 40,268 34,843 1,842 611,490 (206,172) 482,271
Long-term debt 117,940 - - 7,836 - 125,776
Convertible subordinated debentures - 69,000 - - - 69,000
Retirement and other benefits 8,218 645 - 10,714 - 19,577
Deferred taxes 221 (2,316) - 4,597 - 2,502
----------------------------------------------------------------------------------
Total liabilities 166,647 102,172 1,842 634,637 (206,172) 699,126
Minority interests - - - 28,537 - 28,537
Shareholders' equity
Common stock 993 3,086 25,404 136,305 (162,702) 3,086
Additional paid-in capital 130,860 101,853 - 64,839 (195,699) 101,853
Unearned restricted stock
plan compensation (659) (27) (8) (1,202) - (1,896)
Treasury stock at cost - (4,250) - - - (4,250)
Retained earnings 72,305 84,958 10,794 101,959 (185,058) 84,958
Accumulated other comprehensive income (14,168) (32,437) 197 (32,437) 46,408 (32,437)
----------------------------------------------------------------------------------
Total shareholders' equity 189,331 153,183 36,387 269,464 (497,051) 151,314
----------------------------------------------------------------------------------
Total liabilities and equity $355,978 $255,355 $38,229 $932,638 ($703,223) $878,977
==================================================================================
</TABLE>
-10-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
Three months ended June 30, 1998
(In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Sales $ 29,334 $ - $ 591 $ 295,583 $ (35,100) $ 290,408
Cost of sales:
Materials services and supplies 25,872 - 554 269,314 (35,100) 260,640
Interest 102 - - 5,111 - 5,213
----------------------------------------------------------------------------------------
Gross profit 3,360 - 37 21,158 - 24,555
Selling, general &
administrative expenses 2,956 642 101 14,298 - 17,997
Other interest expense 2,790 1,307 2 218 - 4,317
Other income (expense) net 4,555 134 (56) (1,993) - 2,640
----------------------------------------------------------------------------------------
Income (loss) before taxes 2,169 (1,815) (122) 4,649 - 4,881
Income taxes 738 (617) (42) 2,131 - 2,210
----------------------------------------------------------------------------------------
Income (loss) after taxes 1,431 (1,198) (80) 2,518 - 2,671
Minority interests - - - (749) - (749)
Equity in earnings of affiliates - - - 93 - 93
Equity in earnings of subsidiaries 2,306 3,213 (444) - (5,075) -
----------------------------------------------------------------------------------------
Net income 3,737 2,015 (524) 1,862 (5,075) 2,015
Retained earnings at beginning
of period 68,568 82,943 11,318 100,097 (179,983) 82,943
Common stock dividends - - - - - -
----------------------------------------------------------------------------------------
Retained earnings at end of period $ 72,305 $ 84,958 $ 10,794 $ 101,959 $ (185,058) $ 84,958
========================================================================================
</TABLE>
-11-
<PAGE>
STANDARD COMMERCIAL CORPORATION
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
Three months ended June 30, 1998 (In thousands.)
<TABLE>
<CAPTION>
Standard
Commercial Standard Other
Tobacco Co. Commercial Standard Subsidiaries
Inc. Corporation Wool Inc. (Non-
(Issuer) (Guarantor) (Guarantor) Guarantors) Eliminations Total
-------- ----------- ----------- ----------- ------------ -----
<S> <C>
Cash provided by (used in)
operating activities $ 6,131 $ (99) $ 9 $ (21,362) $ - $ (15,321)
---------------------------------------------------------------------------------
Cash flows from investing activities
Property, plant and equipment
- additions (489) - (21) (1,912) - (2,422)
- disposals 4,406 - - 2,510 - 6,916
Business (acquisitions) dispositions - - - (5,342) - (5,342)
---------------------------------------------------------------------------------
Cash provided by (used in)
investing activities 3,917 - (21) (4,744) - (848)
---------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in short-term borrowings - - - 30,043 - 30,043
Proceeds from long-term borrowings - - - 66 - 66
Repayment of long-term borrowings (83) - - (2,900) - (2,983)
Net proceeds of equity offering - - - - - -
Other - 65 - - - 65
---------------------------------------------------------------------------------
Cash provided by (used in)
financing activities (83) 65 - 27,209 - 27,191
---------------------------------------------------------------------------------
Increase (decrease) in cash for year 9,965 (34) (12) 1,103 - 11,022
Cash at beginning of year 6,831 58 242 26,985 - 34,116
---------------------------------------------------------------------------------
Cash at end of year $ 16,796 $ 24 $ 230 $ 28,088 $ - $ 45,138
=================================================================================
Interest $ 62 $ 5 $ - $ 6,356 $ - $ 6,423
Income taxes 183 1,743 - 1,534 - 3,460
</TABLE>
-12-
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales for the quarter ended June 30, 1999 were $246.8 million, versus $290.4
million from a year earlier. Sales of $196.3 million for the tobacco division
were down 13.3% from the corresponding period in 1998. While tobacco volumes
from Africa and South America were higher than last year, overall tobacco volume
was down by 2.7%. Average sales prices were 10.8% below the prior year's first
quarter, reflecting current leaf supply levels and large crops in Brazil.
Nontobacco sales of $50.5 million were down 21.3% because of flat volumes and
weaker pricing as trading conditions remain difficult.
Gross profit for the quarter of $25.5 million improved 3.8% from the 1998
quarter due primarily to mix. Selling, general and administrative expenses
increased slightly due to inflationary factors. Other income in the period
included gain on disposition of assets of $0.2 million, versus $1.9 million in
the prior period.
Income before taxes was lower mainly due to the reduction in the other income
stated above. The effective tax rate increased from 45.3% during the first
quarter in 1998 to 62.7% in the current quarter. This was mainly due to
differences in tax rates and tax credits not utilisable in certain areas where
losses are incurred. Income attributable to minority interest decreased due to a
shift in the mix of oriental tobaccos shipped. Equity in earnings of affilates
were up as a result of contributions from Far East and African affiliates.
Net income was $1.3 million, or $0.10 per share on a basic and diluted basis
with 12.9 million average shares outstanding versus $2.0 million, or $0.16 per
share on 12.8 million shares outstanding for the June 1998 quarter.
Liquidity and Capital Resources
Working capital at June 30, 1999 was $195.5 million, compared to $217.4 million
a year earlier. Most of the decrease was due to the utilisation of working
capital towards additions to property plant and equipment and business
acquisitions. Capital expenditures during the 1999 quarter of $2.4 million
consisted primarily of routine expenditures of $2.1 million in the tobacco
division and $0.3 million in the wool division. During the same period the wool
division invested $2.5 million in a Australian wool washing operation. Cash used
in operating activities during the first quarter totaled $50.3 million mainly
due to increases in receivables and inventories. The Company continues to
closely monitor its inventory levels which fluctuate depending on seasonal
factors and timing of deliveries to customers.
During the first quarter of fiscal 1999 the Company's major tobacco subsidiaries
successfully completed the amendment of their global revolving bank credit
facility. The amount of the facility was increased from $200.0 million to $233.0
million. The maturity date was extended to 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 agreement to
which the Company and its subsidiaries are parties contain financial covenants
which could restrict payment of cash dividends. Under its most restrictive
covenant, the Company had approximately $14.9 million of retained earnings
available for distribution as dividends at June 30, 1999.
-13-
<PAGE>
Year 2000 Matters
The approach of the year 2000 (Y2K) has heightened the concern over potential
problems with data systems that may or may not be able to process year dates
properly after 1999. Affected systems and devices may fail or malfunction if not
remedied or replaced. The actual effects and magnitude of these potential
problems are difficult to quantify. From 1991to 1994, the Company began to move
away from mainframe based systems and became early adopters of PC, LAN and
client-server solutions to meet information needs. New systems were developed
internally to accommodate dates as proper dates types rather than encoded string
variables or limited serial numeric dates. A steering committee representing all
functional areas of the company was formed in 1997. The committee is charged
with developing a plan to ensure readiness, advising group companies of issues,
monitering progress and compliance, and allocating resources for solutions. The
plan adopted consists of two main areas of focus.
(1). Internal issues.
- ---------------------
This area includes the effect on the company's technology, including hardware,
software and equipment containing other embedded systems such as programmable
logic controllers (PLC). The critical systems identified include manufacturing,
inventory and financial systems. The plan is to identify technology at each
location, evaluate the exposure of such technology to Y2K problems, test the
technology for problems and select the means to resolve the identified problems.
The company has made substantial progress on the internal plan. A comprehensive
file for each location has been developed and individual site follow-up visits
to each location by members of the steering committee are scheduled to be
completed by Septemebr 1999. Testing and detailed reviews by a dedicated full
time information resources technician at major sites were completed and his
recommendations are being followed up. The move to internally developed core
systems alleviated the major issues associated with Y2K. In locations were the
Company uses externally provided software, or PLC technology in equipment,
testing has been completed and vendor surveys have been performed. The one major
potential problem identified was in a European subsidiary manufacturing
facility. The Company has replaced the systems in that location with our
internally developed software. Although there can be no absolute assurance that
the Y2K plan will be able to identify all potential problem areas, the Company
is presently on schedule to complete the internal phase of the plan. Contingency
plans are currently being developed to sustain operations and continue to
provide a high level of customer service.
(2).External issues.
- --------------------
The Company has communicated with and continues to communicate with its
suppliers, customers, financial institutions and other business partners to
determine the extent of readiness and compliance with Y2K issues. Responses are
being catalogued and follow-up communications are ongoing as necessary. Certain
significant customers and suppliers are located in foreign countries where the
awareness of Y2K problems and remediation efforts may be behind that of the
United States. Additionally, the Company is subject to operational risks
relating to readiness of utilities, transportation facilities, financial service
providers and government operated services that could interrupt business unit
operations. There can be no assurance that all these business partners will be
fully compliant or the problems they may encounter will have no adverse effect
on company operations. The Company currently estimates that the total cost for
addressing Y2K issues will be $1.4 million, which includes the cost of
installing internally developed manufacturing software in the European
subsidiary, any software upgrades from vendors necessary to be compliant and the
cost of consultants and employees assigned to implement the plan. These amounts
do not include estimated costs to implement any contingency plans that are
currently being developed. The costs associated with Y2K issues are expensed as
incurred and are funded with cash flow from operations. As of June 30, 1999 the
Company had expensed $1.10 million. The Company does not expect the total costs
of addressing these issues to be material to its consolidated financial position
or results of operations. While there can be no absolute assurance that the
Company can identify and address all potential issues arising from Y2K issues,
the management believes that the Company is taking adequate action and will be
able to continue providing quality products and services to our customers.
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.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. The following exhibits are filed as a part of this report:
4(i)Fourth Supplemental Agreement dated May 18, 1999 between the
company and certain subsidiaries and Deutsche Bank A.G. et al.
11 Computation of Earnings per Common Share.
27 Financial Data Schedule
b. The Company did not file any reports on Form 8-K during the quarter.
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: August 10, 1999
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
-15-
<PAGE>
STANDARD COMMERCIAL CORPORATION EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share information; unaudited)
First quarter ended
June 30
1999 1998
---- ----
BASIC AND DILUTED EARNINGS PER SHARE
Net income applicable to common stock................. $1,262 $2,015
=================
Basic average shares outstanding...................... 12,933,331 12,809,842
=====================
Earnings per common share
- net............................................. $0.10 $0.16
================
Note: The incremental shares from assumed conversion of 7 1/4% convertible
subordinated debentures and the exercise of outstanding stock options are not
included in computing the diluted per-share amounts because the calculations
include adjustments which are antidilutive.
-16-
<PAGE>
CONFORMED COPY
DATED 18 May 1999
-----------------
Trans-Continental Leaf Tobacco Corporation Limited, (1)
Standard Commercial Tobacco Company (UK) Limited
and
Standard Commercial Tobacco Co., Inc.
(as Borrowers)
Standard Commercial Corporation (2)
(as Guarantor)
The Steering Committee (3)
Deutsche Bank A.G. in Hamburg (4)
(as Lead Bank)
MeesPierson N.V. (5)
(as International Security Agent)
Bankers Trust Company (6)
(as Retiring US Security Agent, Retiring Co-Lead Bank and Retiring
Documentation Agent)
First Union National Bank (7)
(as Incoming US Security Agent and future Steering Committee
member)
The Banks (8)
---------------------------------------------
FOURTH SUPPLEMENTAL AGREEMENT
TO THE MASTER FACILITIES AGREEMENT
---------------------------------------------
LOVELL WHITE DURRANT
65 Holborn Viaduct
London EC1A 2DY
A7/KB/NPF/509951.9
<PAGE>
THIS AGREEMENT is made the May 1999
BETWEEN:
(1) THE COMPANIES LISTED IN SCHEDULE 1 (the "Borrowers");
(2) STANDARD COMMERCIAL CORPORATION (Federal Tax Identification Number
13/1337610) whose registered office is at 2201 Miller Road, PO Box 450,
Wilson NC 27894-0450, USA ("SCC");
(3) BANKERS TRUST COMPANY, DEUTSCHE BANK A.G. IN HAMBURG, MEESPIERSON N.V.,
NORDDEUTSCHE LANDESBANK GIROZENTRALE AND WESTDEUTSCHE LANDESBANK
GIROZENTRALE (the "Steering Committee");
(4) DEUTSCHE BANK A.G. in Hamburg (the "Lead Bank");
(5) MEESPIERSON N.V. (the "International Security Agent");
(6) BANKERS TRUST COMPANY (in its capacity as Retiring US Security Agent,
Retiring Co-Lead Bank and Retiring Documentation Agent);
(7) FIRST UNION NATIONAL BANK (in its capacity as Incoming US Security Agent
and future Steering Committee member);
(8) THE BANKS LISTED IN SCHEDULE 2 ("the Banks").
WHEREAS:
(A) On 5 May, 1995, certain of the parties entered into the MFA (as defined
below).
(B) The MFA was amended and supplemented by a first supplemental agreement
dated 1 February 1996, a second supplemental agreement dated 16 July 1996
and a third supplemental agreement dated 31 July 1997.
(C) The parties now wish to amend and supplement the MFA as set out in this
Agreement.
IT IS AGREED:
1. DEFINITIONS
1.1 Save as expressly provided in this Agreement, expressions defined in the
MFA shall bear the same meanings in this Agreement and principles of
interpretation applicable to the MFA shall also apply to this Agreement.
1.2 In this Agreement the following expressions shall have the following
respective meanings:
"MFA" means the Master Facilities Agreement dated 5th May 1995 as amended
by a first Supplemental Agreement dated 1 February 1996 , by a Second
Supplemental Agreement dated 16 July 1996 and a Third Supplemental
Agreement dated 31 July 1997 and otherwise as amended, varied,
supplemented and in force immediately prior to the Effective
Date;
<PAGE>
"Effective Date" means the first date on which the Lead Bank shall have
received the documents and payments referred to in clause 3 below,
satisfactory in form and substance to the Lead Bank and on which the Lead
Bank is satisfied with the matters referred to in clause 3 of this
Agreement;
1.3 Unless otherwise specified, any reference in this Agreement to a Clause or
a Schedule is to a Clause or a Schedule of the MFA.
1.4 The MFA shall be amended as set out below.
2. AMENDMENT
2.1 With effect from the Effective Date, the MFA shall be amended as follows:
(a) by deleting the existing definition of "Final Repayment Date" and
replacing it with the following words:
"31 July 2002, (save in respect of Berliner Bank AG whose Facility
expires and shall be repayable in full on 31 July 2000) or, if that
day is not a Business Day, the immediately preceding Business Day";
(b) by deleting the definitions and references to "Co-Lead Bank" and
"Documentation Agent");
(c) by adding to the definition of "Tobacco Group Company" after the
words "may agree in writing from time to time" the words "and SCTC
Inc. and the Lead Bank hereby designate Spierer Tutun Ihracat Sinayi
Ticaret AS (which will be a wholly owned Subsidiary of SCTC Inc) as
a Tobacco Group Company";
(d) by renumbering the wording in clause 14.2 (Restriction on
Encumbrances) following the clause heading as (a) and by inserting a
new sub-clause (b) as follows:
"(b) neither SCC nor any member of the Greater Group shall create
or agree to create or permit to subsist any Encumbrance on any
of the shares in the share capital of Spierer Tutun Ihracat
Sinayi Ticaret AS owned by it nor shall it sell or otherwise
dispose of any interest in such shares;"
(e) by adding to the end of clause 14.11 (Dividends and Distributions)
the words "provided that, the dividend payment described in the
letter dated 28 April 1999 from SCC to the Lead Bank shall not be
deemed to constitute a dividend for the purposes of this clause
14.11 and shall be treated as a Permitted Disposal to which clause
8(b) (Prepayment) applies and clause 14.7(c) (Restrictions on
Disposals) does not apply."
(f) by deleting the wording of clause 15.1 (Borrowings) of the MFA and
replacing it with "deleted";
<PAGE>
-3-
(g) by deleting the wording of clause 15.3 (Monthly Reports) of the MFA
and replacing it with "deleted";
(h) by adding to clause 15.4 (Quarterly Reports) of the MFA a new
sub-clause (f) as follows:
"(f) Rolling Cash Flow: a rolling twelve month Cash Flow Forecast
for the Borrowers commencing on the Quarter Date, in the form
or substantially the form attached as Appendix B for the
Trading Periods following the Quarter Date. The International
Security Agent agrees to use reasonable endeavours to
distribute such Cash Flow Forecast to the Banks as soon as
reasonably practicable."
(i) by amending clause 16.1 (Financial Covenants) as follows:
(i) deleting the wording and figures in sub-clause (a) appearing
under the headings "Minimum Tangible Net Worth" and "Period"
and replacing it with the following:
"Minimum Tangible Net Worth Period
$ 80,000,000 31 July 1997 to 31 March 1998
$ 95,000,000 1 April 1998 to 31 March 1999
$ 102,500,000 1 April 1999 to 31 March 2000
and thereafter increasing by $5,000,000 in each 12 month
period up to the Final Repayment Date."
(ii) deleting the wording and figures in sub-clause (b) appearing
under the headings "SCC Tangible Net Worth" and "Period" and
replacing it with the following:
"SCC Tangible Net Worth Period
$ 125,000,000 31 July 1997 to 31 March 1998
$ 140,000,000 1 April 1998 to 31 March 1999
$ 150,000,000 1 April 1999 to 31 March 2000
and thereafter increasing by $5,000,000 in each 12 month
period up to the Final Repayment Date."
(j) by deleting the existing Schedule II to the MFA and replacing it
with the following:
<PAGE>
-4-
SCHEDULE II
THE BANKS
- -----------------------------------------------------------------------------
Bank Commitment
- -----------------------------------------------------------------------------
ABN Amro Bank $15,000,000
- -----------------------------------------------------------------------------
Berliner Bank AG $15,000,000
- -----------------------------------------------------------------------------
Berenberg Bank $7,500,000
- -----------------------------------------------------------------------------
BHF Bank AG $15,000,000
- -----------------------------------------------------------------------------
Crestar Bank, Inc. $15,000,000
- -----------------------------------------------------------------------------
Commerzbank AG $15,000,000
- -----------------------------------------------------------------------------
Deutsche Bank AG $40,000,000
- -----------------------------------------------------------------------------
KBC Bank NV $12,500,000
- -----------------------------------------------------------------------------
MeesPierson NV $20,000,000
- -----------------------------------------------------------------------------
Norddeutsche Landesbank Girozentrale $23,000,000
- -----------------------------------------------------------------------------
Standard Chartered Bank $20,000,000
- -----------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale $20,000,000
- -----------------------------------------------------------------------------
First Union National Bank $15,000,000
- -----------------------------------------------------------------------------
Total $233,000,000
- -----------------------------------------------------------------------------
(k) by deleting the existing Schedule III to the MFA and replacing it
with the following Schedule III:
SCHEDULE III
THE OBLIGORS
Name Place of Company
Incorporation Number
Standard Commercial Corporation North Carolina 13/1337610
Trans-Continental Leaf Tobacco
Corporation Limited Liechtenstein H.LIV/14
Standard Commercial Tobacco Company
(U.K.) Limited England 1411968
Standard Commercial Tobacco
Co., Inc. North Carolina 56-0323420
Trans-Continental Leaf Tobacco
Corporation (Jersey) Limited Jersey 64368
<PAGE>
-5-
(l) by adding in part I of Schedule IV to the MFA the following details:
Bank Borrower Type of Facility
First Union National Trans-Continental Leaf $15,000,000
Bank Tobacco Corporation Revolving
Limited Credit Facility
Standard Commercial
Tobacco
Company (UK) Limited
Standard Commercial
Tobacco Co., Inc.
2.2 The following additional points were noted and agreed:
(a) Bankers Trust will resign as US Security Agent, Co-Lead
Bank, Documentation Agent and member of the Steering
Committee as soon as the transfer of the security held by
it in its capacity as US Security Agent to First Union
National Bank has been effected (the "Security Transfer
Date") which transfer will be completed as soon as
reasonably practicable pursuant to separate documentation
and with effect from the Effective Date will also cease to
be a Bank under the MFA as amended by this Agreement.
(b) With effect from the Security Transfer Date, First Union
National Bank will become US Security Agent, and member of the
Steering Committee in place of Bankers Trust and, with effect
from the Security Transfer Date the MFA shall be deemed to
have been amended accordingly.
(c) with effect from the Effective Date, First Union National Bank
will become a Bank under the MFA as amended by this Agreement
with the commitment shown in schedule II to the MFA as amended
by this Agreement.
(d) The Banks have consented to:
(i) the release of the pledge granted by SCTC Inc in
favour of the International Security Agent of its 51%
shareholding in Spierer Freres S.A. and
(ii) the release of the pledges of the shares in
Transhellenic Tobacco SA,
in both cases subject to the occurrence of the Effective
Date.
2.3 A copy of the MFA as amended by this Agreement is attached as the
Appendix to this Agreement.
3. CONDITIONS PRECEDENT
3.1 (a) Arrangement Fees: the arrangement fee agreed between the Lead
Bank and the Borrowers has been paid;
(b) Agreement:this Agreement duly signed on behalf of each of the
parties.
(c) Company Documents
<PAGE>
-6-
(i) Constitutional Documents: certified copies of the
certificate of incorporation, certificate of incorporation
on change of name (if any) and current memorandum and
articles of association of each of the Borrowers or, if
previously provided to the Lead Bank, a certificate signed
by a director of such person confirming that the copies
previously provided to the Lead Bank under the MFA remain
unchanged;
(ii) Certificate of Authorisation: in relation to the Borrowers and
SCC, a certificate signed by a duly authorised director to the
effect that the requisite resolution of its board of
directors, in the Agreed Terms, has been duly and properly
passed:-
(aa) authorising its execution, delivery and performance
of this Agreement; and
(bb) authorising a named person or persons specified in such
certificate and whose specimen signatures appear there
to sign (where appropriate, as a Deed) this Agreement
and any amendments and renewals thereof and to give any
notices or certificates required in connection with such
documents,
and confirming that such resolutions are still in effect and
have not been varied or rescinded or a certificate in such
other form as local legal counsel to the Lead Bank and the
Security Agents consider to be satisfactory;
(iii) Authorising Board Resolutions: a certified copy of the
resolutions of the board of directors referred to in paragraph
(c) (ii) above or an original Resolution by Circular Letter of
TCLTC in the agreed terms unless local legal counsel to the
Lead Bank and the Security Agents advises that this is not
necessary;
(iv) Certificate of Authorisation of other Obligors: in relation
to each Obligor other than SCTC Inc, SCTC (UK), TCLTC, and
SCC, a certificate of two of its directors to the effect
that the requisite resolution of its board of directors, in
the Agreed Terms, has been duly and properly passed
approving this Agreement and confirming that such
resolutions are still in effect and have not been varied or
rescinded or a certificate in such other form as local
legal counsel to the Lead Bank and the Security Agents
consider to be satisfactory;
(v) Authorising Board Resolutions: a certified copy of the
resolutions of the board of directors of each of the other
Obligors referred to in paragraph (c)(iv);
(d) Directors' Certificates: a certificate (signed in each case by a
duly authorised director) of each of SCTC Inc. SCTC (UK) and TCLTC
and SCC that, after making diligent enquiry, the directors are not
aware that any Event of Default or Potential Event of Default under
the MFA has occurred and is Continuing.
(e) Bank Mandates: such bank mandates, specimen signatures and similar
documentation as First Union National Bank may require in order to
enable each of the Facilities made available by it to be utilised by
each of the Borrowers, duly signed on behalf of the relevant
Borrower(s);
(f) Repayment of Bankers Trust: written confirmation from Bankers Trust
that it has received, by telegraphic transfer, sufficient funds to
repay all of the sums due to Bankers Trust and that it will transfer
to First Union National Bank, as soon as reasonably practicable, the
security held by it in its capacity as US Security Agent.
<PAGE>
-7-
(g) Letter of Undertaking: a letter of undertaking from SCTC Inc.
undertaking that, if so required at any time by the Lead Bank in
writing, it will, at its own expense, grant to the International
Security Agent a charge or pledge of its shareholding in Spierer
Tutun Ihracat satisfactory in form and substance to the
International Security Agent.
(h) Other Documentation: such other documentation as the Lead Bank
may specify in writing.
3.2 The Lead Bank shall be entitled to disregard discrepancies in any of the
conditions precedent produced to it pursuant to clause 3.1 of this
Agreement where it considers that such discrepancy is of a minor and
non-material nature.
3.3 All fees payable to the respective legal advisers of the Lead Bank, the
International Security Agent and the US Security Agent shall be paid
together with any disbursements and any applicable taxes in full within
five Business Days of the Effective Date.
4. Construction
4.1 The MFA and this Agreement shall after the date of this Agreement be read
and construed as one document and references in the MFA and each Finance
Document to the MFA shall be read and construed as references to the MFA
as supplemented and amended by this Agreement.
4.2 The MFA shall continue in full force and effect, save as otherwise
expressly amended by this Agreement.
4.2 The amendments contained in this Agreement shall be without prejudice to
any rights and liabilities arising under the MFA by reference to any acts,
omissions and events occurring before such amendments come into effect.
5. Approval of Transfer by Bankers Trust Company to First Union National
Bank
By its execution of this Agreement each of the parties agrees and consents
for the purposes of clause 21 of the MFA (Assignments and Transfers) to
the transfer by Bankers Trust Company of its Commitment under the MFA and
all security held by it, on its account or for its benefit as security
therefor to First Union National Bank.
6. Release of Dormant Companies from Share Pledges
In consideration of the Borrowers and SCC hereby undertaking that such are
and will remain dormant and that no assets or business will be transferred
directly or indirectly to such dormant Group Companies by other Group
Companies, the Banks agree to the shares in the Group Companies listed
below being released from the share pledges comprised in the Security
Documents.
Dormant Companies
Siemssen Threshie (Malawi) Ltd
Eryka International SA
Sena Investments (PVT) Ltd
Stanfrie (Private) Ltd
Combined Tobacco Buyers (Private) Ltd
Tobacco Development Co of Africa (PVT) Ltd
ESALTAB (Zimbabwe) (Private) Ltd
Stancom Aviation Services Ltd Malawi
<PAGE>
-8-
7. Costs and Expenses. Release of Dormant Companies from Share
Pledges In consideration of the Borrowers and SCC hereby undertaking
that such are and will remain dormant and that no assets or business
will be transferred directly or indirectly to such dormant Group
Companies by other Group Companies, the Banks agree to the shares in
the Group Companies listed below being released from the share pledges
comprised in the Security Documents.Dormant CompaniesSiemssen Threshie
(Malawi) LtdEryka International SASena Investments (PVT) LtdStanfrie
(Private) LtdCombined Tobacco Buyers (Private) LtdTobacco Development
Co of Africa (PVT) LtdESALTAB (Zimbabwe) (Private) LtdStancom Aviation
Services Ltd Malawi7.
Costs and Expenses. Release of Dormant Companies from Share
Pledges In consideration of the Borrowers and SCC hereby undertaking
that such are and will remain dormant and that no assets or business
will be transferred directly or indirectly to such dormant Group
Companies by other Group Companies, the Banks agree to the shares in the
Group Companies listed below being released from the share pledges
comprised in the Security Documents.Dormant CompaniesSiemssen
Threshie (Malawi) LtdEryka International SASena Investments (PVT)
LtdStanfrie (Private) LtdCombined Tobacco Buyers (Private)
LtdTobacco Development Co of Africa (PVT) LtdESALTAB (Zimbabwe)
(Private) LtdStancom Aviation Services Ltd Malawi7. Costs and Expenses
SCTC Inc. will reimburse the Lead Bank and each of the Security Agents on
demand all reasonable costs and expenses (including legal costs and
out-of-pocket expenses) and all value added tax thereon incurred by the
Bank in connection with the negotiation, preparation and execution of this
Agreement and any condition precedent documentation contemplated in it.
8. Counterparts
This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute a single instrument.
9. Notices
The provisions of Clause 32 (Notices) of the MFA shall be deemed to be
incorporated, mutatis mutandis, in this Agreement.
10. Governing Law and Jurisdiction
The provisions of Clause 40 (Governing Law and Jurisdiction) of the MFA
shall be deemed to be incorporated, mutatis mutandis, in this Agreement.
AS WITNESS the hands of the parties the day and year first above written.
<PAGE>
-9-
SCHEDULE 1
THE BORROWERS
Name Company Number
Trans-Continental Leaf Tobacco Corporation Limited H.LIV/14
Standard Commercial Tobacco Company (UK) Limited 1411968
Standard Commercial Tobacco Co., Inc. 56-0323420
<PAGE>
-10-
SCHEDULE 2
THE BANKS
Deutsche Bank A.G. in Hamburg
MeesPierson N.V.
First Union National Bank
Norddeutsche Landesbank Girozentrale
Westdeutsche Landesbank Girozentrale
Berliner Bank Aktiengesellschaft
Commerzbank A.G.
BHF-Bank Aktiengesellschaft
Berenberg Bank
ABN Amro Bank
Crestar Bank, Inc.
KBC Bank N.V.
Standard Chartered Bank
<PAGE>
-11-
SIGNATURE PAGES
THE BORROWERS
TRANS-CONTINENTAL LEAF TOBACCO CORPORATION LIMITED
FL-9490 Vaduz
Liechtenstein
Facsimile No: 00 41 75 236 5555
Attention: The Finance Director
By: Aileen Woollhead (Attorney-in-fact of Rick N Hardy)
STANDARD COMMERCIAL TOBACCO COMPANY (UK) LIMITED
Standard House
Weyside Park
Godalming
Surrey GU7 1XE
England
Facsimile No: 01483 860176
Attention: The Finance Director
By: Aileen Woollhead (Attorney-in-fact of Rick N Hardy)
STANDARD COMMERCIAL TOBACCO CO., INC.
C/o C.T. Corporation Systems
225 Hillsborough Street
Raleigh
North Carolina 27603, USA
Facsimile No:
Attention: The Finance Director
By: Hampton R Poole
Vice President
SCC (AS GUARANTOR)
STANDARD COMMERCIAL CORPORATION
2201 Miller Road, P O Box 450, Wilson NC 27894-0450, USA
Facsimile No: 00 1 919 237 1109
Attention: The Finance Director
By: Hampton R Poole
Vice President
<PAGE>
-12-
THE LEAD BANK
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By: Dr Reinecke Michael Ziesenitz
THE INTERNATIONAL SECURITY AGENT
MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP
Facsimile No: 0171 444 8810
Attention: Iain Lappin-Smith
By: I Lappin-Smith D De Buck
AS RETIRING US SECURITY AGENT,
RETIRING CO-LEAD BANK AND RETIRING
DOCUMENTATION AGENT
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA
Facsimile No: 001 212 618 2630
Attention: Eric Miller
By:
AS INCOMING US SECURITY AGENT
AND FUTURE STEERING COMMITTEE MEMBER
FIRST UNION NATIONAL BANK
201 South College Street
Charlotte
NC 28288-0334
USA
Facsimile No: 001 704 383 6647
Attention: Doug Davis
By: S T Warren
Vice President
<PAGE>
-13-
THE STEERING COMMITTEE
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By: Dr Reinecke Michael Ziesenitz
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 401 6558
Attention: Jaap Van Beveren
By: J Van Beveren A J V Balen-Roeloffs
BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA
Facsimile No: 001 212 618 2630
Attention: Eric Miller
By:
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No:
Attention:
By: N Meyer (Glindmayer)
<PAGE>
-14-
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By: T Richter (another)
<PAGE>
-15-
THE BANKS
DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany
Facsimile No: 00 49 40 3701 4684
Attention: Michael Ziesenitz
By: Dr Reinecke M Ziesenitz
MEESPIERSON N.V.
Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands
Facsimile No: 0031 10 401 6558
Attention: Jaap Van Beveren
By: J Van Beveren A J V Balen-Roeloffs
FIRST UNION NATIONAL BANK
201 South College Street
Charlotte
NC 28288-0334
USA
Facsimile No: 001 704 383 6647
Attention: Doug Davis
By: S T Warren
Vice President
NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany
Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmayer
By: N Meyer (Glindmayer)
<PAGE>
-16-
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany
Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter
By: T Richter (another)
BERENBERG BANK
Neuer Jungfernstieg 20
20354 Hamburg
Germany
Facsimile No: 00 49 40 354 248
Attention: Mr Schroder
By: Schroder
BHF-BANK AKTIENGESELLSCHAFT
Paulstrasse 5
20095 Hamburg
Germany
Facsimile No: 00 49 40 3200 9203
Attention: Mr Theodore Budde
By: M Philippi T Budde
BERLINER BANK
Niederlassung der Bankgesellschaft Berlin
Aktiengesellschaft
Domstrasse 21
20095 Hamburg
Germany
Facsimile No: 00 49 40 3020 5319
Attention: Mr Gugel
By: (unknown)
<PAGE>
-17-
COMMERZBANK A.G.
Ness 7-9
20457 Hamburg
Germany
Facsimile No: 00 49 40 368 33305
Attention Mr Weidner
By: Loeck (another)
ABN AMRO BANK N.V.
Pelilanstrass 70/76
B-2000 Antwerpen
Belgium
Tel: 00 32 3 2220331
Fax: 00 32 3 2311031
Attention: Mr. Rudolf Oldeman
By: B P Kelkman A Pieterse
CRESTAR BANK
919 East Main Street
Richmond, VA 23219
USA
Tel: 001 804 782 5237
Fax: 001 804 782 5413
Attention: Mr. C Gray Key
By: Gray Kay
Vice President
KBC BANK N.V.
Global Trade Finance Group
Dashwood House
69 Old Street
London EC2M 1GT
England
Tel: +44 171 861 2662
Fax: +44 171 861 2626
Attention: Mr. Adrian Smethurst
By: Malcolm D Wilson Ian D Brigden
First Vice President General Manager, Global Trade Finance
Group
<PAGE>
STANDARD CHARTERED BANK
37 Gracechurch Street
London EC3V OBX
England
Tel: +44 171 280 7585
Fax: +44 171 280 7598
Attention: Mr. Robert Dean
By: R Dean Ian Mote
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 32,279
<SECURITIES> 641
<RECEIVABLES> 269,671<F1>
<ALLOWANCES> 0<F2>
<INVENTORY> 386,926
<CURRENT-ASSETS> 695,462
<PP&E> 151,664<F1>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 916,969
<CURRENT-LIABILITIES> 499,927
<BONDS> 208,522
0
0
<COMMON> 3,111
<OTHER-SE> 147,450
<TOTAL-LIABILITY-AND-EQUITY> 916,969
<SALES> 246,767
<TOTAL-REVENUES> 246,767
<CGS> 221,277
<TOTAL-COSTS> 221,277
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,038
<INCOME-TAX> 1,904
<INCOME-CONTINUING> 1,262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,262
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
<FN>
<F1>SHOWN NET IN FINANCIAL STATEMENTS
<F2>NOT SHOWN SEPARATELY UNDER MATERIALITY GUIDELINES
</FN>
</TABLE>
