UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____to_____
Commission file number 0-25734; 1-13684
DIMON INCORPORATED
(Exact name of registrant as specified in its
charter)
VIRGINIA 54-1746567
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
512 Bridge Street
Danville, Virginia 24541
(Address of principal executive (Zip Code)
offices)
(804) 792-7511
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
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) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock April 30, 1996
NO par value 42,348,609
<PAGE>
DIMON INCORPORATED
This Form 10-Q/A1 is filed to amend Items 1,2 and 6 of the Company's Form 10-Q
for the quarter ended December 31, 1995, initially filed with the Securities and
Exchange Commission on February 13, 1996. The remaining Items have not been
amended and have not been restated in this Form 10-Q/A1.
<TABLE>
<CAPTION>
INDEX
PAGE NO.
<S> <C>
Part I. Financial Information:
Consolidated Balance Sheet - December 31, 1995
and June 30, 1995................................................ 3 - 4
Statement of Consolidated Income - Three Months
and Six Months Ended December 31, 1995
and 1994......................................................... 5
Statement of Consolidated Cash Flows - Six
Months Ended December 31, 1995 and 1994.......................... 6
Notes to Consolidated Financial Statements............................. 7 - 22
Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................23 - 27
Part II. Other Information
Exhibits...............................................................29
</TABLE>
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31 June 30
1995 1995
(in thousands) ____________ ___________
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents...................................................$ 45,725 $ 42,326
Notes receivable............................................................ 1,704 2,002
Trade receivables, net of allowances........................................ 267,742 182,750
Inventories:
Tobacco.................................................................. 501,974 410,431
Other.................................................................... 14,477 14,179
Advances on purchases of tobacco............................................ 26,588 44,379
Recoverable income taxes.................................................... 1,895 2,007
Prepaid expenses............................................................ 10,968 33,045
------------ -----------
Total current assets 871,073 731,119
------------ -----------
Investments and other assets
Equity in net assets of investee companies.................................. 10,026 22,622
Other investments........................................................... 4,383 1,749
Notes receivable............................................................ 6,103 6,107
Other....................................................................... 30,524 28,147
------------ -----------
51,036 58,625
------------ -----------
Intangible assets
Excess of cost over related net assets of
business acquired........................................................ 24,373 26,167
Production and supply contracts............................................. 37,550 36,340
Pension asset............................................................... 4,219 4,219
------------ -----------
66,142 66,726
------------ -----------
Property, plant, and equipment
Land........................................................................ 20,109 19,432
Buildings................................................................... 140,908 135,808
Machinery and equipment..................................................... 174,820 169,181
Allowances for depreciation................................................. (108,347) (101,372)
------------ -----------
227,490 223,049
------------ -----------
Deferred taxes and other deferred charges....................................... 13,682 14,089
------------ -----------
$1,229,423 $1,093,608
============ ===========
</TABLE>
-3-
<PAGE>
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31 June 30
1995 1995
(in thousands) ____________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Notes payable to banks......................................................$ 256,230 $ 233,736
Accounts payable:
Trade.................................................................... 64,165 56,559
Officers and employees................................................... 23,531 20,714
Other.................................................................... 14,981 13,173
Advances from customers..................................................... 151,526 49,224
Accrued expenses............................................................ 38,081 57,359
Income taxes................................................................ 14,233 11,199
Long-term debt current...................................................... 9,067 11,558
------------ -----------
Total current liabilities 571,814 453,522
------------ -----------
Long-term debt
Revolving Credit Notes and Other............................................ 286,632 292,528
Convertible Subordinated Debentures......................................... 54,370 56,370
------------ -----------
341,002 348,898
------------ -----------
Deferred credits:
Income taxes................................................................ 18,891 10,731
Compensation and other benefits............................................. 41,137 40,715
------------ -----------
60,028 51,446
------------ -----------
Minority interest in subsidiaries............................................... 565 936
------------ -----------
Stockholders' equity
Serial Preferred Stock--without par value:
Dec. 31 Jun. 30
Authorized shares 10,000 10,000
Issued shares -0- -0-
Common Stock--without par value:
Dec. 31 Jun. 30
Authorized shares 125,000 125,000
Issued shares 38,230 38,092.............................. 81,980 80,030
Retained earnings........................................................... 173,444 157,880
Equity-currency conversions................................................. 1,876 1,565
Additional minimum pension liability........................................ (1,286) (1,286)
Unrealized gain on investments.............................................. 0 617
------------ -----------
256,014 238,806
------------ -----------
$1,229,423 $1,093,608
============ ==========
</TABLE>
-4-
<PAGE>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED INCOME
Three Months and Six Months Ended December 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1996 1995 1996 1995
Second Second First Six First Six
(in thousands, except per share amounts) Quarter Quarter Months Months
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net sales of goods and services...............................$755,229 $631,503 $1,090,577 $903,455
Cost of goods and services sold............................... 680,909 578,876 965,399 818,785
--------- --------- ----------- ---------
74,320 52,627 125,178 84,670
Selling, administrative and general expenses.................. 36,154 32,024 66,680 60,874
Restructuring................................................. 1,321 0 2,818 0
--------- --------- ----------- ---------
Operating Income................. 36,845 20,603 55,680 23,796
Other income:
Interest................................................... 2,402 2,437 5,352 4,424
Sundry..................................................... 5,787 856 7,181 1,685
--------- --------- ----------- ---------
8,189 3,293 12,533 6,109
Other deductions:
Interest................................................... 14,046 12,928 27,060 22,255
Sundry..................................................... 49 (285) 447 (328)
--------- --------- ----------- ---------
14,095 12,643 27,507 21,927
Income before income taxes, minority
interest, equity in net income of
investee companies and extraordinary item.................. 30,939 11,253 40,706 7,978
Income taxes.................................................. 12,570 7,472 16,282 5,071
--------- --------- ----------- ---------
Income before minority interest,
equity in net income of investee
companies and extraordinary item........................... 18,369 3,781 24,424 2,907
Income applicable to minority interest........................ 124 122 128 123
Equity in net income (loss) of investee
companies, net of income taxes............................. 193 50 170 (596)
--------- --------- ----------- ---------
Income before extraordinary item 18,438 3,709 24,466 2,188
Extraordinary item:
Partial recovery of a previous extraordinary
trade receivable write-off (net of
applicable income tax expense of $870)..................... 1,400 0 1,400 0
--------- --------- ----------- --------
NET INCOME....................................................$ 19,838 $ 3,709 $ 25,866 $ 2,188
========= ========= =========== ========
Earnings Per Share, primary
Income before extraordinary item.......................... $ .48 $ .10 $ .64 $ .06
Extraordinary item........................................ .04 .00 .04 .00
---- ---- ---- ----
Net Income................................................ $ .52 $ .10 $ .68 $ .06
==== ==== ==== ====
Earnings Per Share, assuming full dilution
Income before extraordinary item.......................... $ .45 $ .10 $ .61 *
Extraordinary item........................................ .03 .00 .03 *
---- ---- ---- ---
Net Income................................................ $ .48 $ .10 $ .64 *
==== ==== ==== ===
Average number of shares outstanding:
Primary.................................................... 38,288 38,095 38,231 38,082
Assuming full dilution..................................... 42,403 42,297 42,403 42,298
Cash dividends per share......................................$ 0.135 $ .09 $ .27 $ .18
====== ==== ==== ====
</TABLE>
* Computation of earnings per share is anti-dilutive for first six months of
fiscal year 1995.
-5-
<PAGE>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
Six Months Ended December 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
December 31 December 31
(in thousands) 1995 1994
----------- --------
<S> <C> <C>
Operating activities
Net Income..................................................................$ 25,866 $ 2,188
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............................................ 17,113 13,591
Deferred items........................................................... 2,812 3,839
Loss (gain) on foreign currency transactions............................. (158) 6,873
Gain on disposition of fixed assets...................................... (798) (655)
Gain on sale of investee................................................. (3,751) 0
Gain on sale of investment............................................... (1,090) 0
Undistributed earnings of investees...................................... (170) 596
Income applicable to minority interest................................... 128 123
Bad debt expense......................................................... 497 855
Increase in accounts receivable.......................................... (86,021) (37,572)
Increase in inventories and advances on
purchases of tobacco................................................... (78,650) (213,355)
Decrease in recoverable taxes............................................ 112 544
Decrease (increase) in prepaid expenses.................................. 23,281 (7,114)
Increase (decrease) in accounts payable
and accrued expenses................................................... (5,435) 55,731
Increase in advances from customers...................................... 102,185 64,445
Increase in income taxes................................................. 7,659 4,170
Other.................................................................... (723) 4,704
----------- ---------
Net cash provided (used) by operating
activities............................................................. 2,857 (101,037)
----------- ----------
Investing activities
Purchase of property and equipment.......................................... (10,618) (13,486)
Proceeds from sale of property and equipment................................ 1,962 1,826
Payments received on notes receivable
and receivable from investees............................................ 926 17,038
Advances for notes receivable .............................................. (328) (2,058)
Proceeds from or advances for investees,
other investments and other assets....................................... 9,768 (1,101)
Increase in excess of cost over net
assets of business acquired.............................................. 0 (857)
Purchase of minority interest in subsidiaries............................... 0 (389)
Purchase of subsidiary...................................................... (6,543) 0
------------ ---------
Net cash provided (used) by investing
activities............................................................. (4,833) 973
------------ ---------
Financing activities
Repayment of debt........................................................... (276,841) (73,531)
Proceeds from debt.......................................................... 290,257 189,124
Proceeds from sale of stock................................................. 1,950 9
Cash dividends paid to minority stockholders................................ 0 (162)
Cash dividends paid to DIMON Incorporated
stockholders............................................................. (10,302) (6,789)
------------ ----------
Net cash provided by financing activities................................... 5,064 108,651
------------ ---------
Effect of exchange rate changes on cash......................................... 311 (1,788)
------------ ----------
Increase in cash and cash equivalents........................................... 3,399 6,799
Cash and cash equivalents at beginning of year.................................. 42,326 12,471
----------- ---------
Cash and cash equivalents at end of period.............................$ 45,725 $ 19,270
=========== =========
</TABLE>
-6-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Primary earnings (loss) per share are computed by dividing earnings
(loss) by the weighted average number of shares outstanding plus any
common stock equivalents during each period. The fully diluted
earnings (loss) per share calculation assumes that all of the
Convertible Subordinated Debentures were converted into Common Stock at
the beginning of the reporting period thereby increasing the weighted
average number of shares considered outstanding during each period.
The weighted average number of shares outstanding are further increased
by common stock equivalents on employee stock options. Also, all
interest expense on the debentures for the period is added to pre-tax
income and the hypothetical additional income tax expense is deducted.
2. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included.
3. On April 1, 1995, Dibrell Brothers, Incorporated (Dibrell) and
Monk-Austin, Inc. (Monk-Austin) merged into DIMON Incorporated. The
merger has been accounted for as a pooling of interests and all prior
consolidated financial statements have been restated to include the
historical results of operations of both Dibrell and Monk-Austin
including the effects of conforming the accounting policies of the two
former entities. Recorded assets and liabilities have been carried
forward at their historical book values.
4. In June, 1995, the Company provided a restructuring reserve of $17.9
million pre-tax related primarily to eliminating duplicative facilities
of tobacco operations and a reduction in the number of employees.
During the quarter and six months ended December 31, 1995, an
additional $1.3 million and $2.8 million, respectively, pre-tax was
provided for restructuring the tobacco operations in Brazil and
corporate departments, primarily for a reduction in the number of
employees, net of recoveries of $498 thousands relating primarily to
accounts receivable of closed flower locations. As of
-7-
<PAGE>
December 31, 1995, payments for the six months of $4.7 million have
been recorded as a reduction of the restructuring reserves.
5. The results of operations for the three months and six months ended
December 31, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year and should not be relied on as
a basis for projecting year end results. The Company's operations are
seasonal and quarterly comparisons are of little value.
6. For additional information regarding accounting principles and other
financial data, see Notes to Consolidated Financial Statements in the
Annual Report on Form 10-K for the fiscal year ended June 30, 1995.
7. Certain accounts of the prior periods have been reclassified for
conformity with the financial statements of the current period.
8. The Company called the subordinated debt outstanding as of February 9,
1996, on Form S-3 filed with the Securities and Exchange Commission.
The proforma primary earnings per share of the conversion, assuming it
had taken place at the beginning of the period, would have been $.48
and $.64 for the three and six months ended December 31, 1995,
respectively, or equal to the fully diluted amounts as disclosed in the
statement of consolidated income.
9. On November 7, 1995, DIMON International, Inc., a wholly owned
subsidiary of DIMON Incorporated, completed the sale of its 50%
interest in Rio Grande Tabacalera S.A. (RGT), a Brazilian processing
entity, to an unrelated third party. The Company's investment was sold
for $9,000,000 in cash, recognizing a gain on the sale of RGT of
$3,113,000, net of related taxes of $630,000.
10. The Company filed a registration statement with the Securities and
Exchange Commission relating to $125 million of Senior Notes due 2006.
The Company expects that the offerings of the Notes will be completed
in May, 1996. DIMON International, Inc. and Florimex Worldwide,
Inc.(collectively, the "Guarantors"), wholly owned subsidiaries of the
Company will fully and unconditionally guaranteed on a joint and
several basis the Company's obligations to pay principal, premium and
interest relative to the Notes. Management has determined that
separate, full financial statements of the Guarantors would not be
material to investors and such financial Statements are not provided.
Supplemental combining financial information of the Guarantors is
presented below:
-8-
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Three Months Ended December 31, 1995
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------- ------------ -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales of goods and services $ 11 $ 588,454 $ 329,594 $ (162,831)a $ 755,228
Cost of goods and services sold (2,847)b 558,455 283,974 (158,673)a 680,909
------------- ------------ -------------- ------------- ------------
2,858 29,999 45,620 (4,158) 74,319
Selling, administrative and general 5,212 19,389 19,262 (7,709)a,c 36,154
Restructuring 597 630 93 0 1,320
------------- ------------ -------------- ------------- ------------
(2,951) 9,980 26,265 3,551 36,845
Other income:
Interest 9,236 3,102 2,157 (12,093)a 2,402
Sundry 0 167 9,172 (3,551)a,c 5,788
------------- ------------ -------------- ------------- ------------
9,236 3,269 11,329 (15,644) 8,190
Other deductions:
Interest 8,414 10,127 7,598 (12,093)a 14,046
Sundry 46 0 3 0 49
------------- ------------ -------------- ------------- ------------
8,460 10,127 7,601 (12,093) 14,095
Income (loss) before income taxes,
minority interest, equity in net
income of investee companies and
extraordinary item (2,175) 3,122 29,993 0 30,940
Income taxes (benefits) (887) 1,212 12,246 0 12,571
------------- ------------ -------------- ------------- ------------
Income (loss) before income taxes,
minority interest, equity in net
income of investee companies and
extraordinary item (1,288) 1,910 17,747 0 18,369
Income applicable to minority interest 0 0 124 0 124
Equity in net income (loss) of investee
companies, net of income taxes 0 329 (136) 0 193
Equity in net income of subsidiaries 21,126 17,488 0 (38,614)a 0
------------- ------------ -------------- ------------- ------------
Income before extraordinary item 19,838 19,727 17,487 (38,614) 18,438
Extraordinary item:
Partial recovery of a previous
extraordinary trade receivable
write-off (net of applicable
income tax expense of $870) 0 1,400 0 0 1,400
============= ============ ============== ============= ============
NET INCOME $ 19,838 $ 21,127 $ 17,487 $ (38,614) $ 19,838
============= ============ ============== ============= ============
</TABLE>
a. Inter-company eliminations.
b. Change in reserves for inter-company profit in ending inventory.
c. Royalty expense in SG&A and Royalty income in Other Income for Consolidated
Entities.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Six Months Ended December 31, 1995
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
--------------- ------------ --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales of goods and services $ 23 $ 803,507 $ 536,769 $ (249,722)a $ 1,090,577
Cost of goods and services sold (5,116)d 758,976 456,700 (245,161)a 965,399
--------------- ------------ --------------- ----------------- -------------
5,139 44,531 80,069 (4,561) 125,178
Selling, administrative and general 8,518 31,301 37,367 (10,506)a,e 66,680
Restructuring 597 630 1,591 0 2,818
--------------- ------------ --------------- ----------------- -------------
(3,976) 12,600 41,111 5,945 55,680
Other income:
Interest 16,053 5,375 4,754 (20,830)a 5,352
Sundry 17 757 12,352 (5,945)a,e 7,181
--------------- ------------ --------------- ----------------- -------------
16,070 6,132 17,106 (26,775) 12,533
Other deductions:
Interest 15,053 17,457 15,380 (20,830)a 27,060
Sundry 46 0 401 0 447
--------------- ------------ --------------- ----------------- -------------
15,099 17,457 15,781 (20,830) 27,507
Income (loss) before income taxes,
minority interest, equity in net
income of investee companies and
extraordinary item (3,005) 1,275 42,436 0 40,706
Income taxes (benefits) (1,202) 510 16,974 0 16,282
--------------- ------------ --------------- ----------------- -------------
Income (loss) before income taxes,
minority interest, equity in net
income of investee companies and
extraordinary item (1,803) 765 25,462 0 24,424
Income applicable to minority interest 0 0 128 0 128
Equity in net income (loss) of investee
companies, net of income taxes 0 443 (273) 0 170
Equity in net income of subsidiaries 27,669 25,061 0 (52,730)a 0
--------------- ------------ --------------- ----------------- -------------
Income before extraordinary item 25,866 26,269 25,061 (52,730) 24,466
Extraordinary item:
Partial recovery of a previous
extraordinary trade receivable
write-off (net of applicable
income tax expense of $870) 0 1,400 0 0 1,400
=============== ============ =============== ================= =============
NET INCOME $ 25,866 $ 27,669 $ 25,061 $ (52,730) $ 25,866
=============== ============ =============== ================= =============
</TABLE>
a. Inter-company eliminations.
d. Change in reserves for inter-company profit in ending inventory.
e. Royalty expense in SG&A and Royalty income in Other Income for Consolidated
Entities.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
----------------- ------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ (307) $ 7,930 $ 38,102 $ 0 $ 45,725
Notes receivable 35 1,070 599 0 1,704
Trade receivables, net of allowances 110,427 255,036 194,338 (292,059)a 267,742
Inventories:
Tobacco 0 264,278 237,696 0 501,974
Other 58 1,977 12,442 0 14,477
Advances on purchases of tobacco 237,683 9,880 16,928 (237,903)a 26,588
Recoverable income taxes 0 0 1,895 0 1,895
Prepaid expenses 2,250 1,226 7,492 0 10,968
----------------- ------------- --------------- -------------- -------------
Total current assets 350,146 541,397 509,492 (529,962) 871,073
----------------- ------------- --------------- -------------- -------------
Investments and other assets
Equity in net assets of investee companies 0 7,609 2,417 0 10,026
Consolidated subsidiaries 288,080 293,694 5,007 (586,781)a 0
Other investments 1 3,737 645 0 4,383
Notes receivable 78 907 5,118 0 6,103
Other 292 11,373 18,859 0 30,524
----------------- ------------- --------------- -------------- -------------
288,451 317,320 32,046 (586,781) 51,036
----------------- ------------- --------------- -------------- -------------
Intangible assets
Excess of cost over related net
assets of business acquired 381 8,813 15,179 0 24,373
Production and supply contracts 0 28,517 9,033 0 37,550
Pension asset 3,131 1,088 0 0 4,219
----------------- ------------- --------------- -------------- -------------
3,512 38,418 24,212 0 66,142
----------------- ------------- --------------- -------------- -------------
Property, plant and equipment
Land 1,771 1,827 16,511 0 20,109
Buildings 5,032 25,220 110,656 0 140,908
Machinery and equipment 5,479 47,678 121,663 0 174,820
Allowances for depreciation (5,086) (30,061) (73,200) 0 (108,347)
----------------- ------------- --------------- -------------- -------------
7,196 44,664 175,630 0 227,490
----------------- ------------- --------------- -------------- -------------
Deferred taxes and other deferred charges 9,899 4,558 (775) 0 13,682
================= ============= =============== ============== =============
Total assets $ 659,204 $ 946,357 $ 740,605 $ (1,116,743) $ 1,229,423
================= ============= =============== ============== =============
</TABLE>
a. Inter-Company eliminations.
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
December 31, 1995
<TABLE>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
----------------- ------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Current Liabilities
Notes payable to banks $ 47,300 $ 0 $ 208,930 $ - $ 256,230
Accounts payable:
Trade 299 484,712 89,440 (510,286)a 64,165
Officers and employees 13,628 5,641 4,262 0 23,531
Other 1,173 952 12,856 0 14,981
Advances from customers 3,876 140,710 25,904 (18,964)a 151,526
Accrued expenses 4,600 5,017 28,558 (94)a 38,081
Income taxes (13,444)b 4,498 23,179 0 14,233
Long-term debt current 4,286 0 4,781 0 9,067
----------------- ------------- --------------- -------------- -------------
Total current liabilities 61,718 641,530 397,910 (529,344) 571,814
----------------- ------------- --------------- -------------- -------------
Long-term debt
Revolving Credit Notes and Other 260,286 2,615 23,731 0 286,632
Convertible Subordinated Debentures 54,370 0 0 0 54,370
----------------- ------------- --------------- -------------- -------------
314,656 2,615 23,731 0 341,002
----------------- ------------- --------------- -------------- -------------
Deferred Credits
Income taxes 244 19 18,628 0 18,891
Compensation and other benefits 26,572 7,700 6,865 0 41,137
----------------- ------------- --------------- -------------- ------------
26,816 7,719 25,493 0 60,028
----------------- ------------- --------------- -------------- -------------
Minority interest in subsidiaries 0 0 565 0 565
----------------- ------------- --------------- -------------- -------------
Stockholders' equity
Common stock 81,980 110,710 178,638 (289,348)a 81,980
Retained earnings 173,444 181,724 114,252 (295,976)a 173,444
Equity-currency conversions 1,876 2,059 16 (2,075)a 1,876
Additional minimum pension liability (1,286) 0 0 0 (1,286)
----------------- ------------- --------------- ------------- --------------
256,014 294,493 292,906 (587,399) 256,014
================= ============= =============== ============== =============
Total liabilities and equity $ 659,204 $ 946,357 $ 740,605 $ (1,116,743) $ 1,229,423
================= ============= =============== ============== =============
</TABLE>
a. Inter-company eliminations.
b. Current deferred tax on reserves for restructuring and unallocated, estimated
tax payments.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows
Six Months Ended December 31, 1995
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------- ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Operating activities
Net Income $ 25,866 $ 27,669 $ 25,061 $ (52,730)a $ 25,866
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,146 5,461 10,506 0 17,113
Deferred items 625 175 2,012 0 2,812
Loss (gain) on foreign currency transactions 46 (51) (153) 0 (158)
Gain on disposition of fixed assets (14) (58) (726) 0 (798)
Gain on sale of investee 0 0 (3,751) 0 (3,751)
Gain on sale of investment 0 0 (1,090) 0 (1,090)
Undistributed earnings of
investees/subsidiaries (27,669) (25,504) 273 52,730 a (170)
Income applicable to minority interest 0 0 128 0 128
Bad debt expense 0 (10) 507 0 497
Decrease (increase) in accounts receivable (14,560) (23,632) (63,972) 16,143 a (86,021)
Decrease (increase) in inventories and
advances on purchases of tobacco 28,460 28,663 (139,094) 3,321 a (78,650)
Decrease in recoverable taxes 0 0 112 0 112
Decrease (increase) in prepaid expenses 9,167 (539) 14,653 0 23,281
Increase (decrease) in accounts
payable and accrued expenses (5,915) 331,141 (53,695) (276,966)a (5,435)
Increase (decrease) in advances
from customers 115 (328,280) 190,853 239,497 a 102,185
Increase (decrease) in income
taxes (2,713) 937 9,435 0 7,659
Other 0 0 (723) 0 (723)
------------- ------------- --------------- --------------- -------------
Net cash provided (used) by
operating activities 14,554 15,972 (9,664) (18,005) 2,857
------------- ------------- --------------- --------------- -------------
Investing activities
Purchase of property and equipment (65) (2,566) (7,987) 0 (10,618)
Proceeds from sale of property
and equipment 14 80 1,868 0 1,962
Payments on notes receivable and
receivable from investees 0 50 876 0 926
Issuance of notes receivable 0 (160) 10,208 (10,376)a (328)
Advances for other investments
and other assets 5,599 (212) 10,984 (6,603)a 9,768
Purchase of minority interest
in subsidiaries 0 0 0 0 0
Purchase of subsidiary 0 (6,543) 0 0 (6,543)
------------- ------------- --------------- --------------- -------------
Net cash provided (used) by
investing activities 5,548 (9,351) 15,949 (16,979) (4,833)
------------- ------------- --------------- --------------- -------------
Financing activities
Repayment of debt (199,128) (570) (77,143) 0 (276,841)
Proceeds from debt 185,743 0 96,395 8,119 a 290,257
Proceeds from sale of stock 1,950 0 0 0 1,950
Cash dividends paid to DIMON Incorporated
stockholders (10,302) 0 0 0 (10,302)
------------- -------------- --------------- --------------- -------------
Net cash provided (used) by financing
activities (21,737) (570) 19,252 8,119 5,064
Effect of exchange rate changes on cash 0 0 311 0 311
------------- -------------- --------------- --------------- -------------
Increase (decrease) in cash and cash equivalents (1,635) 6,051 25,848 (26,865) 3,399
Cash and cash equivalents at beginning of year 1,328 1,879 12,254 26,865 a 42,326
============= ============== =============== =============== =============
Cash and cash equivalents at end of period $ (307) $ 7,930 $ 38,102 $ 0 $ 45,725
============= ============== =============== =============== =============
a. Inter-company eliminations.
</TABLE>
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Three Months Ended December 31, 1994
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
-------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales of goods and services $ 11 $ 489,244 $ 163,159 $ 20,911)a $ 631,503
Cost of goods and services sold 630 b 454,305 144,848 (20,907)a 578,876
-------------- ------------ ------------- ------------- -------------
(619) 34,939 18,311 (4) 52,627
Selling, administrative and general 3,768 17,380 10,050 825 a,c 32,023
-------------- ------------ ------------- ------------- -------------
(4,387) 17,559 8,261 (829) 20,604
Other income:
Interest 6,355 1,698 (1,271) (4,345)a 2,437
Sundry 2 392 454 7 855
-------------- ------------ ------------- ------------- -------------
6,357 2,090 (817) (4,338) 3,292
Other deductions:
Interest 4,781 9,123 3,369 (4,345)a 12,928
Sundry (19) 1 556 (822)a,c (284)
-------------- ------------ ------------- -------------
4,762 9,124 3,925 (5,167) 12,644
Income (loss) before income taxes,
minority interest, equity in
net income of investee companies (2,792) 10,525 3,519 0 11,252
Income taxes (benefits) (974) 7,160 1,285 0 7,471
-------------- ------------ ------------- ------------- -------------
Income (loss) before minority
interest and equity in net
income of investee companies (1,818) 3,365 2,234 0 3,781
Income applicable to minority interest 0 0 122 0 122
Equity in net income (loss) of
investee companies, net of income taxes 56 354 (360) 0 50
Equity in net income of subsidiaries 5,471 1,752 0 (7,223)a 0
============== ============ ============= ============= =============
NET INCOME $ 3,709 $ 5,471 $ 1,752 $ (7,223) $ 3,709
============== ============ ============= ============= =============
</TABLE>
a. Inter-company eliminations
b. Change in reserves for inter-company profit in ending inventory.
c. Royalty expense in SG&A and Royalty income in Other Income for Consolidated
Entities.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Six Months Ended December 31, 1994
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
---------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales of goods and services $ 22 $ 615,786 $ 317,257 $ (29,610)a $ 903,455
Cost of goods and services sold 5,852 e 570,680 271,863 (29,610)a 818,785
---------------- ------------- --------------- ------------- -------------
(5,830) 45,106 45,394 0 84,670
Selling, administrative and general 7,649 29,406 23,819 0 60,874
---------------- ------------- --------------- ------------- -------------
(13,479) 15,700 21,575 0 23,796
Other income:
Interest 10,411 3,638 1,281 (10,906)a 4,424
Sundry 143 968 574 0 1,685
---------------- ------------- --------------- ------------- -------------
10,554 4,606 1,855 (10,906) 6,109
Other deductions:
Interest 8,147 14,563 10,451 (10,906)a 22,255
Sundry 1 18 (347) 0 (328)
---------------- ------------- --------------- ------------- -------------
8,148 14,581 10,104 (10,906) 21,927
Income (loss) before income taxes,
minority interest, equity in
net income of investee companies (11,073) 5,725 13,326 0 7,978
Income taxes (benefits) (7,043) 3,641 8,473 0 5,071
---------------- ------------- --------------- ------------- -------------
Income (loss) before minority interest
and equity in net income of
investee companies (4,030) 2,084 4,853 0 2,907
Income applicable to minority interest 0 0 123 0 123
Equity in net income (loss) of
investee companies, net of income taxes 22 595 (1,213) 0 (596)
Equity in net income of subsidiaries 6,196 3,517 0 (9,713)a 0
================ ============= =============== ============= =============
NET INCOME 2,188 6,196 3,517 (9,713) 2,188
================ ============= =============== ============= =============
</TABLE>
a. Inter-company eliminations
e. Change in reserves for inter-company profit in ending inventory.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
December 31, 1994
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
-------------- ------------ --------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 201,147 $ (168,294)b $ (11,935) $ (1,648)a $ 19,270
Notes receivable 15 267 1,141 (132)a 1,291
Trade receivables, net of allowances 10,132 159,628 71,056 (27,154)a 213,662
Inventories:
Tobacco (7,655)c 441,764 178,262 0 612,371
Other 0 594 7,428 0 8,022
Advances on purchases of tobacco 36,056 43,534 33,216 (59,878)a 52,928
Recoverable income taxes 0 0 5,973 0 5,973
Prepaid expenses 1,363 7,455 12,339 0 21,157
-------------- ------------ --------------- ------------- -----------
Total current assets 241,058 484,948 297,480 (88,812) 934,674
-------------- ------------ --------------- ------------- -----------
Investments and other assets
Equity in net assets of investee companies 0 3,456 31,464 0 34,920
Consolidated subsidiaries 278,129 241,497 5,007 (524,633)a 0
Other investments 11,176 (226) 4,753 0 15,703
Notes receivable 53 737 12,847 (457)a 13,180
Other 497 11,486 (7,730) 0 4,253
-------------- ------------ --------------- ------------- -----------
289,855 256,950 46,341 (525,090) 68,056
-------------- ------------ --------------- ------------- -----------
Intangible assets
Excess of cost over related net
assets of business acquired 393 1,970 10,845 0 13,208
Production and supply contracts 0 30,347 9,600 0 39,947
Pension asset 2,458 0 0 0 2,458
-------------- ------------ --------------- ------------- -----------
2,851 32,317 20,445 0 55,613
-------------- ------------ --------------- ------------- -----------
Property, plant and equipment
Land 68 3,201 15,442 0 18,711
Buildings 1,237 29,039 97,136 0 127,412
Machinery and equipment 611 57,420 102,510 0 160,541
Allowances for depreciation (575) (44,381) (48,610) 0 (93,566)
-------------- ------------ --------------- ------------- -----------
1,341 45,279 166,478 0 213,098
-------------- ------------ --------------- ------------- -----------
Deferred taxes and other deferred charges 7,458 4,667 1,694 0 13,819
-------------- ------------ --------------- ------------- -----------
Total assets $ 542,563 $ 824,161 $ 532,438 $ (613,902) $ 1,285,260
============== ============ =============== ============= ===========
</TABLE>
a. Inter-company eliminations.
b. Unrestricted cash balance available in DIMON Incorporated.
c. Reserve for inter-company profit in ending inventories.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
December 31, 1994
<TABLE>
<CAPTION>
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
-------------- ------------ --------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Current Liabilities
Notes payable $ 169,900 $ 40,600 $ 165,291 $ 0 $ 375,791
Accounts payable:
Trade (1,149) 62,861 52,007 (28,599)a 85,120
Officers and employees 1,433 13,635 3,195 0 18,263
Other 403 (70) 6,843 0 7,176
Advances from customers (10) 278,168 (36,488) (58,852)a 182,818
Accrued expenses 2,105 6,996 19,671 (1,596)a 27,176
Income taxes (13,296)d 8,555 15,116 0 10,375
Long-term debt current 0 5,113 12,384 0 17,497
-------------- ------------ --------------- ------------- -----------
Total current liabilities 159,386 415,858 238,019 (89,047) 724,216
-------------- ------------ --------------- ------------- -----------
Long-term debt
Revolving Credit Notes and Other 28,857 128,137 31,856 0 188,850
Convertible Subordinated Debentures 56,475 0 0 0 56,475
-------------- ------------ --------------- ------------- -----------
85,332 128,137 31,856 0 245,325
-------------- ------------ --------------- ------------- -----------
Deferred Credits
Income taxes (725) (1,844) 6,683 0 4,114
Compensation and other benefits 19,773 6,795 5,295 0 31,863
-------------- ------------ --------------- ------------- -----------
19,048 4,951 11,978 0 35,977
-------------- ------------ --------------- ------------- -----------
Minority interest in subsidiaries 0 0 945 0 945
-------------- ------------ --------------- ------------- -----------
Stockholders' equity
Common stock 79,870 109,383 142,826 (252,209)a 79,870
Retained earnings 198,851 157,876 103,241 (261,117)a 198,851
Equity-currency conversions 1,399 8,095 1,383 (9,478)a 1,399
Unrealized loss on investments (2,139) (139) 0 139 a (2,139)
Additional minimum pension liability 816 0 2,190 (2,190)a 816
-------------- ------------ --------------- ------------- -----------
278,797 275,215 249,640 (524,855) 278,797
============== ============ =============== ============= ===========
Total liabilities and equity $ 542,563 $ 824,161 $ 532,438 $ (613,902) $1,285,260
============== ============ =============== ============= ===========
</TABLE>
a. Inter-company eliminations.
d. Current deferred tax on reserves for unallocated, estimated tax payments.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows
Six Months Ended December 31, 1994
<TABLE>
<CAPTION>
DIMON
(in thousands) Incorporated Guarantors Non-Guarantors Eliminations Total
-------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Operating Activities
Net Income (Loss) $ 2,188 $ 6,196 $ 3,517 $ (9,713)a $ 2,188
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities
Depreciation and amortization (70) 4,751 8,910 0 13,591
Deferred items (1,162) 1,059 3,942 0 3,839
Loss (gain) on foreign currency
transactions (54) 12 6,915 0 6,873
Gain on disposition of fixed assets 0 (138) (517) 0 (655)
Undistributed earnings of
investees/subsidiaries (6,218) (4,112) 1,213 9,713 a 596
Income applicable to minority interest 0 0 123 0 123
Bad debt expense 0 0 855 0 855
Decrease (increase) in accounts receivable 106,007 (14,261) 9,201 (138,519)a (37,572)
Decrease (increase) in inventories and
advances on purchases of tobacco 17,178 (288,666) 67,179 (9,046)a (213,355)
Decrease (increase) in recoverable taxes 1,666 0 (1,122) 0 544
Decrease (increase) in prepaid expenses (476) (3,098) (3,540) 0 (7,114)
Increase (decrease) in accounts payable
and accrued expenses (8,624) (85,265) 14,167 135,453 a 55,731
Increase (decrease) in advances from customers (946) 187,303 (133,264) 11,352 a 64,445
Increase (decrease) in income taxes (8,386) 6,380 6,176 0 4,170
Other 0 0 4,704 0 4,704
-------------- ------------ -------------- -------------- ------------
Net cash provided (used) by operating activities 101,103 (189,839) (11,541) (760) (101,037)
-------------- ------------ -------------- -------------- ------------
Investing Activities
Purchase of property and equipment (48) (4,443) (8,995) 0 (13,486)
Proceeds from sale of property and equipment 0 532 1,294 0 1,826
Payments received on notes receivable and
receivable from investees 7 2,360 14,671 0 17,038
Advances for notes receivable 0 (1,275) (1,373) 590 a (2,058)
Proceeds from or advances for investees,
other investments and other assets 3,461 (2,874) (1,014) (1,531)a (1,958)
Purchase of minority interest in subsidiaries 0 0 (389) 0 (389)
-------------- ------------ -------------- -------------- ------------
Net cash provided (used) by investing activities $ 3,420 $ (5,700) $ 4,194 $ (941) $ 973
-------------- ------------ -------------- -------------- ------------
</TABLE>
a. Intercompany eliminations.
<PAGE>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows (continued)
Six Months Ended December 31, 1994
<TABLE>
<CAPTION>
DIMON
(in thousands) Incorporated Guarantors Non-Guarantors Eliminations Total
-------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Financing Activities
Repayment of debt $ (4,286) $ (635) $ (68,610) $ 0 $ (73,531)
Proceeds from debt 101,400 26,000 61,724 0 189,124
Cash dividends paid to DIMON Incorporated
stockholders (6,789) 0 0 0 (6,789)
Cash dividends paid to minority stockholders 0 0 (162) 0 (162)
Proceeds from sale of stock 9 0 0 0 9
-------------- ------------ -------------- -------------- ------------
Net cash provided (used) by financing activities 90,334 25,365 (7,048) 0 108,651
-------------- ------------ -------------- -------------- ------------
Effect of exchange rate changes on cash 0 0 (1,788) 0 (1,788)
-------------- ------------ -------------- -------------- ------------
Increase (decrease) in cash and cash equivalents 194,857 (170,174) (16,183) (1,701) 6,799
Cash and cash equivalents at beginning of year 6,290 1,880 4,248 53 a 12,471
-------------- ------------ -------------- -------------- ------------
Cash and cash equivalents at end of period $ 201,147 $ (168,294) $ (11,935) $ (1,648) $ 19,270
============== ============ ============== ============== ============
</TABLE>
a. Intercompany eliminations.
<PAGE>
10. (a) Each of the Guarantors, the Company's wholly-owned
subsidiaries, DIMON International, Inc. and Florimex Worldwide
Inc., will fully and unconditionally guarantee on a joint and
several basis the performance and punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of
all of the Company's obligations under the Notes and the
related indenture, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The
obligations of each Guarantor will be limited to the maximum
amount which, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, can be guaranteed by the
relevant Guarantor without resulting in the obligations of such
Guarantor under its Guarantee constituting a fraudulent
conveyance or fraudulent transfer under applicable federal or
state law. Each of the Guarantees will be a guarantee of
payment and not collection. Each Guarantor that makes a payment
or distribution under a Guarantee shall be entitled to a
contribution from each other Guarantor in an amount pro rata,
based on the assets less liabilities of each Guarantor
determined in accordance with generally accepted accounting
principles (GAAP). The Company will not be restricted from
selling or otherwise disposing of any of the Guarantors other
than DIMON International, Inc. provided that the proceeds of
any such sale are applied as required by the Indenture.
Florimex Worldwide, Inc. is the primary holding and operating
company in the U.S. and represents the lead company for the
flowers segment. The cut flowers operations consist of buying
flowers from sources throughout the world and transporting
them, normally by air, to operating units for resale to
wholesalers and retailers.
DIMON International, Inc. is the primary holding and operating
company in the U.S. and represents the lead company in the
Tobacco division whose operations consist primarily of
selecting, buying, processing, packing, shipping, storage and
financing tobacco.
(b) DIMON Incorporated and each of the Guarantors has accounted for
their respective subsidiaries on the equity basis.
(c) Certain reclassifications were made to conform all of the
financial information to the financial presentation on a
consolidated basis. The principal eliminating entries eliminate
investments in subsidiaries and intercompany balances.
<PAGE>
(d) Included in the above balance sheets are certain related party
balances among borrower, the guarantors and non-guarantors. Due
to the Company's world-wide operations, related party activity
is included in most balance sheet accounts. The tables below
set forth the significant intercompany balances for each of the
periods presented.
DECEMBER 31, 1995
DEBIT(CREDIT)
DIMON Non-
Incorporated Guarantors Guarantors
Accounts Receivable $ 110,375 $ 107,957 $100,746
Advances on Purchases 237,683 0 5,764
Accounts Payable (234) (466,632) (47,673)
Advances from Customers (3,876) (2,131) (16,199)
DECEMBER 31,1994
DEBIT(CREDIT)
DIMON Non-
Incorporated Guarantors Guarantors
Accounts Receivable $ 10,132 $ 55,755 $ 21,466
Advances on Purchases 36,057 119,399 156,594
Accounts Payable 1,642 (36,985) (2,489)
Advances from Customers 10 (102,477) 42,806
-22-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Three Months Ended December 31, 1995 Compared to Three Months Ended December 31,
1994:
Net sales increased $123.7 million, or 19.6%, for the three months ended
December 31, 1995, from the same period in 1994. The increase in tobacco sales
of $119.7 million, or 22.7%, was primarily due to increased quantities of
foreign grown and of U.S. tobacco sold and higher average prices of foreign
grown tobacco. Average prices of the U.S. tobacco region decreased due to
changes in product mix. Increased quantities of foreign grown and U.S. tobacco
accounted for $44.5 million and $44.3 million, respectively, of the increases,
while higher average prices of foreign grown tobacco accounted for $43.0 million
of the increase, offset by $22.3 million by lower average prices on U.S.
tobacco. The balance of the increase was due to increased revenues from
services. The foreign tobacco sales volumes increased primarily in South
America, Africa and Europe. Due to improving demand, certain customers made
purchases in this year's second quarter that were delayed to the third quarter
for fiscal year 1995. The average prices on foreign grown tobacco increased in
virtually all of DIMON's operating markets due to the continuing reduction in
worldwide leaf oversupply and to improving demand. Flower sales increased $4.0
million, or 3.9%, due primarily to the effects of applying U.S. dollar exchange
rates to European operations.
Cost of sales and expenses, including a $1.3 million charge for restructuring
for the quarter ended December 31, 1995, increased $107.5 million, or 17.6% from
the same period in 1994. Cost of sales and expenses of the tobacco operations
increased $102.7 million, or 20.3%, primarily due to increased sales. The
Company's restructuring of the tobacco operations continued in Brazil with a
$1.2 million charge primarily for severance which will reduce the number of
production workers in the future. The gross profit for the tobacco operations
increased $20.4 million, or 47.6%, due primarily to increased margins on sales
of current year crops from Brazil and Zimbabwe and prior year crops from
Argentina and Turkey. The gross margin for tobacco operations increased from
8.1% to 9.8% due primarily to increased gross margins on foreign tobacco. Cost
of sales and expenses for the flower operations, net of a $0.5 million recovery
relating to restructuring and accounts receivable, increased $1.8 million, or
1.7%. The gross margin for the flower operations increased $1.3 million, or
13.1%, and the gross margin percentage for the flower operations increased from
9.5% to 10.3%, both due primarily to increased gross margins in both the
European and the North American operations. Corporate expenses increased $3.0
million, or 118.5%, due to increased incentive compensation, legal and
professional costs and restructuring costs related to severance which will
reduce the number of employees on the corporate staff.
-23-
<PAGE>
Other income, Interest and Sundry, increased $4.9 million, or 148.7%, for the
quarter ended December 31, 1995, from the same period in 1994. Interest income
decreased $35 thousand while Sundry income increased $4.9 million from the same
period in 1994. The increase in Sundry income is primarily due to the $3.8
million gain on the sale of its 50 percent interest in an unconsolidated
Brazilian affiliate.
Other deductions, primarily Interest expense, increased $1.5 million, or 11.5%,
for the quarter ended December 31, 1995. Interest expense increased $1.1 million
primarily due to higher average borrowings related to increased levels of
tobacco operations.
The effective income tax rate decreased from 66.4% in fiscal year 1995 to 40.6%
in fiscal year 1996 based on estimates of taxable income projected for each
year. The higher effective tax rate in 1994 was due to tax and monetary
regulations in Brazil.
Equity in net income of the tobacco investee companies increased $0.1 million
from the same period last year, primarily due to increased income on operations
in Greece.
Comparison of Six Months Ended December 31, 1995 to Six Months Ended December
31, 1994
Net sales increased $187.1 million, or 20.7%, for the six months ended
December 31, 1995, from the same period in 1994. The increase in tobacco sales
of $181.9 million, or 25.0%, was due to higher average prices on increased
quantities sold of foreign grown tobacco and increased quantities sold of U.S.
tobacco at lower average prices. Higher average prices and increased quantities
of foreign grown tobacco accounted for $89.4 million and $52.1 million,
respectively, of the increase, while increased quantities of U.S. tobacco
accounted for $44.8 million of the increase, offset by lower average prices of
$15.5 million. The balance of the increase was due to increased revenues from
services. The increased quantities of foreign grown tobacco were from South
America, Africa and Europe. Due to improving demand, certain customers made
purchases in this year's second quarter that were delayed to the third quarter
in fiscal year 1995. The increase in flower sales of $5.2 million, or 3.0%, was
due primarily to the European operations and the effect of applying U.S. dollar
exchange rates, offset partially by decreased quantities.
Cost of sales and expenses, including a $2.8 million charge for restructuring
for the period ended December 31, 1995, increased $155.2 million, or 17.6%, from
the same period in 1994. Cost of sales and expenses of the tobacco operations
increased $149.8 million, or 21.5%, primarily due to increased sales. The
Company's restructuring of its tobacco operations continued in Brazil, with a
$2.7 million charge primarily for severance which will reduce the number of
production workers in the future. The gross profit for the tobacco operations
increased $38.4 million, or 55.9%, primarily due to increased margins on sales
of current year crops from Brazil and Zimbabwe and prior year crops from
Argentina and Turkey. The gross margin for tobacco operations increased from
9.4% to 11.8% due primarily to increased gross margins on foreign grown tobacco.
-24-
<PAGE>
Cost of sales and expenses for the flower operations increased $2.0 million, or
1.1%, primarily due to $8.7 million in additional cost related to the effect of
applying U.S. dollar exchange rates to the European operations, offset partially
by $6.7 million of savings relating to cost reductions and closing certain
unprofitable locations in North America. The gross margin for the flower
operations increased $2.1 million, or 13.1%, and the gross margin percentage for
the flower operation increased from 9.1% to 9.9%, both due primarily to the
North American operations. Corporate expenses increased $3.4 million, or 63.0%,
due primarily to increased bonuses accrued, legal and professional costs and
restructuring costs related to severance which will reduce the number of
employees on the corporate staff.
Other income, interest and sundry, increased $6.4 million, or 105.2%, for the
period ended December 31, 1995 from the same period in 1994. Interest income
increased $0.9 million while sundry increased $5.5 million. The increase in
sundry income is primarily due to the tobacco operations and the $3.7 million
gain on the sale of its 50% interest in an unconsolidated Brazilian affiliate.
Other deductions, primarily interest expense, increased $5.6 million, or 25.4%,
for the period ended December 31, 1995. Interest expense increased $4.8 million
primarily due to higher average interest rates and to a lesser extent increased
average short-term borrowings.
The effective tax rate decreased from 63.6% in 1994 to 40.0% in 1995 based on
estimates of taxable income projected for each year. The higher effective tax
rate in 1994 was due to non-taxable operating transaction adjustments related to
the translation of foreign financial statements.
Equity in net income of the tobacco investee companies increased $0.8 million
from the same period last year. The increase is primarily due to decreased
losses from the Company's investee in Brazil, which was sold in November 1995.
FINANCIAL CONDITION:
The purchasing and processing activities of the Company's tobacco business are
seasonal. The Company's need for capital fluctuates accordingly and, at any of
several seasonal peaks, the Company's outstanding indebtedness may be
significantly greater or lesser than at year end. The Company historically has
needed capital in excess of cash flow from operations to finance inventory and
accounts receivable and, more recently, to finance acquisitions of foreign
acquisitions of foreign tobacco operations and flower operations. The Company
also prefinances tobacco crops in certain foreign countries by making cash
advances to farmers prior to and during the growing season.
-25-
<PAGE>
The Company's working capital increased from $277.6 million at June 30, 1995, to
$299.3 million at December 31, 1995. The current ratio of 1.6 to 1 at June 30,
1995 decreased to 1.5 to 1 at December 31, 1995, as current liabilities
increased at a higher percentage than the percentage increase of current assets.
The larger increases in the individual components of current assets and current
liabilities reflect a seasonal increase in the level of tobacco operations.
Current assets increased primarily due to the increases in tobacco inventories
of $91.5 million and in trade receivables of $85.0 million, partially offset by
decreases in advances on purchases of tobacco and prepaid expenses. Current
liabilities increased primarily due to the increases in advances from customers
of $102.3 million and notes payable to banks of $22.5 million. Tobacco
inventories increased due primarily to the seasonal increase in the operations
in the U.S. and the acquisition of the oriental operations in late fiscal 1995,
offset partially by the seasonal decrease in operations in Brazil. However,
reflecting the worldwide improvement in leaf demand, the Company's tobacco
inventories have decreased by approximately $100 million since December 31,
1994. Accounts receivable increased by varying amounts in most regions. Advances
from customers increased due to the seasonal increase in the U.S. operations.
Cash flows used by operating activities increased $103.9 million, or 102.8%, to
$2.9 million in the six months ended December 31, 1995 over the same period last
year, primarily due to decreased tobacco inventory as a result of the increased
sales and increased advances from customers, offset partially by decreased
accounts payable and accrued expenses. Cash flows provided by financing
activities decreased $5.8 million from $1.0 million primarily due to decreased
payments on notes receivable and receivables from investees, offset partially by
increased proceeds from advances for investees. Cash flows provided by financing
activities decreased $103.6 million, or 95.3%, from $108.7 million due primarily
to the increased repayment of debt, offset partially by the increased proceeds
from debt.
At June 30, 1995, the Company had seasonally adjusted lines of credit of $1,126
million, including $876 million uncommitted, unsecured working capital lines
with several banks. At December 31, 1995, the Company had borrowed $255 million
under its $975.5 million lines of credit with interest rates ranging from 5.5%
to 10.6%. At December 31, 1995, the unused short-term lines of credit amounted
to $551.6 million, net of $158.7 million of letters of credit and guarantees
that reduce lines of credit. Total maximum outstanding borrowings during the six
months ended December 31, 1995, were $745.3 million.
To ensure long-term liquidity, the Company entered into the $240 million New
Credit Facility on March 15, 1996. The New Credit Facility replaced the
Company's $250 million Former Credit Facility. The Company used the Former
Credit Facility to reclassify $250 million of short-term debt to long-term debt
and
-26-
<PAGE>
did not borrow under it. The Company generally uses the New Credit Facility to
reclassify similarly $240 million of its short-term debt. The interest rates
available under the New Credit Facility depend on the type of advance selected
and are based either on the agent bank's base lending rate (which was 8.25% at
March 25, 1996, and is adjusted with changes in interest rates generally) or
LIBOR plus 0.75%, through March 15, 1997, and thereafter plus a spread of 0.45%
to 1.25% based on the ratings assigned to the Company's outstanding senior debt
or on its consolidated interest coverage ratio. The New Credit Facility is
subject to certain commitment fees and covenants that among other things require
the Company to maintain minimum working capital and tangible net worth amounts,
require specific liquidity and long-term solvency ratios and restrict
acquisitions and, under certain circumstances, payment of dividends by the
Company. The New Credit Facility terminates on March 15, 1998, but may be
extended thereafter, year to year, upon approval of the Lenders. As of March 31,
1996, there were no borrowings outstanding under the New Credit Facility.
On February 9, 1996, the Company called all of the Debentures for redemption on
March 11, 1996. As of March 4, 1996, holders of Debentures had converted
approximately 99.85% of the Debentures into 4,035,969 shares of Common Stock.
The remaining Debentures were redeemed on March 11, 1996 for $89,188. The
Company funded the redemption price for these Debentures and expenses of the
redemption from working capital.
DIMON's management believes that DIMON's capital resources are adequate to meet
its capital needs through June 30, 1996.
OTHER INFORMATION:
As a result of the April 1995 merger of Dibrell Brothers, Incorporated and
Monk-Austin, Inc., the Company provided in fiscal year 1995 $17.9 million to
complete the combination and rationalization of operations. Additional
restructuring charges of $5 million to $10 million were anticipated during
fiscal 1996. A total of $2.8 million in such charges have been taken in the
first six months of fiscal 1996. Cash expenditures against these reserves are
occurring as planned.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - 10 - Standby Agreement, dated February 9
1996, between the Company and Salomon
Brothers Inc and Wheat, First
Securities, Inc. (previously filed)
11 - Computation of Earnings (Loss) Per Common
Share. (previously filed)
27 - Financial Data Schedule.
(b) Reports on Form 8-K: On November 21, 1995, the Company filed a Form 8-K
reporting, under Item 2 and Item 7 thereof, that the Company had completed the
sale of its 50 percent interest in Rio Grande Tabacalera S.A. ("RGT") to Intabex
Worldwide S.A., an unrelated third party.
On January 11, 1996, the Company filed Form 8-K/A1, amended the Form 8-K, to
include the proforma financial information required by Item 7(b) with respect to
the disposition of RGT.
-27-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
DIMON INCORPORATED
/s/ JERRY L. PARKER
Date May 8, 1996 ____________________________________
Jerry L. Parker
Vice President - Controller
(Principal Accounting Officer)
-28-
EXHIBIT INDEX
Exhibit Page No.
10 Standby Agreement, dated February 9
1996, between the Company and Salomon
Brothers Inc and Wheat, First
Securities, Inc. (previously filed) --
11 Computation of Earnings (Loss) Per Common
Share. (previously filed) --
27 Financial Data Schedule 30
-29-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 45,725
<SECURITIES> 0
<RECEIVABLES> 278,370
<ALLOWANCES> 8,924
<INVENTORY> 516,451
<CURRENT-ASSETS> 871,073
<PP&E> 335,837
<DEPRECIATION> 108,347
<TOTAL-ASSETS> 1,229,423
<CURRENT-LIABILITIES> 571,814
<BONDS> 341,002
0
0
<COMMON> 81,980
<OTHER-SE> 174,034
<TOTAL-LIABILITY-AND-EQUITY> 1,229,423
<SALES> 1,090,577
<TOTAL-REVENUES> 1,090,577
<CGS> 965,399
<TOTAL-COSTS> 965,399
<OTHER-EXPENSES> 2,818<F1>
<LOSS-PROVISION> 705
<INTEREST-EXPENSE> 27,060
<INCOME-PRETAX> 40,706
<INCOME-TAX> 16,282
<INCOME-CONTINUING> 124,424
<DISCONTINUED> 0
<EXTRAORDINARY> 1,400
<CHANGES> 0
<NET-INCOME> 25,866
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.64
<FN>
<F1> Restructuring.
</FN>
</TABLE>
