DIMON INC, 424B4, 1997-09-29

DIMON INC
424B4, 1997-09-29
FARM PRODUCT RAW MATERIALS

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Filed Pursuant to Rule 424b(4)
File Number 333-33267

PROSPECTUS

1,800,000 SHARES [DIMON LOGO]

DIMON INCORPORATED

COMMON STOCK
(NO PAR VALUE)

All of the 1,800,000 shares of common stock, no par value ("Common Stock"), of
DIMON Incorporated (the "Company") offered hereby (the "Shares") are being sold
by certain stockholders of the Company (the "Selling Stockholders"). See
"Selling Stockholders." The Company is not offering any shares for sale
hereunder and will not receive any of the proceeds from the Shares sold by the
Selling Stockholders in this offering (the "Stock Offering").

The Common Stock is traded on the New York Stock Exchange (the "NYSE") under the
symbol "DMN." On September 25, 1997, the last reported sale price of the Common
Stock was $23.625 per share. See "Price Range of Common Stock and Dividends."

Pursuant to a separate prospectus (the "DECS Prospectus"), DECS Trust (the
"Trust") is concurrently offering for sale in a separate offering 3,100,000 DECS
representing beneficial ownership interests in the Trust (the "DECSSM"), plus up
to an additional 379,871 DECS solely to cover over-allotments (the "DECS
Offering"). On or about August 15, 2000, or upon earlier liquidation of the
Trust in certain circumstances, the Trust may distribute shares of Common Stock
to the holders of DECS.

SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT SELLING STOCKHOLDERS(1)
<S> <C> <C> <C>
Per Share.................................... $23.625 $1.06 $22.565
Total(2)..................................... $42,525,000 $1,908,000 $40,617,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>

(1) Expenses of issuance and distribution estimated at $230,000 are payable by
the Company.

(2) The Selling Stockholders have granted the Underwriters an option,
exercisable within 30 days of the date hereof, to purchase up to an
additional 240,000 shares of Common Stock solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Selling Stockholders will be
$48,195,000, $2,162,400 and $46,032,600, respectively. See "Plan of
Distribution."

The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and the Underwriters' right to reject any order in whole or in part
and to withdraw, cancel or modify the offer without notice. It is expected that
delivery of the Shares will be made at the office of Salomon Brothers Inc, Seven
World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about October 1, 1997.

SALOMON BROTHERS INC WHEAT FIRST BUTCHER SINGER

The date of this Prospectus is September 25, 1997.
<PAGE>
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE STOCK OFFERING AND THE DECS OFFERING
MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF THE COMMON STOCK OR THE DECS, INCLUDING PURCHASES OF THE COMMON STOCK
OR THE DECS TO STABILIZE THEIR MARKET PRICES, PURCHASES OF THE COMMON STOCK OR
THE DECS TO COVER SOME OR ALL OF SHORT POSITIONS IN THE COMMON STOCK OR THE DECS
MAINTAINED BY THE RESPECTIVE UNDERWRITERS OF THE STOCK OFFERING AND THE DECS
OFFERING AND IN THE CASE OF THE STOCK OFFERING THE IMPOSITION OF A PENALTY BID.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."

FORWARD-LOOKING STATEMENTS

Certain information that is included or incorporated by reference into this
Prospectus under the captions "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere include "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, and is subject to the safe harbor
created by that Act. These forward-looking statements, which include statements
regarding changes in the tobacco industry and the international tobacco market,
anticipated expenditures and cost savings related to the Intabex Acquisition and
the Merger (each as defined below), regulatory reform and future sales trends,
are generally identified by phrases such as "the Company expects" or words of
similar import. Actual results may differ materially from those anticipated by
the forward-looking statements contained in such discussions for a number of
reasons, as discussed in those sections and in the documents incorporated by
reference herein.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Copies of material
filed electronically by the Company may be obtained without charge on the
worldwide web site maintained by the Commission at http://www.sec.gov. Such
reports, proxy statements and other information concerning the Company may also
be inspected at the offices of the New York Stock Exchange, Inc. at 20 Broad
Street, New York, New York 10005.

The Company has filed with the Commission in Washington, D.C. a
registration statement (herein, together with all amendments and exhibits
thereto, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the Shares to which
this Prospectus relates. As permitted by the Rules and Regulations of the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement, including the exhibits and schedules thereto. Such
documents may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates or may be
examined without charge at the public reference facilities of the Commission.

2
<PAGE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents of the Company filed with the Commission (File No.
1-13684) are incorporated herein by reference:

(i) the Company's Annual Report on Form 10-K for the year ended June
30, 1996;

(ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1996, December 31, 1996, and March 31, 1997;

(iii) the Company's Current Reports on Form 8-K filed February 24,
1997, and April 16, 1997, and the Company's Current Report on Form 8-K/A
filed June 16, 1997; and

(iv) the Company's Registration Statement on Form 8-B filed on March
21, 1995.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide, without charge to any person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any document incorporated by reference herein, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
in such document. Requests shall be directed to 512 Bridge Street, P. O. Box
681, Danville, Virginia 24541, Attention: Secretary. The Company's telephone
number is (804) 792-7511.

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL DATA APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS. UNLESS THE CONTEXT REQUIRES OTHERWISE "DIMON" OR THE
"COMPANY" REFERS TO DIMON INCORPORATED AND ITS CONSOLIDATED SUBSIDIARIES. UNLESS
OTHERWISE INDICATED, ALL INFORMATION CONTAINED HEREIN ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTIONS. SEE "PLAN OF DISTRIBUTION."

THE COMPANY

DIMON is the second largest independent leaf tobacco merchant in the world.
The Company acquired Intabex Holdings Worldwide S.A. ("Intabex") on April 1,
1997 (the "Intabex Acquisition"), and is the successor to Dibrell Brothers,
Incorporated ("Dibrell") and Monk-Austin, Inc. ("Monk-Austin"), which merged in
April 1995 (the "Merger"). Principally through the Intabex Acquisition, the
Company increased its tobacco-related revenues for the fiscal year ended June
30, 1997, by 20%, from $1,770 million to $2,126 million. The Company increased
its tobacco-related revenues for the twelve months ended March 31, 1997, by 44%,
from $1,942 million to $2,787 million on a pro forma basis, and increased its
market share in the established worldwide leaf tobacco market from approximately
30% to approximately 37% on a pro forma basis. Also, as a result of the Intabex
Acquisition, DIMON strengthened its presence in several important tobacco
growing regions, including Brazil, Argentina, Malawi, Thailand and Zimbabwe.

Increased demand and strong brand growth have resulted in increased
production of American blend cigarettes. American blend cigarettes contain
flue-cured, burley and oriental tobacco ("American blend tobacco"), contain less
tar and nicotine, and taste milder than locally produced cigarettes containing
dark and semi-oriental tobacco historically consumed in certain parts of the
world. According to the Tobacco Merchants Association (the "TMA"), American
blend cigarette consumption (excluding China) has increased from 1.7 trillion
units in calendar 1990 to 1.9 trillion units in calendar 1996, an increase of
10.8%. The TMA estimates that worldwide American blend cigarette consumption
(excluding China) will increase an additional 5.5% to more than 2.0 trillion
units by the year 2000. The TMA also estimates that worldwide American blend
cigarette consumption (excluding China), as a percentage of total consumption,
has also experienced substantial growth, increasing from 47.9% in 1990 to 52.5%
in 1996, and is projected to reach 54.3% by the year 2000. As American blend
cigarettes have continued to gain global market share, the demand for export
quality flue-cured, burley and oriental tobacco sourced and processed by leaf
tobacco merchants has grown accordingly. Large multinational cigarette
manufacturers, with one principal exception, rely primarily on the three global
independent leaf tobacco merchants, including the Company, to supply the
majority of their leaf tobacco needs.

As a result of the strong worldwide demand for tobacco products and
tightening of worldwide tobacco inventories, the global leaf tobacco industry
experienced continued improvement in profitability in the twelve months ended
June 30, 1997. These factors, together with the Intabex Acquisition, increased
demand for American blend cigarettes and improved efficiencies resulting from
the Merger, have contributed to substantial improvement in the Company's net
revenues, operating margins and net income. For the fiscal year ended June 30,
1997, the Company's sales and other operating revenues increased 16% to $2,513
million from $2,167 million in fiscal 1996, while operating income and net
income increased to $176.9 million and $77.2 million, respectively, as compared
to $114.4 million and $41.3 million, respectively, for fiscal 1996. The global
leaf tobacco industry has recovered after experiencing a disruption in demand
and reduction in pricing during 1993 and 1994 that was primarily the result of
legislation (the "75/25 Rule"), which was later repealed, requiring that
cigarettes manufactured in the U.S. for domestic consumption and export contain
at least 75% domestically grown tobacco.

The Company sells tobacco predominantly to the large multinational
cigarette manufacturers including Philip Morris Companies, Inc. ("Philip
Morris"), Japan Tobacco, Inc. ("Japan Tobacco"), RJR Tobacco Company, Inc.
("RJR"), Lorillard Tobacco Company, Reemstma Cigarettenfabriken GmbH,
Tabacalera, S.A. and Rothmans International PLC. The Company, through its
predecessors, generally has maintained relationships with its customers for over
seventy years. In fiscal 1997 tobacco shipped to non-U.S. customers accounted
for approximately 62% of the Company's tobacco sales. The Company believes a
significant portion of the tobacco shipped to U.S. destinations is later
exported from the U.S. by customers in the form of manufactured cigarettes.

<PAGE>
The Company has developed an extensive international network through which
it purchases and sells tobacco grown globally. Prior to the Intabex Acquisition,
the Company purchased tobacco in approximately 26 countries, generally at
auction or directly from growers. The Company now purchases tobacco in 32
countries and has expanded its purchasing capabilities significantly in Brazil,
Argentina, Malawi, Thailand and Zimbabwe. The Company believes it has access to
a diverse supply of tobacco grown in a number of regions throughout the world
and can respond quickly to factors that may cause fluctuations in the quality,
yield or price of tobacco grown in any one region. The tobacco purchased by the
Company is processed at 30 facilities around the world, nine of which were
acquired in the Intabex Acquisition. In addition to facilities in Virginia and
North Carolina, the Company owns or has an interest in processing facilities in
Brazil and Zimbabwe, the two most significant non-U.S. exporters of flue-cured
tobacco, Malawi and Mexico, two of the leading non-U.S. exporters of burley
tobacco, and Greece and Turkey, the leading exporters of oriental tobacco. The
Company also has processing facilities in Italy and Germany. In addition, the
Company has entered into contracts, joint ventures and other arrangements for
the purchase and processing of tobacco grown in substantially all other
countries that produce export-quality flue-cured and burley tobacco, including
Argentina, Canada, China, India and Tanzania.

BUSINESS STRATEGY

The Company's primary business objective is to capitalize on the growth in
worldwide consumption of American blend cigarettes by becoming the low-cost,
preferred supplier of leaf tobacco to the large multinational manufacturers of
American blend cigarettes. To achieve this objective, the Company has designed a
strategy to position itself to meet the needs of its cigarette manufacturing
customers throughout the world by expanding its global operations directly in
the major tobacco exporting countries and by forming strategic partnerships with
its major customers in countries with emerging tobacco production. As part of
this strategy, the Company acquired Intabex on April 1, 1997. The Company
believes the Intabex Acquisition will further enhance the Company's global
tobacco purchasing capabilities, expand and diversify its customer base and
expand its geographic reach. The Company's ability to respond to the global
expansion and changing needs of the large multinational cigarette manufacturers
is a critical factor in developing and expanding customer relationships. The
principal components of the Company's business strategy are as follows:

CAPITALIZE ON OUTSOURCING TRENDS. The Company anticipates further
outsourcing of leaf tobacco purchasing and processing by cigarette
manufacturers. This outsourcing trend is driven by the (i) higher margins in
cigarette production, (ii) increased sophistication required in sourcing leaf
tobacco on a global basis and (iii) continued privatization of tobacco and
cigarette production operations in other countries. In 1994, the Company began
providing all leaf tobacco auction buying in the U.S. for RJR, the second
largest cigarette producer in the U.S. In 1995, the Company began to purchase
and process all of Lorillard's auction market tobacco requirements in the U.S.
With the improved tobacco purchasing capabilities and expanded geographic reach
resulting from the Intabex Acquisition, the Company believes it will continue to
be a major beneficiary of the outsourcing trends in the tobacco industry.

IMPROVE EFFICIENCY AND REDUCE OPERATING COSTS. The Company realized
substantial operating efficiencies and operating cost reductions following the
Merger and anticipates achieving similar cost savings from the Intabex
Acquisition. In connection with the Merger, the Company initiated a
restructuring plan for its operations. The plan was designed to eliminate
unprofitable locations, consolidate duplicative processing facilities, reduce
the salaried workforce, improve operating efficiencies and increase regional
unit accountability. This initiative resulted in the recognition of various
charges in fiscal 1996, aggregating $11.8 million, net of tax, and in fiscal
1995, aggregating

<PAGE>
$17.8 million, net of tax. This initiative reduced the Company's annual
operating costs and expenses by approximately $25 million in fiscal 1997. In the
Intabex Acquisition, the Company acquired facilities in Malawi, Italy, Germany,
Zimbabwe, and the U.S., countries where the Company already had facilities. By
eliminating redundant facilities and realizing other efficiencies similar to
those achieved in the Merger, the Company anticipates savings in annual
operating costs as a result of the Intabex Acquisition of approximately $23
million in fiscal 1998.

RECENT DEVELOPMENTS

INTABEX ACQUISITION

On April 1, 1997, DIMON acquired all of the outstanding capital stock and
other rights of Intabex Holdings Worldwide S.A., a privately-owned Luxembourg
holding company. DIMON believes Intabex was the fourth largest independent leaf
tobacco merchant in the world. It owns and operates leaf tobacco buying,
processing and exporting operations in principal tobacco markets around the
world including the U.S., Brazil, Argentina, Italy and Thailand. Intabex is also
a major supplier of Malawian, Zimbabwean and other African grown tobacco to the
cigarette industry. As part of the transaction, Anthony C.B. Taberer, the former
Chairman of the Board of Intabex, joined the Company's Board of Directors and
became non-executive Chairman of the Board of Intabex.

The $245.6 million aggregate adjusted purchase price for Intabex and
certain other rights consisted of 1.70 million shares of Common Stock, $123.3
million in 10-year, 6.25 percent subordinated debentures convertible into 4.287
million shares of Common Stock at $28.77 per share (the "Convertible
Debentures"), and $84.2 million in cash. Intabex's former shareholders, Folium
Inc. ("Folium"), Tabacalera, S.A. ("Tabacalera"), and Leaf Management
Investments Ltd. (collectively, the "Intabex Group"), have agreed to indemnify
the Company against certain liabilities in connection with the Intabex
Acquisition, subject to a maximum of $90 million.

FISCAL 1997 OPERATING RESULTS

The Company reported net income in fiscal 1997, before restructuring
charges, of $79.9 million, or $1.85 per share ($1.82 fully diluted), an increase
of 55% over net income for fiscal 1996, excluding restructuring charges and
extraordinary items, of $51.7 million, or $1.30 per share ($1.26 fully diluted).
The results of Intabex for the three months ended June 30, 1997, are included in
the Company's unaudited consolidated financial information for fiscal 1997.

Including pre-tax restructuring expenses of $3.9 million related to the
Intabex Acquisition, the Company reported net income of $77.2 million, or $1.79
per share ($1.76 fully diluted), on sales of $2.5 billion. In fiscal 1996, net
income was $41.3 million, or $1.04 per share ($1.01 fully diluted), on sales of
$2.2 billion, including pre-tax restructuring charges of $15.4 million and $1.4
million in extraordinary income net of taxes.

For the fourth quarter of fiscal 1997, the Company reported net income
before restructuring charges of $28.7 million or $.64 per share ($.61 fully
diluted) versus net income before restructuring charges of $17.3 million or $.41
per share ($.41 fully diluted) in the fourth quarter of fiscal 1996. Including
the pre-tax restructuring charge of $3.9 million, net income for the quarter was
$26 million, or $.58 per share ($.55 fully diluted), on sales of $663 million.
Net income in the fourth quarter of fiscal 1996, after pre-tax restructuring
charges of $9.8 million, was $9.1 million, or $.21 per share ($.21 fully
diluted) on sales of $487 million. The Company incurred $3.9 million in
restructuring expense in the fourth quarter of fiscal 1997 to rationalize the
operations of Intabex and DIMON.

In conjunction with the Intabex Acquisition, the Company capitalized $9.2
million, net of $3.7 million of tax, to cover the anticipated costs of combining
the acquired business of Intabex with existing tobacco operations of

<PAGE>
DIMON. The capitalized amounts relate primarily to severance and the closure of
certain duplicative administrative, warehouse and plant facilities acquired from
Intabex. Of the capitalized amounts, $7.0 million relates to severance and other
costs associated with employee separations, and $2.2 million relates to costs of
planned facility closures. As these amounts are paid out in cash, the Company
will reduce an accrual established for their expenditure.

The improved performance for the fourth quarter and fiscal 1997 is
primarily attributable to the Company's international tobacco operations.
Generally favorable growing conditions and larger crop sizes in major growing
regions, except the United States, led to higher volumes and eased market
pressures caused by an undersupply of leaf. Significant increases in tobacco
sales for the fourth quarter came from Asia and South America. Increases in
tobacco sales for the year came from North America, Africa, Asia and South
America. Sales in DIMON's tobacco division increased $184.2 million, principally
due to the inclusion of Intabex, to $572.5 million for the quarter, 47% over
sales in the fourth quarter of 1996, and increased $355.6 million to $2.13
billion for the year, 20% over fiscal 1996.

The Company's tobacco division reported a sharp increase in operating
profit, before restructuring charges, for the quarter of $67.6 million, compared
to $35.0 million in the fourth quarter of fiscal 1996. Operating profit for
fiscal 1997, excluding restructuring charges, increased to $184.1 million
compared to operating profit of $137.7 million for fiscal 1996. DIMON's
uncommitted tobacco inventories have increased $99.7 million to $161.7 million
since June 30, 1996, primarily due to better than expected crop yields in Brazil
and to the inclusion of Intabex.

FIRST QUARTER DIVIDEND

At its meeting held on August 22, 1997, the Company's Board of Directors
declared a quarterly dividend of $.15 per share, payable on September 13, 1997,
to holders of record on September 6, 1997.

NEW CREDIT FACILITY

On June 27, 1997, the Company entered into a $500 million revolving credit
facility (the "New Credit Facility") with a syndicate of banks. The New Credit
Facility provides for improved pricing and less restrictive covenants than the
$240 million revolving credit facility that it replaced. Like the prior
facility, the New Credit Facility is primarily used by the Company to reclassify
short-term working capital borrowings to long-term debt. The Company expects
that the expanded New Credit Facility will be adequate to reclassify the
additional working capital debt generated by Intabex operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

THE STOCK OFFERING

<TABLE>
<S> <C>
Common Stock being offered by Selling Shareholders................................ 1,800,000
Common Stock to be outstanding after the offerings................................ 44,312,349 shares(1)
Use of proceeds................................................................... All of the proceeds will be received by
the Selling Stockholders. None of the
proceeds will be received by DIMON.
New York Stock Exchange Symbol.................................................... DMN
</TABLE>

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1Does not include 1,873,889 shares subject to options at an average exercise
price of $16.79 per share of which 842,373 were exercisable at an average
exercise price of $17.58 per share.

THE DECS OFFERING

The Trust is also offering for sale in a separate offering 3,100,000 DECS,
plus up to an additional 379,871 DECS solely to cover over-allotments. On or
about August 15, 2000, or upon earlier liquidation of the Trust in certain
circumstances, the Trust will distribute Common Stock (or, at the Selling
Stockholders' option, the cash equivalent) and/or such other consideration as is
delivered by the Selling Stockholders to the Trust pursuant to their purchase
agreements with the Trust (the "Contracts"), to the holders of the DECS, at the
rate specified in the DECS Prospectus.

<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The following table presents summary selected historical consolidated
financial information of the Company, as of the dates and for the periods
indicated. The historical financial data for the fiscal year ended June 30, 1997
have been derived from the Company's unaudited financial statements. The Company
accounted for the Intabex Acquisition as a purchase and the results of Intabex
for the three months ended June 30, 1997 are included in the Company's unaudited
financial data for fiscal 1997. The historical financial data for the fiscal
years ended June 30, 1996, 1995 and 1994, have been derived from the Company's
financial statements which, except as they relate to the former Dibrell
financial statements for the year ended June 30, 1994, have been audited by
Price Waterhouse LLP, independent accountants, and by Ernst & Young LLP,
independent accountants, insofar as they relate to the former Dibrell financial
statements referred to above. The summary historical financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's financial
statements and notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
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<S> <C> <C> <C> <C>
1997 1996 1995 1994
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<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales and other operating revenues.............................. $ 2,513,227 $2,167,473 $1,941,188 $1,464,778
Cost of goods and services sold................................. 2,195,333 1,904,992 1,759,364 1,317,705
----------- ---------- ---------- ----------
Gross profit.................................................... 317,894 262,481 181,824 147,073
Selling, general and administrative expenses.................... 137,124 132,710 132,802 117,311
Restructuring and merger-related costs.......................... 3,864 15,360 25,955 --
----------- ---------- ---------- ----------
Operating income................................................ 176,906 114,411 23,067 29,762
Interest expense................................................ 53,027 46,924 45,231 35,117
----------- ---------- ---------- ----------
Income (loss) from continuing operations before income taxes,
minority interest, equity in net income (loss) of investee
companies and extraordinary item.............................. 123,879 67,487 (22,164) (5,355)
Income taxes.................................................... 47,108 26,995 5,980 2,767
Income (loss) applicable to minority interest................... 124 292 216 466
Equity in net income (loss) of investee companies
(net of taxes)................................................ 526 (330) (1,805) 98
----------- ---------- ---------- ----------
Income (loss) from continuing operations before extraordinary
items......................................................... 77,173 39,870 (30,165) (8,490)
Extraordinary item (1).......................................... -- 1,400 -- --
Net income (loss)............................................... $ 77,173 $ 41,270 $ (30,165) $ (8,490)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Earnings (loss) per share, primary (2).......................... $ 1.79 $ 1.04 $ (0.79) $ (0.22)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Weighted average shares outstanding, primary.................... 43,176 39,671 38,100 38,091
Earnings (loss) per share, fully-diluted (2)(3)................. $ 1.76 $ 1.01
----------- ----------
----------- ----------
Weighted average shares outstanding, fully-diluted.............. 44,482 42,464 42,355 42,297
OTHER DATA:
Gross Margin.................................................... 12.6% 12.1% 9.4% 10.0%
Operating Margin................................................ 7.0% 5.3% 1.2% 2.0%
Tobacco inventory............................................... $ 583,579 $ 315,476 $ 410,431 $ 403,211
Depreciation and amortization................................... 37,191 33,780 31,852 28,862
Capital expenditures............................................ 60,860 41,266 27,036 32,382
BALANCE SHEET DATA (END OF PERIOD):
Working capital................................................. $ 699,993 $ 422,342 $ 277,597 $ 217,667
Total assets.................................................... 1,987,603 1,020,014 1,093,608 1,043,816
Total debt...................................................... 1,192,639 401,489 594,192 515,133
Stockholders' equity............................................ 408,263 315,848 238,806 288,314
</TABLE>

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(1) Extraordinary item is a partial recovery in fiscal 1996 against an
extraordinary trade receivable reserve of $1.4 million, net of tax,
established in a prior period.

(2) Includes non-recurring restructuring and merger related costs of: $0.06,
$0.23 ($0.22 fully-diluted) and $0.42 per share for the fiscal years ended
June 30, 1997, 1996, and 1995 respectively.

(3) Anti-dilutive for the fiscal years ended June 30, 1995 and 1994.

<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN
EVALUATING AN INVESTMENT IN THE SHARES OFFERED HEREBY.

GOVERNMENTAL INTERVENTION; PROPOSED SETTLEMENT OF TOBACCO LITIGATION

In recent years, governmental entities in the U.S. at all levels have taken
or have proposed actions that may have the effect of reducing consumption of
cigarettes. These activities have included: (i) the U.S. Environmental
Protection Agency's decision to classify tobacco environmental smoke as a "Group
A" (known human) carcinogen; (ii) restrictions on the use of tobacco products in
public places and places of employment including a proposal by the U.S.
Occupational Safety and Health Administration to ban smoking in the work place;
(iii) proposals by the U.S. Food and Drug Administration to sharply restrict
cigarette advertising and promotion and to regulate nicotine as a drug; (iv)
increases in tariffs on imported tobacco; (v) proposals to increase the U.S.
excise tax and state taxes on cigarettes; (vi) the policy of the U.S. government
to link certain federal grants to the enforcement of state laws banning the sale
of tobacco products to minors; and (vii) recent filings of lawsuits against
cigarette manufacturers by many U.S. states and others seeking reimbursement of
Medicaid and other expenditures claimed to have been made by such states to
treat diseases allegedly caused by cigarette smoking. In 1993, Congress enacted
the 75/25 Rule requiring that all domestically manufactured cigarettes contain
at least 75% domestically grown tobacco. Although that law was repealed in 1995
and was replaced with import quotas designed to assist domestic tobacco growers,
the law had the effect of drastically decreasing demand for foreign tobacco in
the domestic production of cigarettes. It is not possible to predict the extent
to which governmental activities might affect the Company's business.

On June 20, 1997, representatives of the leading U.S. manufacturers of
consumer tobacco products, several state attorneys general and certain private
plaintiffs jointly announced a proposed settlement of certain significant
lawsuits pending against the manufacturers. The proposed settlement, which must
be enacted into federal law to become effective, is expected to cost the
nation's leading cigarette manufacturers, all of whom are customers of the
Company, approximately $368 billion in cash outlays over the next 25 years. The
cigarette manufacturers subsequently entered into a separate settlement of a
lawsuit brought by the state of Mississippi and agreed to a settle a lawsuit
brought by the state of Florida. The Mississippi settlement, announced July 3,
1997, requires the manufacturers to pay the state $3.6 billion. The Florida
settlement, announced on August 25, 1997, would require the manufacturers to pay
that state $11.3 billion over the next 25 years. These amounts would be included
within the total amount payable pursuant to any federal settlement. Cigarette
manufacturers may attempt to recover a portion of these costs by demanding price
and other concessions from suppliers such as the Company. Such concessions could
materially and adversely affect the Company's margins and its results of
operations.

The proposed federal settlement also would permit federal regulation of
cigarette production and would severely curtail advertising of tobacco products,
banning many of the marketing methods currently utilized by the cigarette
industry. The separate Florida settlement would provide for similar marketing
restrictions within that state. The settlements may therefore materially
adversely impact sales of tobacco in the U.S. and, possibly, overseas. Certain
customers have expressed their uncertainty regarding the impact of the proposed
federal settlement and a substantial risk exists that past growth trends in
tobacco sales may not continue and that existing sales may decline as a result
of the proposed settlements. In addition, in response to the proposed federal
settlement, groups representing tobacco farmers have proposed certain measures,
including measures similar to the 75/25 Rule, that could adversely affect the
Company's business. However, it is not possible to predict whether or in what
form the proposed federal settlement or any additional measures will be approved
by Congress and the President or the extent to which any settlement or such
measures may affect the Company's business.

A number of foreign nations also have taken steps to restrict or prohibit
cigarette advertising and promotion, to increase taxes on cigarettes and to
discourage cigarette smoking. In some cases, such restrictions are more onerous
than those in the U.S. For example, advertising and promotion of cigarettes has
been banned or severely restricted for a number of years in Australia, Canada,
Finland, France, Italy, Singapore and a number of other countries. It is
impossible to predict the extent to which these and any additional restrictions
might affect the Company's business.

<PAGE>
SMOKING AND HEALTH ISSUES

Reports and speculation with respect to the alleged harmful physical
effects of cigarette smoking have been publicized for many years and, together
with restrictions on cigarette advertisements, requirements that warning
statements be placed on cigarette packaging and in advertising, increased taxes
on tobacco products and controls in certain foreign countries on production and
prices, decreased social acceptance of smoking and increased pressure from
anti-smoking groups have had an ongoing adverse effect on sales of tobacco
products. In addition, subject in some cases to the settlement discussed above,
litigation is pending against the leading U.S. manufacturers of consumer tobacco
products seeking damages for health problems alleged to have resulted from the
use of tobacco in various forms. It is not possible to predict the outcome of
such litigation or what effect adverse developments in pending or future
litigation against manufacturers might have on the business of the Company.

VARIABILITY OF ANNUAL AND QUARTERLY FINANCIAL RESULTS

The comparability of the Company's financial results, particularly the
quarterly financial results, may be significantly affected by fluctuations in
tobacco growing seasons and customer instructions with regard to the shipment of
processed tobacco. The cultivation period for tobacco is dependent upon a number
of factors, including the weather and other natural events, and the Company's
processing schedule can be significantly altered by variations in harvesting
periods.

Further, it is not possible to predict with precision the timing of orders
or shipments, and the Company may from time to time in the ordinary course of
business keep a significant amount of processed tobacco in inventory for its
customers to accommodate their inventory management and other needs. Sales and
revenue recognition by the Company and its subsidiaries is based on the passage
of ownership, usually with shipment of tobacco. Since individual shipments may
represent significant amounts of revenue, the Company's quarterly and annual
financial results may vary significantly depending on its customers' needs and
shipping instructions. In particular, because deliveries of Brazilian tobacco
are made at the end of the fourth fiscal quarter of each year or the beginning
of the first quarter of the following year, significant amounts of revenue and
operating profits may shift from fiscal year to fiscal year. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Tobacco -- Seasonality" and "Business -- Flowers -- Seasonality."

RELIANCE ON SIGNIFICANT CUSTOMERS

The Company's customers are manufacturers of consumer tobacco products
located in approximately 60 countries around the world. Several of these
customers individually account for a significant portion of the Company's sales
in a normal year, and the loss of any one or more of such customers could have a
material adverse effect on the Company's results of operations. Approximately
56% and 46% of the Company's consolidated tobacco sales for the nine months
ended March 31, 1997, and fiscal 1996, respectively, were made to 37 customers
that the Company believes are owned or under common control of Japan Tobacco,
Philip Morris, or RJR, each of which contributed in excess of 10% of
consolidated tobacco sales, with Philip Morris and RJR accounting for
significantly larger portions of the Company's sales than Japan Tobacco. See
"Business -- Tobacco -- Operations -- Selling."

FAILURE TO REALIZE ACQUISITION COST SAVINGS AND POTENTIAL SALES LOSSES

Although the Company anticipates that it will achieve significant cost
savings related to the integration and rationalization of the operations of
Intabex, these savings may not be achieved in the amount or as quickly as
expected. Further, the Company expects that certain customers may reduce the
combined volume of tobacco purchased through the Company from volumes previously
purchased separately from Intabex and the Company for reasons unrelated to the
Company's products or performance, such as a desire to manage dependence on any
one supplier. In addition, the Company anticipates that certain of Intabex's
former customers may not be retained and that sales may be reduced as a result.
The Company is unable to predict whether or to what extent any such reductions
may occur.

INTERNATIONAL BUSINESS RISKS

The Company's international operations are subject to international
business risks, including unsettled political conditions, expropriation, import
and export restrictions, exchange controls, inflationary economies and currency

<PAGE>
risks and risks related to the restrictions of repatriation of earnings or
proceeds from liquidated assets of foreign subsidiaries. In certain countries,
the Company has advanced substantial sums or guaranteed local loans or lines of
credit in substantial amounts for the purchase of tobacco from growers. Risk of
repayment is normally limited to the tobacco season, and the maximum exposure
occurs within a shorter period.

The Company's tobacco business is generally conducted in U.S. dollars, as
is the business of the industry as a whole. Accordingly, there is minimal
currency risk related to the sale of tobacco. However, local country operating
costs, including the purchasing and processing costs for tobacco, are subject to
the effects of exchange fluctuations of the local currency against the U.S.
dollar. The Company attempts to minimize such currency risks by matching the
timing of its working capital borrowing needs against the tobacco purchasing and
processing funds requirements in the currency of the country of tobacco origin.
Fluctuations in the value of foreign currencies can significantly affect the
Company's operating results. See Note N to the Company's Consolidated Financial
Statements for the year ended June 30, 1996, incorporated herein by reference to
the Company's Annual Report on Form 10-K.

RESTRICTIONS ON DIVIDENDS

Under the terms of the Indenture, dated May 29, 1996, between the Company
and Crestar Bank, as trustee (the "Indenture"), relating to the Company's 8-7/8%
Senior Notes due 2006 (the "Notes"), the Company will not be permitted to make
certain restricted payments, including cash dividends on Common Stock, under
certain circumstances. The Company generally may make such restricted payments,
provided that (i) the Company is not in default under the Indenture, (ii) the
Company is able to incur at least $1.00 of additional indebtedness under a
consolidated interest coverage ratio test set forth in the Indenture, and (iii)
the aggregate amount of the payments to be made is less than the total of (a)
$20.0 million, (b) 50% of the Company's consolidated net income for the period
from April 1, 1996, through the end of the Company's most recent fiscal quarter
and (c) the net cash proceeds from the sale by the Company of any equity
securities or debt securities that are converted into equity securities. At June
30, 1997, the Company was permitted to make restricted payments, including cash
dividends on its Common Stock, of up to $78.0 million.

SIGNIFICANT STOCKHOLDERS

Upon completion of the Offering, members of the Monk family will own
approximately 17.1% of the Company's Common Stock. If they determined to vote
together, subject to the restrictions regarding proxy solicitations contained in
the Company's shareholder rights plan, described herein, the Monk family might
influence the outcome of any issues submitted to a vote of the Company's
stockholders, including election of the Company's Board of Directors, adoption
of amendments to the Company's Articles of Incorporation and approvals of
mergers or sales of the Company's assets. See "Selling Stockholders" and
"Description of Capital Stock -- Rights Plan."

<PAGE>
USE OF PROCEEDS

All of the Shares offered hereby are being offered and sold by the Selling
Stockholders. Accordingly, the Company will not receive any of the proceeds from
the Stock Offering or the DECS Offering.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Company's Common Stock is traded on the NYSE under the symbol "DMN."
The following table sets forth for the periods indicated the high and low sales
prices of the Common Stock as reported by the NYSE and the amount of dividends
declared per share for the periods indicated.

<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
FISCAL YEAR 1998
- ----------------
First Quarter (through September 25, 1997)............................................. $ 261/2 $ 211/2 $ .15

FISCAL YEAR 1997
- ----------------
Fourth Quarter......................................................................... $ 263/4 $ 193/4 $ .15
Third Quarter.......................................................................... 26 213/4 .15
Second Quarter......................................................................... 231/4 177/8 .15
First Quarter.......................................................................... 197/8 177/8 .135

FISCAL YEAR 1996
- ---------------------------------------------------------------------------------------
Fourth Quarter......................................................................... $ 191/2 $ 161/8 $.135
Third Quarter.......................................................................... 207/8 16 .135
Second Quarter......................................................................... 183/4 133/4 .135
First Quarter.......................................................................... 175/8 145/8 .135
</TABLE>

The last sale price of the Common Stock as reported on the NYSE on
September 25, 1997, was $23.625. As of June 30, 1997, there were 1,198 holders
of record of the Common Stock. Management of the Company believes that there are
in excess of 4,200 beneficial holders of its Common Stock. The Company pays
dividends quarterly.

The Company is subject to certain restrictions on its ability to pay
dividends on its Common Stock under the Indenture. See "Risk
Factors -- Restrictions on Dividends."

<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents summary selected historical consolidated
financial information of the Company, as of the dates and for the periods
indicated. The historical financial data for the fiscal year ended June 30, 1997
have been derived from the Company's unaudited financial statements. The Company
accounted for the Intabex Acquisition as a purchase and the results of Intabex
for the three months ended June 30, 1997 are included in the Company's unaudited
financial data for fiscal 1997. The historical financial data for the fiscal
years ended June 30, 1996, 1995 and 1994, have been derived from the Company's
financial statements which, except as they relate to the former Dibrell
financial statements for the year ended June 30, 1994, have been audited by
Price Waterhouse LLP, independent accountants, and by Ernst & Young LLP,
independent accountants, insofar as they relate to the former Dibrell financial
statements referred to above. The summary historical financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's financial
statements and notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEAR ENDED JUNE 30,
----------------------- --------------------------------------------------
1997 1996 1997 1996 1995 1994
---------- ---------- ----------- ---------- ---------- ----------

<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales and other operating revenues.............. $1,850,221 $1,680,202 $2,513,227 $2,167,473 $1,941,188 $1,464,778
Cost of goods and services sold................. 1,645,054 1,481,743 2,195,333 1,904,992 1,759,364 1,317,705
---------- ---------- ----------- ---------- ---------- ----------
Gross profit.................................... 205,167 198,459 317,894 262,481 181,824 147,073
Selling, general and administrative expenses.... 91,207 102,736 137,124 132,710 132,802 117,311
Restructuring and merger-related costs.......... -- 5,568 3,864 15,360 25,955 --
---------- ---------- ----------- ---------- ---------- ----------
Operating income................................ 113,960 90,155 176,906 114,411 23,067 29,762
Interest expense................................ 30,614 38,036 53,027 46,924 45,231 35,117
---------- ---------- ----------- ---------- ---------- ----------
Income (loss) from continuing operations before
income taxes, minority interest, equity in net
income (loss) of investee companies and
extraordinary item............................ 83,346 52,119 123,879 67,487 (22,164) (5,355)
Income taxes.................................... 32,780 20,847 47,108 26,995 5,980 2,767
Income (loss) applicable to
minority interest............................. 114 242 124 292 216 466
Equity in net income (loss) of investee
companies (net of taxes)...................... 691 (290) 526 (330) (1,805) 98
---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ----------- ---------- ---------- ----------
Income (loss) from continuing operations before
extraordinary item............................ 51,143 30,740 77,173 39,870 (30,165) (8,490)
Extraordinary item (1).......................... -- 1,400 -- 1,400 -- --
Net income (loss)............................... $ 51,143 $ 32,140 $ 77,173 $ 41,270 $ (30,165) $ (8,490)
---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ----------- ---------- ---------- ----------
Earnings (loss) per share, primary (2).......... $ 1.20 $ 0.83 $ 1.79 $ 1.04 (0.79) (0.22)
---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ----------- ---------- ---------- ----------
Weighted average shares outstanding, primary.... 42,692 38,739 43,176 39,671 38,100 38,091
Earnings (loss) per share, fully-diluted
(2)(3)........................................ $ 1.19 $ 0.80 $ 1.76 $ 1.01
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Weighted average shares outstanding, fully-
diluted....................................... 42,853 42,467 44,482 42,464 42,355 42,297
OTHER DATA:
Gross Margin.................................... 11.1% 11.8% 12.6% 12.1% 9.4% 10.0%
Operating Margin................................ 6.2% 5.4% 7.0% 5.3% 1.2% 2.0%
Tobacco inventory............................... $ 310,674 $ 343,484 $ 583,579 $ 315,476 $ 410,431 $ 403,211
Depreciation and amortization................... 24,462 24,234 37,191 33,780 31,852 28,862
Capital Expenditures............................ 21,082 20,609 60,860 41,266 27,036 32,382

BALANCE SHEET DATA (END OF PERIOD):
Working capital................................. $ 453,479 $ 298,762 $ 699,993 $ 422,342 $ 277,597 $ 217,667
Total assets.................................... 1,059,561 1,011,291 1,987,603 1,020,014 1,093,608 1,043,816
Total debt...................................... 453,473 388,710 1,192,639 401,489 594,192 515,133
Stockholders' equity............................ 348,105 311,232 408,263 315,848 238,806 288,314
</TABLE>

- ---------------
(1) Extraordinary item is a partial recovery in fiscal 1996 against an
extraordinary trade receivable reserve of $1.4 million, net of tax,
established in a prior period.

(2) Includes non-recurring restructuring and merger related costs of: $0.06,
$0.23 ($0.22 fully diluted) and $0.42 per share for the fiscal years ended
June 30, 1997, 1996, and 1995 respectively, and $0.09 per share for the nine
months ended March 31, 1996.

(3) Anti-dilutive for the fiscal years ended June 30, 1995 and 1994.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company is the world's second largest independent purchaser and
processor of leaf tobacco. Approximately 85%, 82% and 80% of the Company's
revenues in fiscal 1997, 1996 and 1995, respectively, were derived from its
tobacco operations. The Company's tobacco operating profits fluctuate from year
to year, primarily due to changes in worldwide supply and demand and government
regulations. See "Risk Factors -- Variability of Annual and Quarterly Financial
Results."

The Company's tobacco business is generally conducted in U.S. dollars, as
is the business of the industry as a whole. Accordingly, there is minimal
currency risk related to the sale of tobacco. However, local country operating
costs, including the purchasing and processing costs for tobacco, are subject to
the effects of exchange fluctuations of the local currency against the U.S.
dollar. The Company attempts to minimize such currency risks by matching the
timing of its working capital borrowing needs against the tobacco purchasing and
processing funds requirements in the individual countries of tobacco origin.
Fluctuations in the value of foreign currencies can significantly affect the
Company's operating results. See "Risk Factors -- International Business Risks"
and Note N to the Company's Consolidated Financial Statements for the year ended
June 30, 1996, incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996.

The remainder of the Company's revenues are derived from purchasing and
selling fresh-cut flowers. Florimex has two principal operations, importing,
exporting and wholesaling fresh-cut flowers, and exporting fresh-cut flowers
purchased primarily from the major flower auctions in The Netherlands.
Approximately 15% of the Company's 1997 revenues were derived from its flower
operations.

On April 1, 1997, the Company acquired all the outstanding capital stock of
Intabex. The acquisition of Intabex has been accounted for under the purchase
method of accounting and, accordingly, no restatement has been made to the
Company's historical financial information. The financial information of the
Company includes that of Intabex for periods beginning after March 31, 1997.

On April 1, 1995, Dibrell and Monk-Austin merged into DIMON. The Merger has
been accounted for as a pooling of interests and all 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.

In connection with the Merger, the Company initiated a restructuring plan
including both the tobacco and flower businesses. The plan was designed to
eliminate unprofitable locations, consolidate duplicative processing facilities,
reduce the salaried workforce, improve operating efficiencies and increase
regional unit accountability. This initiative resulted in the recognition of
various charges in fiscal 1996, aggregating $11.8 million, net of tax, and in
fiscal 1995, aggregating $17.8 million, net of tax.

<PAGE>
RESULTS OF OPERATIONS

The following table expresses items in the Statement of Consolidated Income
as a percentage of sales for each of the three most recent fiscal years and for
the nine-month periods ended March 31, 1997 and 1996. Any reference in the table
and the following discussion to any given year is a reference to the Company's
fiscal year ended June 30.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
MARCH 31, YEAR ENDED JUNE 30,
---------------- ---------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
Sales and other operating revenue.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods and services sold.................................... 88.9 88.2 87.9 90.6 90.0
----- ----- ----- ----- -----
Gross margin....................................................... 11.1% 11.8% 12.1% 9.4% 10.0%
Selling, general and administrative expenses....................... 4.9 6.1 6.1 6.9 8.0
Restructuring and merger related costs............................. -- 0.3 0.7 1.3 --
Operating income................................................... 6.2 5.4 5.3 1.2 2.0
Interest Expense................................................... 1.6 2.3 2.2 2.4 2.4
Income (loss) before income taxes, minority interest, equity in net
income of investee companies and cumulative effect of accounting
changes.......................................................... 4.6 3.1 3.1 (1.2) (0.4)
Income taxes....................................................... 1.8 1.2 1.2 0.3 0.2
Equity in net income of investee companies......................... -- -- -- (0.1) --
Net income (loss).................................................. 2.8% 1.9% 1.9% (1.6)% (0.6)%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

COMPARISON OF NINE MONTHS ENDED MARCH 31, 1997 TO NINE MONTHS ENDED MARCH 31,
1996

Sales and other operating revenues for the nine-month period ended March
31, 1997 were $1.850 billion, an increase of 10.1% from $1.680 billion for the
nine-month period ended March 31, 1996. Sales from tobacco operations increased
12.4%, to $1.553 billion in the nine-month period ended March 31, 1997 from
$1.382 billion in the corresponding period in 1996. The increase in tobacco
sales was due to higher average prices of foreign grown tobacco, increased
quantities, increased average prices and increased service revenues from U.S.
tobacco, partially offset by decreased quantities of foreign grown tobacco. The
increase in average prices for foreign grown tobacco, increased quantities,
higher average prices and increased service revenues accounted for $121.1
million, $51.7 million, $9.1 million and $14.1 million of the increase in
tobacco revenues, respectively, offset by a $25.8 million decrease due to
decreased quantities of foreign grown tobacco. The increased U.S. and foreign
tobacco sales, primarily Africa and Asia, are due to product mix.

Sales from flower operations decreased .5%, from $298.3 million in the
nine-month period ended March 31, 1996 to $297.0 million for the nine-month
period ended March 31, 1997. This decrease in flower sales was primarily due to
an approximate $20.2 million decrease due to the effect of applying U.S. dollar
exchange rates, offset partially by increases in European operations and
Baardse.

Cost of sales and expenses for the nine-month period ended March 31, 1997,
were $1.736 billion, an increase of $151.8 million, or 9.6%, from $1.584
billion, before the $5.6 million charge for restructuring costs, for the nine-
month period ended March 31, 1996. Cost of sales and expenses for the tobacco
operations increased $157.5 million, or 12.3%, in the nine-month period ended
March 31, 1997 over the corresponding period in 1996, primarily due to the
higher sales in the period for tobacco grown in the U.S., Africa and Asia. The
gross profit for the tobacco operations increased 4.0% for the nine-month period
ended March 31, 1997 over the corresponding period in 1996, primarily due to
increased sales and gross margins on the operations in Africa, Asia and South
America, offset partially by decreased gross margins on the U.S. operations. The
Company's gross margin percentage for tobacco operations decreased to 11.2% for
the nine-month period ended March 31, 1997 from 12.1% for the corresponding
period in 1996, due to lower gross margins in the U.S. operations, offset
partially by higher gross margins in Africa, Asia and South America. Cost of
sales and expenses for the flower operations decreased $3.1 million or 1.1%, in
the nine-month period ended March 31, 1997 from the corresponding period in 1996
primarily due to the effect of applying U.S. dollar exchange rates. The
Company's gross margin percentage for flower operations was the same at 10.7%
for the nine-month period ended March 31, 1997 and for the corresponding period
in 1996.

<PAGE>
Corporate expenses decreased $2.6 million, or 23.0%, for the nine-month period
ended March 31, 1997 from the corresponding period in 1996, primarily due to
decreased personnel costs.

Interest expense decreased $7.4 million (19.5%) due to decreased rates,
partially offset by increased borrowings.

The effective tax rate decreased to 39.3% for the nine-month period ended
March 31, 1997 from 40.0% for the corresponding period in 1996, based on
estimates of taxable income projected for each year.

Equity in net income of the tobacco investee companies increased $981
thousand for the nine-month period ended March 31, 1997 from the corresponding
period in 1996. The increase is primarily due to the loss for the tobacco
operations investee in Brazil which was sold during fiscal 1996 and to increased
income in the tobacco operations in the U.S. and Greece.

COMPARISON OF YEAR ENDED JUNE 30, 1996 TO YEAR ENDED JUNE 30, 1995

The Company's sales and other operating revenues in 1996 were $2.167
billion, an increase of 11.7% from $1.941 billion in 1995. Sales from tobacco
operations increased 13.8%, from $1.555 billion in 1995 to $1.770 billion in
1996, primarily due to higher prices on tobacco from South America and increased
quantities sold primarily from Europe and Africa. The sales from South America
increased in the fourth quarter in 1996 compared to 1995 as demand improved, but
the amount is not expected to reduce sales in 1997. The higher tobacco prices
from Europe and Africa accounted for $85.5 million and $29.4 million,
respectively. The increased sales of tobacco from Europe resulted from the
operations acquired in Greece, Italy and Turkey.

Sales and other operating revenues of flowers increased 2.9%, from $385.9
million in 1995 to $397.3 million in 1996. The increase in the Company's sales
of flowers was primarily due to the increased export sales from The Netherlands.

Cost of sales and expenses of the Company's tobacco operations before
restructuring and merger related costs increased 9.2% in 1996 from 1995 due
primarily to the 13.8% increase in net sales. The world oversupply of tobacco,
which began in 1993, started to improve in 1995 and further improved in 1996
which, along with early consolidation-related cost savings, generated the
improvement in the tobacco operating margin (operating income). As a percent of
net sales, operating income, excluding restructuring costs, increased to 7.8% in
1996 compared to 3.9% in 1995.

Cost of sales and expenses of the flower operations before restructuring
costs increased by 0.8% in 1996 from 1995 primarily due to the sales increase of
2.9% offset partially by implementing cost-cutting measures, revising credit
policies which decreased bad debts and the closing of unprofitable operations in
1995. The flower operating income (loss) excluding restructuring costs,
increased from a (0.1%) loss as a percent of net sales in 1995 to a positive
2.0% of net sales in 1996, primarily due to increased gross margins of the
export operations in The Netherlands and by decreased costs mentioned above.

Corporate expenses before restructuring costs increased $4.6 million, or
40.7%, to $15.9 million in 1996 from $11.3 million in 1995, due primarily to
increased personnel costs and bonuses and legal and professional expenses in
1996. Some of the increased costs for personnel relate to reassigning
departments to corporate that were previously in the tobacco operations.

Restructuring charges in 1996 for the tobacco operations and corporate
amounted to $11.5 million and $4.4 million, respectively. The flower operations
had a $.5 million recovery of restructuring costs. The net charges are comprised
of $15.7 million for employee separations, a credit of $1.2 million for facility
sales and closures and $.9 million for asset writedowns and other items.

Interest expense increased $1.7 million in 1996 primarily due to higher
borrowings because of increased average tobacco purchases and, to a lesser
extent, higher average interest rates.

The effective tax rate for 1996 was 40%. In 1995, the Company had tax
expense in spite of the overall pre-tax loss due to the effects of foreign tax
rates, the mix of income and losses of subsidiaries, the currency effect in
Brazil and non-deductible merger expenses.

The $1.5 million decrease in equity in net loss of investee companies in
1996 was due primarily to the sale of the investee in Brazil which had a loss in
1995.

<PAGE>
COMPARISON OF THE YEAR ENDED JUNE 30, 1995 TO THE YEAR ENDED JUNE 30, 1994

The Company's sales and other operating revenues in 1995 were $1.941
billion, an increase of 32.5% from $1.465 billion in 1994. Sales from tobacco
operations increased 41.9%, from $1.096 billion in 1994 to $1.555 billion in
1995, primarily due to higher prices and increased production primarily from the
U.S. and Brazil. The higher tobacco prices and increased production quantities
from the U.S. accounted for $88.1 million and $248.5 million, respectively,
while the increased production quantities from Brazil accounted for
substantially all of the increase from Brazil. The Company's increase in sales
of U.S. tobacco was primarily attributable to the Company's 1994 agreement to
purchase the U.S. tobacco needs for RJR. The increased sales of tobacco from
Brazil resulted from the sales of uncommitted stocks from prior year crops.

Sales from flower operations increased 4.6%, from $369.1 million in 1994 to
$385.9 million in 1995. The increase in the Company's sales of flowers was
primarily due to the favorable effect of applying U.S. dollar exchange rates to
European operations, but these favorable effects were partially offset by
decreased sales of certain North American operations that were closed during the
year. The application of exchange rates increased sales by $35.5 million and the
closing of operations decreased sales by $15.7 million.

Cost of sales and expenses of the Company's tobacco operations increased
40.6% in 1995 from 1994 due primarily to the 41.9% increase in net sales. The
world oversupply of tobacco, which began in fiscal 1993, started to improve in
fiscal 1995 as indicated by the improvement in the tobacco operating margin
(operating income), before restructuring and merger related costs. As a percent
of net sales, operating margins increased to 3.9% in 1995 compared to 3.0% in
1994. See "Business -- Tobacco -- The Leaf Tobacco Industry -- Improved Market
Conditions." However, sales prices continued to be negatively affected by the
oversupply, causing the Company to reduce the carrying amount of its tobacco
inventory at year end by $9.2 million, reflecting the revaluation of that
inventory at the lower of its cost or market value.

Cost of sales and expenses of the flower operations increased by 5.4% in
1995 from 1994 primarily due to the sales increase of 4.6% and increased bad
debts associated with flower operations now closed and other costs, inclusive of
restructuring costs. The flower operating income decreased from 0.7% of net
sales in 1994 to (0.1)% of net sales in 1995, primarily due to decreased gross
margins of both the U.S. operations that were closed and the Baardse operations
and by increased costs mentioned above. Corporate expenses increased $5.6
million, or 97.7%, to $11.3 million in 1995 from $5.7 million in 1994, due
primarily to increased personnel costs and legal and professional expenses in
1995 and reversals of prior accruals in 1994 for stock appreciation rights and
certain stock options. Some of the increased costs for personnel relate to
reassigning departments to corporate that were previously in tobacco operations.

Restructuring charges for the tobacco and flower operations amounted to
$15.2 million and $2.6 million, respectively. The charges are comprised of $12.6
million for employee separations, $2.8 million for facility closures, $2.4
million for asset writedowns and other items. In addition the Company incurred
$8.1 million for merger related charges for legal, accounting and financial
advisors.

Interest expense increased $10.1 million in 1995, primarily due to higher
borrowings because of increased average tobacco inventories and, to a lesser
extent, higher average interest rates.

The Company had tax expense in spite of the overall pre-tax loss in 1995
due to the effects of foreign tax rates, the mix of income and losses of
subsidiaries, the currency effect in Brazil and non-deductible merger expenses.

The $1.9 million decrease in equity in net income of investee companies in
1995 was due primarily to the devaluations of the local currency for the
Company's investee with operations in Zimbabwe and decreased earnings for the
operations in Malawi and Brazil.

<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes items from the Company's Consolidated
Balance Sheet and the Statement of Consolidated Cash Flows.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
------------------- ------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------

<CAPTION>
(IN THOUSANDS, EXCEPT FOR CURRENT RATIO) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents..................................... $ 35,575 $ 12,148 $ 53,820 $ 42,326 $ 12,471
Net trade receivables......................................... 213,461 195,999 190,898 182,750 164,314
Inventories and advances on purchases of tobacco.............. 435,311 438,383 408,210 468,989 469,015
Total current assets.......................................... 707,150 662,756 668,775 731,119 685,443
Notes payable to banks........................................ 52,717 101,288 -- 233,736 255,607
Accounts payable.............................................. 105,631 126,514 104,506 90,446 112,310
Total current liabilities..................................... 253,671 363,994 246,433 453,522 467,776
Current ratio................................................. 2.8 to 1 1.8 to 1 2.7 to 1 1.6 to 1 1.5 to 1
Revolving credit notes and other long-term debt............... $266,436 $278,440 $265,871 $292,528 $188,825
Senior Notes.................................................. 125,000 -- 125,000 -- --
Convertible subordinated debentures........................... -- -- -- 56,370 56,475
Stockholders' equity.......................................... 348,105 311,232 315,848 238,806 288,314
Purchase of property and equipment............................ 21,082 20,609 41,266 27,036 32,382
Proceeds from sale of property and equipment.................. 7,429 3,273 8,605 4,877 5,991
Depreciation and amortization................................. 24,462 24,234 33,780 31,852 28,862
</TABLE>

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
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.

Reflecting the seasonal increase in the tobacco operations, the Company's
working capital increased from $422.3 million at June 30, 1996, to $453.5
million at March 31, 1997. The current ratio of 2.7 to 1 at June 30, 1996,
increased to 2.8 to 1 at March 31, 1997. At March 31, 1997, current assets
increased $38.4 million, or 5.7%, and current liabilities increased $7.2
million, or 2.9%, from June 30, 1996. Current assets increased primarily due to
increases in Trade receivables and Advances on purchases of tobacco. Current
liabilities increased primarily due to increases in Notes payable to banks,
Accounts payable-other, partially offset by decreases in Advances from customers
and Accrued expenses.

Cash flows provided by operating activities decreased $176.5 million from
$146.5 million to $29.9 million of cash flows used for the nine months ended
March 31, 1997 from the same period last year, due primarily to increases in
Trade receivables and Advances on purchases of tobacco and decreases in Advances
from customers and in Accounts payable and Accrued expenses. Cash flows used in
investing activities increased $19.7 million reflecting sale of RGT shares and
Philip Morris shares in 1995, the Prepaid purchase cost-Intabex and offset
partially by the 1995 purchase of a subsidiary. Cash flows used by financing
activities increased $205.5 million to $41.2 million of cash flows provided
primarily due to net increased borrowings.

At March 31, 1997, the Company had seasonally adjusted lines of credit of
$955.4 million, excluding the long-term credit agreements. These lines bear
interest at rates ranging from 1.7% to 11.6%. At March 31, 1997, unused lines of
credit amounted to $536.2 million net of $155.1 million of letters of credit and
guarantees that reduce lines of credit. Total maximum outstanding short-term
borrowings during the nine months ended March 31, 1997 were $566.5 million.

On June 27, 1997, the Company entered into the New Credit Facility with a
syndicate of banks. The Company used its previous $240 million revolving credit
facility to reclassify $240 million of its short-term debt as long-term debt at
March 31, 1997, and will use the $500 million New Credit Facility similarly. 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 8.50% at March 31, 1997, and is adjusted with changes in interest
rates generally) or LIBOR plus 0.70%, through September 30, 1997, and thereafter
plus a spread of 0.40% to 1.00% based on the

<PAGE>
ratings assigned to the Company's outstanding senior debt. 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.

The Company has historically financed its operations through a combination
of short-term lines of credit, customer advances, cash from operations and
equity and equity-linked securities. At March 31, 1997, the Company had no
material capital expenditure commitments other than the acquisition of Intabex
as of April 1, 1997. The Company believes that these sources of funds combined
with the New Credit Facility are sufficient to fund the Company's purchasing and
capital needs for fiscal 1998 and the foreseeable future.

The Company's off-balance-sheet financing is not material. Certain
operating leases were acquired with the acquisition of, or have been added by,
several foreign tobacco processing facilities and the flower subsidiaries.
However, most operating assets are of long-term and continuing benefit and the
Company has generally purchased these assets.

The Board of Directors of the Company, at its meeting held on May 23, 1997,
declared a quarterly dividend of $0.15 per share.

TAX AND REPATRIATION MATTERS

The Company and its subsidiaries are subject to income tax laws in each of
the countries in which they do business through wholly-owned subsidiaries and
through affiliates. The Company makes a comprehensive review of the income tax
requirements of each of its operations, files appropriate returns and makes
appropriate income tax planning analyses directed toward the minimization of its
income tax obligations in these countries. Appropriate income tax provisions are
determined on an individual subsidiary level and at the corporate level on both
an interim and annual basis. These processes are followed using an appropriate
combination of internal staff at both the subsidiary and corporate levels as
well as independent outside advisors in review of the various tax laws and in
compliance reporting for the various operations.

Dividend distributions are regularly made from certain subsidiaries while
the undistributed earnings of certain foreign subsidiaries are not subject to
additional foreign income taxes nor considered to be subject to U.S. income
taxes unless remitted as dividends. The Company intends to reinvest such
undistributed earnings indefinitely; accordingly, no provision has been made for
U.S. taxes on those earnings. The Company regularly reviews the status of the
accumulated earnings of each of its U.S. and foreign subsidiaries and
reevaluates the aforementioned dividend policy as part of its overall financing
plans.

ACCOUNTING MATTERS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which will be effective for the Company's fiscal year 1997
statements. SFAS No. 123 defines a fair value based method of accounting for
stock-based compensation and requires certain disclosures to be made by entities
electing not to adopt this method. The Company has studied the implications of
the statement, and based on its initial evaluation, does not expect it to have a
material impact on the Company's financial condition or results of operations
upon adoption.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128. "Earnings per Share" which
simplifies the earnings per share ("EPS") computation and replaces the
presentation of primary EPS with a presentation of basic EPS. This statement
also requires dual presentation of basic and diluted EPS on the face of the
income statement for entities with a complex capital structure and requires a
reconciliation of the numerator and denominator used for the basic and diluted
EPS computation. This statement will be effective for the Company's March 31,
1998, interim statements and will require the restatement of all prior-period
earnings per share data presented. The Company has studied the implications of
the statement, and based on its initial evaluation, does not expect it to have a
material impact on the Company's financial condition or results of operations
upon adoption.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" which establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. This statement will be effective for the
Company's March 31, 1998, interim statements and will require the restatement of
all prior-periods presented. The Company has studied the implications of the
statement, and based on its initial evaluation, does not expect it to have a
material impact on the Company's financial condition or results of operations
upon adoption.

<PAGE>
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information" which
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to shareholders.
It also requires that public business enterprises report certain information
about their products and services, the geographic areas in which they operate,
and their major customers. This Statement is effective for the Company's June
30, 1998, year end financial statements. The Company has studied the
implications of the statement, and based on its initial evaluation, does not
expect it to have a material impact on the Company's financial condition or
results of operations upon adoption.

BUSINESS

DIMON is the second largest independent leaf tobacco merchant in the world.
The Company acquired Intabex on April 1, 1997, and is the successor to Dibrell
and Monk-Austin, which merged on April 1, 1995. Principally through the Intabex
Acquisition, the Company increased its tobacco-related revenues for the twelve
months ended March 31, 1997, by 20%, from $1,770 million to $2,126 million. The
Company increased its tobacco-related revenues for the twelve months ended March
31, 1997, by 44%, from $1,942 million to $2,787 million on a pro forma basis,
and increased its market share in the established worldwide leaf tobacco market
from approximately 30% to approximately 37% on a pro forma basis. Also as a
result of the Intabex Acquisition, DIMON strengthened its presence in several
important tobacco growing regions, including Brazil, Argentina, Malawi, Thailand
and Zimbabwe. The Company's address is 512 Bridge Street, Danville, Virginia
24541 and its telephone number is (804) 792-7511. See Note M to the Company's
Consolidated Financial Statements for the year ended June 30, 1996, incorporated
herein by reference to the Company's Annual Report on Form 10-K, for detailed
information regarding each of the Company's business segments.

TOBACCO

THE LEAF TOBACCO INDUSTRY

The world's large multinational cigarette manufacturers, with one
exception, rely on independent leaf tobacco merchants such as the Company to
supply the majority of their leaf tobacco needs. Leaf tobacco merchants select,
purchase, process, store, pack, ship and, in certain developing markets, provide
agronomy expertise and financing for growing leaf tobacco. At the present time,
there are three major global leaf tobacco merchants, including the Company.
These three merchants source, process and ship leaf tobacco around the world,
for delivery to manufacturers of cigarettes and other tobacco products. The
Company believes that the leaf tobacco industry is characterized by the
following trends:

GROWTH OF AMERICAN BLEND CIGARETTES. American blend cigarettes have gained
market share in several major foreign markets, including Asia (particularly the
Pacific Rim), Europe and the Middle East in recent years. American blend
cigarettes contain approximately 50% flue-cured, 35% burley and 15% oriental
tobacco, contain less tar and nicotine and taste milder than locally produced
cigarettes containing dark and semi-oriental tobacco historically consumed in
certain parts of the world. According to the TMA, American blend cigarette
consumption (excluding China) has increased from 1.7 trillion units in calendar
1990 to 1.9 trillion units in calendar 1996, an increase of 10.8%. The TMA
estimates that worldwide American blend tobacco consumption (excluding China)
will increase an additional 5.5% to more than 2.0 trillion units by the year
2000. The TMA also estimates that worldwide American blend cigarette consumption
(excluding China), as a percentage of total consumption, has also experienced
substantial growth, increasing from 47.9% in 1990 to 52.5% in 1996, and is
projected to reach 54.3% by the year 2000. As American blend cigarettes have
continued to gain global market share, the demand for export quality flue-cured,
burley and oriental tobacco sourced and processed by the three independent leaf
tobacco merchants, including the Company, has grown accordingly.

GROWTH IN FOREIGN OPERATIONS OF LARGE CIGARETTE MANUFACTURERS. Several of
the large multinational cigarette manufacturers have expanded their operations
throughout the world, particularly in Central and Eastern Europe and the former
Soviet Union, in order to increase their access to and penetration of these
markets. As cigarette manufacturers expand their global operations, the Company
believes there will be increased demand for local sources of leaf tobacco and
local tobacco processing and distribution, primarily due to the semi-perishable
nature of unprocessed leaf tobacco and the existence of domestic content laws in
certain countries. The Company

<PAGE>
believes that the international expansion of the large multinational cigarette
manufacturers will cause these manufacturers to place greater reliance on the
services of financially strong leaf tobacco merchants with the ability to source
and process tobacco on a global basis and to help develop higher quality local
sources of tobacco.

GROWTH IN FOREIGN SOURCED TOBACCO. In an effort to respond to cigarette
manufacturers' increasing demand for lower cost American blend cigarette
ingredients, the major leaf tobacco merchants have made significant investments
in South America, Africa and Asia, the principal sources of flue-cured and
burley tobacco outside the U.S. This trend is expected to continue in the
foreseeable future as the quality of foreign grown tobacco continues to improve.

IMPROVED MARKET CONDITIONS. The global leaf tobacco industry has recovered
from a disruption in demand and reduction in pricing during 1993 and 1994. The
disruption of the industry in the U.S. during these years occurred primarily
because of (i) the enactment of the domestic content 75/25 Rule, (ii) a poor
quality 1993 flue-cured tobacco crop in the U.S. and (iii) the introduction of
legislation in the summer of 1993 to increase significantly the federal excise
tax on cigarettes that resulted in manufacturers' reluctance to build
inventories. Concurrent with the reduction in demand for international tobacco
related to the 75/25 Rule and lower than expected initial demand for imported
tobacco products in Central and Eastern Europe and the former Soviet Union, the
worldwide price of tobacco declined due to oversupply attributable to record
foreign tobacco crops. This combination of reduced demand and lower prices had a
negative impact on the financial performance of the leaf tobacco merchants and
resulted in significant increases in uncommitted tobacco inventories among the
merchants.

In recent years, the demand and supply imbalance in the worldwide tobacco
market has improved. Leaf tobacco production outside the U.S. was curtailed in
response to the high levels of uncommitted tobacco inventories. The 75/25 Rule
was repealed due to its violation of GATT and was replaced by a series of less
stringent import quotas. This resulted in cigarette manufacturers in the U.S.
resuming their purchases of tobacco grown outside the U.S. The combination of
lower levels of tobacco production and increased demand had a positive impact on
worldwide tobacco prices, a corresponding positive impact on the profitability
of the industry, and resulted in significant reductions in uncommitted tobacco
inventories.

BUSINESS STRATEGY

The Company's primary business objective is to capitalize on growth in
worldwide consumption of American blend cigarettes by becoming the low-cost
preferred supplier of leaf tobacco to the large multinational manufacturers of
American blend cigarettes. To achieve this objective, the Company has
implemented a strategy to position itself to meet the needs of its cigarette
manufacturing customers throughout the world by expanding its global operations
directly in the major tobacco exporting countries and by forming strategic
partnerships with its major customers in countries with emerging tobacco
production. As part of its strategy, the Company acquired Intabex on April 1,
1997. The Company believes the Intabex Acquisition will further enhance the
Company's global tobacco purchasing capabilities, expand and diversify its
customer base and expand its geographic reach. The Company's ability to respond
to the global expansion and changing needs of the large multinational cigarette
manufacturers is a critical factor in developing and expanding customer
relationships. The principal components of the Company's business strategy are
as follows:

INCREASE THE COMPANY'S OPERATIONS IN LOW-COST TOBACCO GROWING REGIONS. To
ensure breadth and depth of supply of tobacco, particularly the tobacco used in
American blend cigarettes, the Company has expanded and plans to continue to
expand its operations in South America, Africa and China, the largest production
areas of flue-cured and burley tobacco outside of the U.S. The April 1, 1997
acquisition of Intabex and certain assets of Tabex (PVT) Limited in Zimbabwe
substantially expanded the Company's presence in Brazil, Argentina, Zimbabwe and
Malawi, allowing the Company to significantly enhance its market share in these
countries, and established a new presence in Mozambique, Spain, Sri Lanka,
Thailand, Zaire and Zambia. In 1995, the Company signed an agreement with the
China National Tobacco Corporation to provide additional access to a
state-of-the art processing facility and tobacco sources in the province of
Yunnan. The Company also made acquisitions in 1995 in Bulgaria, Greece and
Turkey, which the Company believes positions DIMON as the largest worldwide
merchant of oriental tobacco. The Company intends to utilize its agronomy
expertise in helping to develop low-cost sources of American blend quality
tobacco and its existing relationships with the major multinational cigarette
manufacturers to gain market share in these growth regions.

<PAGE>
CAPITALIZE ON OUTSOURCING TRENDS. The Company anticipates further
outsourcing of leaf tobacco purchasing and processing by cigarette
manufacturers. This outsourcing trend is driven by (i) higher margins in
cigarette production, (ii) the increasing sophistication required in sourcing
leaf tobacco on a global basis, and (iii) continued privatization of tobacco and
cigarette production operations in other countries. In 1994, the Company began
providing all leaf tobacco auction buying in the U.S. for RJR, the second
largest cigarette producer in the U.S. In 1995, the Company began to purchase
and process all of Lorillard Tobacco Company's ("Lorillard") auction market
tobacco requirements in the U.S. With the improved tobacco purchasing
capabilities and expanded geographic reach resulting from the Intabex
Acquisition, the Company believes it will continue to be a major beneficiary of
the outsourcing trends in the tobacco industry.

IMPROVE EFFICIENCY AND REDUCE OPERATING COSTS. The Company realized
substantial operating efficiencies and operating cost reductions following the
Merger and anticipates achieving similar benefits in the integration of Intabex.
In connection with the Merger, the Company initiated a restructuring plan for
its operations. The plan was designed to eliminate unprofitable locations,
consolidate duplicative processing facilities, reduce the salaried workforce,
improve operating efficiencies and increase regional unit accountability. This
initiative resulted in the recognition of various charges in fiscal 1996,
aggregating $11.8 million, and in fiscal 1995, aggregating $17.8 million. These
initiatives reduced the Company's annual operating costs and expenses by
approximately $25 million in fiscal 1997. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

In the Intabex Acquisition, the Company acquired facilities in Malawi,
Italy, Germany, Zimbabwe, and the U.S., countries where the Company already had
facilities. By eliminating redundant facilities and realizing other efficiencies
similar to those achieved in the Merger, the Company anticipates savings in
annual operating costs relating to the integration of Intabex of approximately
$23 million in fiscal 1998.

In most major tobacco producing areas, the Company and Intabex had similar
operations, which created opportunities for significant cost savings. Since the
acquisition of Intabex, the Company has completed the following in connection
with its consolidation:

-- Integration of the African operations of Intabex, including personnel
reductions and consolidation of administrative offices;

-- Integration of the Latin American operations of Intabex, including
personnel reductions, consolidation of administrative offices, the
sale of the manufacturing assets of a tobacco processing facility to a
third party and the conversion of that facility into a tobacco storage
warehouse;

-- Integration of North American operations of Intabex including the
consolidation of the former joint venture partnership Eastern Carolina
Leaf Processors, consolidation of administrative offices and personnel
reductions; and

-- Integration of Asian operations, consisting primarily of personnel
reductions and consolidation of some administrative offices.

EXPAND OPERATIONS IN NEW MARKETS. During the last decade, several of the
large multinational cigarette manufacturers have expanded their global
operations, particularly into Central and Eastern Europe and the former Soviet
Union, in order to increase their access to and penetration of new markets. The
Company believes this will increase demand for local sources of leaf tobacco and
local tobacco processing due to the semi-perishable nature of unprocessed
tobacco and the existence of domestic content laws in certain foreign countries.
The Company believes these factors will cause manufacturers to place greater
reliance on the services of financially strong leaf tobacco merchants with the
ability to source and process tobacco on a global basis and to help develop
higher quality local sources of leaf tobacco. Intabex's presence in emerging
tobacco markets provides new sources of supply for the Company. Intabex brings
new sources of tobacco in the countries of Mozambique, Spain, Sri Lanka,
Thailand, Zaire and Zambia. In addition, the Company believes Intabex's tobacco
operations in the emerging markets of Africa and Asia will significantly enhance
its strength in these low-cost tobacco growing regions.

OPERATIONS

The Company has developed an extensive international network through which
it purchases, processes and sells tobacco. In addition to its processing
facilities in Virginia and North Carolina, the Company owns or has an interest
in processing facilities in Brazil and Zimbabwe, the two most significant
non-U.S. exporters of flue-cured

<PAGE>
tobacco, Malawi and Mexico, two of the leading non-U.S. exporters of burley
tobacco, and Greece and Turkey, the leading exporters of oriental tobacco. The
Company also has processing facilities in Italy and Germany. Intabex owned and
operated leaf processing facilities in Argentina, Sri Lanka and Thailand. The
Company and Intabex have historically contracted with third parties for the
processing of tobacco in certain countries. Including Intabex operations, the
Company contracts with third parties for leaf processing in Canada, Chile,
China, Guatemala, India, Mozambique, Spain, Zaire and Zambia and certain
countries of the former Soviet Union. In addition, the Company has entered into
contracts, joint ventures and other arrangements for the purchase of tobacco
grown in substantially all countries that produce export-quality, flue-cured and
burley tobacco, including Argentina, Canada, China, India and Tanzania.

PURCHASING. Prior to the Intabex Acquisition, the Company purchased tobacco
in approximately 26 countries, generally at auction or directly from growers.
The Company now purchases tobacco in an additional six countries and has
expanded its purchasing capabilities significantly in Brazil, Argentina, Malawi,
Thailand and Zimbabwe. Although the majority of the dollar value of tobacco sold
by the Company is produced domestically, the relative importance of tobacco
grown overseas to the Company's profitability has increased steadily. During
fiscal 1996, approximately 57% of the dollar value of tobacco purchased by the
Company was purchased in the U.S. Approximately 17%, 9% and 3% of the dollar
value of tobacco purchased by the Company during fiscal 1996 were purchased in
Brazil, Zimbabwe and Malawi, respectively. The balance of the Company's tobacco
purchases during 1996 were made in other tobacco growing countries, including
Argentina, Bulgaria, Canada, China, Germany, France, Greece, India, Italy,
Mexico, Poland, the former Soviet Union, Tanzania and Turkey. The Company
believes it has access to a diverse supply of tobacco grown in a number of
regions throughout the world and can respond quickly to factors that may cause
fluctuations in the quality, yield or price of tobacco crops grown in any one
region.

Tobacco generally is purchased at auction or directly from growers. Tobacco
grown in the U.S., Canada, Malawi and Zimbabwe is purchased by the Company
principally on auction markets. The Company purchases domestic tobacco on the
flue-cured, burley and air-cured auction markets in Florida, Georgia, Kentucky,
Maryland, North Carolina, South Carolina, Tennessee and Virginia for shipment to
the Company's facilities in North Carolina and Virginia for processing to
customer specification. The Company usually purchases tobacco at the auction
markets after receiving specific customer orders or indications of customers'
upcoming needs. The Company's network of more than 100 tobacco buyers allows the
Company to cover the major auctions of flue-cured and burley tobacco throughout
the world. These buyers are experts in differentiating hundreds of grades of
tobacco based on customer specifications and preferences that take into account,
among other factors, the texture, visual appearance and aroma of the tobacco.

In non-auction markets such as Argentina, Brazil, Greece and Turkey, the
Company purchases tobacco directly from farmers or from local entities that have
arranged for purchase from farmers. These direct purchases are often made by the
Company based upon its projection of the needs of its long-standing customers
rather than against specific purchase orders. The Company's arrangements with
farmers vary from locale to locale depending on the Company's predictions of
future supply and demand, local historical practice and availability of capital.
For example, in Brazil, the Company generally contracts to purchase a farmer's
entire tobacco crop at the market price at the time of harvest based on the
quality of the tobacco delivered. Pursuant to these purchase contracts, the
Company provides farmers with fertilizer and other materials necessary to grow
tobacco and may extend loans to farmers to finance the crop. Under longer-term
arrangements with farmers, the Company may also finance farmers' construction of
curing barns. In addition, the Company's agronomists maintain frequent contact
with farmers prior to and during the growing and curing seasons to provide
technical assistance to improve the quality and yield of the crop. In other
non-auction markets, such as Argentina and India, the Company buys tobacco from
local entities that have purchased tobacco from farmers and supervises the
processing of that tobacco by those local entities. The Company believes that
its long-standing relationships with its customers are vital to its operations
outside of the auction markets.

PROCESSING. The Company processes tobacco to meet each customer's
specifications as to quality, yield, chemistry, particle size, moisture content
and other characteristics. The Company processes purchased tobacco in 30
facilities located throughout the world, nine of which were acquired in the
Intabex Acquisition. Unprocessed tobacco is a semi-perishable commodity that
generally must be processed within a relatively short period of time to prevent
fermentation or deterioration in quality. Accordingly, the Company has located
its processing facilities in proximity to its principal sources of tobacco.

<PAGE>
Upon arrival at the Company's processing plants, flue-cured and burley
tobacco is first reclassified according to grade. Most of that tobacco is then
blended to meet customer specifications regarding color, body and chemistry,
threshed to remove the stem from the leaf and further processed to produce
strips of tobacco and sieve out small scrap. The Company also sells a small
amount of processed but unthreshed flue-cured and burley tobacco in loose-leaf
and bundle form to certain of its customers.

Processed flue-cured and burley tobacco is redried to remove excess
moisture so that it can be held in storage by customers or the Company for long
periods of time. After redrying, whole leaves, bundles, strips or stems are
separately packed in cases, bales, cartons or hogsheads for storage and
shipment. Packed flue-cured and burley tobacco generally is transported in the
country of origin by truck or rail, and exports are moved by ship. Prior to and
during processing, steps are taken to ensure consistent quality of the tobacco,
including the regrading and removal of undesirable leaves, dirt and other
foreign matter. Customer representatives are frequently present at the Company's
facilities to monitor the processing of their particular orders. Increased
consumption of discount and value-priced cigarettes and competition among leaf
merchants have led to improvements in processing designed to minimize waste and
thereby increase yield. Throughout the processing, Company technicians use
laboratory test equipment for quality control to ensure that the product meets
all customer specifications.

From time to time, the Company processes and stores tobacco acquired by
various stabilization cooperatives under the U.S.'s price support program. The
Company can derive significant revenues from the fees charged for such services,
particularly in years when a substantial portion of the domestic tobacco crop is
acquired by such cooperatives under the program. While these revenues are not
material to the Company's net sales, they result in additional recovery of fixed
cost which may be significant to gross profit.

SELLING. The Company sells its tobacco to manufacturers of cigarettes and
other consumer tobacco products located in about 60 countries around the world.
The Company ships tobacco to international locations designated by these
manufacturers. A majority of the shipments of tobacco are to factories of these
manufacturers that are located outside the U.S. In certain countries, the
Company also uses sales agents to supplement its selling efforts. Several of
these customers individually account for a significant portion of the Company
sales in a normal year. The loss of any one or more of such customers could have
a materially adverse effect on the tobacco business of the Company.

The consumer tobacco business in most markets is dominated by a relatively
small number of large multinational cigarette manufacturers and by government
controlled entities. Approximately 56% and 55% of the Company's consolidated
tobacco sales for the nine months ended March 31, 1997, and fiscal year 1996,
respectively, were contracted to be delivered to 37 customers which the Company
believes are owned by or under common control of Japan Tobacco, Philip Morris or
RJR and each of which contributed in excess of 10% of total tobacco sales, with
Phillip Morris and RJR accounting for significantly larger portions of the
Company's sales than Japan Tobacco. No other customer accounts for more than 10%
of the Company's sales. See " -- Global Operations -- United States" and Note M
to the Company's Consolidated Financial Statements for the year ended June 30,
1996, incorporated by reference herein to the Company's Annual Report on form
10-K. The Company generally has maintained relationships with its customers for
over forty years. In fiscal 1996, the Company delivered approximately 38% of its
tobacco sales to customers in the U.S., approximately 28% to customers in Europe
and the remainder to customers located in Asia, South America and elsewhere. The
Intabex Acquisition significantly increases the international presence of the
Company.

As of March 31, 1997, the Company's and Intabex's consolidated entities had
tobacco inventories of approximately $579.2 million and approximately $404.6
million in commitments or indications from customers for purchases of tobacco.
Substantially all of the March 31, 1997, orders are expected to be delivered in
fiscal 1998. The level of purchase commitments for tobacco fluctuates from
period to period and is significant only to the extent it reflects short-term
changes in demand for leaf tobacco. The Company typically makes 80-95% of its
leaf tobacco purchases pursuant to customer orders or supply contracts or
customer indications of anticipated need, with most purchases made based on
indications. Customers are legally bound to purchase tobacco purchased by the
Company pursuant to orders, but no contractual obligation exists with respect to
tobacco purchased in response to indications. However, the Company has done
business with most of its customers for many years and has never experienced a
significant failure of customers to purchase tobacco for which they have given
indications. Other than the contracts with RJR and Lorillard described below
under " -- Global Operations -- United States" and an

<PAGE>
agreement between Intabex and Tabacalera S.A. providing that Intabex will
provide a significant portion of Tabacalera's tobacco needs, the Company has no
significant supply agreements with its customers.

The Company typically makes sales based on a customer's letter of credit,
by cash against documents or by payment against invoice. Virtually all of the
Company's sales throughout the world are denominated in U.S. dollars. While
payment for tobacco sold by the Company is usually received after the tobacco
has been processed and shipped, some customers make advances to the Company
periodically throughout the buying season as tobacco is purchased by the Company
for their accounts. Distribution of processed tobacco is made by delivery from
the Company's storage facilities directly to customers, by truck or rail to
customers' storage or manufacturing facilities or to port for shipping.

GLOBAL OPERATIONS

UNITED STATES. The Company owns and operates four processing facilities in
North Carolina and Virginia. The price of tobacco grown in the U.S. is supported
under a government price support program which also establishes quotas for
production. Consequently, U.S.-grown tobacco is typically more expensive than
tobacco grown elsewhere. Although domestic tobacco historically has accounted
for the majority of the Company's sales, the Company expects that, because of
this price differential and its generally increasing business outside of the
U.S., sales of flue-cured and burley tobacco grown in the U.S. and related
services will be less significant than in the past. The Company believes that
any short-term decline in its domestic business should be offset in the
short-term by increased foreign operations.

In late fiscal 1994, Monk-Austin entered into an agreement with RJR to
purchase all of RJR's U.S. auction market tobacco requirements. In late fiscal
1995, Dibrell entered into an agreement with Lorillard pursuant to which the
Company will purchase and process all of Lorillard's domestic auction market
tobacco requirements. Generally, the contracts establish a framework for pricing
the Company's services (which generally is negotiated with respect to crop year,
grade of tobacco leaf or type of service provided based on market prices), do
not provide for minimum purchases and are terminable upon reasonable notice. The
Company expects that purchases under these agreements will account for a
substantial portion of its tobacco purchases in the U.S. in the future.

BRAZIL. The Company believes it is one of the two largest independent leaf
tobacco merchants in Brazil. The Company exports the majority of the tobacco
that it processes in Brazil to its customers around the world. In fiscal 1996,
the Company derived approximately 24% of its tobacco revenue from its Brazilian
operations.

In fiscal 1996, the Company merged its two wholly-owned subsidiaries, Tabra
and Dibrell do Brazil to form DIMON do Brazil. DIMON do Brazil has three modern
tobacco processing facilities located in the center of Brazil's tobacco
production area. Brazil represents the Company's most significant foreign
operation in virtually all respects, including purchasing volume, processing and
storage capacities and operating income potential. Through the Merger and
resulting reduction in duplicative functions and facilities the Company reduced
annual operating costs.

AFRICA. The Company purchases flue-cured and burley tobacco at auction for
customer orders in Zimbabwe and Malawi. The tobacco is threshed and packed for
export at facilities in each country. The Company exports the majority of the
tobacco it processes in Zimbabwe and Malawi to its customers around the world.
In fiscal 1996, the Company derived approximately 12% of its revenue from its
Zimbabwean and Malawian tobacco operations.

Intabex's business in Africa allows the Company to significantly increase
market share in the established markets of Zimbabwe and Malawi. The addition of
Intabex's business also creates a significant presence for the Company in South
Africa, Tanzania, Zambia, Mozambique, and Zaire.

In fiscal 1995, the Company combined the former Dibrell and Monk-Austin
operations in Zimbabwe and Malawi to form two wholly-owned subsidiaries, DIMON
Zimbabwe and DIMON Malawi. Through DIMON Zimbabwe the Company purchases,
processes in two facilities and exports flue-cured and burley tobacco grown in
Zimbabwe. Through DIMON Malawi the Company purchases, processes in one facility
and exports flue-cured and burley tobacco grown in Malawi.

<PAGE>
GREECE AND TURKEY. The Company believes it is the largest exporter of
processed oriental tobacco in the world. Greece and Turkey are the most
important producers of oriental tobacco. Through its wholly-owned subsidiaries,
DIMON Hellas Tobacco SA, Georges Allamanis Tobacco International SA and DIMON
Turk Tutun AS, the Company buys, exports and processes, in two facilities in
each country, oriental tobacco grown in each country.

OTHER FOREIGN OPERATIONS. The Company also has foreign subsidiaries, joint
ventures and affiliates that purchase and sell tobacco grown in other countries
throughout the world. The Intabex Acquisition provided the Company a significant
presence in the established burley tobacco market in Thailand, a new presence in
Spain and, through a wholly-owned subsidiary, new business as a supplier of
premium cigar and other dark-air cured tobacco to the resurgent cigar industry.
In addition, the Company owns and operates processing facilities in Italy,
Germany and Mexico.

In certain countries, such as China and India, the Company has processing
agreements with other processors to use their facilities under the supervision
of the Company's employees. In several South American countries where the
Company operates, tobacco is bought from the farmers by the processors at
negotiated prices, and it is necessary to prefinance the crop by making advances
of cash or materials to the farmers prior to and during the growing season.

TOBACCO FACILITIES

The Company operates each of its tobacco processing plants for seven to
nine months during the year to correspond with the applicable growing seasons.
While the Company believes its processing facilities are being efficiently
utilized, the Company also believes its domestic processing facilities and
certain foreign processing facilities have the capacity to process additional
volumes of tobacco if required by customer demand.

The following is a listing of the various properties used in the tobacco
operations:

<TABLE>
<CAPTION>
LOCATION USE
-------- ---------------------
<S> <C>
UNITED STATES
Danville, VA.............................................................. Storage
Danville, VA.............................................................. Factory
Kenbridge, VA............................................................. Storage
Greenville, NC*........................................................... Factory/Storage
Farmville, NC............................................................. Factory/Storage
Kinston, NC............................................................... Factory/Storage
Sanford, NC............................................................... Storage
Greenville, TN............................................................ Storage
Mullins, SC............................................................... Storage
Lake City, SC............................................................. Storage

SOUTH AMERICA
Santa Cruz, Brazil........................................................ Factory/Storage
Venancio Aires, Brazil.................................................... Factory/Storage
Vera Cruz, Brazil......................................................... Factory/Storage
Mexico City, Mexico....................................................... Factory
Zacapa, Guatemala......................................................... Factory

AFRICA
Lilongwe, Malawi.......................................................... Factory
Harare, Zimbabwe*......................................................... Factories(2)/Storage

EUROPE
Karlsruhe, Germany........................................................ Factory/Storage
Izmir, Turkey............................................................. Factories(2)/Storage
Sparanise, Italy.......................................................... Factory/Storage
Thessaloniki, Greece...................................................... Factories(3)/Storage
</TABLE>

-----------------------

* The Greenville, NC and one of the Harare, Zimbabwe factories were
formerly joint ventures between the Company and Intabex.

<PAGE>
The following is a listing of properties acquired as a result of the
Intabex Acquisition:

<TABLE>
<CAPTION>
LOCATION USE
-------- ---------------------
<S> <C>
SOUTH AMERICA
Venancio Aires, Brazil.................................................... Storage
Provinicia de Jujuy, Argentina............................................ Factory/Storage
Bogota, Columbia.......................................................... Factory/Storage*
Bahia, Brazil............................................................. Factory/Storage*
Santiago de los Caballeros, Dominican Republic............................ Factory/Storage*
Asuncion, Paraguay........................................................ Factory/Storage*

AFRICA
Lilongwe, Malawi.......................................................... Factory/Storage
Limbe, Malawi............................................................. Factory/Storage

EUROPE
Glauzig, Germany.......................................................... Factory/Storage
Palona, Italy............................................................. Factory/Storage

ASIA
Columbo, Sri Lanka........................................................ Factory/Storage
Chiang Mai, Thailand...................................................... Factory/Storage
Manila, Philippines....................................................... Storage*
</TABLE>

-------------------------------

* Dark air-cured operations

COMPETITION

The leaf tobacco industry is highly competitive. Competition among dealers
in leaf tobacco is based on the price charged for products and services as well
as the dealers' ability to meet customer specifications in the buying,
processing and financing of tobacco. The Company believes that it is well
positioned to meet this competition, particularly in view of its important
processing facilities in the U.S., Brazil and other major tobacco growing
countries. Prior to the Intabex Acquisition, the Company competed with three
major tobacco processors and had significantly less market share than the
world's largest processor. Following the Intabex Acquisition, the Company's
principal competitors are Universal Corporation ("Universal") and Standard
Commercial Corporation and the Company's market share has increased from
approximately 30% to 37% on a pro forma basis. Of the independent leaf tobacco
merchants, the Company ranks second in established worldwide market share. The
Company believes that among independent leaf tobacco merchants, it has the
largest or second largest market share in Brazil, Greece, Turkey, the U.S. and
Zimbabwe. Universal's market share in the U.S. is considerably greater than that
of the Company.

SEASONALITY

The purchasing and processing activities of the Company's tobacco business
are seasonal. Flue-cured tobacco grown in the U.S. generally is purchased during
the five-month period beginning in July and ending in November. U.S.-grown
burley tobacco is usually purchased from late November through January or
February. Tobacco grown in Brazil usually is purchased from January through June
and delivered from May to September. Other markets around the world last for
similar periods, although at different times of the year, and as the importance
of these markets has grown the seasonality in the Company's business has
decreased.

Mature tobacco, prior to being processed and packed, is a semi-perishable
commodity. The production cycle for redrying and packing is relatively short.
For example, flue-cured tobacco in the U.S. is processed, packed and invoiced
within the same five-month period (July through November) that it is purchased.
During this period inventories of unprocessed tobacco, inventories of redried
tobacco and trade accounts receivable normally reach peak levels in succession.
Current liabilities, particularly advances from customers and short-term notes
payable to banks, normally reach their peak in this period as a means of
financing the seasonal expansion of current assets. Increasing amounts of
U.S.-grown burley and foreign tobacco are now being processed in periods other
than July through November, reducing the seasonal fluctuations in working
capital. At June 30, the end of the Company's

<PAGE>
fiscal year, the seasonal components of the Company's working capital reflect
primarily the operations related to foreign grown tobacco.

FLOWERS

The Company's fresh-cut flower 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 through its wholly-owned
flowers subsidiary, Florimex. For the fiscal year ended June 30,1997, the
Company's flower operations produced approximately 15% of the Company's
revenues, and at June 30, 1997, represented approximately 5% of the Company's
consolidated assets. The Company does not view its flowers operations as a core
business and will continue to evaluate its strategic alternatives with respect
to Florimex.

Florimex operates through 51 offices in 18 countries, including Austria,
Canada, Colombia, the Czech Republic, Ecuador, France, Germany, Hungary, Italy,
Japan, Poland, The Netherlands, Spain, Switzerland, the United Kingdom and the
U.S. The activities of certain of these offices are limited to acquiring flowers
in the country of origin, but most are engaged in importation and distribution.
Florimex is also engaged in additional value-added services through the design
and assembly of floral bouquets for sale to supermarket retailers. Virtually all
offices are operated as corporate profit centers with the general manager
receiving a bonus related to the financial performance of the operation.

Florimex's Dutch exporting operations, Baardse, are headquartered in
Aalsmeer, The Netherlands, inside the premises of the world's largest flower
auction facilities. In addition to the Aalsmeer auction, Florimex routinely
acquires flowers from all principal Dutch flower auctions. Florimex's Dutch
exporting operations sell and ship product directly to Florimex's fresh-cut
flower operations and its competitors.

Florimex sells to thousands of wholesalers and retailers throughout Europe,
North America and Asia. No customer accounts for a significant portion of
Florimex's sales in a normal year, and the loss of any one customer or a group
of related customers should not have a material adverse effect on Florimex's
business.

EMPLOYEES

The Company's consolidated entities employed about 2,800 persons, excluding
seasonal employees, in its worldwide tobacco operations at June 30, 1996. In the
U.S. tobacco operations the Company's consolidated entities employed about 900
persons, excluding 1,200 seasonal employees at June 30, 1996. Most seasonal
employees are covered by collective bargaining agreements with several U.S.
labor unions. Most of the full-time employees of the Company are not covered by
collective bargaining agreements. In the non-U.S. tobacco operations the
Company's consolidated entities employed about 1,900 persons, excluding 6,650
seasonal employees at June 30, 1996. The Company's worldwide consolidated cut
flower operation entities employ about 1,300 persons, excluding seasonal
employees. The Company considers its employee relations to be satisfactory.

GOVERNMENT REGULATION AND ENVIRONMENTAL COMPLIANCE

<PAGE>
On June 20, 1997, representatives of the leading U.S. manufacturers of
consumer tobacco products, several state attorneys general and certain private
plaintiffs jointly announced a proposed settlement of certain significant
lawsuits pending against the manufacturers. The proposed settlement, which must
be enacted into federal law to become effective, is expected to cost the
nation's leading cigarette manufacturers, all of whom are customers of the
Company, approximately $368 billion in cash outlays over the next 25 years. The
cigarette manufacturers subsequently entered into a separate settlement of a
lawsuit brought by the state of Mississippi and agreed to a settle a lawsuit
brought by the state of Florida. The Mississippi settlement, announced July 3,
1997, requires the manufacturers to pay the state $3.6 billion. The Florida
settlement, announced on August 25, 1997, would require the manufacturers to pay
that state $11.3 billion over the next 25 years. These amounts would be included
within the total amount payable pursuant to any federal settlement. Cigarette
manufacturers may attempt to recover a portion of these costs by demanding price
and other concessions from suppliers such as the Company. Such concessions could
materially and adversely affect the Company's margins and its results of
operations.

<PAGE>
MANAGEMENT

The directors and principal officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- -----------------------------------------------------
<S> <C> <C>
Claude B. Owen, Jr. 52 Chairman of the Board and Chief Executive Officer
Albert C. Monk III 57 President and Director
Brian J. Harker 47 Executive Vice President and Chief Financial Officer
Richard D. O'Reilly 48 Senior Vice President-Human Resources
James A. Cooley 46 Vice President and Treasurer
R. Stuart Dickson 67 Director
John M. Hines 57 Director
Norman A. Scher 59 Director
James E. Johnson, Jr. 67 Director
Joseph L. Lanier, Jr. 65 Director
Robert T. Monk, Jr. 49 Director
Louis N. Dibrell, III 52 Director
Henry F. Frigon 62 Director
Dr. Thomas F. Keller 65 Director
William R. Slee 56 Director
Anthony C.B. Taberer 61 Director
</TABLE>

CLAUDE B. OWEN, JR. was elected Chairman of the Board and Chief Executive
Officer of the Company on October 21, 1994. He also served as Chairman, Chief
Executive Officer and President of Dibrell from July 1993 until the effective
time of the Merger and as Chairman of the Board and Chief Executive Officer of
Dibrell from February 1990 until July 1993. Mr. Owen also serves as a director
for American National Bankshares, Inc. and Richfood Holdings, Inc.

ALBERT C. MONK III was elected President of the Company on October 21, 1994
and President and Chief Executive Officer of DIMON International on January 23,
1995. He also served as Chairman, Chief Executive Officer and President of
Monk-Austin beginning from November 8, 1994 until the effective time of the
Merger, Chief Executive Officer and President of Monk-Austin since 1992 and
President of Monk-Austin since 1990. Mr. Monk is the first cousin of Robert T.
Monk, Jr.

JOHN M. HINES, a director of the Company since October 21, 1994, was
Executive Vice President of the Company from February 22, 1995 until his
retirement on July 1, 1996. Mr. Hines also served as Executive Vice President
and Chief Financial Officer of Monk-Austin from 1990 to the effective time of
the Merger.

RICHARD D. O'REILLY was appointed Senior Vice President -- Human Resources
May 16, 1995. From 1989 to 1995, he served as Vice President -- Human Resources
at Sweetheart Cup Company, Chicago, Illinois.

JAMES A. COOLEY was appointed Vice President and Treasurer on April 1,
1995. He also served as Vice President and Treasurer of Dibrell from January
1994 to the effective time of the Merger, and Vice President-Tax of Dibrell from
October 1988 to January 1994.

BRIAN J. HARKER was elected Executive Vice President and Chief Financial
Officer on October 1, 1996. He served as Senior Vice President of DIMON
International from April 1995 to October 1996 and as Senior Vice
President-Director International Operations of Monk-Austin from July 1991 to
April 1995. Prior thereto he served as Vice President of Monk-Austin.

R. STUART DICKSON, a director of the Company since November 17, 1995, has
been Chairman of the Executive Committee of Ruddick Corporation since February
1994. Ruddick Corporation owns Harris-Teeter Supermarkets and A&E Mills, a
leading thread producer. He also served as Chairman of the Board of Ruddick from
1968 to 1994. Mr. Dickson also serves as a director of First Union Corporation,
PCA International, Inc., Textron, Inc. and United Dominion Industries.

NORMAN A. SCHER, a director of the Company since April 1, 1995, has been
Executive Vice President and Chief Financial Officer of Tredegar Industries,
Inc. since July 1989. Tredegar is a manufacturer of plastics and metal products.

<PAGE>
JAMES E. JOHNSON, JR., a director of the Company since April 1, 1995, has
been a partner of Womble Carlyle Sandridge & Rice, PLLC (a law firm based in
Charlotte, North Carolina) since 1989.

JOSEPH L. LANIER, JR., a director of the Company since April 1, 1995, is
currently Chairman and Chief Executive Officer of Dan River, Inc. Mr. Lanier is
also a director of SunTrust Banks, Inc., Flowers Industries, Inc. and Torchmark
Corporation.

ROBERT T. MONK, JR., director of the Company since April 1, 1995, was
Senior Vice President of DIMON International from April 1, 1995 until his
retirement on June 30, 1996. He served as Vice President and Director of
Processing Operations of Monk-Austin since 1990. Mr. Monk is the first cousin of
Albert C. Monk III.

LOUIS N. DIBRELL, III, a director of the Company since April 1, 1995, is
currently a Senior Vice President of DIMON International, Inc. Prior thereto he
served as Senior Vice President of Dibrell.

HENRY F. FRIGON, a director of the Company since April 1, 1995, is
currently retired. Prior to his retirement he served as Executive Vice President
and Chief Financial Officer of Hallmark Cards, Inc. since December 1990. Mr.
Frigon also serves as a director of H&R Block, Inc., Circle K Stores and Group
Technologies Corporation.

DR. THOMAS F. KELLER, director of the Company since April 1, 1995, is
currently retired. Prior to his retirement he served as Dean and R.J. Reynolds
Industries Professor at the Fuqua School of Business at Duke University in
Durham, North Carolina. He has also served as a director of American Business
Products, LADD Furniture, Inc., Nations Funds Trust, Mentor Series Trust,
Hatteras Income Securities, Inc., and Wendy's International, Inc.

WILLIAM R. SLEE, a director of the Company since November 15, 1996, has
been a Senior Advisor to Schroders PLC, a merchant bank in London, U.K., since
1995. Prior thereto, he was a Group Managing Director with Schroders PLC.

ANTHONY C.B. TABERER, a director of the Company since April 1, 1997, was
formerly the Chairman of the Board and Chief Executive Officer of Intabex, and
upon joining the Board of the Company became the non-executive Chairman of
Intabex. Mr. Taberer will serve as a consultant to a trading subsidiary of
Intabex under an agreement with an initial term expiring in October 2000.

<PAGE>
SELLING STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of shares of the Common Stock as of June 30, 1997, and as adjusted to
reflect the sale by the Selling Stockholders of the shares in the Stock
Offering.

<TABLE>
<CAPTION>
MAXIMUM
BENEFICIAL OWNERSHIP NUMBER OF
BENEFICIAL OWNERSHIP NUMBER OF AFTER THE STOCK SHARES TO
PRIOR TO THE OFFERINGS SHARES TO BE OFFERING BE SOLD IN
----------------------- SOLD IN THE ----------------------- THE DECS
NAME SHARES PERCENT(1) STOCK OFFERING SHARES PERCENT(1) OFFERING(2)
- ---- --------- ---------- -------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
A. C. Monk, Jr. 562,382 1.3% -- 562,382 1.3% 115,000
A. C. Monk, III 1,202,330(3) 2.7 -- 1,202,330 2.7 600,000
A. C. Monk, IV 227,727 -- 170,000 57,727 -- --
Linda Monk Page 1,094,091 2.4 314,232 779,859 1.8 385,868
William S. Page 80,168 -- -- 80,168 -- 60,500
Tracy Gray Monk 227,727 -- 170,000 57,727 -- --
Penelope Monk Page 64,105 -- 25,768(4) 38,337 -- --
W. C. Monk 1,741,452 3.9 -- 1,741,452 3.9 787,368
W. C. Monk, Jr. 145,388 -- 20,000 125,388 -- --
W. C. Monk, Jr. Trust 525,130 1.2 320,000 205,130 -- 187,000
Molly G. Monk 164,088 -- 20,000 144,088 -- --
Molly G. Monk Trust 525,130 1.2 320,000 205,130 -- 187,000
Robert T. Monk 974,359 2.2 -- 974,359 2.2 365,000
Francis J. Monk 38,691 -- -- 38,691 -- 15,000
Robert T. Monk, Jr. 1,000,000(5) 2.3 56,500 943,500 2.1 441,368
Robert T. Monk, Jr. Trust 175,476 -- 160,000 15,476 -- --
Robert T. Monk, III 141,810 -- 125,000 16,810 -- --
Emily Monk Davidson 165,549 -- -- 165,549 -- 130,500
Emily Monk Davidson Trust 462,976 1.0 252,000 210,976 -- 209,500
Emily Monk Davidson Foundation 43,500 -- 43,500 -- -- --
Piper H. Monk 49,266 -- 43,000 6,266 -- --
--------- ---------- -------------- --------- ---------- -----------
Total 9,611,345 21.7% 2,040,000 7,571,345 17.1% 3,484,104
--------- ---------- -------------- --------- ---------- -----------
--------- ---------- -------------- --------- ---------- -----------
</TABLE>

- ---------------
(1) Percentages less than 1% of the outstanding Common Stock are omitted.

(2) The Selling Stockholders may deliver up to 3,484,104 shares upon termination
of the Trust on August 15, 2000. If the Selling Stockholders deliver the
maximum number of shares, they will own an aggregate of 4,087,241 shares of
Common Stock, or 9.2% of the shares outstanding at June 30, 1997, assuming
no change in the number of shares owned by them or outstanding. The Selling
Stockholders may deliver fewer shares or may choose to settle their
obligations under the DECS in cash. See the DECS Prospectus for a
description of the obligations of the Selling Stockholders in the DECS
Offering.

(3) Excludes 463,074 shares held in trust for the benefit of the children of
A.C. Monk III.

(4) To be sold by the Penelope Monk Page Trust.

(5) Excludes 102,368 shares held in trust or as custodian for the children of
Robert T. Monk Jr.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue up to 125,000,000 shares of Common
Stock, no par value per share, and up to 10,000,000 shares of Preferred Stock,
no par value per share. As of June 30, 1997 there were 44,312,349 outstanding
shares of Common Stock and no outstanding shares of Preferred Stock.

COMMON STOCK

Each share of Common Stock is entitled to one vote on all matters submitted
to a vote at any meeting of shareholders. Holders of Common Stock are entitled
to receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefor and, upon liquidation, to receive pro rata all
assets, if any, of the Company available for distribution after the payment of
necessary expenses and all prior claims. Holders of Common Stock have no
preemptive, redemption, conversion, subscription or sinking fund rights, and all
outstanding shares of Common Stock are fully paid and nonassessable. Holders of
Common Stock have no right to cumulate

<PAGE>
votes in the election of directors. The rights and privileges of holders of
Common Stock are subject to any preferences provided for by resolution of the
Board of Directors for any series of Preferred Stock that the Company may issue
in the future.

PREFERRED STOCK

Under the Company's Amended and Restated Articles of Incorporation (the
"Articles"), the Board of Directors may issue shares of Preferred Stock in one
or more series as may be determined by the Board of Directors, which may
establish, from time to time, the number of shares to be included in each
series, may fix the designation, powers, preferences and rights of the shares of
each such series and any qualifications, limitations or restrictions thereof,
and may increase or decrease the number of shares of any series without any
further vote or action by the shareholders. Any Preferred Stock so issued may
rank senior to the Common Stock with respect to the payment of dividends or
amounts upon liquidation, dissolution or winding up of the Company, or both. In
addition, any such shares of Preferred Stock may have class or series voting
rights. Under certain circumstances, the issuance of Preferred Stock or the
existence of the unissued Preferred Stock may tend to discourage or render more
difficult a merger or other change in control of the Company. No shares of
Preferred Stock have been issued and the Company has no present plans to issue
any shares of Preferred Stock.

RIGHTS PLAN

Pursuant to a Rights Agreement, dated as of March 31, 1995, between the
Company and First Union National Bank of North Carolina, as Rights Agent (the
"Rights Plan"), one right to purchase Common Stock (a "Right") is attached to
each share of Common Stock issued prior to the Distribution Date, as defined
below. Except as described below, the Rights are evidenced by certificates for
the Common Stock, and no separate certificates will be distributed.

Each Right entitles the registered holder thereof to purchase from the
Company at any time following the Distribution Date and prior to the earlier of
(a) March 31, 2005, or (b) the time at which the Rights are redeemed (the
"Expiration Date"), one share of Common Stock at a price of $65.00, as adjusted
in certain circumstances described below (the "Purchase Price").

The Rights will separate from the Common Stock and a "Distribution Date"
will occur upon the earliest of (a) the tenth business day after the date on
which there is a public announcement that a person or group of affiliated or
associated persons acting in concert has acquired either (i) beneficial
ownership of an additional 10% or more of outstanding Common Stock or (ii) that
amount of Common Stock that results in such person or group owning both (x) more
than 10% of outstanding Common Stock and (y) that percentage of Common Stock
equal to 3% or more over the percentage of outstanding Common Stock owned by
such person or group at the effective time of the Merger (the "Effective Time")
(an "Acquiring Person"), provided that "Acquiring Person" will not include (i)
any person who becomes an Acquiring Person solely as a result of a reduction in
the number of shares of Common Stock outstanding due to the repurchase of shares
of Common Stock by the Company or solely as a result of acquisition of shares
pursuant to benefit plans adopted by the Board, unless and until such person
shall purchase or otherwise become the beneficial owner of additional shares of
Common Stock constituting 1% or more of the then outstanding shares of Common
Stock or (ii) any person who the Board determines has become an Acquiring Person
inadvertently if such person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such person would no longer be an
Acquiring Person as defined under the Rights Plan, (b) the tenth business day
after the date of commencement of a tender or exchange offer if upon
consummation thereof the offeror, including affiliates and associates, would be
the beneficial owner of 10% or more of the Common Stock (a "Tender Offer") or
(c) the tenth business day after the commencement of a proxy solicitation in
which any Affiliate (as hereinafter defined) of the Company participates,
provided that such tenth business day occurs prior to the third anniversary of
the Effective Time (a "Proxy Solicitation"). For purposes of the Rights Plan,
"Affiliate" means any person or group that beneficially owns 10% or more of the
shares of Common Stock then outstanding; any director of executive officer of
the Company; any person, firm or corporation that directly or indirectly
controls, is controlled by or is under common control with the Company; and any
member of the immediate family of any of the foregoing.

<PAGE>
Until the Distribution Date (a) the Rights are evidenced by the Common
Stock certificates and may be transferred with and only with such certificates,
(b) Common Stock certificates issued after the Effective Time will contain a
notation incorporating the Rights Plan by reference and (c) the surrender for
transfer of any certificate for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Plan, the Company will reserve the right to
require prior to the occurrence of a Triggering Event (as hereinafter defined)
that upon exercise of Rights, a number of Rights be exercised so that only whole
shares of Common Stock will be issued.

The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the Expiration Date, unless earlier redeemed by the
Company as described below.

As soon as practicable after the Distribution Date, certificates will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate certificates alone will
represent the Rights. Only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.

In the event that at any time following the date (a) any person becomes an
Acquiring Person or acquires 10% or more of the Common Stock in a Tender Offer
(either, a "Stock Acquisition Date") or (b) if prior to April 1998, a Proxy
Solicitation is commenced and continues for 10 business days, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of Company)
having a value equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any such event, all
Rights that are, or (under certain circumstances specified in the Rights Plan)
were, beneficially owned by any Acquiring Person (or certain related parties)
or, in the case of a Proxy Solicitation, by an Affiliate who participates in
such Proxy Solicitation, will be null and void.

In the event that, at any time following the Stock Acquisition Date, the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or more than 50% of Company's
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as described above) will thereafter
have the right to receive, upon exercise, common stock of the acquiring company
(the "Acquiring Company") having a value equal to two times the exercise price
of the Right. The events set forth in this paragraph and in the preceding
paragraph are referred to as the "Triggering Events."

At any time following the existence of an Acquiring Person or the
commencement and continuance of a Proxy Solicitation for more than 10 business
days, the Board of Directors may, at its option, exchange all or any part of the
Rights (other than Rights held by an Acquiring Person or an Affiliate who
participates in a Proxy Solicitation) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, provided that such exchange may
not be effected at any time after any person or group acquires 50% or more of
the shares of Common Stock then outstanding.

The Purchase Price payable, and the number of other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (a) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (b) if
holders of the Common Stock are granted certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock or (c) upon the distribution to holders of the Common Stock
of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.

At any time prior to the close of business on the earlier of (a) the Stock
Acquisition Date or (b) the tenth business day after commencement of a Proxy
Solicitation, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors). Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.01 per Right redemption price.

<PAGE>
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the Acquiring Company as set forth above.

The provisions of the Rights Plan may be amended by the Board of Directors
in order to cure any ambiguity, to make changes which do not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person or certain related persons or any Affiliate participating in a Proxy
Solicitation), or to shorten or lengthen any time period under the Rights Plan;
provided, however, that no amendment to adjust the time period governing
redemption may be made at such time as the Rights are not redeemable. The Rights
Plan may not be amended to change the redemption price, the Expiration Date, the
Purchase Price or the number of shares of Common Stock for which a Right is
exercisable, provided that at any time (a) prior to the existence of an
Acquiring Person, (b) prior to the commencement of a Tender Offer or (c) prior
to the commencement of a Proxy Solicitation, provided that such Proxy
Solicitation is commenced before the third anniversary of the Effective Time,
the Board of Directors may amend the Rights Plan to increase the Purchase Price
or extend the Expiration Date.

The Rights may have the effect of delaying or preventing a change in
control of the Company by significantly increasing the cost of acquiring the
Company. If a person were to attempt to acquire control of the Company without
the approval of the Board of Directors, the Rights, should they become
exercisable, would substantially dilute the purchaser's stock position in
Company, thereby increasing the effective cost of control commensurately.

CERTAIN PROVISIONS OF THE VSCA, COMPANY ARTICLES AND COMPANY BYLAWS

GENERAL

A number of provisions of the VSCA, the Articles and the Company's Bylaws
(the "Bylaws") deal with matters of corporate governance and the rights of
shareholders. Certain of these provisions, as well as the ability of the Board
of Directors to issue shares of Preferred Stock and to set the voting rights,
preferences and other terms thereof, may be deemed to have an anti-takeover
effect and may delay or prevent takeover attempts not first approved by the
Board of Directors (including takeovers which certain shareholders may deem to
be in their best interests). These provisions also could delay or frustrate the
removal of incumbent directors or the assumption of control by shareholders. The
Company believes that these provisions are appropriate to protect the interests
of the Company and all of its shareholders. The following describes the
principal provisions of the VSCA, the Articles and the Bylaws that may be deemed
to have anti-takeover effects.

CERTAIN BUSINESS COMBINATIONS

The VSCA generally requires that any merger, share exchange or sale of
substantially all of the assets of a corporation not in the ordinary course of
business be approved by at least two-thirds of the votes entitled to be cast by
each voting group entitled to vote, unless the articles of incorporation provide
for a greater or lesser vote (but in no event less than a majority of votes cast
by each such voting group at a meeting at which a quorum of the voting group
exists). The Articles generally require that any merger, share exchange or sale
of substantially all the assets of DIMON not in the ordinary course of business
be approved by at least two-thirds of the votes entitled to be cast by each
voting group that is entitled to vote on such transactions. In addition to any
vote required by the provisions of VSCA described below, the Articles provide
that any transactions with DIMON or a subsidiary of DIMON that constitutes or
involves an "Affiliated Transaction" with an "Interested Shareholder," as such
terms are defined in Section 13.1-725 of the VSCA, must be approved by a
majority of the votes entitled to be cast by the members of each voting group
that is entitled to vote on such transaction other than votes entitled to be
cast by such interested shareholder and all "affiliates" and "associates" of
such interested shareholder, as such terms are defined in Section 13.1-725 of
the VSCA, unless such affiliated transaction is approved in advance by the vote
of a majority of the members of the DIMON Board (other than such interested
shareholder and any of his affiliates and associates who may be directors at the
time of such vote). The Bylaws require the affirmative vote of two-thirds of the
directors then in office to approve any merger, statutory share exchange, sale
or other disposition of all or substantially all of DIMON's assets, or any sale,
lease, transfer, distribution or other disposition of any business constituting
a "significant subsidiary" of DIMON for purposes of Regulation S-X under the
Securities Act, or any dissolution of DIMON.

<PAGE>
The VSCA contains provisions governing "Affiliated Transactions." These
provisions, with several exceptions discussed below, require approval of
material acquisition transactions between a Virginia corporation and any holder
of more than 10% of any class of its outstanding voting shares (an "Interested
Shareholder") by the holders of at least two-thirds of the remaining voting
shares. Affiliated Transactions subject to this approval requirement include
mergers, share exchanges, material dispositions of corporate assets not in the
ordinary course of business, any dissolution of the corporation proposed by or
on behalf of an Interested Shareholder, or any reclassification, including
reverse stock splits, recapitalization or merger of the corporation with its
subsidiaries which increases the percentage of voting shares owned beneficially
by an Interested Shareholder by more than five percent.

For three years following the time that an Interested Shareholder becomes
an owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with such Interested Shareholder without
approval of two-thirds of the voting shares other than those shares beneficially
owned by the Interested Shareholder, and majority approval of the "Disinterested
Directors." A Disinterested Director means, with respect to a particular
Interested Shareholder, a member of the board of directors who was (a) a member
on the date on which an Interested Shareholder became an Interested Shareholder
and (b) recommended for election by, or was elected to fill a vacancy and
received the affirmative vote of, a majority of the Disinterested Directors then
on the board. At the expiration of the three-year period, the statute requires
approval of Affiliated Transactions by two-thirds of the voting shares other
than those beneficially owned by the Interested Shareholder.

The principal exceptions to the special voting requirement apply to
transactions proposed after the three-year period has expired and require either
that the transaction be approved by a majority of the corporation's
Disinterested Directors or that the transaction satisfy the fair-price
requirements of the statute. In general, the fair-price requirement provides
that in a two-step acquisition transaction, the Interested Shareholder must pay
the shareholders in the second step either the same amount of cash or the same
amount and type of consideration paid to acquire the Virginia corporation's
shares in the first step.

None of the foregoing limitations and special voting requirements applies
to a transaction with an Interested Shareholder (a) whose acquisition of shares
making such person an Interested Shareholder was approved by a majority of the
Virginia corporation's Disinterested Directors or (b) who was an Interested
Shareholder on the date the corporation became subject to these provisions by
virtue of its having 300 shareholders of record.

These provisions were designed to deter certain takeovers of Virginia
corporations. In addition, the statute provides that, by affirmative vote of a
majority of the voting shares other than shares owned by any Interested
Shareholder, a corporation can adopt an amendment to its articles of
incorporation or bylaws providing that the Affiliated Transactions provisions
shall not apply to the corporation. DIMON has not "opted out" of the Affiliated
Transactions provisions.

The VSCA also contains provisions regulating certain "control share
acquisitions," which are transactions causing the voting strength of any person
acquiring beneficial ownership of shares of a public corporation in Virginia to
meet or exceed certain threshold percentages (20%, 33 1/3% or 50%) of the total
votes entitled to be cast for the election of directors. Shares acquired in a
control share acquisition have no voting rights unless (a) the voting rights are
granted by a majority vote of all outstanding shares other than those held by
the acquiring person or any officer or employee director of the corporation, or
(b) the articles of incorporation or bylaws of the corporation provide that
these Virginia law provisions do not apply to acquisitions of its shares. The
acquiring person may require that a special meeting of the shareholders be held
to consider the grant of voting rights to the shares acquired in the control
share acquisition. These provisions were designed to deter certain takeovers of
Virginia public corporations. DIMON has not adopted an amendment to its Articles
or Bylaws making these provisions inapplicable to acquisition of its shares.

PROVISIONS REGARDING BOARD OF DIRECTORS

Certain provisions of the Articles with respect to the classification of
the Board of Directors and the removal of directors could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, control of Company.

<PAGE>
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

The Bylaws establish advance notice procedures for shareholder proposals
and the nomination, other than by or at the direction of the Board of Directors
or a committee thereof, of candidates for election as directors. With respect to
shareholder nominations for the election of directors, the Bylaws provide that,
commencing with the 1996 annual shareholders' meeting, any shareholder entitled
to vote in the election of directors generally may nominate at a meeting one or
more persons for election as a director only if written notice of such
nomination or nominations is delivered or mailed to the secretary of the Company
(a) in the case of an annual meeting of shareholders that is called for a date
that is within 30 days before or after the anniversary date of the immediately
preceding annual meeting of shareholders, not less than 50 days nor more than 75
days prior to such anniversary date and (b) in the case of an annual meeting of
shareholders that is called for a date that is not within 30 days before or
after the anniversary date of the immediately preceding annual meeting of
shareholders, or in the case of a special meeting of shareholders, not later
than the close of business on the tenth day following the day on which the
notice of meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first. Such notification must contain the following
information to the extent known by the notifying shareholder: (a) the name, age
and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the nominee's qualifications to serve as a director; (d)
the name and residence address of the notifying shareholder; and (e) the number
of shares owned by the notifying shareholder. The secretary of the Company will
deliver such notices to the Nominating Committee of the Board of Directors, to
such other committee as may be appointed from time to time by the Board of
Directors for the purpose of recommending to the Board of Directors candidates
to serve as directors or, in the absence of any such committee, to the Board of
Directors, for review. The Nominating Committee or such other committee will
thereafter make its recommendation to the Board of Directors, and the Board of
Directors will thereafter make its determination, with respect to whether such
candidate should be nominated for election as a director. Nominations not made
in accordance with the foregoing provisions will be disregarded by the chairman
of the meeting and all votes cast for each such nominee may be disregarded.

With respect to other shareholder proposals, the Bylaws provide that a
shareholder desiring to make such a proposal must give notice thereof to the
secretary of the Company, not less than 60 days before the first anniversary of
the date of the Company's proxy statement in connection with the last annual
meeting. Such notice must set forth as to each matter the shareholder proposes
to bring before the annual meeting (a) a brief description of the business
desired to be brought before the annual meeting and the reason for conducting
such business at the annual meeting, (b) the name and record address of the
shareholder proposing such business, (c) the class, series and number of the
Company's shares that are beneficially owned by the shareholder, and (d) any
material interest of the shareholder in such business. In the event that a
shareholder attempts to bring business before an annual meeting without
complying with the foregoing provisions, the chairman of the meeting may, if the
facts warrant, determine that the business was not properly brought before the
meeting in accordance with the foregoing procedures, and, if he so determines,
he will declare to the meeting and such business will not be transacted.

The foregoing provisions may preclude shareholders from bringing matters
before other shareholders at an annual or special meeting, including making
nominations for directors.

MEETINGS OF SHAREHOLDERS

Under the Bylaws, meetings of the shareholders may be called by the
chairman of the board, the president or a majority of the Board of Directors.
This provision could have the effect of delaying until the next annual
shareholders' meeting shareholder actions which are favored by the holders of a
majority of the outstanding voting securities of the Company, because such
person or entity, even if it acquired a majority of the outstanding voting
securities of the Company, would be able to take action as a shareholder (such
as electing new directors or approving a merger) only at a duly called
shareholders' meeting.

AMENDMENT OF ARTICLES AND BYLAWS

Subject to the VSCA, the Articles may be amended by the affirmative vote of
the holders of a majority of the outstanding votes entitled to be cast by each
voting group entitled to vote thereon. Notwithstanding the foregoing, the
amendment or repeal of certain provisions of the Articles relating to the
approval of certain business combinations as described below and certain other
matters require the affirmative vote of the holders of two-thirds of the votes
entitled to be cast by each voting group that is entitled to vote on such
amendment or repeal.

<PAGE>
INDEMNIFICATION

The Articles and the Bylaws provide that directors and officers of the
Company will be indemnified by the Company to the fullest extent authorized by
Virginia law, as it now exists or may in the future be amended, against all
expenses and liabilities reasonably incurred in connection with service for or
on behalf of the Company.

LIMITATION OF LIABILITY

In addition, the Articles provides that directors of the Company will not
be personally liable for monetary damages to the Company for certain breaches of
their fiduciary duty as directors, unless they violated their duty of loyalty to
the Company or its stockholders, acted in bad faith, knowingly or intentionally
violated the law, authorized illegal dividends or redemptions or derived an
improper personal benefit from their action as directors. This provision would
have no effect on the availability of equitable remedies or non-monetary relief,
such as an injunction or rescission for breach of the duty of care. In addition,
the provision applies only to claims against a director arising out of his role
as a director and not in any other capacity (such as an officer or employee of
the Company). Further, liability of a director for violations of the federal
securities laws will not be limited by this provision.

TRANSFER AGENT

First Union National Bank of North Carolina is the Transfer Agent for the
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

As of June 30, 1997, the Company had outstanding 44,312,349, shares of
Common Stock, of which 35,895,344 shares are freely tradeable. All of the shares
in the Common Stock Offering and any Shares distributed to holders of DECS will
be freely transferable and may be resold without further registration under the
Securities Act. As of July 24, 1997, the Company had outstanding options to
purchase 1,873,889 shares of Common Stock at an average exercise price of $16.79
per share, of which 842,373 were exercisable at an average exercise price of
$17.58 per share.

Approximately 8,417,005 shares of the Company's Common Stock (including
56,500 shares to be sold in the Common Stock Offering and 1,041,368 shares
included in the DECS Offering that are subject to the restrictions described in
the DECS Prospectus) are held by persons who may be deemed to be "affiliates" of
the Company under the Securities Act and may be resold by them only in
transactions registered under the Securities Act or permitted by the provisions
of Rule 144. Persons who may be deemed to be affiliates include individuals or
entities that control, are controlled by, or are under common control with such
party and may include certain officers, directors and principal shareholders of
such party. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned "restricted
securities" for at least one year may, under certain circumstances, resell
within any three-month period such number of shares as does not exceed the
greater of 1% of the then outstanding shares or the average weekly trading
volume during the four calendar weeks prior to such resale. Rule 144 also
permits, under certain circumstances, the resale of shares without any quantity
limitation by a person who has satisfied a two-year holding period and who is
not, and has not been for the preceding three months, an affiliate of the
Company. In addition, holding periods of successive non-affiliate owners are
aggregated for purposes of determining compliance with these one-and two-year
holding period requirements.

In connection with the Intabex Acquisition, the Company issued 1,701,444
shares of Common Stock and $123.3 million principal amount of Convertible
Debentures. Folium and Tabacalera, formerly the largest shareholders of Intabex,
received an aggregate of 1,190,750 of these shares and all of the Convertible
Debentures. The Convertible Debentures are convertible into an aggregate of
4,286,703 shares of Common Stock at a price per share of $28.77. The shares of
Common Stock and the Convertible Debentures were sold in off-shore transactions
pursuant to Regulation S under the Securities Act and, consequently, currently
may be resold in the U.S. market without restriction. The Company granted Folium
and Tabacalera the right to require DIMON to register under the Securities Act
the shares of Common Stock, the Convertible Debentures and the Common Stock
issuable upon conversion of the Convertible Debentures. This right is
exercisable by each of Tabacalera and Folium not more than twice between April
1, 1998, and March 31, 2001, subject to extension in certain circumstances. The
Company is not required to register (i) less than 1,000,000 shares of Common
Stock or shares of Common Stock having a market value of less than $20 million,
or (ii) less than $35 million in aggregate principal amount of Convertible
Debentures. In addition, the Company granted Folium, Tabacalera and the other
former shareholders of

<PAGE>
Intabex "piggy-back" registration rights permitting them to participate in
certain offerings of Common Stock during the same period.

The availability of shares for sale or actual sales under Rule 144,
Regulation S or otherwise may have an adverse effect on the market price of the
Common Stock. Sales under Rule 144, Regulation S or otherwise also could impair
the Company's ability to market additional equity securities.

PLAN OF DISTRIBUTION

Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), among the Company, the Selling Stockholders and
Salomon Brothers Inc and Wheat, First Securities, Inc., as representatives (the
"Representatives") of the underwriters set forth below (the "Underwriters"), the
Selling Stockholders have agreed to sell to the Underwriters, and each of the
Underwriters has severally agreed to purchase from the Selling Stockholders, the
aggregate number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
Salomon Brothers Inc ........................................................................................... 662,500
Wheat, First Securities, Inc. .................................................................................. 662,500
BT Alex. Brown Incorporated..................................................................................... 75,000
A.G. Edwards & Sons, Inc. ...................................................................................... 75,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................................................. 75,000
J.C. Bradford & Co. ............................................................................................ 50,000
Legg Mason Wood Walker, Incorporated............................................................................ 50,000
The Robinson-Humphrey Company, Inc. ............................................................................ 50,000
Branch, Cabell & Company........................................................................................ 25,000
Davenport & Co. of Virginia, Inc. .............................................................................. 25,000
Interstate/Johnson Lane Corporation............................................................................. 25,000
Scott & Stringfellow, Inc. ..................................................................................... 25,000
---------
Total Underwriters (12)......................................................................................... 1,800,000
---------
---------
</TABLE>

In the Underwriting Agreement, the Underwriters have severally agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock offered hereby if any such shares are purchased. In the
event of a default by any Underwriter, the Underwriting Agreement provides that,
in certain circumstances, the purchase commitments of the non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.

The Company has been advised by the Representatives that the several
Underwriters propose initially to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus, and
to certain dealers at such price less a concession not in excess of $0.64 per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $0.10 per share to certain other dealers. After the initial
public offering, the public offering price and such concessions may be changed.

The Selling Stockholders have granted to the Underwriters an option to
purchase up to an additional 240,000 shares of Common Stock at the initial
offering price less the aggregate underwriting discounts, solely to cover over-
allotments. The option may be exercised at any time up to 30 days after the date
of this Prospectus. To the extent that the Underwriters exercise such option,
each Underwriter will be committed, subject to certain conditions, to purchase a
number of option shares proportionate to such underwriter's initial commitment.

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof.

The Company and the Selling Stockholders have each agreed that they will
not offer, sell, contract to sell or otherwise transfer or dispose of, directly
or indirectly, or approve an offering of, any shares of Common Stock or any
securities convertible into, or exchangeable for, Common Stock for a period of
90 days from the date of this Prospectus without the prior written consent of
the Salomon Brothers Inc; PROVIDED, HOWEVER, that the foregoing shall not
restrict the ability of the Company and the Selling Stockholders to take any of
the foregoing actions in

<PAGE>
connection with (i) the offering by the Trust of the DECS or any delivery of
shares of Common Stock pursuant to the terms of the DECS or (ii) in connection
with any employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of this Prospectus.

In connection with the DECS Offering and the Stock Offering, certain
underwriters and selling group members and their respective affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the DECS or the Common Stock. Such transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which such persons may bid for or purchase DECS or Common Stock for
purposes of stabilizing their market prices. The underwriters also may create
short positions for the account of the underwriters by selling more DECS or
Common Stock in connection with the DECS Offering or the Stock Offering than
they are committed to purchase from the Trust or the Selling Stockholders, and
in such case may purchase DECS or Common Stock in the open market following the
completion of the DECS Offering or the Stock Offering to cover all or a portion
of such short positions. The underwriters may also cover all or a portion of
such short positions by exercising the underwriters' over-allotment options in
the DECS Offering and the Stock Offering. In addition, in the case of the Stock
Offering, Salomon Brothers Inc, on behalf of the underwriters, may impose
"penalty bids" under contractual arrangements with the underwriters whereby it
may reclaim from an underwriter (or dealer participating in the Stock Offering)
for the account of the other underwriters, the selling concession with respect
to Common Stock that is distributed in the Stock Offering but subsequently
purchased for the account of the underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the DECS or the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required, and, if they are undertaken, they may be discontinued at
any time.

The Selling Stockholders and the Trust have entered into a separate
underwriting agreement with Salomon Brothers Inc providing for the offer and
sale by the Trust to Salomon Brothers Inc of 3,100,000 DECS, plus up to an
additional 379,871 DECS solely to cover over-allotments. On or about August 15,
2000, or upon earlier liquidation of the Trust in certain circumstances, the
Trust will distribute Common Stock (or, at the Selling Stockholders' option, the
cash equivalent value and/or such other consideration as is delivered by the
Selling Stockholders to the Trust pursuant to their Contracts) to the holders of
the DECS at the rate specified in the DECS Prospectus. The closings of the Stock
Offering and the DECS Offering are not conditioned upon each other.

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Hunton & Williams, Richmond, Virginia, and for the Underwriters by
Cleary, Gottlieb, Steen & Hamilton, New York, New York. Certain legal matters
will be passed upon for the Selling Stockholders by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.

EXPERTS

The Company's consolidated financial statements, as of June 30, 1996 and
1995, and for each of the three years in the period ended June 30, 1996, except
as they relate to the financial statements of the former Dibrell for the year
ended June 30, 1994, incorporated in this Prospectus by reference in the
Registration Statement, have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, and insofar as they relate to the
Dibrell financial statements referred to above, by Ernst & Young LLP,
independent accountants, given on the authority of such firms as experts in
auditing and accounting.

The consolidated financial statements of Intabex, incorporated by reference
in this Prospectus, at March 31, 1997 and 1996, and for each of the three years
in the period ended March 31, 1997, have been audited by Ernst & Young, LLP,
independent auditors, as set forth in their report thereon, incorporated by
reference herein. Such consolidated financial statements are incorporated herein
by reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.

<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward Looking Statements........................... 2
Available Information................................ 2
Incorporation of Certain Documents by Reference...... 3
Prospectus Summary................................... 4
Risk Factors......................................... 9
Use of Proceeds...................................... 12
Price Range of Common Stock and Dividends............ 12
Selected Consolidated Financial Data................. 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 14
Business............................................. 20
Management........................................... 30
Selling Stockholders................................. 32
Description of Capital Stock......................... 32
Shares Eligible for Future Sale...................... 38
Plan of Distribution................................. 39
Legal Matters........................................ 40
Experts.............................................. 40
</TABLE>

1,800,000 SHARES

DIMON INCORPORATED

[DIMON LOGO]

COMMON STOCK
(NO PAR VALUE)

SALOMON BROTHERS INC
WHEAT FIRST BUTCHER SINGER
PROSPECTUS

DATED SEPTEMBER 25, 1997