<PAGE>
Page 1 of 27
Page 25 - Exhibit Index
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____to_____
Commission file number 0-25734; 1-13684
DIMON INCORPORATED
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1746567
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
512 Bridge Street, Danville, Virginia 24541
(Address of principal executive offices) Zip Code)
Registrant's telephone number, including area code (804) 792-7511
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock November 11, 1997
NO par value 44,457,651
<PAGE>
<TABLE>
<CAPTION>
DIMON INCORPORATED
INDEX
PAGE NO.
--------
<S> <C>
Part I. Financial Information:
Consolidated Balance Sheet - September 30, 1997
and June 30, 1997. . . . . . . . . . . . . . . . . . . . 3-4
Statement of Consolidated Income - Three Months
Ended September 30, 1997 and 1996. . . . . . . . . . . . 5
Statement of Consolidated Cash Flows - Three
Months Ended September 30, 1997 and 1996 . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . 7-20
Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . 21-23
Part II. Other Information. . . . . . . . . . . . . . 23-24
</TABLE>
- -2-
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
September 30
1997 June 30
(Unaudited) 1997
(in thousands) __________ __________
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents. . . . . . . .$ 68,035 $ 107,131
Notes receivable . . . . . . . . . . . . 5,535 6,797
Trade receivables, net of allowances . . 259,140 396,156
Inventories:
Tobacco . . . . . . . . . . . . . . . 876,713 583,579
Other . . . . . . . . . . . . . . . . 16,442 25,282
Advances on purchases of tobacco . . . . 198,038 226,765
Recoverable income taxes . . . . . . . . 1,939 3,051
Prepaid expenses and other assets. . . . 20,851 22,718
----------- ------------
Total current assets . . . . 1,446,693 1,371,479
----------- ------------
Investments and other assets
Equity in net assets of
investee companies . . . . . . . . . . 6,778 9,326
Other investments. . . . . . . . . . . . 10,548 12,293
Notes receivable . . . . . . . . . . . . 9,593 12,738
Other. . . . . . . . . . . . . . . . . . 21,229 15,803
----------- ------------
48,148 50,160
----------- ------------
Intangible assets
Excess of cost over
related net assets of
businesses acquired . . . . . . . . . 187,760 180,435
Production and supply contracts. . . . . 25,479 26,681
Pension asset. . . . . . . . . . . . . . 3,348 3,348
----------- ------------
216,587 210,464
----------- ------------
Property, plant and equipment
Land . . . . . . . . . . . . . . . . . . 30,901 31,082
Buildings. . . . . . . . . . . . . . . . 197,345 196,887
Machinery and equipment. . . . . . . . . 234,498 231,705
Allowances for depreciation. . . . . . . (132,492) (126,922)
----------- ------------
330,252 332,752
----------- ------------
Deferred taxes and other deferred charges. . 22,471 22,748
----------- ------------
$2,064,151 $1,987,603
========== ============
See notes to consolidated financial statements
</TABLE>
- -3-
<PAGE>
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30
1997 June 30
(Unaudited) 1997
(in thousands) __________ __________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to banks . . . . . . . . .$ 352,601 $ 350,263
Accounts payable:
Trade . . . . . . . . . . . . . . . . 80,214 108,283
Officers and employees. . . . . . . . 12,266 13,441
Other . . . . . . . . . . . . . . . . 13,616 22,203
Advances from customers. . . . . . . . . 193,362 69,787
Accrued expenses . . . . . . . . . . . . 62,356 66,141
Income taxes . . . . . . . . . . . . . . 24,748 25,146
Long-term debt current . . . . . . . . . 12,942 16,222
----------- ------------
Total current liabilities 752,105 671,486
----------- ------------
Long-term debt
Revolving Credit Notes and Other . . . . 567,184 577,826
Convertible Subordinated Debentures. . . 123,328 123,328
Senior Notes . . . . . . . . . . . . . . 125,000 125,000
----------- ------------
815,512 826,154
----------- ------------
Deferred credits:
Income taxes . . . . . . . . . . . . . . 30,545 36,630
Compensation and other benefits. . . . . 44,659 44,072
----------- ------------
75,204 80,702
----------- ------------
Minority interest in subsidiaries. . . . . . 849 998
----------- ------------
Commitments and contingencies. . . . . . . . - -
----------- ------------
Stockholders' equity
Preferred Stock--no par value:
Sept.30 Jun. 30
Authorized shares . 10,000 10,000
Issued shares . . . - -. . - -
Common Stock--no par value:
Sept.30 Jun. 30
Authorized shares . 125,000 125,000 .
Issued shares . . . 44,401 44,312 . 180,260 178,939
Retained earnings. . . . . . . . . . . . 243,322 229,521
Equity-currency conversions. . . . . . . (2,234) 670
Additional minimum pension liability . . (867) (867)
----------- ------------
420,481 408,263
----------- ------------
$2,064,151 $1,987,603
=========== ============
</TABLE>
- -4-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED INCOME
Three Months Ended September 30, 1997 and 1996
(Unaudited)
September 30 September 30
(in thousands, except per share amounts) 1997 1996
------------ ------------
<S> <C> <C>
Sales and other operating revenues . . . . . $513,065 $410,734
Cost of goods and services sold. . . . . . . 422,929 345,685
-------- ---------
90,136 65,049
Selling, administrative and
general expenses . . . . . . . . . . . . . 37,068 30,504
-------- ---------
Operating Income . . . . . . . . . . . . . . 53,068 34,545
Interest expense . . . . . . . . . . . . . . 23,005 9,897
-------- ---------
Income before income taxes, minority
interest and equity in net income
(loss) of investee companies . . . . . . 30,063 24,648
Income taxes . . . . . . . . . . . . . . . . 9,921 9,859
-------- ---------
Income before minority interest and
equity in net income (loss) of
investee companies. . . . . . . . . . . 20,142 14,789
Income (loss) applicable to
minority interest. . . . . . . . . . . . . 1 (10)
Equity in net income of investee
companies, net of income taxes . . . . . 310 466
-------- ---------
NET INCOME . . . . . . . . . . . . . . . . . $20,451 $ 15,265
======== =========
Earnings Per Share, primary
Net Income . . . . . . . . . . . . . . . . . $.46 $.36
==== ====
Earnings Per Share, assuming full dilution:
Net Income . . . . . . . . . . . . . . . . . $.44 $.36
==== ====
Average number of shares outstanding:
Primary. . . . . . . . . . . . . . . . . 44,801 42,532
Assuming full dilution . . . . . . . . . 49,117 42,540
Cash dividends per share . . . . . . . . . . $.15 $.135
==== =====
</TABLE>
See notes to consolidated financial statements
- -5-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
Three Months Ended September 30, 1997 and 1996
(Unaudited)
September 30 September 30
(in thousands, except per share amounts) 1997 1996
------------ ------------
<S> <C> <C>
Operating activities
Net Income . . . . . . . . . . . . . . . . $ 20,451 $ 15,265
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization . . . . . 11,780 8,183
Deferred items. . . . . . . . . . . . . (459) 222
Gain on foreign currency transactions . (569) (119)
Gain on disposition of fixed assets . . (718) (551)
Undistributed earnings of investees . . (310) (466)
Income (loss) applicable to
minority interest . . . . . . . . . . 1 (10)
Bad debt expense. . . . . . . . . . . . 270 284
Decrease in accounts receivable . . . . 125,598 65,272
Increase in inventories and advances
on purchases of tobacco . . . . . . . (231,727) (356,871)
Decrease in recoverable taxes . . . . . 1,036 41
Decrease (increase) in prepaid
expenses. . . . . . . . . . . . . . . 1,848 (2,635)
Decrease in accounts payable and
accrued expenses. . . . . . . . . . . (53,193) (2,856)
Increase in advances from customers . . 116,250 104,009
Increase in income taxes. . . . . . . . 46 3,666
Other . . . . . . . . . . . . . . . . . 37 19
-------- ---------
Net cash used by operating
activities. . . . . . . . . . . . . (9,659) (166,547)
-------- ---------
Investing activities
Purchase of property and equipment . . . . (6,681) (6,170)
Proceeds from sale of property
and equipment. . . . . . . . . . . . . . 1,981 804
Payments on notes receivable and
receivable from investees . . . . . . . 1,683 314
Advances for other investments and
other assets . . . . . . . . . . . . . . (2,548) (330)
Purchase of the remaining interest
in an investee . . . . . . . . . . . . . (2,200) -
-------- ---------
Net cash used by
investing activities. . . . . . . . (7,765) (5,382)
-------- ---------
Financing activities
Repayment of debt. . . . . . . . . . . . . (292,477) (52,965)
Proceeds from debt . . . . . . . . . . . . 276,359 261,746
Proceeds from sale of common stock . . . . 1,321 33
Cash dividends paid to
DIMON Incorporated stockholders . . . . (6,650) (5,719)
-------- ---------
Net cash provided (used) by
financing activities. . . . . . . . (21,447) 203,095
-------- ---------
Effect of exchange rate changes on cash. . . (252) (206)
-------- ---------
Increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . (39,123) 30,960
Increase in cash from consolidation
of investee. . . . . . . . . . . . . . . . 27 -
Cash and cash equivalents at
beginning of year. . . . . . . . . . . . . 107,131 53,820
-------- ---------
Cash and cash equivalents at
end of period . . . . . . . . . . . . $ 68,035 $ 84,780
========= =========
</TABLE>
See notes to consolidated financial statements
- -6-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Primary earnings per share are computed by dividing earnings by the
weighted average number of shares outstanding plus any common stock
equivalents during each period. The fully diluted earnings per share
calculation assumes that all of the Convertible Subordinated Debentures
during the periods presented were converted into Common Stock at the
beginning of the reporting period, or as of the date of issue, thereby
increasing the weighted average number of shares considered outstanding
during each period and reducing the after-tax interest expense. The
weighted average number of shares outstanding are further increased by
common stock equivalents on employee stock options.
2. The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included.
3. On April 1, 1995, Dibrell Brothers, Incorporated (Dibrell) and
Monk-Austin, Inc. (Monk-Austin) merged into DIMON. In connection
with the merger, the Company incurred legal, accounting and
financial consultants costs of $8.1 million and commenced various
activities to restructure its worldwide operations. In June, 1995,
the Company provided a restructuring reserve of $17.9 million pre-tax
related primarily to eliminating duplicative facilities of tobacco
operations and a reduction in the number of employees. In 1996 a
restructuring provision of $15.4 million was made primarily for
additional severance costs. During the year ended June 30, 1996,
the Company severed a total of 367 employees most of which were
involuntarily separated. The severed employees were primarily in
the tobacco division and worked in various departments throughout
the Company. During the year ended June 30, 1997, additional
restructuring charges were accrued in the amount of $3.9 million,
of which $2.9 million relates to additional severance costs and
$1 million relates to a reduction of capitalized idle plant expense.
At June 30, 1997, the remaining cash outlays associated with employee
separations are expected to total $7.9 million, of which $3.3 million
will be expended in 1998. Remaining amounts relate primarily to the
pension plan charge and other deferred compensation, which will be
made as required for funding appropriate pension and other payments
in future years. No additional restructuring charges are anticipated.
During the quarter ended September 30, 1997, the Company paid out
$1.2 million, principally for employee separations.
4. On April 1, 1997, DIMON Incorporated acquired all the outstanding
capital stock and other rights of Intabex Holdings Worldwide S.A.
(Intabex), a privately-owned Luxembourg holding company. Separately,
a Zimbabwe company that is a wholly-owned subsidiary of DIMON
acquired certain tobacco assets from an Intabex affiliated company
in Zimbabwe. The purchase price was preliminarily allocated based
on estimated fair values of assets acquired and liabilities assumed
at the date of acquisition. This preliminary allocation resulted in
an excess of purchase price over net assets acquired of $159 million
at June 30, 1997 which has been adjusted to $164 million as of
September 30, 1997, based on current estimates. The excess of
purchase price over net assets acquired is being amortized on a
straight-line basis over 40 years.
- -7-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. In connection with the Intabex acquisition, DIMON issued $123.3
million of 6 1/4% Convertible Subordinated Debentures due on
March 31, 2007 (the "Debentures"). The Debentures are convertible
into approximately 4.29 million shares of the Company's Common
Stock at a conversion price of $28.77 per share at any time prior
to maturity. The Debentures are subordinated in right of payment
to all existing and future senior indebtedness, as defined, of the
Company, and do not have a cross-default provision. The Debentures
are redeemable at the option of the Company under certain
circumstances on or after April 1, 2000. As discussed in Note B
of the June 30, 1997 Form 10-K, Intabex's former shareholders have
agreed to indemnify DIMON against certain liabilities in connection
with the acquisition of Intabex, subject to a maximum of $90 million.
DIMON may set off any such indemnified liabilities against $90
million of the Debentures. The amount of Debentures subject to
set-off declines in stages, also as discussed in Note B of the
June 30, 1997 Form 10-K.
6. On August 29, 1996, the Company received notices from Brazilian tax
authorities of proposed adjustments to income taxes for the calendar
year 1992 based on the Company's recalculation of monetary correction
as allowed under Law 8200. The approximate proposed adjustment claims
additional tax, including penalties and interest, through
June 30, 1997, of $24.1 million, before related tax benefits for all
assessed interest. In 1993, the Company received notices from
Brazilian tax authorities of proposed adjustments to the income tax
returns of the Company's entities located in Brazil for the calendar
years ending 1988 through 1992. The approximate proposed adjustments
claim additional tax, including penalties and interest through
June 30, 1997, of $31.8 million, before related tax benefits for
all assessed interest. In September 1997, the Company prevailed on
several significant issues relating to the assessments, and the
Company does not expect the decisions to be reversed. The Company
believes that it has properly reported its income and paid its taxes
in Brazil in accordance with applicable laws and intends to contest
the remaining proposed adjustments vigorously. The Company expects
that the ultimate resolution of these matters will not have a material
adverse effect on the Company's consolidated balance sheet or results
of operations.
7. The results of operations for the three months ended
September 30, 1997 and 1996 are not necessarily indicative of the
results to be expected for the full year and should not be relied on
as a basis for projecting year end results. The Company's operations
are seasonal and quarterly comparisons are of little value. For
additional information regarding accounting principles and other
financial data, see Notes to Consolidated Financial Statements in the
Annual Report on Form 10-K for the fiscal year ended June 30, 1997.
8. On May 29, 1996, the Company issued $125 million in 8 7/8% Senior
Notes (the "Notes") due 2006. The notes are general unsecured
obligations of the Company and rank equally in right of payment with
all other unsubordinated indebtedness. DIMON International, Inc.
and Florimex Worldwide, Inc.(collectively, the "Guarantors"), wholly
owned subsidiaries of the Company, have fully and unconditionally
guaranteed on a joint and several basis the Company's obligations to
pay principal, premium and interest relative to the Notes. Management
has determined that separate, full financial statements of the
Guarantors would not be material to investors and such financial
statements are not provided. Supplemental combining financial
information of the Guarantors is presented below:
- -8-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
September 30, 1997
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents. . . $ (177) $ 5,452 $ 60,507 $ 2,253 a $ 68,035
Notes receivable . . . . . . . - 343 50,941 (45,749)b 5,535
Trade receivables, net
of allowances . . . . . . . 2,364 84,080 213,731 (41,035)b 259,140
Inventories:
Tobacco. . . . . . . . . . . - 297,522 580,043 (852)b 876,713
Other . . . . . . . . . . . 76 960 15,406 - 16,442
Advances on purchases
of tobacco. . . . . . . . . 297,891 216,979 435,175 (752,007)b 198,038
Recoverable income taxes. . . - - 1,916 23 b 1,939
Prepaid expenses. . . . . . . 1,815 4,507 14,529 - 20,851
------------ ------------ ---------- --------------- ------------
Total current assets . . . 301,969 609,843 1,372,248 (837,367) 1,446,693
------------ ------------ ---------- --------------- ------------
Investments and other assets
Equity in net assets of investee
companies . . . . . . . . . - 2,858 3,920 - 6,778
Consolidated subsidiaries. . . 415,750 440,287 153,761 (1,009,798)b -
Other investments. . . . . . . 1 2,617 7,930 - 10,548
Notes receivable . . . . . . . - 628 8,965 - 9,593
Other. . . . . . . . . . . . . 76,077 3,042 18,048 (75,938)b 21,229
------------ ------------ ---------- --------------- ------------
491,828 449,432 192,624 (1,085,736) 48,148
------------ ------------ ---------- --------------- ------------
Intangible assets
Excess of cost over related
net assets of business
acquired . . . . . . . . . . 157,031 9,921 20,808 - 187,760
Production and supply
contracts. . . . . . . . . . - 19,885 5,594 - 25,479
Pension asset. . . . . . . . . 3,348 - - - 3,348
------------ ------------ ---------- --------------- ------------
160,379 29,806 26,402 - 216,587
------------ ------------ ---------- --------------- ------------
Property, plant and equipment
Land . . . . . . . . . . . . . 1,771 1,770 27,360 - 30,901
Buildings. . . . . . . . . . . 4,309 25,541 167,495 - 197,345
Machinery and equipment. . . . 5,133 61,508 167,857 - 234,498
Allowances for depreciation. . (5,681) (34,537) (92,274) - (132,492)
------------ ------------ ---------- --------------- ------------
5,532 54,282 270,438 - 330,252
------------ ------------ ---------- --------------- ------------
Deferred taxes and
other deferred charges . . . . 22,154 - 317 - 22,471
------------ ------------ ---------- --------------- ------------
Total assets . . . . . . . . . . $981,862 $1,143,363 $1,862,029 ($1,923,103) $2,064,151
============ ============ =========== =============== ============
a. To correct for cash transfers made by DIMON Incorporated to an entity which reports on an earlier period.
b. Inter-company eliminations.
</TABLE>
- -9-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
September 30, 1997
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Notes payable to banks. . . .$ - $ 55,335 $ 362,143 $ (64,877)b $ 352,601
Accounts payable:
Trade . . . . . . . . . . 363 461,312 398,285 (779,746)b 80,214
Officers and employees. . . 5,658 197 6,411 - 12,266
Other . . . . . . . . . . . 2,849 802 9,862 103 b 13,616
Advances from customers . . . (18,000) 143,758 58,654 8,950 b 193,362
Accrued expenses. . . . . . . 5,310 7,355 50,161 (470)b 62,356
Income taxes. . . . . . . . . (6,408)c 4,842 26,314 - 24,748
Long-term debt current. . . . 4,571 - 9,825 (1,454)b 12,942
------------ ------------ ---------- --------------- ----------
Total current liabilities . . . (5,657) 673,601 921,655 (837,494) 752,105
------------ ------------ ---------- --------------- ----------
Long-term debt
Revolving Credit Notes and
Other. . . . . . . . . . . . 282,710 - 284,474 - 567,184
Convertible Subordinated
Debentures . . . . . . . . . 123,328 - - - . 123,328
Senior Notes . . . . . . . . . 125,000 - - - 125,000
------------ ------------ ---------- --------------- ----------
531,038 - 284,474 - 815,512
------------ ------------ ---------- --------------- ----------
Deferred Credits
Income taxes . . . . . . . . . 6,029 (6,572) 31,088 - 30,545
Compensation and other
benefits . . . . . . . . . . 29,971 5,681 9,007 - 44,659
------------ ------------ ---------- --------------- ----------
36,000 (891) 40,095 - 75,204
Minority interest in
subsidiaries . . . . . . . . . - - 378 471 b 849
------------ ------------ ---------- --------------- ----------
Stockholders' equity
Common stock/Paid
in capital. . . . . . . . . 180,260 144,690 353,063 (497,753)b 180,260
Retained earnings . . . . . . 243,322 325,468 264,016 (589,484)b 243,322
Equity-currency
conversions . . . . . . . . (2,234) 495 (1,435) 940 b (2,234)
Unrealized gain on investments. . . - - - - -
Additional minimum
pension liability . . . . . (867) - - - (867)
Treasury stock at cost. . . . - - (217) 217 b -
------------ ------------ ---------- --------------- ----------
420,481 470,653 615,427 (1,086,080)b 420,481
------------ ------------ ---------- --------------- ----------
Total liabilities and equity. . $981,862 $1,143,363 $1,862,029 ($1,923,103) $2,064,151
============ ============ =========== =============== ===========
b. Inter-company eliminations.
c. Current deferred tax on reserves for restructuring and unallocated estimated tax payments.
</TABLE>
- -10-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Three Months Ended September 30, 1997
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Sales and other operating
revenues . . . . . . . . . . . $ 3,240 $223,531 $466,803 ($180,509)a $513,065
Cost of goods and
services sold. . . . . . . . . - 209,931 380,521 (167,523)a 422,929
--------- --------- --------- ------------- ---------
3,240 13,600 86,282 (12,986) 90,136
Selling, administrative and
general expenses . . . . . . . 4,787 10,877 25,202 (3,798)a,b 37,068
--------- --------- --------- ------------- ---------
Operating income (loss). . . . . (1,547) 2,723 61,080 (9,188) 53,068
Interest Expense . . . . . . . . 8,643 4,503 19,047 (9,188)a 23,005
--------- --------- --------- ------------- ---------
Income (loss) before income taxes,
minority interest and equity
in net income of investee
companies. . . . . . . . . . (10,190) (1,780) 42,033 - 30,063
Income taxes (benefit) . . . . . (3,363) (587) 13,871 - 9,921
--------- --------- --------- ------------- ---------
Income (loss) before minority
interest, equity in net income
of investee companies. . . . . (6,827) (1,193) 28,162 - 20,142
Income applicable to
minority interest. . . . . . . - - 1 - 1
Equity in net income (loss)
of investee companies,
net of income taxes. . . . . . - - 310 - 310
Equity in net income of
subsidiaries . . . . . . . . . 27,278 28,471 - (55,749) -
--------- --------- --------- ------------- ---------
NET INCOME . . . . . . . . . . . $20,451 $ 27,278 $ 28,471 ($55,749) $ 20,451
========= ========= ========= ============= =========
a. Inter-company eliminations.
b Royalty expense in SG&A and Royalty income in Other Income for Consolidated Entities.
</TABLE>
- -11-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows
Three Months Ended September 30, 1997
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Operating activities
Net Income . . . . . . . . . $ 20,451 $27,278 $28,471 ($55,749)a $20,451
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization. . . . . . 1,524 3,142 7,114 - 11,780
Deferred items. . . . . . (1,347) (277) 1,165 - (459)
Loss (gain) on foreign
currency transactions . (23) (23) (523) - (569)
Loss (gain) on disposition
of fixed assets . . . . - (83) (635) - (718)
Undistributed earnings
of investees/
subsidiaries. . . . . . (21,522) (27,724) 48,936 - (310)
Income applicable
to minority interest. . - - 1 - 1
Bad debt expense. . . . . - - 270 - 270
Decrease (increase) in
accounts receivable . . 15,217 8,909 240,546 (139,074)a 125,598
Increase in inventories
and advances on
purchases of tobacco. . (54,257) (288,471) (269,770) 380,771 a (231,727)
Decrease in recoverable
taxes . . . . . . . . . - - 1,059 (23)a 1,036
Decrease (increase) in
prepaid expenses. . . . 361 (1,791) 3,278 - 1,848
Increase (decrease) in
accounts payable
and accrued expenses. . 4,038 129,870 112,716 (299,817)a (53,193)
Increase (decrease) in
advances from
customers . . . . . . . 62 122,301 (50,910) 44,797 a 116,250
Increase (decrease) in
income taxes. . . . . . (2,733) (1,302) 4,081 - 46
Other . . . . . . . . . . - - 37 - 37
---------- ----------- ---------- ------------ ---------
Net cash provided
(used) by operating
activities . . . . . . (38,229) (28,171) 125,836 (69,095) (9,659)
---------- ----------- ---------- ------------ ---------
Investing activities
Purchase of property
and equipment . . . . . . (201) (1,932) (4,548) - (6,681)
Proceeds from sale of
property and equipment. . - 507 1,474 - 1,981
Payments on notes receivable
and receivable from
investees . . . . . . . . - 70 1,613 - 1,683
Proceeds from or (advances)
for other investments and
other assets. . . . . . . (5,149) - (58,492) 61,093 a (2,548)
Purchases of minority
interest in investee. . . - - (2,200) - (2,200)
---------- ----------- ---------- ------------ ---------
Net cash provided
(used) by investing
activities . . . . . . (5,350) (1,355) (62,153) 61,093 (7,765)
---------- ----------- ---------- ------------ ---------
a. Inter-company eliminations
</TABLE>
- -12-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows (Continued)
Three Months Ended September 30, 1997
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Financing activities
Repayment of debt . . . . . ($39,581) $ - ($252,896) $ - ($292,477)
Proceeds from debt. . . . . 88,510 17,500 139,578 30,771 a 276,359
Cash dividends paid
to DIMON Incorporated
stockholders. . . . . . . (6,650) - - - (6,650)
Proceeds from sale of
common stock. . . . . . . 1,321 - 10,486 (10,486)a 1,321
---------- ----------- ---------- ------------ ---------
Net cash provided
(used) by financing
activities. . . . . . . 43,600 17,500 (102,832) 20,285 (21,447)
---------- ----------- ---------- ------------ ---------
Effect of exchange rate
changes on cash. . . . . . . - 23 (3,986) 3,711 a (252)
---------- ----------- ---------- ------------ ---------
Increase (decrease) in
cash and cash equivalents. . 21 (12,003) (43,135) 15,994 (39,123)
Cash and cash equivalents
at beginning of year . . . . (198) 17,455 103,615 (13,741)a 107,131
Cash and cash equivalents
from consolidation of
investee . . . . . . . . . . - - 27 - 27
---------- ----------- ---------- ------------ ---------
Cash and cash equivalents
at end of period. . . . ($177) $ 5,452 $ 60,507 $ 2,253 $68,035
========== =========== ========== ============ =========
a. Inter-company eliminations
</TABLE>
- -13-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
June 30, 1997
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents. . . $ (198) $ 17,455 $ 103,615 $ (13,741)a $ 107,131
Notes receivable . . . . . . . - 416 52,130 (45,749)b 6,797
Trade receivables, net
of allowances . . . . . . . 17,559 92,954 465,752 (180,109)b 396,156
Inventories:
Tobacco. . . . . . . . . . . - 44,905 538,783 (109)b 583,579
Other . . . . . . . . . . . 70 1,137 24,075 - 25,282
Advances on purchases of
tobacco . . . . . . . . . . 243,640 180,948 174,156 (371,979)b 226,765
Recoverable income taxes. . . - - 3,051 - 3,051
Prepaid expenses. . . . . . . 2,197 2,715 17,806 - 22,718
------------ ------------ ---------- --------------- ------------
Total current assets . . . 263,268 340,530 1,379,368 (611,687) 1,371,479
------------ ------------ ---------- --------------- ------------
Investments and other assets
Equity in net assets of investee
companies . . . . . . . . . - 2,832 6,494 - 9,326
Consolidated subsidiaries. . . 396,525 411,817 135,356 (943,698)b -
Other investments. . . . . . . 1 2,617 14,682 (5,007)b 12,293
Notes receivable . . . . . . . - 660 12,078 - 12,738
Other 76,077 3,042 12,622 (75,938)b 15,803
------------ ------------ ---------- --------------- ------------
472,603 420,968 181,232 (1,024,643) 50,160
------------ ------------ ---------- --------------- ------------
Intangible assets
Excess of cost over
related net assets
of businesses
acquired . . . . . . . . . 152,870 10,346 17,219 - 180,435
Production and supply
contracts . . . . . . . . - 21,053 5,628 - 26,681
Pension asset. . . . . . . . 3,348 - - - 3,348
------------ ------------ ---------- --------------- ------------
156,218 31,399 22,847 - 210,464
------------ ------------ ---------- --------------- ------------
Property, plant and equipment
Land . . . . . . . . . . . . . 1,771 1,816 27,495 - 31,082
Buildings. . . . . . . . . . . 4,281 25,871 166,735 - 196,887
Machinery and equipment. . . . 4,959 60,109 166,637 - 231,705
Allowances for depreciation. . (5,380) (33,751) (87,791) - (126,922)
------------ ------------ ---------- --------------- ------------
5,631 54,045 273,076 - 332,752
------------ ------------ ---------- --------------- ------------
Deferred taxes and
other deferred charges . . . . 22,295 - 453 - 22,748
------------ ------------ ---------- --------------- ------------
Total assets . . . . . . . . . .$920,015 $846,942 $1,856,976 ($1,636,330) $1,987,603
============ ============ ========== =============== ============
a. To adjust for cash transfers made by DIMON Incorporated to an entity which reports on an earlier period.
b. Inter-company eliminations.
</TABLE>
- -14-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Balance Sheet
June 30, 1997
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Notes payable to banks. . . . $ - $ 37,835 $409,530 $ (97,102)b $ 350,263
Accounts payable:
Trade . . . . . . . . . . 238 333,028 255,852 (480,835)b 108,283
Officers and employees. . . 4,760 989 7,692 - 13,441
Other . . . . . . . . . . . 2,963 133 18,568 539 b 22,203
Advances from customers . . . (18,063) 21,456 102,241 (35,847)b 69,787
Accrued expenses. . . . . . . 2,181 5,344 58,616 - 66,141
Income taxes. . . . . . . . . (4,282)c 5,397 24,031 - 25,146
Long-term debt current. . . . 4,581 - 11,641 - 16,222
-------------- ------------ ---------- -------------- ------------
Total current liabilities. . (7,622) 404,182 888,171 (613,245) 671,486
-------------- ------------ ---------- -------------- ------------
Long-term debt
Revolving Credit Notes
and Other . . . . . . . . . . 233,772 - 344,054 - 577,826
Convertible Subordinated
Debentures. . . . . . . . . . 123,328 - - - 123,328
Senior Notes. . . . . . . . . . 125,000 - - - 125,000
-------------- ------------ ---------- -------------- ------------
482,100 - 344,054 - 826,154
-------------- ------------ ---------- -------------- ------------
Deferred Credits
Income taxes . . . . . . . . . 6,624 (6,572) 36,578 - 36,630
Compensation and other
benefits . . . . . . . . . . 30,650 5,957 7,465 - 44,072
-------------- ------------ ---------- -------------- ------------
37,274 (615) 44,043 - 80,702
Minority interest
in subsidiaries. . . . . . . . - - 527 471 b 998
-------------- ------------ ---------- -------------- ------------
Stockholders' equity
Common stock/Paid-in-
capital . . . . . . . . . . 178,939 144,690 342,577 (487,267)b 178,939
Retained earnings . . . . . . 229,521 298,190 235,545 (533,735)b 229,521
Equity-currency conversions . 670 495 2,276 (2,771)b 670
Additional minimum pension
liability . . . . . . . . . (867) - - - (867)
Treasury stock. . . . . . . . - - (217) 217 b -
-------------- ------------ ---------- -------------- ------------
408,263 443,375 580,181 (1,023,556) 408,263
-------------- ------------ ---------- -------------- ------------
Total liabilities and
equity. . . . . . . . . . $ 920,015 $846,942 $1,856,976 ($1,636,330) $1,987,603
============== ============ ========== ============= ============
b. Inter-company eliminations.
c. Current deferred tax on reserves for restructuring and unallocated estimated tax payments.
</TABLE>
- -15-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Income
Three Months Ended September 30, 1996
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Sales and other operating
revenues. . . . . . . . . . . $ 3,385 $220,086 $264,133 ($76,870)a,b $410,734
Cost of goods and services
sold. . . . . . . . . . . . . 47 203,745 210,835 (68,942)a 345,685
---------- --------- ---------- ------------- ---------
3,338 16,341 53,298 (7,928) 65,049
Selling, administrative and
general expenses. . . . . . . 3,250 12,968 17,121 (2,835)a,b 30,504
---------- --------- ---------- ------------- ---------
Operating income . . . . . . . 88 3,373 36,177 (5,093) 34,545
Interest Expense . . . . . . . 3,972 3,862 7,156 (5,093)a 9,897
---------- --------- ---------- ------------- ---------
Income (loss) before
income taxes, minority
interest and equity in
net income of investee
companies. . . . . . . . . . (3,884) (489) 29,021 - 24,648
Income taxes (benefit) . . . . (1,553) (196) 11,608 - 9,859
---------- --------- ---------- ------------- ---------
Income (loss) before
minority interest, equity
in net income of investee
companies. . . . . . . . . . (2,331) (293) 17,413 - 14,789
Loss applicable to minority
interest . . . . . . . . . . - - (10) - (10)
Equity in net income of
investee companies, net
of income taxes. . . . . . . - 80 386 - 466
Equity in net income
of subsidiaries. . . . . . . 17,596 17,809 - (35,405)a -
---------- --------- ---------- ------------- ---------
NET INCOME . . . . . . . . . . $15,265 $17,596 $ 17,809 ($35,405) $ 15,265
========== ========= ========== ============= =========
a. Inter-company eliminations.
b Royalty expense in SG&A and Royalty income in Other Income for Consolidated Entities.
</TABLE>
- -16-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows
Three Months Ended September 30, 1996
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Operating activities
Net Income . . . . . . . . . $15,265 $17,596 $17,809 ($35,405)a $15,265
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization . . . . . . 645 2,905 4,633 - 8,183
Deferred items. . . . . . (153) (236) 611 - 222
Gain on foreign currency
transactions. . . . . . - (26) (93) - (119)
Loss (gain) on disposition
of fixed assets . . . . 44 (115) (480) - (551)
Undistributed earnings of
investees/
subsidiaries . . . . . (17,596) (17,889) (386) 35,405 a (466)
Loss applicable to
minority interest . . . - - (10) - (10)
Bad debt expense. . . . . - - 284 - 284
Decrease (increase) in
accounts receivable . . (4,988) 111,310 (363) (40,687)a 65,272
Increase in inventories
and advances on
purchases of tobacco. . (114,568) (386,609) (49,639) 193,945 a (356,871)
Decrease in recoverable
taxes . . . . . . . . . - - 41 - 41
Decrease (increase) in
prepaid expenses. . . . 815 (3,259) (191) - (2,635)
Increase (decrease) in
accounts payable
and accrued expenses. . 623 163,109 (41,758) (124,830)a (2,856)
Increase (decrease) in
advances from
customers . . . . . . . (3,345) 114,600 21,371 (28,617)a 104,009
Increase (decrease) in
income taxes. . . . . . (2,181) 204 5,643 - 3,666
Other . . . . . . . . . . - 1 18 - 19
---------- ----------- ---------- ------------ ---------
Net cash provided
(used) by operating
activities . . . . . . (125,439) 1,591 (42,510) (189) (166,547)
---------- ----------- ---------- ------------ ---------
Investing activities
Purchase of property
and equipment . . . . . . (96) (2,208) (3,866) - (6,170)
Proceeds from sale of
property and equipment. . 4 132 668 - 804
Payments on notes receivable and
receivable from investees. . . . - 127 20 167 a 314
Proceeds from or (advances)
for other investments and
other assets . . . . . . . - (500) 170 - (330)
---------- ----------- ---------- ------------ ---------
Net cash provided
(used) by investing
activities. . . . . . . (92) (2,449) (3,008) 167 (5,382)
---------- ----------- ---------- ------------ ---------
a. Inter-company eliminations
</TABLE>
- -17-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
Supplemental Combining Statement of Cash Flows (Continued)
Three Months Ended September 30, 1996
(Unaudited)
(in thousands) DIMON
Incorporated Guarantors Non-Guarantors Eliminations Total
------------ ---------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Financing activities
Repayment of debt . . . . . $ (6,286) $ (286) ($46,393) $ - ($52,965)
Proceeds from debt. . . . . 136,091 - 125,711 (56)a 261,746
Cash dividends paid to
DIMON Incorporated
stockholders. . . . . . . (5,719) - - - (5,719)
Proceeds from sale of
common stock. . . . . . . 33 - - - 33
---------- ----------- ---------- ------------ ---------
Net cash provided (used)
by financing activities. . 124,119 (286) 79,318 (56) 203,095
---------- ----------- ---------- ------------ ----------
Effect of exchange rate
changes on cash. . . . . . . - - (206) - (206)
---------- ----------- ---------- ------------ ----------
Increase (decrease) in
cash and cash equivalents. . (1,412) (1,144) 33,594 (78)a 30,960
Cash and cash equivalents
at beginning of year . . . . 723 6,894 46,120 83 a 53,820
---------- ----------- ---------- ------------ ----------
Cash and cash equivalents
at end of period . . . . . $ (689) $ 5,750 $79,714 $ 5 $84,780
========== =========== ========== ============= ==========
a. Inter-company eliminations
</TABLE>
- -18-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. a. Each of the Guarantors, the Company's wholly-owned subsidiaries,
DIMON International, Inc. and Florimex Worldwide Inc., have fully
and unconditionally guaranteed on a joint and several basis the
performance and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all of the Company's
obligations under the Notes and the related indenture, including
its obligations to pay principal, premium, if any, and interest
with respect to the Notes. The obligations of each Guarantor are
limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such Guarantor and
after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations
of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under the Indenture, can be guaranteed
by the relevant Guarantor without resulting in the obligations of
such Guarantor under its Guarantee constituting a fraudulent
conveyance or fraudulent transfer under applicable federal or
state law. Each of the Guarantees are a guarantee of payment and
not collection. Each Guarantor that makes a payment or distribution
under a Guarantee shall be entitled to a contribution from each
other Guarantor in an amount pro rata, based on the assets less
liabilities of each Guarantor determined in accordance with
generally accepted accounting principles (GAAP). The Company is
not restricted from selling or otherwise disposing of any of the
Guarantors other than DIMON International, Inc. provided that the
proceeds of any such sale are applied as required by the Indenture.
Florimex Worldwide, Inc. is the primary holding and operating
company in the U.S. and represents the lead company for the
flowers segment. The cut flowers operations consist of buying
flowers from sources throughout the world and transporting them,
normally by air, to operating units for resale to wholesalers
and retailers.
DIMON International, Inc. is the primary holding and operating
company in the U.S. and represents the lead company in the
Tobacco division whose operations consist primarily of selecting,
buying, processing, packing, shipping, storage and financing
tobacco.
b. DIMON Incorporated and each of the Guarantors has accounted for
their respective subsidiaries on the equity basis.
c. Certain reclassifications were made to conform all of the
financial information to the financial presentation on a
consolidated basis. The principal eliminating entries eliminate
investments in subsidiaries and intercompany balances.
d. Included in the above balance sheets are certain related party
balances among borrower, the guarantors and non-guarantors.
Due to the Company's world-wide operations, related party
activity is included in most balance sheet accounts. The tables
below set forth the significant intercompany balances for each
of the periods presented.
- -20-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
DEBIT(CREDIT)
DIMON Non-
Incorporated Guarantors Guarantors
------------ ---------- ----------
<S> <C> <C> <C>
Accounts Receivable. . . . . . . $ 2,328 $ 7,380 $ 62,267
Advances on Purchases. . . . . . 297,891 185,532 352,627
Accounts Payable . . . . . . . . (251) (439,589) (344,947)
Advances from Customers. . . . . 18,000 - (12,478)
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
DEBIT(CREDIT)
DIMON Non-
Incorporated Guarantors Guarantors
------------ ---------- ----------
<S> <C> <C> <C>
Accounts Receivable. . . . . . . $ 14,493 $ 11,439 $ 170,529
Advances on Purchases. . . . . . 243,640 174,860 55,019
Accounts Payable . . . . . . . . (61) (321,440) (158,995)
Advances from Customers. . . . . 18,063 (32) (60,944)
</TABLE>
- -20-
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(in thousands)
Three Months Ended September 30, 1997 Compared to Three Months Ended
September 30, 1996:
The Company's sales and other operating revenues increased $102,331
(24.9%) for the three months ended September 30, 1997 from the same
period in 1996. Tobacco sales increased $111,343 (34.0%) primarily
due to increased quantities of U.S. and foreign grown tobacco, an
increase due to the Intabex business, offset partially by decreased
average prices of foreign grown tobacco. Increases in quantities
and processing fees of U.S. tobaccos sold was $24,129. Increased
quantities of foreign tobacco accounted for $144,844 partially offset
by decreased average prices of $57,630. Foreign tobacco sales
increased primarily in Europe and Asia and in the Cigar Leaf business,
where Intabex traditionally had a significant market share. Flower
sales decreased $9,012 due primarily to the effect of applying U.S.
dollar exchange rates.
Cost of sales and expenses for the period ended September 30, 1997,
were $459,997, an increase of 22.3% from $376,189 for the three months
ended September 30, 1996. Cost of sales and expenses of the tobacco
operations increased $92,385 to $382,203 primarily due to higher sales
of tobacco in the period. Gross profit for the tobacco operations
increased $26,032 (45.8%) for the three months ended September 30, 1997
over the corresponding period in 1996 primarily due to increased sales
and gross margins on tobacco from Europe, Asia and North America. The
gross margin percentage for the tobacco operations increased from 17.3%
to 18.9%.
Cost of sales and expenses for the Company's flower segment decreased
$9,129 (11.0%) to $73,992 for the three month period ended
September 30, 1997 from the corresponding period in 1996 due primarily
to the effect of applying U.S. dollar exchange rates. The gross
margin for flower operations decreased $994 (11.6%) and gross margin
percentage for the flower operations decreased from 9.9% to 9.8% due to
decreased margins in the operations of Europe.
Corporate expenses increased $552 to $3,802 in 1997 from $3,250 in 1996
due to increased legal and professional expenses.
Interest expense increased $13,108 for the quarter ended
September 30, 1997 primarily due to higher average borrowings,
partially offset by lower average rates.
The effective income tax rate decreased from 40% in fiscal year 1997
to 33% in fiscal year 1998 primarily as a result of a broader source
of lower-taxed income derived from the Intabex acquisition.
Equity in net income of the tobacco investee companies decreased $156
from the same period last year. The decrease is due to consolidating
the operations in Greece in 1997, partially offset by increases in the
Intabex operations in Malawi and Columbia.
- -21-
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
FINANCIAL CONDITION:
The purchasing and processing activities of the Company's tobacco
business are seasonal. The Company's need for capital fluctuates
accordingly and, at any of several seasonal peaks, the Company's
outstanding indebtedness may be significantly greater or lesser than
at year end. The Company historically has needed capital in excess
of cash flow from operations to finance inventory and accounts
receivable and, more recently, to finance acquisitions of foreign
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.
DIMON's working capital decreased from $699,993 at June 30, 1997 to
$694,588 at September 30, 1997. The current ratio of 2.0 to 1 at
June 30, 1997 decreased to 1.9 to 1 at September 30, 1997. At
September 30, 1997, current assets increased $75,214 (5.5%) and
current liabilities increased $80,619 (12%) from June 30, 1997.
Current assets increased primarily due to an increase in tobacco
inventories of $293,134, reflecting the seasonal increase in the
tobacco operations, partially offset by decreases in trade receivables
of $137,016, cash of $39,096 and advances on purchases of tobacco of
$28,727. Current liabilities increased primarily due to increases in
Advances from customers of $123,575, partially offset by a decrease
in accounts payable trade of $28,069.
Cash flows used in operating activities decreased $156,888 (94.2%) to
$9,659 for the three months ended September 30, 1997 over the same
period last year, due primarily to a decrease in inventories and
advances on purchases of tobacco. Cash flows used in investing
activities increased $2,383 (44.3%) due to an increase in investments
and other assets and the purchase of the remaining interest in an
investee, partially offset with decreases in payments on notes
receivable and receivable from investee and proceeds from sale
of property and equipment. Cash flows provided by financing
activities decreased $224,542 (110.6%) due primarily to repayment
of debt.
At September 30, 1997, DIMON had seasonally adjusted lines of credit
of $1,419 million, excluding the long-term credit agreements. These
lines bear interest at rates ranging from 4.75% to 11.6%. At
September 30, 1997, unused lines of credit amounted to $519 million,
net of $77 million of letters of credit and guarantees that reduce
lines of credit. Total maximum outstanding borrowings during the
three months ended September 30, 1997 were $625 million.
To ensure long-term liquidity, DIMON entered into a $500 million
New Credit Facility, effective June 27, 1997, with 20 banks which
replaced DIMON's $240 million existing credit facility. The Company
had $30,000 of borrowings under these agreements at September 30, 1997.
The Company uses the New Credit Facility to classify $470,000 of
working capital loans to Revolving Credit Notes at September 30, 1997.
It is the Company's intent to finance at least $500,000 on a long-term
basis. The New Credit Facility is subject to certain commitment fees
and covenants that, among other things, require DIMON to maintain
minimum working capital and tangible net worth amounts, require
specific liquidity and long-term solvency ratios and restrict
acquisitions. The New Credit Facility's initial term expires on
June 27, 2000, and subject to approval by the lenders, may be extended.
The rates of interest are based upon the type of loan requested
by the Company. During the life of the agreement, the interest
rate could be the prime rate or the LIBOR rate adjusted. The primary
advance rate is the agent bank's base lending rate (8.50% at
September 30, 1997). The Company pays a commitment fee of 1/4% per
annum on any unused portion of the facility. Decisions relative to
repayments and reborrowings are made based on circumstances then
existing, including management's judgment as to the most effective
utilization of funds.
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
September 30, 1997, the Company had no material capital expenditure
commitments. The Company believes that these sources of funds are
sufficient to fund the Company's purchasing and capital needs for
fiscal 1998.
- -22-
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
OTHER INFORMATION:
The Company is evaluating the strategic fit of its flower operations
with DIMON's long-term growth plans and is considering several
alternatives regarding the optimization of this division's contribution
to shareholder value.
Factors that may affect future results
The foregoing discussion may contain forward-looking statements,
generally identified by phrases such as "the Company expects" or words
of similar effect. Certain important factors that in some cases have
affected, and in the future could affect, the Company's actual results
and could cause the Company's actual results for 1998 and beyond to
differ materially from those expressed in any forward-looking statements
made by the Company are discussed in the Company's Annual Report on
Form 10-K for the year ended June 30, 1997, under the caption
"Managements' Discussion and Analysis of Financial Condition and
Results of Operations - Factors that May Affect Future Results."
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 11 - Computation of Earnings Per Common Share
27 - Financial Data Schedule
(b) Reports on Form 8-K - None
- -23-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its
behalf by the undersigned thereunto duly authorized.
DIMON INCORPORATED
/s/ Jerry L. Parker
___________________________
Date November 14, 1997 Jerry L. Parker
Senior Vice President - Controller
(Principal Accounting Officer)
- -24-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------------------
Exhibit Page No.
- -------- --------
<S> <C>
11 Computation of Earnings Per Common Share. . . . . . 26
27 Financial Data Schedule . . . . . . . . . . . . . . 27
</TABLE>
- -25-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
DIMON INCORPORATED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
September 30 September 30
1997 1996
(in thousands, except per share amounts) _________ _________
<S> <C> <C>
Primary
Earnings
Net Income . . . . . . . . . . . . . $20,451 $15,265
======= =======
Shares
Weighted average number of common
shares outstanding . . . . . . . . 44,338 42,367
Shares applicable to stock options,
net of shares assumed to be
purchased from proceeds at
average market price . . . . . . . 463 165
________ ________
Average Number of Shares
Outstanding. . . . . . . . . . . . 44,801 42,532
======== ========
Earnings per Share
Net Income . . . . . . . . . . . . . $.46 $.36
=== ====
Assuming Full Dilution
Earnings
Net income. . . . . . . . . . . . . . . $20,451 $15,265
Add after tax interest expense
applicable to 6 1/4% Convertible
Debentures issued April 1, 1997. . 1,175 -
________ ________
Net income as adjusted . . . . . . . $21,626 $15,265
======== ========
Shares
Weighted average number of common
shares outstanding . . . . . . . . 44,338 42,367
Shares applicable to stock options,
net of shares assumed to be
purchased from proceeds at the
greater of average market price
or ending market price . . . . . . 492 173
Assuming conversion of 6 1/4%
Convertible Debentures at the
beginning of each period . . . . . 4,287 -
_________ ________
Average Number of Shares
Outstanding. . . . . . . . . . . . 49,117 42,540
========= ========
Earnings Per Share
Net Income as Adjusted . . . . . . . $.44 $.36
==== ====
- -26-
</TABLE>
<TABLE> <S> <C>
<PAGE>
<CAPTION>
EXHIBIT 27
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 68,035
<SECURITIES> 0
<RECEIVABLES> 259,140
<ALLOWANCES> 9,027
<INVENTORY> 893,155
<CURRENT-ASSETS> 1,446,693
<PP&E> 462,744
<DEPRECIATION> (132,492)
<TOTAL-ASSETS> 2,064,151
<CURRENT-LIABILITIES> 752,105
<BONDS> 815,512
<COMMON> 180,260
0
0
<OTHER-SE> 240,221
<TOTAL-LIABILITY-AND-EQUITY> 2,064,151
<SALES> 513,065
<TOTAL-REVENUES> 513,065
<CGS> 422,929
<TOTAL-COSTS> 422,929
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 270
<INTEREST-EXPENSE> 23,005
<INCOME-PRETAX> 30,063
<INCOME-TAX> 9,921
<INCOME-CONTINUING> 20,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,451
<EPS-PRIMARY> .46
<EPS-DILUTED> .44
<PAGE>
</TABLE>
