SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K/A2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 23, 1998
(April 1, 1997)
DIMON Incorporated
(Exact name of registrant as specified in charter)
Virginia 1-13684 54-1746567
(State or other jurisdiction (Commission File No.) I.R.S. Employer
of incorporation) (Identification No.)
512 Bridge Street
Danville, Virginia 24543
(Address of principal executive offices)
(804) 792-7511
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report.)
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DIMON Incorporated ("DIMON") is amending its Form 8-K
filed April 16, 1997, as amended by Amendment No. 1 ("Amendment
No. 1") filed June 16, 1997, to provide additional information
concerning the historical and pro forma financial statements
included in Amendment No. 1 relating to its acquisition of
Intabex Holding Worldwide, S.A. ("Intabex").
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
DIMON acquired Intabex, and certain assets of Tabex (Private)
Limited, an affiliate of Intabex, on April 1, 1997, for an initial
purchase price of $264.19 million, consisting of 1.7 million shares
of DIMON common stock, $140 million in ten year, 6.25% subordinated
convertible debentures, convertible at $28.77 a share (the
"Convertible Debentures"), and $86.12 million in cash, as reported
on Form 8-K filed April 16, 1997.
DIMON previously has announced the continuing adverse
effects on the Company of (1) major tobacco customers curtailing
their global purchasing programs due to domestic uncertainties
stemming from the legal and legislative issues facing the United
States tobacco industry, and (2) the Asian economic crisis, both
of which are occurring during a period of large tobacco crops and
excess inventory on the world markets. Notwithstanding these
market conditions, DIMON has successfully integrated all of the
regional and functional operations of Intabex into DIMON's
worldwide operations following the acquisition, thus realizing
the strategic value of Intabex's sources of supply and customer
base. The consolidated financial statements of DIMON for the
quarter ended June 30, 1997, and for the fiscal year ended June
30, 1998, reflect the operating results of the former Intabex
operations as integrated into DIMON.
The purchase agreements for DIMON's acquisition of Intabex
and the Tabex assets provided several purchase price adjustment
mechanisms relating to the pre-acquisition financial statements
of Intabex and the representations, warranties and covenants of
Intabex negotiated by DIMON as part of the acquisition. The
Intabex stock purchase agreement provided for a post-closing
adjustment in the purchase price based upon the net worth of
Intabex as of March 31, 1997, as determined by audited financial
statements of Intabex that were prepared in accordance with
certain requirements of the stock purchase agreement. In August
1997, the Intabex purchase price was adjusted pursuant to this
mechanism and reduced by $18.6 million to $245.6 million. The
adjustment was effected by the return of $16.7 million principal
amount of Convertible Debentures plus certain interest payments
that had been made thereon, and $1.9 million in cash. The
adjustment was reflected in the Company's Form 10-Q for the
quarter ended September 30, 1997. At the time of the post-
closing settlement, one of the former Intabex shareholders,
Folium, Inc., also agreed to guarantee the sales price by
DIMON of certain tobacco inventory that had been acquired as
part of the Intabex acquisition. That guarantee resulted in a
further payment to DIMON by Folium, Inc. of $7.3 million in
April 1998. Folium, Inc. is controlled by a British Virgin
Islands trust of which A.C.B. Taberer is a potential beneficiary.
Mr. Taberer is a director of and consultant to DIMON and the
former Chairman of Intabex.
In addition to the post-closing audit and purchase price
adjustment and the inventory payments, the former Intabex
shareholders also agreed to indemnify DIMON, up to $90 million,
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for misrepresentations or breaches in Intabexs representations,
warranties or covenants, including representations and warranties
as to the financial statements filed as part of Amendment No. 1.
Convertible Debentures in the principal amount of $90 million
(the "Set-Off Debentures") were segregated at the time of the
acquisition to secure any claims by DIMON for indemnification.
DIMON is entitled, subject to the fulfillment of certain
conditions, to set-off against the Set-Off Debentures any such
claims. The amount of the Set-Off Debentures declines from $90
million in stages, with $15 million principal amount of Set-Off
Debentures continuing to be subject to set-off after October 1,
1998, through July 31, 1999, and $10 million continuing to be
subject to set-off from August 1, 1999 through April 1, 2000.
However, the Set-Off Debentures are not released to the extent
that claims are outstanding as of any of those dates. A DIMON
subsidiary in Zimbabwe is entitled to similar indemnification and
set-off rights in connection with the Zimbabwe tobacco assets
purchased from Tabex, subject to a maximum indemnification and
set-off of $12 million. Except for certain claims relating
primarily to prior period taxes, claims for purchase price
adjustment or indemnity under the stock purchase agreement
generally must be asserted by DIMON by September 30, 1998.
To allow adequate opportunity for discovery of possible
adjustments, DIMON required that the claims mechanisms under the
purchase agreements operate at least through September 30, 1998,
the anticipated completion of DIMON's second full audit cycle
after the acquisition. In connection with the completion of its
analysis of post-closing adjustments, DIMON has asserted claims
for indemnification for the full amount of the Set-Off Debentures.
The claims reflect DIMON's rights for purchase price adjustment or
indemnification under the stock purchase agreement arising out
of, among other matters, inaccuracies or misrepresentations as to
the carrying values of certain assets or income recorded in the
Intabex financial statements for periods prior to the date of
acquisition that were delivered pursuant to the stock purchase
agreement and included in Amendment No. 1, or the understatement
or omission of certain liabilities or expenses recorded in such
financial statements. The acquisition was accounted for using
the purchase method of accounting. As a result, the Intabex
financial statements for periods prior to April 1, 1997, are
not included in the Consolidated Financial Statements of DIMON.
Any recovery pursuant to these claims or upon settlement
with the former Intabex shareholders will be earnings accretive
to DIMON. Any recovery will be applied first against $8.1
million in accounts receivable DIMON has established in its June
30, 1998, financial statements with respect to certain of these
claims. Any balance will be recorded as an adjustment to the
Intabex purchase price and a reduction in the carrying value of
acquired assets, including goodwill, reflected on DIMON's
consolidated balance sheet as of June 30, 1998. A corresponding
reduction in DIMON's interest expense and in the number of shares
used in calculating fully diluted earnings per share would result
from any reduction in principal amount of Set-Off Debentures.
Interest is payable on the Convertible Debentures quarterly,
with the next payment, in the amount of $1.9 million, due on
September 30, 1998. The stock purchase agreement provides that,
absent an agreement among the parties, DIMON must obtain a court
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order before setting off its claims under the stock purchase
agreement against the Set-Off Debentures. DIMON has been advised
by counsel representing one of the former Intabex shareholders
that the former shareholders have acknowledged responsibility for
$4.8 million of the $8.1 million in claims reflected as
receivables in the June 30, 1998 consolidated financial
statements of DIMON, but have not agreed as to the accrual of
interest and specific allocation of indemnity responsibility
among them as to such claims. As to the balance of DIMON's
claims, the former shareholders have advised DIMON that they do
not have sufficient information currently to examine the claims.
While DIMON intends to pursue further the settlement of
these claims, in view of the amount of the claims, the settlement
procedures provided in the stock purchase agreement, and the
significant interest payment due on the Convertible Debentures on
September 30, 1998, DIMON filed suit in the United States
District Court of the Southern District of New York against the
former Intabex shareholders, Mr. Taberer and certain members of
Mr. Taberer's family on September 22, 1998, seeking a court order
with respect to DIMON's claim for set-off against the Set-Off
Debentures, confirmation of DIMON's contractual remedies under
the stock purchase agreement, and related damages as a result of
the former Intabex shareholders' non-compliance with the stock
purchase agreement and the misstatements and omissions with
respect to the acquisition of Intabex. The total of the claims
covered by the lawsuit is $110 million.
During the pendency of the litigation, Mr. Taberer will not
participate in the deliberations of DIMON's Board of Directors
with respect to the pending dispute or any other related matters.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
September 23, 1998 DIMON INCORPORATED
By: /s/ Jerry L. Parker
_______________________________
Name: Jerry L. Parker
Title: Senior Vice President -
Controller
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