Page 1 of 27
Page 16 - 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 March 31, 1998
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 May 4, 1998
- --------------------- ---------------
NO par value 44,525,004
<PAGE>
<TABLE>
<CAPTION>
DIMON INCORPORATED
INDEX
PAGE NO.
---------
<C>
Part I. Financial Information:
<S>
Consolidated Balance Sheet - March 31, 1998
and June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 - 4
Statement of Consolidated Income - Three Months and Nine Months
Ended March 31, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of Consolidated Cash Flows - Nine
Months Ended March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 - 9
Management's Discussion and Analysis
of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 - 13
Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 - 15
</TABLE>
- -2-
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
March 31
1998 June 30
(Unaudited) 1997
(in thousands) ____________ __________
<S>
ASSETS <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 36,132 $ 107,131
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . 6,874 6,797
Trade receivables, net of allowances. . . . . . . . . . . . . . 392,237 396,156
Inventories:
Tobacco. . . . . . . . . . . . . . . . . . . . . . . . . . . 649,101 583,579
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,791 25,282
Advances on purchases of tobacco. . . . . . . . . . . . . . . . 206,691 226,765
Recoverable income taxes. . . . . . . . . . . . . . . . . . . . 5,988 3,051
Prepaid expenses and other assets . . . . . . . . . . . . . . . 21,648 22,718
---------------- ----------------
Total current assets. . . . . . . . . . . . . . . . 1,346,462 1,371,479
---------------- ----------------
Investments and other assets
Equity in net assets of investee companies. . . . . . . . . . . 6,029 9,326
Other investments . . . . . . . . . . . . . . . . . . . . . . . 11,125 12,293
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . 10,240 12,738
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,032 15,803
---------------- ----------------
41,426 50,160
---------------- ----------------
Intangible assets
Excess of cost over related net assets of
businesses acquired. . . . . . . . . . . . . . . . . . . . . 196,686 180,435
Production and supply contracts . . . . . . . . . . . . . . . . 30,316 26,681
Pension asset . . . . . . . . . . . . . . . . . . . . . . . . . 3,348 3,348
---------------- ----------------
230,350 210,464
---------------- ----------------
Property, plant and equipment
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,307 31,082
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,928 196,887
Machinery and equipment . . . . . . . . . . . . . . . . . . . . 240,221 231,705
Allowances for depreciation . . . . . . . . . . . . . . . . . . (140,145) (126,922)
---------------- ----------------
326,311 332,752
---------------- ----------------
Deferred taxes and other deferred charges . . . . . . . . . . . . . 22,126 22,748
---------------- ----------------
$1,966,675 $1,987,603
============ ================
See notes to consolidated financial statements
</TABLE>
- -3-
<PAGE>
<TABLE>
DIMON Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
March 31
1998 June 30
(Unaudited) 1997
(in thousands) ____________ __________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to banks. . . . . . . . . . . . . . . . . . . . . $ 342,169 $ 350,263
Accounts payable:
Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,766 108,283
Officers and employees . . . . . . . . . . . . . . . . . . . 11,329 13,441
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,562 22,203
Advances from customers . . . . . . . . . . . . . . . . . . . . 77,538 69,787
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 54,740 66,141
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 22,895 25,146
Long-term debt current. . . . . . . . . . . . . . . . . . . . . 10,118 16,222
------------------- ------------------
Total current liabilities 660,117 671,486
------------------- ------------------
Long-term debt
Revolving Credit Notes and Other. . . . . . . . . . . . . . . . 562,503 577,826
Convertible Subordinated Debentures . . . . . . . . . . . . . . 123,328 123,328
Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 125,000 125,000
------------------- ------------------
810,831 826,154
------------------- ------------------
Deferred credits:
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 25,047 36,630
Compensation and other benefits . . . . . . . . . . . . . . . . 42,093 44,072
------------------ ------------------
67,140 80,702
------------------- ------------------
Minority interest in subsidiaries . . . . . . . . . . . . . . . . . 895 998
------------------- ------------------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . - -
------------------- ------------------
Stockholders' equity
Preferred Stock--no par value:
Mar. 31 Jun. 30
------- -------
Authorized shares. . . 10,000 10,000
Issued shares. . . . . - - . . . . . . . - -
Common Stock--no par value:
Mar. 31 Jun. 30
------- -------
Authorized shares. . . 125,000 125,000. . . . . . . .
Issued shares. . . . . 44,525 44,312. . . . . . . . 182,144 178,939
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 249,587 229,521
Equity-currency conversions . . . . . . . . . . . . . . . . . . (3,172) 670
Additional minimum pension liability. . . . . . . . . . . . . . (867) (867)
------------------- ------------------
427,692 408,263
------------------- ------------------
$1,966,675 $1,987,603
=================== ==================
</TABLE>
- -4-
<PAGE>
<TABLE>
<CAPTION>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED INCOME
Three Months and Nine Months Ended March 31, 1998 and 1997
(Unaudited)
1998 1997 1998 1997
Third Third First Nine First Nine
(in thousands, except per share amounts) Quarter Quarter Months Months
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sales and other operating revenues. . . . . . . . . . . . $ 744,582 $668,146 $1,946,104 $1,850,221
Cost of goods and services sold . . . . . . . . . . . . . 671,121 598,652 1,714,056 1,645,054
------------ ------------ ----------- ------------
73,461 69,494 232,048 205,167
Selling, administrative and general expenses. . . . . . . . 38,449 28,659 111,026 91,207
------------ ------------ ----------- ------------
Operating Income. . . . . . . . . . . . . . . . . . . . . . 35,012 40,835 121,022 113,960
Interest expense. . . . . . . . . . . . . . . . . . . . . . 20,243 9,065 64,661 30,614
------------ ------------ ----------- ------------
Income before income taxes, minority
interest and equity in net income
(loss) of investee companies . . . . . . . . . . . . . . 14,769 31,770 56,361 83,346
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 3,863 12,665 14,822 32,780
------------ ------------ ----------- ------------
Income before minority interest and
equity in net income (loss) of
investee companies . . . . . . . . . . . . . . . . . . . 10,906 19,105 41,539 50,566
Income applicable to minority interest. . . . . . . . . . . 33 63 80 114
Equity in net income (loss) of investee
companies, net of income taxes . . . . . . . . . . . . . (231) (225) 573 691
------------ ------------ ----------- ------------
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . $ 10,642 $ 18,817 $ 42,032 $ 51,143
============ ============ =========== ============
Basic Earnings Per Share
Net Income . . . . . . . . . . . . . . . . . . . . . . . $.24 $.44 $.95 $1.21
===== ===== ======
Diluted Earnings Per Share
Net Income . . . . . . . . . . . . . . . . . . . . . . . .24 $.44 $.93 $1.20
== ===== ===== ======
Average number of shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . 44,525 42,433 44,456 42,390
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . 48,994 42,897 49,114 42,688
Cash dividends per share. . . . . . . . . . . . . . . . . . $.17 $.15 $.49 $.435
=== ==== ===== ======
See notes to consolidated financial statements
</TABLE>
- -5-
<PAGE>
<TABLE>
DIMON Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
Nine Months Ended March 31, 1998 and 1997
(Unaudited)
March 31 March 31
1998 1997
(in thousands) ____________ __________
<S> <C> <C>
Operating activities
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,032 $ 51,143
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . 35,604 24,462
Deferred items . . . . . . . . . . . . . . . . . . . . . . . . (12,560) (2,504)
Loss on foreign currency transactions. . . . . . . . . . . . . (757) 22
Gain on disposition of fixed assets. . . . . . . . . . . . . . (2,133) (2,925)
Undistributed earnings of investees. . . . . . . . . . . . . . (573) (691)
Income applicable to minority interest . . . . . . . . . . . . 80 113
Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . 950 808
Increase in accounts receivable. . . . . . . . . . . . . . . . (6,339) (28,292)
Increase in inventories and
advances on purchases of tobacco . . . . . . . . . . . . . . (23,793) (32,600)
Increase in recoverable taxes. . . . . . . . . . . . . . . . . (2,995) (933)
Decrease (increase) in prepaid expenses. . . . . . . . . . . . 1,927 (4,995)
Decrease in accounts payable
and accrued expenses . . . . . . . . . . . . . . . . . . . . (22,237) (10,594)
Increase (decrease) in advances from customers . . . . . . . . 6,149 (40,551)
Increase (decrease) in income taxes. . . . . . . . . . . . . . (2,333) 17,565
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 37
____________ __________
Net cash provided (used) by operating activities . . . . . . 13,637 (29,935)
____________ __________
Investing activities
Purchase of property and equipment. . . . . . . . . . . . . . . . (27,949) (21,082)
Proceeds from sale of property and equipment. . . . . . . . . . . 16,964 7,429
Payments received on notes receivable
and receivable from investees. . . . . . . . . . . . . . . . . 8,353 1,357
Advances for notes receivable . . . . . . . . . . . . . . . . . . (6,535) (4,106)
Proceeds (advances) for other investments
and other assets . . . . . . . . . . . . . . . . . . . . . . . (2,195) 2,165
Prepaid purchase cost - Intabex . . . . . . . . . . . . . . . . . - (14,939)
Purchase of subsidiary. . . . . . . . . . . . . . . . . . . . . . (14,590) -
Purchase of remaining interest in investee. . . . . . . . . . . . (2,200) -
____________ __________
Net cash used by investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . (28,152) (29,176)
____________ __________
Financing activities
Net change in short-term borrowings . . . . . . . . . . . . . . . (15,680) 58,555
Proceeds from long-term borrowings . . . . . . . . . . . . . . . 24 8,911
Repayment of long-term borrowings . . . . . . . . . . . . . . . . (20,722) (9,644)
Proceeds from sale of common stock. . . . . . . . . . . . . . . . 3,204 1,804
Cash dividends paid to DIMON Incorporated
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . (21,785) (18,435)
____________ __________
Net cash provided (used) by financing activities. . . . . . . . . (54,959) 41,191
____________ __________
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . (1,552) (325)
____________ __________
Decrease in cash and cash equivalents . . . . . . . . . . . . . . . . (71,026) (18,245)
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 . . . . . . . . . $ 36,132 $ 35,575
============ ==========
See notes to consolidated financial statements
</TABLE>
- -6-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basic earnings per share is computed by dividing earnings
by the weighted average number of shares outstanding
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.
The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share" (FAS 128), and
has reflected changes required for all periods presented
in the accompanying unaudited consolidated financial
statements. The following information reconciles the
basic weighted average number of shares outstanding to
diluted shares outstanding and diluted earnings per
share:
<TABLE>
<CAPTION>
1998 1997 1998 1997
Third Third First Nine FirstNine
(in thousands, except per share amounts) Quarter Quarter Months Months
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Basic Earnings Per Share
------------------------
Net Income. . . . . . . . . . . . . . . . . . $10,642 $18,817 $42,032 $51,143
Shares
------
Weighted Average
Shares Outstanding. . . . . . . . . . . . . . 44,525 42,433 44,456 42,390
Basic Earnings Per Share
------------------------
Net Income. . . . . . . . . . . . . . . . . . $.24 $.44 $.95 $1.21
Diluted Earnings Per Share
--------------------------
Net Income. . . . . . . . . . . . . . . . . . $10,642 $18,817 $42,032 $51,143
Add after tax interest expense
applicable to 6 1/4%
Convertible Debentures
issued April 1, 1997. . . . . . . . . . . . 1,175 - 3,526 -
Adjusted Net Income . . . . . . . . . . . . . $11,817 $18,817 $45,558 $51,143
Shares
------
Weighted average number of
common shares outstanding . . . . . . . . . 44,525 42,433 44,456 42,390
Shares applicable to stock options,
net of shares assumed to be
purchased from proceeds at
ending market price . . . . . . . . . . . . 182 464 371 298
Assuming conversion of 6 1/4%
Convertible Debentures
at beginning of period. . . . . . . . . . . 4,287 - 4,287 -
Weighted Average Diluted Shares
Outstanding . . . . . . . . . . . . . . . . 48,994 42,897 49,114 42,688
Diluted Earnings Per Share
--------------------------
Net Income as Adjusted. . . . . . . . . . . . $.24 $.44 $.93 $1.20
</TABLE>
- -7-
<PAGE>
DIMON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Due to the provisions of FAS 128, previously reported
shares changed insignificantly; however, previously
reported earnings per share for the nine-month period
increased $.01 per share on the diluted computation.
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 nine months ended March 31, 1998, the
Company paid out $2.6 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 $169 million as of March 31,
1998, based on current estimates. The excess of
purchase price over net assets acquired is being
amortized on a straight-line basis over 40 years.
- -8-
<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. 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 and nine
months ended March 31, 1998 and 1997 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. Certain prior period amounts have been reclassified
to conform to the current period presentation.
- -9-
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS:
(in thousands)
Three Months Ended March 31, 1998 Compared to Three Months
Ended March 31, 1997:
Net sales and other operating revenues were $744,582, an
increase of $76,436 or 11.4%, for the three months ended
March 31, 1998, from $668,146 for the same period in 1997.
The increase in tobacco sales revenues of $66,350, or
11.8%, was primarily due to increased quantities of foreign
grown tobacco and increases from new origins of foreign
grown tobacco from Intabex entities, partially offset by
decreased average prices of foreign grown tobacco and
decreased quantities of U.S. grown tobacco. Volumes of
foreign tobacco sold during the quarter increased by
approximately 88% while volumes of U.S. tobacco sold during
the quarter declined approximately 18%. Average prices
decreased due primarily to decreases in prices of tobacco
purchased and product mix. The increases are primarily due
to increased quantities of foreign tobacco and new origins
from Intabex entities which accounted for approximately
$150,000 and $17,000 of the increase, respectively, offset
partially by decreased quantities of U.S. grown tobacco and
decreased average prices of foreign grown tobacco which
accounted for approximately $69,000 and $38,000,
respectively, of the decrease. The foreign grown increased
quantities were primarily in South America, Africa and
Europe; the sales price decreases were primarily in South
America. The significant decline in U.S. tobacco sales
volumes reflect a curtailment of leaf purchases by certain
of the Company's key U.S. domestic customers in
anticipation of either a settlement of tobacco litigation
and potential higher excise taxes on cigarettes sold in the
U.S. The Company was also negatively impacted by devaluing
currencies in certain Asian countries that caused some
customers to delay or cancel shipments of tobacco. The
Company believes that the risks of further delays in
shipments and the realization of lower average prices could
continue in future periods. Sales in the flower division
increased $10,086, or 9.4%, due primarily to the
acquisition of Sierafor B.V., offset partially by the
continuing strength of the U.S. dollar versus European
currencies which negatively impacted sales by approximately
$11,000.
Cost of sales and expenses for the period ended March 31,
1998, were $709,570, an increase of $82,259, or 13.1% from
$627,311 for the three months ended March 31, 1997. Cost
of sales and expenses of the tobacco operations increased
$70,494 or 13.5%, primarily due to increased sales, start-
up costs in Tanzania of $10 million and by increased
selling, general and administrative expense in connection
with the Intabex acquisition including approximately $1,016
of amortization costs. The gross profit for the tobacco
operations increased by $3,858, or 6.7%, due primarily to
increased sales of foreign grown tobacco from South
America, Asia and the Dark tobacco operations from Intabex.
The gross margin percentage decreased from 10.2% to 9.8%.
Cost of sales and expenses for the Company's flower segment
increased $9,459, or 9.2%, primarily due to the acquisition
of Sierafor. The gross margin for the flowers operations
increased $109, primarily due to Sierafor and increased
gross margins in Baardse, partially offset by decreased
gross margins in Germany. Corporate expenses increased
$2,306 due to increased personnel costs related primarily
to a credit in 1997 due to the expiration of unexercised
stock appreciation rights.
Interest expense increased $11,178 for the quarter ended
March 31, 1998, from the same period last year primarily
due to higher average borrowings.
The effective income tax rate decreased from 39.9% in
fiscal year 1997 to 26.2% in fiscal year 1998. The
reduction in the rate for the quarter is primarily due to a
combination of changes in the overall blend of taxable
income and reductions of tax rates from changes in the laws
of the various countries in which the Company operates.
Equity in net loss of the tobacco investee companies
increased $6 in fiscal year 1998 from the same period last
year. The increase is primarily due to investee entities
of Intabex, offset partially due to consolidating
operations in North America and Greece that were investees
with losses in fiscal year 1997.
- -10-
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
(in thousands)
Nine Months Ended March 31, 1998 Compared to Nine Months
Ended March 31, 1997:
Net sales and other operating revenues were $1,946,104, an
increase of $95,883, or 5.2%, for the nine months ended
March 31, 1998, from $1,850,221 for the same period in
1997. The tobacco sales increased $105,488, or 6.8%, due
primarily to increased quantities of foreign grown
tobaccos, new origins from Intabex entities and increased
U.S. and foreign processing services which accounted for
approximately $272,000, $70,000 and $21,000, respectively.
This increase was partially offset by a decrease in
quantities of U.S. grown tobacco and decreased average
prices of foreign grown tobacco which accounted for
$154,000 and $109,000, respectively. The increased
quantities were primarily from South America, Africa and
Europe. Volumes of foreign grown tobacco sold during the
nine-month period increased by more than 53% while volumes
of U.S. grown tobacco sold decreased by more than 17%. The
decreased average prices were due to decreases in prices of
purchased tobacco and product mix on sales from Brazil and
Africa. The decreased quantities of U.S. grown tobacco is
due primarily to decreased orders from domestic cigarette
manufacturers because of uncertainties surrounding
settlement of tobacco litigation and potential higher
excise taxes on cigarettes sold in the U.S. The Company
also was negatively impacted by devaluing currencies in
certain Asian countries that caused some customers to delay
or cancel shipments of tobacco. The Company believes that
the risks of further delays in shipments and the
realization of lower average prices could continue in
future periods. The decrease in flower sales of $9,605, or
3.2%, was due primarily to an approximate $35,600 decrease
due to the effect of applying U.S. dollar exchange rates,
partially offset by increased sales of Baardse and
Sierafor.
Cost of sales and expenses, for the period ended March 31,
1998, were $1,825,082, an increase of $88,821, or 5.1%,
from $1,736,261, from the same period in 1997. Cost of
sales and expenses of the tobacco operations increased
$95,281, or 6.6%, primarily due to increased sales, start-
up costs in Tanzania of $10 million and expenses related to
Intabex including approximately $2,966 of amortization
costs. The gross profit from the tobacco operations
increased $29,604, or 17.1%, primarily due to the increases
in Europe, the Dark tobacco operations of Intabex, Asia and
South America. The gross margin percentage for tobacco
operations increased from 11.2% to 12.2%. Cost of sales
and expenses for the flower operations decreased $9,249, or
3.2%, primarily due to decreased sales and decreased
personnel costs, offset partially for the acquisition of
Sierafor. The gross margin for the flower operations
decreased $2,723, or 8.6%, and the gross margin percentage
for the flower operation decreased from 10.7% to 10.1%,
both due primarily to the economic conditions in Germany,
offset partially by increased gross margins in Baardse and
the acquisition of Sierafor. Corporate expenses increased
$2,789, or 31.9%, due primarily to increased personnel
costs.
Interest expense increased $34,047 for the nine months
ended March 31, 1998, from the same period last year
primarily due to higher average borrowings, partially
offset by lower average rates.
The effective tax rate decreased from 39.3% in fiscal year
1997 to 26.3% in fiscal year 1998. The reduction in the
rate is primarily due to a combination of changes in the
overall blend of taxable income and reductions of tax rates
from changes in the laws of the various countries in which
the Company operates.
Equity in net income of the tobacco investee companies
decreased $118 fiscal year 1998 from the same period last
year. The decrease is primarily due to consolidating
operations in North America and Greece that were investees
with profits in fiscal year 1997, partially offset by
investee entities of Intabex.
- -11-
<PAGE>
Item 2. 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.
Reflecting the seasonal increase in the tobacco operations,
DIMON's working capital decreased from $699,993 at June 30,
1997 to $686,345 at March 31, 1998. The current ratio of
2.0 to 1 at June 30, 1997 remained at 2.0 to 1 at March 31,
1998. At March 31, 1998, current assets decreased $25,017,
or 1.8%, and current liabilities decreased $11,369, or
1.7%, from June 30, 1997. Current assets decreased
primarily due to decreases in cash and advances of $70,999
and $20,074, respectively, offset partially by the increase
in tobacco inventories of $65,522. Current liabilities
decreased primarily due to decreases in accrued expenses,
accounts payable trade and notes payable to banks of
$11,401, $8,517 and $8,094, respectively, offset partially
by the increase in accounts payable other of $19,359.
Although total working capital has remained approximately
the same as June 30, 1997, planned shipments of tobacco
inventory continue to be delayed and shipments to customers
in east Asia that have been postponed to the next fiscal
year have contributed to working capital being
approximately $232 million more at March 31, 1998 than at
March 31, 1997 and more than the Company had previously
planned. This higher than expected working capital asset
level, together with the additional borrowings outstanding
as a result of the Intabex acquisition, has negatively
impacted net income due to the additional interest expense
for the three-month and nine-month periods. Interest
expense for the three months and nine months ended March
31, 1998 totaled $20,243 and $64,661, respectively. These
amounts were approximately 123.3% and 111.2% over interest
expense for the comparable 1997 periods.
At March 31, 1998, DIMON had seasonally adjusted lines of
credit of $1,436 million, excluding the long-term credit
agreements. These lines bear interest at annual rates
ranging from 5.63% to 11.04%. At March 31, 1998, unused
lines of credit amounted to $640 million, net of $92
million of letters of credit and guarantees that reduce
lines of credit. Total maximum outstanding borrowings
excluding the long-term credit agreements during the nine
months ended March 31, 1998 were $652 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 $140 million of
borrowings under these agreements at March 31, 1998. The
Company uses the New Credit Facility to classify $360
million of working capital loans to Revolving Credit Notes
at March 31, 1998. It is the Company's intent to finance
at least $500 million 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 March 31, 1998). 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. The Company believes that these
sources of funds combined with the Senior Notes are
sufficient to fund the Company's purchasing and capital
needs for fiscal 1998.
- -12-
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
Cash flows provided in operating activities increased
$43,572 from ($29,935) to $13,637 for the nine months ended
March 31, 1998 over the same period last year, due
primarily to increases in advances from customers and
accounts receivable, offset by a decrease in income taxes.
Cash flows used in investing activities decreased $1,024
primarily due to decreased prepaid purchase cost-Intabex
and proceeds from the sale of property and equipment,
offset partially by an increase in purchase of subsidiary.
Cash flows provided by financing activities decreased
$96,150 primarily due to net repayment of borrowings.
OTHER INFORMATION:
Although the Company believes that there continue to be
certain positive fundamentals in the tobacco business on a
global basis, the Company does not expect the current
currency crisis in east Asia and the related effect on
purchasing power of Asian customers to improve in the near
term. The Company also believes that the heightened
prospect of increased retail prices and thus lower expected
consumption of cigarettes in the U.S. continues to impact
the purchasing decisions, relating to both U.S. and foreign
leaf tobacco, of certain of the Company's primary U.S.
based customers. In addition, lower production volumes due
to weather patterns in the Brazilian market are expected to
mitigate the Company's opportunity for continued growth in
export volumes from that country. The Company believes
that the risks of further delays in shipments and the
realization of lower average prices could continue in
future periods.
In view of these uncertainties, the Company believes that
it is not likely that there will be robust growth in sales
and operating profit for the remainder of the fiscal year
and the next fiscal year. Additionally, the Company
continues to gauge the changing environment and demand for
its products and will continue to implement responsive
programs seeking to moderate the effects on future periods.
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 above under "OTHER INFORMATION" and 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."
- -13-
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Effective March 31, 1998, DIMON International, Inc. And
Florimex Worldwide, Inc., wholly-owned subsidiaries of the
Company, were merged with and into the Company. The
mergers were permitted under the Indenture, dated May 29,
1996, governing the Company's 8 7/8% Senior Notes due 2006
(the "Notes") and had the effect of eliminating the
guarantees of the Notes made by these subsidiaries.
Effective with its financial statements for the quarter
ended March 31, 1998, the Company has discontinued
providing separate financial information with respect to
these subsidiaries in the notes to its financial
statements.
Item 6. Exhibits and Reports on Form 8-K
( a ) Exhibits 10 - Amendment No. 1 dated May 6, 1998 to the
$500,000,000 Credit Agreement dated as of
June 27, 1997
( b ) Exhibits 27 - Financial Data Schedule
( c ) Reports on Form 8-K - None
- -14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to
be signed on its behalf by the undersigned thereunto duly
authorized.
DIMON INCORPORATED
/s/Jerry L. Parker
Date: May 15, 1998 ----------------------------------
Jerry L. Parker
Senior Vice President - Controller
(Principal Accounting Officer)
- -15-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------------------
Page
Exhibit No.
- ------- ------
<S> <C>
10 Amendment No. 1 dated May 6, 1998 to the
$500,000,000 Credit Agreement dated as of
June 27, 1997 amoung the Company, the
lenders named therein, NationsBank, N.A. as
administrative agent, First Union National Bank,
as documentation agent and Cooperatieve
Centrale Raiffaisen-Boerenleenbank B.A.,
"Rabobank Nederland," New York Branch and
Societe Generale as co-agents. . . . . . . . . . . . 17 - 26
27 Financial Data Schedule. . . . . . . . . . . . . . . 27
</TABLE>
- -16-
<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of May 6, 1998
(the "Amendment"), is by and among DIMON INCORPORATED, a Virginia
corporation (the "Borrower"), the several lenders identified on the
signature pages hereto (the "Lenders"), NATIONSBANK, N.A., as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), FIRST UNION NATIONAL BANK ("FUNB"), as
documentation agent for the Lenders (in such capacity, the "Documentation
Agent"), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND," NEW YORK BRANCH ("Rabobank") and SOCIETE
GENERALE ("SocGen"), as co-agents for the Lenders (in such capacity,
the "Co-Agents").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of June 27, 1997
(the "Credit Agreement") among the Borrower, the Lenders, the
Administrative Agent, the Documentation Agent and the Co-Agents, the
Lenders have extended commitments to make certain credit facilities
available to the Borrower;
WHEREAS, the parties hereto have agreed to enter into this
Amendment in order to effect certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless other-wise defined
herein or the context otherwise requires, the following terms used in
this Amendment, including its preamble and recitals, have the following
meanings:
"Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Amendment,
including its preamble and recitals, have the meanings provided in the
Credit Agreement (as amended hereby).
- -17-
<PAGE>
PART II
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment
Effective Date, the Credit Agreement is hereby amended in accordance
with this Part II.
SUBPART 2.1. Amendments to Section 6.2. Section 6.2 of the Credit
Agreement is hereby amended in its entirety to read as follows:
Section 6.1 Minimum Consolidated Tangible Net Worth.
Maintain Consolidated Tangible Net Worth, calculated on the last
day of each fiscal quarter of not less than the "Minimum Compliance
Level." As of the Closing Date, the "Minimum Compliance Level" shall
be $165,000,000. Beginning on the date on which the Administrative Agent
first receives the officer's certificate to be furnished by the Borrower
pursuant to Section 7.1(c) of this Agreement, the "Minimum Compliance
Level" shall be the greater of (a) $165,000,000 or (b) Consolidated
Tangible Net Worth as of June 30, 1997 less $15,000,000 (or, at any
determination date occurring on or after June 30, 1998, $25,000,000,
provided that the Borrower owns the floral business of Florimex as of
such date). The Minimum Compliance Level shall be adjusted upward (a)
upon the conversion of any Subordinated Debt Securities into stock
of the Borrower, by an amount equal to the aggregate principal amount
of Subordinated Debt Securities so converted and (b) as of the last day
of each fiscal year, from and including the fiscal year ending June 30,
1998, by an amount equal to 55% of Consolidated Net Income (inclusive of
extraordinary gains and without reduction for extraordinary losses) for
such fiscal year. The foregoing increases in the Minimum Compliance
Level shall be cumulative, and no reduction shall be made on account
of any Consolidated Net Income of less than zero for any fiscal year.
SUBPART 2.2. Amendments to Section 6.3. Section 6.3 of the Credit
Agreement is hereby amended in its entirety to read as follows:
Section 6.3 Consolidated Fixed Charge Coverage Ratio.
Maintain a Consolidated Fixed Charge Coverage Ratio, calculated
on the last day of each fiscal quarter ending on the dates set forth
below, of not less than the ratio set forth opposite such date:
- -18-
<PAGE>
Fiscal Quarter End Ratio
------------------ --------
September 30, 1997 0.80:1.0
December 31, 1997 1.10:1.0
March 31, 1998
through
December 31, 1998 0.90:1.0
March 31, 1999 1.10:1.0
June 30, 1999 and
each fiscal quarter
end occurring
thereafter 1.25:1.0
SUBPART 2.3. Amendments to Section 6.4. Section 6.4 of the Credit
Agreement is hereby amended in its entirety to read as follows:
Section 6.4 Consolidated Leverage Ratio.
----------------------------
Maintain a Consolidated Leverage Ratio, calculated on the last
day of each fiscal quarter ending on the dates set forth below, of not
more than the ratio set forth opposite such date:
Fiscal Quarter End Ratio
------------------ -----
June 30, 1997 and
September 30, 1997 0.775:1.0
December 31, 1997
through
December 31, 1998 0.750:1.0
March 31, 1999 0.725:1.0
June 30, 1999 0.700:1.0
September 30, 1999 0.675:1.0
December 31, 1999
and each fiscal
quarter end
occurring thereafter 0.650:1.0
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment Effective Date. This Amendment shall be
and become effective as of the date hereof (the "Amendment Effective
Date") when all of the conditions set forth in this Subpart 3.1 shall
have been satisfied.
SUBPART 3.1.1. Execution of Counterparts of Amendment.
The Administrative Agent shall have received counterparts of this
Amendment, which collectively shall have been duly executed on behalf
of the Borrower and the Required Lenders.
- -19-
<PAGE>
SUBPART 3.1.2. Amendment Fee. The Borrower shall pay to
each Lender which executes this Amendment an amendment fee equal to
five basis points (5bps) on such Lender's Commitment .
SUBPART 3.1.4. Other Documents. The Administrative Agent
shall have received such other documentation as the Administrative Agent
may reasonably request in connection with the foregoing, all in form
reasonably satisfactory to the Administrative Agent.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendment to
any Part or Subpart are, unless otherwise specified, to such Part or
Subpart of this Amendment.
SUBPART 4.2. Instrument Pursuant to Credit Agreement. This
Amendment is a Credit Document executed pursuant to the Credit Agreement
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of
the Credit Agreement.
SUBPART 4.3. References in Other Credit Documents. At such time
as this Amendment shall become effective pursuant to the terms of
Subpart 3.1, all references in the Credit Documents to the "Credit
Agreement" shall be deemed to refer to the Credit Agreement as amended
by this Amendment.
SUBPART 4.4. Survival. Except as expressly modified and amended
in this Amendment, all of the terms and provisions and conditions of
each of the Credit Documents shall remain unchanged.
SUBPART 4.5. Counterparts. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but one
and the same agreement.
SUBPART 4.6. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH
OF VIRGINIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
SUBPART 4.7. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.8. Acknowledgement of Mergers of Certain Subsidiaries.
The Lenders hereby acknowledge that Florimex Worldwide, Inc. and DIMON
International, Inc. have been merged into the Borrower.
- -20-
<PAGE>
Each of the parties hereto has caused a counterpart of this Amendment
to be duly executed and delivered as of the date first above written.
BORROWER:
DIMON INCORPORATED
/s/ James A. Cooley
By____________________________
Senior Vice President and Treasurer
Title_________________________
/s/ B. Lynne Finney
By____________________________
Assistant Treasurer
Title_________________________
[Signatures Continued]
- -21-
<PAGE>
LENDERS:
NATIONSBANK, N.A., as a Lender and
in its capacity as Administrative Agent
/s/ Berthan C. Austin
By________________________________
Name: Berthan C. Austin
Title: Vice President
FIRST UNION NATIONAL BANK, as a Lender
and in its capacity as Documentation Agent
/s/ William C. Moses
By________________________________
Name: William C. Moses
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND," NEW YORK BRANCH, as a
Lender and in its capacity as Co-Agent
/s/ Robert B. Benoit
By________________________________
Name: Robert B. Benoit
Title: Senior Vice President
/s/ M. Christina Debler
By________________________________
Name: M. Christina Debler
Title: Vice President
SOCIETE GENERALE, as a Lender and
in its capacity as Co-Agent
/s/ Ralph Saheb
By________________________________
Name: Ralph Saheb
Title: Vice President, Manager
[Signatures Continued]
- -22-
<PAGE>
BANK OF AMERICA NT & SA
/s/ Thomas Barnett
By________________________________
Name: Thomas Barnett
Title: Managing Director
CRESTAR BANK
/s/ C. Gray Key
By________________________________
Name: C. Gray Key
Title: Vice President
WACHOVIA BANK, N.A.
/s/ Keith Sherman
By________________________________
Name: Keith Sherman
Title: Senior Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
/s/ J. A. Don
By________________________________
Name: J. A. Don
Title: Vice President & Manager
[Signatures Continued]
- -23-
<PAGE>
ABN AMRO BANK N.V. NEW YORK BRANCH
/s/ Richard D. West
By________________________________
Name: Richard D. West
Title: Group Vice President
/s/ Christopher M. Plumb
By________________________________
Name: Christopher M. Plumb
Title: Vice President
THE BANK OF NOVA SCOTIA
/s/ J. W. Campbell
By________________________________
Name: J. W. Campbell
Title: Unit Head
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
/s/ John C. Kissinger
By________________________________
Name: John C. Kissinger
Title: Joint General Manager
BAYERISCHE VEREINSBANK AG,
NEW YORK BRANCH
/s/ William Schwarze
By________________________________
Name: William Schwarze
Title: Vice President
/s/ Donald Asadorian
By________________________________
Name: Donald Asadorian
Title: Vice President
[Signatures Continued]
- -24-
<PAGE>
NATEXIS BANQUE DU COMMERCE EXTERIEUR
(fka Banque Francaise Du Commerce
Exterieur)
/s/ Stephen Jendras
By________________________________
Name: Stephen Jendras
Title: Vice President
CORESTATES BANK, N.A.
/s/ John D. Brady
By________________________________
Name: John D. Brady
Title: Vice President
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
/s/ Luca Sacchi
By________________________________
Name: Luca Sacchi
Title: Vice President
/s/ Carlo Persico
By________________________________
Name: Carlo Persico
Title: Directing General Manager
STANDARD CHARTERED BANK
/s/ Francois P. Dorival-Bordes
By________________________________
Name: Francois P. Dorival-Bordes
Title: Vice President
/s/ Kristina McDavid
By________________________________
Name: Kristina McDavid
Title: Vice President
[Signatures Continued]
- -25-
<PAGE>
BANCA MONTE DEI PASCHI DI SIENA S.P.A.
/s/ S. M. Sondak
By________________________________
Name: S. M. Sondak
Title: F. V. P. & Dep. General Manager
/s/ Brian R. Lander
By________________________________
Name: Brian R. Lander
Title: Vice President
CREDIT LYONNAIS ATLANTA AGENCY
/s/ David M. Cawrse
By________________________________
Name: David M. Cawrse
Title: First Vice President & Manager
THE SANWA BANK, LIMITED, ATLANTA AGENCY
/s/
By________________________________
Name:
Title:
- -26-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 36,132
<SECURITIES> 0
<RECEIVABLES> 392,237
<ALLOWANCES> 10,305
<INVENTORY> 676,892
<CURRENT-ASSETS> 1,346,462
<PP&E> 466,456
<DEPRECIATION> (140,145)
<TOTAL-ASSETS> 1,966,675
<CURRENT-LIABILITIES> 660,117
<BONDS> 810,831
<COMMON> 182,144
0
0
<OTHER-SE> 245,548
<TOTAL-LIABILITY-AND-EQUITY> 1,966,675
<SALES> 1,946,104
<TOTAL-REVENUES> 1,946,104
<CGS> 1,714,056
<TOTAL-COSTS> 1,714,056
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 950
<INTEREST-EXPENSE> 64,661
<INCOME-PRETAX> 56,361
<INCOME-TAX> 14,822
<INCOME-CONTINUING> 42,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,032
<EPS-PRIMARY> 95
<EPS-DILUTED> 93
</TABLE>
