| |
|
Page
1 of 19
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|
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, 2002
|
| |
|
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
|
| |
|
![[f09300210q001.gif]](f09300210q001.gif)
|
|
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 (434) 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
5, 2002
|
|
NO
par value
|
44,724,504
|
| |
Item
1.
Item
2.
Item
3.
Item
4.
Item
1.
Item
6.
| |
| |
| |
|
![[f09300210q002.gif]](f09300210q002.gif)
|
| |
| |
|
DIMON
Incorporated and Subsidiaries
|
| |
| |
|
INDEX
|
| |
| |
| |
Page
No.
|
|
Part
I.
|
Financial
Information
|
|
| |
|
| |
Item
1.
|
Financial
Statements
|
|
| |
|
| |
Consolidated
Balance Sheet - September 30, 2002 and
|
|
| |
June
30, 2002......…………………………………………………………………
|
3
- 4
|
| |
|
| |
Statement
of Consolidated Income – Three Months
|
|
| |
Ended
September 30, 2002 and 2001.........……………........................……
|
5
|
| |
|
| |
Statement
of Consolidated Cash Flows – Three
|
|
| |
Months
Ended September 30, 2002 and 2001.........................……………
|
6
|
| |
|
| |
Notes
to Consolidated Financial Statements………………….……………
|
7
- 11
|
| |
|
|
| |
Item
2.
|
Management's
Discussion and Analysis
|
|
| |
|
of
Financial Condition and Results of Operations……………………
|
12
- 14
|
| |
|
|
|
| |
Item
3.
|
Quantitative
and Qualitative Disclosures
|
|
| |
|
about
Market Risk……………………………………………………
|
14
- 15
|
| |
|
|
|
| |
Item
4.
|
Controls
and Procedures……………………………………………..
|
15
|
| |
|
|
Part
II.
|
Other
Information
|
|
| |
|
|
| |
Item
1.
|
Legal
Proceedings……………………………………………………
|
15
|
| |
|
|
|
| |
Item
6.
|
Exhibits
and Reports on Form 8-K………………………………….
|
16
|
| |
|
-2-
|
| |
| |
|
Part
I. Financial Information
Item 1. Financial Statements
|
| |
| |
|
DIMON
Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
|
| |
| |
|
September
30
2002
(Unaudited)
|
|
June
30
2002
|
|
|
(in
thousands)
|
|
______________________________________
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash
and cash equivalents…...........................................………….
|
$
88,092
|
|
$
108,991
|
|
|
Notes
receivable…......................................................……………..
|
6,183
|
|
4,400
|
|
|
Trade
receivables, net of allowances
|
125,980
|
|
173,576
|
|
|
Inventories:
|
|
|
|
|
|
Tobacco…..............................................................………………
|
528,552
|
|
391,112
|
|
|
Other….................................................................……………….
|
15,889
|
|
19,215
|
|
|
Advances
on purchases of tobacco…................................………...
|
45,962
|
|
67,769
|
|
|
Current
deferred and recoverable income taxes….................……..
|
9,856
|
|
9,736
|
|
|
Prepaid
expenses and other assets….................................………..
|
17,664
|
|
17,239
|
|
| |
____________________________________
|
|
|
Total
current assets…..........................................………………
|
838,178
|
|
792,038
|
|
| |
____________________________________
|
|
| |
|
|
|
Investments
and other assets
|
|
|
|
|
|
Equity
in net assets of investee companies….......................………
|
784
|
|
1,072
|
|
|
Other
investments…....................................................…………….
|
3,199
|
|
1,941
|
|
|
Notes
receivable…......................................................…………….
|
2,887
|
|
5,354
|
|
|
Other…....................................................................……………….
|
23,017
|
|
24,566
|
|
| |
____________________________________
|
|
| |
29,887
|
|
32,933
|
|
| |
____________________________________
|
|
| |
|
|
|
Intangible
assets
|
|
|
|
|
|
Goodwill…...................................…………………………………
|
151,772
|
|
151,772
|
|
|
Production
and supply contracts…...................................…………
|
3,882
|
|
3,938
|
|
|
Pension
asset…..........................................................……………...
|
1,664
|
|
1,664
|
|
| |
____________________________________
|
|
| |
157,318
|
|
157,374
|
|
| |
____________________________________
|
|
|
Property,
plant and equipment
|
|
|
|
|
|
Land…....................................................................………………..
|
18,713
|
|
18,676
|
|
|
Buildings…...............................................................………………
|
179,380
|
|
178,987
|
|
|
Machinery
and equipment…...........................................………….
|
206,274
|
|
210,769
|
|
|
Allowances
for depreciation…........................................………….
|
(151,326)
|
|
(151,148)
|
|
| |
____________________________________
|
|
| |
253,041
|
|
257,284
|
|
| |
____________________________________
|
|
| |
|
|
|
|
|
Deferred
taxes and other deferred charges…..........................………
|
40,774
|
|
37,461
|
|
| |
____________________________________
|
|
| |
$1,319,198
|
|
$1,277,090
|
|
| |
|
|
|
|
|
______________________________________________________________________________________________________________________
|
| |
| |
|
See
notes to consolidated financial statements
|
| |
|
-3-
|
| |
| |
|
Part
I. Financial Information
Item 1. Financial Statements
|
| |
| |
|
DIMON
Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
|
| |
| |
|
September
30
2002
(Unaudited)
|
|
June
30
2002
|
|
|
(in
thousands)
|
|
______________________________________
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Notes
payable to banks…...............................................…………...
|
$ 177,559
|
|
$ 181,629
|
|
|
Accounts
payable:
|
|
|
|
|
|
Trade….................................................................……………….
|
33,286
|
|
55,277
|
|
|
Officers
and employees…...........................................…………..
|
7,879
|
|
13,553
|
|
|
Other….................................................................……………….
|
11,586
|
|
7,964
|
|
|
Advances
from customers…...........................................…………..
|
116,944
|
|
67,616
|
|
|
Accrued
expenses….....................................................…………….
|
27,479
|
|
24,797
|
|
|
Income
taxes…...........................................................……………..
|
9,986
|
|
11,015
|
|
|
Long-term
debt current…..............................................……………
|
1,130
|
|
1,128
|
|
| |
____________________________________
|
|
|
Total
current liabilities…..........................................…………..
|
385,849
|
|
362,979
|
|
| |
____________________________________
|
|
|
Long-term
debt
|
|
|
|
|
|
Revolving
Credit Notes and Other….................................………...
|
12,287
|
|
7,521
|
|
|
Convertible
Subordinated Debentures….............................……….
|
73,328
|
|
73,328
|
|
|
Senior
Notes (Net of Fair Value Adjustment of
$12,965
in FY 2003 and ($3,638) in FY 2002)...…………….……
|
337,965
|
|
321,362
|
|
| |
____________________________________
|
|
| |
423,580
|
|
402,211
|
|
| |
____________________________________
|
|
| |
|
|
|
Deferred
credits:
|
|
|
|
|
|
Income
taxes…...........................................................……………...
|
9,120
|
|
9,243
|
|
|
Compensation
and other ………..........................………………….
|
61,087
|
|
67,205
|
|
| |
____________________________________
|
|
| |
70,207
|
|
76,448
|
|
| |
____________________________________
|
|
|
Minority
interest in subsidiaries….......................................…………
|
781
|
|
789
|
|
| |
____________________________________
|
|
| |
|
|
|
|
|
Commitments
and contingencies…......................................………...
|
-
|
|
-
|
|
| |
____________________________________
|
|
| |
|
|
|
Stockholders'
equity
|
Sept.
30
|
|
June
30
|
|
|
|
|
|
|
Preferred
Stock—no par value:
|
|
|
|
|
|
|
|
|
|
Authorized
shares….................……..
|
10,000
|
|
10,000
|
|
|
|
|
|
|
Issued
shares….......................………
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Common
Stock—no par value:
|
|
|
|
|
|
|
|
|
|
Authorized
shares….................……..
|
125,000
|
|
125,000
|
|
|
|
|
|
|
Issued
shares….......................………
|
44,725
|
|
44,640
|
|
183,292
|
|
182,
768
|
|
|
Retained
earnings…..................................................………………
|
266,971
|
|
264,
148
|
|
|
Accumulated
other comprehensive income…....................……….
|
(11,482)
|
|
(12,
253)
|
|
| |
____________________________________
|
|
| |
438,781
|
|
434,663
|
|
| |
____________________________________
|
|
| |
$1,319,198
|
|
$1,277,090
|
|
|
______________________________________________________________________________________________________________________
|
|
See
notes to consolidated financial statements
|
| |
|
-4-
|
| |
| |
| |
|
DIMON
Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED INCOME
Three Months Ended September 30, 2002 and 2001
(Unaudited)
|
| |
| |
|
(in
thousands, except per share amounts)
|
|
September
30
2002
|
September
30
2001
|
|
| |
|
________________________________________
|
|
|
Sales
and other operating revenues………………………………………
|
|
$270,944
|
|
$288,721
|
|
|
Cost
of goods and services sold…………………………………………
|
|
215,358
|
|
236,109
|
|
| |
|
________________________________________
|
|
| |
|
|
|
|
Gross
profit……………………………………………………………..
|
|
55,586
|
|
52,612
|
|
|
Selling,
administrative and general expenses……………………………
|
|
25,891
|
|
26,191
|
|
| |
|
________________________________________
|
|
|
Operating
income…………………………………………..………….
|
|
29,695
|
|
26,421
|
|
| |
|
|
|
|
|
|
Interest
expense………………………………………….………………
|
|
12,164
|
|
11,329
|
|
|
Current
charge derivative financial instruments…………………………
|
|
10,767
|
|
9,602
|
|
|
|
|
________________________________________
|
|
| |
|
|
|
|
Income
before income taxes and equity
|
|
|
|
|
|
| |
in
net loss of investee companies…………………………………….
|
|
6,764
|
|
5,490
|
|
|
Income
tax expense ……….……………………………………………
|
|
1,559
|
|
1,459
|
|
|
|
|
________________________________________
|
|
|
Income
before equity in net loss of investee companies……………….
|
|
5,205
|
|
4,031
|
|
| |
|
|
|
|
|
|
Equity
in net loss of investee
|
|
|
|
|
|
| |
companies,
net of income taxes………………………………………
|
|
(147)
|
|
(113)
|
|
| |
|
________________________________________
|
|
|
Net
income ………………………………………………………….…
|
|
$ 5,058
|
|
$ 3,918
|
|
| |
|
========================================
|
|
| |
|
|
|
| |
|
|
|
|
|
|
Basic
earnings per share……………………………………………
|
|
$.11
|
|
$.09
|
|
| |
|
========================================
|
|
| |
|
|
|
| |
|
|
|
|
Diluted
earnings per share…………………………………………
|
|
$.11
|
*
|
$.09
|
*
|
| |
|
========================================
|
|
| |
|
|
|
| |
|
|
|
|
Average
number of shares outstanding:
|
|
|
|
|
|
| |
Basic…………………………………………………………………..
|
|
44,526
|
|
44,525
|
|
| |
Diluted…………………………………………………………………
|
|
45,008
|
*
|
45,103
|
*
|
| |
|
========================================
|
|
| |
|
|
|
|
|
|
Cash
dividends per share………………………………………………..
|
|
$.05
|
|
$.05
|
|
| |
|
========================================
|
|
| |
|
See
notes to consolidated financial statements
|
| |
|
* Assumed
conversion of Convertible Debentures at the beginning of the period has
an antidilutive effect on
|
|
earnings
per share.
|
| |
| |
|
-5-
|
| |
| |
| |
|
DIMON
Incorporated and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
Three Months Ended September 30, 2002 and 2001
(Unaudited)
|
| |
| |
| |
|
|
September
30
2002
|
|
September
30
2001
|
|
| |
(in
thousands)
|
|
________________________________________
|
|
| |
Operating
activities
|
|
|
|
|
|
| |
Net
income …………......................................…………………………..
|
|
$ 5,058
|
|
$ 3,918
|
|
| |
Adjustments
to reconcile net income
|
|
|
|
|
|
| |
to
net cash used by operating activities:
|
|
|
|
|
|
| |
Depreciation
and amortization…………………………...................…..
|
|
8,125
|
|
10,545
|
|
| |
Deferred
items………………………...............................……………....
|
|
6,543
|
|
7,334
|
|
| |
Loss
on foreign currency transactions...............................………………
|
|
1,228
|
|
2,068
|
|
| |
Changes
in operating assets and liabilities…………….….............…….
|
|
(35,396)
|
|
(65,100)
|
|
| |
|
|
________________________________________
|
|
| |
Net
cash used by operating activities…………………………........……
|
|
(14,442)
|
|
(41,235)
|
|
| |
|
|
________________________________________
|
|
| |
|
|
|
|
| |
Investing
activities
|
|
|
|
|
|
| |
Purchase
of property and equipment…………………………..............….
|
|
(4,889)
|
|
(6,834)
|
|
| |
Proceeds
from sale of property and equipment…………………………...
|
|
371
|
|
1,192
|
|
| |
Payments
received on notes receivable and
|
|
|
|
|
|
| |
receivable
from investees..................................................………………
|
|
690
|
|
3,088
|
|
| |
Receipts
for other investments and other assets..............…………………
|
|
102
|
|
1,889
|
|
| |
|
|
________________________________________
|
|
| |
Net
cash used by investing activities…….....................………………….
|
|
(3,726)
|
|
(665)
|
|
| |
|
|
________________________________________
|
|
| |
|
|
|
|
| |
Financing
activities
|
|
|
|
|
|
| |
Net
change in short-term borrowings…………………………...........…..
|
|
(2,941)
|
|
47,187
|
|
| |
Proceeds
from long-term borrowings………………………….............…
|
|
2,556
|
|
60,570
|
|
| |
Repayment
of long-term borrowings…………………………............…..
|
|
(423)
|
|
(60,360)
|
|
| |
Cash
dividends paid to DIMON Incorporated stockholders…………...…
|
|
(2,236)
|
|
(2,232)
|
|
| |
|
|
________________________________________
|
|
| |
Net
cash (used) provided by financing activities……..………….......………….
|
|
(3,044)
|
|
45,165
|
|
| |
|
|
________________________________________
|
|
| |
|
|
|
|
| |
Effect
of exchange rate changes on cash…………………………...........…
|
|
313
|
|
(1,786)
|
|
| |
|
|
________________________________________
|
|
| |
|
|
|
|
| |
Increase
(decrease) in cash and cash equivalents……………………………
|
|
(20,899)
|
|
1,479
|
|
| |
Cash
and cash equivalents at beginning of year……………………….……
|
|
108,991
|
|
14,594
|
|
| |
|
|
________________________________________
|
|
| |
|
|
|
|
| |
Cash
and cash equivalents at end of period………………………….......
|
|
$ 88,092
|
|
$ 16,073
|
|
| |
|
|
========================================
|
|
| |
|
| |
See
notes to consolidated financial statements
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
-6-
|
| |
|
|
|
|
| |
|
|
DIMON
Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
(in
thousands, except per share amounts)
|
|
| |
|
|
1.
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BASIS
OF PRESENTATION
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The
accompanying interim unaudited consolidated financial statements of DIMON
Incorporated and Subsidiaries (the “Company” or “DIMON”)
include all normal recurring adjustments necessary for a fair presentation.
Certain prior period amounts have been reclassified to conform to the
current period presentation. 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, 2002. The Company's operations are seasonal.
Therefore, the results of operations for the three months ended September
30, 2002 are not necessarily indicative of the results to be expected
for the full year.
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2.
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EARNINGS
PER SHARE
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Basic
earnings per share is computed by dividing earnings by the weighted average
number of common shares outstanding. The diluted earnings per share
calculation assumes that all of the outstanding Convertible Subordinated
Debentures outstanding 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 and restricted shares
outstanding.
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September
30
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______________________________
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(in
thousands)
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2002
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2001
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______________________________
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Shares
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Weighted
average number of common shares outstanding…………………………
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44,526
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44,525
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Restricted
shares issued and shares applicable to stock options,
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net
of shares assumed to be purchased from proceeds at
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average
market price……………………………………………….…………
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482
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578
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Assuming
conversion of 6.25% Convertible Debentures at the
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beginning
of the period………………………………………………………
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-
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*
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*
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______________________________
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Average
diluted shares outstanding...…....…….........……………………………….....….
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45,008
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45,103
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*
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===============================
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*
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Assumed
conversion of Convertible Debentures at the beginning of the period has
an antidilultive effect on earnings per share.
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3.
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COMPREHENSIVE
INCOME
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The
components of comprehensive income were as follows:
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Three
Months Ended
September 30
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______________________________
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(in
thousands)
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2002
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2001
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______________________________
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Net
income ………..…….…………………………...........………………………………………
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$5,058
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$3,918
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Equity
currency conversion adjustment………..…............………………….…………..
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478
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285
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Derivative
financial instruments adjustment…..…………………………………………
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293
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(588)
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______________________________
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Total
comprehensive income ……….……………...........……………………..…………….
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$5,829
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$3,615
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-7-
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DIMON
Incorporated and Subsidiaries
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4.
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CONTINGENCIES
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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. In August
1996, the Company also received notices of adjustments from Brazilian
tax authorities proposing adjustments to the income taxes for calendar
year 1992 based on the Company's recalculation of monetary correction
as allowed under Law 8200. The company successfully defeated many
of the proposed adjustments in litigation and settled the other issues
under REFIS and Tax Amnesty programs. During the three months ended
September 30, 2002, the Company resolved an additional $2,000 of tax,
penalties and interest. As of September 30, 2002, tax, penalties
and interest relating to still unresolved issues is approximately $1,600,
before related tax benefits for future deductions, and deduction of interest
if the Company failed to prevail on these issues.
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On
October 31, 2002, the Company received an assessment from the tax authorities
in Germany regarding the taxable gain from the sale of its flower operations,
Florimex, in September 1998. The report concluded the values of
the real estate located in Germany were greater than those arrived at
with the buyer of the flower operation. The proposed adjustment
to income tax is equivalent to approximately $4,100. The Company
has challenged this finding with valuations that support the values used
in the original filings and is currently discussing the issue with the
tax officials in Germany.
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In
September 2002, the Company’s Tanzanian operation received an assessment
for income taxes equivalent to approximately $1,000. The company
has filed a protest and an appeal and is awaiting a reply.
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The
Company believes it has properly reported its income and paid its taxes
in Brazil, Germany and Tanzania in accordance with applicable laws and
intends to vigorously contest the proposed adjustments. The Company expects
the ultimate resolution of these matters will not have a material adverse
effect on the Company's consolidated balance sheet or results of operations.
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On
April 3, 2002, the United States District Court for the Middle District
of North Carolina issued an opinion and order certifying a class in Deloach,
et al. v. Philip Morris Companies Inc., et al., a lawsuit pending
in the United States District Court for the Middle District of North Carolina
(Case No. 00-CV-1235) (the "Deloach Suit"). As certified,
the class consists of persons who, at any time from February 1996 to the
present, held a quota to grow or produced and sold U.S. flue-cured
and burley tobacco. The plaintiffs allege that the defendants, which include
cigarette manufacturers and leaf tobacco dealers, including the Company,
violated the antitrust laws by conspiring to rig bids at auction and undermine
the federal government quota and price support program. The plaintiffs
seek injunctive relief, treble damages in an unspecified amount, pre-
and post-judgment interest, attorneys' fees and costs of litigation. The
Company will defend the suit vigorously. Because the suit is still
in its initial stages, the Company cannot estimate the amount or range
of loss that could result if the suit is resolved in a manner unfavorable
to the Company.
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The
Directorate General for Competition (DGCOMP) of the European Commission
(EC) is conducting an administrative investigation into certain tobacco
buying and selling practices alleged to have occurred within the leaf
tobacco industry in Spain and Italy. The Company believes that the DGCOMP
may be conducting similar investigations in other countries. The
Company's subsidiaries in Spain (Agroexpansion) and Italy (DIMON Italia)
are cooperating with the DGCOMP. Based on the Company's understanding
of the facts pertaining to the activities of Spanish and Italian tobacco
processors, including Agroexpansion and DIMON Italia, respectively, the
Company believes there have been infringements of EU law. Agroexpansion
and DIMON Italia believe that there are mitigating circumstances in the
structure and traditional operation of tobacco production and processing
in these markets. The EC is not expected to issue a ruling (Statement
of Objection) concerning either of these investigations until early in
2003 at the earliest. The Company expects that administrative penalties
will be assessed, and those penalties could be material to the Company's
earnings. However, the Company is not able to make an assessment
of the amount of any such penalties at this time. The Company understands
that the cooperation of its subsidiaries with the DGCOMP during its investigations
could result in a reduction of the amount of penalties imposed.
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-8-
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DIMON
Incorporated and Subsidiaries
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4.
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CONTINGENCIES
(Continued)
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The
Company has recently become aware of an administrative inquiry being conducted
by the Argentina National Commission for Defense of Competition ("NCDC")
into the tobacco and cigarette industry in Argentina. The Company's subsidiary
in Argentina, DIMON Argentina S.A., is cooperating with the NCDC. The
Company cannot predict whether the inquiry will result in any further
action by the NCDC.
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The
Company's foreign subsidiaries have guaranteed certain loans made by Brazilian
banks to local growers. There was approximately $45.9 million outstanding
under these guarantees at September 30, 2002.
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The
Company's other off balance sheet risks are not material.
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On
August 21, 2001, the Company's subsidiary in Brazil won a claim related
to certain excise taxes ("IPI credit bonus") for the years 1983
through 1990 and is now pursuing collection. The collection procedures
are not clear and the total realization process could potentially last
for several years. The Company is unable to estimate the realizable
value of this claim as of September 30, 2002.
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Zimbabwe
remains in a period of civil unrest in combination with a deteriorating
economy. Should the current political situation continue, the Company
could experience disruptions and delays associated with its Zimbabwe operations.
If the political and economic situation in Zimbabwe continues to
deteriorate, or if tobacco crop volumes continue declining at a significant
rate, the Company’s ability to recover its assets there could be
impaired. The Company’s Zimbabwe subsidiary has long-lived
assets of approximately $48.7 million as of September 30, 2002.
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Argentina
is in a period of political and economic uncertainty. The Company
purchases Argentine tobacco for export. The Company does not own
any processing assets in Argentina and does not foresee any additional
material effects on its operations there. However, the Company does
continue to closely monitor events associated with the instability in
Argentina and their possible impact on future results.
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5.
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ISSUANCE
OF SENIOR NOTES AND BANK CREDIT FACILITY
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On
October 30, 2001, the Company completed a private issuance of $200 million
principal amount of 9 5/8% Senior Notes due 2011 pursuant to Rule 144A
under the Securities Act of 1933. The financial covenants of the
Senior Notes are substantially similar to those for the existing $125
million principal amount of 8 7/8% Senior Notes due 2006.
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Concurrent
with the completion of the Senior Note issuance, the Company entered into
a derivative financial instrument to swap the entire $200 million notional
amount of Senior Notes to a floating interest rate equal to LIBOR plus
4.11%, set six months in arrears. The rate at September 30, 2002 was 6.35%.
The notional amount, maturity, and payment dates of the derivative financial
instrument match those of the Notes. In accordance with Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," the derivative qualifies for
hedge accounting treatment, as discussed in Note 6.
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In
addition, on October 31, 2001, the Company closed on a three-year $165
million syndicated bank credit facility with a group of five banks. The
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, including certain borrowing base restrictions, and restrict
acquisitions. The Company continuously monitors its compliance with these
covenants. The credit facility's initial term expires on October 31, 2004,
and, subject to approval by the lenders, may be extended. The rates of
interest are based on the Company’s published credit rating and vary
according to 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 (4.75% at September 30, 2002). The Company pays a commitment fee
of 1% per annum on any unused portion of the facility.
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-9-
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DIMON
Incorporated and Subsidiaries
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6.
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DERIVATIVE
FINANCIAL INSTRUMENTS
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In
accordance with Financial Accounting Standards Board (“FASB”)
Statement of Financial Accounting Standards (“SFAS”) No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
the Company recognizes all derivative financial instruments at fair value
regardless of the purpose or intent for holding the instrument. For
the three months ended September 30, 2002 and 2001 accumulated other comprehensive
income increased by $293 (net of deferred taxes of $144) and decreased
by $588 (net of deferred taxes of $289), respectively, related specifically
to accumulated unrealized net losses on forward contracts and interest
rate swap agreements accounted for as cash flow hedges.
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Concurrent
with the private issuance of $200 million principal amount of 9 5/8% Senior
Notes on October 30, 2001, discussed in Note 5, the Company entered into
a derivative financial instrument to swap the entire $200 million notional
amount of Senior Notes to a floating interest rate. This swap is
accounted for as a fair value hedge with the change in the fair value
of the 9 5/8% Senior Notes, as well as the change in the fair value of
the derivative financial instrument being recognized in earnings during
the current period. As of September 30, 2002 and June 30, 2002,
the fair value of the debt increased the Senior Notes liability by $12,965
and decreased the liability by $3,638, respectively, with a corresponding
change in the fair value of the derivative financial instrument included
in Deferred Credits – Compensation and Other.
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SFAS
No. 133 eliminates special hedge accounting if the swap agreements do
not meet certain criteria, thus requiring the Company to reflect all changes
in their fair value in its current earnings. For the three months ended
September 30, 2002 and 2001, the Company recognized non-cash charges of
$10,767 and $9,602, respectively, from the change in the fair value of
these interest rate swap agreements.
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The
fair value estimates are based on information available to management
at September 30, 2002, and were determined using quoted market prices
when available.
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7.
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ADOPTION
OF NEW ACCOUNTING STANDARD
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Effective
July 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets."
This new standard eliminates the amortization of goodwill and intangible
assets with indefinite useful lives. Instead these assets must be
tested at least annually for impairment. In the year of adoption,
SFAS No. 142 also requires the Company to perform an initial assessment
of its reporting units to determine whether there is any indication that
the goodwill carrying value may be impaired. This transitional assessment
is made by comparing the fair value of each reporting unit, as determined
in accordance with the new standard, to its book value. To the extent
the fair value of any reporting unit is less than its book value, which
would indicate that potential impairment of goodwill exists, a second
transitional test is required to determine the amount of impairment.
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The
Company completed the initial transitional assessment during the first
quarter and has determined that no potential goodwill impairment exists
as of July 1, 2002. A goodwill impairment review will be conducted
at least annually and any impairment charges that are required to be recorded
would be charged to operating income.
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-10-
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DIMON
Incorporated and Subsidiaries
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7.
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ADOPTION
OF NEW ACCOUNTING STANDARD (Continued)
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In
accordance with SFAS No. 142, prior period amounts were not restated.
The following table adjusts the reported net income for the three
months ended September 30, 2001 and the income per share amounts to exclude
amortization of goodwill:
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Three
Months Ended
September 30, 2001
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(in
thousands, except for per share data)
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_____________________
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Reported
net income……………………………………………………………………..
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$3,918
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Amortization
of goodwill (net of tax of $10) …………………………………….
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1,690
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________
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Adjusted
net income……………………………………………………………………..
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$5,608
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Reported
basic earnings per share………………………………………….
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$.09
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Amortization
of goodwill (net of tax)……………………………………..
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$.04
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Adjusted
basic earnings per share……………………………..…………..
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$.13
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=====
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8.
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RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
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In
June 2002, the FASB issued SFAS No. 146, “Accounting For Costs Associated
with Exit or Disposal Activities.” This statement requires
that a liability for a cost associated with an exit or disposal activity
be recognized when the liability is incurred. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of
the liability. The Company will adopt this standard by the required
December 2002 deadline. The Company does not believe there will
be any material impact as a result of this statement.
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9.
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SUBSEQUENT
EVENT
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On
October 30, 2002, the Board of Directors declared a quarterly dividend
of $.075 per share, a 50 percent increase over the previous $.05 per share
dividend. The dividend is payable December 12, 2002 to shareholders
of record on December 2, 2002.
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-11-
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DIMON
Incorporated and Subsidiaries
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Item
2. Management’s
Discussion and Analysis of
Financial
Condition and Results of Operations
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LIQUIDITY
AND CAPITAL RESOURCES:
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The
purchasing and processing activities of our business are seasonal. Our
need for working capital fluctuates and, at any of several seasonal peaks,
our outstanding indebtedness may be significantly greater or less than
at year end. We historically have needed working capital in excess
of cash flow from operations to finance inventory and accounts receivable.
We also prefinance tobacco crops in certain foreign countries by
making advances of crop materials and cash to farmers prior to and during
the growing season. We have historically financed our operations through
a combination of short-term lines of credit, customer advances, cash from
operations, debt securities and equity and equity-linked securities
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Working
capital at September 30, 2002 was $452 million compared to $429 million
at June 30, 2002. Our current ratio was 2.2 to 1 at both September 30,
2002 and June 30, 2002. The increase in working capital was the
result of an increase in current assets of $46 million and an increase
of $23 million in current liabilities. The increase in current assets
is primarily a result of increased inventory partially offset by decreases
in trade receivables, cash and advances on purchases of tobacco. The
increase in current liabilities is primarily a result of increases in
the advances from customers partially offset by decreases in accounts
payable.
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Cash
flows used by operating activities were $14.4 million in 2002 compared
to $41.2 million in 2001. This decrease in usage is primarily due
to less cash used for inventories and advances on purchases of tobacco
and more cash provided from collections of accounts receivable offset
partially by less cash provided by customer advances.
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Cash
used by investing activities was $3.7 million in 2002 compared to $0.7
million in 2001. The increase in usage by investing activities relates
to lower collections on notes receivable and lower receipts from sales
of property and equipment and other assets, offset partially by decreases
in purchases of property and equipment.
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Cash
flows used by financing activities were $3.0 million in 2002 compared
to a provision of cash of $45.2 million in 2001. Higher amounts
of cash on hand at June 30, 2002, $109.0 million, compared to June 30,
2001, $14.6 million, decreased the need for additional borrowing to finance
our operations.
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At
September 30, 2002, we had seasonally adjusted lines of credit of $380.2
million, with $177.6 million in borrowings with a weighted average interest
rate of 4.3%. At September 30, 2002, unused lines of credit amounted
to $147.8 million. Total maximum outstanding borrowings, excluding
the long-term credit agreements, during the three months ended September
30, 2002 were $289.4 million. At September 30, 2002, we had $27.9
million of letters of credit outstanding and an additional $26.9 million
of letters of credit lines available.
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On
October 30, 2001 we completed a private issuance of $200 million principal
amount of 9 5/8% Senior Notes due 2011 pursuant to Rule 144A under the
Securities Act of 1933. The financial covenants of the Senior Notes are
substantially similar to those for the existing $125 million principal
amount of 8 7/8% Senior Notes due 2006. In January 2002 we completed with
100% of the holders our offer to exchange our 9 5/8% Senior Notes due
2011, which have been registered under the Securities Act of 1933, as
amended, for a like principal amount of our original unregistered 9 5/8%
Senior Notes due 2011.
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Concurrent
with the completion of the Senior Note issuance, we entered into a derivative
financial instrument to swap the entire $200 million notional amount of
Senior Notes to a floating interest rate equal to LIBOR plus 4.11%, set
six months in arrears. The rate at September 30, 2002 was 6.35%.
The notional amount, maturity, and payment dates of the derivative
financial instrument match those of the Notes. In accordance with
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities," the derivative
qualifies for hedge accounting treatment. See also Note 6 of the “Notes
to Consolidated Financial Statements.”
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In
addition, on October 31, 2001, we closed on a three-year $165 million
syndicated bank credit facility with a group of five banks. The
credit facility is subject to certain commitment fees and covenants that,
among other things, require us to maintain minimum working capital and
tangible net worth amounts, require specific liquidity and long-term solvency
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-12-
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DIMON
Incorporated and Subsidiaries
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LIQUIDITY
AND CAPITAL RESOURCES: (Continued)
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ratios,
including certain borrowing base restrictions, and restrict acquisitions.
We continuously monitor our compliance with these covenants. The credit
facility's initial term expires on October 31, 2004, and, subject to approval
by the lenders, may be extended. The rates of interest are based on our
published credit rating and vary according to the type of loan requested.
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 (4.75% at September 30, 2002). We pay a
commitment fee of 1% per annum on any unused portion of the facility.
Decisions relative to repayments and reborrowings are made based on circumstances
then existing, including our judgment as to the most effective utilization
of funds. Based on forecast working capital needs, we do not anticipate
making significant draws on this facility in the near term.
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We
have historically financed our operations through a combination of short-term
lines of credit, revolving credit arrangements, customer advances, cash
from operations and equity and equity-linked securities. At September
30, 2002, we had no material capital expenditure commitments. We
believe that these sources of funds will be sufficient to fund our anticipated
needs for fiscal 2003. There can be no assurance, however, that
these sources of capital will be available in the future or, if available,
that any such sources will be available on favorable terms.
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RESULTS
OF OPERATIONS:
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Three
Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001
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Our
sales and other operating revenue were $271 million, a decrease of $18
million or 6.3% from $289 million in 2001. The decrease is primarily
due to U.S. sales in 2001 of prior crop tobaccos. Sales of foreign
grown tobacco were comparable between quarters. Lower sales of tobacco
from Africa were offset by increased sales of Asian tobacco.
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Cost
of sales and expenses decreased $19 million from $260 million in 2001
to $241 million in 2002. Gross margin as a percentage of sales increased
from 18.2% in 2001 to 20.5% in 2002.
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Gross
profit increased $3.0 million or 5.7% from $52.6 million in 2001 to $55.6
million in 2002. The increase in gross margin relates primarily
to higher total margins on foreign grown tobaccos partially offset by
lower total margin realized in the U.S. attributable primarily to the
prior year sale of old crop tobacco.
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Selling,
administrative and general expenses, exclusive of amortization of goodwill,
increased $1.4 million or 5.7% from $24.5 million to $25.9 million related
primarily to increased personnel related expenses and professional fees.
Amortization of goodwill was $1.7 million in 2001 and $0 in
2002 due to the adoption of SFAS No. 142. Also see Note 7 of the
"Notes to Consolidated Financial Statements."
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Interest
expense increased $0.9 million from $11.3 million in 2001 to $12.2 million
in 2002 primarily due to higher average borrowings, partially offset by
lower average rates.
|
|
| |
|
|
Non-cash
charges of $10.8 million and $9.6 million related to the change in fair
value of non-qualifying interest rate swap instruments were recognized
in the first quarter of fiscal 2003 and 2002, respectively. Also see Note
6 of the "Notes to Consolidated Financial Statements."
|
|
| |
|
|
The
effective tax rate was 23% in 2002 compared to 27% in 2001. The
change in tax rate relates to the non-amortization of goodwill in 2002
and the distribution of taxable income among various taxing jurisdictions.
|
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|
|
OUTLOOK
AND OTHER INFORMATION:
|
|
| |
|
|
We
believe that global supply and demand for leaf tobacco is now substantially
balanced, and that the raw material inventories held by our customers
are largely in equilibrium with their production forecasts. However,
the political and economic situations in both Zimbabwe and Argentina present
uncertainties that may adversely impact future results.
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-13-
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|
DIMON
Incorporated and Subsidiaries
|
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|
|
OUTLOOK
AND OTHER INFORMATION: (Continued)
|
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|
|
Zimbabwe
remains in a period of civil unrest in combination with a deteriorating
economy. Should the current political situation continue, we could
experience disruptions and delays associated with our Zimbabwe operations.
The government’s forced land resettlement program has caused
disruptions to both tobacco and food farm production in Zimbabwe. The
volume of the current year tobacco crop, which was being marketed through
auction at September 30, 2002, is estimated to decline by approximately
19% in comparison to the prior year crop. Further volume declines
of as much as 60% have been forecast by some industry sources in connection
with next year’s tobacco crop. If the political situation continues
to deteriorate, our ability to recover our assets there could be
impaired.
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|
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|
|
Argentina
is in a period of political and economic uncertainty. We purchase
Argentine tobacco for export. We do not own any processing assets there
and do not foresee any additional material effects on our operations.
However, we do continue to closely monitor events associated with
the instability in Argentina and their possible impact on future results.
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|
|
See
“Factors That May Affect Future Results,” below, for important
warnings about the forward-looking statements included in this section.
|
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|
|
FACTORS
THAT MAY AFFECT FUTURE RESULTS:
|
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|
|
Readers
are cautioned that the statements contained herein regarding expectations
for the Company's performance are "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995. These
statements are based on current expectations of future events. If underlying
assumptions prove inaccurate or unknown risks or uncertainties materialize,
actual results could vary materially from the Company’s expectations
and projections. Risks and uncertainties include changes in the timing
of anticipated shipments, changes in anticipated geographic product sourcing,
political instability in sourcing locations, currency and interest rate
fluctuations, shifts in the global supply and demand position for the
Company’s tobacco products, and the impact of regulation and litigation
on the Company’s customers. A further list and description
of these risks, uncertainties and other factors can be found in the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2002 and
other filings with the Securities and Exchange Commission. The Company
assumes no obligation to update any forward-looking statements as a result
of new information or future events or developments, except as required
by law.
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|
|
Item
3. Quantitative and Qualitative
Disclosures about Market Risk
|
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|
|
In
accordance with SFAS No. 133, the Company recognizes all derivative financial
instruments, such as interest rate swap contracts and foreign exchange
contracts, in the consolidated financial statements at fair value regardless
of the purpose or intent for holding the instrument. The Company uses
forward contracts to mitigate exposure to changes in foreign currency
exchange rates on forecasted transactions. Generally, the effective portion
of unrealized gains and losses associated with forward contracts and the
intrinsic value of option contracts are deferred as a component of accumulated
other comprehensive income net of deferred taxes until the underlying
hedge transactions are reported on the consolidated statement of earnings.
The Company has traditionally used interest rate swaps to mitigate its
exposure to changes in interest rates related to certain debt agreements.
The swaps convert floating-rate debt to fixed-rate debt and fixed rate
debt to floating-rate debt. For interest rate swaps deemed to be
effective that are accounted for as cash flow hedges, the changes in the
fair values of the instruments is recorded in accumulated other comprehensive
income net of deferred taxes. For interest rate swaps deemed to be effective
that are accounted for as fair value hedges, both the fair value of the
hedged item and the interest rate swap are marked-to-market through earnings
in the current period. Changes in the fair values of derivatives
not qualifying as hedges are reported in income. As a result of fluctuations
in interest rates and volatility in market expectations, the fair market
value of interest rate swap instruments can be expected to appreciate
or depreciate over time. Swap instruments, entered into by the Company,
prior to the adoption of SFAS No. 133, which do not qualify as hedges,
have created and may continue to create volatility in reported earnings.
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|
-14-
|
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| |
|
DIMON
Incorporated and Subsidiaries
|
| |
| |
| |
|
Item
3. Quantitative and Qualitative Disclosures about
Market Risk (Continued)
|
|
| |
|
The
Company plans to continue the practice of economically hedging various
components of its debt. However, wherever practical, it is the Company’s
intent that future interest rate swap transactions will match the notional
amounts, maturities, and payment dates of the derivative financial instrument
with those of the underlying debt in order to qualify for hedge accounting
treatment under SFAS No. 133.
|
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| |
|
|
Also,
see Note 5 and Note 6 of the "Notes to Consolidated Financial Statements."
|
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|
|
Item
4. Controls and Procedures
|
|
| |
|
|
Based
on their most recent evaluation, which was completed within 90 days of
the filing of this Form 10-Q, the Company's Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures (as defined in Exchange Act Rule 13a-14(c)) are effective
to ensure that the information required to be disclosed in the Company's
filings with the SEC under the Securities Exchange Act of 1934 is accumulated
and communicated to the Company's management, including its principal
executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
|
|
| |
|
|
There
were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their evaluation.
|
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|
Part
II. Other Information
|
| |
|
Item
1. Legal Proceedings
|
| |
|
|
On
April 3, 2002, the United States District Court for the Middle District
of North Carolina issued an opinion and order certifying a class in Deloach,
et al. v. Philip Morris Companies Inc., et al., a lawsuit pending
in the United States District Court for the Middle District of North Carolina
(Case No. 00-CV-1235) (the "Deloach Suit"). As certified,
the class consists of persons who, at any time from February 1996 to the
present, held a quota to grow or produced and sold U.S. flue-cured
and burley tobacco. The plaintiffs allege that the defendants, which include
cigarette manufacturers and leaf tobacco dealers, including the Company,
violated the antitrust laws by conspiring to rig bids at auction and undermine
the federal government quota and price support program. The plaintiffs
seek injunctive relief, treble damages in an unspecified amount, pre-
and post-judgment interest, attorneys' fees and costs of litigation. The
Company will defend the suit vigorously. Because the suit is still
in its initial stages, the Company cannot estimate the amount or range
of loss that could result if the suit is resolved in a manner unfavorable
to the Company.
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|
|
The
Directorate General for Competition (DGCOMP) of the European Commission
(EC) is conducting an administrative investigation into certain tobacco
buying and selling practices alleged to have occurred within the leaf
tobacco industry in Spain and Italy. The Company believes that the DGCOMP
may be conducting similar investigations in other countries. The
Company’s subsidiaries in Spain (Agroexpansion) and Italy (DIMON
Italia) are cooperating with the DGCOMP. Based on the Company’s
understanding of the facts pertaining to the activities of Spanish and
Italian tobacco processors, including Agroexpansion and DIMON Italia,
respectively, the Company believes there have been infringements of EU
law. Agroexpansion and DIMON Italia believe that there are mitigating
circumstances in the structure and traditional operation of tobacco production
and processing in these markets. The EC is not expected to issue
a ruling (Statement of Objection) concerning either of these investigations
until early in 2003 at the earliest. The Company expects that administrative
penalties will be assessed, and those penalties could be material to the
Company's earnings. However, the Company is not able to make an
assessment of the amount of any such penalties at this time. The
Company understands that the cooperation of its subsidiaries with the
DGCOMP during its investigations could result in a reduction of the amount
of penalties imposed.
|
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|
|
The
Company has recently become aware of an administrative inquiry being conducted
by the Argentina National Commission for Defense of Competition ("NCDC")
into the tobacco and cigarette industry in Argentina. The Company's subsidiary
in Argentina, DIMON Argentina S.A., is cooperating with the NCDC. The
Company cannot predict whether the inquiry will result in any further
action by the NCDC.
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|
-15-
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|
DIMON
Incorporated and Subsidiaries
|
| |
| |
| |
|
|
Item
6. Exhibits and Reports
on Form 8-K
|
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| |
|
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|
(a)
|
Exhibits
|
-
|
None
|
|
| |
|
|
|
|
|
(b)
|
Current
Reports on Form 8-K
|
-
|
August
19, 2002 - Item 7, DIMON’s Earnings for Fiscal Year 2002 Increase
43% Earnings Performance is Expected to Continue in 2003 and Item 9, Regulation
FD Disclosure
|
|
| |
|
-
|
August
29, 2002 - Item 9, Regulation FD Disclosure – A. Sworn Statements
and B. 906 Certification Statements
|
|
| |
|
-
|
August
30, 2002 - Item 5 and 7, DIMON Announces Quarterly Dividend
|
|
| |
|
-
|
October
30, 2002 - Item 5 and 7, DIMON Announces 50% Increase in Quarterly Dividend
|
|
| |
|
-
|
October
30, 2002 – Item 5, DIMON Holds Annual Shareholder Meeting
|
|
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| |
| |
|
-16-
|
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| |
| |
| |
|
CERTIFICATION
|
| |
|
I,
Brian J. Harker, Principal Executive Officer, certify that:
|
| |
| |
1.
|
I
have reviewed this quarterly report on Form 10-Q of DIMON Incorporated;
|
|
| |
|
|
|
| |
2.
|
Based
on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|
|
| |
|
|
|
| |
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
|
|
| |
|
|
|
| |
4.
|
The
registrant's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
|
| |
|
|
|
| |
|
a.
|
designed
such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
|
|
| |
|
|
|
|
| |
|
b.
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
|
|
| |
|
|
|
|
| |
|
c.
|
presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
|
|
| |
|
|
|
|
| |
5.
|
The
registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
|
| |
|
|
|
| |
|
a.
|
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
|
|
| |
|
|
|
|
| |
|
b.
|
any
fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and
|
|
| |
|
|
|
|
| |
6.
|
The
registrant's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|
|
| |
|
/s/
Brian J. Harker
|
|
_____________________________________________
|
|
Brian
J. Harker
|
|
President
and Chief Executive Officer
|
|
November
5, 2002
|
| |
| |
| |
|
-18-
|
| |
| |
| |
|
CERTIFICATION
|
| |
|
I,
James A. Cooley, Principal Financial Officer, certify that:
|
| |
| |
1.
|
I
have reviewed this quarterly report on Form 10-Q of DIMON Incorporated;
|
|
| |
|
|
|
| |
2.
|
Based
on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|
|
| |
|
|
|
| |
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
|
|
| |
|
|
|
| |
4.
|
The
registrant's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
|
| |
|
|
|
| |
|
a.
|
designed
such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
|
|
| |
|
|
|
|
| |
|
b.
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
|
|
| |
|
|
|
|
| |
|
c.
|
presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
|
|
| |
|
|
|
|
| |
5.
|
The
registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
|
| |
|
|
|
| |
|
a.
|
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
|
|
| |
|
|
|
|
| |
|
b.
|
any
fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and
|
|
| |
|
|
|
|
| |
6.
|
The
registrant's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|
|
| |
|
/s/
James A. Cooley
|
|
_____________________________________________
|
|
James
A. Cooley
|
|
Senior
Vice President-Chief Financial Officer
|
| |
|
November
5, 2002
|
| |
| |
|
-19-
|
| |