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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934



FOR THE QUARTER ENDED
SEPTEMBER 30, 2003



COMMISSION FILE NUMBER 1-9875



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LOGO



STANDARD COMMERCIAL CORPORATION



|Incorporated under the laws of North Carolina |  | I.R.S. Employer Identification No. 13-1337610
|--------------------------------------------- |  | ---------------------------------------------



2201
MILLER ROAD, WILSON, NORTH CAROLINA 27893



Telephone Number 252-291-5507



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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) had been subject to such filing requirements for the past 90 days.  YES  x    NO ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).  YES  x    NO ̈



On November 3, 2003 the registrant had outstanding 13,622,420 shares of
Common Stock ($0.20 par value).



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PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

STANDARD COMMERCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                            |  | September 30 |         |   | March 312003* |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------- | -
|                                                                                                                            |  | 2003         |         |   | 2002*         |  
|                                                                                                                            |  | (unaudited)  |         |   |               |  
|ASSETS                                                                                                                      |  |              |         |   |               |  
|Cash                                                                                                                        |  | $            | 16,565  |   |               | $
|Receivables                                                                                                                 |  |              | 189,177 |   |               |  
|Inventories                                                                                                                 |  |              | 267,828 |   |               |  
|Assets of discontinued operations                                                                                           |  |              | 110,612 |   |               |  
|Prepaid expenses                                                                                                            |  |              | 4,890   |   |               |  
|Marketable securities                                                                                                       |  |              | 1,243   |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|Current assets                                                                                                              |  |              | 590,315 |   |               |  
|                                                                                                                            |  |              |        
|Property, plant and equipment                                                                                               |  |              | 157,089 |   |               |  
|Investment in affiliates                                                                                                    |  |              | 7,988   |   |               |  
|Goodwill                                                                                                                    |  |              | 9,003   |   |               |  
|Other assets                                                                                                                |  |              | 35,210  |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|Total assets                                                                                                                |  | $            | 799,605 |   |               | $
|                                                                                                                            |  |              |         |   |               |  
|LIABILITIES                                                                                                                 |  |              |         |   |               |  
|Short-term borrowings                                                                                                       |  | $            | 243,574 |   |               | $
|Current portion of long-term debt                                                                                           |  |              | 7,974   |   |               |  
|Accounts payable and accrued liabilities                                                                                    |  |              | 119,507 |   |               |  
|Liabilities of discontinued operations                                                                                      |  |              | 25,132  |   |               |  
|Taxes accrued                                                                                                               |  |              | 14,793  |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|Current liabilities                                                                                                         |  |              | 410,980 |   |               |  
|Long-term debt                                                                                                              |  |              | 83,850  |   |               |  
|Convertible subordinated debentures                                                                                         |  |              | 45,051  |   |               |  
|Retirement and other benefits                                                                                               |  |              | 15,297  |   |               |  
|Deferred income taxes                                                                                                       |  |              | 4,434   |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|Total liabilities                                                                                                           |  |              | 559,612 |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|MINORITY INTERESTS                                                                                                          |  |              | 1,807   |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|SHAREHOLDERS EQUITY                                                                                                        |  |              |         |   |               |  
|Preferred stock, $1.65 par value; authorized shares 1,000,000 Issued none                                                   |  |              |         |   |               |  
|Common stock, $0.20 par value; authorized shares 100,000,000 Issued 16,237,947 (Sept. 02  16,101,397; Mar 03 
16,110,750) |  |              | 3,248   |   |               |  
|Additional paid-in capital                                                                                                  |  |              | 110,634 |   |               |  
|Unearned restricted stock plan compensation                                                                                 |  |              | (3,984  | ) |               |  
|Treasury shares, 2,617,707                                                                                                  |  |              | (4,250  | ) |               |  
|Retained earnings                                                                                                           |  |              | 157,755 |   |               |  
|Accumulated other comprehensive income                                                                                      |  |              | (25,217 | ) |               |  
|                                                                                                                            |  |              |         |   |               |  
|Total shareholders equity                                                                                                  |  |              | 238,186 |   |               |  
|                                                                                                                            |  |              |         |   |               |  
|Total liabilities and shareholders equity                                                                                  |  | $            | 799,605 |   |               | $
|                                                                                                                            |  |              |         |   |               |  



The
accompanying notes are an integral part of these financial statements.



|* | Certain amounts reclassified to comply with the current period presentation.
|- | ----------------------------------------------------------------------------



-2-



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STANDARD COMMERCIAL CORPORATION

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS

(In thousands, except per
share data; unaudited)



|                                                 |  | Second quarter endedSeptember 30 |         |   | Six months endedSeptember 30 |  
|------------------------------------------------ |  | -------------------------------- | ------- | - | ---------------------------- | -
|                                                 |  | 2003                             |         |   | 2002*                        |  
|Sales - tobacco                                  |  | $                                | 210,081 |   |                              | $
|                                                 |  |                                  |         |   |                              |  
|Cost of sales - materials, services and supplies |  |                                  | 169,876 |   |                              |  
|- interest                                       |  |                                  | 2,669   |   |                              |  
|                                                 |  |                                  |         |   |                              |  
|Gross profit                                     |  |                                  | 37,536  |   |                              |  
|Selling, general and administrative expenses     |  |                                  | 18,859  |   |                              |  
|Other interest expense                           |  |                                  | 1,284   |   |                              |  
|Other income (expense)  net                     |  |                                  | 582     |   |                              |  
|                                                 |  |                                  |         |   |                              |  
|Income before taxes                              |  |                                  | 17,975  |   |                              |  
|Income taxes                                     |  |                                  | (4,146  | ) |                              |  
|                                                 |  |                                  |         |   |                              |  
|Income after taxes                               |  |                                  | 13,829  |   |                              |  
|Minority interests                               |  |                                  | 71      |   |                              |  
|Equity in earnings of affiliates                 |  |                                  | 367     |   |                              |  
|                                                 |  |                                  |         |   |                              |  
|Income from continuing operations                |  |                                  | 14,267  |   |                              |  
|Loss from discontinued operations, net of tax    |  |                                  | (28,576 | ) |                              |  
|                                                 |  |                                  |         |   |                              |  
|Net income/(loss)                                |  |                                  | (14,309 | ) |                              |  
|Retained earnings at beginning of period         |  |                                  | 173,256 |   |                              |  
|Common stock dividends                           |  |                                  | (1,192  | ) |                              |  
|                                                 |  |                                  |         |   |                              |  
|Retained earnings at end of period               |  | $                                | 157,755 |   |                              | $
|                                                 |  |                                  |         |   |                              |  
|Earnings (loss) per common share                 |  |                                  |         |   |                              |  
|Basic:                                           |  |                                  |         |   |                              |  
|From continuing operations                       |  | $                                | 1.05    |   |                              | $
|From discontinued operations                     |  |                                  | (2.10   | ) |                              |  
|                                                 |  |                                  |         |   |                              |  
|Net                                              |  | $                                | (1.05   | ) |                              | $
|                                                 |  |                                  |         |   |                              |  
|Average shares outstanding                       |  |                                  | 13,619  |   |                              |  
|Diluted:                                         |  |                                  |         |   |                              |  
|From continuing operations                       |  | $                                | 0.97    |   |                              | $
|From discontinued operations                     |  |                                  | (1.87   | ) |                              |  
|                                                 |  |                                  |         |   |                              |  
|Net                                              |  | $                                | (0.90   | ) |                              | $
|                                                 |  |                                  |         |   |                              |  
|Average shares outstanding                       |  |                                  | 15,222  |   |                              |  
|Dividend declared per common share               |  | $                                | 0.0875  |   |                              | $



The
accompanying notes are an integral part of these financial statements.



|* | Certain amounts reclassified to comply with the current period presentation.
|- | ----------------------------------------------------------------------------



-3-



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STANDARD COMMERCIAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands; unaudited)



|                                                               |  | Six months endedSeptember 30 |        
|-------------------------------------------------------------- |  | ---------------------------- | -------
|                                                               |  | 2003                         |        
|CASH FLOWS FROM OPERATING ACTIVITIES                           |  |                              |        
|Net income (loss)                                              |  | $                            | (7,697 
|Loss from discontinued operations                              |  |                              | 30,848 
|Depreciation and amortization                                  |  |                              | 8,554  
|Minority interest                                              |  |                              | (139   
|Deferred income taxes                                          |  |                              | (319   
|Undistributed earnings of affiliates net of dividends received |  |                              | (567   
|(Gain) loss on buyback of debt                                 |  |                              |       
|(Gain) loss on disposition of fixed assets                     |  |                              | 59     
|Other                                                          |  |                              | 837    
|                                                               |  |                              |        
|                                                               |  |                              | 31,576 
|Net changes in working capital other than cash                 |  |                              |        
|Receivables                                                    |  |                              | (28,403
|Inventories                                                    |  |                              | (48,311
|Current payables                                               |  |                              | (23,677
|                                                               |  |                              |        
|Net cash used for continuing operations                        |  |                              | (68,815
|Net cash from discontinued operations                          |  |                              | 7,201  
|                                                               |  |                              |        
|CASH USED FOR OPERATING ACTIVITIES                             |  |                              | (61,614
|                                                               |  |                              |        
|CASH FLOW FROM INVESTING ACTIVITIES                            |  |                              |        
|Property, plant and equipment - additions                      |  |                              | (16,719
|- dispositions                                                 |  |                              | 126    
|                                                               |  |                              |        
|Cash used for continuing operations                            |  |                              | (16,593
|Net cash from discontinued operations                          |  |                              | 1,019  
|                                                               |  |                              |        
|CASH USED FOR INVESTING ACTIVITIES                             |  |                              | (15,574
|                                                               |  |                              |        
|CASH FLOWS FROM FINANCING ACTIVITIES                           |  |                              |        
|Net change in short-term borrowings                            |  |                              | 61,471 
|Proceeds from long-term borrowings                             |  |                              | 12,218 
|Repayment of long-term borrowings                              |  |                              | (4,668 
|Buyback of debt                                                |  |                              |       
|Dividends paid                                                 |  |                              | (2,043 
|Other                                                          |  |                              | (49    
|                                                               |  |                              |        
|CASH PROVIDED BY FINANCING ACTIVITIES                          |  |                              | 66,929 
|                                                               |  |                              |        
|Effect of exchange rate changes on cash                        |  |                              | 254    
|                                                               |  |                              |        
|Decrease in cash for period                                    |  |                              | (10,005
|Cash at beginning of period                                    |  |                              | 26,570 
|                                                               |  |                              |        
|CASH AT END OF PERIOD                                          |  | $                            | 16,565 
|                                                               |  |                              |        
|Cash payments for - interest                                   |  | $                            | 8,882  
|- income taxes                                                 |  | $                            | 9,024  



The
accompanying notes are an integral part of these financial statements.



|* | Certain amounts reclassified to comply with the current period presentation.
|- | ----------------------------------------------------------------------------



-4-



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STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | BASIS OF PRESENTATION
|-- | ---------------------



The interim statements presented herein should be read in conjunction with the audited financial statements and notes thereto included in the
Companys latest Annual Report on Form 10-K. The interim period financial statements have been prepared by the Company without audit and contain all of the adjustments which are, in the opinion of the management, necessary for a fair statement
of the financial condition and results of operations. All such adjustments are of normal, recurring nature and there were no material changes in accounting policies during the period ended September 30, 2003. Because of the nature of the
Companys business, fluctuations in results for interim periods are not necessarily indicative of business trends or results to be expected for other interim periods or a full year.



|2. | DISCONTINUED OPERATIONS
|-- | -----------------------



During the last quarter of fiscal 2002 the Company decided to close and dispose of wool units in South Africa, New Zealand, Argentina and the specialty
fibers business in Holland. By September 30, 2003 the sale of the Companies in South Africa and New Zealand and the trade assets of Argentina and specialty fibers units had been completed.



Despite the decision in fiscal 2002 to shrink our wool division and focus on
its core markets while also reducing divisional overheads, trading conditions remained difficult, resulting in continual losses. This is particularly true in the initial processing stages for the apparel industry. Given the continuing uncertainty of
an adequate turnaround leading to acceptable returns for our shareholders, we have made the strategic decision to focus on our core tobacco operations. Accordingly, we have decided to exit all of our remaining wool operations. These operations are
in Australia, UK, Chile, France and Germany. We are currently in discussions with various prospective purchasers for these operations and have identified these assets as held for sale. The wool operating units are available for immediate sale and
the expectation is that the exit plan will be completed without significant changes. We expect to complete the process of selling/liquidating these units in the next twelve months.



These wool units are expected to incur additional operating losses until final disposition. Once disposed, we will not
retain a financial interest and we have not identified any significant contingent liabilities that would delay or significantly alter the plan of disposition. The Company will continue to guarantee the debt of the wool units until disposition, at
which time we will no longer provide any guarantees for the obligations or commitments of the wool units.



We have accounted for the sale of the wool units as discontinued operations, in accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The results for all periods presented are included in the consolidated financial statements as discontinued operations. As noted above,
since the existing debt of the wool units is guaranteed by the Company, we have not included any such debt in liabilities of discontinued operations.



The wool trading loss for the quarter and six months excluding the loss to discontinue the operations was $2.0 and $4.2 million respectively versus $1.5
and $3.3 million in the prior year periods. The charge recorded in the current quarter and for the six months to discontinue the wool operation was $26.6 million. The basic loss per share for the discontinued operations for the quarter and six
months was $2.10 and $2.27 respectively versus a loss of $0.11 and $0.25 in the prior year periods.



The estimated loss to discontinue the wool operations of $26.6 million has been recorded during the quarter ended September 30, 2003 as the carrying
amount of the net assets of the wool units exceeded the fair value less estimated disposal costs. The fair value has been determined based on current negotiations with prospective purchasers and comparisons with other industry transactions.



-5-



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STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued



Revenues and the assets and liabilities for these units were as follows:



|               |  | Quarter endedSeptember 30 |        | Six months endedSeptember 30
|-------------- |  | ------------------------- | ------ | ----------------------------
|               |  | 2003                      |        | 2002                        
|(In thousands) |  |                           |        |                             
|Revenues       |  | $                         | 38,719 |                             
|               |  |                           |        |                             



|                                                                            |  | September 30 |         | March 312003
|--------------------------------------------------------------------------- |  | ------------ | ------- | ------------
|                                                                            |  | 2003         |         | 2002        
|(In thousands)                                                              |  |              |         |             
|Receivables                                                                 |  | $            | 39,311  |             
|Inventory                                                                   |  |              | 66,665  |             
|Other assets                                                                |  |              | 4,636   |             
|                                                                            |  |              |         |             
|Assets                                                                      |  | $            | 110,612 |             
|Accounts payable and other liabilities                                      |  |              | 25,132  |             
|                                                                            |  |              |         |             
|Net assets available for sale                                               |  | $            | 85,480  |             
|                                                                            |  |              |         |             
|                                                                           
|Wool debt guaranteed by the Company not included in discontinued operations
|                                                                            |  |             
|                                                                            |  | September 30 |         | March 31    
|                                                                            |  | 2003         |         | 2002        
|Bank borrowings                                                             |  | $            | 58,658  |             
|Current portion of long-term debt                                           |  |              | 791     |             
|                                                                            |  |              |         |             
|Total current                                                               |  |              | 59,449  |             
|Long-term portion of long-term debt.                                        |  |              | 178     |             
|                                                                            |  |              |         |             
|Total debt guaranteed                                                       |  | $            | 59,627  |             
|                                                                            |  |              |         |             



|3. | COMPREHENSIVE INCOME
|-- | --------------------



The components of comprehensive income (loss) were as follows:



|                                                                     |  | Quarter endedSeptember 30 |         |   | Six months endedSeptember 30
|-------------------------------------------------------------------- |  | ------------------------- | ------- | - | ----------------------------
|                                                                     |  | 2003                      |         |   | 2002                        
|(In thousands)                                                       |  |                           |         |   |                             
|Net (loss) income                                                    |  | $                         | (14,309 | ) |                             
|Other comprehensive income:                                          |  |                           |         |   |                             
|Reclassification for translation adjustment recognized in net income |  |                           | 2,772   |   |                             
|Translation adjustment                                               |  |                           | (2,925  | ) |                             
|Derivative financial instruments                                     |  |                           | (460    | ) |                             
|                                                                     |  |                           |         |   |                             
|Total comprehensive (loss) income                                    |  | $                         | (14,922 | ) |                             
|                                                                     |  |                           |         |   |                             



|4. | EARNINGS PER SHARE
|-- | ------------------



Earnings per share has been presented in conformity with SFAS No. 128. The diluted earnings per share include the effect of the convertible subordinated
debentures, which if converted would have increased the weighted number of shares and net income applicable to common stock. The weighted number of shares were further increased by the employee stock options. Employee stock options with exercise
prices greater than the average market price of common shares were not included in computation of diluted earnings per share.



-6-



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STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued



|5. | DERIVATIVE FINANCIAL INSTRUMENTS
|-- | --------------------------------



The Companys derivative usage is principally foreign currency forwards. These contracts typically have maturities of less than one year. As a matter
of policy, the Company does not use derivative instruments unless there is an underlying exposure. The Companys foreign currency forwards have been designated and qualify as cash flow hedges under the criteria of SFAS No. 133. SFAS No. 133
requires that changes in fair value of derivatives that qualify as cash flow hedges be recognized in other comprehensive income, while the ineffective portion of change in derivatives in fair value be recognized immediately in earnings. The fair
value of the Companys foreign currency forward contracts at September 30, 2003 was $2.8 million with a notional value of $2.8 million



|6. | STOCK-BASED COMPENSATION
|-- | ------------------------



The Company has adopted SFAS No. 148 Accounting for Stock-Based Compensation  Transition and Disclosure  an amendment of FASB Statement No.
123. As permitted under SFAS 123 the Company accounts for stock options under the intrinsic value method recognition and measurement principles of APB Opinion No. 25, Accounting for Stock issued to Employees,and related Interpretations. No
stock-based employee compensation cost is reflected in net income (loss) because all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. As required by SFAS No. 148
the following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation:



|                                  |  | Quarter endedSeptember 30 |         | Six months endedSeptember 30
|--------------------------------- |  | ------------------------- | ------- | ----------------------------
|                                  |  | 2003                      |         |                             
|Net income (loss) (in thousands): |  |                           |         |                             
|As reported                       |  | $                         | (14,309 | )                           
|Pro forma                         |  | $                         | (14,381 | )                           
|Diluted                           |  | $                         | (13,770 | )                           
|Pro forma                         |  | $                         | (13,842 | )                           
|Basic earnings per share:         |  |                           |         |                             
|As reported                       |  | $                         | (1.05   | )                           
|Pro forma                         |  | $                         | (1.06   | )                           
|Diluted earnings per share:       |  |                           |         |                             
|As reported                       |  | $                         | (0.90   | )                           
|Pro forma                         |  | $                         | (0.91   | )                           



|7. | GOODWILL AND OTHER INTANGIBLE ASSETS
|-- | ------------------------------------



In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 141 requires the use of the purchase method of accounting for business combinations initiated after June 30, 2001 and broadens the criteria for recording intangible assets separate from goodwill. SFAS No.
142 uses a non-amortization approach to account for purchased goodwill and certain intangible assets with indefinite useful lives and also requires at least an annual assessment for impairment by applying a fair-value-based test. Intangible assets
with finite useful lives will continue to be amortized over their useful lives.



-7-



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STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued



|7. | GOODWILL AND OTHER INTANGIBLE ASSETS Continued
|-- | ----------------------------------------------



In accordance with SFAS No. 142, goodwill was tested for impairment as of the beginning of the year
in which the statement was adopted in its entirety. SFAS No. 142 allowed six months from the date the statement was initially applied to complete the first step of the transitional goodwill impairment test. During the second quarter of 2003, the
Company completed the process of performing the first step of the transitional goodwill impairment test as of April 1, 2003, and as a result of the test performed, management believes that goodwill was not impaired as of April 1, 2003. SFAS No. 142
also requires that goodwill be tested for impairment annually at the same time each year and on an interim basis when events or circumstances change. The Company elected to perform its annual goodwill impairment test as of September 30, and any
subsequent impairment losses, if any, will be reflected in operating income in the statements of income. The Company completed its impairment test and there was no impairment identified at September 30, 2003.



|GOODWILL                                |  | Total
|--------------------------------------- |  | -----
|(In thousands)                          |  |      
|At April 1, 2003 and September 30, 2003 |  | $    
|                                        |  |      
|                                        | 
|INTANGIBLES                             |  | Total
|(In thousands)                          |  |      
|At April 1, 2003                        |  | $    
|Less amortized                          |  |      
|                                        |  |      
|Balance as of September 30, 2003        |  | $    
|                                        |  |      



|8. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------



In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51. This interpretation
provides guidance related to identifying variable interest entities (previously known as special purpose entities or SPEs) and determining whether such entities should be consolidated. Certain disclosures are required if it is reasonably possible
that a company will consolidate or disclose information about a variable interest entity when it initially applies FIN No. 46. This interpretation will be effective for the Companys quarter ending December 31, 2003. The Company has no
investment in or contractual relationship or other business relationship with a variable interest entity and therefore the adoption of FIN 46 will not have any impact on the Companys consolidated financial position or results of operations.
However, if the Company enters into any such arrangement with a variable interest entity in the future (or an entity with which we currently have a relationship is reconsidered based on guidance in FIN 46 to be a variable interest entity), the
Companys consolidated financial position or results of operations will be impacted.



In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, to provide clarification on the meaning of an underlying, the characteristics of a
derivative that contains financing components and the meaning of an initial investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. This statement
is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. In addition, except as stated below, all provisions of this statement should be applied
prospectively. The provisions of this statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective
effective dates. The adoption of this statement did not have a material impact on the Companys financial condition or results of operations.



-8-



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STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued



|8. | RECENT ACCOUNTING PRONOUNCEMENTS Continued
|-- | ------------------------------------------



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a
financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of
liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, thus the Company adopted the provisions of SFAS No. 150 on July 1, 2003. The adoption of this statement did not have a material impact on the Companys financial position or results of operations.



|9. | LEGAL PROCEEDINGS
|-- | -----------------



On February 26, 2001, we were served with a Third Amended Complaint, naming us and other leaf merchants as defendants in Deloach, et al. V. Philip Morris
Inc., et al., a suit originally filed against U.S. cigarette manufacturers in the United States District Court for the District of Columbia and now pending in the United States District Court for the Middle District of North Carolina, Greensboro
Division (Case No. 00-CV-1235). The Deloach suit is a class action claim brought on behalf of U.S. tobacco growers and quota holders alleging that defendants violated antitrust laws by bid-rigging at tobacco auctions and by conspiring to undermine
the tobacco quota and price support program administered by the federal government. In May 2003, we along with several other domestic cigarette manufacturers and tobacco-leaf dealers, entered into a settlement agreement with the plaintiffs. Under
the agreement we agreed to pay $7 million for distribution of the class. The total amount to be paid by all the settling defendants, to the class is approximately $212 million, plus commitments by the three settling cigarette manufacturers (1) to
purchase certain volumes of domestic flue-cured and burley tobacco for at least 10 years and (2) to pay the fees of plaintiffs counsel when approved by the court. The court approved the settlement agreement in October 2003, and we made our
agreed payment on October 16, 2003.



In October 2001, the
Director General - Competition of the European Commission, or DG Comp, began conducting an administrative investigation of certain selling and buying practices alleged to have occurred within the leaf tobacco industry in some countries within the
European Union, including Spain, Italy and Greece. We, through our local subsidiaries, are cooperating fully with the investigation and have discovered and voluntarily disclosed information which tends to establish that a number of leaf dealers,
including our subsidiaries, have jointly agreed with respect to green tobacco prices and purchase quantities. We believe, however, that there are significant mitigating circumstances relating to the structure of these markets, their historical
conduct and the prominence of sellers cooperatives. The investigation is in its early stages and although the fines, if any, that the DG Comp may assess on our subsidiaries could be material, we are not able to make an accurate assessment of
the amount of any such fines at this time.



Except for the
above, neither we nor any of our subsidiaries are currently involved in any litigation that we believe would, individually or in the aggregate, have a material adverse effect on our consolidated financial position, consolidated results of
operations, or liquidity nor, to our knowledge, is any such litigation currently threatened against us or our subsidiaries.



|10. | SENIOR NOTES
|--- | ------------



The 8 7/8 % Senior Notes due 2005 were issued by Standard Commercial Tobacco Co., Inc. (the Issuer), a wholly owned subsidiary of the Company.
The Company and Standard Wool, Inc., a wholly owned subsidiary of the Company (the Guarantors), jointly and severally, guarantee on a senior basis, the full and prompt performance of the issuers obligations under the terms of the
indenture. Management has determined that full financial statements of the Guarantors would not be material to investors and such financial statements are not provided. The following supplemental combining financial statements present information
regarding the issuer and the Guarantors.



-9-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING BALANCE SHEET

September 30, 2003

(In thousands; unaudited)



|                                            |  | StandardCommercialTobacco Co.Inc.(Issuer) |         |   | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------- |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---------------------------- |  | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Assets                                      |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Cash                                        |  | $                                         | 2,953   |   |                                          | $ | 18      |                              |  | $                                 |  |  | $            | 13,594  |   |       | $
|Receivables                                 |  |                                           | 19,913  |   |                                          |   |        |                              |  |                                   |  |  |              | 169,264 |   |       |  
|Intercompany receivables                    |  |                                           | 101,413 |   |                                          |   | 21,524  |                              |  |                                   |  |  |              | 35,218  |   |       |  
|Inventories                                 |  |                                           | 64,691  |   |                                          |   |        |                              |  |                                   |  |  |              | 203,137 |   |       |  
|Assets of discontinued operations           |  |                                           |        |   |                                          |   |        |                              |  |                                   |  |  |              | 110,612 |   |       |  
|Prepaid expenses                            |  |                                           | 3,301   |   |                                          |   |        |                              |  |                                   |  |  |              | 1,589   |   |       |  
|Marketable securities                       |  |                                           |        |   |                                          |   | 1       |                              |  |                                   |  |  |              | 1,242   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Current assets                              |  |                                           | 192,271 |   |                                          |   | 21,543  |                              |  |                                   |  |  |              | 534,656 |   |       |  
|Property, plant and equipment               |  |                                           | 39,614  |   |                                          |   |        |                              |  |                                   |  |  |              | 117,475 |   |       |  
|Investment in subsidiaries                  |  |                                           | 176,637 |   |                                          |   | 249,287 |                              |  |                                   |  |  |              | 153,214 |   |       |  
|Investment in affiliates                    |  |                                           |        |   |                                          |   |        |                              |  |                                   |  |  |              | 7,988   |   |       |  
|Other noncurrent assets                     |  |                                           | (1,880  | ) |                                          |   | 13,696  |                              |  |                                   |  |  |              | 32,397  |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Total assets                                |  | $                                         | 406,642 |   |                                          | $ | 284,526 |                              |  | $                                 | 0 |  | $            | 845,730 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Liabilities                                 |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Short-term borrowings                       |  | $                                         | 30,890  |   |                                          | $ |        |                              |  | $                                 |  |  | $            | 212,684 |   |       | $
|Current portion of long-term debt           |  |                                           |        |   |                                          |   |        |                              |  |                                   |  |  |              | 7,974   |   |       |  
|Accounts payable                            |  |                                           | 12,899  |   |                                          |   | 8,245   |                              |  |                                   |  |  |              | 98,363  |   |       |  
|Liabilities of discontinued operations      |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              | 25,132  |   |       |  
|Intercompany accounts payable               |  |                                           | 30,328  |   |                                          |   | 1,425   |                              |  |                                   |  |  |              | 126,402 |   |       |  
|Taxes accrued                               |  |                                           | 10,677  |   |                                          |   | (12,250 | )                            |  |                                   |  |  |              | 16,366  |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Current liabilities                         |  |                                           | 84,794  |   |                                          |   | (2,580  | )                            |  |                                   |  |  |              | 486,921 |   |       |  
|Long-term debt                              |  |                                           | 65,177  |   |                                          |   |        |                              |  |                                   |  |  |              | 18,673  |   |       |  
|Convertible subordinated debentures         |  |                                           |        |   |                                          |   | 45,051  |                              |  |                                   |  |  |              |        |   |       |  
|Retirement and other benefits               |  |                                           | 9,652   |   |                                          |   | 1,021   |                              |  |                                   |  |  |              | 4,624   |   |       |  
|Deferred taxes                              |  |                                           | (1,480  | ) |                                          |   | (428    | )                            |  |                                   |  |  |              | 6,342   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Total liabilities                           |  |                                           | 158,143 |   |                                          |   | 43,064  |                              |  |                                   |  |  |              | 516,560 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Minority interests                          |  |                                           |        |   |                                          |   |        |                              |  |                                   |  |  |              | 1,807   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Shareholders equity                        |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Common stock                                |  |                                           | 993     |   |                                          |   | 3,248   |                              |  |                                   |  |  |              | 148,765 |   |       |  
|Additional paid-in capital                  |  |                                           | 130,860 |   |                                          |   | 110,634 |                              |  |                                   |  |  |              | 60,564  |   |       |  
|Unearned restricted stock plan compensation |  |                                           | (996    | ) |                                          |   | (708    | )                            |  |                                   |  |  |              | (2,280  | ) |       |  
|Treasury stock at cost                      |  |                                           |        |   |                                          |   | (4,250  | )                            |  |                                   |  |  |              |        |   |       |  
|Retained earnings                           |  |                                           | 128,878 |   |                                          |   | 157,755 |                              |  |                                   |  |  |              | 145,244 |   |       |  
|Accumulated other comprehensive income      |  |                                           | (11,236 | ) |                                          |   | (25,217 | )                            |  |                                   |  |  |              | (24,930 | ) |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Total shareholders equity                  |  |                                           | 248,499 |   |                                          |   | 241,462 |                              |  |                                   |  |  |              | 327,363 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  
|Total liabilities and equity                |  | $                                         | 406,642 |   |                                          | $ | 284,526 |                              |  | $                                 | 0 |  | $            | 845,730 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |                                   |   |  |              |         |   |       |  



-10-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Second Quarter
ended September 30, 2003

(In thousands; unaudited)



|                                           |  | StandardCommercialTobacco Co.Inc.(Issuer) |         |   | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------ |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Sales                                      |  | $                                         | 50,441  |   |                                          | $ |        |                              |  | $ |                                  |   |  | $            | 220,664 |   |       | $
|Cost of sales:                             |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Materials services and supplies            |  |                                           | 41,663  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 189,237 |   |       |  
|Interest                                   |  |                                           | 291     |   |                                          |   |        |                              |  |   |                                  |   |  |              | 2,378   |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Gross profit                               |  |                                           | 8,487   |   |                                          |   |        |                              |  |   |                                  |   |  |              | 29,049  |   |       |  
|Selling, general & administrative expenses |  |                                           | 2,618   |   |                                          |   | 1,641   |                              |  |   |                                  |   |  |              | 14,600  |   |       |  
|Other interest expense                     |  |                                           | 1,202   |   |                                          |   | 1,073   |                              |  |   |                                  |   |  |              | (991    | ) |       |  
|Other income (expense) net                 |  |                                           | 1,144   |   |                                          |   | (101    | )                            |  |   |                                  |   |  |              | (461    | ) |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) before taxes                 |  |                                           | 5,811   |   |                                          |   | (2,815  | )                            |  |   |                                  |   |  |              | 14,979  |   |       |  
|Income taxes                               |  |                                           | 2,208   |   |                                          |   | (1,070  | )                            |  |   |                                  |   |  |              | 3,008   |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) after taxes                  |  |                                           | 3,603   |   |                                          |   | (1,745  | )                            |  |   |                                  |   |  |              | 11,971  |   |       |  
|Minority interests                         |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 71      |   |       |  
|Equity in earnings of affiliates           |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 367     |   |       |  
|Equity in earnings of subsidiaries         |  |                                           | 12,409  |   |                                          |   | 16,012  |                              |  |   | 0                                 |   |  |              | 0       |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income from continuing operations          |  |                                           | 16,012  |   |                                          |   | 14,267  |                              |  |   |                                  |   |  |              | 12,409  |   |       |  
|Discontinued operations                    |  |                                           | (13,395 | ) |                                          |   | (28,576 | )                            |  |   | 18,823                            |   |  |              | (11,122 | ) |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Net income                                 |  |                                           | 2,617   |   |                                          |   | (14,309 | )                            |  |   | 18,823                            |   |  |              | 1,287   |   |       |  
|Retained earnings at beginning of period   |  |                                           | 133,761 |   |                                          |   | 173,256 |                              |  |   | (18,823                           | ) |  |              | 143,957 |   |       |  
|Common stock dividends                     |  |                                           | (7,500  | ) |                                          |   | (1,192  | )                            |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Retained earnings at end of period         |  | $                                         | 128,878 |   |                                          | $ | 157,755 |                              |  | $ |                                  |   |  | $            | 145,244 |   |       | $
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  



-11-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Six months ended September 30, 2003

(In thousands; unaudited)



|                                           |  | StandardCommercialTobacco Co.Inc.(Issuer) |         |   | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------ |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Sales                                      |  | $                                         | 83,944  |   |                                          | $ |        |                              |  | $ |                                  |   |  | $            | 433,593 |   |       | $
|Cost of sales:                             |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Materials services and supplies            |  |                                           | 69,326  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 372,290 |   |       |  
|Interest                                   |  |                                           | 386     |   |                                          |   |        |                              |  |   |                                  |   |  |              | 4,857   |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Gross profit                               |  |                                           | 14,232  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 56,446  |   |       |  
|Selling, general & administrative expenses |  |                                           | 6,718   |   |                                          |   | 2,975   |                              |  |   |                                  |   |  |              | 27,615  |   |       |  
|Other interest expense                     |  |                                           | 2,598   |   |                                          |   | 1,887   |                              |  |   |                                  |   |  |              | (2,063  | ) |       |  
|Other income (expense) net                 |  |                                           | 2,461   |   |                                          |   | (181    | )                            |  |   |                                  |   |  |              | (1,281  | ) |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) before taxes                 |  |                                           | 7,377   |   |                                          |   | (5,043  | )                            |  |   |                                  |   |  |              | 29,613  |   |       |  
|Income taxes                               |  |                                           | 2,803   |   |                                          |   | (1,916  | )                            |  |   |                                  |   |  |              | 8,615   |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) after taxes                  |  |                                           | 4,574   |   |                                          |   | (3,127  | )                            |  |   |                                  |   |  |              | 20,998  |   |       |  
|Minority interests                         |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 139     |   |       |  
|Equity in earnings of affiliates           |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 567     |   |       |  
|Equity in earnings of subsidiaries         |  |                                           | 21,704  |   |                                          |   | 26,278  |                              |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income from continuing operations          |  |                                           | 26,278  |   |                                          |   | 23,151  |                              |  |   |                                  |   |  |              | 21,704  |   |       |  
|Discontinued operations                    |  |                                           | (13,395 | ) |                                          |   | (30,848 | )                            |  |   | 16,551                            |   |  |              | (13,395 | ) |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Net income                                 |  |                                           | 12,883  |   |                                          |   | (7,697  | )                            |  |   | 16,551                            |   |  |              | 8,309   |   |       |  
|Retained earnings at beginning of period   |  |                                           | 123,495 |   |                                          |   | 167,495 |                              |  |   | (16,551                           | ) |  |              | 136,935 |   |       |  
|Common stock dividends                     |  |                                           | (7,500  | ) |                                          |   | (2,043  | )                            |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Retained earnings at end of period         |  | $                                         | 128,878 |   |                                          | $ | 157,755 |                              |  | $ |                                  |   |  | $            | 145,244 |   |       |  
|                                           |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  



-12-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS

Six months ended September 30, 2003

(In thousands; unaudited)



|                                                |  | StandardCommercialTobacco Co.Inc.(Issuer) |        |   | StandardCommercialCorporation(Guarantor) |   |        | StandardWool Inc.(Guarantor) |  | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         | Total | 
|----------------------------------------------- |  | ----------------------------------------- | ------ | - | ---------------------------------------- | - | ------ | ---------------------------- |  | --------------------------------- | - |  | ------------ | ------- | ----- | 
|Cash provided by (used in) operating activities |  | $                                         | (494   | ) |                                          | $ | 2,007  |                              |  | $                                 |  |  |              | (63,127 | )     | 
|Cash flows from investing activities            |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Property, plant and equipment                   |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|- additions                                     |  |                                           | (6,081 | ) |                                          |   |       |                              |  |                                   |  |  |              | (10,638 | )     | 
|- disposals                                     |  |                                           |       |   |                                          |   |       |                              |  |                                   |  |  |              | 126     |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Net cash used for continuing operations         |  |                                           | (6,081 | ) |                                          |   |       |                              |  |                                   |  |  |              | (10,512 | )     | 
|Net cash from discontinued operations           |  |                                           |       |   |                                          |   |       |                              |  |                                   |  |  |              | 1,019   |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash provided by (used in) investing activities |  |                                           | (6,081 | ) |                                          |   |       |                              |  |                                   |  |  |              | (9,493  | )     | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash flows from financing activities:           |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Proceeds from long-term borrowings              |  |                                           |       |   |                                          |   |       |                              |  |                                   |  |  |              | 12,218  |       | 
|Repayment of long-term borrowings               |  |                                           |       |   |                                          |   |       |                              |  |                                   |  |  |              | (4,668  | )     | 
|Net change in short-term borrowings             |  |                                           | 9,114  |   |                                          |   |       |                              |  |                                   |  |  |              | 52,357  |       | 
|Dividends received /( paid)                     |  |                                           |       |   |                                          |   | (2,043 | )                            |  |                                   |  |  |              |        |       | 
|Other                                           |  |                                           | (49    | ) |                                          |   |       |                              |  |                                   |  |  |              |        |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash provided by (used in) financing activities |  |                                           | 9,065  |   |                                          |   | (2,043 | )                            |  |                                   |  |  |              | 59,907  |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Effect of exchange rate changes on cash         |  |                                           |       |   |                                          |   |       |                              |  |                                   |  |  |              | 254     |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Increase (decrease) in cash for year            |  |                                           | 2,490  |   |                                          |   | (36    | )                            |  |                                   |  |  |              | (12,459 | )     | 
|Cash at beginning of year                       |  |                                           | 463    |   |                                          |   | 54     |                              |  |                                   |  |  |              | 26,053  |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash at end of period                           |  | $                                         | 2,953  |   |                                          | $ | 18     |                              |  | $                                 |  |  | $            | 13,594  |       | 
|                                                |  |                                           |        |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Interest                                        |  | $                                         | 3,142  |   |                                          | $ | 1,615  |                              |  | $                                 |  |  | $            | 4,125   |       | 
|Income taxes                                    |  |                                           |       |   |                                          |   | 3,589  |                              |  |                                   |  |  |              | 5,435   |       | 



-13-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING BALANCE SHEET

September 30, 2002

(In thousands; unaudited)



|                                            |  | StandardCommercialTobaccoCo. Inc.(Issuer) |         |   | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------- |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Assets                                      |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Cash                                        |  | $                                         |        |   |                                          | $ | 58      |                              |  | $ |                                  |   |  | $            | 10,545  |   |       | $
|Receivables                                 |  |                                           | 24,408  |   |                                          |   | 14      |                              |  |   |                                  |   |  |              | 131,907 |   |       |  
|Intercompany receivables                    |  |                                           | 132,248 |   |                                          |   | 33,667  |                              |  |   |                                  |   |  |              | 13,124  |   |       |  
|Inventories                                 |  |                                           | 64,477  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 191,814 |   |       |  
|Assets of discontinued operations           |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 133,369 |   |       |  
|Prepaid expenses                            |  |                                           | 1,916   |   |                                          |   |        |                              |  |   |                                  |   |  |              | 3,840   |   |       |  
|Marketable securities                       |  |                                           |        |   |                                          |   | 1       |                              |  |   |                                  |   |  |              | 1,018   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Current assets                              |  |                                           | 223,049 |   |                                          |   | 33,740  |                              |  |   |                                  |   |  |              | 485,617 |   |       |  
|Property, plant and equipment               |  |                                           | 34,120  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 101,826 |   |       |  
|Investment in subsidiaries                  |  |                                           | 141,498 |   |                                          |   | 227,893 |                              |  |   | 14,540                            |   |  |              | 153,214 |   |       |  
|Investment in affiliates                    |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 6,641   |   |       |  
|Other noncurrent assets                     |  |                                           | (68     | ) |                                          |   | 14,391  |                              |  |   |                                  |   |  |              | 19,996  |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Total assets                                |  | $                                         | 398,599 |   |                                          | $ | 276,024 |                              |  | $ | 14,540                            |   |  | $            | 767,294 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Liabilities                                 |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Short-term borrowings                       |  | $                                         | 18,662  |   |                                          | $ |        |                              |  | $ |                                  |   |  | $            | 207,566 |   |       | $
|Current portion of long-term debt           |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              | 4,953   |   |       |  
|Accounts payable                            |  |                                           | 13,903  |   |                                          |   | 1,009   |                              |  |   |                                  |   |  |              | 73,201  |   |       |  
|Liabilities of discontinued operations      |  |                                           |        |   |                                          |   |        |                              |  |   |                                   |   |  |              | 28,527  |   |       |  
|Intercompany accounts payable               |  |                                           | 45,505  |   |                                          |   | 20,827  |                              |  |   | 1,505                             |   |  |              | 111,202 |   |       |  
|Taxes accrued                               |  |                                           | 16,240  |   |                                          |   | (11,894 | )                            |  |   |                                  |   |  |              | 9,288   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Current liabilities                         |  |                                           | 94,310  |   |                                          |   | 9,942   |                              |  |   | 1,505                             |   |  |              | 434,737 |   |       |  
|Long-term debt                              |  |                                           | 84,000  |   |                                          |   |        |                              |  |   |                                  |   |  |              | 11,977  |   |       |  
|Convertible subordinated debentures         |  |                                           |        |   |                                          |   | 45,051  |                              |  |   |                                  |   |  |              |        |   |       |  
|Retirement and other benefits               |  |                                           | 9,624   |   |                                          |   | 964     |                              |  |   |                                  |   |  |              | 5,979   |   |       |  
|Deferred taxes                              |  |                                           | (1,710  | ) |                                          |   | (376    | )                            |  |   |                                  |   |  |              | 5,910   |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Total liabilities                           |  |                                           | 186,224 |   |                                          |   | 55,581  |                              |  |   | 1,505                             |   |  |              | 458,603 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Minority interests                          |  |                                           |        |   |                                          |   |        |                              |  |   |                                  |   |  |              |        |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Shareholders equity                        |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Common stock                                |  |                                           | 993     |   |                                          |   | 3,220   |                              |  |   | 32,404                            |   |  |              | 166,240 |   |       |  
|Additional paid-in capital                  |  |                                           | 130,860 |   |                                          |   | 108,260 |                              |  |   |                                  |   |  |              | 60,564  |   |       |  
|Unearned restricted stock plan compensation |  |                                           | (861    | ) |                                          |   | (613    | )                            |  |   |                                  |   |  |              | (2,183  | ) |       |  
|Treasury stock at cost                      |  |                                           |        |   |                                          |   | (4,250  | )                            |  |   |                                  |   |  |              |        |   |       |  
|Retained earnings                           |  |                                           | 99,369  |   |                                          |   | 151,167 |                              |  |   | (13,765                           | ) |  |              | 121,124 |   |       |  
|Accumulated other comprehensive income      |  |                                           | (17,986 | ) |                                          |   | (37,341 | )                            |  |   | (5,604                            | ) |  |              | (37,054 | ) |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Total shareholders equity                  |  |                                           | 212,375 |   |                                          |   | 220,443 |                              |  |   | 13,035                            |   |  |              | 308,691 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Total liabilities and equity                |  | $                                         | 398,599 |   |                                          | $ | 276,024 |                              |  | $ | 14,540                            |   |  | $            | 767,294 |   |       |  
|                                            |  |                                           |         |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  







-14-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Second quarter
ended September 30, 2002

(In thousands; unaudited)



|                                           |  | StandardCommercialTobaccoCo. Inc.(Issuer) |        |   | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------ |  | ----------------------------------------- | ------ | - | ---------------------------------------- | - | ------- | ---------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Sales                                      |  | $                                         | 63,365 |   |                                          | $ |        |                              |  | $ |                                  |   |  | $            | 209,802 |   |       | $
|Cost of sales:                             |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Materials services and supplies            |  |                                           | 51,752 |   |                                          |   |        |                              |  |   |                                  |   |  |              | 175,609 |   |       |  
|Interest                                   |  |                                           | 302    |   |                                          |   |        |                              |  |   |                                  |   |  |              | 3,368   |   |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Gross profit                               |  |                                           | 11,311 |   |                                          |   |        |                              |  |   |                                  |   |  |              | 30,825  |   |       |  
|Selling, general & administrative expenses |  |                                           | 4,553  |   |                                          |   | 1,897   |                              |  |   |                                  |   |  |              | 11,672  |   |       |  
|Other interest expense                     |  |                                           | 1,864  |   |                                          |   | 815     |                              |  |   |                                  |   |  |              | (1,857  | ) |       |  
|Other income (expense) net                 |  |                                           | (1,876 | ) |                                          |   | 4,296   |                              |  |   |                                  |   |  |              | (1,105  | ) |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) before taxes                 |  |                                           | 3,018  |   |                                          |   | 1,584   |                              |  |   |                                  |   |  |              | 19,905  |   |       |  
|Income taxes                               |  |                                           | 1,350  |   |                                          |   | 508     |                              |  |   |                                  |   |  |              | 6,103   |   |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) after taxes                  |  |                                           | 1,668  |   |                                          |   | 1,076   |                              |  |   |                                  |   |  |              | 13,802  |   |       |  
|Equity in earnings of affiliates           |  |                                           |       |   |                                          |   |        |                              |  |   |                                  |   |  |              | 100     |   |       |  
|Equity in earnings of subsidiaries         |  |                                           | 13,902 |   |                                          |   | 15,570  |                              |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income from continuing operations          |  |                                           | 15,570 |   |                                          |   | 16,646  |                              |  |   |                                  |   |  |              | 13,902  |   |       |  
|Discontinued operations                    |  |                                           |       |   |                                          |   | (1,524  | )                            |  |   | (1,524                            | ) |  |              | (1,524  | ) |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Net income                                 |  |                                           | 15,570 |   |                                          |   | 15,122  |                              |  |   | (1,524                            | ) |  |              | 12,378  |   |       |  
|Retained earnings at beginning of period   |  |                                           | 83,799 |   |                                          |   | 136,888 |                              |  |   | (12,241                           | ) |  |              | 108,746 |   |       |  
|Common stock dividends                     |  |                                           |       |   |                                          |   | (843    | )                            |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Retained earnings at end of period         |  | $                                         | 99,369 |   |                                          | $ | 151,167 |                              |  | $ | (13,765                           | ) |  | $            | 121,124 |   |       | $
|                                           |  |                                           |        |   |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  



-15-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Six months ended
September 30, 2002

(In thousands; unaudited)



|                                           |  | StandardCommercialTobacco Co.Inc.(Issuer) |        | StandardCommercialCorporation(Guarantor) |   |         | StandardWool Inc.(Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|------------------------------------------ |  | ----------------------------------------- | ------ | ---------------------------------------- | - | ------- | ---------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | -
|Sales                                      |  | $                                         | 97,515 |                                          | $ |        |                              |  | $ |                                  |   |  | $            | 392,994 |   |       | $
|Cost of sales:                             |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Materials services and supplies            |  |                                           | 78,506 |                                          |   |        |                              |  |   |                                  |   |  |              | 334,418 |   |       |  
|Interest                                   |  |                                           | 350    |                                          |   |        |                              |  |   |                                  |   |  |              | 5,842   |   |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Gross profit                               |  |                                           | 18,659 |                                          |   |        |                              |  |   |                                  |   |  |              | 52,734  |   |       |  
|Selling, general & administrative expenses |  |                                           | 6,907  |                                          |   | 3,237   |                              |  |   |                                  |   |  |              | 23,965  |   |       |  
|Other interest expense                     |  |                                           | 3,728  |                                          |   | 1,692   |                              |  |   |                                  |   |  |              | (3,326  | ) |       |  
|Other income (expense) net                 |  |                                           | 79     |                                          |   | 4,416   |                              |  |   |                                  |   |  |              | (2,511  | ) |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) before taxes                 |  |                                           | 8,103  |                                          |   | (513    | )                            |  |   |                                  |   |  |              | 29,584  |   |       |  
|Income taxes                               |  |                                           | 3,079  |                                          |   | (204    | )                            |  |   |                                  |   |  |              | 11,234  |   |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income (loss) after taxes                  |  |                                           | 5,024  |                                          |   | (309    | )                            |  |   |                                  |   |  |              | 18,350  |   |       |  
|Equity in earnings of affiliates           |  |                                           |       |                                          |   |        |                              |  |   |                                  |   |  |              | 100     |   |       |  
|Equity in earnings of subsidiaries         |  |                                           | 18,450 |                                          |   | 23,474  |                              |  |   |                                  |   |  |              |        |   |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Income from continuing operations          |  |                                           | 23,474 |                                          |   | 23,165  |                              |  |   |                                  |   |  |              | 18,450  |   |       |  
|Discontinued operations                    |  |                                           |       |                                          |   | (3,299  | )                            |  |   | (3,299                            | ) |  |              | (3,298  | ) |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Net income                                 |  |                                           | 23,474 |                                          |   | 19,866  |                              |  |   | (3,299                            | ) |  |              | 15,152  |   |       |  
|Retained earnings at beginning of period   |  |                                           | 75,895 |                                          |   | 132,812 |                              |  |   | (10,466                           | ) |  |              | 106,426 |   |       |  
|Common stock dividends                     |  |                                           |       |                                          |   | (1,511  | )                            |  |   |                                  |   |  |              | (454    | ) |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  
|Retained earnings at end of period         |  | $                                         | 99,369 |                                          | $ | 151,167 |                              |  | $ | (13,765                           | ) |  | $            | 121,124 |   |       |  
|                                           |  |                                           |        |                                          |   |         |                              |  |   |                                   |   |  |              |         |   |       |  





-16-



---

STANDARD COMMERCIAL CORPORATION

SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS

Six months ended September 30, 2002

(In thousands; unaudited)



|                                                |  | StandardCommercialTobacco Co.Inc.(Issuer) |         |   | StandardCommercialCorporation(Guarantor) |   |        | StandardWool Inc.(Guarantor) |  | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         | Total | 
|----------------------------------------------- |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ------ | ---------------------------- |  | --------------------------------- | - |  | ------------ | ------- | ----- | 
|Cash provided by (used in) operating activities |  | $                                         | 7,086   |   |                                          | $ | 6,426  |                              |  | $                                 |  |  |              | (87,865 | )     | 
|Cash flows from investing activities            |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Property, plant and equipment                   |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|-additions                                      |  |                                           | (16,368 | ) |                                          |   |       |                              |  |                                   |  |  |              | (4,431  | )     | 
|-disposals                                      |  |                                           | 3       |   |                                          |   |       |                              |  |                                   |  |  |              | 154     |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash used for continuing operations             |  |                                           | (16,365 | ) |                                          |   |       |                              |  |                                   |  |  |              | (4,277  | )     | 
|Cash used in discontinued operations            |  |                                           |        |   |                                          |   |       |                              |  |                                   |  |  |              | (362    | )     | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash provided by (used in) investing activities |  |                                           | (16,365 | ) |                                          |   |       |                              |  |                                   |  |  |              | (4,639  | )     | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash flows from financing activities:           |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Proceeds from long-term borrowings              |  |                                           |        |   |                                          |   |       |                              |  |                                   |  |  |              | 6,641   |       | 
|Repayment of long-term borrowings               |  |                                           |        |   |                                          |   |       |                              |  |                                   |  |  |              | (13,329 | )     | 
|Net change in short-term borrowings             |  |                                           | 6,744   |   |                                          |   |       |                              |  |                                   |  |  |              | 87,104  |       | 
|Buyback of long-term debt                       |  |                                           |        |   |                                          |   | (4,791 | )                            |  |                                   |  |  |              |        |       | 
|Dividends received /( paid)                     |  |                                           |        |   |                                          |   | (1,511 | )                            |  |                                   |  |  |              |        |       | 
|Other                                           |  |                                           |        |   |                                          |   | (145   | )                            |  |                                   |  |  |              |        |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash provided by (used in) financing activities |  |                                           | 6,744   |   |                                          |   | (6,447 | )                            |  |                                   |  |  |              | 80,416  |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Effect of exchange rate changes on cash         |  |                                           |        |   |                                          |   |       |                              |  |                                   |  |  |              | 563     |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Increase (decrease) in cash for year            |  |                                           | (2,535  | ) |                                          |   | (21    | )                            |  |                                   |  |  |              | (11,525 | )     | 
|Cash at beginning of year                       |  |                                           | 2,535   |   |                                          |   | 79     |                              |  |                                   |  |  |              | 22,070  |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Cash at end of period                           |  | $                                         |        |   |                                          | $ | 58     |                              |  | $                                 |  |  | $            | 10,545  |       | 
|                                                |  |                                           |         |   |                                          |   |        |                              |  |                                   |   |  |              |         |       | 
|Interest                                        |  | $                                         | 5,092   |   |                                          | $ | 1,692  |                              |  | $                                 |  |  | $            | 2,895   |       | 
|Income taxes                                    |  |                                           | 916     |   |                                          |   | 2,936  |                              |  |                                   |  |  |              | 5,677   |       | 





-17-



---

Item 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION



Results of Operations

Discontinued operations



During the
last quarter of fiscal 2002 the Company decided to close and dispose of wool units in South Africa, New Zealand, Argentina and the specialty fibers business in Holland. By September 30, 2003 the sale of the Companies in South Africa and New Zealand
and the trade assets of Argentina and specialty fibers units had been completed.



Despite the decision in fiscal 2002 to shrink our wool division and focus on its core markets while also reducing divisional overheads, trading conditions remained difficult, resulting in continual losses. This is particularly true in the
initial processing stages for the apparel industry. Given the continuing uncertainty of an adequate turnaround leading to acceptable returns for our shareholders, we have made the strategic decision to focus on our core tobacco operations.
Accordingly, we have decided to exit all of our remaining wool operations. These operations are in Australia, UK, Chile, France and Germany. We are currently in discussions with various prospective purchasers for these operations and have identified
these assets as held for sale. The wool operating units are available for immediate sale and the expectation is that the exit plan will be completed without significant changes. We expect to complete the process of selling/liquidating these units in
the next twelve months.



These wool units are expected to incur additional
operating losses until final disposition. Once disposed, we will not retain a financial interest and we have not identified any significant contingent liabilities that would delay or significantly alter the plan of disposition. The Company will
continue to guarantee the debt of the wool units until disposition, at which time we will no longer provide any guarantees for the obligations or commitments of the wool units.



We have accounted for the sale of the wool units as discontinued operations, in accordance with the provisions of SFAS No 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. The results for all periods presented are included in the consolidated financial statements as discontinued operations. As noted above, since the existing debt of the wool
units is guaranteed by the Company, we have not included any such debt in liabilities of discontinued operations.



The wool trading loss for the quarter and six months excluding the loss to discontinue the operations was $2.0 and $4.2 million respectively versus $1.5 and $3.3 million
in the prior year periods. The charge recorded in the current quarter and for the six months to discontinue the wool operation was $26.6 million. The basic loss per share for the discontinued operations for the quarter and six months was $2.10 and
$2.27 respectively versus a loss of $0.11 and $0.25 in the prior year periods.



The estimated loss to discontinue the wool operations of $26.6 million has been recorded during the quarter ended September 30, 2003 as the carrying amount of the net assets of the wool units exceeded the fair value less estimated disposal
costs. The fair value has been determined based on current negotiations with prospective purchasers and comparisons with other industry transactions.



Continuing operations



Tobacco sales for the quarter ended September 30, 2003 were $210.1 million, an increase of 3.1% from $203.7 million a year earlier. For the six months sales were up 7.6% from $356.9 million to $384.2 million. Volumes
for the current quarter were down 2.8% and for the six months were up 4.1%. The average sales value per kilo for the current quarter and six months were up 6.4% and 4.4% respectively over the prior year periods. Shipments for the quarter and six
months from Malawi, Zimbabwe and Spain were lower than prior year periods due to the reduction in quantity of tobacco available for marketing, but shipments from Italy, Argentina, Brazil, Kenya, China and Thailand were higher.



Gross profit for the quarter and six months was $37.5 million and $70.7 million versus $42.1
million and $71.4 million respectively in the prior year periods. The variances were mainly due to sales mix and



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Item 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION Continued



Continuing Operations Continued



reduced margins in European tobaccos due to approximately 17% appreciation of Euro against the US Dollar. Selling, general and administrative expenses for
the quarter and six months were higher than the prior year mainly due to normal inflationary increases, higher personnel expenses and legal/professional fees and the effect of a weak dollar against other currencies in which certain expenses were
incurred. The reduction in the current quarter and six months other income (expense)net was mainly due to reduced interest income.



The effective tax rate decreased to 23.1% and 29.7% in the current quarter and six months from 32.5% and 38% in the corresponding periods a year earlier. This was due to
the payment of with-holding taxes on dividends from subsidiary companies during September 2002 quarter and six months .



Income from continuing operations for the quarter and six months were $14.3 million and $23.2 million, respectively, versus $16.6 million and $23.2 million in the prior
year periods.The basic earnings from continuing operations for the quarter per share was $1.05 versus $1.23 per share in the prior year period. Basic earnings per share from continuing operations for the six months was $1.71 versus $1.73 in the
prior years period.



The net loss for the quarter and six months after
the discontinued operations was $14.3 million and $7.7 million or $1.05 and $0.56 per share basic versus net income for the quarter and six months after the discontinued operations in the prior year periods of $15.1 million and $19.8 million or
basic earnings per share of $1.12 and $1.48 respectively.



Liquidity and
Capital Resources



Working capital at September 30, 2003 was $179.3
million, a decrease of $22.6 million compared to $201.9 million a year earlier. Between September 2002 and September 2003 we bought back $18.8 million of our publicly traded debt and our other long-term borrowings increased by $6.7 million. Capital
expenditures during the 2003 six months of $16.7 million consisted of routine capital expenditures mainly in the US, Indonesia, Italy and Malawi. Cash used in operating activities during the period totaled $61.6 million mainly due to increases in
inventories of $48.3 million, receivables of $28.4 million and reduction in payables of $23.7 million. Reduction in the net assets of discontinued operations offset this increased operating cash used by $38.0 million. The increase in inventories was
seasonal. The Company continues to closely monitor its inventory levels, which fluctuate, depending on seasonal factors and timing of deliveries to customers.



On August 26, 2002 the Companys major tobacco subsidiaries amended their global revolving bank credit facility. The facility was decreased from $230.0 million to
$210.0 million. The maturity date has been extended from July 31, 2003 to July 31, 2005. Financial covenants and other terms and conditions are essentially unchanged. Borrowings under the facility continue to be guaranteed by the Company and are
secured by substantially all of the assets of the borrowers. Certain debt agreements to which the Company and its subsidiaries are parties contain financial covenants that could restrict the payment of cash dividends. Under its most restrictive
covenant, the Company had approximately $42.8 million of retained earnings available for distribution as dividends at September 30, 2003.



The Company continues to guarantee the debt of the wool units up to the actual disposition and accordingly has not included the debt in the liabilities of discontinued
operations. At September 30, 2003, this amounted to $59.6 million. We believe that the disposition of the wool operations will not have a material impact on overall liquidity needs of the Company. Based on the outlook for the business for the next
twelve months, we anticipate that we will be able to service the interest and principal on our indebtedness, maintain adequate working capital and provide for capital expenditures out of operating cash flow and available borrowings under our credit
facilities.



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Item 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION Continued



Forward-Looking Statements



Statements in this report that are not purely statements of historical fact may be deemed to be forward-looking. Readers are cautioned that
any such forward-looking statements are based upon managements current knowledge and assumptions, and actual results could be affected in a material way by many factors, including ones over which the Company has little or no control. These
include changes in timing of shipments, weather, demand for and supply of leaf tobacco and wool, tobacco litigation or legislation, customer consolidations, changes in general economic conditions, political risks and changes in government
regulations. Additional information regarding these factors is contained in the Companys other Securities and Exchange Commission filings, copies of which are available upon request from the Company. The Company assumes no obligation to update
any of these forward-looking statements.



|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



As disclosed in our Annual Report on Form 10-K for the year ended March 31, 2003 the Company is exposed to market risk primarily related to foreign exchange and interest
rates. These exposures are actively monitored by management. To manage the volatility relating to these exposures, the Company enters into derivative financial instruments. The objective is to reduce, where we deem appropriate, fluctuations in
earnings and cash flows associated with changes in interest rates and foreign currency rates. It is the Companys policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. The Companys
market risk has not changed substantially since March 31, 2003.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



| | (a) | As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management,
including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e)) pursuant to Exchange Act Rule 13a-15. Based upon that
evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures are effective.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | No change in the Companys internal control over financial reporting occurred during the Companys last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial reporting.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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---

PART II - OTHER INFORMATION



|Item 1. |  | Legal Proceedings
|------- |  | -----------------



On February 26, 2001, we were served with a Third Amended Complaint, naming us and other leaf merchants as defendants in Deloach, et al. V. Philip Morris Inc., et al., a suit originally filed against U.S. cigarette
manufacturers in the United States District Court for the District of Columbia and now pending in the United States District Court for the Middle District of North Carolina, Greensboro Division (Case No. 00-CV-1235). The Deloach suit is a class
action claim brought on behalf of U.S. tobacco growers and quota holders alleging that defendants violated antitrust laws by bid-rigging at tobacco auctions and by conspiring to undermine the tobacco quota and price support program administered by
the federal government. In May 2003, we along with several other domestic cigarette manufacturers and tobacco-leaf dealers, entered into a settlement agreement with the plaintiffs. Under the agreement we agreed to pay $7 million for distribution of
the class. The total amount to be paid by all the settling defendants, to the class is approximately $212 million, plus commitments by the three settling cigarette manufacturers (1) to purchase certain volumes of domestic flue-cured and burley
tobacco for at least 10 years and (2) to pay the fees of plaintiffs counsel when approved by the court. The court approved the settlement agreement in October 2003, and we made our agreed payment on October 16, 2003.



In October 2001, the Director General - Competition of the European Commission, or DG Comp,
began conducting an administrative investigation of certain selling and buying practices alleged to have occurred within the leaf tobacco industry in some countries within the European Union, including Spain, Italy and Greece. We, through our local
subsidiaries, are cooperating fully with the investigation and have discovered and voluntarily disclosed information which tends to establish that a number of leaf dealers, including our subsidiaries, have jointly agreed with respect to green
tobacco prices and purchase quantities. We believe, however, that there are significant mitigating circumstances relating to the structure of these markets, their historical conduct and the prominence of sellers cooperatives. The investigation
is in its early stages and although the fines, if any, that the DG Comp may assess on our subsidiaries could be material, we are not able to make an accurate assessment of the amount of any such fines at this time.



Except for the above, neither we nor any of our subsidiaries are currently involved in any
litigation that we believe would, individually or in the aggregate, have a material adverse effect on our consolidated financial position, consolidated results of operations, or liquidity nor, to our knowledge, is any such litigation currently
threatened against us or our subsidiaries.



|Item 4. |  | Submission of Matters to a Vote of Security Holders
|------- |  | ---------------------------------------------------



|(a) | The annual Meeting of Shareholders was held on August 12, 2003.
|--- | ---------------------------------------------------------------



|(b) | Three persons nominated by management were elected as directors for term expiring in 2006 as follows:
|--- | -----------------------------------------------------------------------------------------------------



|Nominee                |  | Votes For  |  | Votes Withheld
|---------------------- |  | ---------- |  | --------------
|Mark W. Kehaya         |  | 10,151,901 |  | 444,677       
|B. Clyde Preslar       |  | 10,559,100 |  | 37,478        
|Gilbert L. Klemann, II |  | 10,151,801 |  | 444,777       



In addition the following directors
remained in office after the meeting. Robert E. Harrison, William A. Ziegler, William S. Barrack, Jr., Robert A. Sheets and William S. Sheridan.



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---

PART II  OTHER INFORMATION Continued.



|(c) | The appointment of Deloitte & Touche LLP as the Companys independent auditors for fiscal year 2004 was approved by a vote of 10,560,434 shares in favor, 28,677 shares
against and 7,467 abstaining.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



|(a) | Exhibits:
|--- | ---------



|Exhibit # |  | Description                                                                                                                                                                 
|--------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          | 
|11        |  | Computation of Earnings per Common Share                                                                                                                                    
|          | 
|31.1      |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)                                                                                                     
|          | 
|31.2      |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)                                                                                                     
|          | 
|32        |  | Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



|(b) | Forms 8-K:
|--- | ----------



| |  | August 7, 2003 under Item 12 to report the June 30, 2003 fiscal quarter operating and financial results; and
| | - | ------------------------------------------------------------------------------------------------------------



| |  | August 12, 2003 under Item 5 to report an increase in the cash dividend and results of the annual meeting of shareholders..
| | - | ---------------------------------------------------------------------------------------------------------------------------



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                       |  |  |  | STANDARD COMMERCIAL CORPORTATION (Registrant)
|---------------------- |  |  |  | ---------------------------------------------
|                       |  |  | 
|Date: November 3, 2003 |  |  |  | By:                                          
|                       |  |  |  |                                              
|                       |  |  |  |                                              
|                       |  |  |  |                                              
|                       |  |  |  |                                              
|                       |  |  |  |                                              
|                       |  |  |  |                                              



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