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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF
1934



FOR THE
QUARTER ENDED SEPTEMBER 30, 2004



COMMISSION FILE NUMBER 1-9875



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LOGO



STANDARD COMMERCIAL CORPORATION



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|                                              |  |                                              
|--------------------------------------------- |  | ---------------------------------------------
|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) has 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 5, 2004, the registrant had outstanding 13,735,427 shares of
common stock ($0.20 par value per share).



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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 31 2004* |  
|                                                                                                                                 |  | 2004         |         |   | 2003*          |   |        
|                                                                                                                                 |  | (unaudited)  |         |   | (unaudited)    |   |         |   | 
|ASSETS                                                                                                                           |  |              |         |   |                |   |         |   |  |   |         |  
|Cash                                                                                                                             |  | $            | 25,100  |   |                | $ | 16,560  |   |  | $ | 27,673  |  
|Receivables                                                                                                                      |  |              | 210,872 |   |                |   | 171,850 |   |  |   | 182,317 |  
|Inventories                                                                                                                      |  |              | 297,141 |   |                |   | 243,456 |   |  |   | 241,330 |  
|Assets of discontinued operations                                                                                                |  |              | 122,555 |   |                |   | 168,957 |   |  |   | 178,504 |  
|Prepaid expenses                                                                                                                 |  |              | 7,467   |   |                |   | 4,877   |   |  |   | 4,901   |  
|Marketable securities                                                                                                            |  |              | 1,721   |   |                |   | 1,243   |   |  |   | 1,334   |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Current assets                                                                                                                   |  |              | 664,856 |   |                |   | 606,943 |   |  |   | 636,059 |  
|                                                                                                                                 |  |              |        
|Property, plant and equipment                                                                                                    |  |              | 161,255 |   |                |   | 140,498 |   |  |   | 151,510 |  
|Investment in affiliates                                                                                                         |  |              | 9,880   |   |                |   | 7,988   |   |  |   | 9,480   |  
|Goodwill                                                                                                                         |  |              | 9,003   |   |                |   | 9,003   |   |  |   | 9,003   |  
|Other assets                                                                                                                     |  |              | 41,227  |   |                |   | 35,173  |   |  |   | 33,962  |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Total assets                                                                                                                     |  | $            | 886,221 |   |                | $ | 799,605 |   |  | $ | 840,014 |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|LIABILITIES                                                                                                                      |  |              |         |   |                |   |         |   |  |   |         |  
|Short-term borrowings                                                                                                            |  | $            | 282,039 |   |                | $ | 243,574 |   |  | $ | 253,847 |  
|Current portion of long-term debt                                                                                                |  |              | 18,700  |   |                |   | 7,974   |   |  |   | 8,476   |  
|Accounts payable and accrued liabilities                                                                                         |  |              | 149,470 |   |                |   | 111,649 |   |  |   | 132,233 |  
|Liabilities of discontinued operations                                                                                           |  |              | 29,997  |   |                |   | 33,969  |   |  |   | 45,292  |  
|Taxes accrued                                                                                                                    |  |              | 5,329   |   |                |   | 14,074  |   |  |   | 11,698  |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Current liabilities                                                                                                              |  |              | 485,535 |   |                |   | 411,240 |   |  |   | 451,546 |  
|                                                                                                                                 |  |              |        
|Long-term debt                                                                                                                   |  |              | 172,943 |   |                |   | 83,850  |   |  |   | 91,814  |  
|Convertible subordinated debentures                                                                                              |  |              |        |   |                |   | 45,051  |   |  |   | 45,051  |  
|Retirement and other benefits                                                                                                    |  |              | 21,104  |   |                |   | 15,037  |   |  |   | 20,105  |  
|Deferred income taxes                                                                                                            |  |              | 965     |   |                |   | 4,434   |   |  |   | 434     |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Total liabilities                                                                                                                |  |              | 680,547 |   |                |   | 559,612 |   |  |   | 608,950 |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|MINORITY INTERESTS                                                                                                               |  |              | 1,550   |   |                |   | 1,807   |   |  |   | 2,000   |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|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 16,351,597 (September 03  16,237,947; Mar 04 
16,298,557) |  |              | 3,270   |   |                |   | 3,248   |   |  |   | 3,260   |  
|Additional paid-in capital                                                                                                       |  |              | 112,577 |   |                |   | 110,634 |   |  |   | 111,796 |  
|Unearned restricted stock plan compensation                                                                                      |  |              | (3,460  | ) |                |   | (3,984  | ) |  |   | (3,176  | )
|Treasury shares, 2,617,707                                                                                                       |  |              | (4,250  | ) |                |   | (4,250  | ) |  |   | (4,250  | )
|Retained earnings                                                                                                                |  |              | 122,043 |   |                |   | 157,755 |   |  |   | 149,428 |  
|Accumulated other comprehensive loss                                                                                             |  |              | (26,056 | ) |                |   | (25,217 | ) |  |   | (27,994 | )
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Total shareholders equity                                                                                                       |  |              | 204,124 |   |                |   | 238,186 |   |  |   | 229,064 |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  
|Total liabilities and shareholders equity                                                                                       |  | $            | 886,221 |   |                | $ | 799,605 |   |  | $ | 840,014 |  
|                                                                                                                                 |  |              |         |   |                |   |         |   |  |   |         |  

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|* | Certain amounts reclassified to comply with the current period presentation as a result of discontinuing the Italian tobacco operations.
|- | ----------------------------------------------------------------------------------------------------------------------------------------



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



-2-



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STANDARD COMMERCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

(In thousands, except per
share data; unaudited)



|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                                                                  |  | Second quarter endedSeptember 30 |         |   | Six months endedSeptember 30 |  
|                                                                                                                                                                                  |  | 2004                             |         |   | 2003*                        |   |         | 2004 |  |   | 2003*   |  
|Sales                                                                                                                                                                             |  | $                                | 233,390 |   |                              | $ | 187,561 |      |  | $ | 405,868 |   |  | $ | 352,344 |  
|                                                                                                                                                                                  |  |                                  |         |  
|Cost of sales - materials, services and supplies                                                                                                                                  |  |                                  | 197,634 |   |                              |   | 150,493 |      |  |   | 346,630 |   |  |   | 279,798 |  
|- interest                                                                                                                                                                        |  |                                  | 2,763   |   |                              |   | 2,463   |      |  |   | 5,808   |   |  |   | 4,846   |  
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Gross Profit                                                                                                                                                                      |  |                                  | 32,993  |   |                              |   | 34,605  |      |  |   | 53,430  |   |  |   | 67,700  |  
|Selling, general and administrative expenses                                                                                                                                      |  |                                  | 23,923  |   |                              |   | 19,655  |      |  |   | 45,378  |   |  |   | 37,311  |  
|Other interest expense                                                                                                                                                            |  |                                  | 2,508   |   |                              |   | 1,231   |      |  |   | 6,183   |   |  |   | 2,329   |  
|Other income (expense)  net                                                                                                                                                      |  |                                  | 375     |   |                              |   | 587     |      |  |   | 788     |   |  |   | 997     |  
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before taxes                                                                                                                                                        |  |                                  | 6,937   |   |                              |   | 14,306  |      |  |   | 2,657   |   |  |   | 29,057  |  
|Income tax benefit (expense)                                                                                                                                                      |  |                                  | (2,053  | ) |                              |   | (3,918  | )    |  |   | (458    | ) |  |   | (9,189  | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) after taxes                                                                                                                                                         |  |                                  | 4,884   |   |                              |   | 10,388  |      |  |   | 2,199   |   |  |   | 19,868  |  
|Minority interests                                                                                                                                                                |  |                                  | 64      |   |                              |   | 71      |      |  |   | 331     |   |  |   | 139     |  
|Equity in earnings of affiliates                                                                                                                                                  |  |                                  | 150     |   |                              |   | 367     |      |  |   | 400     |   |  |   | 567     |  
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                                                                                                                                          |  |                                  | 5,098   |   |                              |   | 10,826  |      |  |   | 2,930   |   |  |   | 20,574  |  
|Loss from discontinued operations, net of income tax benefit (charge) of $66 and $353 three months to Sept 30, 2004 and 2003; $(42) and $965
six months to Sept 30, 2004 and 2003 |  |                                  | (25,237 | ) |                              |   | (25,135 | )    |  |   | (27,918 | ) |  |   | (28,271 | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                                                                                                                                                 |  |                                  | (20,139 | ) |                              |   | (14,309 | )    |  |   | (24,988 | ) |  |   | (7,697  | )
|Retained earnings at beginning of period                                                                                                                                          |  |                                  | 143,383 |   |                              |   | 173,256 |      |  |   | 149,428 |   |  |   | 167,495 |  
|Common stock dividends                                                                                                                                                            |  |                                  | (1,201  | ) |                              |   | (1,192  | )    |  |   | (2,397  | ) |  |   | (2,043  | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Retained earnings at end of period                                                                                                                                                |  | $                                | 122,043 |   |                              | $ | 157,755 |      |  | $ | 122,043 |   |  | $ | 157,755 |  
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Earnings (loss) per common share                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Basic:                                                                                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|From continuing operations                                                                                                                                                        |  | $                                | 0.37    |   |                              | $ | 0.79    |      |  | $ | 0.21    |   |  | $ | 1.52    |  
|From discontinued operations                                                                                                                                                      |  |                                  | (1.84   | ) |                              |   | (1.84   | )    |  |   | (2.04   | ) |  |   | (2.08   | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Net                                                                                                                                                                               |  | $                                | (1.47   | ) |                              | $ | (1.05   | )    |  | $ | (1.83   | ) |  | $ | (0.56   | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Average shares outstanding                                                                                                                                                        |  |                                  | 13,709  |   |                              |   | 13,619  |      |  |   | 13,693  |   |  |   | 13,578  |  
|Diluted:                                                                                                                                                                          |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|From continuing operations                                                                                                                                                        |  | $                                | 0.37    |   |                              | $ | 0.75    |      |  | $ | 0.21    |   |  | $ | 1.43    |  
|From discontinued operations                                                                                                                                                      |  |                                  | (1.84   | ) |                              |   | (1.65   | )    |  |   | (2.03   | ) |  |   | (1.86   | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Net                                                                                                                                                                               |  | $                                | (1.47   | ) |                              | $ | (0.90   | )    |  | $ | (1.82   | ) |  | $ | (0.43   | )
|                                                                                                                                                                                  |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |         |  
|Average shares outstanding                                                                                                                                                        |  |                                  | 13,733  |   |                              |   | 15,222  |      |  |   | 13,716  |   |  |   | 15,174  |  
|                                                                                                                                                                                  |  |                                  |         |  
|Dividend declared per common share                                                                                                                                                |  | $                                | 0.0875  |   |                              | $ | 0.0875  |      |  | $ | 0.175   |   |  | $ | 0.15    |  

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|* | Certain amounts reclassified to comply with the current period presentation as a result of discontinuing the Italian tobacco operations.
|- | ----------------------------------------------------------------------------------------------------------------------------------------



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



-3-



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STANDARD COMMERCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands; unaudited)



|                                                               |  |                              |          |   |       |   |         |  
|-------------------------------------------------------------- |  | ---------------------------- | -------- | - | ----- | - | ------- | -
|                                                               |  | Six months endedSeptember 30 |         
|                                                               |  | 2004                         |          |   | 2003* |  
|CASH FLOWS FROM OPERATING ACTIVITIES                           |  |                              |          |   |       |   |         |  
|Net income (loss)                                              |  | $                            | (24,988  | ) |       | $ | (7,697  | )
|Loss from discontinued operations                              |  |                              | 27,918   |   |       |   | 28,271  |  
|Depreciation and amortization                                  |  |                              | 10,591   |   |       |   | 7,980   |  
|Minority interest                                              |  |                              | (331     | ) |       |   | (139    | )
|Deferred income taxes                                          |  |                              | 532      |   |       |   | (319    | )
|Undistributed earnings of affiliates net of dividends received |  |                              | (400     | ) |       |   | (567    | )
|Redemption premium on repayment of debt                        |  |                              | 964      |   |       |   |        |  
|(Gain) loss on disposition of fixed assets                     |  |                              | (298     | ) |       |   | 59      |  
|Other                                                          |  |                              | (1,394   | ) |       |   | (121    | )
|                                                               |  |                              |          |   |       |   |         |  
|                                                               |  |                              | 12,594   |   |       |   | 27,467  |  
|                                                               |  |                             
|Net changes in working capital other than cash                 |  |                              |          |   |       |   |         |  
|Receivables                                                    |  |                              | (34,552  | ) |       |   | (22,556 | )
|Inventories                                                    |  |                              | (55,538  | ) |       |   | (54,727 | )
|Current payables                                               |  |                              | 12,766   |   |       |   | (13,013 | )
|                                                               |  |                              |          |   |       |   |         |  
|Cash used for continuing operations                            |  |                              | (64,730  | ) |       |   | (62,829 | )
|Cash from (used for) discontinued operations                   |  |                              | 13,358   |   |       |   | 1,211   |  
|                                                               |  |                              |          |   |       |   |         |  
|CASH USED FOR OPERATING ACTIVITIES                             |  |                              | (51,372  | ) |       |   | (61,618 | )
|                                                               |  |                              |          |   |       |   |         |  
|CASH FLOW FROM INVESTING ACTIVITIES                            |  |                              |          |   |       |   |         |  
|Property, plant and equipment - additions                      |  |                              | (18,865  | ) |       |   | (13,759 | )
|- dispositions                                                 |  |                              | 815      |   |       |   | 126     |  
|                                                               |  |                              |          |   |       |   |         |  
|Cash used for continuing operations                            |  |                              | (18,050  | ) |       |   | (13,633 | )
|Cash from discontinued operations                              |  |                              | (622     | ) |       |   | (1,940  | )
|                                                               |  |                              |          |   |       |   |         |  
|CASH USED FOR INVESTING ACTIVITIES                             |  |                              | (18,672  | ) |       |   | (15,573 | )
|                                                               |  |                              |          |   |       |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                           |  |                              |          |   |       |   |         |  
|Net change in short-term borrowings                            |  |                              | 28,192   |   |       |   | 61,471  |  
|Proceeds from long-term borrowings                             |  |                              | 162,505  |   |       |   | 12,218  |  
|Repayment of long-term borrowings                              |  |                              | (10,389  | ) |       |   | (4,668  | )
|Repayment of debt                                              |  |                              | (111,192 | ) |       |   |        |  
|Dividends paid                                                 |  |                              | (2,397   | ) |       |   | (2,043  | )
|Other                                                          |  |                              | 792      |   |       |   | (49     | )
|                                                               |  |                              |          |   |       |   |         |  
|CASH PROVIDED BY FINANCING ACTIVITIES                          |  |                              | 67,511   |   |       |   | 66,929  |  
|                                                               |  |                              |          |   |       |   |         |  
|Effect of exchange rate changes on cash                        |  |                              | (40      | ) |       |   | 253     |  
|                                                               |  |                              |          |   |       |   |         |  
|Increase (decrease) in cash for period                         |  |                              | (2,573   | ) |       |   | (10,009 | )
|Cash at beginning of period                                    |  |                              | 27,673   |   |       |   | 26,569  |  
|                                                               |  |                              |          |   |       |   |         |  
|CASH AT END OF PERIOD                                          |  | $                            | 25,100   |   |       | $ | 16,560  |  
|                                                               |  |                              |          |   |       |   |         |  
|Cash payments for - interest                                   |  | $                            | 9,441    |   |       | $ | 8,786   |  
|- income taxes                                                 |  | $                            | 6,170    |   |       | $ | 9,024   |  

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|* | Certain amounts reclassified to comply with the current period presentation as a result of discontinuing the Italian tobacco operations.
|- | ----------------------------------------------------------------------------------------------------------------------------------------



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



-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 consolidated financial statements and notes thereto included in the
Companys latest Annual Report on Form 10-K. The interim period consolidated 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, 2004. 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
|-- | -----------------------



Tobacco Operations



During the second quarter of the current fiscal year, the Company decided to discontinue its tobacco processing operations in Italy due to the leaf
tobacco market conditions and the continuing strengthening of Euro currency which have had significant adverse impact on its results. As a result of this decision the assets and liabilities not assumed have been classified as available for sale and
qualify for held for disposal treatment under Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company is in the process of closing its facility and
has notified its employees and the Italian authorities in accordance with Italian law. The facility is expected to be sold within the next twelve months. The Italian operation is expected to incur additional operating losses until final disposition.



The Company has accounted for the Italian tobacco operations
as discontinued operations, in accordance with the provisions of SFAS No. 144. The results for all periods presented are included in the financial statements as discontinued operations.



The Italian trading loss for the quarter and six months ended September 30, 2004, excluding the loss to discontinue the
operations, was $8.3 million and $10.0 million respectively versus an income of $3.4 million and $2.6 million in the prior year periods.



The write-down of long-lived assets recorded in the quarter and six months ended September 30, 2004 to discontinue the operation was $10.7 million. This
was based on external appraisals and is the difference between the carrying value of the net assets and their fair value, less estimated selling costs. The fair value has been determined based on negotiations with prospective purchasers and
comparison with other industry transactions. In addition, the Company incurred and recorded costs of $4.1 million during the quarter and six months ended September 30, 2004. No tax benefit on the losses to discontinue the Italian operations was
recorded due to the uncertainty of the Companys ability to ultimately receive a tax benefit.



Revenues and the assets and liabilities for the Italian operations were as follows:



|                                       |  |                                  |        |                              |   |          |  |      |        |  |   |       
|-------------------------------------- |  | -------------------------------- | ------ | ---------------------------- | - | -------- |  | ---- | ------ |  | - | ------
|                                       |  | Second quarter endedSeptember 30 |        | Six months endedSeptember 30
|(In thousands)                         |  | 2004                             |        | 2003                         |   | 2004     |  | 2003
|Revenues                               |  | $                                | 15,264 |                              | $ | 22,520   |  | $    | 28,766 |  | $ | 31,825
|                                       |  |                                  |        |                              |   |          |  |      |        |  |   |       
|                                       |  |                                  |       
|                                       |  | September 30                     |        |                              |   | March 31
|(In thousands)                         |  | 2004                             |        | 2003                         |   |          |  | 2004
|Inventory                              |  | $                                | 34,434 |                              | $ | 24,372   |  |      |        |  | $ | 51,004
|Receivables                            |  |                                  | 13,264 |                              |   | 17,326   |  |      |        |  |   | 14,364
|Other assets                           |  |                                  | 10,107 |                              |   | 16,647   |  |      |        |  |   | 18,008
|                                       |  |                                  |        |                              |   |          |  |      |        |  |   |       
|Assets                                 |  |                                  | 57,805 |                              |   | 58,345   |  |      |        |  |   | 83,376
|Accounts payable and other liabilities |  |                                  | 8,554  |                              |   | 8,837    |  |      |        |  |   | 13,909
|                                       |  |                                  |        |                              |   |          |  |      |        |  |   |       
|Net assets available for sale          |  | $                                | 49,251 |                              | $ | 49,508   |  |      |        |  | $ | 69,467
|                                       |  |                                  |        |                              |   |          |  |      |        |  |   |       



-5-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|2. | DISCONTINUED OPERATIONS (Continued)
|-- | -----------------------------------



Tobacco debt guaranteed by the Company not included in discontinued operations was as follows:



|                                    |  |              |       |               |   |       |  |   |      
|----------------------------------- |  | ------------ | ----- | ------------- | - | ----- |  | - | -----
|                                    |  | September 30 |       | March 31 2004
|(In thousands)                      |  | 2004         |       | 2003          |  
|Bank borrowings                     |  | $            |      |               | $ | 2,513 |  | $ | 2,396
|Current portion of long-term debt   |  |              | 910   |               |   | 818   |  |   | 884  
|                                    |  |              |       |               |   |       |  |   |      
|Total current                       |  |              | 910   |               |   | 3,331 |  |   | 3,280
|Long-term portion of long-term debt |  |              | 4,945 |               |   | 5,298 |  |   | 5,281
|                                    |  |              |       |               |   |       |  |   |      
|Total debt guaranteed               |  | $            | 5,855 |               | $ | 8,629 |  | $ | 8,561
|                                    |  |              |       |               |   |       |  |   |      



Wool Operations



During the second quarter of fiscal 2004, the Company decided
to focus on the core tobacco operations and close all its wool operations located in the UK, Chile, France, Germany and Australia. As a result of this decision to dispose of these operations, they have been classified as available for sale and
qualify for held for disposal treatment under SFAS No. 144. The unit in Australia was sold in fiscal 2004. The operations of the processing mill in France were shutdown in April 2004. The remaining French assets, along with the remaining trading
operations in France and Germany, and the trading and processing operations in the UK and Chile are the subjects of separate sales negotiations. These negotiations were expected to be finalized by September 30, 2004; however, as a result of delays
caused by unexpected financing issues in the UK and governmental intervention in France, the remaining units are expected to be sold or terminated by March 31, 2005.



These wool units are expected to incur additional operating losses until final disposition. Once disposed, the Company will
not retain a financial interest and it has 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 it does not expect to provide any guarantees for the obligations or commitments of the wool units.



The Company has accounted for the sale of the wool units as discontinued operations, in accordance with the provisions of SFAS No. 144. The results for
all periods presented are included in the consolidated financial statements as discontinued operations. As noted above, because the existing debt of the wool units is guaranteed by the Company, it has not included any such debt in liabilities of
discontinued operations.



The wool operating loss, which
primarily relates to overhead incurred, for the quarter and six months ended September 30, 2004 was $2.1 and $3.2 million respectively versus $2.0 and $4.2 million in the prior year periods. The estimated loss to discontinue wool operations of $26.6
million was recorded during the quarter and six months ended September 30, 2003.



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



|                                       |  |                                  |        |                              |   |               |  |      |        |  |   |       
|-------------------------------------- |  | -------------------------------- | ------ | ---------------------------- | - | ------------- |  | ---- | ------ |  | - | ------
|                                       |  | Second quarter endedSeptember 30 |        | Six months endedSeptember 30
|(In thousands)                         |  | 2004                             |        | 2003                         |   | 2004          |  | 2003
|Revenues                               |  | $                                | 27,999 |                              | $ | 38,719        |  | $    | 63,294 |  | $ | 81,301
|                                       |  |                                  |        |                              |   |               |  |      |        |  |   |       
|                                       |  |                                  |       
|                                       |  | September 30                     |        |                              |   | March 31 2004
|(In thousands)                         |  | 2004                             |        | 2003                         |   |               | 
|Inventory                              |  | $                                | 29,810 |                              | $ | 66,665        |  |      |        |  | $ | 50,827
|Receivables                            |  |                                  | 32,073 |                              |   | 39,311        |  |      |        |  |   | 40,826
|Other assets                           |  |                                  | 2,867  |                              |   | 4,636         |  |      |        |  |   | 3,475 
|                                       |  |                                  |        |                              |   |               |  |      |        |  |   |       
|Assets                                 |  |                                  | 64,750 |                              |   | 110,612       |  |      |        |  |   | 95,128
|Accounts payable and other liabilities |  |                                  | 21,443 |                              |   | 25,132        |  |      |        |  |   | 31,383
|                                       |  |                                  |        |                              |   |               |  |      |        |  |   |       
|Net assets available for sale          |  | $                                | 43,307 |                              | $ | 85,480        |  |      |        |  | $ | 63,745
|                                       |  |                                  |        |                              |   |               |  |      |        |  |   |       



-6-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|2. | DISCONTINUED OPERATIONS (Continued)
|-- | -----------------------------------



Wool debt guaranteed by the Company not included in discontinued operations was as follows:



|                                    |  |              |        |               |   |        |  |   |       
|----------------------------------- |  | ------------ | ------ | ------------- | - | ------ |  | - | ------
|                                    |  | September 30 |        | March 31 2004
|(In thousands)                      |  | 2004         |        | 2003          |  
|Bank borrowings                     |  | $            | 26,284 |               | $ | 58,658 |  | $ | 44,974
|Current portion of long-term debt   |  |              | 21     |               |   | 791    |  |   | 305   
|                                    |  |              |        |               |   |        |  |   |       
|Total current                       |  |              | 26,305 |               |   | 59,449 |  |   | 45,279
|Long-term portion of long-term debt |  |              | 171    |               |   | 178    |  |   | 190   
|                                    |  |              |        |               |   |        |  |   |       
|Total debt guaranteed               |  | $            | 26,476 |               | $ | 59,627 |  | $ | 45,469
|                                    |  |              |        |               |   |        |  |   |       



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



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



|                                                                     |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|-------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------ | -
|                                                                     |  | Second quarter endedSeptember 30 |         |   | Six months endedSeptember 30 |  
|(In thousands)                                                       |  | 2004                             |         |   | 2003                         |   |         | 2004 |  |   | 2003    |  
|Net income (loss)                                                    |  | $                                | (20,139 | ) |                              | $ | (14,309 | )    |  | $ | (24,988 | ) |  | $ | (7,697 | )
|Other comprehensive income (loss):                                   |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Reclassification for translation adjustment recognized in net income |  |                                  | 1,708   |   |                              |   | 2,772   |      |  |   | 1,708   |   |  |   | 2,772  |  
|Translation adjustment                                               |  |                                  | 777     |   |                              |   | (2,925  | )    |  |   | (2      | ) |  |   | 2,471  |  
|Derivative financial instruments                                     |  |                                  | 230     |   |                              |   | (460    | )    |  |   | 232     |   |  |   | (656   | )
|                                                                     |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Total comprehensive income (loss)                                    |  | $                                | (17,424 | ) |                              | $ | (14,922 | )    |  | $ | (23,050 | ) |  | $ | (3,110 | )
|                                                                     |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  



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



Earnings per share has been presented in conformity with SFAS No. 128. The diluted earnings per share for the quarter and six months ended September 30,
2003 include the effect of the convertible subordinated debentures which were redeemed in April 2004, which if converted would have increased the weighted number of shares and net income applicable to common stock. The weighted number of shares were
increased by shares subject to 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.



|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 the effective portion of the changes in fair value of derivatives that qualify as cash flow hedges be recognized in other comprehensive income, while the ineffective portion be recognized immediately in earnings. The fair value of the
Companys foreign currency forward contracts at September 30, 2004 was $3.1 million with a notional value of $3.5 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 No. 123, Accounting for Stock-Based Compensation, the Company accounts for stock options under the intrinsic value method of recognition and measurement principles of Accounting Principles Board (APB)



-7-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|6. | STOCK-BASED COMPENSATION (Continued)
|-- | ------------------------------------



Opinion No. 25, Accounting for Stock Issued to Employees. 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, as amended by SFAS No. 148, to stock-based employee compensation:



|                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------ | -
|                                                                                                            |  | Second quarter endedSeptember 30 |         |   | Six months endedSeptember 30 |  
|                                                                                                            |  | 2004                             |         |   | 2003                         |   |         | 2004 |  |   | 2003    |  
|Net income (loss) (in thousands):                                                                           |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|As reported                                                                                                 |  | $                                | (20,139 | ) |                              | $ | (14,309 | )    |  | $ | (24,988 | ) |  | $ | (7,697 | )
|Deduct Total stock-based compensation expense determined under fair value method of all awards, net of tax |  |                                  | (45     | ) |                              |   | (72     | )    |  |   | (46     | ) |  |   | (126   | )
|                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Pro forma                                                                                                   |  | $                                | (20,184 | ) |                              | $ | (14,381 | )    |  | $ | (25,034 | ) |  | $ | (7,823 | )
|                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Diluted                                                                                                     |  | $                                | (20,139 | ) |                              | $ | (13,770 | )    |  | $ | (24,988 | ) |  | $ | (6,619 | )
|Deduct Total stock-based compensation expense determined under fair value method of all awards, net of tax |  |                                  | (45     | ) |                              |   | (72     | )    |  |   | (46     | ) |  |   | (126   | )
|                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Pro forma                                                                                                   |  | $                                | (20,184 | ) |                              | $ | (13,842 | )    |  | $ | (25,034 | ) |  | $ | (6,745 | )
|                                                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|Basic earnings (loss) per share:                                                                            |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|As reported                                                                                                 |  | $                                | (1.47   | ) |                              | $ | (1.05   | )    |  | $ | (1.83   | ) |  | $ | (0.56  | )
|Pro forma                                                                                                   |  | $                                | (1.47   | ) |                              | $ | (1.06   | )    |  | $ | (1.83   | ) |  | $ | (0.58  | )
|                                                                                                            |  |                                  |         |  
|Diluted earnings (loss) per share:                                                                          |  |                                  |         |   |                              |   |         |      |  |   |         |   |  |   |        |  
|As reported                                                                                                 |  | $                                | (1.47   | ) |                              | $ | (0.90   | )    |  | $ | (1.82   | ) |  | $ | (0.43  | )
|Pro forma                                                                                                   |  | $                                | (1.47   | ) |                              | $ | (0.91   | )    |  | $ | (1.82   | ) |  | $ | (0.44  | )



|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.



SFAS No. 142 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 performs 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, 2004.



The carrying value of intangible assets other than goodwill as of September
30, 2004 represents deferred long-term debt financing fees. These intangible assets were determined by management to meet the criterion for recognition apart from goodwill and to have finite lives. The Company did not have any indefinite-lived
intangible assets, other than goodwill. In conjunction with the debt refinancing discussed in Note 11, the Company wrote-off $1.4 million of deferred financing fees



-8-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



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



during the six months ended September 30, 2004. Based on managements analysis of all pertinent factors, no adjustments were necessary to the
remaining useful lives of these assets, which will continue to be amortized on a straight-line basis through 2012.



|                                    |  |       |        |  
|----------------------------------- |  | ----- | ------ | -
|INTANGIBLES (In
thousands)          |  | Total |       
|At April 1, 2004                    |  | $     | 1,368  |  
|Additions  deferred financing fees |  |       | 6,160  |  
|Less amortization                   |  |       | (2,241 | )
|                                    |  |       |        |  
|Balance as of September 30, 2004    |  | $     | 5,287  |  
|                                    |  |       |        |  



|8. | PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
|-- | -----------------------------------------------



Net Periodic Benefit Cost for All Significant Plans



|                                   |  |                              |        |   |                               |   |        |      |  |      |     |  |   |     |  
|---------------------------------- |  | ---------------------------- | ------ | - | ----------------------------- | - | ------ | ---- |  | ---- | --- |  | - | --- | -
|                                   |  | Defined Benefit PensionPlans |        |   | Other Post-retirementBenefits |  
|                                   |  | Six months endedSeptember 30 |        |   | Six months ended September 30 |  
|(In thousands)                     |  | 2004                         |        |   | 2003                          |   |        | 2004 |  | 2003 |    
|Service cost                       |  | $                            | 1,933  |   |                               | $ | 1,555  |      |  | $    | 230 |  | $ | 186 |  
|Interest cost                      |  |                              | 2,160  |   |                               |   | 1,872  |      |  |      | 383 |  |   | 348 |  
|Expected return on plan assets     |  |                              | (1,875 | ) |                               |   | (1,462 | )    |  |      |    |  |   |    |  
|Amortization of prior service cost |  |                              | 63     |   |                               |   | 33     |      |  |      |    |  |   | (69 | )
|Recognized net actuarial loss      |  |                              | 606    |   |                               |   | 543    |      |  |      | 83  |  |   | 18  |  
|                                   |  |                              |        |   |                               |   |        |      |  |      |     |  |   |     |  
|Net periodic benefit cost          |  | $                            | 2,887  |   |                               | $ | 2,541  |      |  | $    | 696 |  | $ | 483 |  
|                                   |  |                              |        |   |                               |   |        |      |  |      |     |  |   |     |  



Employer
Contributions



Pension Plans



The Company has defined benefit pension plans which cover employees in the
United States and a number of other countries. Benefits are based on length of service and eligible compensation.



The Companys funding policy is to contribute to those plans when pension laws and economies either require or encourage funding. As previously
disclosed in the Companys financial statements for the year ended March 31, 2004, the Company expects to contribute $2.4 million to its U.S. qualified pension plan trust in fiscal 2005. No contributions were made to this plan in the first six
months of fiscal 2005. The Company also has a non-qualified supplemental pension plan to which it made $29,000 of benefit payments in the first six months of fiscal 2005.



Other Post-retirement Benefits



The Company also provides health care and life insurance benefits for substantially all of its retired salaried employees in
the U.S. These benefits are accounted for in accordance with SFAS No. 106, Employers Accounting for Post-retirement Benefits Other Than Pensions, which requires the accrual of the estimated cost of retiree benefit payments during the years
the employee provides services. The Company expects the ongoing impact of SFAS No. 106 as it relates to employees of foreign subsidiaries to be immaterial. The Company expenses the costs of these benefits as incurred. In fiscal 2005, the Company
does not expect to contribute assets to its other post retirement benefit plan trust. Benefit payments to retirees under the plan are expected to be approximately $700,000 for this year. In the first six months of fiscal 2005, we made benefit
payments of $367,000 to the plan.



-9-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|9. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------



In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law. In accordance with
guidance issued by the FASB in FASB Staff Position 106-1, the Company has elected to defer the effects of the Act due to uncertainties regarding the effects of the implementation of the Act and the accounting for certain provisions of the Act. The
FASB recently issued definitive accounting guidance for the Act in FASB Staff Position 106-2, which is effective for the Company in the quarter ended September 30, 2004. The Company will have no impact on benefit cost from the new
legislation.



|10. | LEGAL PROCEEDINGS
|--- | -----------------



In October 2001, the Directorate 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. The Company, through its local subsidiaries, cooperated fully with the
investigation and discovered and voluntarily disclosed information which tended to establish that a number of leaf dealers, including its subsidiaries, jointly agreed with respect to green tobacco prices and purchase quantities. In respect of the
Spanish investigation, on December 15, 2003, the DG Comp served on 20 entities within the Spanish leaf tobacco industry, including the Company and three of its subsidiaries, a Statement of Objections alleging certain infringements of the antitrust
laws of the European Union. On March 1, 2004, the DG Comp served a similar Statement of Objections on 11 entities within the Italian leaf tobacco industry, including the Company and one of its subsidiaries. The Company responded to the Statements
and has cooperated in the investigations. Through the Statements, DG Comp intended to impose, where appropriate, administrative penalties on the entities it determined have infringed the EC anti-competition laws. On October 20, 2004 the European
Commission announced that as a result of its Spanish investigation it had imposed on the Company, through its Spanish subsidiary and two other of the Companys subsidiaries, a fine of Euros 1,822,500. A number of other tobacco processors,
growers and agricultural associations were assessed fines in various amounts which, including the amount assessed against the Company, totaled Euros 20,000,000. The Company is awaiting the published decision of the European Commission in order to
consider an appeal of the fine. The Company has previously announced that it expects to be assessed penalties and expects that the penalties could be material to its earnings, but that there may be mitigating circumstances in the investigations,
including the Companys cooperation with the DG Comp, and the Company is unable to assess the amount of any penalties which might be imposed as a result of the remaining investigations.



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



|11. | SUBSEQUENT EVENTS
|--- | -----------------



On November 7, 2004, the Company and DIMON Incorporated, a Virginia corporation (DIMON) entered into an Agreement and Plan of Reorganization
(the Merger Agreement). Under the terms of the Merger Agreement, the common shareholders of the Company will be entitled to receive three shares of DIMON common stock in exchange for each share of the Companys common stock. The
transaction is intended to be treated as a reorganization for U.S. federal income tax purposes.



The closing of the merger is subject to certain closing conditions, including approval by the shareholders of the Company and DIMON, approval of U.S. and
foreign antitrust authorities, effectiveness of a proxy statement/prospectus relating to shareholder approval, DIMON obtaining financing for the merger consideration and any debt of the Company or DIMON that must be refinanced and other customary
conditions.



-10-



---

STANDARD COMMERCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|12. | DEBT
|--- | ----



On April 2, 2004, the Companys major tobacco subsidiaries entered into a new three year unsecured revolving bank facility to replace the existing revolving bank credit facility. The new facility provides for
borrowings of $150.0 million for working capital and other general corporate purposes, and the interest rate on borrowings under the facility is variable. The rate is currently LIBOR plus 2.0%. The borrowings under the facility are guaranteed by the
Company and certain of its tobacco subsidiaries. The new facility includes certain financial covenants that, among other things, require the Company to maintain tangible net worth, current ratio, interest cover ratio and also includes certain
borrowing base restrictions. The Company was in compliance with all financial covenants as of September 30, 2004.



On April 2, 2004, the Company issued $150.0 million of 8% senior notes due 2012. The proceeds were used to redeem the $45.1 million outstanding 71/4% convertible subordinated debentures and to retire the $65.2 million 87/8% senior notes due 2005. The new notes are guaranteed by the Companys U.S. tobacco subsidiary on a senior
unsecured basis. The indenture governing these senior notes contains certain covenants that, among other things, limit the Companys ability to (1) pay dividends, (2) incur additional indebtedness, (3) transfer or issue shares of capital stock
of subsidiaries to third parties, (4) sell assets, (5) issue preferred stock, (6) incur or assume any liens that secures obligations under any indebtedness on any asset or property, or (7) merge with or into any entity.



|13. | SENIOR NOTES
|--- | ------------



On April 2, 2004, $150 million of 8 % Senior Notes due 2012 were issued by the Company and guaranteed by Standard Commercial Tobacco Co., Inc., its wholly
owned U.S. tobacco subsidiary, on a senior unsecured fully and unconditionally basis. Management has determined that full financial statements of the Guarantor would not be material to investors and such financial statements are not provided. The
following supplemental combining financial statements present information regarding the Company and the Guarantor.



-11-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING BALANCE SHEET

September 30, 2004

(In thousands; unaudited)



|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------- |  | ------------------------------------- | ------- | - | --------------------------------------------- | - | ------- | -------------------------------- |  | ------------------------------------ | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                            |  | StandardCommercialCorporation(Issuer) |         |   | StandardCommercialTobacco Co. Inc.(Guarantor) |   |         | StandardWool Inc.(Non-Guarantor) |  | Other Subsidiaries (Non- Guarantors) |   |  | Eliminations |         |   | Total |  
|Assets                                      |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Cash                                        |  | $                                     | 133     |   |                                               | $ | 6,674   |                                  |  | $                                    |  |  | $            | 18,293  |   |       | $ |         |   |  | $ | 25,100  |  
|Receivables                                 |  |                                       | 10      |   |                                               |   | 40,301  |                                  |  |                                      |  |  |              | 170,561 |   |       |   |         |   |  |   | 210,872 |  
|Intercompany receivables                    |  |                                       | 181,325 |   |                                               |   | 166,938 |                                  |  |                                      |  |  |              | 89,184  |   |       |   | (437,447 | ) |  |   |        |  
|Inventories                                 |  |                                       |        |   |                                               |   | 66,241  |                                  |  |                                      |  |  |              | 230,900 |   |       |   |         |   |  |   | 297,141 |  
|Assets of discontinued operations           |  |                                       |        |   |                                               |   |        |                                  |  |                                      |  |  |              | 122,555 |   |       |   |         |   |  |   | 122,555 |  
|Prepaid expenses                            |  |                                       | (305    | ) |                                               |   | 1,540   |                                  |  |                                      |  |  |              | 6,232   |   |       |   |         |   |  |   | 7,467   |  
|Marketable securities                       |  |                                       | 1       |   |                                               |   |        |                                  |  |                                      |  |  |              | 1,720   |   |       |   |         |   |  |   | 1,721   |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Current assets                              |  |                                       | 181,164 |   |                                               |   | 281,694 |                                  |  |                                      |  |  |              | 639,445 |   |       |   | (437,447 | ) |  |   | 664,856 |  
|Property, plant and equipment               |  |                                       |        |   |                                               |   | 44,865  |                                  |  |                                      |  |  |              | 116,390 |   |       |   |         |   |  |   | 161,255 |  
|Investment in subsidiaries                  |  |                                       | 231,649 |   |                                               |   | 176,692 |                                  |  |                                      |  |  |              | 153,214 |   |       |   | (561,555 | ) |  |   |        |  
|Investment in affiliates                    |  |                                       |        |   |                                               |   |        |                                  |  |                                      |  |  |              | 9,880   |   |       |   |         |   |  |   | 9,880   |  
|Other noncurrent assets                     |  |                                       | 18,266  |   |                                               |   | 577     |                                  |  |                                      |  |  |              | 31,387  |   |       |   |         |   |  |   | 50,230  |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total assets                                |  | $                                     | 431,079 |   |                                               | $ | 503,828 |                                  |  | $                                    |  |  | $            | 950,316 |   |       | $ | (999,002 | ) |  | $ | 886,221 |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Liabilities                                 |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Short-term borrowings                       |  | $                                     |        |   |                                               | $ | 31,145  |                                  |  | $                                    |  |  | $            | 250,894 |   |       | $ |         |   |  | $ | 282,039 |  
|Current portion of long-term debt           |  |                                       |        |   |                                               |   |        |                                  |  |                                      |  |  |              | 18,700  |   |       |   |         |   |  |   | 18,700  |  
|Accounts payable and accrued liabilities    |  |                                       | 16,867  |   |                                               |   | 19,573  |                                  |  |                                      |  |  |              | 113,030 |   |       |   |         |   |  |   | 149,470 |  
|Liabilities of discontinued operations      |  |                                       |        |   |                                               |   |        |                                  |  |                                      |  |  |              | 29,997  |   |       |   |         |   |  |   | 29,997  |  
|Intercompany accounts payable               |  |                                       | 64,301  |   |                                               |   | 202,009 |                                  |  |                                      |  |  |              | 171,137 |   |       |   | (437,447 | ) |  |   |        |  
|Taxes accrued                               |  |                                       | (7,295  | ) |                                               |   | 1,769   |                                  |  |                                      |  |  |              | 10,855  |   |       |   |         |   |  |   | 5,329   |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Current liabilities                         |  |                                       | 73,873  |   |                                               |   | 254,496 |                                  |  |                                      |  |  |              | 594,613 |   |       |   | (437,447 | ) |  |   | 485,535 |  
|Long-term debt                              |  |                                       | 150,000 |   |                                               |   |        |                                  |  |                                      |  |  |              | 22,943  |   |       |   |         |   |  |   | 172,943 |  
|Retirement and other benefits               |  |                                       | 1,091   |   |                                               |   | 10,264  |                                  |  |                                      |  |  |              | 9,749   |   |       |   |         |   |  |   | 21,104  |  
|Deferred income taxes                       |  |                                       | (486    | ) |                                               |   | (546    | )                                |  |                                      |  |  |              | 1,997   |   |       |   |         |   |  |   | 965     |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total liabilities                           |  |                                       | 224,478 |   |                                               |   | 264,214 |                                  |  |                                      |  |  |              | 629,302 |   |       |   | (437,447 | ) |  |   | 680,547 |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Minority interests                          |  |                                       |        |   |                                               |   |        |                                  |  |                                      |  |  |              | 1,550   |   |       |   |         |   |  |   | 1,550   |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Shareholders equity                        |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Common stock                                |  |                                       | 3,270   |   |                                               |   | 993     |                                  |  |                                      |  |  |              | 138,253 |   |       |   | (139,246 | ) |  |   | 3,270   |  
|Additional paid-in capital                  |  |                                       | 112,577 |   |                                               |   | 130,860 |                                  |  |                                      |  |  |              | 60,564  |   |       |   | (191,424 | ) |  |   | 112,577 |  
|Unearned restricted stock plan compensation |  |                                       | (983    | ) |                                               |   | (783    | )                                |  |                                      |  |  |              | (1,694  | ) |       |   |         |   |  |   | (3,460  | )
|Treasury stock at cost                      |  |                                       | (4,250  | ) |                                               |   |        |                                  |  |                                      |  |  |              |        |   |       |   |         |   |  |   | (4,250  | )
|Retained earnings                           |  |                                       | 122,043 |   |                                               |   | 118,602 |                                  |  |                                      |  |  |              | 148,397 |   |       |   | (266,999 | ) |  |   | 122,043 |  
|Accumulated other comprehensive loss        |  |                                       | (26,056 | ) |                                               |   | (10,058 | )                                |  |                                      |  |  |              | (26,056 | ) |       |   | 36,114   |   |  |   | (26,056 | )
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total shareholders equity                  |  |                                       | 206,601 |   |                                               |   | 239,614 |                                  |  |                                      |  |  |              | 319,464 |   |       |   | (561,555 | ) |  |   | 204,124 |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total liabilities and equity                |  | $                                     | 431,079 |   |                                               | $ | 503,828 |                                  |  | $                                    |  |  | $            | 950,316 |   |       | $ | (999,002 | ) |  | $ | 886,221 |  
|                                            |  |                                       |         |   |                                               |   |         |                                  |  |                                      |   |  |              |         |   |       |   |          |   |  |   |         |  



-12-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Second quarter ended September 30, 2004

(In thousands; unaudited)



|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------ |  | ------------------------------------- | ------- | - | --------------------------------------------- | - | ------- | ---------------------------------- |  | ---------------------------------- | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                           |  | StandardCommercialCorporation(Issuer) |         |   | StandardCommercialTobacco Co. Inc.(Guarantor) |   |         | Standard Wool Inc. (Non-Guarantor) |  | Other Subsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|Sales                                      |  | $                                     |        |   |                                               | $ | 51,845  |                                    |  | $                                  |  |  | $            | 253,823 |   |       | $ | (72,278  | ) |  | $ | 233,390 |  
|Cost of sales:                             |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Materials services and supplies            |  |                                       |        |   |                                               |   | 43,784  |                                    |  |                                    |  |  |              | 226,128 |   |       |   | (72,278  | ) |  |   | 197,634 |  
|Interest                                   |  |                                       |        |   |                                               |   | 91      |                                    |  |                                    |  |  |              | 2,672   |   |       |   |         |   |  |   | 2,763   |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Gross profit                               |  |                                       |        |   |                                               |   | 7,970   |                                    |  |                                    |  |  |              | 25,023  |   |       |   |         |   |  |   | 32,993  |  
|Selling, general & administrative expenses |  |                                       | 2,647   |   |                                               |   | 4,804   |                                    |  |                                    |  |  |              | 16,472  |   |       |   |         |   |  |   | 23,923  |  
|Other interest expense                     |  |                                       | 3,119   |   |                                               |   | 857     |                                    |  |                                    |  |  |              | (1,468  | ) |       |   |         |   |  |   | 2,508   |  
|Other income (expense) net                 |  |                                       | 2,154   |   |                                               |   | (102    | )                                  |  |                                    |  |  |              | (1,677  | ) |       |   |         |   |  |   | 375     |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) before taxes                 |  |                                       | (3,612  | ) |                                               |   | 2,207   |                                    |  |                                    |  |  |              | 8,342   |   |       |   |         |   |  |   | 6,937   |  
|Income tax expense (benefit)               |  |                                       | (1,372  | ) |                                               |   | 840     |                                    |  |                                    |  |  |              | 2,585   |   |       |   |         |   |  |   | 2,053   |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) after taxes                  |  |                                       | (2,240  | ) |                                               |   | 1,367   |                                    |  |                                    |  |  |              | 5,757   |   |       |   |         |   |  |   | 4,884   |  
|Minority interests                         |  |                                       |        |   |                                               |   |        |                                    |  |                                    |  |  |              | 64      |   |       |   |         |   |  |   | 64      |  
|Equity in earnings of affiliates           |  |                                       |        |   |                                               |   |        |                                    |  |                                    |  |  |              | 150     |   |       |   |         |   |  |   | 150     |  
|Equity in earnings of subsidiaries         |  |                                       | 7,338   |   |                                               |   | 5,971   |                                    |  |                                    |  |  |              |        |   |       |   | (13,309  | ) |  |   |        |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) from continuing operations   |  |                                       | 5,098   |   |                                               |   | 7,338   |                                    |  |                                    |  |  |              | 5,971   |   |       |   | (13,309  | ) |  |   | 5,098   |  
|Discontinued operations                    |  |                                       | (25,237 | ) |                                               |   | (23,125 | )                                  |  |                                    |  |  |              | (14,318 | ) |       |   | 37,443   |   |  |   | (25,237 | )
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Net income (loss)                          |  |                                       | (20,139 | ) |                                               |   | (15,787 | )                                  |  |                                    |  |  |              | (8,347  | ) |       |   | 24,134   |   |  |   | (20,139 | )
|Retained earnings at beginning of period   |  |                                       | 143,383 |   |                                               |   | 134,389 |                                    |  |                                    |  |  |              | 156,744 |   |       |   | (291,133 | ) |  |   | 143,383 |  
|Common stock dividends                     |  |                                       | (1,201  | ) |                                               |   |        |                                    |  |                                    |  |  |              |        |   |       |   |         |   |  |   | (1,201  | )
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Retained earnings at end of period         |  | $                                     | 122,043 |   |                                               | $ | 118,602 |                                    |  | $                                  |  |  | $            | 148,397 |   |       | $ | (266,999 | ) |  | $ | 122,043 |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  



-13-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Six months ended September 30, 2004

(In thousands; unaudited)



|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------ |  | ------------------------------------- | ------- | - | --------------------------------------------- | - | ------- | ---------------------------------- |  | ---------------------------------- | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                           |  | StandardCommercialCorporation(Issuer) |         |   | StandardCommercialTobacco Co. Inc.(Guarantor) |   |         | Standard Wool Inc. (Non-Guarantor) |  | Other Subsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|Sales                                      |  | $                                     |        |   |                                               | $ | 90,860  |                                    |  | $                                  |  |  | $            | 493,909 |   |       | $ | (178,901 | ) |  | $ | 405,868 |  
|Cost of sales:                             |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Materials services and supplies            |  |                                       |        |   |                                               |   | 77,837  |                                    |  |                                    |  |  |              | 447,694 |   |       |   | (178,901 | ) |  |   | 346,630 |  
|Interest                                   |  |                                       |        |   |                                               |   | 114     |                                    |  |                                    |  |  |              | 5,694   |   |       |   |         |   |  |   | 5,808   |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Gross profit                               |  |                                       |        |   |                                               |   | 12,909  |                                    |  |                                    |  |  |              | 40,521  |   |       |   |         |   |  |   | 53,430  |  
|Selling, general & administrative expenses |  |                                       | 4,674   |   |                                               |   | 10,377  |                                    |  |                                    |  |  |              | 30,327  |   |       |   |         |   |  |   | 45,378  |  
|Other interest expense                     |  |                                       | 6,318   |   |                                               |   | 1,386   |                                    |  |                                    |  |  |              | (1,521  | ) |       |   |         |   |  |   | 6,183   |  
|Other income (expense) net                 |  |                                       | 3,767   |   |                                               |   | (2,177  | )                                  |  |                                    |  |  |              | (802    | ) |       |   |         |   |  |   | 788     |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) before taxes                 |  |                                       | (7,225  | ) |                                               |   | (1,031  | )                                  |  |                                    |  |  |              | 10,913  |   |       |   |         |   |  |   | 2,657   |  
|Income tax expense (benefit)               |  |                                       | (2,746  | ) |                                               |   | (392    | )                                  |  |                                    |  |  |              | 3,596   |   |       |   |         |   |  |   | 458     |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) after taxes                  |  |                                       | (4,479  | ) |                                               |   | (639    | )                                  |  |                                    |  |  |              | 7,317   |   |       |   |         |   |  |   | 2,199   |  
|Minority interests                         |  |                                       |        |   |                                               |   |        |                                    |  |                                    |  |  |              | 331     |   |       |   |         |   |  |   | 331     |  
|Equity in earnings of affiliates           |  |                                       |        |   |                                               |   |        |                                    |  |                                    |  |  |              | 400     |   |       |   |         |   |  |   | 400     |  
|Equity in earnings of subsidiaries         |  |                                       | 7,409   |   |                                               |   | 8,048   |                                    |  |                                    |  |  |              |        |   |       |   | (15,457  | ) |  |   |        |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) from continuing operations   |  |                                       | 2,930   |   |                                               |   | 7,409   |                                    |  |                                    |  |  |              | 8,048   |   |       |   | (15,457  | ) |  |   | 2,930   |  
|Discontinued operations                    |  |                                       | (27,918 | ) |                                               |   | (24,763 | )                                  |  |                                    |  |  |              | (15,957 | ) |       |   | 40,720   |   |  |   | (27,918 | )
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Net income (loss)                          |  |                                       | (24,988 | ) |                                               |   | (17,354 | )                                  |  |                                    |  |  |              | (7,909  | ) |       |   | 25,263   |   |  |   | (24,988 | )
|Retained earnings at beginning of period   |  |                                       | 149,428 |   |                                               |   | 135,956 |                                    |  |                                    |  |  |              | 156,306 |   |       |   | (292,262 | ) |  |   | 149,428 |  
|Common stock dividends                     |  |                                       | (2,397  | ) |                                               |   |        |                                    |  |                                    |  |  |              |        |   |       |   |         |   |  |   | (2,397  | )
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  
|Retained earnings at end of period         |  | $                                     | 122,043 |   |                                               | $ | 118,602 |                                    |  | $                                  |  |  | $            | 148,397 |   |       | $ | (266,999 | ) |  | $ | 122,043 |  
|                                           |  |                                       |         |   |                                               |   |         |                                    |  |                                    |   |  |              |         |   |       |   |          |   |  |   |         |  



-14-



---

SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS

Six months ended September 30, 2004

(In thousands; unaudited)



|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|--------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------------------------------- | - | ------- | -------------------------------- |  | ---------------------------------- | - |  | ------------ | ------- | ----- |  | - | - |  | - | -------- | -
|                                                    |  | StandardCommercialCorporation(Issuer) |         |   | StandardCommercialTobacco Co.Inc.(Guarantor) |   |         | StandardWool Inc.(Non-Guarantor) |  | OtherSubsidiaries(Non- Guarantors) |   |  | Eliminations |         | Total | 
|Cash provided by (used for) operating activities    |  | $                                     | (98,164 | ) |                                              | $ | 68,131  |                                  |  | $                                  |  |  | $            | (21,339 | )     |  | $ |  |  | $ | (51,372  | )
|                                                    |  |                                       |         |   |                                              |  
|Cash flows from investing activities                |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Property, plant and equipment                       |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|additions                                          |  |                                       |        |   |                                              |   | (5,968  | )                                |  |                                    |  |  |              | (12,897 | )     |  |   |  |  |   | (18,865  | )
|disposals                                          |  |                                       |        |   |                                              |   | 479     |                                  |  |                                    |  |  |              | 336     |       |  |   |  |  |   | 815      |  
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Cash provided by (used for) continuing activities   |  |                                       |        |   |                                              |   | (5,489  | )                                |  |                                    |  |  |              | (12,561 | )     |  |   |  |  |   | (18,050  | )
|Cash provided by (used for) discontinued activities |  |                                       |        |   |                                              |   |        |                                  |  |                                    |  |  |              | (622    | )     |  |   |  |  |   | (622     | )
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Cash provided by (used for) investing activities    |  |                                       |        |   |                                              |   | (5,489  | )                                |  |                                    |  |  |              | (13,183 | )     |  |   |  |  |   | (18,672  | )
|Cash flows from financing activities:               |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Proceeds from long-term borrowings                  |  |                                       | 145,651 |   |                                              |   |        |                                  |  |                                    |  |  |              | 16,854  |       |  |   |  |  |   | 162,505  |  
|Repayment of long-term borrowings                   |  |                                       |        |   |                                              |   |        |                                  |  |                                    |  |  |              | (10,389 | )     |  |   |  |  |   | (10,389  | )
|Net change in short-term borrowings                 |  |                                       |        |   |                                              |   | 8,317   |                                  |  |                                    |  |  |              | 19,875  |       |  |   |  |  |   | 28,192   |  
|Dividends received / (paid)                         |  |                                       | (2,397  | ) |                                              |   |        |                                  |  |                                    |  |  |              |        |       |  |   |  |  |   | (2,397   | )
|Repayment of debt                                   |  |                                       | (45,051 | ) |                                              |   | (66,141 | )                                |  |                                    |  |  |              |        |       |  |   |  |  |   | (111,192 | )
|Other                                               |  |                                       |        |   |                                              |   | 792     |                                  |  |                                    |  |  |              |        |       |  |   |  |  |   | 792      |  
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Cash provided by (used in) financing activities     |  |                                       | 98,203  |   |                                              |   | (57,032 | )                                |  |                                    |  |  |              | 26,340  |       |  |   |  |  |   | 67,511   |  
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Effect of exchange rate changes on cash             |  |                                       |        |   |                                              |   |        |                                  |  |                                    |  |  |              | (40     | )     |  |   |  |  |   | (40      | )
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Increase (decrease) in cash for period              |  |                                       | 39      |   |                                              |   | 5,610   |                                  |  |                                    |  |  |              | (8,222  | )     |  |   |  |  |   | (2,573   | )
|Cash at beginning of period                         |  |                                       | 94      |   |                                              |   | 1,064   |                                  |  |                                    |  |  |              | 26,515  |       |  |   |  |  |   | 27,673   |  
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Cash at end of period                               |  | $                                     | 133     |   |                                              | $ | 6,674   |                                  |  | $                                  |  |  | $            | 18,293  |       |  | $ |  |  | $ | 25,100   |  
|                                                    |  |                                       |         |   |                                              |   |         |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |          |  
|Interest                                            |  | $                                     | 299     |   |                                              | $ | 2,998   |                                  |  | $                                  |  |  | $            | 6,144   |       |  |   |   |  | $ | 9,441    |  
|Income taxes                                        |  |                                       |        |   |                                              |   |        |                                  |  |                                    |  |  |              | 6,170   |       |  |   |   |  |   | 6,170    |  



-15-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING BALANCE SHEET

September 30, 2003

(In thousands; unaudited)



|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------- |  | ---------------------------------------- | ------- | - | ------------------------------------------- | - | ------- | -------------------------------- |  | --------------------------------- | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                            |  | StandardCommercialCorporation(Guarantor) |         |   | StandardCommercialTobacco Co. Inc. (Issuer) |   |         | StandardWool Inc.(Non-Guarantor) |  | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|Assets                                      |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Cash                                        |  | $                                        | 18      |   |                                             | $ | 2,953   |                                  |  | $                                 |  |  | $            | 13,589  |   |       | $ |         |   |  | $ | 16,560  |  
|Receivables                                 |  |                                          |        |   |                                             |   | 19,913  |                                  |  |                                   |  |  |              | 151,937 |   |       |   |         |   |  |   | 171,850 |  
|Intercompany receivables                    |  |                                          | 21,524  |   |                                             |   | 101,413 |                                  |  |                                   |  |  |              | 35,218  |   |       |   | (158,155 | ) |  |   |        |  
|Inventories                                 |  |                                          |        |   |                                             |   | 64,691  |                                  |  |                                   |  |  |              | 178,765 |   |       |   |         |   |  |   | 243,456 |  
|Assets of discontinued operations           |  |                                          |        |   |                                             |   |        |                                  |  |                                   |  |  |              | 168,957 |   |       |   |         |   |  |   | 168,957 |  
|Prepaid expenses                            |  |                                          |        |   |                                             |   | 3,301   |                                  |  |                                   |  |  |              | 1,576   |   |       |   |         |   |  |   | 4,877   |  
|Marketable securities                       |  |                                          | 1       |   |                                             |   |        |                                  |  |                                   |  |  |              | 1,242   |   |       |   |         |   |  |   | 1,243   |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Current assets                              |  |                                          | 21,543  |   |                                             |   | 192,271 |                                  |  |                                   |  |  |              | 551,284 |   |       |   | (158,155 | ) |  |   | 606,943 |  
|Property, plant and equipment               |  |                                          |        |   |                                             |   | 39,614  |                                  |  |                                   |  |  |              | 100,884 |   |       |   |         |   |  |   | 140,498 |  
|Investment in subsidiaries                  |  |                                          | 249,287 |   |                                             |   | 176,637 |                                  |  |                                   |  |  |              | 153,214 |   |       |   | (579,138 | ) |  |   |        |  
|Investment in affiliates                    |  |                                          |        |   |                                             |   |        |                                  |  |                                   |  |  |              | 7,988   |   |       |   |         |   |  |   | 7,988   |  
|Other noncurrent assets                     |  |                                          | 13,696  |   |                                             |   | (1,880  | )                                |  |                                   |  |  |              | 32,360  |   |       |   |         |   |  |   | 44,176  |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total assets                                |  | $                                        | 284,526 |   |                                             | $ | 406,642 |                                  |  | $                                 |  |  | $            | 845,730 |   |       | $ | (737,293 | ) |  | $ | 799,605 |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Liabilities                                 |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Short-term borrowings                       |  | $                                        |        |   |                                             | $ | 30,890  |                                  |  | $                                 |  |  | $            | 212,684 |   |       | $ |         |   |  | $ | 243,574 |  
|Current portion of long-term debt           |  |                                          |        |   |                                             |   |        |                                  |  |                                   |  |  |              | 7,974   |   |       |   |         |   |  |   | 7,974   |  
|Accounts payable and accrued liabilities    |  |                                          | 8,245   |   |                                             |   | 12,899  |                                  |  |                                   |  |  |              | 90,505  |   |       |   |         |   |  |   | 111,649 |  
|Liabilities of discontinued operations      |  |                                          |        |   |                                             |   |        |                                  |  |                                   |  |  |              | 33,969  |   |       |   |         |   |  |   | 33,969  |  
|Intercompany accounts payable               |  |                                          | 1,425   |   |                                             |   | 30,328  |                                  |  |                                   |  |  |              | 126,402 |   |       |   | (158,155 | ) |  |   |        |  
|Taxes accrued                               |  |                                          | (12,250 | ) |                                             |   | 10,677  |                                  |  |                                   |  |  |              | 15,647  |   |       |   |         |   |  |   | 14,074  |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Current liabilities                         |  |                                          | (2,580  | ) |                                             |   | 84,794  |                                  |  |                                   |  |  |              | 487,181 |   |       |   | (158,155 | ) |  |   | 411,240 |  
|Long-term debt                              |  |                                          |        |   |                                             |   | 65,177  |                                  |  |                                   |  |  |              | 18,673  |   |       |   |         |   |  |   | 83,850  |  
|Convertible subordinated debentures         |  |                                          | 45,051  |   |                                             |   |        |                                  |  |                                   |  |  |              |        |   |       |   |         |   |  |   | 45,051  |  
|Retirement and other benefits               |  |                                          | 1,021   |   |                                             |   | 9,652   |                                  |  |                                   |  |  |              | 4,364   |   |       |   |         |   |  |   | 15,037  |  
|Deferred income taxes                       |  |                                          | (428    | ) |                                             |   | (1,480  | )                                |  |                                   |  |  |              | 6,342   |   |       |   |         |   |  |   | 4,434   |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total liabilities                           |  |                                          | 43,064  |   |                                             |   | 158,143 |                                  |  |                                   |  |  |              | 516,560 |   |       |   | (158,155 | ) |  |   | 559,612 |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Minority interests                          |  |                                          |        |   |                                             |   |        |                                  |  |                                   |  |  |              | 1,807   |   |       |   |         |   |  |   | 1,807   |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Shareholders equity                        |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Common stock                                |  |                                          | 3,248   |   |                                             |   | 993     |                                  |  |                                   |  |  |              | 148,765 |   |       |   | (149,758 | ) |  |   | 3,248   |  
|Additional paid-in capital                  |  |                                          | 110,634 |   |                                             |   | 130,860 |                                  |  |                                   |  |  |              | 60,564  |   |       |   | (191,424 | ) |  |   | 110,634 |  
|Unearned restricted stock plan compensation |  |                                          | (708    | ) |                                             |   | (996    | )                                |  |                                   |  |  |              | (2,280  | ) |       |   |         |   |  |   | (3,984  | )
|Treasury stock at cost                      |  |                                          | (4,250  | ) |                                             |   |        |                                  |  |                                   |  |  |              |        |   |       |   |         |   |  |   | (4,250  | )
|Retained earnings                           |  |                                          | 157,755 |   |                                             |   | 128,878 |                                  |  |                                   |  |  |              | 145,244 |   |       |   | (274,122 | ) |  |   | 157,755 |  
|Accumulated other comprehensive loss        |  |                                          | (25,217 | ) |                                             |   | (11,236 | )                                |  |                                   |  |  |              | (24,930 | ) |       |   | 36,166   |   |  |   | (25,217 | )
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total shareholders equity                  |  |                                          | 241,462 |   |                                             |   | 248,499 |                                  |  |                                   |  |  |              | 327,363 |   |       |   | (579,138 | ) |  |   | 238,186 |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Total liabilities and equity                |  | $                                        | 284,526 |   |                                             | $ | 406,642 |                                  |  | $                                 |  |  | $            | 845,730 |   |       | $ | (737,293 | ) |  | $ | 799,605 |  
|                                            |  |                                          |         |   |                                             |   |         |                                  |  |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  



-16-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Second quarter ended September 30, 2003

(In thousands; unaudited)



|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | ------------------------------------------- | - | ------- | -------------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                           |  | StandardCommercialCorporation(Guarantor) |         |   | StandardCommercialTobacco Co. Inc. (Issuer) |   |         | StandardWool Inc.(Non-Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|Sales                                      |  | $                                        |        |   |                                             | $ | 50,441  |                                  |  | $ |                                  |   |  | $            | 186,074 |   |       | $ | (48,954  | ) |  | $ | 187,561 |  
|Cost of sales:                             |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Materials services and supplies            |  |                                          |        |   |                                             |   | 41,663  |                                  |  |   |                                  |   |  |              | 157,784 |   |       |   | (48,954  | ) |  |   | 150,493 |  
|Interest                                   |  |                                          |        |   |                                             |   | 291     |                                  |  |   |                                  |   |  |              | 2,172   |   |       |   |         |   |  |   | 2,463   |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Gross profit                               |  |                                          |        |   |                                             |   | 8,487   |                                  |  |   |                                  |   |  |              | 26,118  |   |       |   |         |   |  |   | 34,605  |  
|Selling, general & administrative expenses |  |                                          | 1,641   |   |                                             |   | 2,618   |                                  |  |   |                                  |   |  |              | 15,396  |   |       |   |         |   |  |   | 19,655  |  
|Other interest expense                     |  |                                          | 1,073   |   |                                             |   | 1,202   |                                  |  |   |                                  |   |  |              | (1,044  | ) |       |   |         |   |  |   | 1,231   |  
|Other income (expense) net                 |  |                                          | (101    | ) |                                             |   | 1,144   |                                  |  |   |                                  |   |  |              | (456    | ) |       |   |         |   |  |   | 587     |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) before taxes                 |  |                                          | (2,815  | ) |                                             |   | 5,811   |                                  |  |   |                                  |   |  |              | 11,310  |   |       |   |         |   |  |   | 14,306  |  
|Income tax expense (benefit)               |  |                                          | (1,070  | ) |                                             |   | 2,208   |                                  |  |   |                                  |   |  |              | 2,780   |   |       |   |         |   |  |   | 3,918   |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) after taxes                  |  |                                          | (1,745  | ) |                                             |   | 3,603   |                                  |  |   |                                  |   |  |              | 8,530   |   |       |   |         |   |  |   | 10,388  |  
|Minority interests                         |  |                                          |        |   |                                             |   |        |                                  |  |   |                                  |   |  |              | 71      |   |       |   |         |   |  |   | 71      |  
|Equity in earnings of affiliates           |  |                                          |        |   |                                             |   |        |                                  |  |   |                                  |   |  |              | 367     |   |       |   |         |   |  |   | 367     |  
|Equity in earnings of subsidiaries         |  |                                          | 12,571  |   |                                             |   | 8,968   |                                  |  |   |                                  |   |  |              |        |   |       |   | (21,539  | ) |  |   |        |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income from continuing operations          |  |                                          | 10,826  |   |                                             |   | 12,571  |                                  |  |   |                                  |   |  |              | 8,968   |   |       |   | (21,539  | ) |  |   | 10,826  |  
|Discontinued operations                    |  |                                          | (25,135 | ) |                                             |   | (9,954  | )                                |  |   | 18,823                            |   |  |              | (7,681  | ) |       |   | (1,188   | ) |  |   | (25,135 | )
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Net income (loss)                          |  |                                          | (14,309 | ) |                                             |   | 2,617   |                                  |  |   | 18,823                            |   |  |              | 1,287   |   |       |   | (22,727  | ) |  |   | (14,309 | )
|Retained earnings at beginning of period   |  |                                          | 173,256 |   |                                             |   | 133,761 |                                  |  |   | (18,823                           | ) |  |              | 143,957 |   |       |   | (258,895 | ) |  |   | 173,256 |  
|Common stock dividends                     |  |                                          | (1,192  | ) |                                             |   | (7,500  | )                                |  |   |                                  |   |  |              |        |   |       |   | 7,500    |   |  |   | (1,192  | )
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Retained earnings at end of period         |  | $                                        | 157,755 |   |                                             | $ | 128,878 |                                  |  | $ |                                  |   |  | $            | 145,244 |   |       | $ | (274,122 | ) |  | $ | 157,755 |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  



-17-



---

STANDARD COMMERCIAL CORPORATION



SUPPLEMENTAL COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS

Six months ended September 30, 2003

(In thousands; unaudited)



|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | ------------------------------------------- | - | ------- | -------------------------------- |  | - | --------------------------------- | - |  | ------------ | ------- | - | ----- | - | -------- | - |  | - | ------- | -
|                                           |  | StandardCommercialCorporation(Guarantor) |         |   | StandardCommercialTobacco Co. Inc. (Issuer) |   |         | StandardWool Inc.(Non-Guarantor) |  |   | OtherSubsidiaries(Non-Guarantors) |   |  | Eliminations |         |   | Total |  
|Sales                                      |  | $                                        |        |   |                                             | $ | 83,944  |                                  |  | $ |                                  |   |  | $            | 383,672 |   |       | $ | (115,272 | ) |  | $ | 352,344 |  
|Cost of sales:                             |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Materials services and supplies            |  |                                          |        |   |                                             |   | 69,326  |                                  |  |   |                                  |   |  |              | 325,744 |   |       |   | (115,272 | ) |  |   | 279,798 |  
|Interest                                   |  |                                          |        |   |                                             |   | 386     |                                  |  |   |                                  |   |  |              | 4,460   |   |       |   |         |   |  |   | 4,846   |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Gross profit                               |  |                                          |        |   |                                             |   | 14,232  |                                  |  |   |                                  |   |  |              | 53,468  |   |       |   |         |   |  |   | 67,700  |  
|Selling, general & administrative expenses |  |                                          | 2,975   |   |                                             |   | 6,718   |                                  |  |   |                                  |   |  |              | 27,618  |   |       |   |         |   |  |   | 37,311  |  
|Other interest expense                     |  |                                          | 1,887   |   |                                             |   | 2,598   |                                  |  |   |                                  |   |  |              | (2,156  | ) |       |   |         |   |  |   | 2,329   |  
|Other income (expense) net                 |  |                                          | (181    | ) |                                             |   | 2,461   |                                  |  |   |                                  |   |  |              | (1,283  | ) |       |   |         |   |  |   | 997     |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) before taxes                 |  |                                          | (5,043  | ) |                                             |   | 7,377   |                                  |  |   |                                  |   |  |              | 26,723  |   |       |   |         |   |  |   | 29,057  |  
|Income tax expense (benefit)               |  |                                          | (1,916  | ) |                                             |   | 2,803   |                                  |  |   |                                  |   |  |              | 8,302   |   |       |   |         |   |  |   | 9,189   |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income (loss) after taxes                  |  |                                          | (3,127  | ) |                                             |   | 4,574   |                                  |  |   |                                  |   |  |              | 18,421  |   |       |   |         |   |  |   | 19,868  |  
|Minority interests                         |  |                                          |        |   |                                             |   |        |                                  |  |   |                                  |   |  |              | 139     |   |       |   |         |   |  |   | 139     |  
|Equity in earnings of affiliates           |  |                                          |        |   |                                             |   |        |                                  |  |   |                                  |   |  |              | 567     |   |       |   |         |   |  |   | 567     |  
|Equity in earnings of subsidiaries         |  |                                          | 23,701  |   |                                             |   | 19,127  |                                  |  |   |                                  |   |  |              |        |   |       |   | (42,828  | ) |  |   |        |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Income from continuing operations          |  |                                          | 20,574  |   |                                             |   | 23,701  |                                  |  |   |                                  |   |  |              | 19,127  |   |       |   | (42,828  | ) |  |   | 20,574  |  
|Discontinued operations                    |  |                                          | (28,271 | ) |                                             |   | (10,818 | )                                |  |   | 16,551                            |   |  |              | (10,818 | ) |       |   | 5,085    |   |  |   | (28,271 | )
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Net income (loss)                          |  |                                          | (7,697  | ) |                                             |   | 12,883  |                                  |  |   | 16,551                            |   |  |              | 8,309   |   |       |   | (37,743  | ) |  |   | (7,697  | )
|Retained earnings at beginning of period   |  |                                          | 167,495 |   |                                             |   | 123,495 |                                  |  |   | (16,551                           | ) |  |              | 136,935 |   |       |   | (243,879 | ) |  |   | 167,495 |  
|Common stock dividends                     |  |                                          | (2,043  | ) |                                             |   | (7,500  | )                                |  |   |                                  |   |  |              |        |   |       |   | 7,500    |   |  |   | (2,043  | )
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  
|Retained earnings at end of period         |  | $                                        | 157,755 |   |                                             | $ | 128,878 |                                  |  | $ |                                  |   |  | $            | 145,244 |   |       | $ | (274,122 | ) |  | $ | 157,755 |  
|                                           |  |                                          |         |   |                                             |   |         |                                  |  |   |                                   |   |  |              |         |   |       |   |          |   |  |   |         |  



-18-



---

SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS

Six months ended September 30, 2003

(In thousands; unaudited)



|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|--------------------------------------------------- |  | ---------------------------------------- | ------ | - | ------------------------------------------ | - | ------ | -------------------------------- |  | ---------------------------------- | - |  | ------------ | ------- | ----- |  | - | - |  | - | ------- | -
|                                                    |  | StandardCommercialCorporation(Guarantor) |        |   | StandardCommercialTobacco Co.Inc. (Issuer) |   |        | StandardWool Inc.(Non-Guarantor) |  | OtherSubsidiaries(Non- Guarantors) |   |  | Eliminations |         | Total | 
|Cash provided by (used for) operating activities    |  | $                                        | 2,007  |   |                                            | $ | (494   | )                                |  | $                                  |  |  | $            | (63,131 | )     |  | $ |  |  | $ | (61,618 | )
|                                                    |  |                                          |        |   |                                            |  
|Cash flows from investing activities                |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Property, plant and equipment                       |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|additions                                          |  |                                          |       |   |                                            |   | (6,081 | )                                |  |                                    |  |  |              | (7,678  | )     |  |   |  |  |   | (13,759 | )
|disposals                                          |  |                                          |       |   |                                            |   |       |                                  |  |                                    |  |  |              | 126     |       |  |   |  |  |   | 126     |  
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Cash provided by (used for) continuing activities   |  |                                          |       |   |                                            |   | (6,081 | )                                |  |                                    |  |  |              | (7,552  | )     |  |   |  |  |   | (13,633 | )
|Cash provided by (used for) discontinued activities |  |                                          |       |   |                                            |   |       |                                  |  |                                    |  |  |              | (1,940  | )     |  |   |  |  |   | (1,940  | )
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Cash provided by (used for) investing activities    |  |                                          |       |   |                                            |   | (6,081 | )                                |  |                                    |  |  |              | (9,492  | )     |  |   |  |  |   | (15,573 | )
|Cash flows from financing activities:               |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Proceeds from long-term borrowings                  |  |                                          |       |   |                                            |   |       |                                  |  |                                    |  |  |              | 12,218  |       |  |   |  |  |   | 12,218  |  
|Repayment of long-term borrowings                   |  |                                          |       |   |                                            |   |       |                                  |  |                                    |  |  |              | (4,668  | )     |  |   |  |  |   | (4,668  | )
|Net change in short-term borrowings                 |  |                                          |       |   |                                            |   | 9,114  |                                  |  |                                    |  |  |              | 52,357  |       |  |   |  |  |   | 61,471  |  
|Dividends received / (paid)                         |  |                                          | (2,043 | ) |                                            |   |       |                                  |  |                                    |  |  |              |        |       |  |   |  |  |   | (2,043  | )
|Other                                               |  |                                          |       |   |                                            |   | (49    | )                                |  |                                    |  |  |              |        |       |  |   |  |  |   | (49     | )
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Cash provided by (used in) financing activities     |  |                                          | (2,043 | ) |                                            |   | 9,065  |                                  |  |                                    |  |  |              | 59,907  |       |  |   |  |  |   | 66,929  |  
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Effect of exchange rate changes on cash             |  |                                          |       |   |                                            |   |       |                                  |  |                                    |  |  |              | 253     |       |  |   |  |  |   | 253     |  
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Increase (decrease) in cash for period              |  |                                          | (36    | ) |                                            |   | 2,490  |                                  |  |                                    |  |  |              | (12,463 | )     |  |   |  |  |   | (10,009 | )
|Cash at beginning of period                         |  |                                          | 54     |   |                                            |   | 463    |                                  |  |                                    |  |  |              | 26,052  |       |  |   |  |  |   | 26,569  |  
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Cash at end of period                               |  | $                                        | 18     |   |                                            | $ | 2,953  |                                  |  | $                                  |  |  | $            | 13,589  |       |  | $ |  |  | $ | 16,560  |  
|                                                    |  |                                          |        |   |                                            |   |        |                                  |  |                                    |   |  |              |         |       |  |   |   |  |   |         |  
|Interest                                            |  | $                                        | 1,615  |   |                                            | $ | 3,142  |                                  |  | $                                  |  |  | $            | 4,029   |       |  |   |   |  | $ | 8,786   |  
|Income taxes                                        |  |                                          | 3,589  |   |                                            |   |       |                                  |  |                                    |  |  |              | 5,435   |       |  |   |   |  |   | 9,024   |  



-19-



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Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION



Executive Summary



On a global basis, supply and demand for flue-cured tobacco remain relatively balanced as a large crop in Brazil has offset smaller crops in Zimbabwe. There is a slight
oversupply in burley due to the large crops in Malawi and Brazil. There is a balanced position of oriental styles. Inventory balances at September 30, 2004 were $53.7 million higher than the September 30, 2003 level. The level of inventory
fluctuates based on customer shipment schedules and availability of shipping containers. The increase also reflects the additions to inventory that result from new operations that are becoming fully operational such as our new growing projects in
Africa.



The U.S. Dollar remains weak. While most of the sales are denominated
in dollars, local country operating costs, including the purchasing and processing costs for tobaccos, are incurred in local currency. This has increased the costs of tobaccos in certain areas from the prior year that are currently being sold.



During the six months ended September 30, 2004, we issued $150 million of 8%
senior notes due 2012, redeemed $45.1 million of 71/4% convertible
debentures and retired $65.2 million of 87/8% senior notes due 2005. Early in April 2004, our major tobacco subsidiaries entered into a new $150 million three-year unsecured revolving facility.



Consolidated Results of Operations (in thousands)



Comparison of the Quarter ended September 30, 2004 to the Quarter ended September 30,
2003



|                                             |  |                                  |         |   |                      |   |         |   |  |   |        |  
|-------------------------------------------- |  | -------------------------------- | ------- | - | -------------------- | - | ------- | - |  | - | ------ | -
|                                             |  | Second quarter endedSeptember 30 |         |   | Increase /(Decrease) |  
|                                             |  | 2004                             |         |   | 2003                 |   |        
|Sales                                        |  | $                                | 233,390 |   |                      | $ | 187,561 |   |  | $ | 45,829 |  
|Gross profit                                 |  |                                  | 32,993  |   |                      |   | 34,605  |   |  |   | (1,612 | )
|Selling, general and administrative expenses |  |                                  | 23,923  |   |                      |   | 19,655  |   |  |   | 4,268  |  
|Interest expense                             |  |                                  | 2,508   |   |                      |   | 1,231   |   |  |   | 1,277  |  
|Income tax benefit (expense)                 |  |                                  | (2,053  | ) |                      |   | (3,918  | ) |  |   | (1,865 | )
|Income (loss) from continuing operations     |  |                                  | 5,098   |   |                      |   | 10,826  |   |  |   | (5,728 | )
|Loss from discontinued operations            |  |                                  | (25,237 | ) |                      |   | (25,135 | ) |  |   | (102   | )
|Net income (loss)                            |  |                                  | (20,139 | ) |                      |   | (14,309 | ) |  |   | (5,830 | )



Sales.Sales for the three
months ended September 30, 2004 increased by 24.4% to $233.4 million from $187.6 million in the prior year period. The volume of tobacco sold during the current quarter increased by 21.8% over the prior year quarter. This was mainly due to increased
shipments from Brazil, India, Russia, Turkey, Zimbabwe and Spain. Shipments from Thailand were lower during the current quarter due to delayed customer delivery schedules. In addition, we exited the Greek and Honduran markets during the prior year
quarter.



Gross Profit.Gross profit for the quarter ended September 30,
2004 was $33.0 million versus $34.6 million in the prior year period. Gross margins were down from 18.5% to 14.1% primarily due to higher tobacco and operating costs in Zimbabwe, India, China, Thailand and Argentina and sales mix in our African
operations.



Selling, General and Administrative Expenses.SG&A
expense for the quarter were higher by $4.3 million. This was mainly due to a charge of $2.4 million accrued for fines relating to the European Commission investigation in Spain and an increase in legal and professional expenses of $1.1 million
related to this and other matters.



-20-



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Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)



Interest Expense.Interest expense for the current quarter was higher by $1.3 million
due to both increased average borrowings and higher average rates.



Income
taxes.Income tax charges or credits as a percentage of pretax income can vary due to differences in tax rates and relief available in areas where profits are earned or losses are incurred. As a result, the effective tax rate for the quarter was
30% versus 27% for the prior year quarter.



Income from Continuing
Operations.Income from continuing operations was $5.1 million for the current quarter versus profit of $10.8 million in the prior year quarter.



Loss from Discontinued Operations.The tobacco operating loss for the three months ended September 30, 2004 was $8.3 million versus a profit of $3.4 million in the
prior year quarter. The charge recorded in the current quarter for the discontinued tobacco operation was $14.8 million. No tax benefit on the losses to discontinue the Italian operations was recorded due to the uncertainty of our ability to
ultimately receive a tax benefit. The wool operating loss for the quarter was $2.1 million versus $2.0 million in the prior year period. The charge recorded in the prior year quarter to discontinue the wool operation was $26.6 million. The basic
loss per share for the discontinued operations for the quarter was $1.84 the same as the prior year period.



Net Loss.The consolidated net loss for the quarter was $20.1 million versus a loss of $14.3 million in the prior year period.



Comparison of the Six Months ended September 30, 2004 to the Six Months ended September 30, 2003



|                                             |  |                              |         |   |                      |   |         |   |  |   |         |  
|-------------------------------------------- |  | ---------------------------- | ------- | - | -------------------- | - | ------- | - |  | - | ------- | -
|                                             |  | Six months endedSeptember 30 |         |   | Increase /(Decrease) |  
|                                             |  | 2004                         |         |   | 2003                 |   |        
|Sales                                        |  | $                            | 405,868 |   |                      | $ | 352,344 |   |  | $ | 53,524  |  
|Gross profit                                 |  |                              | 53,430  |   |                      |   | 67,700  |   |  |   | (14,270 | )
|Selling, general and administrative expenses |  |                              | 45,378  |   |                      |   | 37,311  |   |  |   | 8,067   |  
|Interest expense                             |  |                              | 6,183   |   |                      |   | 2,329   |   |  |   | 3,854   |  
|Income tax benefit (expense)                 |  |                              | (458    | ) |                      |   | (9,189  | ) |  |   | (8,731  | )
|Income (loss) from continuing operations     |  |                              | 2,930   |   |                      |   | 20,574  |   |  |   | (17,644 | )
|Loss from discontinued operations            |  |                              | (27,918 | ) |                      |   | (28,271 | ) |  |   | 353     |  
|Net income (loss)                            |  |                              | (24,988 | ) |                      |   | (7,697  | ) |  |   | (17,291 | )



Sales.Sales for the six months
ended September 30, 2004 increased by 15.2% to $405.9 million from $352.3 million in the prior year period. The volume of tobacco sold during the current six months increased by 12.4% over the prior year period. This was mainly due to increased
shipments from Brazil, India, Russia, Turkey and Spain. Shipments from Thailand and Malawi were lower during the current six months due to delayed customer delivery schedules and a shortage of containers used for shipping tobacco for Malawi. As
previously stated, we exited Greece and Honduras in the prior year.



Gross
Profit.Gross profit for the six months ended September 30, 2004 was $53.4 million versus $67.7 million in the prior year period. Gross margins were down from 19.2% to 13.2% primarily due to higher tobacco and operating costs in Brazil,
Zimbabwe, India, China, Thailand, Argentina and Turkey.



Selling, General
and Administrative Expenses.SG&A expense for the current six months were higher by $8.1 million. This was mainly due to a charge of $2.4 million accrued for fines relating to the European Commission investigation in Spain, increase in legal
and professional expenses of $1.5 million related to this and other matters, increases in compensation of $0.9 million, higher communication and rental expense of $0.8 million and other normal inflationary increases.



-21-



---

Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)



Interest Expense.Interest expense for the current six months was higher by $3.9
million due to both increased average borrowings and higher interest rates, as well as payment of $1.0 million for the May 2004 early retirement of the 87/8% senior notes.



Income taxes.Income tax charges or credits as a percentage of pretax income can vary due to differences in tax rates and relief available in areas where profits are earned or losses are incurred. The effective
tax rate for the six months was 17% versus 32% for the prior year period.



Income from Continuing Operations.For the current six months income from continuing operations was $2.9 million versus $20.6 million in the prior year period.



Loss from Discontinued Operations.The operating loss for the discontinued tobacco operation for the six months to September 30, 2004
was $10.0 million versus a profit of $2.6 million in the prior year period. The charge recorded in the current six months for the discontinued tobacco operation was $14.8 million. No tax benefit on the losses to discontinue the Italian operations
was recorded due to the uncertainty of our ability to ultimately receive a tax benefit. The wool operating loss for the current six months was $3.2 million versus $4.2 million in the prior year period. The charge recorded in the prior year period to
discontinue the wool operation was $26.6 million. The basic loss per share for the discontinued operations for the six months was $2.04 versus $2.08 in the prior year period.



Net Loss.The consolidated net loss for the six months was $25.0 million versus a loss of $7.7 million in the prior year period.



Discontinued operations



Tobacco Operations



During the second quarter of the current fiscal year, we decided to discontinue our tobacco processing operations in Italy due to the leaf
tobacco market conditions and the continuing strengthening of Euro currency, which have had significant adverse impact on our results. As a result of this decision, the assets and liabilities not assumed have been classified as available for sale
and qualify for held for disposal treatment under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We are in the process of closing the facility and have notified our employees and the Italian authorities in
accordance with Italian law. The facility is expected to be sold within the next twelve months. The Italian operation is expected to incur additional operating losses until final disposition.



We have accounted for the Italian tobacco operations as discontinued operations, in
accordance with the provisions of SFAS No. 144. The results for all periods presented are included in the financial statements as discontinued operations.



The Italian trading loss for the quarter and six months ended September 30, 2004, excluding the loss to discontinue the operations, was $8.3 million and $10.0 million
respectively versus an income of $3.4 million and $2.6 million in the prior year periods.



The write-down of long-lived assets recorded in the quarter and for six months ended September 30, 2004 to discontinue the operations was $10.7 million. This was based on external appraisals and is the difference
between the carrying value of the net assets and their fair value, less estimated selling costs. The fair value has been determined based on negotiations with prospective purchasers and comparison with other industry transactions. In addition, we
incurred and recorded costs of $4.1 million during the quarter and six months ended September 30, 2004. No tax benefit on the losses to discontinue the Italian operations was recorded due to the uncertainty of our ability to ultimately receive a tax
benefit.



-22-



---

Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)



Wool Operations



During the second quarter of fiscal 2004, we decided to focus on our core tobacco operations and close all our wool operations located in
the UK, Chile, France, Germany and Australia. As a result of this decision to dispose of these operations, they have been classified as available for sale and qualify for held for disposal treatment under SFAS No. 144. The unit in Australia was sold
in fiscal 2004. The operations of the processing mill in France were shutdown in April 2004. The remaining French assets, along with the remaining trading operations in France and Germany, and the trading and processing operations in the UK and
Chile are the subjects of separate sales negotiations. These negotiations were expected to be finalized by September 30, 2004; however, as a result of delays caused by unexpected financing issues in the UK and governmental intervention in France,
the remaining units are expected to be sold or terminated by March 31, 2005.



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. We will continue to guarantee the debt of the wool units until disposition, at which time we do not expect to 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. The results for all periods presented are included in the consolidated financial statements as discontinued operations. As noted above, because the existing debt of the wool units is guaranteed by us, we have not
included any such debt in liabilities of discontinued operations.



The wool
operating loss, which primarily relates to overhead incurred, for the quarter and six months ended September 30, 2004 was $2.1 and $3.2 million respectively versus $2.0 and $4.2 million in the prior year periods. The estimated loss to discontinue
wool operations of $26.6 million was recorded during the quarter and six months ended September 30, 2003.



Liquidity and Capital Resources



The
following table is a summary of items from our consolidated balance sheet and our statement of consolidated cash flows at the dates or for the periods presented (in thousands, except for current ratio).



|                                         |  |              |         |               |   |         |  |   |        
|---------------------------------------- |  | ------------ | ------- | ------------- | - | ------- |  | - | -------
|                                         |  | September 30 |         | March 31 2004
|                                         |  | 2004         |         | 2003          |  
|                                         |  | (unaudited)  |         | (unaudited)   |   |        
|Cash and cash equivalents                |  | $            | 25,100  |               | $ | 16,560  |  | $ | 27,673 
|Receivables                              |  |              | 210,872 |               |   | 171,850 |  |   | 182,317
|Inventories                              |  |              | 297,141 |               |   | 243,456 |  |   | 241,330
|Total current assets                     |  |              | 664,856 |               |   | 606,943 |  |   | 636,059
|Working capital                          |  |              | 179,321 |               |   | 195,703 |  |   | 184,513
|Short-term borrowings                    |  |              | 282,039 |               |   | 243,574 |  |   | 253,847
|Accounts payable and accrued liabilities |  |              | 149,470 |               |   | 111,649 |  |   | 132,233
|Total current liabilities                |  |              | 485,535 |               |   | 411,240 |  |   | 451,546
|Current ratio                            |  |              | 1.37:1  |               |   | 1.48:1  |  |   | 1.41:1 
|Total long-term debt                     |  |              | 172,943 |               |   | 128,901 |  |   | 136,865
|Shareholders equity                     |  |              | 204,124 |               |   | 238,186 |  |   | 229,064
|Capital expenditures                     |  |              | 18,865  |               |   | 13,759  |  |   | 16,800 
|Depreciation and amortization expense    |  |              | 10,591  |               |   | 7,980   |  |   | 32,742 



Working capital at September 30, 2004
was $179.3 million, down from the $195.7 million at September 30, 2003. The net contributions from financing activity of $67.5 million was offset by $18.7 million used for investing activity and $51.4 million used in operating activities.



-23-



---

Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)



Cash used for operating activities at September 30, 2004 totaled $51.4 million, primarily
due to the increase in inventory of $55.5 million and $34.6 million in receivables, partly offset by net cash flows from discontinued operations and increase in payables. The increase in the value of inventories was largely due to larger growing
projects and shipping delays in Africa. We continue to monitor our inventories, which fluctuate depending on seasonal factors and timing of deliveries to customers.



Cash used for investing activities of $18.7 million at September 30, 2004 related to capital expenditures in our facilities in the U.S.,
Turkey, Brazil, Indonesia and Malawi.



The increase in cash and cash
equivalents was largely due to timing of receipt of cash from customers against the timing of maturities of short-term borrowings.



Financing Arrangements. We incur short-term debt to finance our seasonal working capital needs, which typically peak in the third quarter, under secured lines of
credit with several banks.



On April 2, 2004, our major tobacco subsidiaries
entered into a new three-year unsecured revolving bank facility to replace the existing revolving bank credit facility. The new facility provides for borrowings of $150.0 million for working capital and other general corporate purposes, and the
interest rate on borrowings under the facility is variable. The rate is currently LIBOR plus 2.0%. The borrowings under the facility are guaranteed by us and certain of our tobacco subsidiaries. The new facility includes certain financial covenants
that, among other things, require us to maintain tangible net worth, current ratio, interest cover ratio and also includes certain borrowing base restrictions. We were in compliance with all financial covenants as of September 30, 2004.



On April 2, 2004, we issued $150.0 million of 8% senior notes due 2012. The proceeds were
used to redeem the $45.1 million of outstanding 71/4% convertible subordinated debentures and to retire the
$65.2 million of 87/8% senior notes due 2005. The new notes are guaranteed by our U.S. tobacco subsidiary on a senior unsecured basis. The indenture governing these senior notes contains covenants that, among other things,
limit our ability to (1) pay dividends, (2) incur additional indebtedness, (3) transfer or issue shares of capital stock of subsidiaries to third parties, (4) sell assets, (5) issue preferred stock, (6) incur or assume any liens that secures
obligations under any indebtedness on any asset or property, or (7) merge with or into any entity.



Debt agreements to which our subsidiaries and we are parties contain financial covenants, which could restrict the payment of cash dividends. Under the most restrictive
covenant, we had approximately $19.1 million of retained earnings available for distribution as dividends at September 30, 2004.



We continue to guarantee the debts of the discontinued Italian tobacco operations and wool units up to their actual disposition and accordingly have not included the
debts in the liabilities of discontinued operations. At September 30, 2004, this amounted to $32.4 million. We believe that the disposition of the Italian tobacco operations and wool operations will not have a material impact on our overall
liquidity needs.



A growing trend that has developed as a response to the
market disruptions in Zimbabwe is the development of new growing projects in Zambia and Mozambique, and to some extent Malawi. These new growing projects generally involve growers with small individual farms rather than large commercial farms such
as existed in Zimbabwe. As a result, we might need to provide additional pre-financing to these small individual farms to develop these new crops, which could increase the pressure on our short-term liquidity resources.



Based on the outlook for the business for the next 12 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. Our future operating performance
will be subject to economic conditions and to financial, political, agricultural and other factors, many of which are beyond our control.



-24-



---

Item 2

MANAGEMENTS
DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)



Contractual Obligations



We have tobacco purchase obligations that result from contracts with growers to buy either
specified quantities of tobacco or the growers total tobacco production. This is a normal and routine practice in our industry in some areas, notably Brazil and Turkey. At September 30, 2004, we had contractual obligations with tobacco growers
to purchase tobacco for approximately $206 million. Payments due under these obligations within a year total $164 million and the remainder are due between one and three years.



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 we have 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 or pricing or payment
policies. Additional information regarding these factors is contained in our other Securities and Exchange Commission filings, copies of which are available upon request from us. We assume 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, 2004, we are 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, we enter 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 our policy and practice to use derivative financial instruments
only to the extent necessary to manage exposures. Our market risk has not changed substantially since March 31, 2004.



Item 4. Controls and Procedures



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



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



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PART II - OTHER INFORMATION



Item 1. Legal Proceedings



In October 2001, the Directorate 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, cooperated fully with the investigation and discovered and
voluntarily disclosed information which tended to establish that a number of leaf dealers, including our subsidiaries, jointly agreed with respect to green tobacco prices and purchase quantities. In respect of the Spanish investigation, on December
15, 2003, the DG Comp served on 20 entities within the Spanish leaf tobacco industry, including our company and three of our subsidiaries, a Statement of Objections alleging certain infringements of the antitrust laws of the European Union. On March
1, 2004, the DG Comp served a similar Statement of Objections on 11 entities within the Italian leaf tobacco industry, including our company and one of our subsidiaries. We responded to the Statements and have cooperated in the investigations.
Through the Statements, DG Comp intended to impose, where appropriate, administrative penalties on the entities it determined have infringed the EC anti-competition laws. On October 20, 2004 the European Commission announced that as a result of its
Spanish investigation it had imposed on us, through our Spanish subsidiary and two other of our subsidiaries, a fine of Euros 1,822,500. A number of other tobacco processors, growers and agricultural associations were assessed fines in various
amounts which, including the amount assessed against us, totaled Euros 20,000,000. We are awaiting the published decision of the European Commission in order to consider an appeal of the fine. We have previously announced that we expect to be
assessed penalties and expect that the penalties could be material to our earnings, but that there may be mitigating circumstances in both investigations, including our cooperation with the DG Comp and we are unable to assess the amount of any
penalties which might be imposed as a result of the remaining investigations.



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 10, 2004.
|--- | ---------------------------------------------------------------



|(b) | Three persons were elected as directors for terms expiring in 2007 as follows:
|--- | ------------------------------------------------------------------------------



|                    |  |            |  |               
|------------------- |  | ---------- |  | --------------
|Nominee             |  | Votes For  |  | Votes Withheld
|Nigel G. Howard     |  | 10,112,676 |  | 1,508,589     
|Robert A. Sheets    |  | 9,512,690  |  | 2,108,575     
|William S. Sheridan |  | 10,112,776 |  | 1,508,489     



In addition the
following directors remained in office after the meeting. Robert E. Harrison, William A. Ziegler, Mark W. Kehaya, B. Clyde Preslar, Gilbert L. Klemann, II, and H. Carl McCall.



|(c) | The adoption of the 2004 Performance Improvement Compensation Plan and the reservation of 800,000 shares for issuance thereunder was approved by a vote of 7,257,210 shares in favor,
3,403,927 shares against and 8,731 shares abstaining.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | The appointment of Deloitte & Touche LLP as the Companys independent auditors for fiscal year 2005 was approved by a vote of 11,559,823 shares in favor, 50,980 shares
against and 10,462 shares abstaining.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II - OTHER INFORMATION (Continued)



Item 6. 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



-27-



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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 8, 2004 |  | By:                              |  | /s/ Robert E. Harrison                                               
|                       |  |                                  |  | Robert E. Harrison President and Chief Executive
Officer             
|                       |  |                                 
|                       |  | By:                              |  | /s/ Robert A. Sheets                                                 
|                       |  |                                  |  | Robert A. Sheets Executive Vice President and Chief
Financial Officer