MORRISVILLE, N.C., Feb. 8 /PRNewswire-FirstCall/ -- Alliance One
International, Inc. (NYSE:AOI) today announced results for its
third fiscal quarter ended December 31, 2009. Third Quarter Results
For the nine months ended December 31, 2009, Operating Income
increased $16.3 million to $179.3 million driven by stable revenues
and reduced direct cost compared to the prior year. For the third
quarter ended December 31, 2009, the Company reported net income of
$47.3 million, or $0.53 per basic share, compared to net income of
$59.5 million, or $0.67 per basic share last year. Additionally,
for the nine months ended December 31, 2009, the Company reported
net income of $60.3 million, or $0.68 per basic share, compared to
net income of $95.1 million or $1.08 per basic share for the same
period of the prior fiscal year. The year to date results were
achieved despite incurring a one time $40.4 million pre-tax debt
retirement expense, of which $23.5 million was cash cost during the
period, resulting from the July-August 2009 debt refinancing,
versus $1.0 million last year. Robert E. Harrison, Chief Executive
Officer, said, "Volumes and sales were in line with our
expectations, and year to date operating margin remained strong
despite some third quarter slippage, driven by our global
operations, which have done a good job of controlling costs.
Additionally, the global debt markets have improved further, which
should help short term borrowing costs for the remainder of this
year and next, while US dollar volatility versus many currencies
that impact our costs, remains challenging. "Looking forward, our
order book is solid, although the operating environment will remain
dynamic. Global production for the next crop cycle is currently
stable, though recent flooding in Brazil and dryer weather in
Malawi will impact those markets. Importantly, our customer centric
strategy encompasses expense control, while investing for the
future where appropriate returns exist, and is critical to
continued plan execution and enhanced shareholder returns. We are
excited about our business and its future as we drive hard to
achieve new milestones. Mr. Harrison concluded, "As we look ahead,
hopefully to a more stable global economy, we will begin to focus
on reducing our leverage again, while managing working capital and
capital expenditures to maximize shareholder value. Our debt
refinancing during the second quarter has significantly extended
long term debt maturities and reduced financing risk due to the
onslaught of refinancing activities that we believe will be
occurring in the high yield markets over the next four years,
allowing management to focus on further enhancing the business."
Performance Summary for the Third Fiscal Quarter Ended December 31,
2009 The following is a brief overview of our financial results for
the quarter ended December 31, 2009. Additional information on our
results may be found in our Quarterly Report on Form 10-Q filed on
February 8, 2010. Sales and other operating revenues decreased 4.6%
from $690.0 million in 2008 to $658.4 million in 2009 primarily due
to a 12.9% decrease in quantities sold and a 13.3% decrease in
processing and other revenues partially offset by a 10.2% increase
in average sales prices. South America Region tobacco sales
decreased $12.8 million primarily as a result of a 9.7% decrease in
higher priced lamina volumes sold compared to the prior year,
partially offset by increased sales prices for both lamina and
by-products, as average sales price per kilo increased $0.64.
During the quarter lower by-product volumes resulted in a total 8.7
million kilo decrease, while reduced lamina volumes sold were
driven by tighter tobacco availability. Other Regions tobacco sales
decreased $12.9 million mainly as a result of a 9.9 million kilo
decrease in volumes sold partially offset by a $0.37 per kilo
increase in average selling prices. Decreased revenues were driven
primarily by European shipment timing. Compared to the prior year,
expected shipments from Bulgaria and Macedonia were delayed into
the next quarter while shipments from Turkey were accelerated into
the prior quarter. Last year's quarter also included older crop
opportunistic sales that did not occur this year. Partially
offsetting decreased European volumes were increased average sales
prices resulting from Euro strength and product mix compared to the
prior year. Decreased European revenues were offset by increased
revenues from Asia as delayed higher priced Thai lamina shipments
occurred during the quarter. Volumes and revenues declined in
Africa due to Malawi and Tanzania shipments delayed into the fourth
quarter. Decreased revenues from Africa were offset by increased
revenues from North America primarily as a result of the change to
direct contracting in Canada. Processing and other revenues
decreased $5.9 million mainly as a result of decreased processing
volumes in Africa and Europe. Gross profit decreased 17.9% from
$119.5 million in 2008 to $98.1 million in 2009 and gross profit as
a percentage of sales decreased from 17.3% in 2008 to 14.9% in
2009. South America Region gross profit decreased $19.4 million
mainly as a result of decreased lamina volumes, losses on
derivative financial instruments and significant exchange losses
due to the volatility of the Brazilian Real this quarter compared
to the same quarter in the prior year. Other Regions gross profit
decreased $2.0 million and is primarily attributable to a market
adjustment related to an Asian tobacco shipment. Gross profit
remained fairly constant across most areas after absorbing
significant exchange losses due to the volatility of the various
foreign currencies in which we buy tobacco and incur process costs
compared to the same quarter in the prior year. Selling,
administrative and general expenses increased 7.6% from $35.4
million in 2008 to $38.1 million in 2009. The increase was mainly
driven by currency fluctuations in South America and Asia and
incremental stock based compensation costs compared to the prior
year. Interest expense increased $5.5 million from $24.0 million in
2008 to $29.5 million in 2009 primarily due to higher average
borrowings, higher average interest rates on our seasonal
borrowings and increased debt amortization expense compared to the
prior year. Effective tax rates were a benefit of 47.2% in 2009 and
an expense of 1.2% in 2008. The effective tax rates for these
periods are based on the current estimate of full year results
after the effect of taxes related to specific events which are
recorded in the interim period in which they occur. The significant
variance in the effective tax rates between 2009 and 2008 is
primarily related to foreign currency translation adjustments
related to income taxes and the reversal of unrecognized tax
benefit liabilities in 2009. During the three months ended December
31, 2009, we participated in various governmental tax programs in
certain locations in an effort to resolve outstanding tax issues.
By participating in these programs our liability for unrecognized
tax benefits, including accrued interest and penalties, was reduced
from $72.6 million to $23.3 million as compared to September 30,
2009. We forecast the effective tax rate for the year ending March
31, 2010 will be an expense of 4.2% after absorption of discrete
items. Our effective tax rate can vary significantly between
quarters and fiscal years as a result of foreign currency
fluctuations. Foreign currencies such as the Brazilian Real and the
Euro have been particularly volatile in the recent past. The
resulting exchange gains or losses in income can fluctuate greatly
which directly impact actual and forecasted effective tax rates.
Exchange rate variances on the translation of foreign denominated
tax account balances also directly impact actual and forecasted
effective tax rates. Actual and forecasted effective tax rates for
the remainder of 2009 will be updated as specific event adjustments
and currency fluctuations occur. Liquidity and Capital Resources As
of December 31, 2009, available credit lines and cash seasonally
increased 49.8% over the fiscal year ended March 31, 2009 to $733.8
million comprised of $109.5 million in cash, $615.3 million of
credit lines and $9.0 million exclusively for letters of credit.
Increased available credit lines also reflect improvement in the
global debt markets. Additionally, from time to time in the future,
we may elect to redeem, repay, make open market purchases, retire
or cancel indebtedness prior to stated maturity under our various
global bank facilities or outstanding public notes, as permitted.
2010 Fiscal Year, Third Quarter Financial Results Investor Call The
Company will hold a conference call to report financial results for
its third fiscal quarter ended December 31, 2009, on February 9,
2010 at 8:00 A.M. ET. Those seeking to listen to the call may
access a live broadcast on the Alliance One website. Please visit
http://www.aointl.com/ fifteen minutes in advance to register. For
those who are unable to listen to the live event, a replay will be
available by telephone from 11:00 A.M. ET, February 9th through
11:00 A.M. February 14th. To access the replay, dial (888) 203-1112
within the U.S., or (719) 457-0820 outside the U.S., and enter
access code 7144282. Any replay, rebroadcast, transcript or other
reproduction of this conference call, other than the replay
accessible by calling the number above, has not been authorized by
Alliance One and is strictly prohibited. Investors should be aware
that any unauthorized reproduction of this conference call may not
be an accurate reflection of its contents. This press release
contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. These statements are
based on current expectations of future events. Such statements
include, but are not limited to, statements about future financial
and operating results, plans, objectives, expectations and
intentions and other statements that are not historical facts. Such
statements are based on the current beliefs and expectations of
management and are subject to significant risks and uncertainties.
If underlying assumptions prove inaccurate or unknown risks or
uncertainties materialize, actual results may differ materially
from current expectations and projections. The following factors,
among others, could cause actual results to differ from those set
forth in the forward-looking statements: changes in the timing of
anticipated shipments, changes in anticipated geographic product
sourcing, political instability in sourcing locations, currency and
interest rate fluctuations, shifts in the global supply and demand
position for tobacco products, and the impact of regulation and
litigation on customers. Additional factors that could cause AOI's
results to differ materially from those described in
forward-looking statements can be found in AOI's Annual Reports on
Form 10-K and other filings with the Securities and Exchange
Commission (the "SEC") which are available at the SEC's Internet
site (http://www.sec.gov/). Three Months Ended Nine Months Ended
December 31, December 31, ----------------- ------------------- (in
thousands, except per share amounts) 2009 2008 2009 2008
-------------------- ---- ---- ---- ---- Sales and other operating
revenues $658,353 $689,974 $1,743,991 $1,746,231 Cost of goods and
services sold 560,252 570,485 1,451,102 1,469,633 ------- -------
--------- --------- Gross profit 98,101 119,489 292,889 276,598
Selling, administrative and general expenses 38,070 35,395 116,461
113,644 Other income (expense) 112 (982) 2,817 465 Restructuring
and asset impairment charges - 47 - 499 --- --- --- --- Operating
income 60,143 83,065 179,245 162,920 Debt retirement expense 62 -
40,351 954 Interest expense (includes debt amortization of $2,518
and $1,067 for the three months and $6,803 and $3,300 for the nine
months in 2009 and 2008, respectively) 29,479 24,033 87,224 74,847
Interest income 957 883 3,062 2,525 --- --- ----- ----- Income
before income taxes and other items 31,559 59,915 54,732 89,644
Income tax expense (benefit) (14,891) 697 (5,219) (3,918) Equity in
net income of investee companies 1,338 398 1,338 1,497 ----- ---
----- ----- Income from continuing operations 47,788 59,616 61,289
95,059 Income (loss) from discontinued operations, net of tax -
(41) - 423 --- --- --- --- Net income 47,788 59,575 61,289 95,482
Less: Net income attributable to noncontrolling interests 530 113
1,011 358 --- --- ----- --- Net income attributable to Alliance One
International, Inc. $47,258 $59,462 $60,278 $95,124 ------- -------
------- ------- Amounts attributable to Alliance One International,
Inc. Income from continuing operations $47,258 $59,503 $60,278
$94,701 Income (loss) from discontinued operations - (41) - 423 ---
--- --- --- Net income attributable to Alliance One International,
Inc. $47,258 $59,462 $60,278 $95,124 ------- ------- -------
------- Basic earnings per share Net income from continuing
operations $.53 $.67 $.68 $1.08 Income (loss) from discontinued
operations - - - - --- --- --- --- Net income $.53 $.67 $.68 $1.08
---- ---- ---- ----- Diluted earnings per share Net income from
continuing operations $.43 $.67 $.60 $1.07 Income (loss) from
discontinued operations - - - - --- --- --- --- Net income $.43
$.67 $.60 $1.07 ---- ---- ---- ----- Average number of shares
outstanding Basic 88,689 88,460 88,589 88,324 Diluted 111,937
89,070 104,058 89,101 ------- ------ ------- ------ DATASOURCE:
Alliance One International, Inc. CONTACT: Joel L. Thomas, Alliance
One International, Inc., +1-919-379-4300 Web Site:
http://www.aointl.com/
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