Alliance One International Reports Fiscal Year 2014 Second Quarter Results

  Alliance One International Reports Fiscal Year 2014 Second Quarter Results

PR Newswire

MORRISVILLE, N.C., Nov. 5, 2013

MORRISVILLE, N.C., Nov. 5, 2013 /PRNewswire/ --Alliance One International,
Inc. (NYSE: AOI) today announced results for its second fiscal quarter ended
September 30, 2013.

Second Quarter Results

Fiscal year 2014 volume, revenue and core operating income are on track to
exceed last year, driven by increased full service volumes when compared to
the prior year. For the quarter and first six months ended September 30, 2013
revenue increased $124.3 million and $150.4 million versus last year, to
$700.7 million and $1,084.6 million, respectively. Operating income for the
quarter was $48.3 million, a $1.5 million decrease compared to the prior year,
but was impacted by $0.6 million of restructuring and asset impairment
expense. For the six months operating income was $40.3 million, a decrease of
$14.8 million compared to the year-to-date period last year. The six month
results this year included $11.0 million of expense related to unrecovered
farmer advances in Zambia and $2.8 million of restructuring and asset
impairment expense mainly related to a new processing arrangement that should
lead to lower processing costs in future periods. 

For the second quarter ended September 30, 2013, the Company reported a net
loss of ($46.0) million, or ($0.53) per basic share, compared to net income of
$18.4 million, or $0.21 per basic share, last year. Additionally, for the six
months ended September 30, 2013, the Company reported a net loss of ($82.8)
million, or ($0.95) per basic share, compared to a net loss of ($12.4) million
or ($0.14) per basic share for the same period of the prior fiscal year.
Included in the net loss for the quarter ended September 30, 2013 was
restructuring and asset impairment expense and debt retirement expense that
after adjusting for tax, negatively impacted earnings per basic share ($0.64).
Additionally, included in the net loss for the six months year-to-date period
ended September 30, 2013 was expense related to unrecovered farmer advances in
Africa, restructuring and asset impairment expense, and debt retirement
expense. After adjusting for tax, these costs negatively impacted earnings per
basic share ($0.78).

In August the Company refinanced its long term debt. As part of the
refinancing it issued a new $735.0 million 9.875% senior secured second lien
note maturing July 2021 and the US revolver maturity was extended to April
2017, as well as modifying certain terms and conditions. To complete these
transactions and retire the old debt, the Company incurred $55.6 million of
expense that impacted results for both the quarter and six months.
Importantly, the refinancing extended long term debt maturities and provides a
solid capital base going forward.

Pieter Sikkel, Chief Executive Officer and President, said, "Fiscal year 2014
volume, revenue and core operating income is on track to exceed last year,
driven by increased full service volumes compared to the prior year and as
internally planned. Full service volumes improved 10.7% for the quarter and
6.1% for the six months. As a result of volume improvement and some price
increases due to increased green tobacco costs that were partially passed on
to our customers, revenue for the quarter was $700.7 million, a $124.3 million
increase compared to last year that is the best second quarter on record for
our Company. For the first half of the year revenue was $1,084.6 million, our
second best start of all time. Despite volume and revenue improvement, we did
not pass on the full impact of green tobacco cost increases to our customer
base that is reflected in our margins.

"For the quarter, loss before taxes and other items was ($37.2) million and
was impacted by $55.6 million of debt retirement expense primarily related to
our August refinancing and $0.6 million of restructuring and asset impairment
expense. Had these expenses not occurred, income before taxes and other items
would have been $19.0 million or only down $2.2 million compared to last year.
Additionally, for the six months, loss before taxes and other items was
($72.0) million and was impacted by $11.0 million of expense related to
unrecovered farmer advances in Zambia, $55.6 million of debt retirement
expense mainly related to our August refinancing and $2.8 million of
restructuring and asset impairment expense primarily due to a new processing
arrangement that should lead to lower processing costs in future periods. Had
these expenses not occurred, loss before taxes and other items would have been
($2.6) million or slightly below last year's $0.3 million of income before
taxes and other items.

"Global supply and demand conditions are returning to slight over supply in
the markets where we have positioned our factories to handle more volume and
should improve operating performance, as well as core factory profitability.
We continue to reduce inventory levels that are down $24.9 million versus last
year to $984.8 million at this year's quarter end. Additionally, our
uncommitted inventory is inside the higher end of our stated range with
expectations to decrease significantly by fiscal year end, when compared to
last year. Similar to last year, following industry and customer mix changes,
the back half of this fiscal year will drive the majority of our volume,
revenue and profitability that should be improved for the full year when
compared to last year. Looking to next year, further global rollout of our
integrated production system and our associated increasing dedicated worldwide
supplier base uniquely position our company versus many competitors to meet
customer supply requirements and their increased demand for higher quality
leaf.

Mr. Sikkel, concluded, "Our continued focus on investmentto improve grower
sustainability, enhance social responsibility and increase effectivefarmer
agronomy programs all support our customers' global initiatives. Targeted
successful investments in these areas,combined with attention to our
customers' immediate requirements and our ability to address their longer term
needs cost effectively, should improve our results and enhance long-term
shareholder value." 

Performance Summary for the Second Fiscal Quarter Ended September 30, 2013

Total sales and other operating revenues increased 21.6% to $700.7 million
versus last year. The primary drivers were a 10.7% increase in kilos sold to
128.6 million, as well as an 11.3% increase in average sales price per kilo to
$5.30. Tobacco revenues increased mainly due to increased shipments that
included new crop and volumes that did not ship last fiscal year, which are
now shipping, as well as higher average selling prices. Increased average
sales prices were primarily related to higher green costs in Africa and
Brazil, and product mix. Average cost of tobacco sold increased 14.6% to $4.70
per kilo primarily due to higher green costs across all regions that were not
fully passed on to our customers. Processing and other revenues decreased $4.1
million to $18.8 million due to a reduction in customer volumes in Brazil,
while processing cost of services sold decreased $1.0 million to $11.7 million
based on the lower volumes. As a result of the difference in the changes in
total sales and other operating revenues compared to change in total cost of
goods and services sold, gross profit declined 3.4% to $84.0 million.

Selling, general and administrative expenses decreased an additional $1.4
million to $34.6 million, while restructuring and asset impairment charges
were $0.6 million this year primarily due to employee termination costs mainly
in South America compared to no costs last year. Other income (expense)
decreased $0.7 million to $0.5 million expense. As a result of the net
changes in income and costs, operating income declined $1.5 million when
compared to last year to $48.3 million.

This year, we refinanced all $635.0 million of our 10% senior notes and
purchased $60.0 million of our 5.5% convertible notes resulting in a onetime
debt retirement expense of $55.6 million. Debt retirement expense included
$21.1 million of accelerated amortization of debt issuance costs and
recognition of original issue discount related to the 10% senior notes. Our
interest costs increased $1.9 million to $31.7 million driven by higher
average borrowings to support increased sales and associated inventories, in
addition to higher average rates on borrowed funding. Partially offsetting
increased interest expense was a $0.8 million increase in interest income to
$1.9 million. Our effective tax rate was (27.7)% this year compared to 18.4%
last year. The effective tax rate variance is mainly related to losses for
which no tax benefit has been recorded and the effect of exchange gains and
losses this year compared to last year.

Liquidity and Capital Resources

As of September 30, 2013, available credit lines and cash were $644.9 million,
comprised of $85.4 million in cash and $548.7 million of credit lines, of
which $303.9 million was available under the U.S. revolving credit facility
for general corporate purposes, $244.1 million of foreign seasonal credit
lines, $0.7 million of other long term debt lines and $10.8 million
exclusively for letters of credit.

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 and outstanding public
notes, as they may permit.

Effective September 30, 2013, the Company did not achieve a fixed charge ratio
under the 9.875% senior secured second lien note indenture to access the
restricted payments basket for the purchase of common stock, payment of
dividends and other actions under that basket. From time to time the Company
may not meet or exceed the ratio to utilize this basket.

Fiscal Year 2014 Second Quarter Financial Results Investor Call

The Company will hold a conference call to report financial results for its
second fiscal quarter ended September 30, 2013, on November 6, 2013 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 www.aointl.comfifteen 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, November 6th through 11:00 A.M.
November 11th. To access the replay, dial (888) 203-1112 within the U.S., or
(719) 457-0820 outside the U.S., and enter access code 2330109. 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 known or unknown
risks or uncertainties materialize, actual results may differ materially from
those currently anticipated expected or projected. The following factors,
among others, could cause actual results to differ from those expressed or
implied by 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
expressed or implied by forward-looking statements can be found in AOI's most
recent Annual Report on Form 10-K and the other filings with the Securities
and Exchange Commission (the "SEC") which are available at the SEC's Internet
site (http://www.sec.gov).

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended September 30, 2013 and 2012
(Unaudited)
                         Three Months Ended        Six Months Ended
                         September 30              September 30,
(in thousands, except    2013          2012        2013          2012
per share data)
Sales and other          $ 700,680    $ 576,411  $ 1,084,567   $ 934,181
operating revenues
Cost of goods and        616,710       489,448     972,103       805,655
services sold
Gross profit             83,970        86,963      112,464       128,526
Selling, administrative  34,641        35,982      70,132        72,076
and general expenses
Other income (expense)   (499)         (1,157)     745           (1,347)
Restructuring and asset  580           -           2,776         -
impairment charges
Operating income         48,250        49,824      40,301        55,103
Debt retirement expense  55,582        -           55,599        -
Interest expense         31,684        29,776      60,527        56,891
Interest income          1,859         1,121       3,845         2,119
Income (loss) before
income taxes and other   (37,157)      21,169      (71,980)      331
items
Income tax expense       10,291        3,901       11,159        13,140
Equity in net income of  1,362         1,045       320           850
investee companies
Net income (loss)        (46,086)      18,313      (82,819)      (11,959)
Less: Net income
(loss) noncontrolling    (104)         (55)        25            416
interests
Net income (loss)
Alliance One             $  (45,982) $ 18,368    $  (82,844) $  (12,375)
International, Inc.
Earnings (loss) per
share:
Basic                $ (0.53)     $ 0.21      $ (0.95)     $ (0.14)
Diluted              $ (0.53)     $ 0.18      $ (0.95)     $ (0.14)
Weighted average number
of shares outstanding:
Basic                87,570        87,367      87,522        87,280
Diluted              87,570        110,545     87,522        87,280
See notes to condensed consolidated financial statements



SOURCE Alliance One International, Inc.

Website: http://www.aointl.com
Contact: Joel L. Thomas, (919) 379-4300
 
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