Alliance One International Inc. (AOI, Financial) filed Quarterly Report for the period ended 2010-06-30.
Alliance One International Inc. has a market cap of $316.4 million; its shares were traded at around $3.55 with a P/E ratio of 4.7 and P/S ratio of 0.2. AOI is in the portfolios of Seth Klarman of The Baupost Group, Jeff Auxier of Auxier Focus Fund, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Tom Russo of Gardner Russo & Gardner.
Sales and other operating revenues increased 19.6% from $410.5 million in 2009 to $491.0 million in 2010 however gross profit decreased 9.1% from $88.0 million in 2009 to $80.0 million in 2010. Sales increases are the result of a 4.2% or $0.18 per kilo increase in average sales prices and a 16.1% or 15.2 million kilo increase in quantities sold partially offset by a $4.2 million decrease in processing and other revenues. Gross profit as a percentage of sales decreased from 21.4% in 2009 to 16.3% in 2010 which was the primary reason for our operating income decreasing $6.8 million compared to the prior year. Slight increases in our selling, administrative and general expenses, primarily related to foreign currency rate changes, were offset by more operating income in the current year due to increased gains on the sale of assets.
This quarter, we purchased $23.6 million of our 8.5% senior notes as we focus on reducing leverage. Associated cash premiums and other costs, and the related accelerated amortization of deferred financing costs and original issue discount, resulted in our recording $0.9 million of debt retirement expense this quarter. Our interest costs increased $1.7 million as a result of higher debt levels from our refinancing in the second quarter last year and higher green costs this year requiring additional working capital borrowing. Primarily as a result of decreased margins, our pretax income decreased from $27.1 million in 2009 to $18.7 million in 2010. Our effective tax rate decreased from 45.2% in 2009 to 25.9% in 2010. The significant variance in the effective tax rate between 2010 and 2009 is primarily related to a greater impact on the 2009 effective tax rate for foreign currency exchange effects and specific event expense adjustments for unrecognized tax benefits and deferred tax adjustments.
Tobacco revenues increased $39.0 million or 21.2% primarily as a result of an increase of 12.3 million kilos in quantities sold partially offset by a $0.07 per kilo decrease in average sales prices. Processing and other revenues decreased 49.4% or $4.2 million primarily as a result of decreased processing volumes in Asia and North America. Gross profits increased $15.1 million in 2010 compared to 2009.
Net cash provided by financing activities increased $162.2 million in 2010 compared to 2009. This increase is primarily due to a $222.2 million increase in the net change in short-term borrowings as a result of less financing from customers and our revolver in the current year. Partially offsetting this increase was a decrease of $34.2 million in revolver net proceeds in the prior year and a $23.6 million purchase of our 8.5% senior notes in the current year.
We continue to finance our business with a combination of cash from operations, short-term seasonal credit lines, our revolving credit facility, long-term debt securities, customer advances and cash from operations. At June 30, 2010 we had cash of $247.6 million and total debt outstanding of $1,276.7 million comprised of $510.6 million of notes payable to banks, no revolver borrowings, $2.1 million of other long-term debt, $643.0 million of 10% senior notes, $6.0 million of 8.5% senior notes and $115.0 million of 5 ½% convertible senior subordinated notes. The $321.6 million seasonal increase in notes payable to banks from March 31, 2010 to June 30, 2010 results from anticipated seasonal fluctuation to account for the current purchase and processing of African and Brazilian tobaccos. Available credit as of June 30, 2010 was $532.9 million comprised of $290.0 million under our revolver, $234.2 million of notes payable to banks and $8.7 million of availability exclusively for letters of credit. We expect to incur $75.0 million of capital expenditures during fiscal year 2011. Maintenance expenditures are anticipated to be between $20.0 million and $25.0 million, while our continuing SAP software implementation and new Brazilian factory are major expenditures in addition to regularly scheduled maintenance. We may also decide to deploy additional discretionary amounts to enhance future business prospects, but only if stringent management return thresholds are likely to be achieved. No cash dividends were paid to stockholders during the quarter ended June 30, 2010. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for the remainder of fiscal year 2011.
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Alliance One International Inc. has a market cap of $316.4 million; its shares were traded at around $3.55 with a P/E ratio of 4.7 and P/S ratio of 0.2. AOI is in the portfolios of Seth Klarman of The Baupost Group, Jeff Auxier of Auxier Focus Fund, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Tom Russo of Gardner Russo & Gardner.
Highlight of Business Operations:
Liquidity requirements for our business are impacted by crop seasonality, foreign currency and interest rates, green tobacco prices, crop quality and throw and other factors. We continuously monitor and adjust funding sources as required based on business dynamics, utilizing cash from operations, our revolving credit facility, short term credit lines throughout the world, sales of accounts receivable, active working capital management and advances from customers. As of June 30, 2010, we had $780.5 million of cash and available credit comprised of $247.6 million of cash and $532.9 million in available credit inclusive of $290.0 million undrawn on our revolver, $234.2 million of notes payable to banks, and $8.7 million exclusively for letters of credit. We continually modify the makeup of our available liquidity to enhance business flexibility and reduce costs.Sales and other operating revenues increased 19.6% from $410.5 million in 2009 to $491.0 million in 2010 however gross profit decreased 9.1% from $88.0 million in 2009 to $80.0 million in 2010. Sales increases are the result of a 4.2% or $0.18 per kilo increase in average sales prices and a 16.1% or 15.2 million kilo increase in quantities sold partially offset by a $4.2 million decrease in processing and other revenues. Gross profit as a percentage of sales decreased from 21.4% in 2009 to 16.3% in 2010 which was the primary reason for our operating income decreasing $6.8 million compared to the prior year. Slight increases in our selling, administrative and general expenses, primarily related to foreign currency rate changes, were offset by more operating income in the current year due to increased gains on the sale of assets.
This quarter, we purchased $23.6 million of our 8.5% senior notes as we focus on reducing leverage. Associated cash premiums and other costs, and the related accelerated amortization of deferred financing costs and original issue discount, resulted in our recording $0.9 million of debt retirement expense this quarter. Our interest costs increased $1.7 million as a result of higher debt levels from our refinancing in the second quarter last year and higher green costs this year requiring additional working capital borrowing. Primarily as a result of decreased margins, our pretax income decreased from $27.1 million in 2009 to $18.7 million in 2010. Our effective tax rate decreased from 45.2% in 2009 to 25.9% in 2010. The significant variance in the effective tax rate between 2010 and 2009 is primarily related to a greater impact on the 2009 effective tax rate for foreign currency exchange effects and specific event expense adjustments for unrecognized tax benefits and deferred tax adjustments.
Tobacco revenues increased $39.0 million or 21.2% primarily as a result of an increase of 12.3 million kilos in quantities sold partially offset by a $0.07 per kilo decrease in average sales prices. Processing and other revenues decreased 49.4% or $4.2 million primarily as a result of decreased processing volumes in Asia and North America. Gross profits increased $15.1 million in 2010 compared to 2009.
Net cash provided by financing activities increased $162.2 million in 2010 compared to 2009. This increase is primarily due to a $222.2 million increase in the net change in short-term borrowings as a result of less financing from customers and our revolver in the current year. Partially offsetting this increase was a decrease of $34.2 million in revolver net proceeds in the prior year and a $23.6 million purchase of our 8.5% senior notes in the current year.
We continue to finance our business with a combination of cash from operations, short-term seasonal credit lines, our revolving credit facility, long-term debt securities, customer advances and cash from operations. At June 30, 2010 we had cash of $247.6 million and total debt outstanding of $1,276.7 million comprised of $510.6 million of notes payable to banks, no revolver borrowings, $2.1 million of other long-term debt, $643.0 million of 10% senior notes, $6.0 million of 8.5% senior notes and $115.0 million of 5 ½% convertible senior subordinated notes. The $321.6 million seasonal increase in notes payable to banks from March 31, 2010 to June 30, 2010 results from anticipated seasonal fluctuation to account for the current purchase and processing of African and Brazilian tobaccos. Available credit as of June 30, 2010 was $532.9 million comprised of $290.0 million under our revolver, $234.2 million of notes payable to banks and $8.7 million of availability exclusively for letters of credit. We expect to incur $75.0 million of capital expenditures during fiscal year 2011. Maintenance expenditures are anticipated to be between $20.0 million and $25.0 million, while our continuing SAP software implementation and new Brazilian factory are major expenditures in addition to regularly scheduled maintenance. We may also decide to deploy additional discretionary amounts to enhance future business prospects, but only if stringent management return thresholds are likely to be achieved. No cash dividends were paid to stockholders during the quarter ended June 30, 2010. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for the remainder of fiscal year 2011.
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