Alliance One International Inc. (AOI, Financial) filed Quarterly Report for the period ended 2008-12-31.
Alliance One International Inc. is a leading independent leaf tobacco merchant. Alliance One International Inc. has a market cap of $258 million; its shares were traded at around $3.01 with a P/E ratio of 16.11 and P/S ratio of 0.13.
Other Regions. Tobacco sales from the Other Regions operating segment increased $92.3 million or 25.4% primarily as a result of an increase of $0.87 per kilo in average sales prices and a slight increase in volumes of 1.8 million kilos. Increased average sales prices as well as changes in product mix accounted for the increased revenues in Asia, Africa, Europe and the United States. Processing and other revenues increased 7.7% or $3.2 million from $41.3 million in 2007 to $44.5 million in 2008 primarily as a result of increased processing volumes in Africa.
Other Region. Tobacco sales from the Other Regions operating segment increased $127.2 million or 16.2% primarily as a result of an increase of $0.69 per kilo in average sales prices partially offset by a 7.9 million kilo decrease in volumes. Average sales prices increased across all regions. Volume decreases in Europe and Africa were partially offset by increased volumes in Asia. In Europe, volumes decreased primarily as a result of the exit from the Greek and Spanish tobacco markets. In Africa, volumes decreased due to lower volumes available from the previous fiscal year to be carried over into the current fiscal year. However, in Asia, volumes increased as a result of shipments in the current year that were delayed from the prior year and increased customer demand. Processing and other revenues increased 18.4% or $9.6 million from $52.3 million in 2007 to $61.9 million in 2008 primarily as a result of increased processing volumes and prices in the United States, Africa and in Asia.
Other income (expense) decreased from $4.0 million in 2007 to $0.5 million in 2008. The $3.5 million decrease is primarily due to a $1.7 million decrease in gains on sales of fixed assets and assets held for sale in 2007 compared to 2008 and a $1.8 million increase in losses on sale of receivables as a result of our expanded trade accounts receivable securitization agreement. See Note 15 Sale of Receivables to the Notes to Condensed Consolidated Financial Statements for further information.
Restructuring and asset impairment charges were $0.5 million in 2008 compared to $15.9 million in 2007. The costs of $0.5 million in 2008 primarily relate to employee severance costs in connection with the closure of an operation in Germany. The costs of $15.9 million in 2007 relate to asset impairment charges of $10.1 million which are primarily the result of a $6.1 million charge from the October 2007 sale of CdF which considered the $3.9 million currency translation account debit previously included in accumulated other comprehensive income and the valuation of assets to be received from the purchaser. In addition, there was a net charge of $2.6 million in Turkey related to impairment for long-lived assets as a result of significant reductions in future Turkish flue cured and burley tobacco volumes. The remaining restructuring charges of $5.8 million are substantially employee severance charges primarily in Malawi due to the impending sale of one of the Malawi factories that was completed in March 2008 and other employee severance charges as we continued the execution of our merger integration plan. See Note 3 Restructuring and Asset Impairment Charges to the Notes to Condensed Consolidated Financial Statements for further information.
Available credit as of December 31, 2008 was $591.4 million comprised of our $250.0 million revolver, $30.1 million of other long term debt, $269.7 million of notes payable to banks and $41.6 million of availability exclusively for letters of credit. We expect to incur $25.0 million of capital expenditures during fiscal year 2009 driven in part by our previously announced SAP software implementation in addition to regularly scheduled maintenance. No cash dividends were paid to stockholders during the quarter ended December 31, 2008. 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, sale of accounts receivable and customer advances. At December 31, 2008, we had cash of $74.6 million and total debt outstanding of $1,036.4 million comprised of $488.8 million of notes payable to banks, $39.9 million of other long-term debt, $264.4 million of 11% senior notes, $149.4 million of 8.5% senior notes, $83.7 million of senior subordinated notes and $10.2 million of other legacy company senior notes. The $101.6 million seasonal increase in notes payable to banks from March 31, 2008 to December 31, 2008 is as anticipated based on the higher cost of the 2008 Brazilian crop, which we are continuing to sell and ship. Our fiscal year 2010 short-term debt for working capital purposes may be at lower levels than fiscal year 2009 based on current foreign currency exchange rates. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for fiscal year 2009 and 2010.
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Alliance One International Inc. is a leading independent leaf tobacco merchant. Alliance One International Inc. has a market cap of $258 million; its shares were traded at around $3.01 with a P/E ratio of 16.11 and P/S ratio of 0.13.
Highlight of Business Operations:
Our liquidity as of December 31, 2008, was $666.0 million comprised of $74.6 million of cash and $591.4 million of available credit, that includes our undrawn $250.0 million senior credit facility, $30.1 million of other long term debt, $269.7 million of notes payable to banks, and $41.6 million exclusively for letters of credit. While the global capital markets remain challenged by the current financial crisis our access to capital has remained in line with managements expectations and required levels to adequately fund ongoing business requirements. We continue to monitor unfolding financial market developments, with a view toward adjusting our strategy if warranted to protect capital and liquidity, while maintaining funding sources, controlling costs and maximizing enterprise flexibility. Challenges in anticipating future financial market changes, coupled with the seasonal nature of our business, industry and country supply and demand levels; as well as other external economic and currency factors that may change quickly and in an unanticipated manner, could negatively impact our results. As part of addressing these risks, our liquidity is derived from a numbers of sources including cash from operations, our committed Senior Credit Facility, sale of accounts receivable, active working capital management, advances from our well-capitalized customers, and lastly, bilateral short-term credit lines throughout the world. Additionally, our primary overnight cash investments are with financial institutions that have government guaranties, though in amounts that may exceed applicable guarantee levels, and we do not invest cash in auction rate securities or mortgage backed money market funds. Our strategy to protect capital and ensure appropriate liquidity management is dynamic and will be modified to meet changing market conditions.Other Regions. Tobacco sales from the Other Regions operating segment increased $92.3 million or 25.4% primarily as a result of an increase of $0.87 per kilo in average sales prices and a slight increase in volumes of 1.8 million kilos. Increased average sales prices as well as changes in product mix accounted for the increased revenues in Asia, Africa, Europe and the United States. Processing and other revenues increased 7.7% or $3.2 million from $41.3 million in 2007 to $44.5 million in 2008 primarily as a result of increased processing volumes in Africa.
Other Region. Tobacco sales from the Other Regions operating segment increased $127.2 million or 16.2% primarily as a result of an increase of $0.69 per kilo in average sales prices partially offset by a 7.9 million kilo decrease in volumes. Average sales prices increased across all regions. Volume decreases in Europe and Africa were partially offset by increased volumes in Asia. In Europe, volumes decreased primarily as a result of the exit from the Greek and Spanish tobacco markets. In Africa, volumes decreased due to lower volumes available from the previous fiscal year to be carried over into the current fiscal year. However, in Asia, volumes increased as a result of shipments in the current year that were delayed from the prior year and increased customer demand. Processing and other revenues increased 18.4% or $9.6 million from $52.3 million in 2007 to $61.9 million in 2008 primarily as a result of increased processing volumes and prices in the United States, Africa and in Asia.
Other income (expense) decreased from $4.0 million in 2007 to $0.5 million in 2008. The $3.5 million decrease is primarily due to a $1.7 million decrease in gains on sales of fixed assets and assets held for sale in 2007 compared to 2008 and a $1.8 million increase in losses on sale of receivables as a result of our expanded trade accounts receivable securitization agreement. See Note 15 Sale of Receivables to the Notes to Condensed Consolidated Financial Statements for further information.
Restructuring and asset impairment charges were $0.5 million in 2008 compared to $15.9 million in 2007. The costs of $0.5 million in 2008 primarily relate to employee severance costs in connection with the closure of an operation in Germany. The costs of $15.9 million in 2007 relate to asset impairment charges of $10.1 million which are primarily the result of a $6.1 million charge from the October 2007 sale of CdF which considered the $3.9 million currency translation account debit previously included in accumulated other comprehensive income and the valuation of assets to be received from the purchaser. In addition, there was a net charge of $2.6 million in Turkey related to impairment for long-lived assets as a result of significant reductions in future Turkish flue cured and burley tobacco volumes. The remaining restructuring charges of $5.8 million are substantially employee severance charges primarily in Malawi due to the impending sale of one of the Malawi factories that was completed in March 2008 and other employee severance charges as we continued the execution of our merger integration plan. See Note 3 Restructuring and Asset Impairment Charges to the Notes to Condensed Consolidated Financial Statements for further information.
Available credit as of December 31, 2008 was $591.4 million comprised of our $250.0 million revolver, $30.1 million of other long term debt, $269.7 million of notes payable to banks and $41.6 million of availability exclusively for letters of credit. We expect to incur $25.0 million of capital expenditures during fiscal year 2009 driven in part by our previously announced SAP software implementation in addition to regularly scheduled maintenance. No cash dividends were paid to stockholders during the quarter ended December 31, 2008. 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, sale of accounts receivable and customer advances. At December 31, 2008, we had cash of $74.6 million and total debt outstanding of $1,036.4 million comprised of $488.8 million of notes payable to banks, $39.9 million of other long-term debt, $264.4 million of 11% senior notes, $149.4 million of 8.5% senior notes, $83.7 million of senior subordinated notes and $10.2 million of other legacy company senior notes. The $101.6 million seasonal increase in notes payable to banks from March 31, 2008 to December 31, 2008 is as anticipated based on the higher cost of the 2008 Brazilian crop, which we are continuing to sell and ship. Our fiscal year 2010 short-term debt for working capital purposes may be at lower levels than fiscal year 2009 based on current foreign currency exchange rates. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for fiscal year 2009 and 2010.
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