Alliance One International Inc. (AOI, Financial) filed Quarterly Report for the period ended 2009-12-31.
Alliance One International Inc. has a market cap of $428.51 million; its shares were traded at around $4.81 with a P/E ratio of 6.77 and P/S ratio of 0.19. AOI is in the portfolios of Seth Klarman of The Baupost Group, John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, Tom Russo of Gardner Russo & Gardner.
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. The decrease in the liability for unrecognized tax benefits relates to cash payments of approximately $12.9 million, settlement of unrecognized tax benefits of approximately $37.3 million, and an increase related to current period activity of approximately $.9 million. As recognized in the income statement the settlement of unrecognized tax benefits is reduced by the write off of related deferred tax assets. 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.
Debt retirement expense was $40.4 million in 2009 compared to $1.0 million in 2008. During the quarter ended September 30, 2009, we underwent a debt refinancing. As a result, significant one-time costs were incurred to retire our existing debt. These costs include premiums of $22.9 million to purchase and redeem our senior notes and senior subordinated notes, fees and other related costs of $0.6 million associated with the purchase and redemption of these notes and the non-cash accelerated recognition of $16.9 million of debt issuance costs and original issue discounts related to the existing debt. The cost in 2008 relates to accelerated amortization of debt issuance costs as a result of debt prepayment.
Effective tax rates were a benefit of 9.5% in 2009 and 4.4% 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 the unrecognized tax benefit liabilities in 2009. During the three months ended December 31, 2009, we pursued 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. The decrease in the liability for unrecognized tax benefits relates to cash payments of approximately $12.9 million, settlement of unrecognized tax benefits of approximately $37.3 million, and an increase related to current period activity of approximately $.9 million. As recognized in the income statement the settlement of unrecognized tax benefits is reduced by the write off of related deferred tax assets. 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.
Net cash provided by financing activities decreased $24.9 million in 2009 compared to 2008. This decrease is primarily due to a $168.5 million decrease in the net change in short-term borrowings and $81.2 million in debt issuance, debt retirement and other debt related costs primarily associated with our refinancing transactions last quarter. Partially offsetting this decrease is a $170.5 million increase in the net change in long-term borrowings primarily relating to our debt refinancing and a $55.1 million decrease in net repayments of short-term demand notes.
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 December 31, 2009 we had cash of $109.5 million and total debt outstanding of $1,112.0 million comprised of $286.4 million of notes payable to banks, no revolver borrowings, $39.5 million of other long-term debt, $641.5 million of 10% senior notes, $29.6 million of 8.5% senior notes and $115.0 million of 5 ½% convertible senior subordinated notes. The $25.0 million seasonal increase in notes payable to banks from March 31, 2009 to December 31, 2009 results from anticipated seasonal fluctuation to account for the current purchase and processing of African, Brazilian, Indian and U.S. tobaccos. The $202.4 million seasonal decrease in notes payable to banks from December 31, 2008 to December 31, 2009 is driven by the refinancing we completed during the quarter ended September 30, 2009. Available credit as of December 31, 2009 was $624.3 million comprised of $270.0 million under our revolver, $1.9 million of other long-term debt, $343.4 million of notes payable to banks and $9.0 million of availability exclusively for letters of credit. We expect to incur $47.0 million of capital expenditures during fiscal year 2010. Maintenance expenditures are anticipated to be between $19.0 and $28.0, 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 December 31, 2009. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for the remainder of fiscal year 2010.
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Alliance One International Inc. has a market cap of $428.51 million; its shares were traded at around $4.81 with a P/E ratio of 6.77 and P/S ratio of 0.19. AOI is in the portfolios of Seth Klarman of The Baupost Group, John Buckingham of Al Frank Asset Management, Inc., 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 December 31, 2009, we had $733.8 million of cash and available credit comprised of $109.5 million of cash and $624.3 million in available credit inclusive of $270.0 million undrawn on our revolver, $1.9 million of other long-term debt, $343.4 million of notes payable to banks, and $9.0 million exclusively for letters of credit. We continually modify the makeup of our available liquidity to enhance business flexibility and reduce costs.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. The decrease in the liability for unrecognized tax benefits relates to cash payments of approximately $12.9 million, settlement of unrecognized tax benefits of approximately $37.3 million, and an increase related to current period activity of approximately $.9 million. As recognized in the income statement the settlement of unrecognized tax benefits is reduced by the write off of related deferred tax assets. 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.
Debt retirement expense was $40.4 million in 2009 compared to $1.0 million in 2008. During the quarter ended September 30, 2009, we underwent a debt refinancing. As a result, significant one-time costs were incurred to retire our existing debt. These costs include premiums of $22.9 million to purchase and redeem our senior notes and senior subordinated notes, fees and other related costs of $0.6 million associated with the purchase and redemption of these notes and the non-cash accelerated recognition of $16.9 million of debt issuance costs and original issue discounts related to the existing debt. The cost in 2008 relates to accelerated amortization of debt issuance costs as a result of debt prepayment.
Effective tax rates were a benefit of 9.5% in 2009 and 4.4% 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 the unrecognized tax benefit liabilities in 2009. During the three months ended December 31, 2009, we pursued 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. The decrease in the liability for unrecognized tax benefits relates to cash payments of approximately $12.9 million, settlement of unrecognized tax benefits of approximately $37.3 million, and an increase related to current period activity of approximately $.9 million. As recognized in the income statement the settlement of unrecognized tax benefits is reduced by the write off of related deferred tax assets. 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.
Net cash provided by financing activities decreased $24.9 million in 2009 compared to 2008. This decrease is primarily due to a $168.5 million decrease in the net change in short-term borrowings and $81.2 million in debt issuance, debt retirement and other debt related costs primarily associated with our refinancing transactions last quarter. Partially offsetting this decrease is a $170.5 million increase in the net change in long-term borrowings primarily relating to our debt refinancing and a $55.1 million decrease in net repayments of short-term demand notes.
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 December 31, 2009 we had cash of $109.5 million and total debt outstanding of $1,112.0 million comprised of $286.4 million of notes payable to banks, no revolver borrowings, $39.5 million of other long-term debt, $641.5 million of 10% senior notes, $29.6 million of 8.5% senior notes and $115.0 million of 5 ½% convertible senior subordinated notes. The $25.0 million seasonal increase in notes payable to banks from March 31, 2009 to December 31, 2009 results from anticipated seasonal fluctuation to account for the current purchase and processing of African, Brazilian, Indian and U.S. tobaccos. The $202.4 million seasonal decrease in notes payable to banks from December 31, 2008 to December 31, 2009 is driven by the refinancing we completed during the quarter ended September 30, 2009. Available credit as of December 31, 2009 was $624.3 million comprised of $270.0 million under our revolver, $1.9 million of other long-term debt, $343.4 million of notes payable to banks and $9.0 million of availability exclusively for letters of credit. We expect to incur $47.0 million of capital expenditures during fiscal year 2010. Maintenance expenditures are anticipated to be between $19.0 and $28.0, 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 December 31, 2009. We believe that these sources of liquidity versus our requirements will be sufficient to fund our anticipated needs for the remainder of fiscal year 2010.
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