Alliance One International Reports Further Improvement in Second Quarter Operating Income

Alliance One International Reports Further Improvement in Second Quarter
Operating Income

MORRISVILLE, N.C., Nov. 9 /PRNewswire-FirstCall/ -- Alliance One
International, Inc. (NYSE: AOI) today announced results for its second fiscal
quarter ended September 30, 2009.

Second Quarter Results

Driven by core global operations, for the quarter and six months ended
September 30, 2009, Operating Income increased $28.3 million and $39.2 million
to $67.9 million and $119.1 million, respectively. During the second fiscal
quarter this year the Company incurred a one time $40.3 million pre-tax, cash
and non-cash debt retirement expense associated with the July-August 2009 debt
refinancing, versus $1.0 million last year. Both negatively impacted Net
Income. In that regard, for the second quarter ended September 30, 2009, the
Company reported a net loss of $1.5 million, or $0.02 per basic share,
compared to net income of $20.4 million, or $0.23 per basic share, last year.
Additionally, for the six months ended September 30, 2009, the Company
reported net income of $13.0 million, or $0.15 per basic share, compared to
net income of $35.7 million or $0.40 per basic share for the same period of
the prior fiscal year.

Robert E. Harrison, Chief Executive Officer, said, "Volume, sales and margins
this quarter were improved versus last year and met our expectations.
Improvements were achieved in what continues to be a very fluid environment
with costs increasing in many markets, a US dollar that has begun to weaken
again and implementation of certain manufacturer security of supply strategies
that provide challenges as well as opportunities. Continued strong customer
support and the positive impact of cost containment initiatives are key
elements to our strategic plan execution.

"To better position ourselves in this operating environment, we have continued
to focus on enhancing our capabilities to deliver specialized services and
value-added products. As such, I am pleased to announce that we have just
received six US Patent Office "Notices of Allowance" for three lower alkaloid
variety burley tobaccos, developed over an eight year period utilizing
conventional plant breeding methods at our R&D facility in Brazil. We
originally reported these new varieties in November 2007, which further
reinforces our commitment to the industry's ongoing research to develop new
products. We believe these new varieties retain the desirable leaf quality,
grower yields and smoking characteristics typical of existing Brazilian burley
tobaccos and we have now started commercial production. Also, on November
6th, we announced commencing work on a new 70 million kilo factory in the
Brazilian State of Santa Catarina that will be operational for processing the
2011 crop. Our new factory will place processing closer to this key growing
area, establish additional needed storage and meet our investment objectives.

Mr. Harrison concluded, "Looking to the future we are strengthening our
balance sheet through continued emphasis on working capital management
combined with our long term debt refinancing that we just completed during the
quarter. Our refinancing extends maturities and successfully establishes a
solid base for future business growth. Going forward, many industry drivers
will remain unchanged, although our dynamic marketplace will present new
challenges and no doubt new opportunities as well, that will transform our
thinking and shape future performance improvements. Our global workforces'
overarching belief is focus on customer needs and requirements, combined with
innovative solutions, will strengthen our ability to enhance future
performance and ultimately create additional long-term shareholder value."

Performance Summary for the Second Fiscal Quarter Ended September 30, 2009

The following is a brief overview of our financial results for the quarter
ended September 30, 2009. Additional information on our results may be found
in our Quarterly Report on Form 10-Q filed on November 9, 2009.

Sales and other operating revenues increased 13.1% to $675.2 million in 2009
versus last year primarily driven by an 11.9% increase in quantities sold and
a 1.7% average sales price increase.

South America Region tobacco sales increased $24.2 million resulting from a
12.7 million increase in kilos sold following the recovery of purchasing and
processing delays from the first quarter and increased by-product sales. The
effect of the change in product mix is that while average lamina and
by-product sales prices increased this year, higher quantities sold of lower
priced by-products caused the overall average selling price per kilo to
decrease $0.43.

Other Regions tobacco sales increased $57.1 million mainly as a result of a
$0.53 per kilo average sales price increase and an additional 4.3 million
kilos sold. Volume increases were driven by African shipments delayed from the
prior quarter as well as the larger current Malawi crop, while average African
sales prices remained fairly constant. European volumes and average selling
prices increased, and combined with Euro strength, also resulted in increased
revenue contribution. Partially offsetting these improvements were delayed
shipments from Thailand and a $3.2 million decrease in African and European
processing and other revenues driven by lower volumes.

Gross profit increased 32.8% to $106.8 million in 2009, and as a percentage of
sales improved from 13.5% in 2008 to 15.8% this year.

South America Region gross profit increased $17.9 million primarily as a
result of increased volumes that were delayed from the prior quarter and
derivative financial instrument gains. Partially offsetting these improvements
are 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 increased $8.5 million mainly due to lower green
costs and larger crop size in Malawi, gains on derivative financial
instruments and increased volumes due to delayed shipments from last quarter.

Selling, administrative and general expenses increased 5.1% from 2008 to $42.1
million in 2009. The increase is largely due to increased stock based
compensation costs, as well as increased legal and professional fees, which
were partially offset by hedging gains on forward currency contracts.

Other income (expense) was $3.1 million in 2009 compared to $(0.8) million in
2008, due to a $3.9 million gain primarily from the sale of a redundant
Turkish warehouse this year. Impacting results were losses on the sale of
receivables which were $(0.8) million in both 2009 and 2008 under our accounts
receivable securitization.

Debt retirement expense was $40.3 million in 2009 compared to $1.0 million in
2008. The 2009 increase was driven by our long term debt refinancing that
included costs associated with the redemption of our prior senior and senior
subordinated notes of $22.9 million in tender premiums, $16.9 million in
accelerated non-cash debt issuance costs and original issue discounts, and
$0.5 million in fees and other related costs. Debt prepayment in 2008 resulted
in accelerated amortizing debt issuance costs.

Interest expense increased $6.4 million to $32.8 million in 2009 primarily due
to slightly higher average borrowings and higher average interest rates on our
seasonal borrowings compared to the prior year.

Liquidity and Capital Resources

As of September 30, 2009, available credit lines and cash increased 34.9% over
the fiscal year ended March 31, 2009 to $660.8 million comprised of $97.5
million in cash, $554.9 million of credit lines and $8.4 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 or outstanding public notes,
as permitted.

2010 Fiscal Year, 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, 2009, on November 9, 2009 at 5:00
P.M. ET. Those seeking to listen to the call may access a live broadcast on
the Alliance One website. Please visit 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 8:00 P.M. ET, November 9th through 8:00 P.M.
November 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 4924617. 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 Six Months Ended
(in thousands, except per September 30, September 30,
share amounts) 2009 2008 2009 2008
---- ---- ---- ----
Sales and other
operating revenues $675,154 $597,092 $1,085,638 $1,056,257
Cost of goods and
services sold 568,328 516,647 890,850 899,149
--- --- ------- -------
Gross profit 106,826 80,445 194,788 157,108
Selling, administrative
and general expenses 42,063 40,016 78,392 78,249
Other income (expense) 3,145 (825) 2,705 1,449
Restructuring and asset
impairment charges
(recovery) - (44) - 452
--- --- --- ---
Operating income 67,908 39,648 119,101 79,856
Debt retirement expense 40,288 954 40,288 954
Interest expense
(includes debt
amortization of $2,433
and $1,292 for the three
months and $4,285 and
$2,233 for the six months
in 2009 and 2008,
respectively) 32,776 26,385 57,744 50,814
Interest income 1,188 705 2,104 1,642
----- --- ----- -----
Income (loss) before
income taxes and other
items (3,968) 13,014 23,173 29,730
Income tax expense
(benefit) (2,592) (6,408) 9,673 (4,615)
Equity in net income of
investee companies - 1,099 - 1,099
--- --- --- -----
Income (loss) from
continuing operations (1,376) 20,521 13,500 35,444
Income (loss) from
discontinued
operations, net of tax - (45) - 463
--- --- --- ---
Net income (loss) (1,376) 20,476 13,500 35,907
Less: Net income
attributable to
noncontrolling
interests 82 119 481 245
-- --- --- ---
Net income (loss)
attributable to
Alliance One
International, Inc. $(1,458) $20,357 $13,019 $35,662
------- ------- ------- -------

Amounts attributable to
Alliance One
International, Inc.
Income (loss) from
continuing operations $(1,458) $20,402 $13,019 $35,199
Income (loss) from
discontinued
operations - (45) - 463
--- --- --- ---
Net income (loss)
attributable to
Alliance One
International, Inc. $(1,458) $20,357 $13,019 $35,662
------- ------- ------- -------

Basic earnings (loss)
per share
Net income (loss) from
continuing operations $(.02) $.23 $.15 $.39
Income (loss) from
discontinued
operations - - - .01
--- --- --- ---
Net income (loss) $(.02) $.23 $.15 $.40
----- ---- ---- ----

Diluted earnings (loss)
per share
Net income (loss) from
continuing operations $(.02) $.23 $.14 $.39
Income (loss) from
discontinued
operations - - - .01
--- --- --- ---
Net income (loss) $(.02) $.23 $.14 $.40
----- ---- ---- ----

Average number of
shares outstanding
Basic 88,598 88,303 88,539 88,255
Diluted 88,598 89,076 100,425 89,175

SOURCE Alliance One International, Inc.

Joel L. Thomas, +1-919-379-4300