Employee Benefits

Retirement Benefits

The Company has multiple benefit plans at several locations. The Company has a defined benefit plan that provides retirement benefits for substantially all U.S. salaried personnel based on years of service rendered, age and compensation. The Company also maintains various other Excess Benefit and Supplemental Plans that provide additional benefits to (1) certain individuals whose compensation and the resulting benefits that would have actually been paid are limited by regulations imposed by the Internal Revenue Code and (2) certain individuals in key positions. In addition, a Supplemental Retirement Account Plan ("SRAP"), a defined contribution program, is maintained.

The Company's policy is to contribute amounts to the plans sufficient to meet or exceed funding requirements of local governmental rules and regulations.

Additional non-U.S. plans sponsored by certain subsidiaries cover substantially all of the full-time employees located in Germany, Turkey and the United Kingdom.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Retirement Benefits (continued)

In fiscal 2014, the Company experienced a special termination benefit and curtailment loss of $1,261 during the quarter ended June 30, 2013 in connection with restructuring in its Turkey location, which has been recorded in Restructuring and Asset Impairment Charges (Recoveries).

A reconciliation of benefit obligations, plan assets and funded status of the plans at March 31, 2015 and 2014, the measurement dates, is as follows:



		U.S. Plans						Non-U.S. Plans
		March 31,						March 31,
		2015			2014			2015			2014
Change in Benefit Obligation
	Benefit obligation, beginning	$	99,061		$	107,742		$	66,847		$	70,684
	Service cost	1,856			1,839			173			282
	Interest cost	3,969			3,956			2,711			2,820
	Actuarial (gains) losses	9,813			(5,090		)	9,349			(3,184		)
	Settlements/special termination benefits	(517		)	(4,223		)	(136		)	1,226
	Transfers	—			—			230			—
	Effects of currency translation	—			—			(5,985		)	2,754
	Benefits paid	(6,759		)	(5,163		)	(3,250		)	(7,735		)
	Benefit obligation, ending	$	107,423		$	99,061		$	69,939		$	66,847

Change in Plan Assets
	Fair value of plan assets, beginning	$	44,597		$	45,242		$	52,133		$	45,603
	Actual return on plan assets	1,832			4,121			5,137			3,433
	Employer contributions	5,768			4,620			3,686			8,193
	Plan settlements	(517		)	(4,223		)	(208		)	—
	Effects of currency translation	—			—			(3,789		)	2,639
	Benefits paid	(6,759		)	(5,163		)	(3,250		)	(7,735		)
	Fair value of plan assets, ending	$	44,921		$	44,597		$	53,709		$	52,133
	Net amount recognized	$	(62,502	)	$	(54,464	)	$	(16,230	)	$	(14,714	)



		U.S. Plans						Non-U.S. Plans
		March 31,						March 31,
		2015			2014			2015			2014
Amounts Recognized in the Consolidated Balance Sheets Consist of:
	Noncurrent benefit asset recorded in Other Noncurrent Assets	$	—		$	—		$	175		$	—
	Accrued current benefit liability recorded in Accrued Expenses and Other Current Liabilities	(2,975		)	(3,083		)	(1,173		)	(1,175		)
	Accrued noncurrent benefit liability recorded in Pension, Postretirement and Other Long-Term Liabilities	(59,527		)	(51,381		)	(15,232		)	(13,539		)
Net amount recognized		$	(62,502	)	$	(54,464	)	$	(16,230	)	$	(14,714	)

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Retirement Benefits (continued)

The pension obligations for all defined benefit pension plans:



		U.S. Plans				Non-U.S. Plans
		March 31,				March 31,
		2015		2014		2015		2014
Information for Pension Plans with Accumulated Benefit
Obligation in Excess of Plan Assets:
	Projected benefit obligation	$	107,423	$	99,061	$	36,951	$	66,847
	Accumulated benefit obligation	104,652		96,218		36,033		65,750
	Fair value of plan assets	44,921		44,597		20,546		52,133

Net periodic pension costs included the following components:



	U.S. Plans									Non-U.S. Plans
	March 31,									March 31,
	2015			2014			2013			2015			2014			2013
Service cost	$	1,856		$	1,839		$	1,777		$	173		$	282		$	288
Interest cost	3,969			3,956			4,289			2,711			2,820			3,046
Expected return on plan assets	(3,131		)	(3,078		)	(3,313		)	(3,477		)	(3,112		)	(2,945		)
Amortization of actuarial losses	1,440			1,808			1,509			740			1,262			479
Amortization of prior service cost	192			195			204			1			5			16
Curtailment gain	—			—			—			—			70			(27		)
Special termination benefits	—			—			—			72			1,226			45
Effects of settlement	35			1,049			—			(13		)	—			—
Net periodic pension cost	$	4,361		$	5,769		$	4,466		$	207		$	2,553		$	902

The amounts showing in accumulated other comprehensive income at March 31, 2015, March 31, 2014 and movements for the year were as follows:



	U.S. and Non-U.S. Pension			U.S. and Non-U.S. Post-retirement			Total
Prior service credit (cost)	$	(2,142	)	$	1,464		$	(678	)
Net actuarial losses	(42,092		)	(4,876		)	(46,968		)
Deferred taxes	11,551			(591		)	10,960
Balance at March 31, 2014	$	(32,683	)	$	(4,003	)	$	(36,686	)
Prior service credit (cost)	$	196		$	(1,287	)	$	(1,091	)
Net actuarial gains	(14,714		)	73			(14,641		)
Deferred taxes	219			(33		)	186
Total change for 2015	$	(14,299	)	$	(1,247	)	$	(15,546	)
Prior service credit (cost)	$	(1,946	)	$	177		$	(1,769	)
Net actuarial losses	(56,806		)	(4,803		)	(61,609		)
Deferred taxes	11,770			(624		)	11,146
Balance at March 31, 2015	$	(46,982	)	$	(5,250	)	$	(52,232	)

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Retirement Benefits (continued)

The following weighted average assumptions were used to determine the expense for the pension, postretirement, other postemployment, and employee savings plans as follows:



	U.S. Plans			Non-U.S. Plans
	March 31,			March 31,
	2015	2014	2013	2015	2014	2013
Discount rate	4.20%	3.86%	4.30%	4.30%	4.31%	5.22%
Rate of increase in future compensation	4.50%	4.00%	4.00%	3.94%	4.36%	4.45%
Expected long-term rate of return on plan assets	7.25%	7.25%	7.75%	6.83%	6.56%	6.93%

In order to project the long-term investment return for the total portfolio, estimates are prepared for the total return of each major asset class over the subsequent 10-year period, or longer. Those estimates are based on a combination of factors including the current market interest rates and valuation levels, consensus earnings expectations and historical long-term risk premiums. To determine the aggregate return for the pension trust, the projected return of each individual asset class is then weighted according to the allocation to that investment area in the trust’s long-term asset allocation policy.

A March 31 measurement date is used for the pension, postretirement, other postemployment and employee savings plans. The expected long-term rate of return on assets was determined based upon historical investment performance, current asset allocation, and estimates of future investment performance by asset class.

The following assumptions were used to determine the benefit obligations disclosed for the pension plans at March 31, 2015 and 2014:



	U.S. Plans		Non-U.S. Plans
	March 31,		March 31,
	2015	2014	2015	2014
Discount rate	3.60%	4.20%	3.13%	4.30%
Rate of increase in future compensation	4.50%	4.50%	3.56%	3.94%

Net gain (loss) and prior service credits (costs) for the combined U.S. and non-U.S. pension plans expected to be amortized from accumulated comprehensive income into net periodic benefit cost during fiscal 2016 is $(2,183) and $(1,381), respectively.

Plan Assets

The Company’s asset allocations and the percentage of the fair value of plan assets at March 31, 2015 and 2014 by asset category are as follows:



	Target Allocations		U.S. Plans				Non-U.S. Plans
	March 31, 2015		March 31,				March 31,
(percentages)	March 31, 2015		2015		2014		2015		2014
Asset Category:
Cash and cash equivalents	—	%	2.1	%	4.1	%	1.4	%	1.2	%
Equity securities	37.0		35.9		35.8		60.5		62.0
Debt securities	24.0		23.2		22.5		32.5		30.8
Real estate and other investments	39.0		38.8		37.6		5.6		6.0
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Plan Assets (continued)

The Company's investment objectives are to generate consistent total investment return to pay anticipated plan benefits, while minimizing long-term costs. Financial objectives underlying this policy include maintaining plan contributions at a reasonable level relative to benefits provided and assuring that unfunded obligations do not grow to a level that would adversely affect the Company's financial health. Manager performance is measured against investment objectives and objective benchmarks, including: Citibank 90 Day Treasury Bill, Barclays Intermediate Govt. Credit, Barclays Aggregate Index, Russell 1000 Value, Russell 1000 Growth, Russell 2500 Value, Russell 2500 Growth, and MSCI EAFE. The Portfolio Objective is to exceed the actuarial return on assets assumption. Management regularly reviews portfolio allocations and periodically rebalances the portfolio to the targeted allocations when considered appropriate. Equity securities do not include the Company's common stock. Our diversification and risk control processes serve to minimize the concentration of risk. There are no significant concentrations of risk, in terms of sector, industry, geography or companies.

The fair values for the pension plans by asset category are as follows:



U.S. Pension Plans	March 31, 2015
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	965	$	434	$	531	$	—
U.S. equities / equity funds	8,302		8,302		—		—
International equities / equity funds	7,769		7,769		—		—
U.S. fixed income funds	8,870		8,870		—		—
International fixed income funds	1,564		1,564		—		—
Other investments:
Diversified funds	12,994		12,918		—		76
Real estate	4,457		—		—		4,457
Total	$	44,921	$	39,857	$	531	$	4,533



U.S. Pension Plans	March 31, 2014
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	1,819	$	1,265	$	554	$	—
U.S. equities / equity funds	8,220		8,220		—		—
International equities / equity funds	7,747		7,747		—		—
U.S. fixed income funds	8,393		8,393		—		—
International fixed income funds	1,643		1,643		—		—
Other investments:
Diversified funds	12,755		12,656		—		99
Real estate	4,020		—		—		4,020
Total	$	44,597	$	39,924	$	554	$	4,119

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Plan Assets (continued)



Non-U.S. Pension Plans	March 31, 2015
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	770	$	770	$	—	$	—
U.S. equities / equity funds	7,862		7,862		—		—
International equities / equity funds	14,191		4,797		9,394		—
Global equity funds	10,372		—		10,372		—
U.S. fixed income funds	2,849		2,849		—		—
International fixed income funds	8,507		—		8,507		—
Global fixed income funds	6,135		1,295		4,840		—
Other investments:
Diversified funds	1,844		1,844		—		—
Real estate equities	1,179		1,179		—		—
Total	$	53,709	$	20,596	$	33,113	$	—



Non-U.S. Pension Plans	March 31, 2014
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	649	$	649	$	—	$	—
U.S. equities / equity funds	8,046		8,046		—		—
International equities / equity funds	14,297		4,598		9,699		—
Global equity funds	9,913		—		9,913		—
International fixed income funds	2,725		2,725		—		—
U.S. fixed income funds	7,491		—		7,491		—
Global fixed income funds	5,862		1,287		4,575		—
Other investments:
Diversified funds	1,991		1,991		—		—
Real estate equities	1,159		1,159		—		—
Total	$	52,133	$	20,455	$	31,678	$	—

The fair value hierarchy is described in Note 18 “Fair Value Measurements” to the “Notes to Consolidated Financial Statements."

A reconciliation of the beginning and ending balance of U.S. pension plan assets that are measured at fair value using significant unobservable inputs (Level 3) as of March 31, 2015 is as follows:



	U.S. Pension Plans
	Diversified funds			Real estate			Total Level 3 Plan assets
Fair value, March 31, 2013	$	165		$	4,801		$	4,966
Total gains (unrealized/realized)	12			419			431
Purchases, sales and settlements net	(78		)	(1,200		)	(1,278		)
Fair value, March 31, 2014	99			4,020			4,119
Total gains (unrealized/realized)	5			437			442
Purchases, sales and settlements net	(28		)	—			(28		)
Fair value, March 31, 2015	$	76		$	4,457		$	4,533

For all periods presented, the Company had no Non-U.S. pension plan assets measured at fair value using significant unobservable inputs (Level 3). Plan assets are recognized and measured at fair value in accordance with the accounting standards regarding fair value measurements. The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used to determine the fair value of each major category of plan assets.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Plan Assets (continued)

Cash and cash equivalents include short-term investment funds, primarily in diversified portfolios of investment grade money market instruments and are valued using quoted market prices or other valuation methods, and thus classified within Level 1 or Level 2 of the fair value hierarchy.

Equity securities are investments in common stock of domestic and international corporations in a variety of industry sectors, and are valued primarily using quoted market prices and generally classified within Level 1 in the fair value hierarchy.

Fixed income securities include U.S. Treasuries and agencies, debt obligations of foreign governments and debt obligations in corporations of domestic and foreign issuers. The fair value of fixed income securities are based on observable prices for identical or comparable assets, adjusted using benchmark curves, sector grouping, matrix pricing, broker/dealer quotes and issuer spreads, and are generally classified within Level 1 or Level 2 in the fair value hierarchy.

Investments in equity and fixed income mutual funds are publicly traded and valued primarily using quoted market prices and generally classified within Level 1 in the fair value hierarchy. Investments in commingled funds used in certain non-U.S. pension plans are not publicly traded, but the underlying assets held in these funds are traded in active markets and the prices for these assets are readily observable. Holdings in these commingled funds are generally classified as Level 2 investments.

Real estate investments include those in private limited partnerships that invest in various commercial and residential real estate projects both domestically and internationally as well as publicly traded REIT securities. The fair values of private real estate assets are typically determined by using income and/or cost approaches or comparable sales approach, taking into consideration discount and capitalization rates, financial conditions, local market conditions and the status of the capital markets, and thus are generally classified within Level 3 in the fair value hierarchy. Publicly traded REIT securities are valued primarily using quoted market prices and are generally classified within Level 1 in the fair value hierarchy.

Diversified investments include those in limited partnerships that invest in companies that are not publicly traded on a stock exchange and mutual funds with an absolute return strategy. Limited partnership investment strategies in non-publicly traded companies include leveraged buyouts, venture capital, distressed investments and investments in natural resources. These investments are valued using inputs such as trading multiples of comparable public securities, merger and acquisition activity and pricing data from the most recent equity financing taking into consideration illiquidity, and thus are classified within Level 3 in the fair value hierarchy. Mutual fund investments with absolute return strategies are publicly traded and valued using quoted market prices and are generally classified within Level 1 in the fair value hierarchy.

Cash Flows

Contributions

The Company expects to contribute $5,126 to its U.S. benefits plans and $3,554 to its non-U.S. benefit plans in fiscal 2016.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



	Pension Benefits				Other Benefits
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
	March 31, 2015		March 31, 2015		March 31, 2015		March 31, 2015
2016	$	8,405	$	3,431	$	637	$	93
2017	7,435		3,000		640		97
2018	7,417		3,120		618		101
2019	7,478		3,482		599		105
2020	7,967		3,262		592		116
Years 2021-2025	38,042		18,464		2,733		657

The Company sponsors 401-k savings plans for most of its salaried employees located in the United States. The Supplemental Executive Retirement Plan and the Pension Equity Plan were replaced by the SRAP during 2008. The Company also maintains defined contribution plans at various foreign locations. The Company’s contributions to the defined contribution plans were $4,009 in 2015, $4,435 in 2014 and $5,056 in 2013.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Postretirement Health and Life Insurance Benefits

The Company provides certain health and life insurance benefits to retired U.S. employees (and their eligible dependents) who meet specified age and service requirements. The plan excludes new employees after September 2005 and caps the Company’s annual cost commitment to postretirement benefits for retirees. The Company retains the right, subject to existing agreements, to modify or eliminate these postretirement health and life insurance benefits in the future.

The Company provides certain health and life insurance benefits to retired Brazilian directors and certain retirees located in Europe including their eligible dependents who meet specified requirements.

The following assumptions were used to determine non-U.S. Plan postretirement benefit obligations at March 31:



	2015		2014
Discount rate	10.54	%	11.13	%
Health care cost trend rate assumed for next year	7.87	%	7.88	%
Ultimate trend rate	7.87	%	7.88	%

A one-percentage-point change in assumed health care cost trend rates would not have a significant effect on the amounts reported for health care plans.

For 2015 and 2014, the annual rate of increase in the per capita cost of covered health care benefits is not applicable as the Company’s annual cost commitment to the benefits is capped and not adjusted for future medical inflation.

Additional retiree medical benefits are provided to certain U.S. individuals in accordance with their employment contracts. For 2015 the additional cost related to these contracts was $23.

Prior service credits of $11 and unrecognized net actuarial losses of $447 are expected to be amortized from accumulated comprehensive income into postretirement healthcare benefits net periodic benefit cost for the combined U.S. and non-U.S. postretirement benefits during fiscal 2016.

A reconciliation of benefit obligations, plan assets and funded status of the plans is as follows:



		U.S. Plans						Non-U.S. Plans
		March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
		March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
Change in Benefit Obligation
	Benefit obligation, beginning	$	8,727		$	9,995		$	1,636		$	2,217
	Service cost	39			60			3			6
	Interest cost	361			375			154			173
	Effect of currency translation	—			—			(446		)	(217		)
	Actuarial losses	370			(804		)	(6		)	(426		)
	Benefits paid	(656		)	(899		)	(98		)	(117		)
	Benefit obligation, ending	$	8,841		$	8,727		$	1,243		$	1,636
Change in Plan Assets
	Fair value of plan assets, beginning	$	—		$	—		$	—		$	—
	Employer contributions	656			899			98			117
	Benefits paid	(656		)	(899		)	(98		)	(117		)
	Fair value of plan assets, ending	$	—		$	—		$	—		$	—
	Net amount recognized	$	(8,841	)	$	(8,727	)	$	(1,243	)	$	(1,636	)


		U.S. Plans						Non-U.S. Plans
		March 31,						March 31,
		2015			2014			2015			2014
Amounts Recognized in the Consolidated Balance Sheets Consist of:
	Accrued current benefit liability recorded in Accrued Expenses and Other Current Liabilities	$	(637	)	$	(671	)	$	(93	)	$	(126	)
	Accrued non-current benefit liability recorded in Pension, Postretirement and Other Long-Term Liabilities	(8,204		)	(8,056		)	(1,150		)	(1,510		)
	Net amount recognized	$	(8,841	)	$	(8,727	)	$	(1,243	)	$	(1,636	)

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 13 - Employee Benefits (continued)

Postretirement Health and Life Insurance Benefits (continued)

There are no plan assets for 2015 or 2014. Net periodic benefit costs included the following components:



	U.S. Plans									Non-U.S. Plans
	March 31,									March 31,
	2015			2014			2013			2015			2014			2013
Service cost	$	39		$	60		$	57		$	3		$	6		$	5
Interest cost	361			375			434			154			173			175
Prior service credit	(1,196		)	(1,622		)	(1,622		)	(14		)	(16		)	(18		)
Actuarial losses (gains)	450			474			460			(5		)	15			6
Net periodic benefit costs (income)	$	(346	)	$	(713	)	$	(671	)	$	138		$	178		$	168

The Company continues to evaluate ways to better manage these benefits and control their costs. Any changes in the plan or revisions to assumptions that affect the amount of expected future benefits may have a significant effect on the amount of the reported obligation and annual expense. The Company expects to contribute $730 to its combined U.S. and non-U.S. postretirement benefit plans in fiscal 2016.

Employees in operations located in certain other foreign operations are covered by various postretirement benefit arrangements. For these foreign plans, the cost of benefits charged to income was not material in 2015, 2014 and 2013.