Restatement of Previously Issued Condensed Consolidated Financial Statements

In the course of downsizing and terminating certain operations of Alliance One Tobacco (Kenya) Limited (“AOTK”), and preparing our financial statements for the quarter ended September 30, 2015, the Company identified errors in accounts receivable, inventory, sales and cost of goods sold in AOTK. Specifically, the value of inventory was overstated due to improper accounting for shrinkage, deferred crop costs, lower of cost or market valuations and accurate inventory counts. Further, sales and other operating revenues, and trade and other receivables, net were incorrectly stated due to improper revenue recognition for external sales. As a result of these errors, we have restated our audited consolidated financial statements for the years ended March 31, 2015, 2014 and 2013 and our unaudited condensed consolidated financial information for the three and six months ended September 30, 2014 on this Form 10-Q. See the Company’s Annual Report on Form 10-K/A for the fiscal year ended March 31, 2015 for further information.

As of September 30, 2015, the correction of these errors principally decreased the Company’s inventory by approximately $46 million, decreased accounts receivable by approximately $3 million, and decreased retained earnings by approximately $49 million. Approximately $39 million of the decrease in retained earnings is related to March 31, 2015 and prior periods, with a portion in each quarter dating back to fiscal 2011. Further, these corrections decreased operating income for the three months ended September 30, 2015 by approximately $4 million and decreased operating income for the six months ended September 30, 2015 by approximately $10 million.

Along with restating our financial statements to correct the errors discussed above, we are making adjustments for certain previously identified immaterial accounting errors related to the periods covered by this Form 10-Q. When these financial statements were originally issued, we assessed the impact of these errors and concluded that they were not material to our financial statements for the three months and six months ended September 30, 2014. However, in conjunction with our need to restate our financial statements as a result of the errors above, we have determined that it would be appropriate within this Form 10-Q to make adjustments for all such previously unrecorded adjustments.

The combined impacts of all the adjustments to the applicable line items in our unaudited consolidated financial statements for the periods covered by this Form 10-Q are provided in the tables below.



	Condensed Consolidated Statements of Operations
	Three Months Ended September 30, 2014
(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)		Other Adjustments (3)			As Restated
Sales and other operating revenues	$	589,815		$	—		$	7,155	$	—		$	596,970
Cost of goods and services sold	518,332			13,762			—		—			532,094
Gross profit	71,483			(13,762		)	7,155		—			64,876
Operating income	35,310			(13,762		)	7,155		—			28,703
Income (loss) before income taxes and other items	8,389			(13,762		)	7,155		—			1,782
Income tax expense (benefit)	11,345			(3,021		)	2,575		80			10,979
Net income (loss)	(1,917		)	(10,741		)	4,580		(80		)	(8,158		)
Net income (loss) attributable to Alliance One International, Inc.	(1,910		)	(10,741		)	4,580		(80		)	(8,151		)
Income (loss) per share:
Basic	(0.22		)	(1.20		)	0.51		(0.01		)	(0.92		)
Diluted	(0.22		)	(1.20		)	0.51		(0.01		)	(0.92		)

Note 1A - Restatement of Previously Issued Condensed Consolidated Financial Statements (continued)



	Condensed Consolidated Statements of Operations
	Six Months Ended September 30, 2014
(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Sales and other operating revenues	$	838,832		$	—		$	7,282		$	—		$	846,114
Cost of goods and services sold	732,245			17,561			—			(1,838		)	747,968
Gross profit	106,587			(17,561		)	7,282			1,838			98,146
Operating income	39,889			(17,561		)	7,282			1,838			31,448
Income (loss) before income taxes and other items	(12,603		)	(17,561		)	7,282			1,838			(21,044		)
Income tax expense (benefit)	8,431			3,302			(590		)	155			11,298
Net income (loss)	(20,480		)	(20,863		)	7,872			1,683			(31,788		)
Net income (loss) attributable to Alliance One International, Inc.	(20,528		)	(20,863		)	7,872			1,683			(31,836		)
Income (loss) per share:
Basic	(2.33		)	(2.35		)	0.88			0.19			(3.61		)
Diluted	(2.33		)	(2.35		)	0.88			0.19			(3.61		)



	Condensed Consolidated Statements of Comprehensive Income (Loss)
	Three Months Ended September 30, 2014
(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)		Other Adjustments (3)			As Restated
Net income (loss)	$	(1,917	)	$	(10,741	)	$	4,580	$	(80	)	$	(8,158	)
Total comprehensive income (loss), net of tax	(5,791		)	(10,741		)	4,580		(80		)	(12,032		)
Comprehensive income (loss) attributable to Alliance One International, Inc.	(5,784		)	(10,741		)	4,580		(80		)	(12,025		)



	Condensed Consolidated Statements of Comprehensive Income (Loss)
	Six Months Ended September 30, 2014
(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)		Other Adjustments (3)		As Restated
Net income (loss)	$	(20,480	)	$	(20,863	)	$	7,872	$	1,683	$	(31,788	)
Total comprehensive income (loss), net of tax	(23,732		)	(20,863		)	7,872		1,683		(35,040		)
Comprehensive income (loss) attributable to Alliance One International, Inc.	(23,780		)	(20,863		)	7,872		1,683		(35,088		)

Note 1A - Restatement of Previously Issued Condensed Consolidated Financial Statements (continued)



	September 30, 2014
Condensed Consolidated Balance Sheets (in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Trade and other receivables, net	$	233,785		$	—		$	(1,762	)	$	—		$	232,023
Inventories	976,416			(34,498		)	—			—			941,918
Total current assets	1,509,543			(34,498		)	(1,762		)	—			1,473,283
Investments in unconsolidated affiliates	52,199			—			—			530			52,729
Total assets	1,945,660			(34,498		)	(1,762		)	530			1,909,930
Income taxes	9,238			4,109			(862		)	(4,345		)	8,140
Total current liabilities	843,498			4,109			(862		)	(4,345		)	842,400
Deferred income taxes	5,410			—			—			1,657			7,067
Liability for unrecognized tax benefits	9,617			—			—			3,060			12,677
Pension, postretirement and other long-term liabilities	76,785			—			—			250			77,035
Retained deficit	(174,516		)	(38,607		)	(900		)	133			(213,890		)
Accumulated other comprehensive loss	(41,353		)	—			—			(225		)	(41,578		)
Total stockholders' equity of Alliance One International, Inc.	251,270			(38,607		)	(900		)	(92		)	211,671
Total equity	254,613			(38,607		)	(900		)	(92		)	215,014
Total liabilities and stockholders' equity	1,945,660			(34,498		)	(1,762		)	530			1,909,930



Condensed Statements of Consolidated Stockholders' Equity (in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Retained deficit at March 31, 2014	$	(153,988	)	$	(17,744	)	$	(8,772	)	$	(1,550	)	$	(182,054	)
Net income (loss)	(20,528		)	(20,863		)	7,872			1,683			(31,836		)
Retained deficit at September 30, 2014	(174,516		)	(38,607		)	(900		)	133			(213,890		)

Accumulated Other Comprehensive Income (in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Pensions, net of tax at March 31, 2014	$	(36,461	)	$	—		$	—		$	(225	)	$	(36,686	)
Pensions, net of tax at September 30, 2014	(35,634		)	—			—			(225		)	(35,859		)

(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Total equity at March 31, 2014	$	276,888		$	(17,744	)	$	(8,772	)	$	(1,775	)	$	248,597
Net Income (loss)	(20,480		)	(20,863		)	7,872			1,683			(31,788		)
Total equity at September 30, 2014	254,613			(38,607		)	(900		)	(92		)	215,014

Note 1A - Restatement of Previously Issued Condensed Consolidated Financial Statements (continued)



	Statement of Condensed Consolidated Cash Flows for the six months ended September 30, 2014
(in thousands)	As Previously Reported			Inventory Adjustments (1)			Receivables Adjustments (2)			Other Adjustments (3)			As Restated
Net income (loss)	$	(20,480	)	$	(20,863	)	$	7,872		$	1,683		$	(31,788	)
Changes in operating assets and liabilities, net	(343,610		)	20,863			(7,872		)	(1,719		)	(332,338		)
Net cash used by operating activities	(334,359		)	—			—			(36		)	(334,395		)
Decrease in cash and cash equivalents	(125,135		)	—			—			(36		)	(125,171		)
Cash and cash equivalents at beginning of period	234,742			—			—			36			234,778

(1) Adjustments per the errors described above related to 1) improper accounting for shrinkage, deferred crop costs, lower of cost or market valuations and accurate inventory, and 2) costs of goods and services sold associated with improper revenue recognition.

(2) Adjustments for the errors described above related to improper revenue recognition.

(3) Adjustments for the previously identified immaterial accounting errors described above, primarily impacting inventories, costs of goods and services sold, income tax expense, and interest expense.