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Before I begin to discuss our results, I caution you that we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future. For information on some other factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2012, as well as the 10-Q for the first fiscal quarter of 2013 which was filed today. The factors that can affect our estimates include such things as customer mandated timing of shipments, weather conditions, political and economic environment, changes in currency, industry consolidation and evolution, and changes in market structure or sources. Finally, some of the information I have for you today is based on unaudited allocations, and is subject to reclassification.Net income for the first quarter of fiscal year 2013 which ended on June 30 2012 was $23.1 million that is $0.81 per diluted share; last year’s first quarter net income was $15.9 million or $0.52 per diluted share. Last year’s first quarter results also included the net effect of two unusual items, restructuring costs of $6.9 million before taxes and a $9.6 million pre-tax gain on a insurance settlement. The net impact of those two items was $2.7 million gain before taxes and an $0.08 benefit per share. Consolidated revenues of $461 million were down about 4% on a small volume reduction at slightly lower average prices. First, I’ll cover a few points that are key to the results for the quarter. First, benefits from shipments of carryover stocks from last year’s large crops in Africa improved results in the other region segment. Although average prices on those crops were lower and contributed to declines in revenues for that segment. Second, lower selling, general and administrative costs improved operating margins in many regions and contributed to operating income improvement, particularly in the other regions segment. The decline was mainly due to a combination of lower provisions on receivables from suppliers, lower compensation expenses and net currency re-measurement on exchange gain.
Third, third key point is that there are lower uncommitted stocks as well as smaller crops affecting our results. Uncommitted stock levels are down significantly compared with last year’s first quarter, which reflected average supply conditions.Smaller corps in South America contributed to lower volumes there this quarter. For some of the detail, income for our flue-cured and burley operation increased by 35% to $35.8 million as improvements in the other region segment were partially offset by declines in North America. In our other region segments, operating income was up about $14 million, and operating margins improved in those regions. Results for these segments were influenced mainly by the items mentioned previously. Africa shipments of carryover crops increased volumes and were offset in part by fewer shipments due to smaller crops in Brazil. Selling, general and administrative costs were significantly lower for this segment as previously indicated. Operating income for the North America segment decreased by $4.6 million as carryover old crop sales seen in last year’s first quarter were not repeated this year as those uncommitted stocks were depleted. Shipment delays in Central America and factory overhead allocations also played a role in the decline. Operating income for the Other Tobacco Operations segment improved by $5.6 million for the first fiscal quarter with better results in both the dark tobacco operations and Oriental joint venture. The dark tobacco business improved mainly on Nicaragua and Indonesia while the joint venture benefited from higher volumes on earlier shipments and lower expenses. To reiterate our results for the first fiscal quarter signal a good start to the year ahead, and a movement away from last year’s oversupplied condition. Some of the benefits in this period are related to variances in shipment timing, particularly carryover shipments from last year’s large African crop. We have managed our uncommitted inventory levels well throughout the past year, and we now carry those stock levels which are near the bottom of our historical norms. Read the rest of this transcript for free on seekingalpha.com