Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

The following executive overview is intended to provide significant highlights of the discussion and analysis that follows.

Financial Results

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 U.S. dollar that has begun to weaken again and implementation of certain manufacturer security of supply strategies that provide opportunities and challenges. To better position ourselves in this challenging operating environment, we have continued to focus on enhancing our capabilities to deliver superior services and value-added products.

Liquidity

Our enterprise liquidity requirements are dynamic. As such we utilize various sources, which are continuously monitored and adjusted as required based on the seasonality of our business and include 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 September 30, 2009, we had $660.8 million of cash and available credit comprised of $97.5 million of cash and $563.3 million in available credit inclusive of $270.0 million undrawn on our revolver, $9.9 million of other long-term debt, $275.0 million of notes payable to banks, and $8.4 million exclusively for letters of credit. On an ongoing basis we continue to modify the composition of our available liquidity maximizing business flexibility and minimizing costs.

Outlook

Flue cured tobacco remains in tighter global supply which continues to place upward pressure on green prices paid to farmers and in turn prices paid by our customers. World supplies of burley tobacco that appeared to be in greater supply at the beginning of this season due to the larger Malawi crop have tightened as the Malawi crop size estimates and quality have reduced. Our burley purchases in various markets are selling through, while prices paid to farmers, and by customers are increasing. We are proactively reaching out to our customer base regarding related cost increases and at the same time taking appropriate hedging actions. Improving operating efficiencies and evolving agronomy programs focused on increasing crop yields should also help to partially offset cost pressures going forward.

- 28 -