-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ee6n+WCxxLNwpR+VDbuQ/xAWsDI/WWTOo/InUjPyYnL6/Irpc1LHFfSGK70e32aX vAR8ajBcA08HRF18wxxH5w== /in/edgar/work/20001101/0000916641-00-001553/0000916641-00-001553.txt : 20001106 0000916641-00-001553.hdr.sgml : 20001106 ACCESSION NUMBER: 0000916641-00-001553 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL CORP /VA/ CENTRAL INDEX KEY: 0000102037 STANDARD INDUSTRIAL CLASSIFICATION: [5150 ] IRS NUMBER: 540414210 STATE OF INCORPORATION: VA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00652 FILM NUMBER: 751286 BUSINESS ADDRESS: STREET 1: 1501 NORTH HAMILTON STREET STREET 2: PO BOX 25099 CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 8043599311 MAIL ADDRESS: STREET 1: PO BOX 25099 CITY: RICHMOND STATE: VA ZIP: 23260 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL LEAF TOBACCO CO INC DATE OF NAME CHANGE: 19880314 10-Q 1 0001.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Period Ended September 30, 2000 ------------------ OR [ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Transition Period From_____________to_______________ Commission file number 1-652 ----- UNIVERSAL CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter) VIRGINIA 54-0414210 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1501 North Hamilton Street, Richmond, Virginia 23230 - -------------------------------------------------- ---------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code - (804) 359-9311 --------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ ----- Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock as of the latest practicable date: Common Stock, No par value - 27,519,565 shares outstanding as of October 27, 2000 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Universal Corporation and Subsidiaries UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 2000 1999 ---------------------- (In thousands of dollars, except share and per share data) Sales and other operating revenues $650,765 $787,006 Costs and expenses Cost of goods sold 529,182 661,051 Selling, general and administrative expenses 69,647 74,374 ---------------------- Operating Income 51,936 51,581 Equity in pretax earnings of unconsolidated affiliates 1,349 6,596 Interest expense 14,829 11,776 ---------------------- Income before income taxes and other items 38,456 46,401 Income taxes 14,998 16,704 Minority interests (1,507) 195 ---------------------- Net Income $ 24,965 $ 29,502 ============================================================================================================== ====================== Earnings per common share $ 0.89 $ 0.93 ============================================================================================================== ====================== Diluted earnings per share $ 0.89 $ 0.93 ============================================================================================================== Retained earnings - beginning of period $499,490 $510,123 Net income 24,965 29,502 Cash dividends declared ($.31 - 2000, $.30 - 1999) (8,421) (9,313) Purchase of common stock (9,573) (24,333) ---------------------- Retained earnings - end of period $506,461 $505,979
See accompanying notes. 2 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands of dollars)
September 30, June 30, 2000 2000 ---- ---- ASSETS Current Cash and cash equivalents $ 64,767 $ 61,395 Accounts receivable 353,307 358,897 Advances to suppliers 59,900 52,383 Accounts receivable - unconsolidated affiliates 5,480 12,573 Inventories - at lower of cost or market: Tobacco 551,906 379,504 Lumber and building products 80,638 77,096 Agri-products 70,818 73,024 Other 33,907 33,068 Prepaid income taxes 5,829 9,283 Deferred income taxes 8,475 9,008 Other current assets 25,795 21,919 ------------------------- Total current assets 1,260,822 1,088,150 Property, plant and equipment - at cost Land 27,832 27,377 Buildings 243,941 245,570 Machinery and equipment 516,527 505,323 ------------------------- 788,300 778,270 Less accumulated depreciation 440,673 430,925 ------------------------- 347,627 347,345 Other assets Goodwill 112,729 113,498 Other intangibles 16,648 17,145 Investments in unconsolidated affiliates 78,023 77,046 Deferred income taxes 33,176 33,606 Other noncurrent assets 67,750 71,314 ------------------------- 308,326 312,609 ------------------------- $1,916,775 $1,748,104 ======================================================================================================
See accompanying notes. 3 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands of dollars)
September 30, June 30, 2000 2000 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $ 456,969 $ 356,283 Accounts payable 263,752 256,666 Accounts payable - unconsolidated affiliates 5,228 10,169 Customer advances and deposits 167,355 91,414 Accrued compensation 12,321 20,997 Income taxes payable 41,716 26,682 Current portion of long-term obligations 100,960 121,023 -------------------------- Total current liabilities 1,048,301 883,234 Long-term obligations 223,067 223,262 Postretirement benefits other than pensions 41,800 41,295 Other long-term liabilities 55,514 53,948 Deferred income taxes 8,719 11,749 Minority interests 35,339 36,837 Shareholders' equity Preferred stock, no par value, authorized 5,000,000 shares none issued or outstanding Common stock, no par value, authorized 100,000,000 shares, issued and outstanding 27,737,797 shares (28,146,697 at June 30, 2000) 65,333 66,274 Retained earnings 506,461 499,490 Accumulated other comprehensive income (67,759) (67,985) -------------------------- Total shareholders' equity 504,035 497,779 -------------------------- $1,916,775 $1,748,104 ========================================================================================================
See accompanying notes. 4 Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended September 30, 2000 and 1999 (In thousands of dollars)
2000 1999 ---- ----- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 24,965 $ 29,502 Adjustments to reconcile net income to net cash provided by operating activities 9,500 6,700 Changes in operating assets and liabilities (76,893) 45,826 -------------------------- Net cash provided (used) by operating activities (42,428) 82,028 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (16,000) (14,000) Proceeds from sale of equity investment 22,000 -------------------------- Net cash provided (used) in investing activities (16,000) 8,000 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance (repayment) of short-term debt, net 100,700 (45,000) Repayment of long-term debt (20,000) (20,000) Purchases of common stock (10,500) (25,700) Dividends paid (8,400) (9,300) -------------------------- Net cash provided (used) in financing activities 61,800 (100,000) Net increase in cash and cash equivalents 3,372 (9,972) Cash and cash equivalents at beginning of year 61,395 92,784 -------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 64,767 $ 82,812 ==================================================================================================================
See accompanying notes. 5 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 All figures contained herein are unaudited. 1). Universal Corporation, with its subsidiaries (the "Company"), has seasonal operations in tobacco, lumber and building products, and agri-products. Therefore, the results of operations for the periods ended September 30, 2000, are not necessarily indicative of results to be expected for the year ending June 30, 2001. All adjustments necessary to state fairly the results for such period have been included and were of a normal recurring nature. Certain amounts in prior year statements have been reclassified to conform to the current year's presentation. 2). Contingent liabilities: the Company provides guarantees for seasonal pre- export crop financing for some of its subsidiaries and unconsolidated affiliates. In addition, certain subsidiaries provide guarantees that ensure that value-added taxes will be repaid if the crops are not exported. At September 30, 2000, total exposure under guarantees issued for banking facilities of unconsolidated affiliates and suppliers was approximately $58 million. Other contingent liabilities approximate $19 million. The Company considers the possibility of loss on any of these guarantees to be remote. The Company's Brazilian subsidiaries have been notified by the tax authorities of proposed adjustments to the income tax returns filed in prior years. The total proposed adjustments, including penalties and interest, approximate $23 million. The Company believes the Brazilian tax returns filed were in compliance with the applicable tax code. The numerous proposed adjustments vary in complexity and amount. While it is not feasible to predict the precise amount or timing of each proposed adjustment, the Company believes that the ultimate disposition will not have a material adverse effect on the Company's consolidated financial position or results of operations. 3). On July 1, 2000, the Company adopted Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities". The adoption of this standard did not have a material impact on the quarterly consolidated financial position or results of operations for the Company. 4). In the fourth quarter of fiscal year 2000, plans were approved to reduce the Company's U. S. cost structure including the consolidation of tobacco processing facilities and a corresponding reduction in the number of employees. The consolidated statement of income included an $11 million pretax charge related to the plan in fiscal year 2000. The charge includes $7 million of severance costs related to 108 employees in purchasing, processing and sales. In the first quarter of fiscal year 2001, $2.8 million in cash payments were made to 105 employees. The remaining severance payments will be made in fiscal year 2001. No additional restructuring costs were recorded during the quarter. 5). The following table sets forth the computation of earnings per share and diluted earnings per share. 6
Three months ended September 30, 2000 1999 ---- ---- Net income (in thousands of dollars) $ 24,965 $ 29,502 Denominator for earnings per share: Weighted average shares 28,055,105 31,692,282 Effect of dilutive securities: Employee stock options 5,460 15,662 ----------- ----------- Denominator for diluted earnings per share 28,060,565 31,707,944 Earnings per share $ 0.89 $ 0.93 =========== =========== Diluted earnings per share $ 0.89 $ 0.93 =========== ===========
6). Comprehensive Income:
Three Months Ended September 30, (In thousands of dollars) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------- Net income $ 24,965 $ 29,502 Foreign currency translation adjustment 226 821 ----------- ----------- Comprehensive income $ 25,191 $ 30,323 =========== ============
7). Segments are based on product categories. The Company evaluates performance based on segment operating income and equity in pretax earnings of unconsolidated affiliates.
THREE MONTHS ENDED SEPTEMBER 30, (In thousands of dollars) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------- SALES AND OTHER OPERATING REVENUES Tobacco $ 402,245 $ 513,773 Lumber/building products 129,662 142,021 Agri-products 118,858 131,212 ---------------------------------- Consolidated total $ 650,765 $ 787,006 - -------------------------------------------------------------------------------- OPERATING INCOME Tobacco $ 46,780 $ 48,606 Lumber/building products 7,650 8,810 Agri-products 3,757 5,058 - ----------------------------------------------------------------------------------------------------------------------------- Total 58,187 62,474 Less: Corporate expenses 4,902 4,297 Equity in pretax earnings of unconsolidated affiliates 1,349 6,596 ---------------------------------- Consolidated total $ 51,936 $ 51,581 =============================================================================================================================
7 7). Short- and Long-Term-Debt: Subsequent to the end of the quarter, the Company issued in the public market $63 million in 8% medium-term notes due on October 2, 2003. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- Working capital at September 30, 2000 was $213 million compared to $205 million at June 30, 2000. The slight increase in working capital was the net result of an increase in current assets of $173 million, primarily from a seasonal increase in tobacco inventories, which was offset by an increase in current liabilities of $165 million. The working capital accounts fluctuate between September and June primarily due to seasonality. In the United States, tobacco working capital needs are normally at their lowest point at June 30. In the first quarter of the fiscal year, the United States flue-cured tobacco markets open and tobacco is purchased and shipped to factories for processing. This is reflected at September 30 in increased tobacco inventories of $172 million along with increases in the total of notes payable and customer advances of $177 million. The mix of notes payable and customer advances is dependent on both the company's and its customers' borrowing capabilities, interest rates and exchange rates. The company does not purchase material quantities of tobacco in the United States on a speculative basis; thus the respective increase in United States inventory represents tobacco that has been committed to customers. Generally, the company's international tobacco operations conduct business in United States dollars, thereby limiting foreign exchange risk to local production and overhead costs. Agri-product and lumber operations enter into foreign exchange contracts to hedge firm purchase and sales commitments for terms of less than six months. Interest rate risk is limited because customers in the tobacco business usually pre-finance purchases or pay market rates of interest for inventory purchased for their accounts. The company continues its share purchase programs, which have been in progress since 1998. As of October 24, 2000, the company had purchased 8.5 million shares of Universal common stock at a total price of approximately $227 million. The programs provide for purchases of up to $300 million. Currently, about 27.5 million shares are outstanding. During the quarter, Universal registered with the Securities and Exchange Commission $400 million in debt securities. The securities are intended to be issued over time as medium-term notes as an additional source of liquidity for general corporate purposes. Pursuant to that medium-term note program, on October 2, 2000, the company issued $63 million in 8% notes due October 2, 2003. The proceeds were used to retire short-term debt. The liquidity and capital resources of the company at September 30, 2000 remain adequate to support the company's foreseeable operating needs. Results of Operations - --------------------- `Sales and Other Operating Revenues' decreased $136 million or 17% in the first quarter of fiscal year 2001. A decline in tobacco revenues accounted for $112 million of the decrease while lumber and building products revenues were down $12 million and agri-products revenues declined $12 million. The lower tobacco revenues resulted from a smaller flue-cured crop in the United States and corresponding reduced customer orders and high carryover shipments of African and dark tobaccos from fiscal year 1999 into the first quarter of last year. The reduction 9 in lumber and building products revenues was primarily related to the stronger U.S. dollar. Fiscal year 2001 segment operating income in the first quarter was down 7% to $58 million compared to the same period last year at $62 million, however, fiscal 2000 included a one-time gain of $4 million from the sale of an interest in a tobacco joint venture. Tobacco segment operating income (excluding the gain) was up almost 5% to $47 million. Volumes in South American and Western Europe were ahead of last year's pace in the quarter. Shipments of African tobacco and dark tobaccos were higher in the first quarter of fiscal 2000, reflecting carryover shipments from the prior fiscal year. The company expects shipments from Zimbabwe's large crop to take place late in this fiscal year. In addition, fiscal year 2001 earnings from an oriental tobacco joint venture declined due to similar customer requested shipment changes last year. Lumber and building products operating income declined 13% in the first quarter compared to the same period last year as the sharp decline in the Euro/guilder exchange rate more than offset improved local currency sales. Construction activity in the Netherlands continues to be strong although there are some indications that capacity constraints, particularly a shortage of skilled labor, may affect future growth. Operating income for the agri-products business was down 26% in the first quarter. Intense competition in confectionery sunflower seeds and cashew nuts continued to negatively influence results, while tea volumes and margins were somewhat improved. Interest expense increased in the first quarter primarily due to higher short-term rates as a result of the Federal Reserve policy of raising interest rates over the past year. The company's estimated effective tax rate in fiscal year 2001 is approximately 39% compared to 36% last year due to a combination of reduced domestic income and higher effective tax rates on foreign income. World leaf markets appear to be improving as cigarette sales recover in a number of areas and surplus leaf inventories move into the market. The company continues to be concerned about the situation in the United States where declining crops and non-competitive prices are affecting sales volumes. Despite the evident flaws in the leaf tobacco support price program, no clear consensus for change has yet emerged and it is doubtful that meaningful reforms will be enacted in time to reverse the current United States leaf market decline. The company generally expects the lower U.S. volumes to be offset by increased business in international markets. It is likely that movement of volumes from the United States to international operations will affect quarterly comparisons in the future and volatility, resulting from particular crop conditions and shipment timing issues, will continue to make prediction of quarterly earnings difficult. A move to direct contracting with tobacco farmers in the United States is appearing increasingly likely, which could lead to the end of the U. S. auction system and create new difficulties for export customers. The company is well prepared for this outcome should it occur. The company continues to pursue its fundamental strategy and despite challenging conditions, particularly in the United States, expects solid performance for the remainder of the fiscal year. Readers are cautioned that the statements contained herein regarding the Company's future business opportunities and prospects, including expected earnings and expectations for the company's performance are forward-looking statements based upon management's current knowledge and assumptions about future events, including anticipated levels of production of tobacco and demand for tobacco and the company's products and services, costs incurred in providing these products and services, timing of shipments to customers and market structure. Lumber earnings could also be affected by a number of factors, including the translation effects of currency rate changes and unusual weather conditions in the 10 Netherlands. Actual results, therefore, could vary from those expected. Reference is made to Items 1 and 7 and the Notes to the Consolidated Financial Statements in Item 8 of the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, regarding important factors that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of the company, including forward-looking statements contained in Item 2 of this Form 10-Q. 11 PART II. OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The Company held its annual meeting of shareholders on October 24, 2000, to elect four directors to serve three-year terms and one director to serve a two- year term. The names of the five directors and the number of votes cast for them are listed below: Name of Director Votes for Votes Withheld - ---------------- --------- -------------- Joseph C. Farrell (three year) 24,007,093 136,162 Henry H. Harrell (three year) 23,984,934 158,321 Walter A. Stosch (three year) 23,991,231 152,024 Eugene P. Trani (three year) 23,982,458 160,797 Eddie N. Moore, Jr. (two year) 24,000,281 142,974 No broker non-votes were recorded with regard to the election of any of the five directors listed above. The directors whose terms continued after the meeting were William W. Berry, Ronald E. Carrier, Hubert R. Stallard, Charles H. Foster, Jr., Richard G. Holder, Allen B. King and Jeremiah J. Sheehan. Item 6. Exhibits and Reports on Form 8-K a. Exhibits 12 Ratio of earnings to fixed charges. 27 Financial Data Schedule* b. Reports on Form 8-K. Report on Form 8-K dated July 27, 2000 filing press release announcing earnings expectations. Report on Form 8-K/A dated August 11, 2000 filing press release reporting fiscal year earnings and press release announcing quarterly dividend. Report on Form 8-K dated September 6, 2000 filing Distribution Agreement dated September 6, 2000. * Filed herewith 12 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 1 , 2000 UNIVERSAL CORPORATION ------------------------------------- (Registrant) /s/ Hartwell H. Roper ------------------------------------- Hartwell H. Roper, Vice President and Chief Financial Officer /s/ William J. Coronado ------------------------------------- William J. Coronado, Vice President and Controller (Principal Accounting Officer) 13 EX-12 2 0002.txt RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12. RATIO OF EARNINGS TO FIXED CHARGES
(in thousands of dollars) For the Three Months ended For the years ended June 30, September 30, 2000 2000 1999 1998 1997 ------------------ -------- -------- -------- -------- Pretax income from continuing operations $ 37,107 $177,055 $197,719 $231,138 $171,941 Distribution of earnings from unconsolidated affiliates - 4,220 840 602 1,509 Fixed charges 15,121 57,907 57,744 64,881 65,827 ------------------ -------- -------- -------- -------- Earnings $ 52,228 $239,182 $256,303 $296,621 $239,277 Interest $ 14,829 $ 56,869 $ 56,837 $ 63,974 $ 64,886 Amortization of premiums and other 292 1,038 907 907 941 ------------------ -------- -------- -------- -------- Fixed Charges $ 15,121 $ 57,907 $ 57,744 $ 64,881 $ 65,827 Ratio of Earnings to Fixed Charges 3.45 4.13 4.44 4.57 3.63
EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 0000102037 UNIVERSAL CORPORATION 1,000 3-MOS JUN-30-2001 SEP-30-2000 64,767 0 353,307 0 737,269 1,260,822 788,300 440,673 1,916,775 1,048,301 223,067 0 0 65,333 438,702 1,916,775 650,765 650,765 531,662 531,662 0 0 14,829 38,456 14,998 24,965 0 0 0 24,965 .89 .89
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