-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ssgZKieZWTDPwFlzcZsvpZX2XmKxjIGPVaS8YxA9mNpaJ7fp32WXPh0/0zSQi2S7 XQPT2T+1oUIvtLjPQTnPzQ== 0000916641-94-000139.txt : 19941116 0000916641-94-000139.hdr.sgml : 19941116 ACCESSION NUMBER: 0000916641-94-000139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-00652 FILM NUMBER: 94559217 BUSINESS ADDRESS: STREET 1: P O BOX 25099 STREET 2: 1501 N HAMILTON ST 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 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 1994 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) State or other jurisdiction of incorporation or organization - VIRGINIA I.R.S. Employer Identification Number - 54-0414210 Address of principal executive offices - 1501 NORTH HAMILTON STREET RICHMOND, VIRGINIA 23230 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 Common Stock, No par value - 35,007,585 shares outstanding as of November 8, 1994 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Three Months Ended September 30, 1994 and 1993 1994 1993 Sales and other operating revenues $656,024 $690,739 Costs and expenses Cost of goods sold 566,620 575,280 Selling, general and administrative 66,184 73,727 Interest 14,900 15,869 647,704 664,876 Income before income taxes and other items 8,320 25,863 Income taxes 2,802 7,918 Minority interests 120 (87) Income from consolidated operations 5,398 18,032 Equity in net income of unconsolidated affiliates 470 427 Income before cumulative effect of change in accounting principle 5,868 18,459 Cumulative effect of change in accounting principle (29,406) Net income $5,868 $(10,947) Per common share Income before cumulative effect of change in accounting principle $ .17 $ .52 Cumulative effect of change in accounting principle (.83) Net income $ .17 $(.31) Retained earnings - Beginning of period $317,344 $341,523 Net income 5,868 (10,947) Cash dividends declared ($.24-1994; $.22-1993) (8,401) (7,840) Retained earnings - End of period $314,811 $322,736 Average common shares outstanding 35,003,055 35,631,485 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, June 30, 1994 1994 ASSETS Current Cash and cash equivalents $67,658 $164,520 Accounts and notes receivable 469,207 368,989 Accounts receivable - unconsolidated affiliates 60,691 28,113 Inventories at lower of cost or market: Tobacco 524,981 436,033 Lumber and building products 92,413 83,441 Agri-products 56,689 60,132 Other 8,357 8,753 Prepaid income taxes 14,848 10,095 Deferred income taxes 4,480 5,530 Other current assets 20,595 20,423 Total current assets 1,319,919 1,186,029 Real estate, plant and equipment - at cost Land 22,865 22,607 Buildings 169,081 166,111 Machinery and equipment 350,865 350,426 542,811 539,144 Less accumulated depreciation 275,803 269,955 267,008 269,189 Other assets Goodwill 123,554 124,286 Other intangibles 25,797 27,089 Investments in unconsolidated affiliates 26,781 26,298 Deferred income taxes 3,881 3,494 Other noncurrent assets 31,156 30,658 211,169 211,825 $1,798,096 $1,667,043 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, June 30, 1994 1994 LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $589,131 $531,209 Accounts payable 206,749 199,280 Accounts payable - unconsolidated affiliates 17,565 34,810 Customer advances and deposits 135,803 51,671 Accrued compensation 11,632 13,366 Provision for restructuring 14,500 15,500 Income taxes payable 3,528 6,217 Current portion long-term obligations 17,850 15,947 Total current liabilities 996,758 868,000 Long - term obligations 301,264 298,117 Postretirement benefits other than pensions 48,656 48,969 Other long - term liabilities 55,252 57,156 Deferred income taxes 12,344 12,361 Minority interests 4,920 4,966 Shareholders' equity Preferred stock $100 par, 8% cumulative, authorized 75,000 shares, issued and outstanding 4 shares Additional preferred stock, no par value, authorized 5,000,000 shares, none issued or outstanding Common stock, no par value, authorized 50,000,000 shares, issued and outstanding 35,003,185 shares (35,001,185 at June 30, 1994) 75,309 75,287 Retained earnings 314,811 317,344 Foreign currency translation adjustments (11,218) (15,157) Total shareholders' equity 378,902 377,474 $1,798,096 $1,667,043
Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 1994 and 1993 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $5,868 $(10,947) Adjustments to reconcile net income to net cash provided by operating activities 8,700 13,000 Cumulative effect of change in accounting principle 29,406 Changes in operating assets and liabilities net of effects from purchase of businesses (157,830) (196,423) Net cash used in operating activities (143,262) (164,964) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (6,400) (8,400) Other 1,800 Net cash used in investing activities (4,600) (8,400) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance (repayment) of short-term debt - net 53,800 137,400 Repayment of short-term debt classified as long-term June 30,1993 (100,000) Issuance of long-term debt 5,600 115,000 Dividends paid (8,400) (7,840) Net cash provided by financing activities 51,000 144,560 Net decrease in cash and cash equivalents (96,862) (28,804) Cash and cash equivalents at beginning of period 164,520 119,693 CASH AND CASH EQUIVALENTS AT END OF PERIOD $67,658 $90,889 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1994 All figures contained herein are unaudited and stated in thousands of dollars 1) The Company's operating segments of domestic and foreign tobacco, lumber and building products and agri-products are seasonal by nature. Therefore, the results of operations for the three-month period ended September 30, 1994 are not necessarily indicative of results to be expected for the year ending June 30, 1995. All adjustments necessary to fairly state the results for such period have been included and were of a normal recurring nature. 2) At September 30, 1994, total exposure under guarantees issued for banking facilities of unconsolidated affiliates was $14 million. Other contingent liabilities approximate $134 million and relate principally to Common Market guarantees. 3) The lower effective tax rate for last year's quarter was due to the reversal of taxes accrued on non-repatriated earnings that were permanently reinvested in certain foreign subsidiaries and a greater proportion of earnings taxed at less than the full statutory rate. 4) The Company recognized in June 1994 a pre-tax restructuring charge of $17.5 million related to the consolidation of tobacco operations and a reduction in the number of employees. The charge included $16 million for the expected costs of severance payments related to approximately 700 employees throughout the Company. As of September 30, 1994, payments of $3 million, primarily for severance and related costs of approximately 250 employees, had been recorded as a reduction of the restructuring provision. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Current assets and current liabilities increased $134 million and $129 million, respectively, at September 30, 1994 compared to June 30, 1994, primarily due to the seasonal requirements of the Company's domestic tobacco operations, advances of agricultural materials to Brazilian farmers and advances made to purchase tobacco from unconsolidated affiliates. The June 30 balance sheet generally reflects the low point of working capital needs in the U.S. while those for South and Central America start to expand. By the end of the Company's first quarter, U.S. operations related to the current flue-cured crop are in full swing. The Company is carrying green tobacco purchases and unshipped processed tobacco in inventory and larger accounts receivable balances related to shipments made during the quarter. In Brazil, the first quarter reflects a combination of the working capital requirements of the prior and current crops, as well as advances to farmers for the next crop for which deliveries are expected to begin at the end of the fiscal year. The seasonal expansion of accounts receivable and inventories is supported by lines of credit and customer advances. Recently the Brazilian government implemented a new monetary policy. Subsequently the U.S. dollar declined in value relative to the real, the new Brazilian currency. The exchange ratio of the dollar to the real, in combination with the Company's net real monetary position could lead to material swings in foreign exchange gains and losses. In addition, if the real does not devalue at a rate in line with Brazilian inflation, there could be significant dollar cost increases for the next crop. The potential impact of these factors cannot be determined at this time. The Company's liquidity position at September 30, 1994, remains strong. The Company has also reduced its capital expenditure requirements over the last year and continues to do so in the current year. During the current quarter the Company acquired a major Dutch softwood distributor that will strengthen its position in the industry. Results from this acquisition will begin to appear in the second quarter. The acquisition was financed with short-term borrowings. Results of Operations 'Sales and Other Operating Revenues' declined $35 million in the quarter, primarily due to reduced Brazilian current crop sales with lower average sales prices. Domestic tobacco sales and operating revenues were comparable to last year's quarter. Lumber and building product sales in the quarter were up due to an increase in the number of distribution outlets resulting from the acquisition of Steffex in fiscal 1994. Agri-product revenues were down slightly due to the Company's decision last year to discontinue coffee trading activity. Gross profits in the quarter declined $26 million to 13.6% of gross revenues compare to 16.7% in last year's quarter. Operations in Brazil were a dominant factor in the decline. A number of shipments from Brazil during the quarter consisted of old crop stocks, which had been written down in the previous year. These sales were nominally profitable and had the effect of reducing the overall profit margins reported. In addition, profits from dark tobacco operations were down due to a poor crop in Northern Brazil and increased competition for Indonesian leaf styles. Volumes of the current U.S. flue-cured crop bought and processed increased in the quarter on a better quality crop than last year's. Although overall tobacco results were disappointing, the world markets are improving. Production of leaf at the farmer level is more nearly in line with demand. Gross profits in lumber and building products for the quarter were lower than the same period last year. In the prior year the Company was able to take advantage of rising raw material and finished goods costs, by selling lower cost inventories on hand. Agri-product gross profits were down slightly in the quarter as the gains realized from the discontinuance of coffee trading were principally offset by a decline in tea earnings caused by unfavorable market conditions and less blending activity. 'Selling, general and administrative expenses' declined $7.5 million or over 10% in the quarter on reduced sales-related expenses. This decrease was partially offset by the inclusion of Steffex's selling, general and administrative expenses in the first quarter of fiscal 1995. 'Interest expense' reflects the positive impact of a reduction in inventory levels since September 1993 in certain geographic areas. 'Income Taxes' in the prior year's quarter reflected an effective tax rate that was approximately three percentage points lower than that of fiscal 1995 due to the reversal of taxes previously accrued on earnings from certain foreign subsidiaries and a greater proportion of earnings taxed at less than full statutory rates. Currently, conditions in the world tobacco markets are improving. Inventory levels are lower and tobacco production is more nearly in line with demand. Because of its commitment to cost effectiveness and the advantage of improving market conditions, management is cautiously optimistic that earnings for the full fiscal year will meet or exceed the $50 million that was earned last year before net of tax restructuring charges and an accounting change. As reported in the 1994 annual report to shareholders, the Company adopted a restructuring plan for its tobacco operations in June 1994. As of the date of this report there have been no material changes to the plan or its underlying assumptions. See Note 4 for more information. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on October 25, 1994, the following proposals were voted on: (a) To approve amendments to the Universal Corporation 1989 Executive Stock Plan to provide that (i) no individual may be granted Stock Incentives in any calendar year for more than 200,000 shares of Common Stock and (ii) the exercise price for a stock option shall not be less than the fair market value of a share of Common Stock on the date of grant. The proposal was approved with the following vote: Shares Voted "FOR" Shares Voted "AGAINST" Shares "ABSTAINING" 27,670,244 1,790,653 382,319 (b) To approve the Universal Corporation 1994 Stock Option Plan for Non- Employee Directors. The proposal was approved with the following vote: Shares Voted "FOR" Shares Voted "AGAINST" Shares "ABSTAINING" 26,620,211 2,862,197 360,808 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 8, 1994 UNIVERSAL CORPORATION (Registrant) / s / Hartwell H. Roper Hartwell H. Roper, Vice President and Chief Financial Officer / s / William J. Coronado William J. Coronado, Controller (Principal Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 0000102037 UNIVERSAL CORPORATION 1,000 3-MOS JUN-30-1995 SEP-30-1994 67,658 0 529,898 0 682,440 1,319,919 542,811 275,803 1,798,096 996,758 301,264 75,309 0 0 303,593 1,798,096 656,024 656,024 566,620 566,620 66,184 0 14,900 8,320 2,802 5,868 0 0 0 5,868 .17 .17
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