-----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, FKN84LqMTyPG2kpGHGAYzzbx7dZQMiTr70b/ziczOlXcJps6CxDaIcWpvGeypmby 9iRZZTShGEWEb7u32yLCWw== 0000916641-95-000157.txt : 19950511 0000916641-95-000157.hdr.sgml : 19950511 ACCESSION NUMBER: 0000916641-95-000157 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL CORP /VA/ CENTRAL INDEX KEY: 0000102037 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [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: 95535992 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 UNIVERSAL CORP. 10-Q Page 1 of 10 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 March 31, 1995 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 - 35,025,135 shares outstanding as of May 8, 1995 Page 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS THREE AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994 THREE MONTHS NINE MONTHS 1995 1994 1995 1994 SALES AND OTHER OPERATING REVENUES $974,862 $752,587 $2,594,631 $2,306,900 Costs and expenses Cost of goods sold 867,762 668,942 2,277,285 1,993,225 Selling, general and administrative 73,363 61,317 224,631 206,647 Interest 17,992 14,809 48,063 45,021 959,117 745,068 2,549,979 2,244,893 INCOME BEFORE INCOME TAXES AND OTHER ITEMS 15,745 7,519 44,652 62,007 Income taxes 6,138 259 16,437 17,745 Minority interests 983 262 1,145 566 INCOME FROM CONSOLIDATED OPERATIONS 8,624 6,998 27,070 43,696 Equity in net income of unconsolidated affiliates 1,680 2,345 4,051 4,316 INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 10,304 9,343 31,121 48,012 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (29,406) NET INCOME $10,304 $9,343 $31,121 $18,606 PER COMMON SHARE Income before cumulative effect of change in accounting principle $.29 $.26 $.89 $1.35 Cumulative effect of change in accounting principle (.83) Net income $.29 $.26 $.89 $.52 RETAINED EARNINGS - BEGINNING OF PERIOD $317,344 $341,523 Net income 31,121 18,606 Cash dividends declared ($.74-1995; $.70-1994) (25,918) (24,944) RETAINED EARNINGS - END OF PERIOD $322,547 $335,185 AVERAGE COMMON SHARES OUTSTANDING 35,009,358 35,631,878 Page 3 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, June 30, 1995 1994 ASSETS CURRENT Cash and cash equivalents $64,365 $164,520 Accounts and notes receivable 406,774 368,989 Accounts receivable - unconsolidated affiliates 33,225 28,113 Inventories at lower of cost or market: Tobacco 472,639 436,033 Lumber and building products 114,274 83,441 Agri-products 66,602 60,132 Other 14,299 8,753 Prepaid income taxes 6,806 10,095 Deferred income taxes 5,566 5,530 Other current assets 21,220 20,423 Total current assets 1,205,770 1,186,029 REAL ESTATE, PLANT AND EQUIPMENT - AT COST Land 32,266 22,607 Buildings 191,086 166,111 Machinery and equipment 365,557 350,426 588,909 539,144 Less accumulated depreciation 294,056 269,955 294,853 269,189 OTHER ASSETS Goodwill 127,185 124,286 Other intangibles 23,253 27,089 Investments in unconsolidated affiliates 40,902 26,298 Deferred income taxes 9,916 3,494 Other noncurrent assets 34,803 30,658 236,059 211,825 $1,736,682 $1,667,043 Page 4 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, June 30, 1995 1994 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT Notes payable and overdrafts $540,343 $531,209 Accounts payable 206,504 199,280 Accounts payable - unconsolidated affiliates 35,427 34,810 Customer advances and deposits 91,151 51,671 Accrued compensation 12,788 13,366 Provision for restructuring 7,000 15,500 Income taxes payable 8,931 6,217 Current portion long-term obligations 30,072 15,947 Total current liabilities 932,216 868,000 LONG - TERM OBLIGATIONS 285,325 298,117 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 48,027 48,969 OTHER LONG - TERM LIABILITIES 54,073 57,156 DEFERRED INCOME TAXES 22,447 12,361 MINORITY INTERESTS 5,673 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 35,025,135 shares (35,001,185 at June 30, 1994) 75,707 75,287 Retained earnings 322,547 317,344 Foreign currency translation adjustments (9,333) (15,157) Total shareholders' equity 388,921 377,474 $1,736,682 $1,667,043 Page 5 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED MARCH 31, 1995 AND 1994 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $31,121 $18,606 Adjustments to reconcile net income to net cash provided by operating activities 33,300 44,000 Cumulative effect of change in accounting principle 29,406 Changes in operating assets and liabilities net of effects from purchase of businesses (63,976) (219,032) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 445 (127,020) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (18,900) (19,000) Purchase of businesses (net of cash acquired) (60,800) (15,200) Other 1,500 NET CASH USED IN INVESTING ACTIVITIES (78,200) (34,200) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance (repayment) of short-term debt - net (3,800) 122,600 Repayment of short-term debt classified as long-term June 30,1993 (100,000) Issuance of long-term debt 6,800 115,000 Issuance (purchase) of common stock 200 (600) Dividends paid (25,600) (24,200) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (22,400) 112,800 Net decrease in cash and cash equivalents (100,155) (48,420) Cash and cash equivalents at beginning of period 164,520 119,693 CASH AND CASH EQUIVALENTS AT END OF PERIOD $64,365 $71,273 Page 6 UNIVERSAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1995 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 nine month period ended March 31, 1995 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) 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 Common Market subsidies and value-added taxes will be repaid if the crops are not exported or if the subsidies are not properly distributed to Common Market farmers. At March 31, 1995, total exposure under guarantees issued for banking facilities of unconsolidated affiliates was $21 million. Other contingent liabilities approximate $105 million and relate principally to Common Market guarantees. The Company considers the possibility of loss on any of these guarantees to be remote. 3) Last year's effective tax rate in the quarter was reduced by refunds from filing amended U.S. tax returns. The nine-month rate last year also included benefits realized from reversing prior years' taxes on foreign earnings deemed permanently reinvested. 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 March 31, 1995, payments of $10.5 million, primarily for severance and related costs of approximately 560 employees, had been recorded as a reduction of the restructuring provision. Page 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Working capital at March 31, 1995, declined to $274 million, a 14% drop from the level as of June 30, 1994. The decrease was primarily due to financing a lumber and building product acquisition with short-term borrowings. The acquired company had current assets of $39 million, non current assets of $36 million and total liabilities of $23 million. Generally, the March 31 consolidated balance sheet reflects lower working capital requirements for U.S. operations. At the same point in time Western European requirements are up due to purchasing and processing of the current crop. The combination of expansion and contraction of working capital needs in the different geographic regions mitigates the overall fluctuations in the balances of current assets and current liabilities from those at June 30. In July 1994, the Brazilian government implemented a new monetary policy. Subsequently, the U.S. dollar declined in value relative to the real, the new Brazilian currency. Since July 1, the purchasing power of the U.S. dollar in Brazil declined as the average monthly inflation rate of about 2.5% has been compounded by the strengthening of the real from parity at July 1 to a high point of U.S. $1 equivalent to .834 real. Unless the real devalues at a rate at least equal to the Brazilian inflation rate, there will be increased dollar costs. To date the increased costs of the tobacco crop being delivered, due to the stronger real and inflation will be somewhat alleviated by increased sales prices. The prospects for timely devaluation of the real are not strong. The overall potential earnings impact of Brazilian currency movements cannot be determined at this time due to the affect of future exchange and inflation rates and negotiation of final sales prices with customers on the remainder of the 1995 crop. The Company's liquidity position at March 31, 1995, remains strong. In the current year the Company has been implementing the restructuring plan announced in June 1994. Through March 31, 1995 the financial statements reflect payments of approximately $10.5 million made for severance and other costs related to the restructuring provision made last year. The Company's capital expenditures continue to be less than the depreciation of existing assets. The Statement of Cash Flows includes the net cash outlay for the aforementioned European lumber acquisition. The acquisition will strengthen the Company's overall competitive position in the European market. Results of Operations 'Sales and Other Operating Revenues' increased $222 million and $288 million in the quarter and nine-month period, respectively. Tobacco sales increased $178 million in the quarter. The balance of the increase in the quarter was due to an increase primarily in lumber and building products revenues, $18 million of which resulted from the inclusion of acquired operations. Agri-product revenues were up slightly in both the quarter and nine-month period. The nine-month period for fiscal year 1994 included approximately $33 million of revenues related to coffee trading activity which was discontinued late last year. A significant portion of the coffee revenue decline was offset by increased revenues from other trading activities. Gross profits were up by $23 million to $107 million in the quarter, but were flat year-to-date at approximately $317 million. Nine-month tobacco results for fiscal year 1994 included $10.5 million of inventory writedowns compared to $6.6 million in the current year. In the quarter the comparative writedown amounts were $5.1 million in 1994 and $3.9 million in Page 8 1995. The writedowns in 1995 were primarily related to dark air-cured operations. Gross profits on sales of oriental tobaccos improved in both the quarter and nine-month period. Despite the improvements in the quarter, year-to-date profits were down due to reduced tobacco gross profits resulting from a significant decline in margins on Brazilian 1994 and old crop sales experienced in the first six months of the year. Sales of old crop tobacco, that had been written down in the prior fiscal year, were nominally profitable and had the effect of reducing the overall profit margins reported. Margins on current crop sales were lower, despite benefits from restructuring, because of reduced overall volumes and continued pressure from customers on pricing. For the nine-month period, the volume of U.S. flue-cured and burley tobacco bought was up, while processing volumes were comparable with last year. Domestic gross profits were up in the quarter but down year-to-date due to a shift in processing mix to lower margin business. Lumber and building products gross profits improved in the quarter almost $9 million, the majority of which was generated by new outlets. Agri-product gross profits were up slightly in the quarter and nine-month period due to improvements in trading activities as well as comparative improvements realized from having discontinued coffee activities which reported before tax losses of $1.6 million in the prior year's nine-month period. 'Selling, general and administrative expenses' increased $12 million in the quarter and $18 million on a year-to-date basis. The fiscal 1995 year-to-date amounts included a $3.8 million provision against customer obligations related to Eastern Europe. In addition, approximately $4 million and $8 million of expenses were included in the quarter and year-to-date period resulting from the inclusion of the aforementioned lumber company acquisition. 'Interest expense' reflects the higher rates in the current year. 'Income Taxes' in the prior year's quarter were reduced by refunds from filing amended U.S. tax returns. The nine-month tax rate last year also included $2.1 million of benefits realized from reversing prior years' taxes on foreign earnings deemed permanently reinvested. The Company's consolidated income tax rate is affected by a number of factors; including, but not limited to: the mix of domestic and foreign earnings; subsidiary local tax rates; the Company's policy regarding repatriation of foreign earnings; and its ability to utilize foreign tax credits. Historically the Company has been able to credit foreign taxes paid against U.S. taxes on foreign earnings. Due to shifts in the mix of earnings and increases in foreign effective tax rates, the utilization of foreign tax credits may be limited in years subsequent to fiscal 1995. The limitation would have the effect of increasing the Company's consolidated tax rate. However, the Company through the implementation of a number of tax planning strategies is taking steps to minimize the potential impact in the future. Fiscal year 1995 earnings before the effect of accounting changes are not expected to match 1994's reported results. The restructuring program begun in fiscal 1994 will be completed before the end of fiscal 1995. The Company is currently reviewing a number of areas that may give rise to additional restructuring charges in the fourth quarter of fiscal 1995. The improved worldwide tobacco supply and demand relationship has led to favorable marketing conditions for next year's crops. In Brazil, 1995 crop prices are up and the crop appears to be selling well, while in Africa the markets have just opened. In the U.S., customer indications for the next year's crops exceed those of fiscal 1995. It is too early to forecast the full effects of the improved supply and demand relationship, but the significant oversupply which adversely affected results over the last two years has been corrected. Page 9 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: May 8, 1995 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) Page 10 EX-27 2 EXHIBIT 27. FINANCIAL DATA SCHEDULE
5 0000102037 UNIVERSAL CORPORATION 1,000 9-MOS JUN-30-1995 MAR-31-1995 64,365 0 439,999 0 667,814 1,205,770 588,909 294,056 1,736,682 932,216 285,325 75,707 0 0 313,214 1,736,682 2,594,631 2,594,631 2,277,285 2,277,285 224,631 0 48,063 44,652 16,437 31,121 0 0 0 31,121 .89 0
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