-----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, O9kNe5oZgAJdH6u3VIXj51glGcb1LFWV7PXFiTsDdQuEt3Y1T7FDZpwSOZM8M1ip kEmn/6tLoBq7P1ULnEtXgw== 0000916641-97-000459.txt : 19970509 0000916641-97-000459.hdr.sgml : 19970509 ACCESSION NUMBER: 0000916641-97-000459 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 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: 97597815 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 3RD QUARTER 10-Q Page 1 of 12 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 March 31, 1997 -------------- 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 (I.R.S. Employer of 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 ------- -------- Common Stock, No par value - 35,085,332 shares outstanding as of May 7, 1997 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, 1997 and 1996
Three Months Nine Months 1997 1996 1997 1996 ----------------- ----------------- --------------- --------------- Sales and other operating revenues $1,013,715 $942,587 $3,171,776 $2,817,870 Costs and expenses Costs of goods sold 871,895 811,723 2,757,278 2,448,556 Selling, general and administrative 83,123 77,258 231,658 219,135 Interest 15,243 19,474 49,498 51,786 ----------------- ----------------- --------------- -------------- 970,261 908,455 3,038,434 2,719,477 ----------------- ----------------- --------------- -------------- Income before income taxes and other items 43,454 34,132 133,342 98,393 Income taxes 17,381 13,639 53,336 39,348 Minority interests 1,694 2,752 5,643 5,617 ----------------- ----------------- --------------- -------------- Income from consolidated operations 24,379 17,741 74,363 53,428 Equity in net income of unconsolidated 3,235 686 4,675 2,591 affiliates ----------------- ----------------- --------------- -------------- Net income $27,614 $ 18,427 $79,038 $56,019 ================= ================= =============== ============== Earnings per common share $.79 $.53 $2.25 $1.60 ================= ================= =============== ============== Retained earnings - Beginning of period $360,273 $323,595 Net income 79,038 56,019 Cash dividends declared ($.785-1997; $.760-1996) (27,176) (26,629) --------------- -------------- Retained earnings - End of period $412,135 $352,985 =============== ============== Average common shares outstanding 35,068,788 35,035,516
3 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS
March 31, June 30, 1997 1996 ---------------- ----------------- ASSETS Current Cash and cash equivalents $133,366 $214,782 Accounts and notes receivable 597,352 384,278 Accounts receivable - unconsolidated affiliates 15,156 17,843 Inventories - at lower of cost or market: Tobacco 621,617 490,557 Lumber and building products 109,368 106,916 Agri-products 64,364 71,145 Other 13,100 15,373 Prepaid income taxes 2,539 5,867 Deferred income taxes 5,993 5,984 Other current assets 20,664 16,215 ---------------- ----------------- Total current assets 1,583,519 1,328,960 Real estate, plant and equipment - at cost Land 33,775 33,786 Buildings 220,202 218,012 Machinery and equipment 431,334 414,141 ---------------- ----------------- 685,311 665,939 Less accumulated depreciation 370,019 345,549 ---------------- ----------------- 315,292 320,390 Other assets Goodwill 118,523 122,579 Other intangibles 24,887 26,726 Investments in unconsolidated affiliates 30,224 27,191 Deferred income taxes 13,440 13,029 Other noncurrent assets 74,893 50,638 ---------------- ----------------- 261,967 240,163 ---------------- ----------------- $2,160,778 $1,889,513 ================ =================
4 Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS
March 31, June 30, 1997 1996 --------------- --------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $595,092 $551,667 Accounts payable 305,157 222,154 Accounts payable - unconsolidated affiliates 11,564 6,813 Customer advances and deposits 276,496 122,894 Accrued compensation 14,659 18,245 Income taxes payable 20,201 24,061 Current portion long-term obligations 32,592 83,348 --------------- --------------- Total current liabilities 1,255,761 1,029,182 Long - term obligations 296,735 309,543 Postretirement benefits other than pensions 45,504 46,268 Other long - term liabilities 42,475 44,920 Deferred income taxes 27,755 13,846 Minority interests 30,294 28,449 Shareholders' equity 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 35,085,332 shares (35,056,357 at June 30,1996) 76,336 76,053 Retained earnings 412,135 360,273 Foreign currency translation adjustments (26,217) (19,021) --------------- --------------- Total shareholders' equity 462,254 417,305 --------------- --------------- $2,160,778 $1,889,513 =============== ===============
5 Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended March 31, 1997 and 1996
1997 1996 ------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $79,038 $56,019 Adjustments to reconcile net income to net cash provided by operating activities 51,000 34,600 Changes in operating assets and liabilities net of effects from purchase of businesses (133,934) (21,257) ------------- ---------------- Net cash provided by (used in) operating activities (3,896) 69,362 ------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (35,700) (25,500) Purchase of businesses (net of cash acquired) (17,600) Other (2,100) ------------- ---------------- Net cash used in investing activities (35,700) (45,200) ------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of (repayment) short-term debt - net 43,400 (80,300) Repayment of long-term debt (76,900) (27,400) Issuance of long-term debt 18,600 117,200 Proceeds from minority investment in a subsidiary 10,000 Issuance of common stock 280 50 Dividends paid (27,200) (26,500) ------------- ---------------- Net cash provided by (used in) financing activities (41,820) (6,950) ------------- ---------------- Net decrease in cash and cash equivalents (81,416) 17,212 Cash and cash equivalents at beginning of period 214,782 158,093 ------------- ---------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $133,366 $175,305 ============= ================
6 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 All figures contained herein are unaudited and stated in thousands of dollars, except per share data and the number of average common shares outstanding. 1) The operations of segments; domestic and foreign tobacco, lumber and building products and agri-products are seasonal. Therefore, the results of operations for the nine-month period ended March 31, 1997 are not necessarily indicative of results to be expected for the year ending June 30, 1997. 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, 1997, total exposure under guarantees issued for banking facilities of unconsolidated affiliates was $6 million. Other contingent liabilities approximate $48 million and relate principally to Common Market guarantees. The Company considers the possibility of loss on any of these guarantees to be remote. 3) Amounts in the prior year's statement have been reclassified to be reported on a consistent basis with the current year's presentation. 4) In the first quarter of fiscal year 1997 the Company adopted Statement of Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The adoption of this standard did not and is not expected to have a material impact on results of operations or financial position. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Working capital at March 31, 1997, was $328 million compared to $300 million at June 30, 1996. The net change in working capital was accounted for by increased tobacco inventory and accounts receivable, net of higher customer deposits and accounts payable supporting the increase in current assets. Within domestic tobacco operations, the June 30 balance sheet normally reflects the low point in the annual operating cycle. At March 31, domestic tobacco inventories represent processed tobacco awaiting shipment to customers. Inventory levels fluctuate from quarter to quarter depending on customer requirements. While the inventory of domestic tobacco operations is normally higher at March compared to June, major foreign tobacco origins such as Africa and Brazil are lower. However, a portion of the increase in accounts receivable represents advances of funds to farmers for fertilizer and seeds that will be recovered when the farmers deliver their crops in the upcoming quarter. Generally, the Company does not purchase tobacco in the U.S. on a speculative basis; thus the increase in inventory, related to domestic inventories, for the most part represents tobacco that has been committed to customers. Generally the Company's international tobacco operations conduct business in U.S. 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 liquidity and capital resources of the Company at March 31, 1997 remain adequate to support its businesses. In January 1997, the Company repaid at maturity $50 million of medium term notes that carried an average interest rate of 7.3%. Results of Operations 'Sales and Other Operating Revenues' increased $71 million or 7.5% in the quarter. In the quarter higher tobacco sales were partially offset by lower lumber and building product sales that reflected cold weather in Holland, an unfavorable economic climate in Belgium and a stronger U.S. dollar. Year-to-date revenues were up $354 million or over 12.5% compared to last year. All three operating segments had higher year-to-date sales, with tobacco operations accounting for over 85% of the increase in the current year. Tobacco sales continue to reflect improved market conditions, while lumber and building product sales showed improvement in regional and industrial sales. Operating profits, before interest, in the quarter increased almost 10% to $59 million, principally due to improvements realized in foreign tobacco. The year-to-date operating profit increase of over 20% to $183 million benefited from both improved foreign tobacco and lumber operations. Foreign tobacco operating results were strong due to a combination of higher volumes and margins plus benefits from the company's continuing cost reduction plan. Dark tobacco operations reported improved operating results on increased sales and margins. Demand for dark air-cured tobacco exceeds supply as manufacturers seek to keep pace with the significant increase in cigar consumption in the U.S. and, to a lesser extent, abroad. Agri-product earnings comparisons were flat for both the quarter and for the nine-month period. While tea results were lower on margin pressure and an inadequate supply of higher grade teas, confectionery sunflower seeds and spices performed well. 8 'Selling, General and Administrative Expenses' for the year were up less than 6% reflecting increased foreign tobacco shipments. Interest expense was down slightly year-to-date reflecting increased financing by customer advances. In the quarter interest expense includes a reclassification of approximately $2.7 million, which reduced both revenues and interest expense but had no effect on earnings. The outlook for next year is positive. Customer interest appears to be strong for tobaccos in Brazil and Africa where marketing of the 1996/97 crops is currently in progress. The results from these crops will be reflected in fiscal year 1998. Larger flue-cured and burley crops are anticipated in the United States, which should enable the company to purchase and process larger leaf volumes and improve profitability for the coming fiscal year. The lumber distribution and agri-products segments continue to perform well, and company-wide efforts to reduce costs and improve efficiency are producing positive results. Reference is made to Items 1 and 7 and the Notes to the Consolidated Financial Statements in Item 8 of the Company's Form 10-K for the fiscal year ended June 30, 1996 and to Item 2 "Forward Looking Statements" on pages 8 through 11 of the Company's Form 10-Q for the first quarter ended September 30, 1996, regarding important factors that would 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. 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 7, 1997 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) 10 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 12. Ratio of Earnings to Fixed Charges 27. Financial Data Schedule EX-12 2 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12. Universal Corporation and Subsidiaries RATIO OF EARNINGS TO FIXED CHARGES Nine Months Ended March 31, 1997 and 1996
1997 1996 --------------------- ------------------ Pretax income from continuing operations $133,342 $98,393 Pretax income of unconsolidated affiliates 6,386 3,875 Fixed Charges 50,154 52,454 --------------------- ------------------ Earnings $189,449 $154,722 ===================== ================== Interest $49,498 $51,786 Interest of unconsolidated affiliates 400 493 Debt discount amortization 256 175 --------------------- ------------------ Fixed Charges $50,154 $52,454 ===================== ================== Ratio of Earnings to Fixed Charges 3.8 2.9 ===================== ==================
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000102037 UNIVERSAL CORPORATION 1,000 9-MOS JUN-30-1996 MAR-31-1997 133,366 0 612,508 0 808,449 1,583,519 685,311 370,019 2,160,778 1,255,761 296,735 0 0 76,336 385,918 2,160,778 3,171,776 3,171,776 2,757,278 2,757,278 231,658 0 49,498 133,342 53,336 79,038 0 0 0 79,038 2.25 0
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