-----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, JjbZ8WwIYBEEy5v4agqP5Q05owpDJ7BwW91kX2ga+LY5Lq58EqfqQ6XySvN4uQb/ A+s1BJIZI7KuJHf6DOtxtA== 0001127264-03-000120.txt : 20031028 0001127264-03-000120.hdr.sgml : 20031028 20031028151854 ACCESSION NUMBER: 0001127264-03-000120 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031028 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031028 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00652 FILM NUMBER: 03960849 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 8-K 1 univ_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 28, 2003 (Date of earliest event reported) UNIVERSAL CORPORATION (Exact Name of Registrant as Specified in its Charter) Virginia 1-652 54-0414210 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 1501 North Hamilton Street 23230 Richmond, Virginia (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code: (804) 359-9311 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. No. Description --- ----------- 99.1 Press release dated October 28, 2003 announcing earnings for period ended September 30, 2003.* Item 12. Results of Operations and Financial Condition. On October 28, 2003, Universal Corporation issued a press release announcing its financial results for the quarter ended September 30, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated into this Item 12. No information contained in or incorporated into this Item 12 shall be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. - --------- *Filed Herewith SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UNIVERSAL CORPORATION (Registrant) Date: October 28, 2003 By: /s/ George C. Freeman, III ----------------------------------- George C. Freeman, III General Counsel and Secretary Exhibit Index Exhibit Number Document - ------ -------- 99.1 Press release dated October 28, 2003 announcing earnings for period ended September 30, 2003.* - ---------- *Filed Herewith EX-99.1 3 ex-991.txt PRESS RELEASE Exhibit 99.1 LOGO Universal Corporation P.O. Box 25099 Richmond, VA 23260 - phone: (804) 359-9311 - fax (804) 254-3594 - -------------------------------------------------------------------------------- PRESS RELEASE CONTACT RELEASE Karen M. L. Whelan 2:15 p.m. Eastern Time Phone: (804) 359-9311 Fax: (804) 254-3594 Email: investor@universalleaf.com Universal Corporation Reports Solid First Quarter Earnings Richmond, VA, October 28, 2003 / PRNEWSWIRE Allen B. King, President and Chief Executive Officer of Universal Corporation (NYSE:UVV), announced today that the Company's net income for the quarter ended September 30, 2003, was $34.4 million, or $1.37 per diluted share, compared to $28.5 million, or $1.09 per diluted share, in the first quarter of fiscal year 2003. Last year's first quarter included a restructuring charge of $13.5 million before taxes related to the consolidation and streamlining of U.S. operations. Operating income increased by $8.7 million to $59.7 million. Revenues were $787 million in the quarter compared to $657 million a year ago, an increase of $130 million or nearly 20%. Revenues for the tobacco segment increased by about $55 million due to increased volume shipped from Europe, sales of African tobacco carried over from last year, and the impact of the strong euro on local European Union sales. Tobacco segment operating income decreased somewhat in the quarter compared to a very strong first quarter last year. The decrease was primarily caused by a change in sales mix in Brazil as well as the effect of a poor Indonesian crop. These effects were partially offset by the impact of carryover sales from Africa and by our oriental tobacco joint venture. Argentine operations also continued to perform well as shipment volumes were more than double last year's levels. Lumber and building products revenues were up 37% to $196.3 million, and earnings were up 14% to $8.0 million in the quarter due to the inclusion of JeWe, which was acquired in January 2003, and the on-going benefit from a stronger euro. The euro was up 21% in the first quarter of fiscal year 2004 compared to the same quarter a year ago. However, euro sales and earnings for the group, excluding JeWe, were lower, as volume and margin pressures continued in The Netherlands, reflecting the stagnant economy and a slowdown in construction activity. Agri-products revenues were up in the quarter primarily due to minor acquisitions made during fiscal year 2003 and higher tea sales, but earnings were below last year's levels as difficult market conditions continued in tea, rubber, and canned foods, and results from nuts and dried fruit distribution lagged last year's record levels. Confectionery seeds showed good improvement in the quarter. Mr. King noted, "Fiscal year 2004 is off to a good start, and we are optimistic about the outlook for the year. Conditions remain difficult in Zimbabwe where the economic and political situation continues to deteriorate. We Universal Corporation Page 2 currently expect about 85 million kilos of flue-cured tobacco to be marketed this year, down from 166 million kilos a year ago. And, the crop that will be marketed in our fiscal year 2005 is projected to be only 50 million kilos. We have moved to replace the lost Zimbabwe volumes by encouraging increased production in South America and in a number of African countries, and we believe that the availability of flue-cured and burley tobacco in fiscal year 2004 will remain adequate to meet our customers' requirements. "We have been pleased with the early results from our new processing center in Nash County, North Carolina, which began operations in August of this year. U.S. flue-cured and burley crops continued to suffer from the effects of an antiquated federal program that supports U.S. leaf prices at noncompetitive levels. Discussions continue in the U.S. Congress on legislative alternatives for changes in the federal tobacco program and a buyout of quota. However, consensus remains elusive, and it does not seem likely that needed legislation to make U.S. leaf competitive in the world market will be taken in the few legislative days remaining in the current session. "Difficult economic conditions in Europe continued to adversely effect our lumber and building products distribution operations. However, we have moved to control costs and remain hopeful that economic forecasts of improved conditions in the first half of 2004 will prove to be correct. The strength of the euro continues to benefit the translation of the earnings of this segment into U.S. dollars. International markets remain unsettled for many of the products included in our agri-products segment; however, prospects for our confectionery seed business have improved, and our nut and dried fruit distribution businesses are performing well. "As we announced in August, the Company will be changing its fiscal year end to March 31 from June 30 for fiscal year 2004, which will align all our worldwide operations to the same reporting date and better match our reporting dates with the crop and operating cycles of our largest operations. We are pleased that fiscal year 2004 is off to a good start and expect that earnings for the nine months ending March 31, 2004, which will be our transitional period, will be in the range of $85 million to $95 million compared to $79 million for the first nine months of fiscal year 2003." The Company cautions readers that any statements contained herein regarding earnings and expectations for our performance are forward-looking statements based upon management's current knowledge and assumptions about future events, including anticipated levels of demand for and supply of the Company's products and services; costs incurred in providing these products and services; timing of shipments to customers; changes in market structure; and general economic, political, market, and weather conditions. Lumber and building products earnings are also affected by changes in exchange rates between the U.S. dollar and the euro. Actual results, therefore, could vary from those expected. For more details on important factors that could cause actual results to differ from our expectations, see Item 1, Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7, and Notes to the Consolidated Financial Statements in Item 8 of the Company's Annual Report on Form 10-K for the year ended June 30, 2003, as filed with the Securities and Exchange Commission. Universal Corporation Page 3 At 4:00 p.m. (Eastern Time) on October 28, 2003, the Company will host a conference call to discuss these results. Those wishing to listen to the call may do so by visiting www.universalcorp.com at that time. A replay of the call will also be available for seven days at this web site or by dialing 888-707-8786. Universal Corporation (NYSE: UVV) is a diversified company with operations in tobacco, lumber, and agri-products. Its gross revenues for the fiscal year that ended on June 30, 2003, were approximately $2.6 billion. For more information, visit Universal's web site at www.universalcorp.com. Universal Corporation Page 4 UNIVERSAL CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 2003 and 2002 (In thousands of dollars, except share and per share data) THREE MONTHS 2003 2002 -------- -------- Sales and other operating revenues $786,601 $657,276 Costs and expenses Cost of goods sold 647,008 525,571 Selling, general and administrative expenses 79,939 67,199 Restructuring costs - 13,498 --------------------------- Operating income 59,654 51,008 Equity in pretax earnings of unconsolidated affiliates 3,776 1,542 Interest expense 11,076 10,484 --------------------------- Income before income taxes and other items 52,354 42,066 Income taxes 18,847 14,935 Minority interests (921) (1,346) --------------------------- Net income $34,428 $28,477 =================================================================================================== Earnings per common share - basic $1.38 $1.09 =================================================================================================== Earnings per common share - diluted $1.37 $1.09 =================================================================================================== Denominator for earnings per share (weighted average shares) Basic: 24,941,340 26,062,038 =================================================================================================== Diluted: 25,135,042 26,106,372 =================================================================================================== Cash dividends declared $0.36 $0.34 =================================================================================================== See accompanying notes. Universal Corporation Page 5 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) September 30, September 30, June 30, 2003 2002 2003 --------- --------- --------- (Unaudited) (Unaudited) ASSETS Current Cash and cash equivalents $57,183 $84,355 $44,659 Accounts receivable 408,213 377,245 370,784 Advances to suppliers 137,608 109,589 115,928 Accounts receivable - unconsolidated affiliates 5,622 1,359 7,595 Inventories - at lower of cost or market: Tobacco 609,431 540,591 529,736 Lumber and building products 140,299 86,840 140,647 Agri-products 76,748 74,129 82,527 Other 35,878 26,278 30,377 Prepaid income taxes 5,819 10,511 12,375 Deferred income taxes 5,995 6,008 6,168 Other current assets 34,893 24,165 34,201 --------- --------- --------- Total current assets 1,517,689 1,341,070 1,374,997 Property, plant and equipment - at cost Land 51,692 28,336 51,110 Buildings 306,092 257,991 303,916 Machinery and equipment 695,450 590,553 679,556 --------- --------- --------- 1,053,234 876,880 1,034,582 Less accumulated depreciation 524,234 456,231 521,201 --------- --------- --------- 529,000 420,649 513,381 Other assets Goodwill and other intangibles 132,472 125,984 132,903 Investments in unconsolidated affiliates 93,559 85,235 90,119 Deferred income taxes 45,436 45,990 45,466 Other noncurrent assets 91,631 80,237 86,208 --------- --------- --------- 363,098 337,446 354,696 --------- --------- --------- $2,409,787 $2,099,165 $2,243,074 ============================================================================================================== See accompanying notes. Universal Corporation Page 6 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) September 30, September 30, June 30, 2003 2002 2003 ---------- ---------- ---------- (Unaudited) (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $253,423 $204,200 $265,742 Accounts payable 366,818 282,094 361,058 Accounts payable - unconsolidated affiliates 3,375 7,721 2,073 Customer advances and deposits 193,202 155,172 42,093 Accrued compensation 23,780 15,437 31,959 Income taxes payable 23,958 22,457 20,969 Current portion of long-term obligations 102,413 120,370 100,387 ---------- ---------- ---------- Total current liabilities 966,969 807,451 824,281 Long-term obligations 609,939 511,982 614,994 Postretirement benefits other than pensions 40,491 38,882 40,305 Other long-term liabilities 97,780 86,354 96,522 Deferred income taxes 12,392 21,769 12,348 Minority interests 33,416 26,719 34,346 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, 24,983,745 issued and outstanding shares (24,920,083 at June 30, 2003) 95,169 89,372 90,665 Retained earnings 614,844 577,548 592,673 Accumulated other comprehensive income (loss) (61,213) (60,912) (63,060) ---------- ---------- ---------- Total shareholders' equity 648,800 606,008 620,278 ---------- ---------- ---------- $2,409,787 $2,099,165 $2,243,074 ==================================================================================================================== See accompanying notes. -- M O R E -- Universal Corporation Page 7 UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended September 30, 2003 and 2002 (In thousands of dollars) THREE MONTHS 2003 2002 ------- ------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $34,428 $28,477 Depreciation 11,892 11,917 Amortization 792 1,188 Other adjustments to reconcile net income to net cash provided by operating activities (4,354) 22,695 Changes in operating assets and liabilities 9,866 (132,325) --------------------------- Net cash provided (used) by operating activities 52,624 (68,048) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (19,500) (35,300) --------------------------- Net cash used in investing activities (19,500) (35,300) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance (repayment) of short-term debt, net (12,300) 77,400 Issuance of long-term debt 2,900 73,000 Repayment of long-term debt (3,400) - Issuance of common stock 4,700 - Purchases of common stock (3,500) (11,900) Dividends paid (9,000) (8,800) --------------------------- Net cash provided (used) in financing activities (20,600) 129,700 Net increase in cash and cash equivalents 12,524 26,352 Cash and cash equivalents at beginning of year 44,659 58,003 --------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $57,183 $84,355 ============================================================================================= See accompanying notes. --MORE-- Universal Corporation Page 8 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2003 All figures contained herein are unaudited. 1). Universal Corporation, with its subsidiaries (the "Company" or "Universal"), has operations in tobacco, lumber and building products, and agri-products. Because of the seasonal nature of these businesses, the results of operations for any fiscal quarter will not necessarily be indicative of results to be expected for other quarters or a full fiscal year. All adjustments necessary to state fairly the results for the 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 presentation. Universal has decided to change its fiscal year-end to March 31 from June 30 effective for the current fiscal year. This change will bring all consolidated subsidiaries to the same reporting date and will better match the fiscal reporting period with the crop and operating cycles of the Company's largest operations. The Company plans to file a Transitional Report on Form 10-K for the nine months ending March 31, 2004. 2). Guarantees and other contingent liabilities: Guarantees of bank loans to growers for crop financing and construction of curing barns or other tobacco producing assets are industry practice in Brazil and support the farmers' production of tobacco there. At September 30, 2003, total exposure under subsidiaries' guarantees issued for banking facilities of Brazilian farmers was approximately $68.7 million. About 45% of these guarantees expire within one year, and the remainder expire within 5 years. The Company withholds payments due to the farmer on delivery of tobacco and forwards those payments to the third-party bank. Failure of farmers to deliver sufficient quantities of tobacco to the Company to cover their obligations to third-party banks could result in a liability for the Company; however, in that case, the Company would have recourse against the farmers. Other contingent liabilities total approximately $12.6 million and include value-added tax payments that would be required in certain countries if subsidiaries fail to export tobacco. They also include bid and performance bonds. The Company considers the possibility of a material loss on any of the guarantees and other contingencies to be remote, and the accrual recorded for the value of the guarantees was not material at September 30, 2003. In recent years, economic and political changes in Zimbabwe have led to a significant decline in tobacco production in that country. Universal and other leaf tobacco merchants operating in Zimbabwe have been able to offset this decline with increased production in other countries and growing regions. If the political situation in Zimbabwe were to further deteriorate significantly, the Company's ability to recover its assets there could be impaired. The Company's equity in its net assets of subsidiaries in Zimbabwe was $59 million at September 30, 2003. --MORE-- Universal Corporation Page 9 3). On February 26, 2001, Universal Leaf Tobacco Company, Incorporated, J.P. Taylor Company, Incorporated, and Southwestern Tobacco Company, Incorporated, which are subsidiaries of Universal Corporation (the "Company Subsidiaries"), were served with the Third Amended Complaint, naming them and other leaf tobacco merchants as defendants in DeLoach, et al. v. Philip Morris Inc., et al., a suit originally filed against U.S. cigarette manufacturers in the United States District Court for the District of Columbia and subsequently moved to the United States District Court for the Middle District of North Carolina, Greensboro Division (Case No. 00-CV-1235) (the "DeLoach Suit"). The DeLoach Suit is a class action brought on behalf of U.S. tobacco growers and quota holders that alleges that defendants violated antitrust laws by bid-rigging at tobacco auctions and by conspiring to undermine the tobacco quota and price support program administered by the federal government. In May 2003, the Company Subsidiaries, along with several other domestic cigarette manufacturers and tobacco-leaf dealers, entered into a settlement agreement with the plaintiffs. Under the settlement agreement, the Company Subsidiaries agreed to pay $12 million for distribution to members of the class. The total amount to be paid by all the settling defendants, of which there are five in addition to the Company Subsidiaries, to the class is approximately $212 million, plus commitments by the three settling cigarette manufacturers (i) to purchase certain volumes of domestic flue-cured and burley tobacco for at least ten years and (ii) to pay the fees of plaintiffs' counsel when approved by the court. The court approved the settlement agreement in October 2003, and Universal completed its payment on October 20, 2003. 4). The Competition Directorate-General of the European Commission ("DG Comp") is investigating the buying practices of Spanish tobacco processors with the stated aim of determining to what extent the tobacco processing companies have jointly agreed on raw tobacco qualities and prices offered to Spanish tobacco growers. After conducting an investigation, the Company believes that Spanish tobacco processors, including the Company's Spanish subsidiary, Tabacos Espanoles, S.A. ("TAES"), have jointly agreed to the terms of sale of green tobacco and quantities to be purchased from associations of farmers and have jointly negotiated with those associations. TAES is cooperating fully with the DG Comp in its investigation and believes that there are unusual, mitigating circumstances peculiar to the highly structured market for green tobacco in Spain. At this time, no estimate can be made of the amount or timing of the fine, if any, that the DG Comp may assess on TAES. 5). During fiscal year 2003, the Company recorded about $33.0 million in restructuring charges associated with continued consolidation of U.S. and African tobacco operations. Approximately $28 million of the charges were to record the severance cost associated with approximately 941 hourly production employees associated with tobacco processing operations and 366 salaried employees. The severance costs included $13.5 million recorded in the first quarter related to the U.S. operations. During the quarter ended September 30, 2003, the Company paid approximately $1.5 million associated with the plan, to 77 employees. --MORE-- Universal Corporation Page 10 Changes in severance liabilities are shown below: Three months Three months Fiscal year ended ended ended September 30, September 30, June 30, Severance Liabilities (in thousands of dollars) 2003 2002 2003 ------------- ------------- ----------- Beginning balance $13,399 $2,079 $2,079 Restructuring charges - 13,498 27,981 Payments (1,464) (1,672) (16,661) ------------- ------------- ----------- Ending balance $11,935 $13,905 $13,399 ============= ============= =========== 6). As permitted under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," the Company applies the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," to stock options granted to employees. Under Statement No 123, as amended by Statement No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," the Company discloses pro forma net income and basic and diluted earnings per share as if the fair value-based method had been applied to all awards. THREE MONTHS Periods ended September 30, 2003 2002 ----------------------- Net income (in thousands of dollars) $34,428 $28,477 Stock-based employee compensation cost, net of tax effect, under fair value accounting (978) (962) ----------------------- Pro forma net income under fair value method $33,450 $27,515 ----------------------- Earnings per share - basic $1.38 $1.09 Per share stock-based employee compensation cost, net of tax effect, under fair value accounting (0.04) (0.04) ----------------------- Pro forma earnings per share - basic $1.34 $1.05 ----------------------- Earnings per share - diluted $1.37 $1.09 Per share stock-based employee compensation cost, net of tax effect, under fair value accounting (0.04) (0.04) ----------------------- Pro forma earnings per share - diluted $1.33 $1.05 ----------------------- --MORE-- Universal Corporation Page 11 7). The following table sets forth the computation of basic and diluted earnings per share. THREE MONTHS Periods ended September 30, 2003 2002 - --------------------------------------------------------------------------- Net income (in thousands of dollars) $34,428 $28,477 ------------------------- Denominator for basic earnings per share: Weighted average shares 24,941,340 26,062,038 Effect of dilutive securities: Employee stock options 193,702 44,334 ------------------------- Denominator for diluted earnings per share 25,135,042 26,106,372 ------------------------- Earnings per share - basic $1.38 $1.09 - --------------------------------------------------------------------------- Earnings per share - diluted $1.37 $1.09 - --------------------------------------------------------------------------- 8). Comprehensive Income: THREE MONTHS Periods ended September 30, 2003 2002 - ------------------------------------------------------------------------------ (in thousands of dollars) Net income $34,428 $28,477 Foreign currency translation adjustment 1,847 10,309 ------------------------- Comprehensive income $36,275 $38,786 - ------------------------------------------------------------------------------ --MORE-- Universal Corporation Page 12 9). Segments are based on product categories. The Company evaluates performance based on segment operating income, which includes equity in pretax earnings of unconsolidated affiliates. THREE MONTHS Periods ended September 30, 2003 2002 - ------------------------------------------------------------------------------------------ (in thousands of dollars) SALES AND OTHER OPERATING REVENUES Tobacco $456,689 $401,777 Lumber and building products distribution 196,331 142,904 Agri-products 133,581 112,595 ---------------------------- Consolidated total $786,601 $657,276 - ------------------------------------------------------------------------------------------ OPERATING INCOME Tobacco $58,229 $60,519 Lumber and building products distribution 7,963 6,970 Agri-products 2,843 3,800 - ------------------------------------------------------------------------------------------ Total segment operating income 69,035 71,289 Less: Corporate expenses 5,605 5,241 Restructuring costs - 13,498 Equity in pretax earnings of unconsolidated affiliates 3,776 1,542 ---------------------------- Consolidated total $59,654 $51,008 - ------------------------------------------------------------------------------------------
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