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: August 5, 2004

(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 of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1501 North Hamilton Street Richmond, Virginia	23230
(Address of Principal Executive Offices)	(Zip Code)

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 August 5, 2004, announcing earnings for period ended June 30, 2004.*

Item 12. Results of Operations and Financial Condition.

On August 5, 2004, Universal Corporation issued a press release announcing its financial results for the period ended June 30, 2004. 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: August 5, 2004	By:	/s/ George C. Freeman, III
		George C. Freeman, III
		General Counsel and Secretary

Exhibit Index

Exhibit Number	Document
99.1	Press release dated August 5, 2004 announcing earnings for period ended June 30, 2004.*

* Filed Herewith

EX-99.1

EXHIBIT 99.1

P.O. Box 25099  •  Richmond, VA 23260  •  Phone: (804) 359-9311  •  Fax: (804) 254-3594

PRESS  RELEASE

CONTACT:	Karen M. L. Whelan	RELEASE: Hold for call
	Phone: (804) 359-9311
	Fax: (804) 254-3594
	Email: investor@universalleaf.com

Universal Corporation Announces First Quarter Results

Richmond, VA, August 5, 2004 / PRNEWSWIRE

Allen B. King, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE:UVV), announced today that late receipt of the Brazilian crops and shipping delays in South America and Africa had a major impact on the Company’s first quarter earnings. Net income for the first quarter of fiscal year 2005, which ended on June 30, 2004, was $20.5 million, or $0.80 cents per diluted share, compared to $34.4 million, or $1.37 per diluted share, for the three months ended September 30, 2003, which is the most comparable quarter of fiscal year 2004 because of last year’s change in the fiscal year. Gross revenues for the three-month period ended June 30, 2004, were $737 million compared to $787 million for the September 2003 quarter.

Tobacco results were sharply lower in the quarter due to the late Brazilian crops, which, because of their size and timing, helped to create a major shortage of outbound shipping capacity. The shipping delays affect the timing of quarterly earnings recognition, but management expects the bulk of the crop to be shipped over the remainder of this fiscal year. In addition, the Company experienced customer-mandated shipping delays in Africa. The South American and African delays also caused most of the $107 million reduction in tobacco revenues for the quarter. Since these regions represent important components of the tobacco operations, the combination of these factors has caused a large increase in inventories, most of which is committed. U.S. results were lower in the first quarter as the April-June period is normally when processing operations are suspended during the interval between production cycles in the United States. Last year’s first quarter, which covered the period from July 1 through September 30, 2003, included several weeks of processing at the start of the season for the 2003 crop.

Non-tobacco results showed good improvement in the first quarter. In the lumber and building products segment, the retail supply group benefited from strong spring garden product sales and product mix as well as continuing attention to cost control. The construction supply operations had additional working days this quarter, primarily because of the timing of the annual summer holiday period. The continued strength of the euro and income from a small Dutch distributor of garden timber and products, which was acquired in May 2004, also contributed to earnings. The seasonal increase in sales, additional working days, the strong euro, and sales from the acquired operations accounted for most of the $26 million increase in revenues for this segment. Agri-product revenues and operating results were up due to higher volumes in tea, rubber, and canned meat. These gains more than offset lower results in nuts and dried fruit that were caused by shipment delays.

The effective income tax rate at 39.5% is higher for the first quarter and is expected to remain so for the year. This rate reflects an increase in local tax expense in Zimbabwe on local currency earnings from the sale of inventory that had been purchased prior to the devaluation of the Zimbabwe dollar. In addition, exchange losses

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related to net monetary assets denominated in local currencies in South America and Zimbabwe increased by approximately $7.4 million. Selling, general, and administrative expenses increased in the quarter due to higher legal fees associated with the European Union’s investigation of tobacco buying practices and expenses necessitated by the implementation of the Sarbanes-Oxley Section 404 requirements.

Mr. King said, “We expect to have a good year despite the lower results reported in the first quarter. The shipping delays that we experienced in the first quarter in Brazil and Africa are primarily timing issues, which should be overcome in the remaining three quarters of fiscal year 2005. Tobacco volumes handled in South America will be up significantly. Brazilian flue-cured and burley crops are expected to exceed 830 million kilos this year and result in record volumes handled by our operations in that country. However, due to adverse weather, there will be a shortage of ripe leaf in the Brazilian crop, which will change the mix of sales and negatively impact margins. Comparisons for the year will also be difficult due to the inclusion of approximately $11 million in U.S. factory overhead costs that were not in the nine-month transitional year. We expect the volumes we handle in the United States to be comparable to last year, and we should continue to benefit from yield and efficiency improvements from our new state-of-the-art processing plants. African volumes will be lower for the year as the Zimbabwe crop continues to decline in response to the economic and political turmoil in that country. The benefits of our investment in projects to expand leaf production in a number of other African origins are not expected to contribute significantly to our earnings before our fiscal year 2006.

“Lumber and building products results are off to a good start, due in part to the change in the fiscal year. The euro remains strong relative to the U.S. dollar, and we are hopeful that economic conditions in some European markets are beginning to improve. The outlook for the agri-products that we handle has also improved.

“In addition, as we have pointed out, the effective corporate income tax rate is expected to be higher for the year, as are our costs associated with the implementation of the Sarbanes-Oxley 404 requirements and the European Union investigation into tobacco buying practices.

“We believe that we should be able to ship the bulk of the South American and African crops by the end of the fiscal year, and we expect, once again, to achieve good earnings performance for the year.”

Additional information

The Company cautions readers that any forward-looking statements contained herein are 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 factors that could affect expectations, see the Management’s Discussion & Analysis section of the Company’s Transition Report on Form 10-K for the nine months ended March 31, 2004, as filed with the Securities and Exchange Commission.

At 5:00 p.m. (Eastern Time) on August 5, 2004, 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.

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Universal Corporation is a diversified company with operations in tobacco, lumber, and agri-products. Universal Corporation’s gross revenues for the transitional fiscal year that consisted of the nine months ended on March 31, 2004, were approximately $2.3 billion. For more information on Universal Corporation, visit its web site at www.universalcorp.com.

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UNIVERSAL CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30, 2004 and September 30, 2003

(In thousands of dollars, except share and per share data)

	THREE MONTHS
	June 30, 2004			September 30, 2003
Sales and other operating revenues	$	737,141		$	786,601
Costs and expenses
Cost of goods sold		601,067			647,008
Selling, general and administrative expenses		94,849			79,939
Operating income		41,225			59,654
Equity in pretax earnings of unconsolidated affiliates		2,909			3,776
Interest expense		12,608			11,076
Income before income taxes and other items		31,526			52,354
Income taxes		12,453			18,847
Minority interests		(1,406	)		(921	)
Net income	$	20,479		$	34,428
Earnings per common share - basic	$	0.80		$	1.38
Earnings per common share - diluted	$	0.80		$	1.37
Denominator for earnings per share (weighted average shares)
Basic:		25,471,365			24,941,340
Diluted:		25,688,649			25,135,042
Cash dividends declared	$	0.39		$	0.36

See accompanying notes.

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UNIVERSAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	June 30, 2004		September 30, 2003		March 31, 2004
	(Unaudited)		(Unaudited)
ASSETS
Current
Cash and cash equivalents	$	52,686	$	57,183	$	39,310
Accounts receivable, net		430,736		408,213		432,546
Advances to suppliers, net		113,913		122,991		140,758
Accounts receivable - unconsolidated affiliates		6,545		5,622		6,156
Inventories - at lower of cost or market:
Tobacco		790,089		609,431		562,927
Lumber and building products		150,045		140,299		138,423
Agri-products		127,573		76,748		106,214
Other		49,715		35,878		35,071
Prepaid income taxes		10,061		5,819		9,635
Deferred income taxes		15,146		5,995		16,908
Other current assets		49,216		34,893		38,721
Total current assets		1,795,725		1,503,072		1,526,669
Property, plant and equipment - at cost
Land		70,188		51,692		60,823
Buildings		376,952		306,092		364,948
Machinery and equipment		703,716		695,450		694,314
		1,150,856		1,053,234		1,120,085
Less accumulated depreciation		574,783		524,234		559,217
		576,073		529,000		560,868
Other assets		133,844		132,472		134,664
Goodwill and other intangibles		89,043		93,559		94,460
Investments in unconsolidated affiliates		61,758		45,436		62,489
Deferred income taxes		91,883		91,631		103,623
Other noncurrent assets		376,528		363,098		395,236
Total assets	$	2,748,326	$	2,395,170	$	2,482,773

See accompanying notes.

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UNIVERSAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	June 30, 2004			September 30, 2003			March 31, 2004
	(Unaudited)			(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Notes payable and overdrafts	$	394,375		$	253,423		$	244,031
Accounts payable		320,514			352,201			331,963
Accounts payable - unconsolidated affiliates		401			3,375			2,571
Customer advances and deposits		183,554			193,202			59,894
Accrued compensation		25,786			23,780			32,703
Income taxes payable		30,559			23,958			22,007
Current portion of long-term obligations		57,419			102,413			45,941
Total current liabilities		1,012,608			952,352			739,110
Long-term obligations		769,348			609,939			770,296
Postretirement benefits other than pensions		42,283			40,491			41,721
Other long-term liabilities		92,632			97,780			93,739
Deferred income taxes		32,484			12,392			43,691
Total liabilities		1,949,355			1,712,954			1,688,557
Minority interests		32,272			33,416			34,383
Shareholder’s 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, 25,532,406 issued and outstanding shares (24,983,745 at September 30, 2003, and 25,446,975 at March 31, 2004)		111,896			95,169			112,505
Retained earnings		689,730			614,844			679,202
Accumulated other comprehensive income (loss)		(34,927	)		(61,213	)		(31,874	)
Total shareholders’ equity		766,699			648,800			759,833
Total liabilities and shareholders’ equity	$	2,748,326		$	2,395,170		$	2,482,773

See accompanying notes.

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UNIVERSAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended June 30, 2004, and September 30, 2003

(In thousands of dollars)

	THREE MONTHS
	June 30, 2004			September 30, 2003
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	20,479		$	34,428
Depreciation		15,585			11,892
Amortization		848			792
Other adjustments to reconcile net income to net cash provided by operating activities		5,819			(4,354	)
Changes in operating assets and liabilities		(112,017	)		9,866
Net cash provided (used) by operating activities		(69,286	)		52,624
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(14,078	)		(19,500	)
Purchase of business, net of cash acquired		(12,477	)		—
Sales of property, plant, and equipment and other		2,261			—
Net cash used in investing activities		(24,294	)		(19,500	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (repayment) of short-term debt, net		120,655			(12,300	)
Issuance of long-term debt		—			2,900
Repayment of long-term debt		(4,550	)		(3,400	)
Issuance of common stock		802			4,700
Purchases of common stock		—			(3,500	)
Dividends paid		(9,951	)		(9,000	)
Net cash provided (used) in financing activities		106,956			(20,600	)
Net increase in cash and cash equivalents		13,376			12,524
Cash and cash equivalents at beginning of year		39,310			44,659
Cash and cash equivalents at end of period	$	52,686		$	57,183

See accompanying notes.

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UNIVERSAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

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.

NOTE 2. CHANGE IN FISCAL YEAR END AND ELIMINATION OF REPORTING LAG FOR FOREIGN SUBSIDIARIES

The Company changed its fiscal year end from June 30 to March 31, effective March 31, 2004. In addition to better matching the fiscal reporting period with the crop and operating cycles of the Company’s largest operations, the change allowed the Company to eliminate the three-month reporting lag previously used by most of its foreign subsidiaries. All of the Company’s consolidated subsidiaries now have the same fiscal reporting period.

Throughout the fiscal year that will end on March 31, 2005, quarterly financial statements will include comparative information for the same sequential quarter of the prior year. Due to the year-end change, interim quarters in fiscal year 2005 will end three months earlier than the corresponding quarters in fiscal year 2004. Management believes this presentation provides the most appropriate comparison since foreign results, which represent the majority of the Company’s business, are generally compared for the same operating months in each year, due to the reporting lag in 2004. Comparisons of summarized historical financial information are provided in Note 11 that present 2004 data recast for the effect of eliminating the reporting lag; however, it is not practical to provide recast 2004 data for all information reported in the quarterly financial statements.

NOTE 3. GUARANTEES, OTHER CONTINGENT LIABILITIES, AND OTHER MATTERS

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 June 30, 2004, total exposure under subsidiaries’ guarantees issued for banking facilities of Brazilian farmers was approximately $110.6 million. About 57% of these guarantees expire within one year, and nearly all of the remainder expire within five years. The Company withholds payments due to the farmers 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. The fair value of guarantees issued or last modified after December 31, 2002, was not material. The maximum potential amount of future payments that the Company’s subsidiary could be required to make is the face amount, $110.6 million, and any unpaid accrued interest. In addition, the Company has contingent liabilities of approximately $6.8 million that consist primarily of bid and performance bonds. The Company considers the possibility of a material loss on any of the guarantees and other contingencies to be remote. The accrual recorded for the value of the guarantees was not material at June 30, 2004.

In recent years, economic and political changes in Zimbabwe have led to a significant decline in tobacco production in that country. Universal has been able to offset the effect of this decline on its business with

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increased production in other countries. 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 approximately $55.6 million at June 30, 2004.

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. Current guidelines allow the DG Comp to assess fines in this case in amounts that would be material to the Company’s earnings. Although the Company expects to be assessed a fine, management is unable to estimate an amount at this time, and no liability has been recorded in the financial statements.

NOTE 4. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share.

	THREE MONTHS
	June 30, 2004		September 30, 2003
Net income (in thousands of dollars)	$	20,479	$	34,428
Denominator for basic earnings per share:
Weighted average shares		25,471,365		24,941,340
Effect of dilutive securities:
Employee stock options		217,284		193,702
Denominator for diluted earnings per share		25,688,649		25,135,042
Earnings per share – basic	$	0.80	$	1.38
Earnings per share – diluted	$	0.80	$	1.37

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NOTE 5. COMPARISON TO SUMMARIZED HISTORICAL INFORMATION RECAST FOR THE EFFECT OF ELIMINATING THE REPORTING LAG FOR FOREIGN SUBSIDIARIES

As discussed in Note 2, in connection with its change in fiscal year end, the Company eliminated the three-month reporting lag previously used for most of its foreign subsidiaries. Beginning with the quarter ended June 30, 2004, all of the Company’s consolidated subsidiaries follow the same fiscal reporting period. To facilitate comparisons, unaudited summarized financial information for the four quarters in the twelve-month period ended March 31, 2004, recast for the effect of eliminating the reporting lag, has been prepared. Comparisons to the recast information for the three months ended June 30, 2003, are as follows:

	THREE MONTHS
(in thousands of dollars, except per share data)	June 30, 2004		June 30, 2003 (Recast)
Sales and other operating revenues	$	737,141	$	771,734
Operating income		41,225		43,020
Income before income taxes and other items		31,526		35,945
Net income		20,479		23,465
Net income:
Per common share	$	0.80	$	0.94
Per diluted common share	$	0.80	$	0.94

The recast results for the three months ended June 30, 2003, include restructuring charges of $5.7 million, which is $3.7 million after taxes or $.15 per share, and a charge of $12 million, which is $7.7 million after taxes or $0.31 per share, related to the settlement of a lawsuit.

NOTE 6. SEGMENT INFORMATION

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
(in thousands of dollars)	June 30, 2004		September 30, 2003
SALES AND OTHER OPERATING REVENUES
Tobacco	$	349,468	$	456,689
Lumber and building products distribution		222,772		196,331
Agri-products		164,901		133,581
Consolidated total	$	737,141	$	786,601
OPERATING INCOME
Tobacco	$	32,237	$	58,229
Lumber and building products distribution		15,752		7,963
Agri-products		3,705		2,843
Total segment operating income		51,694		69,035
Less:
Corporate expenses		7,560		5,605
Equity in pretax earnings of unconsolidated affiliates		2,909		3,776
Consolidated total	$	41,225	$	59,654

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