RICHMOND, Va., Aug. 4 /PRNewswire-FirstCall/ -- HIGHLIGHTS Diluted
earnings per share increased to $1.47 versus $0.64 last year.
Revenues up 22% to $616 million on higher volumes from earlier
shipments and better product mix. Operating income up 83% to $70
million. George C. Freeman, III, Chairman, President, and Chief
Executive Officer of Universal Corporation (NYSE:UVV), announced
that net income attributable to Universal Corporation for the first
quarter of fiscal year 2010, which ended on June 30, 2009, was
$43.7 million, or $1.47 per diluted share. Those results more than
doubled last year's income of $21.1 million, or $0.64 per diluted
share, mostly because of earlier shipments of tobacco this year and
a more favorable product mix. The same factors caused a 22% revenue
increase compared to the same quarter last year. Revenues for the
quarter were about $616 million. Mr. Freeman stated, "We are very
pleased with our performance during the first quarter. Each of our
operations performed as we had expected or better. Earlier
shipments of Brazilian and European tobacco boosted our results,
and leaf costs were lower due to the stronger U.S. dollar. Looking
at the current worldwide situation, we see the U.S. dollar
beginning to weaken again, which could increase costs as we enter
the next purchasing season. We will be monitoring these factors as
the year progresses, and we will be working to control our costs.
"We do not foresee any oversupply of flue-cured tobacco in the
coming year. Global burley availability improved after the shortage
of filler style crops two years ago, and there is a large crop
again this year. So it is likely that we will see some oversupply
of burley. Worldwide dealer inventories for flue-cured and burley
tobacco are about 70 million kilos compared to about 80 million
kilos last year. "Japan Tobacco Inc., one of our largest customers,
recently announced steps to enhance their direct leaf procurement
capabilities by acquiring and entering joint ventures with smaller
leaf merchants. They enumerated several factors that prompted their
moves, including the desire to enhance internal expertise in leaf
procurement, actively manage the leaf supply chain, and work more
directly with tobacco growers. Over time, these steps are likely to
reduce our volumes with them in the United States, and may affect
other regions as well. However, the overall impact and timing
cannot yet be determined. We are continuing our dialogue with Japan
Tobacco and believe that we will continue our long-term
relationship. "Two Board members are retiring after long service to
the Company: Joseph C. Farrell and Walter A. Stosch. Both are
veteran Board members who have provided us with the benefit of
their long and successful experience in business and finance. We
wish them well and thank them for their insightful guidance. In
addition, Robert C. Sledd has been elected to the Board today. He
is Managing Partner of Pinnacle Ventures, LLC, a venture capital
company, and Sledd Properties, LLC, an investment company. He
served as the Chairman of Performance Food Group until June 2008,
and currently serves as a Director of Owens & Minor, Inc. and
SCP Pool Corporation." FLUE-CURED AND BURLEY LEAF TOBACCO
OPERATIONS: Operating income for our flue-cured and burley tobacco
operations increased by 85% to $64 million. That performance
includes results from our North America and Other Regions segments.
Operating income for the North America segment reflected its normal
seasonal low period, but its performance was also affected by lower
sales volumes of old crop U.S. leaf this quarter and lower Canadian
volumes from the reduced crop there. The volume decline
significantly reduced that segment's revenues. In contrast,
operating income for the Other Regions segment includes the
seasonally strong Brazilian operations, which were characterized
this year by substantially higher volumes due to earlier shipments.
Average leaf sales prices were lower this year, reflecting lower
leaf costs. Leaf costs were lower in U.S. dollar terms because of
the weaker Brazilian currency during the leaf purchasing season;
however, a significant portion of that cost of producing the crop
was incurred in the form of inputs advanced to farmers before the
local currency weakened and was included in last year's
remeasurement losses. Earlier shipments of tobacco from Europe and
increased volumes in Asia also benefited the quarter's results,
while lower shipments of old crop tobacco from Africa reduced that
region's results during its seasonal low period. Revenues for the
Other Regions segment increased by nearly 30%, primarily due to the
earlier shipments from Brazil and Europe, and the increased Asian
trading volumes, which were partly offset by the lower sales of old
crop tobacco from Africa. In addition to increased volumes,
revenues increased on higher proportions of lamina in shipments
during the quarter and higher prices for certain Asian trading
volumes. OTHER TOBACCO OPERATIONS: The Other Tobacco Operations
segment performed well as the oriental tobacco joint venture
results improved, mainly due to a more favorable sales mix as well
as to certain cost containment measures. Dark tobacco results also
improved on better product mix although volumes declined. During
the last quarter of fiscal year 2009, customers had purchased leaf
earlier than usual in anticipation of the enactment of U.S. excise
tax increases, and thus volumes were lower this year. Despite the
lower volumes, dark tobacco revenues, which are the predominant
factor in segment revenues, increased due to higher prices caused
by increased leaf costs during last year's purchasing season and a
more favorable product mix. OTHER ITEMS: Cost of sales increased by
18% to $476 million in the quarter on the increased volumes
shipped, offset by lower costs as the U.S. dollar strengthened
against the currencies of many origins during the leaf purchasing
season. Selling, general, and administrative costs increased by 7%,
reflecting additional currency remeasurement losses of about $6
million. Interest expense was comparable to that of fiscal year
2009, and the effective income tax rate was similar to last year's
rate. Additional information This information includes
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The Company cautions
readers that any statements contained herein regarding earnings and
expectations for its 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 its 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. Actual results, therefore, could
vary from those expected. A further list and description of these
risks, uncertainties and other factors can be found in the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2009, and in other documents the Company files with the
Securities and Exchange Commission. This information should be read
in conjunction with the Annual Report on Form 10-K for the year
ended March 31, 2009. At 5:00 p.m. (Eastern Time) on August 4,
2009, the Company will host a conference call to discuss these
results. Those wishing to listen to the call may do so by visiting
http://www.universalcorp.com/ at that time. A replay of the webcast
will be available at that site for three months. A taped replay of
the call will also be available until August 25, 2009, by dialing
(800) 642-1687. The confirmation number to access the replay is
22877191. Headquartered in Richmond, Virginia, Universal
Corporation is the world's leading tobacco merchant and processor
and conducts business in more than 30 countries. Its revenues for
the fiscal year ended March 31, 2009, were $2.6 billion. For more
information on Universal Corporation, visit its web site at
http://www.universalcorp.com/. UNIVERSAL CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands of
dollars, except per share data) Three Months Ended June 30, 2009
2008 (Unaudited) Sales and other operating revenues $616,112
$506,287 Costs and expenses Cost of goods sold 476,748 403,253
Selling, general and administrative expenses 69,592 64,847
Operating income 69,772 38,187 Equity in pretax earnings (loss) of
unconsolidated affiliates 3,641 (50) Interest income 565 950
Interest expense 8,155 7,666 Income before income taxes and other
items 65,823 31,421 Income taxes 22,019 10,281 Net income 43,804
21,140 Less: net income attributable to noncontrolling interests in
subsidiaries (59) (29) Net income attributable to Universal
Corporation 43,745 21,111 Dividends on Universal Corporation
convertible perpetual preferred stock (3,712) (3,712) Earnings
available to Universal Corporation common shareholders $40,033
$17,399 Earnings per share attributable to Universal Corporation
common shareholders: Basic $1.60 $0.65 Diluted $1.47 $0.64 See
accompanying notes. UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands of dollars) June 30, June
30, March 31, 2009 2008 2009 (Unaudited) (Unaudited) ASSETS Current
Cash and cash equivalents $131,167 $141,805 $212,626 Short-term
investments - 28,939 - Accounts receivable, net 229,764 224,854
263,383 Advances to suppliers, net 141,383 207,743 214,282 Accounts
receivable - unconsolidated affiliates 15,654 16,183 20,371
Inventories - at lower of cost or market: Tobacco 886,232 965,244
586,136 Other 66,851 63,766 60,712 Prepaid income taxes 14,238
13,005 13,181 Deferred income taxes 43,385 24,281 68,264 Other
current assets 80,031 93,216 64,964 Total current assets 1,608,705
1,779,036 1,503,919 Property, plant and equipment Land 16,002
16,516 15,773 Buildings 254,846 256,470 251,875 Machinery and
equipment 507,681 517,272 492,214 778,529 790,258 759,862 Less
accumulated depreciation (462,266) (463,345) (447,575) 316,263
326,913 312,287 Other assets Goodwill and other intangibles 106,030
106,413 106,097 Investments in unconsolidated affiliates 112,781
115,744 103,987 Deferred income taxes 20,393 50,164 17,376 Other
noncurrent assets 91,297 92,922 94,510 330,501 365,243 321,970
Total assets $2,255,469 $2,471,192 $2,138,176 See accompanying
notes. UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (In thousands of dollars) June 30, June 30, March 31, 2009
2008 2009 (Unaudited) (Unaudited) LIABILITIES AND SHAREHOLDERS'
EQUITY Current Notes payable and overdrafts $171,125 $260,590
$168,608 Accounts payable and accrued expenses 281,336 310,971
236,837 Accounts payable - unconsolidated affiliates 100 119 19,191
Customer advances and deposits 57,288 165,945 14,162 Accrued
compensation 20,818 19,128 24,710 Income taxes payable 8,839 7,133
6,867 Current portion of long-term Obligations 79,500 - 79,500
Total current liabilities 619,006 763,886 549,875 Long-term
obligations 329,596 399,496 331,808 Pensions and other
postretirement benefits 94,219 91,776 91,248 Other long-term
liabilities 81,639 95,839 79,159 Deferred income taxes 51,226
44,072 52,842 Total liabilities 1,175,686 1,395,069 1,104,932
Shareholders' equity Universal Corporation: Preferred stock: Series
A Junior Participating Preferred Stock, no par value, 500,000
shares authorized, none issued or outstanding - - - Series B 6.75%
Convertible Perpetual Preferred Stock, no par value, 5,000,000
shares authorized, 219,999 shares issued and outstanding (219,999
at June 30, 2008, and March 31, 2009) 213,023 213,023 213,023
Common stock, no par value, 100,000,000 shares authorized,
24,901,506 shares issued and outstanding (26,095,635 at June 30,
2008, and 24,999,127 at March 31, 2009) 195,437 200,763 194,037
Retained earnings 712,684 671,322 686,960 Accumulated other
comprehensive loss (45,207) (12,156) (64,547) Total Universal
Corporation shareholders' equity 1,075,937 1,072,952 1,029,473
Noncontrolling interests in subsidiaries 3,846 3,171 3,771 Total
shareholders' equity 1,079,783 1,076,123 1,033,244 Total
liabilities and shareholders' equity $2,255,469 $2,471,192
$2,138,176 See accompanying notes. UNIVERSAL CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of
dollars) Three Months Ended June 30, 2009 2008 (Unaudited) CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $43,804 $21,140
Adjustments to reconcile net income to net cash used by operating
activities: Depreciation 9,902 10,292 Amortization 504 249
Provisions for losses on advances and guaranteed loans to suppliers
583 3,766 Remeasurement loss (gain), net 6,261 (306) Other, net
13,825 10,280 Changes in operating assets and liabilities, net
(126,603) (182,739) Net cash used by operating activities (51,724)
(137,318) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of
property, plant and equipment (11,158) (6,126) Purchases of
short-term investments - (9,658) Maturities and sales of short-term
investments - 39,608 Proceeds from sale of property, plant and
equipment, and other 1,813 3,866 Net cash provided (used) by
investing activities (9,345) 27,690 CASH FLOWS FROM FINANCING
ACTIVITIES: Issuance (repayment) of short-term debt, net (3,124)
127,318 Issuance of common stock - 37 Repurchase of common stock
(2,981) (47,229) Dividends paid on convertible perpetual preferred
stock (3,712) (3,712) Dividends paid on common stock (11,461)
(11,729) Net cash provided (used) by financing activities (21,278)
64,685 Effect of exchange rate changes on cash 888 678 Net decrease
in cash and cash equivalents (81,459) (44,265) Cash and cash
equivalents at beginning of year 212,626 186,070 Cash and cash
equivalents at end of period $131,167 $141,805 See accompanying
notes. NOTE 1. BASIS OF PRESENTATION Universal Corporation, with
its subsidiaries ("Universal" or the "Company"), is the world's
leading leaf tobacco merchant and processor. Because of the
seasonal nature of the Company's business, 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. This
press release should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2009. NOTE
2. ACCOUNTING PRONOUNCEMENTS Effective April 1, 2009, Universal
adopted Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards No. 160, "Noncontrolling Interests
in Consolidated Financial Statements - an amendment of ARB No. 51"
("SFAS 160"). SFAS 160 requires that noncontrolling interests in
subsidiaries that are included in a company's consolidated
financial statements, commonly referred to as "minority interests,"
be reported as a component of shareholders' equity in the balance
sheet. It also requires that a company's consolidated net income
include the amounts attributable to both the company's interest and
the noncontrolling interest in the subsidiary, identified
separately in the financial statements. The new guidance requires
certain disclosures about noncontrolling interests in the
consolidated financial statements. Adoption of SFAS 160 did not
have a material impact on the Company's financial statements. NOTE
3. 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
June 30, 2009, the Company's total exposure under guarantees issued
by its operating subsidiary in Brazil for banking facilities of
farmers in that country was approximately $82 million, net of the
accrual recorded for the fair value of the guarantees. About 44% of
these guarantees expire within one year, and all of the remainder
expire within five years. The subsidiary withholds payments due to
the farmers on delivery of tobacco and forwards those payments to
the third-party banks. Failure of farmers to deliver sufficient
quantities of tobacco to the subsidiary to cover their obligations
to the third-party banks could result in a liability for the
subsidiary under the related guarantees; however, in that case, the
subsidiary would have recourse against the farmers. The maximum
potential amount of future payments that the Company's subsidiary
could be required to make at June 30, 2009, was the face amount
($82 million) including unpaid accrued interest ($110 million as of
June 30, 2008, and $104 million at March 31, 2009). The fair value
of the guarantees was a liability of approximately $36 million at
June 30, 2009 ($37 million at June 30, 2008, and $35 million at
March 31, 2009). In addition to these guarantees, the Company has
other contingent liabilities totaling approximately $53 million,
primarily related to a bank guarantee that bonds an appeal of a
2006 fine in the European Union. Various subsidiaries of the
Company are involved in other litigation and tax examinations
incidental to their business activities. While the outcome of these
matters cannot be predicted with certainty, management is
vigorously defending the claims and does not currently expect that
any of them will have a material adverse effect on the Company's
financial position. However, should one or more of these matters be
resolved in a manner adverse to management's current expectation,
the effect on the Company's results of operations for a particular
fiscal reporting period could be material. NOTE 4. EARNINGS PER
SHARE The following table sets forth the computation of earnings
per share for the periods presented in the consolidated statements
of income. Three Months Ended June 30, (in thousands, except per
share data) 2009 2008 Basic Earnings Per Share Numerator for basic
earnings per share Net income attributable to Universal Corporation
$43,745 $21,111 Less: Dividends on convertible perpetual preferred
stock (3,712) (3,712) Earnings available to Universal Corporation
common shareholders for calculation of basic earnings per share
40,033 17,399 Denominator for basic earnings per share Weighted
average shares outstanding 24,985 26,897 Basic earnings per share
$1.60 $0.65 Diluted Earnings Per Share Numerator for diluted
earnings per share Earnings available to Universal Corporation
common shareholders $40,033 $17,399 Add: Dividends on convertible
perpetual preferred stock (if conversion assumed) 3,712 -- Earnings
available to Universal Corporation common shareholders for
calculation of diluted earnings per share 43,745 17,399 Denominator
for diluted earnings per share: Weighted average shares outstanding
24,985 26,897 Effect of dilutive securities (if conversion or
exercise assumed) Convertible perpetual preferred stock 4,728 --
Employee share-based awards 131 218 Denominator for diluted
earnings per share 29,844 27,115 Diluted earnings per share $1.47
$0.64 For the three months ended June 30, 2008, conversion of the
Company's outstanding Series B 6.75% Convertible Perpetual
Preferred Stock was not assumed since the effect was not dilutive
to earnings per share. NOTE 5. SEGMENT INFORMATION The principal
approach used by management to evaluate the Company's performance
is by geographic region, although some components of the business
are evaluated on the basis of their worldwide operations. The
Company evaluates the performance of its segments based on
operating income after allocated overhead expenses (excluding
significant non-recurring charges or credits), plus equity in
pretax earnings of unconsolidated affiliates. Operating results for
the Company's reportable segments for each period presented in the
consolidated statements of income were as follows: Three Months
Ended June 30, (in thousands of dollars) 2009 2008 SALES AND OTHER
OPERATING REVENUES Flue-cured and burley leaf tobacco operations:
North America $36,132 $48,427 Other regions (1) 521,172 401,485
Subtotal 557,304 449,912 Other tobacco operations (2) 58,808 56,375
Consolidated sales and other operating revenues $616,112 $506,287
OPERATING INCOME (LOSS) Flue-cured and burley leaf tobacco
operations: North America $306 $(426) Other regions (1) 63,909
35,185 Subtotal 64,215 34,759 Other tobacco operations (2) 9,198
3,378 Segment operating income 73,413 38,137 Less: Equity in pretax
earnings (loss) of unconsolidated affiliates (3) 3,641 (50)
Consolidated operating income $69,772 $38,187 (1) Includes South
America, Africa, Europe, and Asia regions, as well as inter-region
eliminations. (2) Includes Dark Air-Cured, Special Services, and
Oriental, as well as inter-company eliminations. Sales and other
operating revenues for this reportable segment include limited
amounts for Oriental because its financial results consist
principally of equity in the pretax earnings of an unconsolidated
affiliate. (3) Item is included in segment operating income, but
not included in consolidated operating income. DATASOURCE:
Universal Corporation CONTACT: Karen M. L. Whelan of Universal
Corporation, +1-804-359-9311, or fax: +1-804-254-3584, Web Site:
http://www.universalcorp.com/
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