FISCAL YEAR 2009 THIRD QUARTER HIGHLIGHTS
-- Diluted earnings per share up 14% to
-- Revenues up 22% to
and higher green tobacco costs.
-- Operating income down
remeasurement losses as the U.S. dollar strengthened.
FISCAL YEAR 2009 NINE-MONTH HIGHLIGHTS
-- Diluted earnings per share up 12%, to
share last year.
-- Revenues up 19% to
-- Operating income up slightly to
Mr. Freeman stated, "We are pleased with our operations so far this year. It was gratifying to see the recovery of our African operations. African results improved due to higher volumes as well as efficiencies and strong teamwork. But the continued devaluation of the Brazilian currency has again adversely affected our results because of our balance sheet exposure there. Part of that exposure is related to farmer receivables that will be collected upon delivery of the current crop, and it reflects the higher cost of the local currency when fertilizer and seeds were provided to the farmers. The agricultural materials were purchased in the spring in the midst of the overheated commodity markets and when the local Brazilian currency was 30 - 40% stronger than it is today. The regions have delivered operating improvements as a result of hard work and careful attention to costs.
"Tobacco competes with commodity crops for acreage, and world markets for commodity products have changed a great deal during the fiscal year. Early in the year, the cost of green tobacco escalated as all areas worked to ensure sustainability of supply in the face of competing crops. The market situation for fiscal year 2010 is likely to be very different. We saw a much needed recovery in burley volumes in
"Notwithstanding the 12% increase in earnings per share this year, we have not been immune to the effects of the financial chaos in world markets. Remeasurement losses related to the rapid and severe weakening of the local Brazilian currency reduced our earnings per share by
FLUE-CURED AND BURLEY OPERATIONS:
The flue-cured and burley operations posted a very strong quarter as operating income increased by 3%, to about
For the nine months, results for flue-cured and burley operations increased by more than 5%, to nearly
OTHER TOBACCO OPERATIONS
Results for Other Tobacco Operations declined as earnings from the Special Services group, where sales were accelerated last year, showed an expected decrease related to a shift of business to the origins. That change also caused the 16% decline in segment revenue in the quarter. In addition, results from the oriental tobacco joint venture declined, primarily due to the sale of lower margin styles and grades this year and to currency remeasurement losses. Earnings of the dark tobacco operations were comparable to last year. For the nine months, segment earnings were 15% lower than the same period last year. The shift in business from Special Services caused the decline, but that effect was partially offset by improved performance in dark tobacco operations and the oriental tobacco joint venture. The latter group saw higher volumes for the nine-month period, the effect of which was partly offset by lower margins and lower currency remeasurement gains this year.
Selling, general and administrative expenses, which are included in segment operating results, increased by about
Net interest expense increased by
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
UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands of dollars, except per share data) Three Months Ended Nine Months Ended December 31, December 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) Sales and other operating Revenues $699,144 $573,094 $1,991,021 $1,678,641 Costs and expenses Cost of goods sold 533,176 446,089 1,566,876 1,324,752 Selling, general and administrative expenses 88,556 47,869 237,351 165,545 Restructuring costs - - - 3,304 Operating income 77,412 79,136 186,794 185,040 Equity in pretax earnings of unconsolidated affiliates 5,259 8,477 12,792 7,231 Interest income 195 4,453 1,562 13,317 Interest expense 11,435 10,314 29,214 32,274 Income before income taxes and other items 71,431 81,752 171,934 173,314 Income taxes 18,638 29,204 52,034 62,937 Minority interests, net of income taxes (291) 1,796 3,923 974 Income from continuing Operations 53,084 50,752 115,977 109,403 Loss from discontinued operations, net of income taxes - - - (145) Net income 53,084 50,752 115,977 109,258 Dividends on convertible perpetual preferred stock (3,712) (3,712) (11,137) (11,137) Earnings available to common shareholders $49,372 $47,040 $104,840 $98,121 Basic earnings per common share: From continuing operations $1.98 $1.72 $4.07 $3.60 From discontinued operations - - - (0.01) Net income $1.98 $1.72 $4.07 $3.59 Diluted earnings per common share: From continuing operations $1.78 $1.56 $3.78 $3.38 From discontinued operations - - - (0.01) Net income $1.78 $1.56 $3.78 $3.37 See accompanying notes. UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) December 31, December 31, March 31, 2008 2007 2008 (Unaudited) (Unaudited) ASSETS Current Cash and cash equivalents $87,971 $502,277 $186,070 Short-term investments 5,939 - 58,889 Accounts receivable, net 342,595 233,861 231,107 Advances to suppliers, net 153,806 114,897 149,376 Accounts receivable - unconsolidated affiliates 35,234 46,732 43,718 Inventories - at lower of cost or market: Tobacco 613,597 486,785 602,945 Other 67,000 42,289 42,562 Prepaid income taxes 20,270 8,032 17,696 Deferred income taxes 36,799 19,158 22,737 Other current assets 65,630 58,264 61,960 Total current assets 1,428,841 1,512,295 1,417,060 Property, plant and equipment Land 15,978 17,061 16,460 Buildings 252,846 250,202 254,737 Machinery and equipment 503,993 515,870 519,695 772,817 783,133 790,892 Less accumulated depreciation (453,288) (442,844) (456,059) 319,529 340,289 334,833 Other assets Goodwill and other intangibles 106,137 104,689 106,647 Investments in unconsolidated affiliates 110,166 114,622 116,185 Deferred income taxes 35,562 66,991 49,632 Other noncurrent assets 97,020 183,948 109,755 348,885 470,250 382,219 Total assets $2,097,255 $2,322,834 $2,134,112 See accompanying notes. UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of dollars) December 31, December 30, March 31, 2008 2007 2008 (Unaudited) (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $140,677 $139,632 $126,229 Accounts payable and accrued Expenses 201,961 173,864 210,354 Accounts payable - unconsolidated affiliates 28,880 8,815 10,343 Customer advances and deposits 27,344 86,099 21,030 Accrued compensation 16,646 15,007 25,484 Income taxes payable 10,087 12,712 8,886 Current portion of long-term Obligations 79,500 150,000 - Total current liabilities 505,095 586,129 402,326 Long-term obligations 333,943 400,644 402,942 Pensions and other postretirement Benefits 86,609 98,242 88,278 Other long-term liabilities 66,796 73,322 84,958 Deferred income taxes 54,156 47,881 36,795 Total liabilities 1,046,599 1,206,218 1,015,299 Minority interests 6,861 6,985 3,182 Shareholders' equity 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
December 31, 2007, and March 31, 2008) 213,023 213,023 213,023 Common stock, no par value, 100,000,000 shares authorized, 24,987,055 shares issued and outstanding (27,299,524 at December 31, 2007, and 27,162,150 at March 31, 2008) 193,020 198,581 206,436 Retained earnings 688,015 729,548 711,655 Accumulated other comprehensive Loss (50,263) (31,521) (15,483) Total shareholders' equity 1,043,795 1,109,631 1,115,631 Total liabilities and shareholders' equity $2,097,255 $2,322,834 $2,134,112 See accompanying notes. UNIVERSAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) Nine Months Ended December 31, 2008 2007 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS: Net income $115,977 $109,258 Adjustments to reconcile net income to net cash provided (used) by operating activities of continuing operations: Net loss from discontinued operations -- 145 Depreciation 31,651 31,028 Amortization 736 1,597 Provisions for losses on advances and guaranteed loans to suppliers 14,427 12,218 Remeasurement loss (gain), net 42,432 (13,187) Restructuring costs -- 3,304 Other, net 31,248 29,677 Changes in operating assets and liabilities, net (243,274) 28,988 Net cash provided (used) by operating activities of continuing operations (6,803) 203,028 CASH FLOWS FROM INVESTING ACTIVITIES OF CONTINUING OPERATIONS: Purchase of property, plant and equipment (28,900) (18,355) Purchases of short-term investments (9,658) -- Maturities and sales of short-term investments 62,833 -- Proceeds from sale of business, less cash of business sold -- 26,556 Proceeds from sale of property, plant and equipment, and other 14,530 15,964 Deposit to escrow account -- (32,098) Net cash provided (used) by investing activities of continuing operations 38,805 (7,933) CASH FLOWS FROM FINANCING ACTIVITIES OF CONTINUING OPERATIONS: Issuance (repayment) of short-term debt, net 28,288 (2,559) Repayment of long-term debt...... -- (14,000) Issuance of common stock 37 16,131 Repurchase of common stock (111,073) (4,084) Dividends paid on convertible perpetual preferred stock (11,137) (11,137) Dividends paid on common stock (34,623) (36,422) Other (104) (907) Net cash used by financing activities of continuing operations (128,612) (52,978) Net cash provided (used) by continuing operations (96,610) 142,117 CASH FLOWS FROM DISCONTINUED OPERATIONS: Net cash provided by operating activities of discontinued operations -- 6,495 Net cash used by investing activities of discontinued operations -- (17) Net cash used by financing activities of discontinued operations -- (4,957) Net cash provided by discontinued operations -- 1,521 Effect of exchange rate changes on cash (1,489) 164 Net increase (decrease) in cash and cash equivalents (98,099) 143,802 Cash and cash equivalents of continuing operations at beginning of year 186,070 358,236 Cash and cash equivalents of discontinued operations at beginning of year -- 239 Less: Cash and cash equivalents of discontinued operations at end of period -- -- Cash and cash equivalents at end of period $87,971 $502,277 See accompanying notes.
NOTE 1. BASIS OF PRESENTATION
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 document 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
NOTE 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
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 expectations, the effect on the Company's results of operations for a particular fiscal reporting period could be material.
NOTE 3. 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 Nine Months Ended December 31, December 31, (in thousands, except per share data) 2008 2007 2008 2007 Basic Earnings Per Share Numerator for basic earnings per share From continuing operations: Income from continuing operations $53,084 $50,752 $115,977 $109,403 Less: Dividends on convertible perpetual preferred stock (3,712) (3,712) (11,137) (11,137) Earnings available to common shareholders from continuing operations 49,372 47,040 104,840 98,266 From discontinued operations: Earnings (loss) available to common shareholders from discontinued operations - - - (145) Net income available to common shareholders $49,372 $47,040 $104,840 $98,121 Denominator for basic earnings per share Weighted average shares outstanding 24,989 27,357 25,759 27,285 Basic earnings per share: From continuing operations $1.98 $1.72 $4.07 $3.60 From discontinued operations - - - (0.01) Net income per share $1.98 $1.72 $4.07 $3.59 Diluted Earnings Per Share Numerator for diluted earnings per share From continuing operations: Earnings available to common shareholders from continuing operations $49,372 $47,040 $104,840 $98,266 Add: Dividends on convertible perpetual preferred stock (if conversion assumed) 3,712 3,712 11,137 11,137 Earnings available to common shareholders from continuing operations for calculation of diluted earnings per share 53,084 50,752 115,977 109,403 From discontinued operations: Earnings (loss) available to common shareholders from discontinued operations - - - (145) Net income available to common shareholders $53,084 $50,752 $115,977 $109,258 Denominator for diluted earnings per share: Weighted average shares outstanding 24,989 27,357 25,759 27,285 Effect of dilutive securities (if conversion or exercise assumed) Convertible perpetual preferred stock 4,719 4,711 4,717 4,710 Employee share-based awards 142 373 196 385 Denominator for diluted earnings per share 29,850 32,441 30,672 32,380 Diluted earnings per share: From continuing operations $1.78 $1.56 $3.78 $3.38 From discontinued operations - - - (0.01) Net income per share $1.78 $1.56 $3.78 $3.37
NOTE 4. 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 Nine Months Ended December 31, December 31, (in thousands of dollars) 2008 2007 2008 2007 SALES AND OTHER OPERATING REVENUES Flue-cured and burley leaf tobacco operations: North America $160,979 $133,319 $264,272 $222,004 Other regions (1) 482,538 373,670 1,570,299 1,258,781 Subtotal 643,517 506,989 1,834,571 1,480,785 Other tobacco operations (2) 55,627 66,105 156,450 197,856 Consolidated sales and other operating revenues $699,144 $573,094 $1,991,021 $1,678,641 OPERATING INCOME Flue-cured and burley leaf tobacco operations: North America $23,894 $19,395 $27,218 $18,364 Other regions (1) 49,747 52,016 147,385 147,928 Subtotal 73,641 71,411 174,603 166,292 Other tobacco operations (2) 9,030 16,202 24,983 29,283 Segment operating income 82,671 87,613 199,586 195,575 Less: Equity in pretax earnings of unconsolidated affiliates (3) 5,259 8,477 12,792 7,231 Restructuring costs (4) - - - 3,304 Consolidated operating income $77,412 $79,136 $186,794 $185,040 (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. (4) Item is not included in segment operating income, but is included in consolidated operating income.
Universal Corporation -0- 02/05/2009 /CONTACT: Karen M. L. Whelan of Universal Corporation, +1-804-359-9311, fax +1-804-254-3594, email@example.com/ /Web Site: http://www.universalcorp.com / (UVV UVV)