HIGHLIGHTS
Results include a
Six Months
Fully diluted earnings per share of
Segment operating results of
Second Quarter
Segment operating earnings at
Uncommitted inventory levels reduced from first quarter to 14% of total inventory.
Segment operating income, which excludes the effect of those unusual items, was also lower in both the three- and six-month periods ended
The following table sets forth the charges and gains included in reported results:
Three Months Ended | Six Months Ended | |||||||||
(in millions of dollars, except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||
Charges and (gains) | ||||||||||
Charge for (reversal of) | $ 49.1 | $ (7.4) | $ 49.1 | $ (7.4) | ||||||
Restructuring costs, primarily in | 3.0 | 2.0 | 9.8 | 3.0 | ||||||
Gain on fire loss insurance settlement in | — | — | (9.6) | — | ||||||
Total effect on operating income | $ 52.1 | $ (5.4) | $ 49.3 | $ (4.4) | ||||||
Total effect on net income | $ 48.2 | $ (3.5) | $ 46.3 | $ (3.0) | ||||||
Total effect on diluted earnings per share | $ 0.12 | $ 0.10 | ||||||||
(1) | Fiscal year 2012 - fines and accumulated interest from the | |||||||||
Fiscal year 2011 -- the reversal of a portion of a | ||||||||||
(2) | Restructuring charges, primarily related to plant closures and workforce reductions in several areas. | |||||||||
(3) | The fire loss insurance settlement related to a plant fire in | |||||||||
"I am pleased to see the increase in selling activity since the end of the first fiscal quarter, and I am proud of our team's success in managing uncommitted inventory levels. That is one of the ways that we guard our financial resources to enable us to grow when we have opportunities. It also allows us to reward our shareholders as we have with our 41st consecutive annual dividend increase, which we announced today. Most importantly, our customer relationships remain strong, and we continue to focus on keeping costs low by maximizing efficiencies in our procurement and production processes while supporting the core of our successful operation - sustainable tobacco production."
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
Six Months
Operating income for the flue-cured and burley tobacco operations, which includes results for the
In the
Earnings for the Other Regions segment were
Second Quarter
In the second quarter of fiscal year 2012, operating income for flue-cured and burley operations declined by
OTHER TOBACCO OPERATIONS:
The Other Tobacco Operations segment operating income declined by
OTHER ITEMS:
In
Cost of sales decreased by about 7% to
Selling, general, and administrative costs were relatively flat in both the second fiscal quarter and in the first half of the year. For the quarter, currency-related items generated unfavorable variances of about
Interest expense was relatively flat for the second quarter and first half of fiscal year 2012 compared with previous periods. Interest income in the second quarter and the six months of the current year was about
The consolidated effective income tax rates on pretax earnings were approximately 275% and 70% for the quarter and six months ended
On
Additional information
Amounts described as "net income" and "earnings per diluted share" that are included in the previous discussion are attributable to
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; government regulation; product taxation; industry consolidation and evolution; 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
At
Headquartered in
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||
(In thousands of dollars, except per share data) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
(Unaudited) | (Unaudited) | ||||||||
Sales and other operating revenues | |||||||||
Costs and expenses | |||||||||
Cost of goods sold | 521,600 | 530,914 | 906,707 | 967,593 | |||||
Selling, general and administrative expenses | 57,660 | 59,094 | 119,238 | 119,277 | |||||
Other income | — | — | (9,592) | — | |||||
Restructuring costs | 2,962 | 2,020 | 9,821 | 2,969 | |||||
Charge for (reversal of) | 49,091 | (7,445) | 49,091 | (7,445) | |||||
Operating income | 9,713 | 79,605 | 45,226 | 120,710 | |||||
Equity in pretax earnings (loss) of unconsolidated affiliates | 153 | 2,014 | (3,336) | 2,392 | |||||
Interest income | 364 | 1,416 | 721 | 1,860 | |||||
Interest expense | 5,665 | 5,862 | 11,198 | 10,988 | |||||
Income before income taxes and other items | 4,565 | 77,173 | 31,413 | 113,974 | |||||
Income taxes | 12,562 | 23,390 | 22,088 | 35,773 | |||||
Net income (loss) | (7,997) | 53,783 | 9,325 | 78,201 | |||||
Less: net (income) loss attributable to noncontrolling interests in subsidiaries | (42) | (1,952) | (1,476) | (1,050) | |||||
Net income (loss) attributable to | (8,039) | 51,831 | 7,849 | 77,151 | |||||
Dividends on | (3,713) | (3,713) | (7,425) | (7,425) | |||||
Earnings (loss) available to | $ 48,118 | $ 424 | $ 69,726 | ||||||
Earnings (loss) per share attributable to | |||||||||
Basic | $ (0.51) | $ 2.00 | $ 0.02 | $ 2.89 | |||||
Diluted | $ (0.51) | $ 1.78 | $ 0.02 | $ 2.65 | |||||
See accompanying notes. | |||||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands of dollars) | |||||||
September 30, | September 30, | March 31, | |||||
(Unaudited) | (Unaudited) | ||||||
ASSETS | |||||||
Current | |||||||
Cash and cash equivalents | $ 45,505 | $ 43,816 | $ 141,007 | ||||
Accounts receivable, net | 378,406 | 315,290 | 335,575 | ||||
Advances to suppliers, net | 75,477 | 128,923 | 160,616 | ||||
Accounts receivable - unconsolidated affiliates | 47,875 | 68,493 | 10,433 | ||||
Inventories - at lower of cost or market: | |||||||
Tobacco | 966,914 | 1,076,984 | 742,422 | ||||
Other | 73,048 | 64,792 | 48,647 | ||||
Prepaid income taxes | 17,777 | 11,075 | 18,661 | ||||
Deferred income taxes | 69,905 | 47,342 | 47,009 | ||||
Other current assets | 70,444 | 74,227 | 73,864 | ||||
Total current assets | 1,745,351 | 1,830,942 | 1,578,234 | ||||
Property, plant and equipment | |||||||
Land | 13,986 | 15,866 | 14,851 | ||||
Buildings | 239,325 | 266,298 | 257,380 | ||||
Machinery and equipment | 530,982 | 551,551 | 555,316 | ||||
784,293 | 833,715 | 827,547 | |||||
Less accumulated depreciation | (479,882) | (503,859) | (510,844) | ||||
304,411 | 329,856 | 316,703 | |||||
Other assets | |||||||
Goodwill and other intangibles | 99,365 | 105,444 | 99,546 | ||||
Investments in unconsolidated affiliates | 88,217 | 107,588 | 115,478 | ||||
Deferred income taxes | 14,879 | 30,177 | 18,177 | ||||
Other noncurrent assets | 51,416 | 90,431 | 99,729 | ||||
253,877 | 333,640 | 332,930 | |||||
Total assets | $ 2,303,639 | $ 2,494,438 | |||||
See accompanying notes. | |||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands of dollars) | |||||||
September 30, | September 30, | March 31, | |||||
(Unaudited) | (Unaudited) | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current | |||||||
Notes payable and overdrafts | $ 288,444 | $ 372,727 | $ 149,291 | ||||
Accounts payable and accrued expenses | 198,942 | 214,339 | 213,014 | ||||
Accounts payable - unconsolidated affiliates | 2,607 | 140 | 4,154 | ||||
Customer advances and deposits | 56,332 | 86,628 | 8,426 | ||||
Accrued compensation | 17,526 | 17,559 | 30,201 | ||||
Income taxes payable | 9,294 | 15,656 | 12,265 | ||||
Current portion of long-term obligations | 10,000 | 100,000 | 95,000 | ||||
Total current liabilities | 583,145 | 807,049 | 512,351 | ||||
Long-term obligations | 300,000 | 326,466 | 320,193 | ||||
Pensions and other postretirement benefits | 105,546 | 100,899 | 102,858 | ||||
Other long-term liabilities | 88,232 | 52,936 | 50,213 | ||||
Deferred income taxes | 58,576 | 45,459 | 42,847 | ||||
Total liabilities | 1,135,499 | 1,332,809 | 1,028,462 | ||||
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 | 213,023 | 213,023 | 213,023 | ||||
Common stock, no par value, 100,000,000 shares authorized, 23,230,486 | |||||||
shares issued and outstanding (23,908,085 at | |||||||
23,240,503 at | 193,644 | 194,523 | 191,608 | ||||
Retained earnings | 800,763 | 798,269 | 825,751 | ||||
Accumulated other comprehensive loss | (54,519) | (51,122) | (44,776) | ||||
Total Universal Corporation shareholders' equity | 1,152,911 | 1,154,693 | 1,185,606 | ||||
Noncontrolling interests in subsidiaries | 15,229 | 6,936 | 13,799 | ||||
Total shareholders' equity | 1,168,140 | 1,161,629 | 1,199,405 | ||||
Total liabilities and shareholders' equity | $ 2,303,639 | $ 2,494,438 | |||||
See accompanying notes. | |||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(In thousands of dollars) | |||||
Six Months Ended | |||||
2011 | 2010 | ||||
(Unaudited) | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net income | $ 9,325 | $ 78,201 | |||
Adjustments to reconcile net income to net cash used by operating activities: | |||||
Depreciation | 21,786 | 21,516 | |||
Amortization | 785 | 814 | |||
Provisions for losses on advances and guaranteed loans to suppliers | 6,421 | 7,363 | |||
Foreign currency remeasurement loss (gain), net | 1,921 | (183) | |||
Gain on fire loss insurance settlement | (9,592) | 0 | |||
Restructuring costs | 9,821 | 2,969 | |||
Charge for (reversal of) | 49,091 | (7,445) | |||
Other, net | 20,061 | (7,794) | |||
Changes in operating assets and liabilities, net | (231,659) | (410,647) | |||
Net cash used by operating activities | (122,040) | (315,206) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchase of property, plant and equipment | (18,474) | (23,345) | |||
Proceeds from sale of property, plant and equipment, and other | 7,905 | 5,684 | |||
Proceeds from fire loss insurance settlement | 9,933 | — | |||
Net cash used by investing activities | (636) | (17,661) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Issuance (repayment) of short-term debt, net | 144,148 | 190,000 | |||
Repayment of long-term obligations | (95,000) | (10,000) | |||
Issuance of common stock | 134 | — | |||
Repurchase of common stock | (4,004) | (19,540) | |||
Dividends paid on convertible perpetual preferred stock | (7,425) | (7,425) | |||
Dividends paid on common stock | (22,343) | (22,779) | |||
Proceeds from termination of interest rate swap agreements | 13,388 | 0 | |||
Net cash provided by financing activities | 28,898 | 130,256 | |||
Effect of exchange rate changes on cash | (1,724) | 474 | |||
Net decrease in cash and cash equivalents | (95,502) | (202,137) | |||
Cash and cash equivalents at beginning of year | 141,007 | 245,953 | |||
Cash and cash equivalents at end of period | $ 43,816 | ||||
See accompanying notes. | |||||
NOTE 1. BASIS OF PRESENTATION
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 expectation, 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 | Six Months Ended | ||||||||
(in thousands, except per share data) | 2011 | 2010 | 2011 | 2010 | |||||
Basic Earnings (Loss) Per Share | |||||||||
Numerator for basic earnings (loss) per share | |||||||||
Net income (loss) attributable to | $ (8,039) | ||||||||
Less: Dividends on convertible perpetual preferred stock | (3,713) | (3,713) | (7,425) | (7,425) | |||||
Earnings (loss) available to | |||||||||
for calculation of basic earnings (loss) per share | (11,752) | 48,118 | 424 | 69,726 | |||||
Denominator for basic earnings (loss) per share | |||||||||
Weighted average shares outstanding | 23,229 | 24,081 | 23,211 | 24,147 | |||||
Basic earnings (loss) per share | $ (0.51) | $ 2.00 | $ 0.02 | $ 2.89 | |||||
Diluted Earnings (Loss) Per Share | |||||||||
Numerator for diluted earnings (loss) per share | |||||||||
Earnings (loss) available to | $ 424 | ||||||||
Add: Dividends on convertible perpetual preferred stock (if | |||||||||
conversion assumed) | — | 3,713 | — | 7,425 | |||||
Earnings (loss) available to | |||||||||
for calculation of diluted earnings (loss) per share | (11,752) | 51,831 | 424 | 77,151 | |||||
Denominator for diluted earnings (loss) per share: | |||||||||
Weighted average shares outstanding | 23,229 | 24,081 | 23,211 | 24,147 | |||||
Effect of dilutive securities (if conversion or exercise assumed) | |||||||||
Convertible perpetual preferred stock | — | 4,747 | — | 4,745 | |||||
Employee share-based awards | — | 225 | 296 | 242 | |||||
Denominator for diluted earnings (loss) per share | 23,229 | 29,053 | 23,507 | 29,134 | |||||
Diluted earnings (loss) per share | $ (0.51) | $ 1.78 | $ 0.02 | $ 2.65 | |||||
For the three and six months ended
For the six months ended
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 | Six Months Ended | ||||||||
(in thousands of dollars) | 2011 | 2010 | 2011 | 2010 | |||||
SALES AND OTHER OPERATING REVENUES | |||||||||
Flue-cured and burley leaf tobacco operations: | |||||||||
North America | $ 67,729 | $ 56,751 | $ 126,358 | $ 119,918 | |||||
Other regions (1) | 535,149 | 559,939 | 893,799 | 961,758 | |||||
Subtotal | 602,878 | 616,690 | 1,020,157 | 1,081,676 | |||||
Other tobacco operations (2) | 38,148 | 47,498 | 100,334 | 121,428 | |||||
Consolidated sales and other operating revenues | |||||||||
OPERATING INCOME | |||||||||
Flue-cured and burley leaf tobacco operations: | |||||||||
North America | $ 5,053 | $ 11,998 | $ 10,630 | $ 15,690 | |||||
Other regions (1) | 56,441 | 58,583 | 77,350 | 90,910 | |||||
Subtotal | 61,494 | 70,581 | 87,980 | 106,600 | |||||
Other tobacco operations (2) | 425 | 5,613 | 3,230 | 12,026 | |||||
Segment operating income | 61,919 | 76,194 | 91,210 | 118,626 | |||||
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates (3) | (153) | (2,014) | 3,336 | (2,392) | |||||
Restructuring costs (4) | (2,962) | (2,020) | (9,821) | (2,969) | |||||
Charge for (reversal of) | (49,091) | 7,445 | (49,091) | 7,445 | |||||
Add: Other income (4) | — | — | 9,592 | — | |||||
Consolidated operating income | $ 9,713 | $ 79,605 | $ 45,226 | $ 120,710 | |||||
(1) Includes South America, | |||||||||
(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. | |||||||||
SOURCE
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