F O R M  10-K



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



          [ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                    For the fiscal year ended June 30, 1994

                                       OR

        [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

               SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

               For the transition period from ________________ to



                          Commission File Number 1-652



                             UNIVERSAL CORPORATION

             (Exact name of Registrant as specified in its charter)



State or other jurisdiction of incorporation or organization - VIRGINIA


I.R.S. Employer Identification Number - 54-0414210



Address of principal executive offices - HAMILTON STREET AT BROAD
                                         RICHMOND, VIRGINIA  23230



Telephone Number - (804) 359-9311



Securities registered pursuant to Section 12(b) of the Act:



                        Name of each exchange      Outstanding Shares
Title of each class            on which registered       at September 21, 1994

8% Cumulative Preferred                None                          4

Additional Preferred Stock              None                        None



Common Stock, no par value           New York                   35,001,185



Securities registered pursuant to Section 12(g) of the Act:  None



Indicate by "X" mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.              Yes  X  No



Indicate by "X" mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein,  and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                            Yes X   No



The aggregate market value of Registrant's voting stock held by non-affiliates
was  $764,000,000  at September 21, 1994.



                     INFORMATION INCORPORATED BY REFERENCE



Certain information in the September 23, 1994 Proxy Statement for the Annual
Meeting of Shareholders of Registrant is incorporated by reference into Part III
hereof.





PART I

ITEM 1.  BUSINESS



A.    The Company



Universal Corporation (which together with its subsidiaries is
referred to herein as "Universal" or the "Company") is the
world's largest independent leaf tobacco dealer and has
additional operations in agri-products and lumber and building
products.  Universal's tobacco operations have been the
principal focus of the Company since its founding in 1918, and
for the fiscal year ended June 30, 1994, such operations
accounted for 73% of revenues and 75% of operating profits.  Its
agri-products and lumber and building products operations
accounted for 15% and 12% of  revenues and 8% and  17% of
operating profits, respectively, during the same period.  See
Note 5 to Consolidated Financial Statements for additional
business segment and geographical information.





B.    Description of Tobacco Business



General



Universal is the world's largest independent leaf tobacco
dealer.  This business involves selecting, buying, shipping,
processing, packing, storing, and financing leaf tobacco in the
United States and other tobacco growing countries for the
account of, or for resale to, manufacturers of tobacco products
throughout the world.  Universal does not manufacture cigarettes
or other consumer tobacco products.  Most of its tobacco
revenues are derived from sales of processed tobacco and from
fees and commissions for specific services for its customers.



Timely and efficient processing of leaf tobacco is a service of
continuing importance to the Company's customers, the tobacco
product manufacturers, as the quality of the Company's finished
product substantially affects the cost and quality of the
manufacturer's production.  The Company's processing includes
grading in the factories, blending, separation of leaf lamina
from the stems, and packing to precise moisture targets for
proper aging.  To accomplish these tasks according to exacting
customer specifications requires considerable skill and
significant investment in plants and machinery.



The Company's sales are predominantly flue-cured and burley
tobaccos.  Universal estimates that in fiscal 1994 it purchased
or processed approximately 33% of the flue-cured and burley
tobacco produced in the aggregate in the United States, Brazil,
Zimbabwe, and Malawi.   In addition, Universal  maintains a
presence, and in certain cases a leading presence, in virtually
all other tobacco growing regions in the world.  Management
believes that its leading position in the leaf tobacco industry
is based on its broad market presence, its development of
processing equipment and technologies, its solid financial
position, and its ability to meet customer demand through
internal growth and selected acquisitions.


Universal has a leading position in worldwide dark tobacco
markets.  Its operations are located in the major producing
countries (i.e., the United States, the Dominican Republic,
Indonesia, and northern Brazil) and other smaller markets.
These types of tobacco are typically used for cigars and
smokeless tobacco products.



Although consumption of tobacco products in the United States
and certain industrialized countries has been declining,
consumption in most developing countries has been rising.
Moreover, as a result of the elimination of trade barriers in
Far Eastern markets and the opening of markets in Eastern and
Central Europe, a significant amount of the world's tobacco
markets are open to free trade compared to ten years ago.



Reports and speculation with respect to the alleged harmful
physical effects of cigarette smoking, restrictions on the use
of tobacco products in public places and in advertising, and
increases in sales and excise taxes have all had some adverse
effect upon cigarette sales in the U.S. and in certain foreign
countries.  The U. S. Environmental Protection Agency has
classified environmental tobacco smoke as a "Group A" ("known
human") carcinogen, which action has been challenged in court by
the Company and others.  The U.S. Occupational Safety  and
Health Administration has proposed a standard on indoor air
quality which if adopted would substantially limit smoking in
the workplace.  Also in the U.S., legislation has been proposed
to increase the excise tax on cigarettes, and the U.S. Food and
Drug Administration is considering regulating nicotine as a
drug.



Litigation seeking damages for health problems alleged to have
resulted from the use of tobacco is pending against the leading
United States manufacturers of consumer tobacco products.  It is
not possible to predict the outcome of such litigation or what
effect adverse determinations against the manufacturers might
have on the business of the Company.



Domestic Tobacco Business



Universal is represented by its buyers on all significant
tobacco markets in the United States, including flue-cured
tobacco markets in Virginia, North Carolina, South Carolina,
Georgia, and Florida; Light air-cured (burley and Maryland)
tobacco markets in Kentucky, Tennessee, Virginia, North
Carolina, and Maryland; air-cured tobacco markets in Kentucky
and Virginia; dark fired and dark air-cured markets in Virginia,
Tennessee, and Kentucky; and cigar/chewing tobacco markets in
Connecticut, Pennsylvania, and Wisconsin.



In the United States, flue-cured and burley tobacco is generally
sold at public auction to the highest bidder.  In addition, the
price of such tobacco is supported under an industry-funded
federal program that also restricts tobacco production through a
quota system.  The price support system has operated recently to
cause U.S. grown tobacco to be more expensive than most non-U.S.
tobacco, resulting in lower exports and declining quotas.
Industry leaders are currently exploring options including
program changes to improve the competitive position of U.S.
leaf.  Other factors affecting the competitive position of U.S.
tobacco include improved methods of production and quality in
the U.S. and in foreign countries.  In 1994, imports of foreign
leaf declined in response to legislation enacted in 1993 which
requires that cigarettes manufactured in the U.S. contain at
least 75%  U.S. grown tobacco.  Although this legislation has
been found in violation of GATT, new measures limiting tobacco
imports have been proposed.  Despite the recent decline in
imports, inventories of U.S. flue-cured and burley tobacco  held
by various stabilization cooperatives under the price support
program increased in 1994.  This has resulted in higher revenues
to the Company for processing and storing such tobacco,
offsetting reduced processing volume from the Company's regular
customers.  See "Management's Discussion and  Analysis of
Financial Condition and Results of Operations -- Results of
Operations".



Foreign Tobacco Business



Universal's business of selecting, buying, shipping, processing,
packing, storing, financing, and selling tobacco is, in addition
to its domestic operations, conducted in varying degrees in
Argentina, Belgium, Brazil, Canada, the Commonwealth of
Independent States (the former Soviet Union), Colombia, the
Dominican Republic, Ecuador, France, Germany, Greece, Guatemala,
Hong Kong, Hungary, India, Indonesia, Italy, Malawi, Mexico, the
Netherlands, Paraguay, the People's Republic of China, the
Philippines, Spain, Switzerland, Tanzania, Thailand, Turkey,
Uganda, the United Kingdom, Zambia, and Zimbabwe.



In a number of countries including Brazil, Hungary, Italy,
Mexico, and Thailand, Universal contracts directly with tobacco
farmers, in some cases before harvest, and thereby takes the
risk that the delivered quality and quantity will meet market
requirements.  The price may be set by negotiation with farmers'
groups or with agencies of the local government.  In some
countries Universal also provides agronomy services and advances
for fertilizers and supplies.  Tobacco in Zimbabwe, Malawi,
Canada, and to a certain extent in India, is purchased under a
public auction system.



In southern Brazil, the Company has made substantial capital
investments and the profitability of the operations there can
materially affect the operating results of the Company.  The
Company owns three tobacco leaf processing facilities in
southern Brazil.  See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and
Capital Resources".



Sales to foreign customers are made by Universal's sales force
and through the use of commissioned agents.  Most foreign
customers are long-established firms or government monopolies.



Universal's foreign operations are subject to the usual
international business risks, including unsettled political
conditions, expropriation, import and export restrictions,
exchange controls, and currency fluctuations.  During the
tobacco season in many of the countries enumerated above,
Universal has advanced substantial sums, has guaranteed local
loans, or has guaranteed lines of credit in substantial amounts
for the purchase of tobacco.  Most tobacco sales are denominated
in U.S. dollars, thus limiting the Company's currency risk.



Recent Developments and Trends



For recent developments and trends in the Company's tobacco
business, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations".


Seasonality



The purchasing and processing aspects of Universal's tobacco
business are seasonal in nature.  The United States flue-cured
tobacco markets usually open the third week of July and last for
approximately four months.  The United States burley tobacco
markets open in late November and last for approximately two and
one-half months.  Tobacco in Brazil is usually purchased from
January through May.  Other markets around the world last for
similar periods, although at different times of the year, and
this has resulted in less overall seasonality in the Company's
business.



Universal normally operates its processing plants for
approximately seven to nine months of the year.  It purchases
most of the tobacco which it redries and packs in the U.S. in
the eight-month period, July through February.  During this
period, inventories of green tobacco, inventories of redried
tobacco and trade accounts receivable normally reach peak levels
in succession.  Current liabilities, particularly short-term
notes payable to banks, commercial paper, and customer advances
are a means of financing this expansion of current assets and
normally reach their peaks in this period.  At the end of the
Company's fiscal year (June 30), these seasonal expansions in
the United States are normally not reflected in the components
of working capital. Seasonal expansions are reflected at that
time, however, for Universal's operations in Brazil, Italy and
Mexico.



Customers



A material part of the Company's tobacco business is dependent
upon a few customers, the loss of any one of whom would have an
adverse effect on the Company.  The Company has long-term
contracts (which under certain circumstances may be amended or
terminated) with a few of these customers, and, while there are
no formal continuing contracts with the others, the Company has
done business with each of its major customers for over 35
years.  For the year ended June 30, 1994, tobacco sales to
Philip Morris Companies, Inc. accounted for greater than 10% of
consolidated revenues.  See Note 12 to Consolidated Financial
Statements.  Five other customers accounted for approximately
12%.



Universal had orders from customers in excess of $231 million
for its tobacco inventories at June 30, 1994.  Based upon
historical experience, it is expected that at least 90% of such
orders will be delivered during the fiscal year ending June 30,
1995.  Typically, delays in the delivery of orders result from
changing customer requirements.  Orders from customers at June
30, 1993,  were in excess of $245 million, of which over 90% was
delivered in the following fiscal year.  The level of purchase
commitments for tobacco fluctuates from period to period and is
significant only to the extent that it reflects short-term
changes in demand for redried tobacco.



Competitors



Competition among leaf tobacco dealers is based on the price
charged for products and services as well as the dealer's
ability to meet customer specifications in the buying,
processing, and financing of tobacco.  Universal has many
processing plants equipped with the latest technology and a
world-wide buying organization of tobacco specialists which,
management believes, give it a competitive edge.  Competition
varies depending on the market or country involved.  Normally,
there are from five to seven  buyers on each of the United
States flue-cured and burley markets, representing both
cigarette manufacturers and dealers.  The number of competitors
in foreign markets varies from country to country, but there is
competition in all areas to buy the available tobacco.  The
principal competitors in the industry that do not manufacture
consumer tobacco products and that compete with the Company on
the United States markets and on foreign markets are as follows:
 Monk-Austin, Inc., Dibrell Brothers, Incorporated, Export Leaf
Tobacco Company, and Standard Commercial Tobacco Company.  Of
the significant competitors in the United States that are not
also manufacturers, Universal believes that it ranks first in
total U.S. market share and also first in total worldwide market
share.



C.    Description of Agri-Products Business



The Company's agri-products business involves the selecting,
buying, shipping, processing, storing, financing, distribution,
importing and exporting of a number of products including tea,
rubber, sunflower seeds, nuts, dried fruit, canned meats, spices
and seasonings.   During the past fiscal year, the Company
acquired two additional companies in the dried fruit and nut
import and distribution business and discontinued its coffee
trading activities.



The emphasis of the Company's agri-products business is on
value-adding activities and/or trading of physical products in
markets where a real function can be performed in the supply
system from the countries of origin to the consuming industries.
 In a number of countries, longstanding sourcing arrangements
for certain products or value-adding activities through modern
processing facilities (tea, spices and sunflower seeds)
contribute to the stability and profitability of the business.
Traders are subject to strict trading limits to minimize
speculative risks and allow effective management control.
Seasonal effects on trading are limited.



The Company provides various products to numerous large and
small customers in the food and food packaging industry and in
the rubber and tire manufacturing industry.  Generally, there
are no formal continuing contracts with these customers,
although business relationships may be longstanding.  No single
customer accounts for 10% or more of the Company's consolidated
agri-products revenues.



Competition among traders in the agricultural products in which
Universal deals is based on price as well as the ability to meet
customer requirements in buying, processing, financing and
delivery.  The number of competitors in each market varies from
country to country but there is competition for all products and
markets in which the Company operates.  Some of the main
competitors are:  Agway, Akbar Brothers, Andrew Weir
Commodities, Atlantic, Ennar, Cargill, Dahlgren, E.D. and F.
Mann, EP Lambert Co., Finlay, Metallgeschellschaft/SAFIC Alcan,
Stassens, Suiker Unie, Symington, and Verstegen.



For recent developments and trends in the Company's
agri-products business, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations".



D.    Description of Lumber and Building Products Business



The Company is engaged in the lumber and building products
business in the Netherlands and Belgium, where its subsidiaries
distribute and sell lumber and related building products through
a network of  regional outlets, mainly to the building and
construction market.  The Company's lumber and building products
business has a leading market share in the Netherlands and
significant operations in Belgium.  The majority of lumber
products are sourced outside the Netherlands, principally in
North America, Scandinavia, Eastern and Western Europe, and the
Far East.



The lumber and building products business is seasonal to the
extent that winter weather may temporarily interrupt the
building industry which in turn affects this segment.  The
lumber and building products business is also subject to
exchange risks and other normal market and operational risks
associated with lumber operations centered in Europe including
general economic conditions in the countries where the Company
is located and related trends in the building and construction
industries.



The wholesale and distribution activities necessarily include
carrying inventories to meet customers' demands for rapid
delivery.  The level of inventories is based on a balance
between providing service and continuity of supply to customers
and achieving the highest possible turnover.  The Company does
not provide extended payment terms to its customers.  No single
customer accounts for 10% or more of the Company's consolidated
lumber and building products revenues.



The Company's lumber and building products sales accounted for
approximately 17% of the total market volume for the
Netherlands, which is slightly above the market share of its
largest competitor, Pont-Meyer N.V.  Ten additional competitors
account for approximately 20% to 30% of the market share and the
balance is held by approximately 200 smaller competitors.  The
primary factors of competition are quality and price, product
range, and speed and reliability of logistic systems.  The
Company  believes that its full geographical market coverage,
its automated inventory control and billing system, and
efficient logistics give it a competitive advantage in the
Netherlands.  The Company's share of the highly fragmented
Belgium lumber and building products market is approximately 3%.



For recent developments and trends in the Company's lumber and
building products business, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations".







E.    Employees



The Company employed approximately 25,000 employees on average
throughout the world during the fiscal year ended June 30, 1994.
 This figure is estimated because many of the non-salaried
personnel are seasonal employees.



Universal believes that in the United States approximately 1,300
of the non-salaried employees of its consolidated tobacco
subsidiaries are represented by unions.  Most of these are
seasonal employees.  The Company's labor relations have been
good.


F.    Research and Development



No material amounts were expended for research and development
during the fiscal years ended June 30, 1994, 1993, and 1992.



G.    Patents, etc.



The Company holds no material patents, licenses, franchises or
concessions.



H.    Environmental Matters



Compliance with Federal, state and local provisions regarding
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had, and
is not anticipated to have, any material effect upon the capital
expenditures, earnings or competitive position of the Company.





ITEM 2.  PROPERTIES



Universal owns the land and building located at Hamilton and
Broad Streets in Richmond, Virginia, where it is headquartered.
The building contains approximately 83,000 square feet of floor
space.  The Company also owns a smaller office building nearby
which contains approximately 11,300 square feet of floor space.



In its domestic tobacco processing operations, Universal owns
six large, modern, high volume plants which have the capacity to
thresh, separate, quality grade and redry tobacco.  Four of
these plants are located in North Carolina (Wilson, Henderson,
Rocky Mount and Smithfield), one plant is in Danville, Virginia,
and one plant is in Lexington, Kentucky.  The Henderson plant
has a production capacity of over 140 million pounds of green
tobacco and 500,000 square feet of floor space.  The Wilson
plant has approximately 500,000 square feet of floor space and a
production capacity of over 130 million pounds of green tobacco.
 The remaining four plants each have a floor space of 300,000 to
400,000 square feet and an average annual production capacity of
over 100 million pounds of green tobacco.  Universal also owns a
processing facility in Dinwiddie County, Virginia with 250,000
square feet of floor space.



Universal's foreign subsidiaries, some of which are not
majority-owned, own tobacco processing plants in the following
locations:  a large processing plant in Canada; one large
processing plant and one smaller plant in Malawi; three large
processing plants in Italy; and plants in the Philippines,
Greece, Hungary, Thailand and Turkey.  Universal's two plants in
South Korea recently have been sold.  In Brazil, Universal owns
three large plants.  In Zimbabwe the operations of two of the
Company's four plants have recently been combined with one plant
being utilized for storage.



The facilities described above are engaged primarily in
processing tobacco used by manufacturers in the production of
cigarettes.  In addition, Universal owns plants that process
cigar/chewing tobaccos in Lancaster, Pennsylvania; Kenbridge,
Virginia; the Dominican Republic; Colombia; Indonesia; and
Brazil.  It operates a sheet manufacturing plant in the
Netherlands and has access to one in Germany.




Universal owns or leases extruder plants (baling operations),
packaging stations, and warehouse space in the tobacco-growing
states and abroad.  Large baling plants are owned in Lumberton
and Rocky Mount, North Carolina; Danville, Virginia;
Greeneville, Tennessee; and Lexington and Bowling Green,
Kentucky.



The processing and extruder plants are operated seasonally.  The
large processing plants usually are in operation from seven to
nine months out of the year.



A portion of Universal's tobacco inventory is stored in public
storages.  The following storages are owned:



    (a)    Wilson, North Carolina - 12 storages covering 460,000
square feet;

    (b)    Smithfield, North Carolina - 7 storages covering 240,000
square feet;

    (c)    Henderson, North Carolina - 6 storages covering 178,500
square feet;

    (d)    Rocky Mount, North Carolina - 3 storages covering 133,000
square feet;

    (e)    Danville, Virginia - 4 storages covering 153,000 square
feet;

    (f)    Lexington, Kentucky - 5 storages covering 127,000 square
feet; and

    (g)    Kenbridge, Virginia - 7 storages covering 243,000 square
feet.



Additional storage space is leased in Danville, Virginia;
Lexington, Kentucky; and in Smithfield, Henderson and Rocky
Mount, North Carolina.  Lancaster Leaf Tobacco Company of
Pennsylvania, Inc. owns storage space with a capacity of 19,300
tons of tobacco and leases additional storage space.  In other
U.S. tobacco areas, Universal owns or leases storages on a
smaller scale.  In foreign areas storage space is owned or
leased on a comparable scale.



The Company believes that the above-listed properties are
maintained in good operating condition and are suitable and
adequate for its purposes at current sales levels.  Facilities
owned are not subject to indebtedness except for those in
Dinwiddie County and Kenbridge, Virginia, which are financed in
part through governmental industrial development authorities.



The Company's agri-products subsidiaries own and operate a tea
blending plant in the Netherlands, a tea warehouse and office in
Sri Lanka, spice blending facilities in the Netherlands,  a bean
processing plant in Park Rapids, Minnesota and sunflower seed
processing plants in Colby, Kansas and Fargo, North Dakota.
These latter two facilities are financed in part through
governmental industrial development authorities.  The Company
has leased agri-products trading offices around the world,
including  locations in New York, London, Warsaw, Rotterdam,
Indonesia, Kenya and Malawi.



The lumber and building products division owns or leases 37
sales outlets in the Netherlands and six sales outlets in
Belgium as well as three trading warehouses and a building
components manufacturing facility, all in the Netherlands.  Most
of these locations are owned.


ITEM 3.  LEGAL PROCEEDINGS



Not Applicable.





ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



During the quarter ended June 30, 1994, there were no matters
submitted to a vote of security holders.



PART II



ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS





Dividend and market price information is as follows:



                                     First     Second       Third     Fourth
                                     Quarter   Quarter      Quarter   Quarter

1994

Cash dividends declared               $.22        $.24      $.24      $.24

Market price range:  High           25 1/4      27 7/8    26 1/4    19 5/8

                     Low            21 3/4      22 3/8    18 1/2    17 3/4

1993

Cash dividends declared                .20         .22       .22       .22

Market price range:  High           29 3/8      34 1/4    33 3/4    29 7/8

                     Low           $25 1/2     $25 3/8   $26 1/4   $24 1/8

The Company expects the past trend of dividend payments to
continue, subject, however, to its future earnings and financial
condition.  At June 30, 1994 there were 4,022 holders of record
of the registrant's common stock which is traded on the New York
Stock Exchange.



ITEM 6.  SELECTED FINANCIAL DATA





Five-Year Comparison of Selected Financial Data For Years Ended
June 30



(In thousands except per share data,
ratios, and number of common
shareholders)                                    1994          1993           1992        1991        1990
                                                                              
Summary of Operations
Gross revenues                               $2,975,050     $3,047,213     $2,989,018     $2,896,464    $2,389,346

Income from continuing operations before
 extraordinary item and cumulative effect
 of change in accounting principle               38,564         80,242         70,721         56,374        47,287

Net income                                       $9,158        $80,242        $70,721        $20,224       $45,105

Return on beginning common shareholders'
 equity                                             2.2%          26.6%          18.1%           5.1%         11.7%

Per common share

Income from continuing operations before
 extraordinary item and cumulative effect
 of change in accounting  principle               $1.09          $2.39          $2.15          $1.72         $1.41

Net income                                        $  .26         $2.39          $2.15          $ .62         $1.35

Financial Position at Year End

Current ratio                                       1.37          1.38           1.39           1.34          1.60

Total assets                                  $1,667,043    $1,564,188     $1,261,449     $1,275,621    $1,011,012

Long-term obligations                            298,117       281,807        190,211        160,014       142,878

Working capital                                  318,029       300,531        273,299        223,450       244,039

Shareholders' equity                            $377,474      $417,913       $301,696       $389,829      $397,059

General

Number of common shareholders                      4,022         4,132          4,210          4,157         4,288

Weighted average common shares outstanding
(used as basis for computation of E.P.S.)         35,502        33,599         32,822         32,792        33,522

Dividends per common share                     $     .94     $     .86      $     .79      $    .755     $     .73

Book value per common share                    $   10.78     $   11.73      $    9.18      $   11.89     $   12.08

Amounts for 1990 and 1991 have been reclassified to include the results of operations and financial position of Lawyers Title as discontinued operations. Fiscal year 1990 reflects the cumulative effect of the change in accounting principle ($5.1 million benefit) resulting from the adoption of SFAS 96 "Accounting for Income Taxes." Per common share information reflects December 1991 two-for-one stock split. Fiscal year 1991 reflects an extraordinary loss ($3.8 million) resulting from a provision for the uncollectability of a receivable from the Iraqi State Tobacco Monopoly as a result of the Persion Gulf war. Fiscal year 1994 reflects the cumulative effect of the change in accounting principle ($29.4 million) resulting from the adoption of SFAS 106 "Employer's Accounting for Postretirement Benefits Other Than Pensions" as well as a $17.5 million ($11.8 million net of tax) restructuring charge. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity & Capital Resources Universal Corporation's financial condition remained strong during a year marked by extremely difficult market conditions. During the year, the Company continued to expand its operations with acquisitions in all segments of the business. It also took advantage of attractive market prices to repurchase 632,400 shares of common stock at a total cost of $11.4 million. In August 1993, the Company issued $100 million of 6.14% notes in a private placement with a final maturity in the year 2000. The proceeds of this issue were used to reduce short-term borrowings and, in part, represented the prefunding of acquisitions completed later in the year. In addition, in December 1993, the Company finalized a new $100 million revolving credit facility. The facility is available to support the issuance of commercial paper. In fiscal year 1994, the Company recorded charges for the implementation of a restructuring plan and for the adoption of a change in accounting principle. These charges to income and the stock repurchase reduced shareholders' equity, causing an increase in the Company's ratio of long-term debt to total capitalization. The stock repurchase and restructuring were undertaken with due consideration to maintaining the Company's financial flexibility and strength; and, although certain measures of financial strength have declined, management believes that they are well within appropriate limits and that the long-term benefits to the Company justified the actions. The Company's working capital increased by approximately 6% to $318 million while its current ratio has remained stable over the last four years at approximately 1.4. The increase in working capital relates primarily to acquisitions that occurred during the year. These additions were offset, in part, by the restructuring provision. Despite the worldwide oversupply of tobacco, the Company's tobacco inventories were relatively stable at $436 million, although uncommitted tonnage in inventory was lower than at this time last year. The Company's capital needs are predominantly short term in nature and relate to working capital needs for financing crop purchases. The working capital needs of the Company are seasonal within each geographical region. Generally, the peak need of domestic tobacco operations occurs in the second quarter of the fiscal year. Foreign tobacco operations tend to have higher requirements in the remainder of the year. The geographical dispersion and the timing of working capital needs permit the Company to predict its general level of cash requirements during the year. Each geographic area follows the cycle of buying, processing, and shipping of the tobacco crop. The timing of individual customer shipping requirements may change the level or duration of crop financing from year to year. The working capital needs of individual agri-products operations fluctuate during the year, depending on the product, the country of origin, and the Company's inventory position; however, the total working capital requirements of agri-products during the year remain relatively stable due to offsetting seasonal patterns. Working capital needs of lumber and building products in Europe follow a pattern similar to that of the construction industry in which the third quarter of the fiscal year is typically sluggish. The Company finances its working capital needs with short-term lines of credit, exchange contracts for export prefinance, customer advances, and trade payables. Long-term investments are reflected in "Net cash used for investing activities." Over the last three years, total investment needs of $209 million were provided by cash flow from operating activities and the issuance of common stock in 1993 supplemented by long-term debt. Investments during 1994 included acquisitions of a Hungarian tobacco processing facility, two small dealers in agri-products, and a door and window producer in the Netherlands. These purchases required a net cash payment of $21.9 million. Over the last three years, net cash paid for acquisitions totaled approximately $126 million. Those transactions were highlighted by the purchase of The Casalee Group S.A. in 1993 and a Brazilian tobacco supplier in 1992. In August 1994, the Company agreed to acquire the premier distributor of value-added softwood products in Holland. For its year ended December 31, 1993 the distributor had approximately $65 million in revenues. The transaction is subject to satisfactory completion of due diligence reviews and will initially be funded with existing credit lines. During the last several years, the Company completed a major capital expenditure program that included a new processing plant and new threshing and separating equipment in the United States and upgraded processing lines in Brazil. Annual capital spending related to that program and others averaged approximately $42 million in 1992 and 1993. Following the completion of the program in 1994 capital expenditures fell to approximately $24 million. Although no major program is currently underway, the Company continues to improve its processing operations with incremental projects. At June 30, 1994, the Company had no material commitments for capital expenditures. The Company believes that its financial resources are adequate to support its capital needs. The Company and its subsidiaries currently have $1.5 billion in uncommitted lines of credit of which approximately $1 billion was available at June 30, 1994 to support future seasonal working capital needs in the United States and several foreign countries. In addition, the Company has $100 million in an unused committed facility under a revolving credit agreement. This facility is also available to support the future issuance of commercial paper. The Company's debt ratings are investment grade. Excess cash flow from operations after dividends, capital expenditures, and long-term debt payments will be available to reduce short-term debt, improve the Company's liquidity, or fund expansion. Results of Operations Fiscal Year 1994 Compared to 1993 Consolidated revenues in fiscal year 1994 declined $72 million or 2.4% compared to last year. The decline was mitigated by the inclusion of twelve months of Casalee's 1994 sales versus the six weeks included last year. Tobacco revenues declined $109 million primarily due to the poor quality U.S. flue-cured crop and reduced worldwide demand for all growths. Lumber and building product revenues declined in fiscal year 1994 principally due to exchange rate differences. An increase of $53 million in agri-product revenues in fiscal year 1994 was attributable to increased nut and canned meat trading. Tobacco operating profit of $82.5 million in fiscal year 1994 was net of a $17.5 million restructuring charge. Excluding the restructuring charge, tobacco operating profits were down $46 million or almost 32% compared to last year. Included in fiscal year 1994 results were $27 million of inventory write-downs compared to approximately $14 million in fiscal year 1993. Tobacco operating results in fiscal 1994 reflect a number of adverse factors in the U.S., including a poor quality flue-cured crop, domestic content legislation, and pending excise tax increases on cigarettes. In addition to these domestic issues, there was a worldwide glut of tobacco as demand softened in the face of record crops. The culmination of these factors was depressed prices and pressure on margins. Total domestic tobacco purchases in fiscal year 1994 were down primarily due to lower flue-cured purchases. However, processing volumes were comparable to the prior year as reduced cigarette manufacturer orders were offset by significantly larger volumes of tobacco processed for the Stabilization Cooperatives. In addition to the adverse effects of the current crop volumes, domestic tobacco results in fiscal 1994 were down on a comparative basis to last year due to customer-mandated hold-over shipments in the first quarter of fiscal 1993. International tobacco profits for fiscal year 1994 were down principally due to the pressure on margins which reduced sales profits and resulted in significant inventory write-downs. Lumber and building product operations reported higher operating results in fiscal year 1994 due to increased prices for hard and softwoods. Operating profits of the lumber and building products segment in fiscal year 1993 included a pre-tax gain of $3.8 million realized on the sale of the Company's flatboard finishing operation. Excluding the gain, lumber and building products operating profits increased almost 50% in 1994. Agri-product operating results were down approximately 15% in fiscal year 1994 compared to last year. Improved results in nuts and sunflower seeds were more than offset by shortfalls in tea and coffee. Sunflower seed operations benefited from increased demand and fewer supplies, while tea operations were adversely affected by a weak market. Losses in coffee trading in the current fiscal year reflected the continuing volatility of those markets and the decision by the Company to terminate this business. Selling, general and administrative expenses increased $31 million as a result of the inclusion of Casalee's operations for the full fiscal year in 1994. This increase was slightly offset by declines in selling and shipping expenses on reduced volumes in fiscal year 1994. Interest expense in fiscal year 1994 increased $12.3 million due to increased inventory levels, longer holding periods, and increased levels of higher rate long-term financing. The Company's effective tax rate for fiscal year 1994 was 26.9% compared to 36.8% last year. The decrease in 1994 was due to a higher proportion of foreign earnings which were deemed permanently reinvested compared to 1993. In the future, the Company's effective tax rate is expected to approximate statutory rates. See Note 10 for more information. The Company's equity in net income of unconsolidated affiliates increased over 40% compared to last year due to the sale of idle facilities in Korea in fiscal 1994. In June of 1994, the Company adopted a major restructuring plan for its tobacco operations. The plan includes the rationalization and consolidation of operations worldwide. The tobacco merchant industry over the past few years has been undergoing significant competitive changes. Consolidations within the industry have reduced the number of competitors. At the same time, customer pressure has increased to reduce costs and continue to deliver high quality products and services. Shortly after the acquisition of Casalee, the Company embarked on a study of its worldwide operations to identify areas of duplication. Included in the $17.5 million restructuring charge was approximately $16 million of severance provisions for approximately 700 of the Company's employees. The severance costs will be funded by cash provided by operations. The plan is expected to be implemented by the end of fiscal year 1995. Estimated savings after the plan is fully implemented are estimated to be $19 million per year, related primarily to reduced total compensation. In the first quarter of fiscal 1994, the Company adopted SFAS 106 and elected to record a one-time charge of $29.4 million; subsequently, in the third quarter the Company amended its postemployment benefit plans. The effect of the amendment is expected to substantially offset the effect on earnings from SFAS 106. See Note 3 for more information. Fiscal Year 1993 Compared to 1992 Consolidated revenues were up $58 million or about 2% in fiscal 1993 compared to 1992. Increases in revenues were realized in tobacco and lumber and building products segments, while revenues in agri-products were down slightly. Net income for fiscal year 1993 increased by nearly $10 million or 13%. This improvement was largely attributable to increases in foreign tobacco profits. Results of operations for the year included the results of Casalee for the six-week period from the date of its acquisition through March 31, 1993. Amounts for individual income statement captions were not materially affected. Casalee reported a loss of $3.5 million for the six-week period, principally due to seasonally low sales activity combined with inventory carrying costs and overhead. Tobacco operating profits increased to $146 million in fiscal year 1993. Foreign tobacco reflected improved results from Brazil and from sales of African tobaccos. With the acquisition of Casalee and its Brazilian operations, the significance of this geographic region to consolidated results has increased. Results of U.S. tobacco operations were up slightly in 1993 versus 1992 due to increased processing efficiencies and shipments delayed, at customers' requests, to the first quarter of 1993. The total volume of tobacco bought and processed was down compared to 1992. The majority of this decrease was in burley tobacco where orders were down almost 15%. Overall operating profits of European lumber operations were down slightly for the year. During the year, the continuing European recession, along with increased labor costs and higher material prices, created a difficult market climate for the lumber distribution segment. Consolidation of a number of regional branches and the installation of a computer network led to improved inventory control and reduced overhead. The acquisition of a small window and door frame company also improved results in 1993. Operating profits of agri-products operations were down slightly compared to those of fiscal year 1992. Each significant agri-product group made positive contributions to the results of the current year. In tea, drought conditions led to an improvement in the supply/demand relationship and in operating results. The effect of these market conditions was complemented by the Company's strategy of offering expanded and improved services to its customers. Sunflower seeds also benefited from reduced supply, as frost reduced the U.S. crop and led to improved selling prices. Other agri-product operations including rubber, coffee, spices and specialty seeds were up over 1992 as the Company took advantage of better trading opportunities available in fiscal year 1993. Selling, general and administrative expenses reflected an increase in 1993 of $18 million or 8% over 1992. Approximately $5 million of the increase was due the inclusion of Casalee in the fourth quarter of fiscal year 1993. The balance of the increase was primarily due to higher selling and shipping costs incurred on higher volumes of foreign tobaccos sold. Interest expense continued the downward trend of the last several years primarily reflecting the reduction of short- term borrowing rates. There was no significant change in the Company's effective tax rate compared to 1992. The rate increased approximately two percentage points principally due to reduced tax benefits in fiscal year 1993 on foreign earnings deemed permanently reinvested. Other Information Regarding Trends and Management's Actions Last year's report discussed the growth potential of China and the former East Bloc. During the past year, there was economic and political uncertainty in several countries in Eastern Europe. As the former East Bloc has attempted economic reform, a number of new situations have been encountered, including privatization, exchange controls, tax policies, import / export policies and hyperinflation. As these regions go through change, we believe it is important to be participants in the tobacco activities while, at the same time, limiting our financial exposure. Over the past few years, restrictions on cigarette smoking in public places and advertising have increased substantially. During the past year, particularly in the United States, the tobacco industry has been under unprecedented legislative and bureaucratic attack. There have been proposed increases in excise taxes, restrictions on the importation of foreign leaf, lawsuits regarding secondhand smoke and the Food and Drug Administration's review of nicotine levels in cigarettes. These efforts have adversely affected U.S. cigarette consumption. The worldwide balance between tobacco supply and demand was one of oversupply during the current year. Consequently, tobacco prices have been under pressure. Progress has been made at limiting production in the current year in a number of foreign countries. In the United States, stabilization inventories are in excess of reserve requirements, and crop size may have to be reduced. Over the short term the surplus of tobacco will continue to put pressure on margins and earnings. The Company is not expected to immediately return to the record level of earnings reported in fiscal 1993; however, efforts to control leaf production and to further enhance operating efficiencies that the Company has achieved through restructuring are some of the important keys to long-term improvements. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Years Ended June 30, 1994, 1993 and 1992 (In thousands of dollars except per share data) 1994 1993 1992 Sales and other operating revenues $2,975,050 $3,047,213 $2,989,018 Costs and expenses Cost of goods sold 2,576,807 2,635,560 2,608,684 Selling, general and administrative expenses 278,527 247,325 229,450 Restructuring charge 17,500 Interest 58,387 46,087 49,807 2,931,221 2,928,972 2,887,941 Income before income taxes and other items 43,829 118,241 101,077 Income taxes 11,804 43,455 35,265 Minority interests 130 (749) (267) Income from consolidated operations 31,895 75,535 66,079 Equity in net income of unconsolidated affiliates 6,669 4,707 4,642 Income before cumulative effect of change in accounting principle 38,564 80,242 70,721 Cumulative effect of change in accounting principle (29,406) Net income 9,158 80,242 70,721 Per common share Income before cumulative effect of change in accounting principle 1.09 2.39 2.15 Cumulative effect of change in accounting principle (.83) Net income $ .26 $ 2.39 $ 2.15
See accompanying notes. Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS June 30, 1994 and 1993 (In thousands of dollars) 1994 1993 ASSETS Current Cash and cash equivalents $164,520 $119,693 Accounts and notes receivable 368,989 345,766 Accounts receivable - unconsolidated affiliates 28,113 20,098 Inventories-at lower of cost or market: Tobacco 436,033 431,140 Lumber and building products 83,441 63,386 Agri-products 60,132 56,004 Other 8,753 18,811 Prepaid income taxes 10,095 Deferred income taxes 5,530 3,606 Other current assets 20,423 28,431 Total current assets 1,186,029 1,086,935 Real estate, plant and equipment - at cost Land 22,607 21,004 Buildings 166,111 155,652 Machinery and equipment 350,426 347,569 539,144 524,225 Less accumulated depreciation 269,955 246,450 269,189 277,775 Other assets Goodwill 124,286 119,717 Other intangibles 27,089 20,080 Investments in unconsolidated affiliates 26,298 25,745 Deferred income taxes 3,494 2,193 Other noncurrent assets 30,658 31,743 211,825 199,478 $1,667,043 $1,564,188 See accompanying notes. Universal Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS June 30, 1994 and 1993 (In thousands of dollars) 1994 1993 LIABILITIES AND SHAREHOLDERS' EQUITY Current Notes payable and overdrafts $531,209 $426,251 Accounts payable 199,280 237,574 Accounts payable - unconsolidated affiliates 34,810 25,402 Customer advances and deposits 51,671 52,672 Accrued compensation 13,366 21,017 Provision for restructuring 15,500 Income taxes payable 6,217 3,936 Current portion of long-term obligations 15,947 19,552 Total current liabilities 868,000 786,404 Long-term obligations 298,117 281,807 Postretirement benefits other than pensions 48,969 Other long-term liabilities 57,156 40,592 Deferred income taxes 12,361 35,020 Minority interests 4,966 2,452 Commitments and contingent liabilities Shareholders' equity Preferred stock, $100 par, 8% cumulative, authorized 75,000 shares, issued and outstanding 4 shares Additional preferred stock, no par value, authorized 5,000,000 shares, none issued or outstanding Common stock, no par value, authorized 50,000,000 shares, issued and outstanding 35,001,185 shares (35,631,485 at June 30, 1993) 75,287 86,672 Retained earnings 317,344 341,523 Foreign currency translation adjustments (15,157) (10,282) Total shareholders' equity 377,474 417,913 $1,667,043 $1,564,188 Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30, 1994, 1993 and 1992 (In thousands of dollars) 1994 1993 1992 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $9,158 $80,242 $70,721 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting principle 29,406 Restructuring charge ($17,500 less cash payments of $2,000) 15,500 Depreciation 37,086 32,773 29,169 Amortization 7,790 2,878 2,975 Deferred taxes (471) 4,731 705 Translation loss-net 6,718 2,434 5,605 Other (3,963) (8,119) (8,620) 101,224 114,939 100,555 Changes in operating assets and liabilities net of effects from purchase of businesses: Accounts and notes receivable (29,998) (55,298) 77,207 Inventories and other current assets 440 (933) (130,029) Income taxes (7,712) (4,288) (3,500) Accounts payable and other accrued liabilities (36,824) 10,250 7,051 Net cash provided by operating activities 27,130 64,670 51,284 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (23,728) (37,474) (47,129) Purchase of businesses (net of cash acquired) (21,861) (84,850) (19,034) Sales of property, plant and equipment 4,035 6,935 9,760 Other 507 (827) 4,307 Net cash used in investing activities (41,047) (116,216) (52,096) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of short-term debt - net 107,147 80,315 18,952 Repayment of short-term debt classified as long-term June 30, 1993 (100,000) Repayment of long-term debt (22,829) (40,948) (31,803) Issuance of long-term debt 119,000 5,820 63,441 Issuance (purchase) of common stock (11,437) 70,943 1,576 Dividends paid (32,775) (28,220) (25,600) Net cash provided by financing activities 59,106 87,910 26,566 Effect of exchange rate changes on cash (362) 655 (2,616) Net increase in cash and cash equivalents 44,827 37,019 23,138 Cash and cash equivalents at beginning of year 119,693 82,674 59,536 CASH AND CASH EQUIVALENTS AT END OF YEAR $164,520 $119,693 $82,674 Supplemental cash flow information: Cash paid during the year for: Interest $53,761 $41,483 $44,473 Income taxes - net of refunds $19,767 $39,539 $28,501 See accompanying notes. Universal Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Years Ended June 30, 1994, 1993 and 1992 (In thousands of dollars) 1994 1993 1992 COMMON STOCK: Balance at beginning of year $86,672 $15,597 $13,914 Issuance of common stock 52 70,579 109 Exercise of stock options 496 1,576 Common shares repurchased (11,437) (2) Balance at end of year 75,287 86,672 15,597 RETAINED EARNINGS: Balance at beginning of year 341,523 290,766 377,932 Net Income 9,158 80,242 70,721 Cash dividends declared ($.94 per share in 1994; $.86 in 1993; $.79 in 1992) (33,337) (29,485) (25,946) Distribution of title insurance shares* (131,941) Balance at end of year 317,344 341,523 290,766 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS: Balance at beginning of year (10,282) (4,667) (5,136) Translation adjustments for the year (7,552) (8,400) 728 Allocated income taxes 2,677 2,785 (259) Balance at end of year (15,157) (10,282) (4,667) NET UNREALIZED INVESTMENT GAINS: Balance at beginning of year 3,119 Net unrealized gains for the year 4,705 Distribution of title insurance shares* (7,824) Balance at end of year 0 SHAREHOLDERS' EQUITY AT END OF YEAR $377,474 $417,913 $301,696 See accompanying notes. *Equivalent to the net assets of Lawyers Title at October 1, 1991 Universal Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1994 Note 1 - ACCOUNTING POLICIES Principles of Consolidation The financial statements include the accounts of all controlled domestic and foreign subsidiaries. All material intercompany items and transactions have been eliminated. The fiscal years of foreign subsidiaries generally end March 31 or April 30 to facilitate timely reporting. The Company uses the equity method of accounting for its investments in affiliates which generally are owned less that 50%. However, due to exchange controls which restrict the remittance of dividends and governmental and other uncertainties, affiliates in Zimbabwe are accounted for under the cost method. Translation of Foreign Currencies The financial statements of foreign subsidiaries where the local currency is the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from translation of financial statements are reflected as a separate component of shareholders' equity. The financial statements of foreign subsidiaries located in highly inflationary economies are remeasured as if the functional currency were the U.S. dollar. The remeasurement of local currencies into U.S. dollars creates translation adjustments which are included in net income. Exchange losses in 1994, 1993 and 1992 resulting from foreign currency transactions were $6.8, $1.6 and $4.1 million, respectively (including $6.7, $2.4 and $5.6 million of translation losses related to subsidiaries located in highly inflationary economies) and are included in the respective statements of income. Inventories Inventories of tobacco and agri-products are valued at the lower of specific cost or market. In determining lower of cost or market for agri-products, an entire position, i.e., tea, including forward purchase and sales contracts, is considered. Net unrealized losses by position are charged to income. However, no recognition is given to net unrealized gains. All other inventories are valued principally at lower of average cost or market. Depreciation Depreciation expense is based upon historical cost and the estimated useful lives of the assets. Depreciation of property used in domestic tobacco operations is calculated using the declining balance method in the early years and the straight-line method thereafter. All other properties are generally depreciated using the straight-line method. Estimated useful lives of properties range from three to forty years. Income Taxes The Company provides deferred income taxes on temporary differences arising from employee benefit accruals, depreciation, deferred compensation, and undistributed earnings of consolidated subsidiaries and unconsolidated affiliates not permanently reinvested. At June 30, 1994 the cumulative amount of undistributed earnings of consolidated subsidiaries on which no provision for U.S. income taxes had been made was $ 47.9 million. It is not practical to determine the amount of deferred income tax liabilities that would result had such earnings been actually repatriated. Goodwill and Other Intangible Assets Goodwill and other intangibles include the excess of the purchase price of acquired companies over the net assets, convenants not to compete and pension intangibles. Goodwill and other intangibles are amortized using the straight-line method over periods not exceeding 40 years. Accumulated amortization at June 30, 1994, and 1993 was $11.3 and $3.9 million, respectively. Consolidated Statements of Cash Flows For purposes of these statements, the Company considers all highly liquid investments, with a maturity of three months or less at the time of purchase, to be cash equivalents. Fair Values of Financial Instruments The fair values of the Company's long-term obligations have been estimated using discounted cash flow analyses based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount of all other current assets and liabilities as reported in the balance sheet at June 30, 1994 and 1993, which qualify as financial instruments, approximate their fair values. Postretirement Benefits Other Than Pensions On July 1, 1993, the Company adopted SFAS 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions". The initial effect of adopting the statement was recorded as a cumulative change in accounting principle. See Note 3. Reclassification Amounts in prior years' statements have been reclassified to be reported on a consistent basis with the current year's presentation. Note 2 - PENSION PLANS The Company and its subsidiaries have several defined benefit pension plans covering United States and foreign salaried employees and certain other employee groups. These plans provide retirement benefits based primarily on employee compensation and years of service. The Company's funding policy for domestic plans is to make contributions currently to the extent deductible under existing tax laws and regulations, subject to the full-funding limits of the Employee Retirement Income Security Act of 1974. Foreign plans are funded in accordance with local practices. Domestic and foreign plan assets consist primarily of fixed income securities and equity investments. Prior service costs are amortized equally over the average remaining service period of employees. Information regarding net pension cost and the funded status of domestic and foreign plans was as follows: Pension costs Domestic Foreign 1994 1993 1992 1994 1993 1992 Service cost for benefits earned during the period $2,925 $2,617 $2,361 $2,392 $2,134 $1,885 Interest cost on projected benefit obligation 6,489 6,053 5,614 5,210 5,245 4,592 Actual return on plan assets (5,872) (7,829) (5,861) (11,629) (5,929) (5,145) Net amortization and deferral 1,258 3,358 1,348 5,240 (234) 37 Total pension cost $4,800 $4,199 $3,462 $1,213 $1,216 $1,369
Funded status Domestic - March 31 measurement date Assets Exceed Accumulated Benefits Accumulated Benefits Exceed Assets 1994 1993 1994 1993 Vested benefit obligation $68,047 $60,767 $5,280 $5,085 Accumulated benefit obligation 68,888 61,677 6,521 5,988 Projected benefit obligation 84,707 78,337 9,699 8,053 Plan assets at fair value 75,839 72,010 Plan assets less than projected benefit obligation (8,868) (6,327) (9,699) (8,053) Unrecognized net (asset) liability at transition (4,320) (4,919) 637 716 Unrecognized prior service costs 949 2,383 1,701 494 Unrecognized net loss 16,217 13,235 3,017 3,220 Additional minimum liability (2,177) (2,365) Prepaid (accrued) pension cost $3,978 $4,372 $(6,521) $(5,988)
Foreign - April 30 measurement date Assets Exceed Accumulated Benefits Accumulated Benefits Exceed Assets 1994 1993 1994 1993 Vested benefit obligation $62,303 $59,639 $8,787 $8,408 Accumulated benefit obligation 70,368 62,727 10,609 10,004 Projected benefit obligation 75,916 67,392 11,583 11,089 Plan assets at fair value 81,881 73,563 3,692 3,417 Plan assets in excess of (less than) projected benefit obligation 5,965 6,171 (7,891) (7,672) Unrecognized net (asset) liability at transition (6,309) (7,215) 34 76 Unrecognized net loss (gain) 978 291 142 29 Additional minimum liability (273) (217) Accrued pension cost $634 $(753) $(7,988) $(7,784)
SFAS 87 "Employers' Accounting for Pensions," required the Company to recognize an additional minimum liability of $2.4 and $2.6 million for the unfunded accumulated benefit obligation in 1994 and 1993, respectively. An equal amount was recognized as an intangible asset in those years. Assumptions used in the computations were: 1994 1993 1992 Discount rate: Domestic 7.25% 7.75% 8.25% Foreign 6.00% 7.00% 8.10% Rate of increase in future compensation levels: Domestic 5.50% 6.00% 6.00% Foreign 4.50% 5.00% 5.25% Expected long-term rate of return on plan assets: Domestic 8.75% 8.50% 8.50% Foreign 7.00% 7.00% 8.25% Note 3 - POSTRETIREMENT BENEFITS The Company provides postretirement health and life insurance benefits for eligible U.S. employees attaining specific age and service requirements. The health plan is funded by the Company as the costs of the benefits are incurred and contains cost-sharing features such as deductibles and coinsurance. The Company funds the life insurance plan with deposits to a retired life reserve account held by an insurance company. The Company has made changes to the plans that have reduced benefits in the past and reserves the right to amend or discontinue the plans at any time. Effective July 1, 1993, the Company adopted SFAS 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires that the estimated costs of these benefits be expensed over the employees' active service period rather than as paid. In accordance with SFAS 106 the Company elected to recognize the obligation as a one-time charge of approximately $29 million (net of $18 million in taxes) or $.83 per share during the first quarter of the year. Effective January 1, 1994, the Company amended the benefit plans for future retirees which reduced the Company's postretirement obligation by approximately $14 million (net of tax benefits). The amortization of this reduction is expected to substantially offset the net periodic postretirement benefit expense from SFAS 106 through fiscal year 2001. Net periodic postretirement benefit expense was as follows: 1994 Service cost $1,268 Interest cost 3,255 Return on plan assets (141) Net amortization and deferral (1,527) Net periodic postretirement benefit expense $2,855 Prior to fiscal year 1994 the Company recognized expense in the year the benefits were paid. In fiscal year 1993 and 1992 approximately $1 million of expenses was recorded annually. The following table sets forth the components of the postretirement benefit obligation: June 30 measurement date 1994 Accumulated postretirement benefit obligation: Retirees $21,080 Fully eligible active plan participants 7,812 Other active plan participants 5,555 Accumulated postretirement benefit obligation 34,447 Fair value of plan assets 3,414 Accumulated postretirement benefit obligation in excess of plan assets 31,033 Unrecognized prior service cost 22,119 Unrecognized net loss (4,183) Accrued postretirement benefit cost $48,969 The accumulated postretirement benefit obligation was determined using an assumed annual increase in the health care cost trend rate of 13% for fiscal year 1995 and is assumed to decrease gradually to 6.5% by fiscal year 2005. A one percentage point increase in the assumed health care cost trend rate would increase the accumulated benefit obligation by approximately $2 million and the aggregate of the service and interest cost components of net periodic postretirement benefit expense for the fiscal year by approximately $100 thousand. The postretirement benefit obligation was determined using an assumed discount rate of 7.25% and an estimated long-term salary increase rate of 5.50%. Note 4 - LONG-TERM OBLIGATIONS 1994 1993 6.14% Senior notes payable in five annual installments from 1996 to 2000 $100,000 Notes payable classified as long-term $100,000 9.25% Medium-term notes due February 2001 100,000 100,000 Medium-term notes due January 1997 at an average rate of 7.3% 50,000 50,000 Other notes due through 1999 at various interest rates ranging from 5.5% to 12% 25,209 43,199 Notes due through 1998 at variable rates, currently 11% 16,587 4.26% Promissory note due August 1995 15,000 Revenue bonds due through 2001 at various interest rates below prime 7,268 8,160 314,064 301,359 Less current portion (15,947) (19,552) Long-term obligations $298,117 $281,807 The fair value of the Company's long-term obligations was approximately $303 million at June 30, 1994 and $301 million at June 30, 1993. Certain notes are denominated in local currencies of foreign subsidiaries. Effective U.S. dollar interest rates vary based on exchange rate fluctuations. Senior notes: On August 24, 1993, the Company issued $100 million of 6.14% senior notes due in five equal installments beginning in fiscal 1997. The proceeds from these notes were used to repay $100 million of notes payable which were classified as long-term at June 30, 1993. In connection with these notes, the Company must meet certain financial covenants including maintainence of $300 million minimum shareholders' equity and restrictions on the issuance of long-term debt. Other information: Maturities of long-term debt for the fiscal years succeeding June 30, 1994 are as follows: 1995-$15,947; 1996-$28,161; 1997-$77,676; 1998-$22,218; 1999-$23,566; 2000 and after-$146,496. Note 5 - BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Company operates principally in three business segments: Tobacco Selecting, buying, shipping, processing, packing, storing and financing leaf tobacco in the United States and other tobacco growing countries for the account of, or for resale to, manufacturers of tobacco products throughout the world. Lumber and Building Products Distribution of lumber and building products to the building and construction market in Europe, primarily in Holland. Agri-Products Trading and processing tea, and sunflower seeds and trading other products from the countries of origin to various customers in the consuming industries throughout the world. Generally, sales between business segments and geographic areas are priced on the same basis as sales to unaffiliated customers. Sales between business segments are insignificant. Operating profit is total revenue less operating expenses. In computing operating profit, none of the following items have been added or deducted: general corporate expenses, interest expense, income taxes and equity in net income of unconsolidated affiliates. Identifiable assets are those of the Company that are identified with the operations in each industry group. Corporate assets are principally the fixed assets of the Company's administrative offices, certain notes receivable and corporate cash and cash equivalents. U.S. Export Sales by Geographic Area 1994 1993 1992 Europe $182,140 $302,733 $314,383 Asia 203,197 168,075 155,336 Other Areas 27,321 33,895 56,272 $412,658 $504,703 $525,991 Lumber and Business Segments Tobacco Building Products Agri-products Consolidated 1994 Gross revenues $2,175,644 $368,463 $430,943 $2,975,050 Operating profit (net of restructuring charge) 82,522 18,768 9,224 110,514 General corporate expenses (8,298) Interest expense (58,387) Income before income tax and other items 43,829 Identifiable assets 1,205,173 262,442 171,372 1,638,987 Investments in unconsolidated affiliates 26,298 Corporate assets 1,758 Total assets 1,667,043 Depreciation and amortization 38,943 4,376 1,557 44,876 Capital expenditures 18,640 4,265 823 23,728 1993 Gross revenues 2,284,936 384,631 377,646 3,047,213 Operating profit 146,199 16,427 10,898 173,524 General corporate expenses (9,196) Interest expense (46,087) Income before income tax and other items 118,241 Identifiable assets 1,180,168 217,129 138,310 1,535,607 Investments in unconsolidated affiliates 25,745 Corporate assets 2,836 Total assets 1,564,188 Depreciation and amortization 29,574 4,684 1,393 35,651 Capital expenditures 30,963 4,931 1,580 37,474 1992 Gross revenues 2,235,210 370,186 383,622 2,989,018 Operating profit 134,534 14,651 11,453 160,638 General corporate expenses (9,754) Interest expense (49,807) Income before income tax and other items 101,077 Identifiable assets 862,971 225,411 148,017 1,236,399 Investments in unconsolidated affiliates 21,995 Corporate assets 3,055 Total assets 1,261,449 Depreciation and amortization 26,315 4,081 1,748 32,144 Capital expenditures $ 39,914 $ 4,793 $2,422 $ 47,129
Consolidated Operations United South/Central Other by Geographic Area States America Europe Areas Eliminations Consolidated 1994 Revenues from unaffiliated customers $1,532,592 $217,534 $1,088,693 $136,231 $2,975,050 Transfers between geographic areas 1,658 123,898 34,588 34,903 $(195,047) Gross revenues 1,534,250 341,432 1,123,281 171,134 (195,047) 2,975,050 Operating profit (net of restructuring charge) 44,686 20,691 49,221 (4,084) 110,514 General corporate expenses (8,298) Interest expense (58,387) Income before income taxes and other items 43,829 Identifiable assets 575,425 469,415 754,696 107,456 (268,005) 1,638,987 Investments in unconsolidated affiliates 26,298 Corporate assets 1,758 Total assets 1,667,043 1993 Revenues from unaffiliated customers 1,690,484 187,790 1,014,450 154,489 3,047,213 Transfers between geographic areas 824 102,891 19,580 33,838 (157,133) Gross revenues 1,691,308 290,681 1,034,030 188,327 (157,133) 3,047,213 Operating profit 71,820 39,930 56,593 6,688 (1,507) 173,524 General corporate expenses (9,196) Interest expense (46,087) Income before income taxes and other items 118,241 Identifiable assets 497,706 471,892 613,998 107,545 (155,534) 1,535,607 Investments in unconsolidated affiliates 25,745 Corporate assets 2,836 Total assets 1,564,188 1992 Revenues from unaffiliated customers 1,759,594 141,118 897,058 191,248 2,989,018 Transfers between geographic areas 2,361 110,931 20,367 53,370 (187,029) Gross revenues 1,761,955 252,049 917,425 244,618 (187,029) 2,989,018 Operating profit 65,777 30,647 54,101 11,111 (998) 160,638 General corporate expenses (9,754) Interest expense (49,807) Income before income taxes and other items 101,077 Identifiable assets $498,135 $245,420 $452,061 $112,581 $(71,798) 1,236,399 Investments in unconsolidated affiliates 21,995 Corporate assets 3,055 Total assets $1,261,449
Note 6 - UNCONSOLIDATED AFFILIATES The combined results of operations of the Company's unconsolidated affiliates, primarily foreign tobacco, are summarized below: Equity Basis Cost Basis 1994 1993 1992 1994 1993 1992 Gross revenues $291,892 $308,731 $402,399 $226,589 $149,169 $167,554 Gross profit 46,663 44,195 39,689 46,216 30,112 26,735 Net income $12,052 $10,565 $10,696 $6,454 $1,446 $4,675
The combined financial position of the Company's unconsolidated affiliates, primarily foreign tobacco, are summarized below: Equity Basis Cost Basis 1994 1993 1994 1993 Current assets $104,723 $149,197 $45,048 $88,093 Non-current assets 31,552 29,058 19,402 16,495 Current liabilities 88,093 130,726 38,467 92,305 Non-current liabilities $ 12,034 $ 13,130 $ 6,858 $ 6,070 Note 7 - UNAUDITED QUARTERLY FINANCIAL DATA Due to the seasonal nature of the tobacco, lumber and building products, and agri-products businesses, it is always more meaningful to focus on cumulative rather than quarterly results. First Second Third Fourth Quarter Quarter Quarter Quarter 1994 Sales and other operating revenues $690,739 $863,674 $749,587 $671,050 Gross profit 115,459 109,840 80,631 90,527 Income (loss) before cumulative effect of change in accounting principle 18,459 20,210 9,343 (9,448) Net income (loss) (10,947) 20,210 9,343 (9,448) Per common share Income (loss) before cumulative effect of change in accounting principle .52 .57 .26 (.27) Net income (loss) (.31) .57 .26 (.27) Cash dividends declared .22 .24 .24 .24 Market price range: High 25 1/4 27 7/8 26 1/4 19 5/8 Low 21 3/4 22 3/8 18 1/2 17 3/4 1993 Sales and other operating revenues 826,581 888,294 836,688 495,650 Gross profit 118,717 117,556 95,476 79,158 Net income 23,776 35,249 19,082 2,135 Per common share Net income .72 1.08 .58 .06 Cash dividends declared .20 .22 .22 .22 Market price range: High 29 3/8 34 1/4 33 3/4 29 7/8 Low $25 1/2 $25 3/8 $26 1/4 $24 1/8 The Company recorded $16.1 and $12.5 million in pre-tax writedowns of tobacco inventory and purchase commitments in the fourth quarter of 1994 and 1993, respectively. The fourth quarter of 1994 includes a $17.5 million pre-tax restructuring charge. The third quarter of 1993 includes a pre-tax gain of $3.8 million on the sale of the U.S. flatboard finishing company. Note 8 - SHARE PURCHASE RIGHTS PLAN In 1989, the Company distributed as a dividend one preferred share purchase right for each outstanding share of common stock. As adjusted for the two-for-one split of the common stock effective December 16, 1991, each right entitles the shareholder to purchase one-half of one-hundredth of a share of Series A Junior Participating Preferred Stock ("Preferred Stock") at an exercise price of $110, subject to adjustment. The rights will become exercisable only if a person or group acquires or announces a tender offer for 20% or more of the Company's outstanding common stock. The Board of Directors may reduce this threshold percentage to 10%. If a person or group acquires the threshold percentage of common stock, each right will entitle the holder, other than the acquiring party, to buy shares of common stock or Preferred Stock having a market value of twice the exercise price. If the Company is acquired in a merger or other business combination, each right will entitle the holder, other than the acquiring person, to purchase securities of the surviving company having a market value equal to twice the exercise price of the rights. Following the acquisition by any person of more than the threshold percentage of the Company's outstanding common stock but less than 50% of such shares, the Company may exchange one share of common stock for each right (other than rights held by such person). Until the rights become exercisable, they may be redeemed by the Company at a price of one cent per right. The rights expire on February 13, 1999. Note 9 - EXECUTIVE STOCK PLAN Under the Company's Executive Stock Plan (the Plan) executives, key employees, and directors may receive grants and/or awards including common stock, restricted stock, options qualifying as incentive or non-qualified stock options and "reload options". Reload options allow a participant to exercise an option and receive new options by exchanging previously acquired common stock for the shares received from the exercise. One new option may be granted for each share exchanged with an exercise price equivalent to the market price at the date of exchange. Up to 3.2 million shares of the Company's common stock may be issued under the Plan. Pursuant to the Plan non-qualified and reload options have been granted to executives and key employees at an option price equal to the fair market value of a share of common stock on the date of grant. Options granted under the Plan become exercisable one year after date of grant except those granted in December 1991 which became exercisable November 1, 1992. Options granted after December 4, 1991 qualify for reload options which are fully exercisable six months after the date of the grant. All options expire ten years after date of grant. Further information regarding options in the Plan for 1994, 1993 and 1992 is summarized as follows: For the year ended: 1994 1993 1992 Price Range July 1 Outstanding 644,064 689,242 204,300 $11.06-28.00 Granted 12,000 116,805 590,000 27.38-28.00 Exercised (141,032) (81,158) 11.06-27.38 Canceled (20,951) (23,900) 11.06-28.00 June 30 Outstanding 656,064 644,064 689,242 11.06-28.00 Exercisable 650,064 588,231 99,242 11.06-28.00 Available for future grant 2,334,376 1,633,746 229,600 Note 10 - INCOME TAXES The components of income before income taxes and other items consist of the following: Year Ended June 30, 1994 1993 1992 United States $12,545 $45,772 $36,119 Foreign 31,284 72,469 64,958 $43,829 $118,241 $101,077 Income taxes consist of the following: Year Ended June 30, 1994 1993 1992 Current United States $5,165 $18,025 $14,865 State and local 1,065 4,676 2,896 Foreign 6,045 16,023 16,799 12,275 38,724 34,560 Deferred United States (5,083) 118 (1,366) State and local 652 (132) (83) Foreign 3,960 4,745 2,154 (471) 4,731 705 Total $11,804 $43,455 $35,265 A reconciliation of the statutory U.S. federal rates is as follows: Year Ended June 30, 1994 1993 1992 Tax at statutory rate 35.0% 34.0% 34.0% State income taxes - net of federal benefit 2.5 2.4 1.9 Permanently reinvested earnings (9.6) (.8) (1.1) Increase in federal statutory rate 2.5 Other - net (3.5) 1.2 .1 26.9% 36.8% 34.9% In August, 1993, Congress passed the "Omnibus Budget Reconciliation Act of 1993" which, among other things, increased the corporate tax rate from 34% to 35% retroactive to January 1, 1993 which increased tax expense approximately $1.5 million in the first quarter. Significant components of deferred tax liabilities and assets as of June 30 were as follows: 1994 1993 Liabilities Nonrepatriated earnings $29,132 $21,278 Tax over book depreciation 6,637 12,834 All other 8,058 10,832 Total deferred tax liability 43,827 44,944 Assets Employee benefit plans 20,327 485 Foreign currency translation 4,990 4,113 Deferred compensation 4,220 5,895 All other 10,953 5,230 Total deferred tax asset 40,490 15,723 Less current portion (5,530) (3,606) Net deferred tax asset 34,960 12,117 Net deferred tax liability $8,867 $32,827 Note 11 - SHORT-TERM CREDIT FACILITIES The Company maintains lines of credit in a number of foreign countries. Foreign borrowings are generally in the form of exchange contracts and overdraft facilities at rates competitive in the countries in which the Company operates. Generally, each foreign line is available only for borrowings related to operations of a specific country. At June 30, 1994, unused, uncommitted lines of credit were approximately $1.0 billion. In addition, the Company maintains a $100 million revolving credit facility to support short-term borrowings including the issuance of commercial paper. Note 12 - COMMITMENTS AND OTHER MATTERS A material part of the Company's tobacco business is dependent upon a few customers, the loss of any one of whom would have an adverse effect on the Company. For the years ended June 30, 1994, 1993 and 1992, one customer accounted for revenues of $900 million, $1.1 billion and $1.2 billion, respectively. At June 30, 1994, total exposure under guarantees issued for banking facilities of unconsolidated affiliates was $32.6 million. Other commitments and contingent liabilities were approximately $152 million and relate principally to Common Market guarantees. At June 30, 1994, the Company's equity in the underlying net assets of its unconsolidated equity affiliates was approximately equal to its investment. Consolidated retained earnings at June 30, 1994 include undistributed earnings of unconsolidated affiliates of $25 million (including additional deferred income tax benefits of $3 million). The Company's operating subsidiaries within each industry segment perform credit evaluations of customers' financial condition prior to the extension of credit. Generally, accounts and notes receivable are not secured with collateral and are due within 30 days. When collection terms are extended for longer periods, interest and carrying costs are recovered. Credit losses are provided for in the financial statements and such amounts have not been material except for the write-off of an account receivable from Iraq in fiscal year 1991. In the lumber and building product operations in Europe, it is traditional business practice to insure accounts and notes receivable against uncollectibility. At June 30, accounts and notes receivable by operating segment were as follows (in millions of dollars): 1994 1993 Tobacco $246 $233 Lumber and Building Products 71 70 Agri-products 52 43 $369 $346 Note 13 - ACQUISITIONS On February 12, 1993, the Company acquired substantially all of the tobacco operations of The Casalee Group SA (Casalee) through the purchase of all of Casalee's capital stock and certain of its subsidiaries at a cost of approximately $100 million. The acquisition has been accounted for by the purchase method of accounting. For financial reporting purposes the accounts of Casalee are on a March 31 fiscal year basis, and are consolidated with the Company's June 30 fiscal year. Accordingly, the consolidated results of operations for the fiscal year ended June 30, 1993 include the results of Casalee from the acquisition date thru March 31, 1993. Unaudited pro forma consolidated results of operations for the years ended June 30, 1993 and 1992 as though Casalee had been acquired at the beginning of the fiscal year follow: 1993 1992 Gross revenues $3,230,206 $3,170,413 Net income 59,498 68,449 Earnings per share* $ 1.67 $ 1.92 * Weighted average shares outstanding includes 2.7 million shares assumed to have been issued at the beginning of 1992. Note 14 - RESTRUCTURING CHARGE In the fourth quarter of fiscal year 1994, plans were developed to reduce the Company's worldwide cost structure including the consolidation of certain tobacco operations and the reduction in the number of employees. The consolidated statement of income includes an estimated $17.5 million of pretax charge ($11.8 million net of tax benefits, or $.33 per share) related to the plan. This charge includes $16 million for the expected costs of severance payments related to approximately 700 employees throughout the Company. As of June 30, 1994, payments of $2 million, primarily for severance and related costs of approximately 200 employees, had been recorded as a reduction of the provision for restructuring. REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Shareholders Universal Corporation We have audited the accompanying consolidated balance sheets of Universal Corporation and subsidiaries as of June 30, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended June 30, 1994. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accompanying principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Universal Corporation and subsidiaries at June 30, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 1994, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Note 3 to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits other than pensions in fiscal year 1994. /s/ Ernst & Young LLP Richmond, Virginia August 4, 1994 REPORT OF MANAGEMENT To the Shareholders of Universal Corporation The consolidated financial statements of Universal Corporation have been prepared under the direction of management, which is responsible for their integrity and objectivity. The statements have been prepared in accordance with generally accepted accounting principles and, where appropriate, include amounts based on judgements of management. Management is also responsible for maintaining an effective system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that transactions are executed in accordance with management's authorization and properly recorded. This system is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel, and an internal audit program to monitor its effectiveness. Ernst & Young LLP, independent auditors, are retained to audit our financial statements. Their audit provides an objective assessment of how well management discharged its responsibility for fairness in financial reporting. The Audit Committee of the Board of Directors is composed solely of outside directors. The committee meets periodically with management, the internal auditors and the independent auditors to assure that each is properly discharging its responsibilities. Ernst & Young LLP and the internal auditors have full and free access to meet privately with the Audit Committee to discuss accounting controls, audit findings and financial reporting matters. /s/ Hartwell H. Roper Hartwell H. Roper Vice President & Chief Financial Officer August 4, 1994 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE For the three years ended June 30, 1994, there were no changes in and disagreements between the Company and its independent auditors on any matter of accounting principles, practices or financial statement disclosures. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Refer to the caption, "Election of Directors" in the September 23, 1994 Proxy Statement which information is incorporated herein by reference. Fiscal Year Name Position Age Elected H. H. Harrell Chairman and Chief Executive Officer 55 1991 A. B. King President and Chief 48 1993 Operating Officer H. H. Roper Vice President and 46 1993 Chief Financial Officer W. L. Taylor Vice President and 53 1993 Chief Administrative Officer K. M. L. Whelan Vice President and Treasurer 47 1993 J. M. White, III Secretary and General Counsel 55 1988 W. J. Coronado Controller 40 1991 J. Godthelp President and Chairman of the 60 1990 Board of Deli Universal, Inc. R. J. Zalzneck Senior Vice President of 48 1990 Universal Leaf Tobacco Company, Incorporated There are no family relationships between any of the above officers. Term of Office: All officers are elected until the next annual shareholders meeting or until their successors are elected. Footnotes: (1) H. H. Harrell was elected chairman and chief executive officer of Universal Leaf Tobacco Company, Incorporated in 1989. He was elected president in 1988. (2) A. B. King was elected president in 1991. He was elected executive vice president in 1988 of Universal Leaf Tobacco Company, Incorporated. (3) H. H. Roper was elected vice president in 1990 and controller in 1988. (4) W. L. Taylor was elected vice president in 1991. He joined Universal Leaf Tobacco Company, Incorporated in 1990 as senior vice president and chief administrative officer. Prior to 1990, for more than five years he was a partner with the law firm of McGuire, Woods, Battle and Boothe. (5) K. M. L. Whelan joined the company in 1993. Prior to joining the company she was elected vice president of financial reporting in 1989 and assistant treasurer in 1986 of James River Corporation. (6) W. J. Coronado was elected controller in 1990 and assistant controller in 1988 of Universal Leaf Tobacco Company, Incorporated. (7) J. Godthelp was elected executive vice president in 1986 of Deli Universal, Inc., a subsidiary of the Company. (8) R. J. Zalzneck joined the Company in 1988. ITEM 11. EXECUTIVE COMPENSATION Refer to the caption, "Stock Ownership," in the September 23, 1994 Proxy Statement which information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Refer to the caption, "Certain Relationships," in the September 23, 1994 Proxy Statement which information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Refer to the caption, "Certain Relationships and Related Transactions," in the September 23, 1994 Proxy Statement which information is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) and (2) - The following consolidated financial statements of Universal Corporation and Subsidiaries are included in Item 8: Consolidated Statements of Income for the years ended June 30, 1994, 1993 and 1992 Consolidated Balance Sheets at June 30, 1994 and 1993 Consolidated Statements of Cash Flows for the years ended June 30, 1994, 1993 and 1992 Consolidated Statements of Changes in Shareholders' Equity for the years ended June 30, 1994, 1993 and 1992 Notes to Consolidated Financial Statements for the years ended June 30, 1994, 1993 and 1992 Report of Ernst & Young LLP, Independent Auditors The following consolidated financial statement schedule of Universal Corporation and Subsidiaries is included in Item 14(d): Schedule IX Short-term borrowings (3) Listing of Exhibits 3.1 Restated Articles of Incorporation (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, File No. 1-652). 3.2 Bylaws (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, File No. 1-652). 4.1 Indenture between the Registrant and Chemical Bank, as trustee (incorporated herein by reference to Registrant's Current Report on Form 8-K, dated February 25, 1991, File No. 1-652). 4.2 Form of Fixed Rate Medium-Term Note, Series A (incorporated herein by reference to the Registrant's Current Report on Form 8-K, dated February 25, 1991, File No. 1-652). 4.3 Form of 9 1/4% Note due February 15, 2001 (incorporated herein by reference to the Registrant's Current Report on Form 8-K, dated February 25, 1991, File No. 1-652). 4.4 Rights Agreement, dated February 2, 1989, between the Registrant and Sovran Bank, N.A., as Rights Agent (incorporated herein by reference to the Registrant's Form 8-A Registration Statement, dated February 9, 1989, File No. 1-652). 4.5 Amendment to Rights Agreement, dated May 2, 1991, between the Registrant and Sovran Bank, N.A., as Rights Agent (incorporated hereby by reference to the Registrant's Form 8 Amendment No. 1, dated May 7, 1991, to Form 8-A Registration Statement, dated February 9, 1989, File No. 1-652). 4.6 Amendment to Rights Agreement, dated July 17, 1992, between the Registrant, NationsBank, N.A., as Rights Agent, and Wachovia Bank of North Carolina, N.A., as Successor Rights Agent (incorporated herein by reference to the Registrant's Form 8 Amendment No. 2, dated July 17, 1992, to Form 8-A Registration Statement, dated February 9, 1989, File No. 1-652). The Registrant, by signing this Report on Form 10-K, agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument which defines the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any unconsolidated subsidiaries for which financial statements are required to be filed, which authorizes a total amount of securities not in excess of 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. 10.1 Universal Corporation Restricted Stock Plan for Non-Employee Directors (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, File No. 1-652). 10.2 Universal Leaf Tobacco Company, Incorporated Supplemental Stock Purchase Plan, as amended June 24, 1991 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, File No. 1-652). 10.3 Universal Corporation Management Performance Plan (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, File No. 1-652). 10.4 Universal Leaf Tobacco Company, Incorporated Management Performance Plan (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, File No. 1-652). 10.5 Universal Leaf Tobacco Company, Incorporated Executive Life Insurance Agreement.* 10.6 Universal Leaf Tobacco Company, Incorporated Deferred Income Plan (incorporated herein by reference to the Registrant's Report on Form 8, dated February 8, 1991, File No. 1-652). 10.7 Universal Leaf Tobacco Company, Incorporated Benefit Replacement Plan (incorporated herein by reference to the Registrant's Report on Form 8, dated February 8, 1991, File No. 1-652). 10.8 Universal Leaf Tobacco Company, Incorporated Senior Executive Severance Plan (incorporated herein by reference to the Registrant's Report on Form 8, dated February 8, 1991, File No. 1-652). 10.9 Universal Leaf Tobacco Company, Incorporated Supplemental Pension Plan (incorporated herein by reference to the Registrant's Report on Form 8, dated February 8, 1991, File No. 1-652). 10.10 Universal Corporation 1989 Executive Stock Plan, as amended as of October 27, 1992 (incorporated hereby by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, File No. 1-652). 10.11 Universal Corporation 1991 Stock Option and Equity Accumulation Agreement (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1991, File No. 1-652). 10.12 Amendment to Universal Corporation 1991 Stock Option and Equity Accumulation Agreement (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992, File No. 1-652). 10.13 Deli Universal, Inc. Management Performance Plan (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, File No. 1-652). 10.14 Universal Leaf Tobacco Company, Incorporated 1994 Deferred Income Plan.* 10.15 Universal Corporation Outside Directors' 1994 Deferred Income Plan.* 10.16 Universal Leaf Tobacco Company, Incorporated 1994 Benefit Replacement Plan.* 21 Subsidiaries of the Registrant.* 23 Consent of Ernst & Young LLP.* 27 Financial Data Schedule.* * Filed herewith. (b) Reports on Form 8-K filed in the fourth quarter of 1994 Form 8-K filed on July 11, 1994. The form describes a press release announcing a plan of restructuring which provides for the consolidation and rationalization of operations and services in company facilities around the world. (c) Exhibits The exhibits listed in Item 14(a)(3) are filed as part of this annual report. (d) Financial Statement Schedules The consolidated financial statement schedule listed in Item 14(a) is filed as part of this annual report. All other schedules are omitted since the required information is not present in amounts sufficient to require submission or because the information required is included in the consolidated financial statements and notes therein. SCHEDULE IX SHORT - TERM BORROWINGS Years Ended June 30, 1994, 1993 and 1992 (In thousands of dollars)
Maximum Amount Average Amount Weighted Average Balance at End Weighted Average Outstanding During Outstanding During Interest Rate During Classification of the Period Interest Rate the Period (1) the Period (1) the Period (2) 1994 Notes Payable $525,521 5.62% $565,281 $533,602 5.01% 1993 Notes Payable 417,067 5.60 444,600 378,721 6.35 1992 Notes Payable 363,378 6.57 363,378 288,750 8.88 Commercial Paper $0 NA $43,000 $16,454 5.93%
(1) Based on quarter-end balances. (2) The weighted average interest rate was calculated by dividing total interest paid by average amount borrowed. Reference is made to Note 12 of the financial statements. Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized. (REGISTRANT) September 21, 1994 By /s/ Henry H. Harrell Henry H. Harrell Chairman and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Chairman, Chief Executive /s/ Henry H. Harrell Officer and Director September 21, 1994 Henry H. Harrell (Principal Executive Officer) /s/ Allen B. King President, Chief Operating September 22, 1994 Allen B. King Officer and Director /s/ William W. Berry Director September 28, 1994 William W. Berry /s/ Wallace L. Chandler Director September 21, 1994 Wallace L. Chandler /s/ Richard G. Holder Director September 28, 1994 Richard G. Holder /s/ Hubert R. Stallard Director September 28, 1994 Hubert R. Stallard /s/ Thomas R. Towers Director September 22, 1994 Thomas R. Towers /s/ Hartwell H. Roper Vice President and September 23, 1994 Hartwell H. Roper Chief Financial Officer /s/ William J. Coronado Controller (Principal September 21, 1994 William J. Coronado Accounting Officer)
EXHIBIT 10.5

                 EXECUTIVE LIFE INSURANCE AGREEMENT

  Agreement, dated as of this ____ day of __________, 1994, by
and between [NAME] (the "Employee") and UNIVERSAL LEAF TOBACCO
COMPANY, INCORPORATED, a Virginia corporation (the "Corporation").

                             Recitals

  The Employee is a valued employee of the Corporation and the
Corporation desires to retain the Employee in its employment.
Therefore, to induce his continued employment, the Corporation
desires to assist the Employee with his personal life insurance
through this executive life insurance plan.

  The Corporation is presently providing group term life
insurance for the Employee equal to twice compensation and a
certain amount of post retirement life insurance which
eventually reduces to 20% of the pre retirement benefit.  The
Corporation wishes to pay on behalf of the Employee in the
future an amount equal to the amount currently being paid for
group life insurance coverage plus an amount equal to the
present value of post retirement coverage amortized over a time
period to age 65 (or age 70 in the event the Employee is age 55
or older on the date of this Agreement).  However to do so, the
Employee shall apply for these dollars, it is believed that by
using reasonable projections the Employee will have
substantially more post retirement insurance than under the
present arrangement.  However, this executive life insurance
plan entails certain risks including but not limited to the
ability of the Insurer to pay, the amount of interest credited
to the policy by the Insurer, taxes and changes in the tax law. 
By entering into this Agreement, the benefits under the risks of
owning the policy are transferred to the Employee.

  As is the case with the present group life insurance plan, the
Corporation may change the amount of premium payments, and also
may change its corporate policy towards providing or assisting
in providing pre or post retirement life insurance.  However,
the present intention of the Company to make payments are stated
in this Agreement.  An Insurance Advisor (Clark/Bardes, Inc.)
has provided the Employee a booklet and has discussed the terms
of the policy with the Employee.  The Employee has considered
the advantages and disadvantages of signing this Agreement as
opposed to continuing under Corporation's present group term
life insurance plan.

  NOW THEREFORE, in consideration of the following, the Employee
and the Corporation agree as follows:

  1.  Effect of Agreement

    By entering into this Agreement, the Employee authorizes the
Corporation to cease the Employee's coverage under the present
group life insurance plan as of July 1, 1994 and to participate
in this arrangement as described herein.  The election is
irrevocable and will cause the Employee to be ineligible for the
present group term plan or any term plan that replaces the
present group term plan.

  2.  The Policy

    The life insurance policy (the "Policy") covered by this
Agreement is:

                                          Initial Amount
  Insurer          Policy Number           of Insurance

    Manufacturers Life
$

issued on the life of the Employee.  The Employee shall be the
sole owner of the Policy.  The Corporation shall have no
interest in the Policy nor any claim to the cash value or Policy
proceeds.

  3.  Payment of Premiums by the Corporation

    A.  During Employment

      The present plan of the Corporation is to pay on behalf of
the Employee during the period of employment an amount based on
cost tables and calculation methods held by the Human Resources
Department.  This amount consists of two parts as follows:  (i)
the current cost per $1,000 of term insurance by age using group
New York group term rates discounted by 58.6% which are the
Corporation's present group term policy rates and (ii) the
amortization to age 65 (or 70 in the event the Employee is age
55 or older on the date of this Agreement) of the present value
of the post retirement coverage the Employee would have had
under the present Group Term Life Insurance Plan at normal
retirement, using 1980 CSO Mortality tables to determine life
expectancy of the insured and a discount rate of 5.27%.

      The above amount will be paid on a net after-tax basis, i.e.
the gross amount will be computed as above and 32% shall be
withheld for the Employee's federal and state income tax
liability on the above amount yielding the net amount to be paid
to the Insurer.  If in the future the federal (39.6%) and/or
state (5.75%) income taxes on earned income changes, the gross
amount to be paid by the Corporation will be adjusted to yield
the same net amount to be forwarded to the Insurer.

    B.  Disability

      If the Employee becomes disabled during the term of
employment the Corporation plans to continue to pay the above
payment specified under paragraph 4 "Employee Contribution" and
the amount of the supplemental insurance premium (if elected by
the Employee during disability) until the earlier of death or
age 65 (or age 70 in the event the Employee is age 55 or older
on the date of this Agreement).

    C.  Early Retirement

      If the Employee elects early retirement between the ages of
55 and 65, the Corporation plans to pay the sum of (i) an amount
equal to the current group-term premium taking into
consideration the coverage reduction schedule currently being
used for early retirees and (ii) the amount of amortization for
post retirement coverage paid by the Corporation during the last
year of employment.  No further Corporation payments will be
made after age 65 (or 70 in the event the Employee is 55 or
older on the date of this Agreement).

    D.  Employment after Age 65

      If the Employee works past age 65, the Corporation intends to
continue the portion of the payment for current term coverage as
specified in paragraph 3 A(i) on an after-tax basis.  No further
post retirement amortization payment as specified in
subparagraph 3 A(ii) will be made after age 65 unless the
employee was age 55 or older on the date of this Agreement.

    E.  Right of Corporation to Determine and Change

      The Corporation reserves the right to change or terminate the
amounts of its payment in accordance with future circumstances. 
Any determination of the obligation to make payment under this
Agreement or to make any interpretation or construction of this
Agreement shall be the sole prerogative of the Corporation.

  4.  Employee Contributions

    The Employee Contribution shall equal the income tax on group
life insurance coverage in excess of $50,000 at various ages for
which the Employee would have paid assuming Table I rates as of
December 1989, the current federal and state combined income tax
rate and the amount of insurance coverage in effect.

    The Employee authorizes the Corporation to withhold from his
compensation (salary, bonus or other compensation) amounts equal
to the Employee Contributions.  These amounts will be paid by
the Corporation on behalf of the Employee to the Insurer under
the insurance contract.

    A.  Supplemental Insurance

      The employee may pay an additional amount for Supplemental
Insurance (equal to annual compensation) at rates specified by
the Company's Insurance Advisor and acceptable to the Insurer,
assuming that the Employee qualifies for Supplemental Insurance
under the Policy.  By electing Supplemental Insurance, the
Employee authorizes the corporation to withhold the amounts and
pay the Insurer.

    B.  Additional Payments

      At any time before or after termination of employment, the
Employee may take any such additional payments to the Policy as
may be allowed by the terms of the Policy.  Upon retirement, the
employee should consult with the Insurance Advisor with respect
to any options available under the Policy.

  5.  Transfer of Policy

    The Employee may transfer all of his interest in the Policy
and the transfer shall not effect the Corporation's payment of
premiums.  The transfer is subject to the terms of the Policy
and the Corporation makes no representation as to the legal or
tax effects of such transfer.

  6.  Payment of Policy Proceeds

    In the event the Policy becomes a claim by reason of the
Employee's death, the Corporation shall have no interest in the
proceeds of the Policy.  The total proceeds of the Policy shall
be paid directly by the Insurer to the beneficiary designated in
the Policy by the owner thereof.

  7.  Surrender of Policy or Withdrawing Sums

    The Employee shall have the exclusive right to surrender or
cancel the Policy and receive the cash surrender value thereof. 
However, if the Employee during his employ should cease to make
payments or fail to authorize the Corporation to make payments
on his behalf or if the Employee should withdraw funds or borrow
funds from the Policy, then the Corporation shall have the right
not to make any further contributions to the Policy.  The
Corporation wants to encourage the Employee to keep the Policy
in effect and funded during employment.

  8.  Termination of Agreement by the Corporation

    In the event the Employee shall fail to pay that portion of
each premium payment required in Paragraph 4 hereof, or in the
event of the termination of the Employee's employment with the
Corporation for any reason whatsoever other than the Employee's
death, retirement, early retirement, or disability, the
Corporation may terminate the agreement.  Termination from
employment shall not terminate the right of the Corporation to
withhold or collect any Employee contributions due or paid to
the Insurer by the Corporation on behalf of the Employee.

  9.  Obligations of Insurer under Agreement

    The insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or action
taken by it in accordance therewith shall fully discharge it
from all claims, suits and demands of all persons whatsoever. 
It shall in no way be bound by or deemed to have notice of the
provisions of this Agreement.

  10.  Changes in Amount of Insurance

    The Corporation intends to maintain the amount of life
insurance coverage in force pursuant to this Agreement to equal
twice the Employee's compensation effective July 1 each year but
such increases however shall be subject to the terms and
limitations of the Policy.

  11.  Accident Insurance

    During the term of employment the Corporation intends to
provide a separate policy accidental death coverage in an amount
equal to twice compensation subject to certain maximum coverage
limits (currently $750,000).

  12.  Miscellaneous

    A.  Where appropriate in this Agreement (i) words used in the
singular shall include the plural and words used in the
masculine shall include the feminine and vice versa and (ii) the
word "Employee" shall include his transferee, subowner,
subowner's assigns or Policy beneficiary as the case may be. 
The word "Corporation" shall include its successors and assigns.
 Headings and subheadings are for convenience only and have no
effect on the construction of this Agreement.

    B.  This Agreement may be altered, amended or modified by
written notice signed by the Corporation.  The laws of the
Commonwealth of Virginia shall govern this Agreement.

    C.  This Agreement is not an employment contract nor does it
create any right of continued employment with the Corporation.

  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in more than one counterpart, each of which is an
original.

                       UNIVERSAL LEAF TOBACCO COMPANY INCORPORATED

                       By:________________________________

_____________________________
          [NAME]

EXHIBIT 10.14

             UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED

                     1994 DEFERRED INCOME PLAN

   Universal Leaf Tobacco Company, Incorporated (the "Sponsor")
hereby establishes a non-qualified deferred compensation program
for certain employees as described herein.  The following shall
constitute the terms and conditions of the 1994 Deferred Income
Plan, effective July 1, 1994.

A.   Purpose and Administration

   1.   Statement of Purpose
        The purpose of the 1994 Deferred Income Plan (the "Plan") is to
        provide certain officers of Universal Leaf Tobacco Company,
        Incorporated, of its parent, Universal Corporation, and of
        certain of its domestic subsidiaries as are listed on Schedule A
        attached hereto, and as amended from time to time
        ("Participating Subsidiaries") (individually and collectively,
        the "Company") with recurrent opportunities to defer receipt of
        a portion of salary and amounts earned pursuant to the
        applicable Management Performance Plan of the Company (the
        "MPP").  Such deferrals, until a date certain in the future,
        would apply to amounts which otherwise would be payable
        currently.

   2.   Top Hat Plan
        The Sponsor intends that the Plan constitute an unfunded "top
        hat" plan maintained for the purpose of providing deferred
        compensation to a select group of management employees, within
        the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
        Employee Retirement Security Act of 1974, as amended from time
        to time, and the rules and regulations thereunder ("ERISA").

   3.   Plan Administration
        Full power and authority to construe, interpret and administer
        the Plan and to change requirements for eligibility and
        investment options shall be vested in the Executive Committee of
        the Sponsor (the "Committee").  The Committee shall have the
        authority to make determinations provided for or permitted to be
        made under the Plan and to establish such rules and regulations,
        if any, that the Committee deems necessary and appropriate for
        the ongoing administration and operation of the Plan.

B.   Eligibility

    4.  Eligible Employees
        Participants in this plan shall consist of the following
        corporate officers:  (a) Officers of Universal Corporation, (b)
        Corporate Directors and above of the Sponsor, (c) Vice
        Presidents and above of Participating Subsidiaries, and (d)
        Assistant Vice Presidents who are also assistant general
        managers at processing plants of Participating Subsidiaries
        (collectively referred to hereinafter as "Participants").

C.   Deferral Elections

    5.  Agreements
        The initial deferral agreement (the "Initial Agreement"), in a
        form approved by the Committee shall be executed by the Company
        and each Participant to effectuate the deferrals described in
        Section 6(a) below.  Subsequent deferral agreements (the
        "Subsequent Agreements"), in a form approved by the Committee
        shall be executed by the Sponsor and each Participant to
        effectuate the deferrals described in Section 6(b) below (the
        Initial Agreement and the Subsequent Agreements are collectively
        referred to herein as the "Deferral Agreements").  Execution of
        the Deferral Agreements between the Company and each Participant
        shall constitute the sole means for each Participant to
        effectuate deferral elections pursuant to the Plan.

    6.  Deferral Elections

        (a)  Initial Deferral
        Each Participant may elect in writing to defer an amount of
        salary up to a maximum of seventy-five percent (75%) for the
        initial deferral period of July 1, 1994 through December 31,
        1995 (the "Initial    Deferral Period").  There are two separate
        deferral elections for the Initial Deferral Period.  The first
        election is for the period July 1, 1994    to December 31, 1994,
        and the second election is for calendar year 1995.  Each
        Participant may also elect in writing to defer up to one hundred
        percent (100%) of his or her MPP award for the Sponsor's fiscal
        year beginning July 1, 1994 and ending June 30, 1995, which is
        generally payable in September of 1995 (the "1995 MPP Award"),
        or all of his or her 1995 MPP award in excess of a designated
        sum, if any.  The election with respect to salary for the
        Initial Deferral Period and/or the 1995 MPP Award shall be made
        in the month of June 1994.

        (b)  Subsequent Deferrals
        Each Participant may elect in writing to defer an amount of
        salary up to a maximum of twenty-five percent (25%) for
        subsequent calendar year deferrals (the "Subsequent Deferral
        Period").  Each Participant may also elect in writing to defer
        either (i) up to one hundred percent (100%) of his or her MPP
        Award for the Sponsor's subsequent fiscal years which are
        generally payable the September after the conclusion of the
        fiscal year (the "Subsequent MPP Awards"), or (ii) all of a
        Subsequent MPP Award in excess of a designated sum, if any.  The
        election with respect to salary for the Subsequent Deferral
        Period and/or a Subsequent MPP Award shall be made in the month
        of June prior to the July 1 beginning of the Sponsor's fiscal
        year in which any MPP Award is earned and, therefore, prior to
        the calendar year in which any of the salary is earned.

        (c)  New Participant Deferrals
        Any new Employee to the Company who is eligible to participate
        in the Plan subsequent to the Plan's commencement date of July
        1, 1994 may elect to defer salary within thirty (30) days from
        the date on which he or she first becomes eligible to
        participate.  Each continuing Employee who becomes eligible to
        participate in the Plan subsequent to the Plan's commencement
        date of July 1, 1994, may elect salary and/or MPP award
        deferrals during the next regular June deferral election period.

D.   Deferral Accounts

   7.   Deferral Account
        The Company shall establish a deferral account in the name of
        each Participant on the Company's books and records which shall
        reflect the amount of actual deferrals plus any earnings and
        less any losses thereon (the  "Adjustment") as described in
        Section 9 hereinafter as an unfunded liability of the Company to
        the Participant (the actual deferrals plus or minus the
        Adjustment is collectively referred to herein as the "Deferral
        Account").

   8.   Irrevocability of Deferral Elections
        Once a Participant elects to defer salary and/or a MPP award
        pursuant to the terms of a Deferral Agreement, including
        elections as to amount, timing and method of payout, such
        election shall be irrevocably binding upon the Participant.

   9.   Investment Options
        The Sponsor has selected the following initial investment funds
        which may be modified from time to time by the Committee: 
        Oppenheimer Capital Appreciation Fund, Oppenheimer Global Fund,
        Massachusetts Mutual Equity Fund, Massachusetts Mutual Bond Fund
        and the Massachusetts Mutual Money Market Fund (the "Investment
        Options").  Participants shall designate annually in June how
        their deferrals are to be hypothetically invested among the
        Investment Options.  The Sponsor shall use the Participant's
        Investment Option designations to calculate the Adjustment
        component of the Deferral Account.  The Participant may each
        June change his or her investment election designation both as
        to amounts then in the Deferral Account and future amounts to be
        allocated to the Deferral Account.  If a Participant changes his
        or her Investment Option designation for either amounts then in
        the Deferral Account or future amounts to be allocated to the
        Deferral Account, then such change shall supersede the previous
        designation effective as of the last day of the month after the
        date of the changed election.  The Sponsor shall begin crediting
        the Participant's Deferral Account with the amount deferred by
        the Participant on the last day of the month in which the salary
        or MPP Award would have otherwise been paid.  As to the
        applicable amount distributed, the Sponsor shall cease crediting
        or debiting Adjustments to the Participant's Deferral Account on
        the last day of the month of the applicable distribution event
        set forth in Sections 10, 11, 12, 13, 14 or 15 (the "Valuation
        Date").

        Allocation of investment selections shall be made among the
        Investment Options.  A Participant shall have absolutely no
        ownership interest in any Investment Option.  The Sponsor may,
        but is not required to, invest the amounts represented by the
        Deferral Accounts in the Investment Options.  The Sponsor shall
        be the sole owner of any funds invested in any such Investment
        Option, as well as all amounts accounted for in the Deferral
        Accounts, all of which shall at all times be subject to the
        claims of the Company's general unsecured creditors.

E.   Distributions

  10.   Pre-Deferral Irrevocable Payout Election
        A Participant may irrevocably elect to receive the distribution
        of the Deferral Account, as follows:

        (a)  in a one-time partial distribution of a specified amount on
        a specified future date that is more than five (5) years from
        the date of execution of the Deferral Agreement with the
        remainder to be distributed in accordance with subsection (c) or
        (d), and with such partial distributions to be made on or before
        the fifteenth day of the month following the specified date;
        and/or

        (b)  in a lump sum distribution of the entire Deferral Account
        on a specified future date that is more than five (5) years from
        the date of execution of the Deferral Agreement with payment
        made on or before the fifteenth day of the month following the
        specified date; or

        (c)  upon retirement from the Company, in a lump sum
        distribution on or before the fifteenth day following the
        Valuation Date; or

        (d)  upon retirement from the Company, in annual payments for a
        period of up to fifteen (15) years beginning on or before the
        fifteenth day following the Valuation Date and on each
        subsequent anniversary date thereafter.  Under this method, for
        example, assuming a fifteen year payment election, the first
        year distribution will equal one-fifteenth (1/15) of the total
        Deferral Account, the second year distribution will equal
        one-fourteenth (1/14) of the remaining Deferral Account, and so
        forth.

        Notwithstanding the Participant's irrevocable election, the
        distribution of the Deferral Account to a Participant shall be
        accelerated in the event of permanent disability (Section 11),
        death (Section 12), termination of employment other than by
        retirement (Section 13) or a Change of Control, as defined
        hereinafter (Section 14), and may be accelerated in the event of
        an Unforeseeable Emergency, as defined hereinafter (Section 15).

  11.   Payment in Event Participant Becomes Permanently Disabled
        In the event a Participant terminates employment as a result of
        permanent disability, as that term is defined in the Sponsor's
        Long Term Disability Benefits Plan, the method of payment shall
        be a lump sum distribution on or before the fifteenth day
        following the Valuation Date.

  12.   Payment in Event of Participant's Death
        In the event a Participant pre-deceases his or her election date
        for payment of the Deferral Account or has not received all of
        his or her payments, the method of payment shall be a lump sum
        distribution to the beneficiary designated by the Participant on
        or before the fifteenth day following the Valuation Date.

        Each Participant shall designate in writing a beneficiary to
        whom benefits hereunder are to be paid, if the Participant dies
        prior to receiving his or her entire Deferral Account.  A
        Participant may change his or her beneficiary designation at any
        time by filing a revised beneficiary designation form with the
        Committee.

        If a Participant fails to designate a beneficiary as provided
        above, or if all designated beneficiaries predecease the
        Participant, or die before the completion of all payments due
        hereunder, the Sponsor shall pay the Deferral Account to the
        Participant's estate. 

  13.   Payment in Event of Participant's Termination of Employment
        Upon termination of employment for reasons other than
        retirement, permanent disability or death, the Company shall pay
        the terminated Participant his or her Deferral Account in a lump
        sum distribution on or before the fifteenth day following the
        Valuation Date.

  14.   Payment in Event of Change of Control
        Upon the Occurrence of a Change of Control, as defined below,
        with respect to both Participants and retirees who are receiving
        payments hereunder, the Company shall pay the Participant his or
        her Deferral Account in a lump sum distribution on or before the
        fifteenth day following the Valuation Date.

        For the purpose of this Plan, a "Change of Control" shall mean:

        (a)  The acquisition by any individual, entity or group (within
        the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
        Exchange Act of 1934, as amended (the "Exchange Act")) (a
        "Person") of beneficial ownership (within the meaning of Rule
        13d-3 promulgated under the Exchange Act) of 20% or more of
        either (i) the then outstanding shares of Common Stock of
        Universal Corporation (the "Outstanding Common Stock") or (ii)
        the combined voting power of the then outstanding voting
        securities of Universal Corporation entitled to vote generally
        in the election of directors (the "Outstanding Voting
        Securities"); provided, however, that for purposes of this
        subsection (a), the following acquisitions shall not constitute
        a Change of Control:  (i) any acquisition directly from
        Universal Corporation, (ii) any acquisition by Universal
        Corporation, (iii) any acquisition by any employee benefit plan
        (or related trust) sponsored or maintained by Universal
        Corporation or any corporation controlled by Universal
        Corporation or (iv) any acquisition by any corporation pursuant
        to a transaction which complies with clauses (i), (ii) and (iii)
        of subsection (c); or

        (b)  Individuals who, as of July 1, 1994, constitute the Board
        of Directors of Universal Corporation (the "Incumbent Board")
        cease for any reason to constitute at least a majority of such
        Board; provided, however, that any individual becoming a
        director subsequent to the date hereof whose election, or
        nomination for election by the shareholders of Universal
        Corporation, was approved by a vote of at least a majority of
        the directors then comprising the Incumbent Board shall be
        considered as though such individual were a member of the
        Incumbent Board, but excluding, for this purpose, any such
        individual whose initial assumption of office occurs as a result
        of an actual or threatened election contest with respect to the
        election or removal of directors or other actual or threatened
        solicitation of proxies or consents by or on behalf of a Person
        other than the Board of Directors of Universal Corporation; or

        (c)  Consummation of a reorganization, merger or consolidation
        or sale or other disposition of all or substantially all of the
        assets of Universal Corporation (a "Business Combination"), in
        each case, unless, following such Business Combination, (i) all
        or substantially all of the individuals and entities who were
        the beneficial owners, respectively, of the Outstanding Common
        Stock and Outstanding Voting Securities immediately prior to
        such Business Combination beneficially own, directly or
        indirectly, more than 50% of, respectively, the then outstanding
        shares of common stock and the combined voting power of the then
        outstanding voting securities entitled to vote generally in the
        election of directors, as the case may be, of the corporation
        resulting from such Business Combination (including, without
        limitation, a corporation which, as a result of such
        transaction, owns Universal Corporation or all or substantially
        all of Universal Corporation's assets either directly or through
        one or more subsidiaries) in substantially the same proportions
        as their ownership, immediately prior to such Business
        Combination of the Outstanding Common Stock and Outstanding
        Voting Securities, as the case may be, (ii) no Person (excluding
        any corporation resulting from such Business Combination or any
        employee benefit plan (or related trust) of Universal
        Corporation or such corporation resulting from such Business
        Combination) beneficially owns, directly or indirectly, 20% or
        more of, respectively, the then outstanding shares of common
        stock of the corporation resulting from such Business
        Combination or the combined voting power of the then outstanding
        voting securities of such corporation except to the extent that
        such ownership existed prior to the Business Combination and
        (iii) at least a majority of the members of the board of
        directors of the corporation resulting from such Business
        Combination were members of the Incumbent Board at the time of
        the execution of the initial agreement, or of the action of the
        Board, providing for such Business Combination, or

        (d)  Approval by the shareholders of Universal Corporation of a
        complete liquidation or dissolution of Universal Corporation.

  15.   Payment in Event of Unforeseeable Emergency

        (a)  A distribution of a portion of the Participant's Deferral
        Account because of an Unforeseeable Emergency will be permitted
        only to the extent required by the Participant to satisfy the
        emergency need.  Whether an Unforeseeable Emergency has occurred
        will be determined solely by the Committee.  Distributions in
        the event of an Unforeseeable Emergency may be made by and with
        the approval of the Committee upon written request by a
        Participant.

        (b)  An "Unforeseeable Emergency" is defined as a severe
        financial hardship to the Participant resulting from a sudden
        and unexpected illness or accident of the Participant or of a
        dependent of the Participant, loss of the Participant's property
        due to casualty, or other similar extraordinary and
        unforeseeable circumstances arising as a result of events beyond
        the Participant's control.  The circumstances that will
        constitute an unforeseeable emergency will depend upon the facts
        of each case, but, in any event, any distribution under this
        Section shall not exceed the remaining amount required by the
        Participant to resolve the hardship after (i) reimbursement or
        compensation through insurance or otherwise, (ii) obtaining
        liquidation of the Participant's assets, to the extent such
        liquidation would not itself cause a severe financial hardship,
        or (iii) suspension of deferrals under the Plan.

F.   Participants' Rights

  16.   Participant Rights in the Unfunded Plan
        Any liability of the Company to any Participant with respect to
        any benefit shall be based solely upon the contractual
        obligations created by the Plan and the Deferral Agreements
        (collectively, the "Agreements"); no such obligation shall be
        deemed to be secured by any pledge or any encumbrance on any
        property of the Company.  No Participant shall have any rights
        under the Plan other than those of a general unsecured creditor
        of the Company.  Assets segregated or identified by the Company
        for the purpose of paying benefits pursuant to the Plan remain
        general corporate assets subject to the claims of the Company's
        general creditors, and are not held in trust by the Company for
        the benefit of Participants.

  17.   Non-Assignability
        Except as provided in Section 12, each Participant's rights
        under the Plan shall be non-transferrable and non-assignable.

G.   The Sponsor's Reservation of Rights

  18.   Termination or Amendment of Plan
        The Sponsor retains the right, at any time and in its sole
        discretion, to amend or terminate the Plan, in whole or in part.
        Any amendment of the Plan shall be approved by the Board of
        Directors of the Sponsor, shall be in writing and shall be
        communicated within thirty (30) days of its adoption to the
        Participants.  Notwithstanding the above, the Committee shall
        have the authority to change the requirements of eligibility or
        to modify the Investment Options hereunder.  No amendment of the
        Plan shall substantially impair or curtail the Sponsor's
        contractual obligations arising from Deferral Agreements
        previously entered into for benefits accrued prior to such
        amendment.  Notwithstanding any other provision herein to the
        contrary, in the event of Plan termination, payment of Deferral
        Accounts shall occur not later than the last business day of the
        third month following the month in which the termination is made
        effective.

H.   Claims for Benefits

  19.   Claims Procedure
        Any claim by a Participant or his or her Beneficiary (hereafter
        "Claimant") for benefits shall be submitted to the Committee. 
        The Committee shall be responsible for deciding whether such
        claim is within the scope provided by the Plan (a "Covered
        Claim") and for providing full and fair review of the decision
        of such claim.  In addition, the Committee shall provide a full
        and fair review in accordance with ERISA, including without
        limitation Section 503 thereof.

        Each claimant or other interested person shall file with the
        Committee such pertinent information as the committee may
        specify, and in such manner and form as the Committee may
        specify and provide, and such person shall not have any rights
        or be entitled to any benefits or further benefits hereunder, as
        the case may be, unless such information is filed by the
        Claimant or on behalf of the Claimant.  Each Claimant shall
        supply at such times and in such manner as may be required,
        written proof that the benefit is covered under the Plan.  If it
        is determined that a Claimant has not incurred a Covered Claim
        or if the Claimant shall fail to furnish such proof as is
        requested, no benefits or no further benefits hereunder, as the
        case may be, shall be payable to such Claimant.

        Notice of a decision by the Committee with respect to a Claim
        shall be furnished to the Claimant within ninety (90) days
        following the receipt of the claim by the Committee (or within
        ninety (90) days following the expiration of the initial ninety
        (90) day period, in a case where there are special circumstances
        requiring extension of time for processing the claim).  If
        special circumstances require an extension of time for
        processing the claim, written notice of the extension shall be
        furnished by the Committee to the Claimant prior to the
        expiration of the initial ninety (90) day period.  The notice of
        extension shall indicate the special circumstances requiring the
        extension and the date by which the notice of decisions with
        respect to the claim shall be furnished.  Commencement of
        benefit payments shall constitute notice of approval of a claim
        to the extent of the amount of the approved benefit.  If such
        claim shall be wholly or partially denied, such notice shall be
        in writing and worded in a manner calculated to be understood by
        the Claimant, and shall set forth (i) the specific reason or
        reasons for the denial; (ii) specific reference to pertinent
        provisions of the Plan on which the denial is based; (iii) a
        description of any additional material or information necessary
        for the Claimant to perfect the claim and an explanation of why
        such material or information is necessary; and (iv) an
        explanation of the Plan's claims review procedure.  If the
        Committee fails to notify the Claimant of the decision regarding
        his or her claim in accordance with these "Claims Procedure"
        provisions, the claim shall be deemed denied and the Claimant
        then shall be permitted to proceed with the claims review
        procedure provided herein.

        Within sixty (60) days following receipt by the Claimant of
        notice of the claim denial, or within sixty (60) days following
        the close of the ninety (90) day period referred to herein, or
        if the Committee fails to notify the Claimant of the decision
        within such ninety (90) day period, the Claimant may appeal
        denial of the claim by filing a written application for review
        with the Committee.  Following such request for review, the
        Committee shall fully and fairly review the decision denying the
        claim.  Prior to the decision of the Committee, the Claimant
        shall be given an opportunity to review pertinent documents and
        to submit issues and comments to the Committee in writing.  The
        decision of the Committee shall be made within sixty (60) days
        following receipt by the Committee of the request for review (or
        within one hundred and twenty (120) days after such receipt, in
        a case where there are special circumstances requiring extension
        of time for reviewing such denied claim).  The Committee shall
        deliver its decision to the Claimant in writing.  If the
        decision on review is not furnished within the prescribed time,
        the claim shall be deemed denied on review.

        For all purposes under the Plan, the decision with respect to a
        claim if no review is requested and the decision with respect to
        a claim if review is requested shall be final, binding and
        conclusive on all interested parties as to matters relating to
        the Plan.

  20.   Committee Determinations Final
        Each determination provided for in the Plan shall be made in the
        absolute discretion of the Committee.  Any such determination
        shall be final, binding and conclusive on all persons.

I.   Miscellaneous Provisions

  21.   Effect on Other Benefits
        Except as otherwise required by applicable law, the salary
        deferred by a Participant shall be included in the Participant's
        annual compensation for purposes of calculating the
        Participant's bonuses and awards, insurance and other employee
        benefits.  However, in accordance with the terms of any plan
        qualified under Section 401 of the Internal Revenue Code
        maintained by the Sponsor, the amount of salary deferrals under
        the Plan shall not be included as calendar year compensation in
        calculating the Participant's benefits or contributions by or on
        behalf of the Participant.  Distributions made under the Plan
        shall be excluded from compensation in years paid for purposes
        of calculating a Participant's bonuses and awards, insurance and
        other employee benefits.

  22.   Plan Year
        The Plan Year shall be the calendar year.

  23.   Tax Withholding
        The Sponsor shall withhold from any payment made by it under the
        Plan such amount or amounts as may be required for purposes of
        complying with the tax withholding or other provisions of the
        Internal Revenue Code of 1986, as amended, or the Social
        Security Act, as amended, or any federal, state or local income
        or employment tax provision or for purposes or paying any
        estate, inheritance or other tax attributable to any amounts
        payable hereunder.

  24.   Participant's Incapacity
        If, in the Committee's opinion, a Participant of other person
        entitled to receive benefits under the Plan is in any way
        incapacitated so as to be unable to manage his or her financial
        affairs, then the Committee may make such payment(s) into a
        separate interest-bearing account established for the benefit of
        and on behalf of the Participant or other recipient, for release
        at such time as a claim is made by a conservator or other person
        legally charged with the care of his or her person or of his or
        her estate.  Thereafter, any benefits payable under the Plan
        shall be made to the conservator or other person legally charged
        with the care of his or her person or estate.

  25.   Independence of Plan
        Except as otherwise expressly provided herein, this Plan shall
        be independent of, and in addition to, any other employment
        agreement or employment benefit agreement or plan or rights that
        may exist from time to time between the parties hereto.  This
        Plan shall not be deemed to constitute a contract of employment
        between the Company and a Participant, nor shall any provision
        hereof restrict the right of the Company at any time to
        discharge a Participant, with or without assigning a reason
        therefore, or restrict the right of a Participant to terminate
        his or her employment with the Company.

  26.   Responsibility for Legal Effect
        Neither the Committee nor the Company makes any representations
        or warranties, express or implied, or assumes any responsibility
        concerning the legal, tax, or other implications of effects of
        this Plan.

  27.   Successors, Acquisitions, Mergers, Consolidations
        The terms and conditions of the Plan and each Deferral Agreement
        shall inure to the benefit of and bind the Company and the
        Participants, and their successors, assigns, and personal
        representatives.

  28.   Controlling Law
        The Plan shall be construed in accordance with the laws of the
        Commonwealth of Virginia to the extent not preempted by laws of
        the United States of America.


EXHIBIT 10.15

                      UNIVERSAL CORPORATION

            OUTSIDE DIRECTORS' 1994 DEFERRED INCOME PLAN

   Universal Corporation (the "Sponsor") hereby establishes a
non-qualified deferred compensation program for its non-employee
directors (the "Outside Directors").  The following shall
constitute the terms and conditions of the Outside Directors'
1994 Deferred Income Plan, effective October  1, 1994.

A.  Purpose and Administration

   1.   Statement of Purpose.  The purpose of the Outside Directors'
        1994 Deferred Income Plan (the "Plan") is to provide the Outside
        Directors of Universal Corporation with recurrent opportunities
        to defer receipt of a portion of their compensation.  Such
        deferrals, until a date certain in the future, would apply to
        amounts which otherwise would be payable currently.

   2.    Top Hat Plan.  The Sponsor intends that the Plan constitute
        an unfunded "top hat" plan maintained for the purpose of
        providing deferred compensation to Outside Directors, within the
        meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
        Employee Retirement Income Security Act of 1974, as amended from
        time to time, and the rules and regulations thereunder
        ("ERISA").  This plan shall not cover any person who is, or
        becomes, an employee of the Sponsor, or its affiliated entities.

   3.    Plan Administration.  Full power and authority to construe,
        interpret and administer the Plan and to change requirements for
        eligibility and investment options shall be vested in the
        Executive Committee of Universal Corporation (the "Committee"). 
        The Committee shall have the authority to make determinations
        provided for or permitted to be made under the Plan and to
        establish such rules and regulations, if any, that the Committee
        deems necessary and appropriate for the ongoing administration
        and operation of the Plan.

B.  Eligibility

   4.    Eligible Persons.  Participants in this plan shall consist
        solely of the Outside Directors (individually or collectively
        sometimes referred to herein as "Participant" or "Participants").

C. Deferral Elections

   5.    Agreements.  The initial deferral agreement (the "Initial
        Agreement"), in the form approved by the Committee and attached
        to this Plan as Exhibit A, shall be executed by the Sponsor and
        each Participant to effectuate the deferrals described in
        Section 6(a) below.  Subsequent deferral agreements (the
        "Subsequent Agreements"), in the form approved by the Committee,
        shall be executed by the Sponsor and each Participant to
        effectuate the deferrals described in Section 6(b) below (the
        Initial Agreement and the Subsequent Agreements are collectively
        referred to herein as the "Deferral Agreements").  Execution of
        the Deferral Agreements between the Sponsor and each Participant
        shall constitute the sole means for each Participant to
        effectuate deferral elections of compensation pursuant to the
        Plan.  For purposes of this Plan, compensation shall mean any
        director's fees, including retainers and fees for Board and
        committee meetings (collectively, "Compensation").

   6.    Deferral Elections.

    (a) Initial Deferral.  Each Participant may elect in writing
        to defer an amount of Compensation up to a maximum of
        one-hundred percent (100%) for the initial deferral period of
        October 1, 1994 through September 30, 1995 (the "Initial
        Deferral Period").

    (b) Subsequent Deferrals.  Each Participant may elect in
        writing to defer an amount of Compensation up to a maximum of
        one hundred percent (100%) for subsequent October 1 to September
        30 Plan Year deferrals (the "Subsequent Deferral Period").  The
        election with respect to Compensation for the Subsequent
        Deferral Period shall be made in the month of September prior to
        the October 1 beginning of the Sponsor's Plan Year.

    (c) New Participant Deferrals.  Any new Outside Director who
        is eligible to participate in the Plan subsequent to the Plan's
        commencement date of October 1, 1994, may elect to defer
        compensation within (i) thirty (30) days from the date on which
        he or she first becomes eligible to participate or (ii) during
        the next regular September deferral election period.

D.  Deferral Accounts

   7.    Deferral Account.  The Sponsor shall establish a deferral
        account in the name of each Participant on its books and records
        which shall reflect the amount of actual deferrals plus any
        earnings and less any losses thereon (the "Adjustment") as
        described in Section 9 hereinafter as an unfunded liability of
        the Sponsor to the Participant (the actual deferrals plus or
        minus the Adjustment is collectively referred to herein as the
        "Deferral Account").

   8.    Irrevocability of Deferral Elections.  Once a Participant
        elects to defer Compensation pursuant to the terms of a Deferral
        Agreement, including elections as to amount, timing and method
        of payout, such election shall be irrevocably binding upon the
        Participant.

   9.    Investment Options.  The Sponsor has selected the following
        initial investment funds which may be modified from time to time
        by the Committee:  Oppenheimer Capital Appreciation Fund,
        Oppenheimer Global Fund, Massachusetts Mutual Equity Fund,
        Massachusetts Mutual Bond Fund, and Massachusetts Mutual Money
        Market Fund (the "Investment Options").  Participants shall
        annually designate in September how their deferrals are to be
        hypothetically invested among the Investment Options.  The
        Sponsor shall use the Participant's Investment Option
        designations to calculate the Adjustment component of the
        Deferral Account.  The Participant may each September change his
        or her investment election designation both as to amounts then
        in the Deferral Account and future amounts to be allocated to
        the Deferral Account.  If a Participant changes his or her
        Investment Option designation for either amounts then in the
        Deferral Account or future amounts to be allocated to the
        Deferral Account, then such change shall supersede the previous
        designation effective as of the last day of the month after the
        date of the changed election.  The Sponsor shall begin crediting
        the Participant's Deferral Account with the amount deferred by
        Participant on the last day of the month in which the
        Compensation would have otherwise been paid.  As to the
        applicable amount distributed, the Sponsor shall cease crediting
        or debiting Adjustments to the Participant's Deferral Account on
        the last day of the month of the applicable distribution event
        set forth in Sections 10, 11, 12 or 13 (the "Valuation Date").

        Allocation of investment selections shall be made among the
        Investment Options.  A Participant shall have absolutely no
        ownership interest in any Investment Option.  The Sponsor may,
        but is not required to, invest the amounts represented by the
        Deferral Accounts in the Investment Options.  The Sponsor shall
        be the sole owner of any funds invested in any such Investment
        Option, as well as all amounts accounted for in the Deferral
        Accounts, all of which shall at all times be subject to the
        claims of the Sponsor's general unsecured creditors.

E.  Distributions

        10. Pre-Deferral Irrevocable Payout Election.  A Participant
        may irrevocably elect to receive the distribution of the
        Deferral Account, as follows:

    (a) In a one-time partial distribution of a specified amount
        on a specified future date that is more than five (5) years from
        the date of execution of the Deferral Agreement with the
        remainder to be distributed in accordance with subsection (c) or
        (d), and with such partial distribution to be made on or before
        the fifteenth day of the month following the specified date;
        and/or

    (b) In a lump sum distribution of the entire Deferral Account
        on a specified future date that is more than five (5) years from
        the date of execution of the Deferral Agreement with payment
        made on or before the fifteenth day of the month following the
        specified date; or

    (c) Upon termination of service as an Outside Director, in a
        lump sum distribution on or before the fifteenth day following
        the Valuation Date; or

    (d) Upon termination of service as an Outside Director, in
        annual payments for a period of up to fifteen (15) years
        beginning on or before the fifteenth day following the Valuation
        Date, and, on each subsequent anniversary date thereafter. 
        Under this method, for example, assuming a fifteen year payment
        election, the first year distribution will equal one-fifteenth
        (1/15) of the total Deferral Account, the second year
        distribution will equal one-fourteenth (1/14) of the remaining
        Deferral Account, and so forth.

        Notwithstanding the Participant's irrevocable election, the
        distribution of the Deferral Account to a Participant shall be
        accelerated in the event of death (Section 11) or a Change of
        Control, as defined hereinafter (Section 12), and may be
        accelerated in the event of death an Unforeseeable Emergency, as
        defined hereinafter (Section 13).

    11. Payment in Event of Participant's Death.  In the event a
        Participant pre-deceases his or her election date for payment of
        the Deferral Account or has not received all of his or her
        payments, the method of payment shall be a lump sum distribution
        to the beneficiary designated by the Participant on or before
        the fifteenth day following the Valuation Date.

        Each Participant shall designate in writing a beneficiary to
        whom benefits hereunder are to be paid, if the Participant dies
        prior to receiving his or her entire Deferral Account.  A
        Participant may change his or her beneficiary designation at any
        time by filing a revised beneficiary designation form with the
        Committee.

    If a Participant fails to designate a beneficiary as provided
        above, or if all designated beneficiaries predecease the
        Participant, or die before the completion of all payments due
        hereunder, the Sponsor shall pay the Deferral Account to
        Participant's estate.

    12. Payment in Event of Change of Control.  Upon the Occurrence
        of a Change of Control, as defined below, with respect to both
        Participants and Outside Directors who are receiving payments
        hereunder, the Sponsor shall pay the Participant his or her
        Deferral Account in a lump sum distribution on or before the
        fifteenth day following the Valuation Date.

    For the purpose of this Plan, a "Change of Control" shall mean:

    (a) The acquisition by any individual, entity or group (within
        the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
        Exchange Act of 1934, as amended (the "Exchange Act")) (a
        "Person") of beneficial ownership (within the meaning of Rule
        13d-3 promulgated under the Exchange Act) of 20% or more of
        either (i) the then outstanding shares of Common Stock of the
        Sponsor (the "Outstanding Common Stock") or (ii) the combined
        voting power of the then outstanding voting securities of the
        Sponsor entitled to vote generally in the election of directors
        (the "Outstanding Voting Securities"); provided, however, that
        for purposes of this subsection (a), the following acquisitions
        shall not constitute a Change of Control:  (i) any acquisition
        directly from the Sponsor, (ii) any acquisition by the Sponsor,
        (iii) any acquisition by any employee benefit plan (or related
        trust) sponsored or maintained by the Sponsor or any corporation
        controlled by the Sponsor or (iv) any acquisition by any
        corporation pursuant to a transaction which complies with
        clauses (i), (ii) and (iii) of subsection (c); or

    (b) Individuals who, as of October 1, 1994, constitute the
        Board of Directors of the Sponsor (the "Incumbent Board") cease
        for any reason to constitute at least a majority of such Board;
        provided, however, that any individual becoming a director
        subsequent to the date hereof whose election, or nomination for
        election by the shareholders of the Sponsor, was approved by a
        vote of at least a majority of the directors then comprising the
        Incumbent Board shall be considered as though such individual
        were a member of the Incumbent Board, but excluding, for this
        purpose, any such individual whose initial assumption of office
        occurs as a result of an actual or threatened election contest
        with respect to the election or removal of directors or other
        actual or threatened solicitation of proxies or consents by or
        on behalf of a Person other than the Board of Directors of the
        Sponsor; or

    (c) Consummation of a reorganization, merger or consolidation
        or sale or other disposition of all or substantially all of the
        assets of the Sponsor (a "Business Combination"), in each case,
        unless, following such Business Combination, (i) all or
        substantially all of the individuals and entities who were the
        beneficial owners, respectively,  of the Outstanding Common
        Stock and Outstanding Voting Securities immediately prior to
        such Business Combination beneficially own,  directly or
        indirectly, more than 50% of, respectively, the then outstanding
        shares of common stock and the combined voting power of the then
        outstanding voting securities entitled to vote generally in the
        election of directors, as the case may be, of the corporation
        resulting from such Business Combination (including, without
        limitation, a corporation which as a result of such transaction
        owns the Sponsor or all or substantially all of the Sponsor's
        assets either directly or through one or more subsidiaries) in
        substantially the same proportions as their ownership,
        immediately prior to such Business Combination of the
        Outstanding Common Stock and Outstanding Voting Securities, as
        the case may be, (ii) no Person (excluding any corporation
        resulting from such Business Combination or any employee benefit
        plan (or related trust) of the Sponsor or such corporation
        resulting from such Business Combination) beneficially owns,
        directly or indirectly, 20% or more of, respectively, the then
        outstanding shares of common stock of the corporation resulting
        from such Business Combination or the combined voting power of
        the then outstanding voting securities of such corporation
        except to the extent that such ownership existed prior to the
        Business Combination and (iii) at least a majority of the
        members of the board of directors of the corporation resulting
        from such Business Combination were members of the Incumbent
        Board at the time of the execution of the initial agreement, or
        of the  action of the Board, providing for such Business
        Combination, or

    (d) Approval by the shareholders of the Sponsor of a complete
        liquidation or dissolution of the Sponsor.

    13. Payment in Event of Unforeseeable Emergency.

    (a) A distribution of a portion of the Participant's Deferral
        Account because of an Unforeseeable Emergency will be permitted
        only to the extent required by the Participant to satisfy the
        emergency need.  Whether an Unforeseeable Emergency has occurred
        will be determined solely by the Committee.  Distributions in
        the event of an Unforeseeable Emergency may be made by and with
        the approval of the Committee upon written request by a
        Participant.

    (b) An "Unforeseeable Emergency" is defined as a severe
        financial hardship to the Participant resulting from a sudden
        and unexpected illness or accident of the Participant or of a
        dependent of the Participant, loss of the Participant's property
        due to casualty, or other similar extraordinary and
        unforeseeable circumstances arising as a result of events beyond
        the Participant's control.  The circumstances that will
        constitute an unforeseeable emergency will depend upon the facts
        of each case, but, in any event, any distribution under this
        Section shall not exceed the remaining amount required by the
        Participant to resolve the hardship after (i) reimbursement or
        compensation through insurance or otherwise, (ii) obtaining
        liquidation of the Participant's assets, to the extent such
        liquidation would not itself cause a severe financial hardship,
        or (iii) suspension of deferrals under the Plan.

F.  Participants' Rights

    14. Participant Rights in the Unfunded Plan.  Any liability of
        the Sponsor to any Participant with respect to any benefit shall
        be based solely upon the contractual obligations created by the
        Plan and the Deferral Agreements (collectively, the
        "Agreements"); no such obligation shall be deemed to be secured
        by any pledge or any encumbrance on any property of the Sponsor.
        No Participant shall have any rights under the Plan other than
        those of a general unsecured creditor of the Sponsor.  Assets
        segregated or identified by the Sponsor for the purpose of
        paying benefits pursuant to the Plan, remain general corporate
        assets, subject to the claims of the Sponsor's general creditors
        and are not held in trust by the Sponsor for the benefit of
        Participants.

    15. Non-Assignability.    Except as provided in Section 11, each
        Participant's rights under the Plan shall be non-transferable
        and non-assignable.

G.  The Sponsor's Reservation of Rights

    16. Termination or Amendment of Plan.  The Sponsor retains the
        right, at any time and in its sole discretion, to amend or
        terminate the Plan, in whole or in part.  Any amendment of the
        Plan shall be approved by the Board of Directors of the Sponsor,
        shall be in writing and shall be communicated within thirty (30)
        days of its adoption to the Participants.  Notwithstanding the
        above, the Committee shall have the authority to change the
        requirements of eligibility or to modify the Investment Options
        hereunder.  No amendment of the Plan shall substantially impair
        or curtail the Sponsor's contractual obligations arising from
        deferral  Agreements previously entered into for benefits
        accrued prior to such amendment.  Notwithstanding any other
        provision herein to the contrary, in the event of Plan
        termination, payment of Deferral Accounts shall occur not later
        than the last business day of the third month following the
        month in which the termination is made effective.

H.  Committee Determinations

    17. Committee Determinations Final.  Each determination
        provided for in the Plan, including a claim hereunder, shall be
        made in the absolute discretion of the Committee.  Any such
        determination shall be final, binding and conclusive on all
        persons.

I.  Miscellaneous Provisions

    18. Plan Year.  The Plan Year shall be October 1 through
        September 30.

    19. Tax Withholding.  The Sponsor shall withhold from any
        payment made by it under the Plan such amount or amounts as may
        be required for purpose of complying with the tax withholding or
        other provisions of the Internal Revenue Code of 1986, as
        amended, or the Social Security Act, as amended, or any federal,
        state or local tax provision, or for purposes of paying any
        estate, inheritance or other tax attributable to any amounts
        payable hereunder.

    20. Participant's Incapacity.  If, in the Committee's opinion,
        a Participant or other person entitled to receive benefits under
        the Plan is in any way incapacitated so as to be unable to
        manage his or her financial affairs, then the Committee may make
        such payment(s) into a separate interest-bearing account
        established for the benefit of and on behalf of the  Participant
        or other recipient, for release at such time as a claim is made
        by a conservator or other person legally charged with the care
        of his or her person or of his or her estate.  Thereafter, any
        benefits payable under the Plan shall be made to the conservator
        or other person legally charged with the care of his or her
        person or estate.

    21. Independence of Plan.  Except as otherwise expressly
        provided herein, this Plan shall be independent of, and in
        addition to, any other agreement for the provision of services
        or rights that may exist from time to time between the parties
        hereto.

    22. Responsibility for Legal Effect.  Neither the Committee nor
        the Sponsor makes any representations or warranties, express or
        implied, or assumes any responsibility concerning the legal,
        tax, or other implications or effects of this Plan.

    23. Successors, Acquisitions, Mergers, Consolidations.    The
        terms and conditions of the Plan and each Deferral Agreement
        shall inure to the benefit of and bind the Sponsor and the
        Participants, and their successors, assigns, and personal
        representatives.

    24. Controlling  Law.  The Plan shall be construed in
        accordance with the laws of the Commonwealth of Virginia to the
        extent not preempted by laws of the United States of America.


EXHIBIT 10.16



                  UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED

                         1994 BENEFIT REPLACEMENT PLAN







                                   ARTICLE I

                                    PURPOSE



    The purpose of the Universal Leaf Tobacco Company, Incorporated
1994 Benefit Replacement Plan (hereinafter referred to as the
"Plan") is to provide specified benefits to a select group of
management and highly compensated employees who contribute
materially to the continued growth, development and future
business of the Company and its subsidiaries.



                                   ARTICLE II

                                  ELIGIBILITY



    This Plan shall apply only to officers and employees of
Universal Leaf Tobacco Company, Incorporated, of its parent,
Universal Corporation, and of certain of their subsidiaries
(individually and collectively, the "Company") who are
participants in the Universal Leaf Tobacco Company, Incorporated
1994 Deferred Income Plan (the "1994 Deferred Income Plan").



                                  ARTICLE III

                                    BENEFITS



    The normal, early, delayed, and disability retirement benefits
and the benefit upon death before retirement to be provided by
this Plan shall be the amount for the option selected by the
Participant or otherwise provided under and as determined by the
Employees' Retirement Plan of Universal Leaf Tobacco Company,
Incorporated and Designated Affiliated Companies (hereinafter
referred to as the "Retirement Plan") but (i) with the
inclusion, for the purpose of computing benefits, of the amounts
deferred by the Participant and the exclusion of any payments
received, pursuant to the 1994 Deferred Income Plan of the
Company, for the years in which such deferrals or payments
occurred; and (ii) offset by benefits payable in accordance with
the Retirement Plan.

    Payment of benefits hereunder shall coincide with payments from
the Retirement Plan and shall be payable to the Participant or
the beneficiary designated in the Retirement Plan for the period
designated in the Retirement Plan and in the same form as
elected by the Participant in the Retirement Plan.



                                   ARTICLE IV

                                    VESTING



    A participant shall have the right to receive a benefit
hereunder if and to the extent that at the time his employment
is terminated for any reason, he is entitled to receive a
benefit under the Retirement Plan.  Vesting shall be determined
in accordance with the schedule contained in the Retirement
Plan.  Such employee's rights and benefits shall be determined
under provisions of the Plan and the Retirement Plan as in
effect on the date of the said employee's termination.

    Notwithstanding the foregoing, a participant shall forfeit all
benefits from the Plan if the Company terminates the
participant's employment as a result of fraud, dishonesty or
embezzlement.



                                   ARTICLE V

                                 ADMINISTRATION



    The Plan shall be administered by the Human Resources and
Retirement Committee (the "Retirement Committee") appointed by
the Board of Directors of Universal Leaf Tobacco Company,
Incorporated, and any decision or interpretation of the Plan,
whether it be of content or construction, shall be made solely
by the Retirement Committee.

    The Retirement Committee may establish rules and procedures for
 making such decisions and keep accurate records thereof.

                                   ARTICLE VI

                         OTHER BENEFITS AND AGREEMENTS



    The benefits provided under the Plan are in addition to any
other benefits available to such Participant under any other
plan or program of the Company for its employees, and, except as
may otherwise be expressly provided for, the Plan shall
supplement and shall not supersede, modify or amend any other
plan or program of the Company.  Benefits under the Plan shall
not be considered "compensation" for the purpose of computing
contributions or benefits under any other plan or plans
maintained by the Company or any of its affiliates or
subsidiaries which are qualified under Sections 401(a) and
501(a) of the Internal Revenue Code of 1986, as amended.



                                  ARTICLE VII

                     RESTRICTIONS ON ALIENATION OF BENEFITS



    No right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance
or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the same shall be void.  No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.  If any Participant or
beneficiary under the Plan should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge
any right to a benefit hereunder, then such right or benefit, in
the discretion of the Company, shall cease, and in such event
the Company may hold or apply the same or any part thereof for
the benefit of such Participant, his or her spouse, children, or
other dependents, or any of them in such manner and in such
proportion as the Company may deem proper.



                                  ARTICLE VIII

                               SOURCE OF BENEFITS



    Amounts payable hereunder shall be paid exclusively from the
general assets of the Company, and no person entitled to payment
hereunder shall have any claim, right, security interest or
other interest in any fund, trust, account, insurance contract,
or asset of the Company which may be looked to for such payment.
 The Company's liability for the payment of benefits hereunder
shall be evidenced only by this Plan.



                                   ARTICLE IX

                                CLAIMS PROCEDURE



    Any claim by a Participant or his beneficiary (hereafter
"Claimant") for benefits shall be submitted to the Retirement
Committee.  The Retirement Committee shall be responsible for
deciding whether such claim is within the scope provided by the
Plan (a "Covered Claim") and for providing full and fair review
of the decision with respect to such claim.  In addition, the
Retirement Committee shall provide a full and fair review in
accordance with ERISA, including without limitation Section 503
thereof.

    Each Claimant or other interested person shall file with the
Retirement Committee such pertinent information as the
Retirement Committee may specify, and in such manner and form as
the Retirement Committee may specify and provide, and such
person shall not have any rights or be entitled to any benefits
or further benefits hereunder, as the case may be, unless such
information is filed by the Claimant or on behalf of the
Claimant.  Each Claimant shall supply at such times and in such
manner as may be required, written proof that the benefit is
covered under the Plan.  If it is determined that a Claimant has
not incurred a Covered Claim or if the Claimant shall fail to
furnish such proof as is requested, no benefits or no further
benefits hereunder, as the case may be, shall be payable to such
Claimant.

    Notice of a decision by the Retirement Committee with respect
to a claim shall be furnished to the Claimant within ninety (90)
days following the receipt of the claim by the Retirement
Committee (or within ninety (90) days following the expiration
of the initial ninety (90) day period, in a case where there are
special circumstances requiring extension of time for processing
the claim).  If special circumstances require and extension of
time for processing the claim, written notice of the extension
shall be furnished by the Retirement Committee to the Claimant
prior to the expiration of the initial ninety (90) day period.
The notice of extension shall indicate the special circumstances
requiring the extension and the date by which the notice of
decisions with respect to the claim shall be furnished.
Commencement of benefit payments shall constitute notice of
approval of a claim to the extent of the amount of the approved
benefit.  If such claim shall be wholly or partially denied,
such notice shall be in writing and worded in a manner
calculated to be understood by the Claimant, and shall set forth
(i) the specific reason or reasons for the denial; (ii) specific
reference to pertinent provisions of the Plan on which the
denial is based; (iii) a description of any additional material
or information necessary for the Claimant to perfect the claim
and an explanation of why such material or information is
necessary; and (iv) an explanation of the Plan's claims review
procedure.  If the Retirement Committee fails to notify the
Claimant of the decision regarding his or her claim in
accordance with these "Claims Procedure" provisions, the claim
shall be deemed denied and the Claimant shall then be permitted
to proceed with the claims review procedure provided herein.

    Within sixty (60) days following receipt by the Claimant of
notice of the claim denial, or within sixty (60) days following
the close of the ninety (90) day period referred to herein, or
if the Retirement Committee fails to notify the Claimant of the
decision within such ninety (90) day period, the Claimant may
appeal denial of the claim by filing a written application for
review with the Retirement Committee.  Following such request
for review, the Retirement Committee shall fully and fairly
review the decision denying the claim.  Prior to the decision of
the Retirement Committee, the Claimant shall be given an
opportunity to review pertinent documents and to submit issues
and comments to the Retirement Committee in writing.  The
decision of the Retirement Committee shall be made within sixty
(60) days following receipt by the Retirement Committee of the
request for review (or within one hundred and twenty (120) days
after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing such
denied claim).  The Retirement Committee shall deliver its
decision to the Claimant in writing.  If the decision on review
is not furnished within the prescribed time, the claim shall be
deemed denied on review.

    For all purposes under the Plan, the decision with respect to a
claim if no review is requested and the decision with respect to
a claim if review is requested shall be final, binding and
conclusive on all interested parties as to matters relating to
the Plan.



                                   ARTICLE X

                           AMENDMENT AND TERMINATION



    The Plan may be terminated or amended at any time by resolution
of the Executive Committee of the Board of Directors of the
Company, with the approval of the Executive Compensation
Committee of the Board of Directors of Universal Corporation,
which is communicated in writing to participants within sixty
(60) days of its adoption.  Such termination or amendment shall
not affect or alter the benefits paid or obligations to any
participant who retired prior to such termination or amendment
and shall not affect or alter the benefits payable hereunder as
a result of agreements entered into with Participants under the
1994 Deferred Income Plan; provided, however, that to the extent
that benefits paid or payable, pursuant to such agreements may
be modified, benefits payable under this Plan may also be
modified accordingly.



                                   ARTICLE XI

                                 MISCELLANEOUS



    Any notice which shall be or may be given under the Plan shall
be in writing and shall be mailed by United States mail, postage
prepaid.  If notice is to be given to the Company, such notice
shall be addressed to the Company at P. O. Box 25099, Hamilton
Street at Broad, Richmond, Virginia  23260, marked for the
attention of the Secretary; or if notice to a Participant or
beneficiary, addressed to the Participant's or beneficiary's
last known address.

    The Plan does not in any way obligate the Company to continue
the employment of an employee with the Company, nor does it
limit the right of the Company at any time to terminate a
Participant's employment.

    Masculine pronouns wherever used shall include feminine
pronouns and the singular shall include the plural.



                                  ARTICLE XII

                                 EFFECTIVE DATE





    The Plan shall be effective July 1, 1994.


















EXHIBIT 21.  SUBSIDIARIES OF THE REGISTRANT

                                                               ORGANIZED
                                                              UNDER LAW OF

UNIVERSAL CORPORATION                                         Virginia

(1) Universal Leaf Tobacco Company, Incorporated              Virginia

    (1) K. R. Edwards Leaf Tobacco Company,
        Incorporated                                          Virginia

        (1) Casa Export Limited                               Virginia

        (1) Grassland Holding, Incorporated                   Kentucky

        (1) Tabacos Del Pacifico Norte, S.A.                  Mexico

        (1) Tabacos Argentinos S.A.                           Argentina

        (3) Tabacos Aztecas, S.A.                             Mexico

    (1) Lancaster Leaf Tobacco Company of Pennsylvania,
        Inc.                                                  Virginia

        (1) Lancotab, N.V.                                    Belgium

        (1) Lancaster Philippines, Incorporated               Philippines

    (1) Latin America Tobacco Company                         Virginia

    (1) Maclin-Zimmer-McGill Tobacco Company,
        Incorporated                                          Virginia

    (1) Simcoe Leaf Tobacco Company, Limited                  Canada

    (1) Southern Processors, Incorporated                     Virginia

    (1) Southwestern Tobacco Company, Incorporated            Virginia

    (1) J. P. Taylor Company, Incorporated                    Virginia

      (1) Dunnington-Beach Tobacco Company, Incorporated      Virginia

    (1) Thorpe & Ricks, Inc.                                  Virginia

        (1) Thorpe-Greenville Export Tobacco Company          North Carolina

    (1) Tobacco Processors, Incorporated                      Virginia

    (1) Universal Leaf Export Company, Incorporated           Guam

    (1) Virginia Tobacco Company, Incorporated                Virginia

        (1) Virsa, Incorporated                               Virginia

    (1) Winston Leaf Tobacco Company                          Virginia

    (1) R. P. Watson Company                                  North Carolina

    (1) W. H. Winstead Company, Incorporated                  Virginia

    (1) B. V. European Tobacco Company                        Netherlands

        (1) L'Agricola, S.p.A.                                Italy

    (1) Deltafina, S.p.A.                                     Italy

    (1) Forestab, S.p.A.                                      Italy

    (1) Itofina, S.A.                                         Switzerland

    (1) Orient Leaf Tobacco Co., Inc.                         Philippines

    (1) Greek Tobacco Trading Company                         Greece

    (1) Universal Leaf Tabacos Limitada                       Brazil

        (1) Tebe-Ele S.A. Comercio Exterior Ltda.             Brazil

        (1) Fumossul S.A. Industria E Comercio                Brazil

    (1) Universal Leaf Far East, Limited                      Hong Kong

    (1) Universal Leaf (International) Limited                United Kingdom

    (1) Universal Yaprak Tutun Sanayi ve Ticaret A.S.         Turkey

    (1) Continental Tobacco, S.A.                             Switzerland

        (1) Toutiana, S.A.                                    Switzerland

            (1) Nyiregyhaza Tobacco Processing Company        Hungary

            (1) Ultoco, S.A.                                  Switzerland

        (2) Limbe Leaf Tobacco Company, Limited               Malawi

            (2) Lytton Tobacco Company (Malawi) Limited       Malawi

    (1) Gebruder Kulenkampff, Inc.                            Virginia

        (1) Gebruder Kulenkampff AG                           Germany

            (1) Tutuntex Ticaret A.S.                         Turkey

            (1) Armada Industria e Comercio de Fumos Ltda.    Brazil

            (1) Industria AG                                  Switzerland

                (2) Trestina Azienda Tabacchi, S.p.A.         Italy

            (1) Latina Tabacchi Greggi Italiani, S.p.A.       Italy

    (2) Thai-Am Tobacco Limited                               Thailand

    (3) Zimleaf Holdings Limited                              Zimbabwe

        (3) Lytton Tobacco Company, Limited                   Zimbabwe

        (3) Zimbabwe Leaf Tobacco Company (Private)
           Limited                                            Zimbabwe

    (1) Casalee, Inc.                                         Virginia

        (1) Casalee Tabak Lieferanten S.A.                    Panama

        (1) Casalee A.G.                                      Switzerland

            (1) Casalee Belgium N.V.                          Belgium

        (1) Universal DC Holdings Ltd.                        USA/United Kingdom

            (1) Casalee Trading Limited                       USA/United Kingdom

                (1) C.G. Services Ltd.                        United Kingdom

                (1) Casalee (UK) Ltd.                         United Kingdom

        (3) Casalee Tobacco Processors (PVT) Ltd.             Zimbabwe

(1) Deli Universal, Inc.                                      Virginia

    (1) Imperial Commodities Corporation                      California

    (1) Red River Foods, Inc.                                 Virginia

        (1) HTC Commodity, Inc.                               New Jersey

    (1) Red River Commodities, Incorporated                   North Dakota

    (1) Harkema, Inc.                                         Connecticut

    (1) Ermor Tabarama-Tabacos do Brasil Ltda.                Brazil

    (1) Deli Holding U.K. Ltd.                                United Kingdom

        (1) Corrie, MacColl & Son Ltd.                        United Kingdom

        (1) Van Rees Ltd.                                     United Kingdom

    (1) N.V. Deli Universal                                   Netherlands

        (1) Deli-Maatschappij B.V.                            Netherlands

        (1) Jongeneel Holding B.V.                            Netherlands

            (1) Jongeneel B.V.                                Netherlands

        (1) Steffex Handelmattschappij B.V.                   Netherlands

        (2) Jadico and Specerijen B.V.                        Netherlands


        (1) B.V. Deli-HTL Tabak Maatschappij                  Netherlands

        (1) Industria Exportadora de Tabacos Dominicanos
            "Inetab" C. por                                   Dominican Republic

        (1) Companhia Panamericana de Tabacos "Copata"        Dominican Republic



        (1) Van Rees B.V.                                     Netherlands

        (1) Van Rees Ceylon B.V.                              Netherlands

        (1) Indoco International B.V.                         Netherlands





(1)      Consolidated subsidiaries.



(2)      Companies 20 percent or more owned by parent and earnings of which are
         recorded under the equity method of accounting.



(3)      Company earnings are recorded under the cost method of accounting as
         the Company does not exercise significant influence over financial and
         operating policies or there exists exchange controls restricting the
         remittance of dividends, governmental or other uncertainties.









EXHIBIT 23.



                        CONSENT OF INDEPENDENT AUDITORS





We  consent to the incorporation by reference in the following
Registration Statements of our report dated August 4, 1994 with
respect to the consoldiated financial statements and schedule of
Universal Corporation and subsidiaries included in this Annual
Report (Form 10-K) for the year ended June 30, 1994.




        Registration Statement
             Number                                  Description

               33-21781                                   Form S-8
               33-38652                                   Form S-8
               33-55140                                   Form S-8
               33-38148                                   Form S-8



                                    /s/ ERNST & YOUNG LLP



Richmond, Virginia
September 27, 1994








 



5 0000102037 UNIVERSAL CORPORATION 1,000 YEAR JUN-30-1994 JUN-30-1994 164,520 0 397,102 0 588,359 1,186,029 539,144 269,955 1,667,043 868,000 298,117 75,287 0 0 302,187 1,667,043 2,975,050 2,975,050 2,576,807 2,576,807 296,027 0 58,387 43,829 11,804 38,564 0 0 (29,406) 9,158 0.26 0.26