Universal Corporation
Feb 4, 2010

Universal Corporation Reports Increased Nine-Month Results

Richmond, VA, Feb 04, 2010 /PRNewswire via COMTEX/ -- HIGHLIGHTS

Nine Months

Diluted earnings per share increased to $4.78 versus $3.78 last year.

Revenues down 3% as pricing and mix reduce effect of shipment delays.

Operating income up 15%, to $215 million on lower currency costs, partially offset by shipment delays.

Quarter

Diluted earnings per share decreased to $1.54 versus $1.78 last year.

Shipment timing is primary factor reducing results.

Revenues lower by 5%, to $661 million.

Operating income reduced by $8.5 million, to $69 million.

George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE: UVV), announced that net income for the nine months ended December 31, 2009, was $142.0 million, or $4.78 per diluted share, 22% above last year's results of $116.0 million, or $3.78 per diluted share. Last year's strong performance was overshadowed by the recognition of $45 million in currency-related costs due to the rapid strengthening of the U.S. dollar, and the current year has benefited from a $42 million reduction in those costs. That benefit was partially offset by delays in shipments from Africa and North America this year. Those shipment delays also caused a 3% reduction in revenues for the nine months and contributed to a modest decline in third quarter results this year. For the third quarter of fiscal year 2010, net income was about $45.7 million, or $1.54 per diluted share, compared to last year's net income of $53.1 million, or $1.78 per diluted share. Revenues for the quarter of about $661 million were down by 5%.

Mr. Freeman stated, "Our operations continue to perform well as we look at them over the crop cycle. Timing differences are a normal part of our business whether caused by farmer deliveries that affect inventory levels or by shipments that affect both inventory and income recognition. This year is no exception as both North American and African shipments have been delayed. We currently expect the shipments to be substantially completed by our fiscal year end. We are benefiting from continued cost controls and global coordination, and we are pleased with our performance so far this year.

"Looking ahead to crops that will be sold in fiscal year 2011, Brazilian crops are now expected to be lower than originally estimated because of excess rainfall, while dry conditions have reduced the Malawi burley crop. However, these changes should not have a substantial effect on worldwide production. In recent months, some of our customers have announced that the combined impact of increased excise taxes and the recessionary economy has reduced demand somewhat for tobacco products in more developed markets. Although such decreases could shift future demand for some types of leaf, we expect the overall export markets will remain largely in balance because export production appears stable and worldwide uncommitted dealer inventories remain near historical December lows."

FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:

Nine Months

Operating income for the flue-cured and burley tobacco operations, which comprise the North America and Other Regions segments, increased by more than 14% to nearly $200 million for the first nine months of this fiscal year, largely on lower currency-related costs. Revenues were down by 4%, primarily due to shipment delays in North America and Africa that were partly offset by higher sales from Asia and South America. In North America, operating income increased by nearly $5 million as higher prices and improved experience with farmer advances in some areas outweighed the effect of lower U.S. shipments. Revenues for the North America unit declined on shipment delays, lower sales of old crop leaf, and lower Canadian volumes. Earnings for the Other Regions segment were up by nearly 14%, primarily due to large currency-related costs in Brazil last year. African volumes were substantially lower because the current crop is being shipped later and because first quarter shipments of old crop tobacco were lower this year. The later timing of current crop shipments from Africa was due to customer delays, a late start to the purchasing season, and logistical issues. In Europe, lower margins and the effect of currency translation reduced reported results. Volumes improved in Asia on increased trading business, and currency effects were favorable in that region as well. Revenues for Other Regions were nearly flat for the nine months as lower volumes from the shipment delays in Africa were offset by higher sales in Asia and South America.

Third Quarter

In the third quarter of fiscal year 2010, operating income for flue-cured and burley operations was $66 million, 10% lower than the same period last year. Revenues for the group, at $604 million, were lower due to the decrease in volumes caused by the delayed shipments from North America and Africa. Sales increases in South America offset part of the reduction from shipment timing. Despite lower volumes, operating income for the North America segment was flat, largely reflecting additional processing business and improved margins in some areas. Results for the Other Regions segment were down 15%, primarily due to lower African volumes. Although results benefited from the absence of currency losses in Brazil this year, the benefit was reduced by several other factors in the quarter, including higher pension settlement costs and higher provisions against direct and guaranteed farmer loans in Brazil. Revenues for the Other Regions segment revenue increased by 4% in the quarter compared to last year as the effect of African shipment delays was mitigated by higher volumes in Asia, coupled with higher prices in some areas to recover increased costs of green tobacco.

OTHER TOBACCO OPERATIONS:

The Other Tobacco Operations segment performed well during the first nine months of fiscal year 2010 with a 27% improvement in operating income compared to last year. The dark tobacco group benefited from a better currency environment and improvements related to mix of business, which more than offset slightly lower volumes and costs of rationalizing their U.S. operations. Despite a decrease in overall volumes, the oriental tobacco joint venture earnings increased by $4 million for the nine months due to a better sales mix and cost savings, as well as lower interest and currency costs. The latter factors also benefited the third quarter, driving segment performance up 17% for that period. Dark tobacco business results lagged the prior year primarily due to some one-time sales last year and shipment timing differences, which also reduced revenues for the quarter. The facility upgrade and expansion in Lancaster, Pennsylvania, was near completion in December, and the factory is now operating. Segment revenues were higher in both the quarter and the nine months ended December 31, 2009, as higher volumes of oriental leaf in each period were sold through the consolidated group.

OTHER ITEMS:

Selling, general, and administrative costs decreased by about $13 million, or 14%, in the quarter and $21 million, or 9%, in the nine months ended December 31, 2009, compared to the same periods last year. The reductions were primarily due to lower currency remeasurement and exchange losses, which were down $25 million for the quarter and $42 million for the nine months, offset partially by higher pension settlement costs and an increase in provisions on direct and guaranteed farmer loans in Brazil. Compared to last year, interest expense was about $6 million lower in the quarter and $9 million lower in the nine-month period primarily because of lower average borrowings combined with lower average interest rates.

The consolidated effective income tax rates on pre-tax earnings for the quarter and nine months ended December 31, 2009, were approximately 32% and 31%, respectively. During both the second and third quarters, management reversed income taxes previously provided for uncertain tax positions because the statutes of limitations expired for the related tax years in the applicable tax jurisdictions. In addition, forecast current year earnings of subsidiaries in the African region have resulted in the recognition of foreign tax credits on historical unremitted earnings. The favorable impact of these items was partially offset by additional U.S. taxes provided for certain foreign income taxes that are not eligible as foreign tax credits when the related earnings are repatriated in future periods. The effect of these items reduced the consolidated effective tax rate below the 35% U.S. statutory rate for the quarter and nine months.

The consolidated effective income tax rates for the quarter and nine months ended December 31, 2008, were approximately 26% and 30%, respectively. During the quarter ended December 31, 2008, management reversed income taxes previously provided for uncertain tax positions due to the expiration of the related statute of limitations. In addition, changes in Universal's overall tax position allowed the Company to utilize foreign tax credit carryforwards and reverse a valuation allowance that had previously been recorded on those carryforwards. The effect of these items reduced the consolidated effective tax rate below the 35% U.S. statutory rate for both the quarter and the nine months.

Additional information

Amounts included in the previous discussion are attributable to Universal Corporation and exclude earnings related to non-controlling interests in subsidiaries.

This information includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that any statements contained herein regarding earnings and expectations for its performance are forward-looking statements based upon management's current knowledge and assumptions about future events, including anticipated levels of demand for and supply of its products and services; costs incurred in providing these products and services; timing of shipments to customers; changes in market structure; and general economic, political, market, and weather conditions. Actual results, therefore, could vary from those expected. A further list and description of these risks, uncertainties and other factors can be found in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2009, and in other documents the Company files with the Securities and Exchange Commission. This information should be read in conjunction with the Annual Report on Form 10-K for the year ended March 31, 2009.

At 5:00 p.m. (Eastern Time) on February 4, 2010, the Company will host a conference call to discuss these results. Those wishing to listen to the call may do so by visiting www.universalcorp.com at that time. A replay of the webcast will be available at that site for three months. A taped replay of the call will also be available through February 25, 2010, by dialing (800) 642-1687. The confirmation number to access the replay is 54399037.

Headquartered in Richmond, Virginia, Universal Corporation is the world's leading leaf tobacco merchant and processor and conducts business in more than 30 countries. Its revenues for the fiscal year ended March 31, 2009, were $2.6 billion. For more information on Universal Corporation, visit its web site at www.universalcorp.com.

    UNIVERSAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
    (In thousands of dollars, except per share data)

                                     Three Months Ended     Nine Months Ended
                                         December 31,          December 31,
                                         -----------           -----------
                                       2009      2008        2009        2008
                                       ----      ----        ----        ----
                                         (Unaudited)            (Unaudited)
    Sales and other operating
     revenues                       661,205  $699,144  $1,925,235  $1,991,021
    Costs and expenses
        Cost of goods sold          516,541   533,176   1,493,864   1,566,876
        Selling, general and
         administrative expenses     75,719    88,556     216,789     237,351
                                     ------    ------     -------     -------
    Operating income                 68,945    77,412     214,582     186,794
        Equity in pretax earnings
         of unconsolidated
         affiliates                   7,783     5,259      17,029      12,792
        Interest income                 130       195         926       1,562
        Interest expense              5,438    11,435      20,287      29,214
                                      -----    ------      ------      ------
    Income before income
     taxes and other items           71,420    71,431     212,250     171,934
        Income taxes                 22,946    18,638      65,300      52,034
                                     ------    ------      ------      ------
    Net income                       48,474    52,793     146,950     119,900
    Less:  net (income) loss
     attributable to noncontrolling
     interests in subsidiaries       (2,778)      291      (4,994)     (3,923)
                                     ------       ---      ------      ------
    Net income attributable to
     Universal Corporation           45,696    53,084     141,956     115,977
    Dividends on Universal
     Corporation convertible
      perpetual preferred
      stock                          (3,712)   (3,712)    (11,137)    (11,137)
                                     ------    ------     -------     -------
    Earnings available to
     Universal Corporation
     common shareholders            $41,984   $49,372    $130,819    $104,840
                                    =======   =======    ========    ========
    Earnings per share attributable
     to Universal Corporation common
     shareholders:
      Basic                           $1.70     $1.98       $5.27       $4.07
                                      =====     =====       =====       =====
      Diluted                         $1.54     $1.78       $4.78       $3.78
                                      =====     =====       =====       =====


    See accompanying notes.



    UNIVERSAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (In thousands of dollars)
                                      December    December   March
                                         31,         31,       31,
                                        2009        2008      2009
                                      --------    --------    ----
                                    (Unaudited) (Unaudited)
                ASSETS
    Current
        Cash and cash equivalents    $164,170     $87,971   $212,626
        Short-term investments              -       5,939          -
        Accounts receivable, net      255,847     342,595    263,383
        Advances to suppliers,
         net                          134,209     170,440    214,282
        Accounts receivable -
         unconsolidated
         affiliates                    26,550      35,234     20,371
        Inventories - at lower of
         cost or market:
            Tobacco                   770,708     613,597    586,136
            Other                      50,716      67,000     60,712
        Prepaid income taxes           14,632      20,270     13,181
        Deferred income taxes          48,711      36,799     68,264
        Other current assets           64,234      65,630     64,964
                                       ------      ------     ------
            Total current assets    1,529,777   1,445,475  1,503,919
    Property, plant and equipment
        Land                           16,147      15,978     15,773
        Buildings                     259,912     252,846    251,875
        Machinery and equipment       535,278     503,993    492,214
                                      -------     -------    -------
                                      811,337     772,817    759,862
            Less accumulated
             depreciation            -483,349    -453,288   -447,575
                                     --------    --------   --------
                                      327,988     319,529    312,287
    Other assets
        Goodwill and other
         intangibles                  106,000     106,137    106,097
        Investments in
         unconsolidated
         affiliates                   124,503     110,166    103,987
        Deferred income taxes          13,961      35,562     17,376
        Other noncurrent assets       122,057      97,020     94,510
                                      -------      ------     ------
                                      366,521     348,885    321,970
                                      -------     -------    -------
            Total assets           $2,224,286  $2,113,889 $2,138,176
                                    =========   =========  =========


    See accompanying notes.



    UNIVERSAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (In thousands of dollars)
                                               December    December    March
                                                  31,         31,        31,
                                                 2009        2008       2009
                                               --------    --------     ----
                                               (Unaudited) (Unaudited)
      LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
        Notes payable and overdrafts          $151,252    $140,677   $168,608
        Accounts payable and accrued expenses  196,126     208,805    236,837
        Accounts payable - unconsolidated
         affiliates                             17,398      28,880     19,191
        Customer advances and deposits          38,032      27,344     14,162
        Accrued compensation                    25,143      16,646     24,710
        Income taxes payable                    11,753      10,087      6,867
        Current portion of long-term
         obligations                            15,000      79,500     79,500
                                                ------      ------     ------
               Total current liabilities       454,704     511,939    549,875
    Long-term obligations                      414,222     333,943    331,808
    Pensions and other postretirement benefits  90,662      86,609     91,248
    Other long-term liabilities                 71,607      76,586     79,159
    Deferred income taxes                       41,608      54,156     52,842
                                                ------      ------     ------
               Total liabilities             1,072,803   1,063,233  1,104,932
    Shareholders' equity
      Universal Corporation:
        Preferred stock:
          Series A Junior Participating Preferred
           Stock, no par value, 500,000 shares
           authorized, none issued or
           outstanding                               -           -          -
          Series B 6.75% Convertible Perpetual
           Preferred Stock, no par value,
           5,000,000 shares authorized,
           219,999 shares issued and outstanding
           (219,999 at December 31, 2008, and
           March 31, 2009)                     213,023     213,023    213,023
        Common stock, no par value, 100,000,000
         shares authorized, 24,617,987 shares
         issued and outstanding (24,987,055 at
         December 31, 2008, and 24,999,127 at
         March 31, 2009)                       195,679     193,020    194,037
        Retained earnings                      770,103     688,015    686,960
        Accumulated other comprehensive loss   (36,084)    (50,263)   (64,547)
                                               -------     -------    -------
               Total Universal Corporation
                shareholders' equity         1,142,721   1,043,795  1,029,473
      Noncontrolling interests in
       subsidiaries                              8,762       6,861      3,771
                                                 -----       -----      -----
               Total shareholders' equity    1,151,483   1,050,656  1,033,244
                                             ---------   ---------  ---------
               Total liabilities and
                shareholders' equity        $2,224,286  $2,113,889 $2,138,176
                                             =========   =========  =========


    See accompanying notes.



    UNIVERSAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands of dollars)
                                                  Nine Months Ended
                                                     December 31,
                                                     ------------
                                                    2009      2008
                                                    ----      ----
                                                    (Unaudited)
    CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                               $146,950  $119,900
       Adjustments to reconcile net income to
        net cash provided (used) by operating
        activities:
          Depreciation                            30,888    31,651
          Amortization                             1,791       736
          Provisions for losses on advances and
           guaranteed loans to suppliers          19,148    14,427
          Remeasurement loss (gain), net           7,219    42,432
          Other, net                              (2,841)   27,325
          Changes in operating assets and
           liabilities, net                     (148,345) (243,274)
                                                --------  --------
            Net cash provided (used) by
             operating activities                 54,810    (6,803)
                                                  ------    ------
    CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchase of property, plant and
         equipment                               (42,923)  (28,900)
        Purchases of short-term investments            -    (9,658)
        Maturities and sales of short-term
         investments                                   -    62,833
        Proceeds from sale of property, plant and
         equipment, and other                      3,356    14,530
                                                   -----    ------
            Net cash provided (used) by
             investing activities                (39,567)   38,805
                                                 -------    ------
    CASH FLOWS FROM FINANCING ACTIVITIES:
        Issuance (repayment) of short-term debt,
         net                                     (23,935)   28,288
        Issuance of long-term obligations         99,208         -
        Repayment of long-term obligations       (79,500)        -
        Dividends paid to noncontrolling
         interests                                  (105)     (105)
        Issuance of common stock                     205        37
        Repurchase of common stock               (15,342) (111,072)
        Dividends paid on convertible perpetual
         preferred stock                         (11,137)  (11,137)
        Dividends paid on common stock           (34,315)  (34,623)
        Other                                       (943)        -
                                                    ----       ---
            Net cash used by financing
             activities                          (65,864) (128,612)
                                                 -------  --------
    Effect of exchange rate changes on cash        2,165    (1,489)
                                                   -----    ------
    Net decrease in cash and cash equivalents    (48,456)  (98,099)
    Cash and cash equivalents at beginning of
     year                                        212,626   186,070
                                                 -------   -------
    Cash and cash equivalents at end of period  $164,170   $87,971
                                                 =======    ======


    See accompanying notes.


NOTE 1. BASIS OF PRESENTATION

Universal Corporation, with its subsidiaries ("Universal" or the "Company"), is the world's leading leaf tobacco merchant and processor. Because of the seasonal nature of the Company's business, the results of operations for any fiscal quarter will not necessarily be indicative of results to be expected for other quarters or a full fiscal year. All adjustments necessary to state fairly the results for the period have been included and were of a normal recurring nature. Certain amounts in prior year statements have been reclassified to conform to the current year presentation. As part of the process of preparing its financial statements, the Company performed an evaluation of subsequent events occurring from December 31, 2009, the date of the consolidated balance sheet included in this report, through February 5, 2010, the date its financial statements were issued. This Form 10-Q should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2009.

NOTE 2. ACCOUNTING PRONOUNCEMENTS

Effective April 1, 2009, Universal adopted FASB Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS 160"). SFAS 160, which is now set forth in Topic 810 of the Codification, requires that noncontrolling interests in subsidiaries that are included in a company's consolidated financial statements, commonly referred to as "minority interests," be reported as a component of shareholders' equity in the balance sheet. It also requires that a company's consolidated net income and comprehensive income include the amounts attributable to both the company's interest and the noncontrolling interest in the subsidiary, identified separately in the financial statements. Finally, the new guidance requires certain disclosures about noncontrolling interests in the consolidated financial statements. Adoption of this guidance did not have a material impact on the Company's financial statements.

NOTE 3. GUARANTEES AND OTHER CONTINGENT LIABILITIES

Guarantees of bank loans to growers for crop financing and construction of curing barns or other tobacco producing assets are industry practice in Brazil and support the farmers' production of tobacco there. At December 31, 2009, the Company's total exposure under guarantees issued by its operating subsidiary in Brazil for banking facilities of farmers in that country was approximately $129 million ($155 million face amount including unpaid accrued interest, less $26 million recorded for the fair value of the guarantees). About 80% of these guarantees expire within one year, and all of the remainder expire within five years. The subsidiary withholds payments due to the farmers on delivery of tobacco and forwards those payments to the third-party banks. Failure of farmers to deliver sufficient quantities of tobacco to the subsidiary to cover their obligations to the third-party banks could result in a liability for the subsidiary under the related guarantees; however, in that case, the subsidiary would have recourse against the farmers. The maximum potential amount of future payments that the Company's subsidiary could be required to make at December 31, 2009, was the face amount, $155 million including unpaid accrued interest ($133 million as of December 31, 2008, and $139 million at March 31, 2009). The fair value of the guarantees was a liability of approximately $26 million at December 31, 2009 ($26 million at December 31, 2008, and $35 million at March 31, 2009). In addition to these guarantees, the Company has other contingent liabilities totaling approximately $62 million, primarily related to a bank guarantee that bonds an appeal of a 2006 fine in the European Union.

Various subsidiaries of the Company are involved in other litigation and tax examinations incidental to their business activities. While the outcome of these matters cannot be predicted with certainty, management is vigorously defending the claims and does not currently expect that any of them will have a material adverse effect on the Company's financial position. However, should one or more of these matters be resolved in a manner adverse to management's current expectation, the effect on the Company's results of operations for a particular fiscal reporting period could be material.

NOTE 4. EARNINGS PER SHARE

The following table sets forth the computation of earnings per share for the periods presented in the consolidated statements of income.

                                               Three Months     Nine Months
                                                   Ended           Ended
                                               December 31,     December 31,
                                               ------------     ------------
    (in thousands, except per share data)      2009    2008     2009     2008
    -------------------------------------------------------------------------
    Basic Earnings Per Share
    ------------------------
    Numerator for basic earnings per share
       Net income attributable to
        Universal Corporation               $45,696 $53,084 $141,956 $115,977
       Less:  Dividends on convertible
        perpetual preferred stock            (3,712) (3,712) (11,137) (11,137)
                                             ------  ------  -------  -------
       Earnings available to Universal
        Corporation common shareholders
        for calculation of basic earnings
        per share                            41,984  49,372  130,819  104,840
                                             ------  ------  -------  -------
     Denominator for basic earnings per share
        Weighted average shares
         outstanding                         24,684  24,989   24,823   25,759
                                             ------  ------   ------   ------
     Basic earnings per share                 $1.70   41.98    $5.27    $4.07
                                               ====    ====     ====     ====
    Diluted Earnings Per Share
    --------------------------
    Numerator for diluted earnings per share
       Earnings available to Universal
        Corporation common shareholders     $41,984 $49,372 $130,819 $104,840
       Add:  Dividends on convertible
        perpetual preferred stock (if
          conversion assumed)                 3,712   3,712   11,137   11,137
                                              -----   -----   ------   ------
       Earnings available to Universal
        Corporation common shareholders for
        calculation of diluted earnings per
        share                                45,696  53,084  141,956  115,977
                                             ------  ------  -------  -------
    Denominator for diluted earnings per share:
        Weighted average shares
         outstanding                         24,684  24,989   24,823   25,759
        Effect of dilutive securities (if
         conversion or exercise assumed)
           Convertible perpetual preferred
            stock                             4,735   4,719    4,731    4,717
           Employee share-based awards          226     142      173      196
                                                ---     ---      ---      ---
        Denominator for diluted
         earnings per share                  29,645  29,850   29,727   30,672
                                             ------  ------   ------   ------
    Diluted earnings per share                $1.54   $1.78    $4.78    $3.78
                                               ====    ====     ====     ====

For the three- and nine-month periods ended December 31, 2009 and 2008, certain employee share-based awards were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. These awards included stock appreciation rights and stock options totaling 507,801 shares at a weighted-average exercise price of $56.52 for the quarter and nine months ended December 31, 2009, and 704,972 shares at a weighted-average exercise price of $50.92 for the quarter and nine months ended December 31, 2008.

NOTE 5. SEGMENT INFORMATION

The principal approach used by management to evaluate the Company's performance is by geographic region, although some components of the business are evaluated on the basis of their worldwide operations. The Company evaluates the performance of its segments based on operating income after allocated overhead expenses (excluding significant non-recurring charges or credits), plus equity in pretax earnings of unconsolidated affiliates.

Operating results for the Company's reportable segments for each period presented in the consolidated statements of income were as follows:

                                           Three Months         Nine Months
                                              Ended                Ended
                                           December 31,         December 31,
                                         --------------       ---------------
    (in thousands of dollars)            2009      2008       2009       2008
    ----------------                     ----      ----       ----       ----
    SALES AND OTHER OPERATING REVENUES
       Flue-cured and burley leaf
        tobacco operations:
            North America            $101,302  $160,979   $187,308   $264,272
            Other regions(1)          502,624   482,538  1,570,973  1,570,299
                                       ------   -------  ---------  ---------
                 Subtotal             603,926   643,517  1,758,281  1,834,571
       Other tobacco operations(2)     57,279    55,627    166,954    156,450
                                       ------    ------    -------    -------
       Consolidated sales and
        other operating revenues     $661,205  $699,144 $1,925,235 $1,991,021
                                      =======   =======  =========  =========
    OPERATING INCOME
       Flue-cured and burley leaf
        tobacco operations:
            North America             $23,826   $23,894    $32,080    $27,218
            Other regions(1)           42,320    49,747    167,706    147,385
                                       ------    ------    -------    -------
                 Subtotal              66,146    73,641    199,786    174,603
       Other tobacco operations(2)     10,582     9,030     31,825     24,983
                                       ------     -----     ------     ------
       Segment operating income       $76,728   $82,671   $231,611   $199,586
       Less:
            Equity in pretax
             earnings of
             unconsolidated
             affiliates(3)              7,783     5,259     17,029     12,792
                                        -----     -----     ------     ------
       Consolidated operating income  $68,945   $77,412   $214,582   $186,794
                                       ======    ======    =======    =======

    (1)  Includes South America, Africa, Europe, and Asia regions, as well as
         inter-region eliminations.
    (2)  Includes Dark Air-Cured, Special Services, and Oriental, as well as
         inter-company eliminations.  Sales and other operating revenues for
         this reportable segment include limited amounts for Oriental because
         its financial results consist principally of equity in the pretax
         earnings of an unconsolidated affiliate.
    (3)  Item is included in segment operating income, but not included in
         consolidated operating income.



SOURCE Universal Corporation