"Despite these challenges, we are pleased with our success to date in managing crop purchases and customer requirements and believe that we are well-positioned to avoid excessive uncommitted stock levels throughout the season. Although levels of uncommitted inventory are up in both absolute and relative terms, we are beginning to see them decline in some areas as the trading season develops in the second fiscal quarter. In fact, sales activity has increased through July and remains at a brisk pace, and we are having good results in strengthening relationships with customers — both new and old. We continue to make progress as well on our restructuring programs in several regions, to further reduce operating cost structures where necessary. Our folks are busy and motivated to efficiently serve our customers around the world, and we are optimistic about our prospects for managing well through the current cycle."
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
Operating income for the Company's flue-cured and burley tobacco operations decreased by 26%, to
OTHER TOBACCO OPERATIONS:
The Other Tobacco Operations segment operating income for the first fiscal quarter was down by about
OTHER ITEMS:
Cost of sales decreased by 12% to
During the first quarter, an insurance settlement was received for replacement cost recovery on the factory and equipment destroyed in a fire at the Company's sheet tobacco operations in
Additional information
Amounts described as "net income" and "earnings per diluted share" that are included in the previous discussion are attributable to
This information includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that any statements contained herein regarding earnings and expectations for its performance are forward-looking statements based upon management's current knowledge and assumptions about future events, including anticipated levels of demand for and supply of its products and services; costs incurred in providing these products and services; timing of shipments to customers; changes in market structure; government regulation; product taxation; industry consolidation and evolution; and general economic, political, market, and weather conditions. Actual results, therefore, could vary from those expected. A further list and description of these risks, uncertainties, and other factors can be found in the Company's Annual Report
on Form 10-K for the fiscal year ended
At
Headquartered in
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS | |||||||
(In thousands of dollars, except per share data) | |||||||
Three Months Ended | |||||||
2011 | 2010 | ||||||
(Unaudited) | |||||||
Sales and other operating revenues | $ 479,465 | $ 538,916 | |||||
Costs and expenses | |||||||
Cost of goods sold | 385,107 | 436,679 | |||||
Selling, general and administrative expenses | 61,578 | 60,183 | |||||
Other income | (9,592) | — | |||||
Restructuring costs | 6,859 | 949 | |||||
Operating income | 35,513 | 41,105 | |||||
Equity in pretax earnings (loss) of unconsolidated affiliates | (3,489) | 378 | |||||
Interest income | 357 | 444 | |||||
Interest expense | 5,533 | 5,126 | |||||
Income before income taxes and other items | 26,848 | 36,801 | |||||
Income taxes | 9,526 | 12,383 | |||||
Net income | 17,322 | 24,418 | |||||
Less: net (income) loss attributable to noncontrolling interests in subsidiaries | (1,434) | 902 | |||||
Net income attributable to Universal Corporation | 15,888 | 25,320 | |||||
Dividends on Universal Corporation convertible perpetual preferred stock | (3,712) | (3,712) | |||||
Earnings available to Universal Corporation common shareholders | $ 12,176 | $ 21,608 | |||||
Earnings per share attributable to Universal Corporation common shareholders: | |||||||
Basic | $ 0.52 | $ 0.89 | |||||
Diluted | $ 0.52 | $ 0.87 | |||||
See accompanying notes. | |||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(In thousands of dollars) | |||||||||||
June 30, | June 30, | March 31, | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
ASSETS | |||||||||||
Current | |||||||||||
Cash and cash equivalents | $ 93,795 | $ 61,781 | $ 141,007 | ||||||||
Accounts receivable, net | 322,690 | 221,053 | 335,575 | ||||||||
Advances to suppliers, net | 130,783 | 122,878 | 160,616 | ||||||||
Accounts receivable - unconsolidated affiliates | 47,111 | 42,403 | 10,433 | ||||||||
Inventories - at lower of cost or market: | |||||||||||
Tobacco | 987,379 | 1,152,427 | 742,422 | ||||||||
Other | 60,871 | 66,183 | 48,647 | ||||||||
Prepaid income taxes | 20,493 | 14,062 | 18,661 | ||||||||
Deferred income taxes | 54,479 | 46,058 | 47,009 | ||||||||
Other current assets | 77,527 | 72,042 | 73,864 | ||||||||
Total current assets | 1,795,128 | 1,798,887 | 1,578,234 | ||||||||
Property, plant and equipment | |||||||||||
Land | 14,186 | 15,740 | 14,851 | ||||||||
Buildings | 241,771 | 262,468 | 257,380 | ||||||||
Machinery and equipment | 537,693 | 535,480 | 555,316 | ||||||||
793,650 | 813,688 | 827,547 | |||||||||
Less accumulated depreciation | (483,481) | (486,576) | (510,844) | ||||||||
310,169 | 327,112 | 316,703 | |||||||||
Other assets | |||||||||||
Goodwill and other intangibles | 99,461 | 105,409 | 99,546 | ||||||||
Investments in unconsolidated affiliates | 113,745 | 95,494 | 115,478 | ||||||||
Deferred income taxes | 12,957 | 28,627 | 18,177 | ||||||||
Other noncurrent assets | 66,165 | 101,870 | 99,729 | ||||||||
292,328 | 331,400 | 332,930 | |||||||||
Total assets | $ 2,397,625 | $ 2,457,399 | $ 2,227,867 | ||||||||
See accompanying notes. | |||||||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(In thousands of dollars) | |||||||||||
June 30, | June 30, | March 31, | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current | |||||||||||
Notes payable and overdrafts | $ 263,302 | $ 298,899 | $ 149,291 | ||||||||
Accounts payable and accrued expenses | 217,225 | 239,451 | 213,014 | ||||||||
Accounts payable - unconsolidated affiliates | 322 | 977 | 4,154 | ||||||||
Customer advances and deposits | 65,588 | 144,477 | 8,426 | ||||||||
Accrued compensation | 22,532 | 17,978 | 30,201 | ||||||||
Income taxes payable | 10,942 | 13,958 | 12,265 | ||||||||
Current portion of long-term obligations | 95,000 | 5,000 | 95,000 | ||||||||
Total current liabilities | 674,911 | 720,740 | 512,351 | ||||||||
Long-term obligations | 321,612 | 418,547 | 320,193 | ||||||||
Pensions and other postretirement benefits | 106,612 | 98,686 | 102,858 | ||||||||
Other long-term liabilities | 44,729 | 65,412 | 50,213 | ||||||||
Deferred income taxes | 45,036 | 38,627 | 42,847 | ||||||||
Total liabilities | 1,192,900 | 1,342,012 | 1,028,462 | ||||||||
Shareholders' equity | |||||||||||
Universal Corporation: | |||||||||||
Preferred stock: | |||||||||||
Series A Junior Participating Preferred Stock, no par value, | |||||||||||
500,000 shares authorized, none issued or outstanding | — | — | — | ||||||||
Series B 6.75% Convertible Perpetual Preferred Stock, no par value, | |||||||||||
5,000,000 shares authorized, 219,999 shares issued | |||||||||||
and outstanding (219,999 at June 30, 2010, and March 31, 2011) | 213,023 | 213,023 | 213,023 | ||||||||
Common stock, no par value, 100,000,000 shares | |||||||||||
authorized, 23,226,863 shares issued and outstanding | |||||||||||
(24,155,316 at June 30, 2010, and 23,240,503 at March 31, 2011 | 192,590 | 194,960 | 191,608 | ||||||||
Retained earnings | 823,793 | 768,772 | 825,751 | ||||||||
Accumulated other comprehensive loss | (39,910) | (66,242) | (44,776) | ||||||||
Total Universal Corporation shareholders' equity | 1,189,496 | 1,110,513 | 1,185,606 | ||||||||
Noncontrolling interests in subsidiaries | 15,229 | 4,874 | 13,799 | ||||||||
Total shareholders' equity | 1,204,725 | 1,115,387 | 1,199,405 | ||||||||
Total liabilities and shareholders' equity | $ 2,397,625 | $ 2,457,399 | $ 2,227,867 | ||||||||
See accompanying notes. | |||||||||||
UNIVERSAL CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands of dollars) | ||||||||
Three Months Ended | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ 17,322 | $ 24,418 | ||||||
Adjustments to reconcile net income to net cash used by operating activities: | ||||||||
Depreciation | 11,027 | 10,823 | ||||||
Amortization | 400 | 412 | ||||||
Provisions for losses on advances and guaranteed loans to suppliers | 4,254 | 2,991 | ||||||
Foreign currency remeasurement loss (gain), net | 178 | 1,876 | ||||||
Gain on fire loss insurance settlement | (9,592) | — | ||||||
Restructuring costs | 6,859 | 949 | ||||||
Other, net | 10,371 | (1,023) | ||||||
Changes in operating assets and liabilities, net | (186,063) | (303,270) | ||||||
Net cash used by operating activities | (145,244) | (262,824) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property, plant and equipment | (8,827) | (13,154) | ||||||
Proceeds from sale of property, plant and equipment, and other | 5,817 | 945 | ||||||
Proceeds from fire loss insurance settlement | 9,933 | — | ||||||
Net cash provided (used) by investing activities | 6,923 | (12,209) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Issuance (repayment) of short-term debt, net | 109,662 | 127,985 | ||||||
Repayment of long-term obligations | — | (10,000) | ||||||
Issuance of common stock | 134 | — | ||||||
Repurchase of common stock | (4,004) | (10,933) | ||||||
Dividends paid on convertible perpetual preferred stock | (3,712) | (3,712) | ||||||
Dividends paid on common stock | (11,195) | (11,427) | ||||||
Net cash provided by financing activities | 90,885 | 91,913 | ||||||
Effect of exchange rate changes on cash | 224 | (1,052) | ||||||
Net decrease in cash and cash equivalents | (47,212) | (184,172) | ||||||
Cash and cash equivalents at beginning of year | 141,007 | 245,953 | ||||||
Cash and cash equivalents at end of period | $ 93,795 | $ 61,781 | ||||||
See accompanying notes. | ||||||||
NOTE 1. BASIS OF PRESENTATION
NOTE 2. GUARANTEES AND OTHER CONTINGENT LIABILITIES
Guarantees of bank loans to growers for crop financing and construction of curing barns or other tobacco producing assets are industry practice in
The Company is involved in other litigation and tax examinations incidental to its business activities. While the outcome of these matters cannot be predicted with certainty, management is vigorously defending these matters and does not currently expect that any of them will have a material adverse effect on the Company's financial position. However, should one or more of these matters be resolved in a manner adverse to management's current expectation, the effect on the Company's results of operations for a particular fiscal reporting period could be material.
NOTE 3. EARNINGS PER SHARE
The following table sets forth the computation of earnings per share for the periods presented in the consolidated statements of income.
Three Months Ended | ||||||||
(in thousands, except per share data) | 2011 | 2010 | ||||||
Basic Earnings Per Share | ||||||||
Numerator for basic earnings per share | ||||||||
Net income attributable to Universal Corporation | $ 15,888 | $ 25,320 | ||||||
Less: Dividends on convertible perpetual preferred stock | (3,712) | (3,712) | ||||||
Earnings available to Universal Corporation common shareholders | ||||||||
for calculation of basic earnings per share | 12,176 | 21,608 | ||||||
Denominator for basic earnings per share | ||||||||
Weighted average shares outstanding | 23,194 | 24,213 | ||||||
Basic earnings per share | $ 0.52 | $ 0.89 | ||||||
Diluted Earnings Per Share | ||||||||
Numerator for diluted earnings per share | ||||||||
Earnings available to Universal Corporation common shareholders | $ 12,176 | $ 21,608 | ||||||
Add: Dividends on convertible perpetual preferred stock (if | ||||||||
conversion assumed) | — | 3,712 | ||||||
Earnings available to Universal Corporation common shareholders | ||||||||
for calculation of diluted earnings per share | 12,176 | 25,320 | ||||||
Denominator for diluted earnings per share: | ||||||||
Weighted average shares outstanding | 23,194 | 24,213 | ||||||
Effect of dilutive securities (if conversion or exercise assumed) | ||||||||
Convertible perpetual preferred stock | — | 4,742 | ||||||
Employee share-based awards | 319 | 260 | ||||||
Denominator for diluted earnings per share | 23,513 | 29,215 | ||||||
Diluted earnings per share | $ 0.52 | $ 0.87 | ||||||
For the three months ended
NOTE 4. SEGMENT INFORMATION
The principal approach used by management to evaluate the Company's performance is by geographic region, although some components of the business are evaluated on the basis of their worldwide operations. The Company evaluates the performance of its segments based on operating income after allocated overhead expenses (excluding significant non-recurring charges or credits), plus equity in pretax earnings of unconsolidated affiliates.
Operating results for the Company's reportable segments for each period presented in the consolidated statements of income were as follows:
Three Months Ended | ||||||||
(in thousands of dollars) | 2011 | 2010 | ||||||
SALES AND OTHER OPERATING REVENUES | ||||||||
Flue-cured and burley leaf tobacco operations: | ||||||||
North America | $ 58,629 | $ 63,167 | ||||||
Other regions (1) | 358,650 | 401,819 | ||||||
Subtotal | 417,279 | 464,986 | ||||||
Other tobacco operations (2) | 62,186 | 73,930 | ||||||
Consolidated sales and other operating revenues | $ 479,465 | $ 538,916 | ||||||
OPERATING INCOME | ||||||||
Flue-cured and burley leaf tobacco operations: | ||||||||
North America | $ 5,577 | $ 3,692 | ||||||
Other regions (1) | 20,909 | 32,327 | ||||||
Subtotal | 26,486 | 36,019 | ||||||
Other tobacco operations (2) | 2,805 | 6,413 | ||||||
Segment operating income | 29,291 | 42,432 | ||||||
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates (3) | 3,489 | (378) | ||||||
Restructuring costs (4) | (6,859) | (949) | ||||||
Add: Other income | 9,592 | — | ||||||
Consolidated operating income | $ 35,513 | $ 41,105 | ||||||
(1) Includes South America,
(2) Includes Dark Air-Cured, Special Services, and Oriental, as well as inter-company eliminations. Sales and other operating revenues for this reportable segment include limited amounts for Oriental because its financial results consist principally of equity in the pretax earnings of an unconsolidated affiliate.
(3) Item is included in segment operating income, but not included in consolidated operating income.
(4) Item is not included in segment operating income, but is included in consolidated operating income.
SOURCE
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