HIGHLIGHTS
Third Quarter
Diluted earnings per share of
Segment operating income of
Revenues down 1% to
Nine Months
Diluted earnings per share of
Segment operating income of
Revenues down 19% to
Net income for the nine months ended
"Although it is early and logistics delays can always occur, the fourth fiscal quarter's processing and shipping schedules are proceeding as anticipated, with the largest portion of shipping volumes coming from the
"I am proud of the achievements of our operations around the globe, as we have managed well through these uncertain markets. Our balance sheet remains strong, and our major refinancing in December ensures that we are well-positioned to meet the future financial needs of our business. We are optimistic about the prospects for our industry, and we continue to see opportunities to enhance our business by providing supply chain efficiencies, such as improved leaf utilization, that also bring value to our customers."
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
OTHER REGIONS:
Operating income for the Other Regions segment for the quarter ended
Operating income for the nine months ended
Operating income for the
OTHER TOBACCO OPERATIONS:
The Other Tobacco Operations segment reported an operating loss of
For the nine months ended
OTHER ITEMS:
Cost of goods sold decreased by about 3% to
The consolidated effective income tax rates were approximately 34% and 33% for the quarters ended
On
Additional information
Amounts 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
CONSOLIDATED STATEMENTS OF INCOME (in thousands of dollars, except per share data) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
2014 |
2013 |
2014 |
2013 | |||||||||||||
(Unaudited) |
(Unaudited) | |||||||||||||||
Sales and other operating revenues |
$ |
758,054 |
$ |
767,802 |
$ |
1,493,642 |
$ |
1,852,199 |
||||||||
Costs and expenses |
||||||||||||||||
Cost of goods sold |
610,482 |
628,495 |
1,205,459 |
1,522,112 |
||||||||||||
Selling, general and administrative expenses |
53,539 |
66,468 |
177,125 |
201,542 |
||||||||||||
Other income |
— |
— |
— |
(81,619) |
||||||||||||
Restructuring costs |
1,143 |
3,400 |
4,493 |
4,708 |
||||||||||||
Operating income |
92,890 |
69,439 |
106,565 |
205,456 |
||||||||||||
Equity in pretax earnings (loss) of unconsolidated affiliates |
(527) |
1,789 |
3,391 |
1,755 |
||||||||||||
Interest income |
148 |
344 |
358 |
748 |
||||||||||||
Interest expense |
4,637 |
5,157 |
13,509 |
16,623 |
||||||||||||
Income before income taxes |
87,874 |
66,415 |
96,805 |
191,336 |
||||||||||||
Income tax expense |
29,797 |
22,212 |
22,719 |
63,390 |
||||||||||||
Net income |
58,077 |
44,203 |
74,086 |
127,946 |
||||||||||||
Less: net (income) loss attributable to noncontrolling interests in subsidiaries |
(5,038) |
(5,618) |
(5,305) |
(5,608) |
||||||||||||
Net income attributable to |
53,039 |
38,585 |
68,781 |
122,338 |
||||||||||||
Dividends on |
(3,712) |
(3,712) |
(11,137) |
(11,137) |
||||||||||||
Cost in excess of carrying value on repurchase of convertible perpetual stock |
(18) |
— |
(18) |
— |
||||||||||||
Earnings available to |
$ |
49,309 |
$ |
34,873 |
$ |
57,626 |
$ |
111,201 |
||||||||
Earnings per share attributable to |
||||||||||||||||
Basic |
$ |
2.13 |
$ |
1.50 |
$ |
2.49 |
$ |
4.78 |
||||||||
Diluted |
$ |
1.87 |
$ |
1.36 |
$ |
2.43 |
$ |
4.31 |
||||||||
See accompanying notes. |
CONSOLIDATED BALANCE SHEETS (in thousands of dollars) | ||||||||||||
|
|
| ||||||||||
2014 |
2013 |
2014 | ||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||
ASSETS |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
$ |
120,315 |
$ |
191,867 |
$ |
163,532 |
||||||
Accounts receivable, net |
290,234 |
329,120 |
468,015 |
|||||||||
Advances to suppliers, net |
106,563 |
120,443 |
134,621 |
|||||||||
Accounts receivable—unconsolidated affiliates |
342 |
776 |
7,375 |
|||||||||
Inventories—at lower of cost or market: |
||||||||||||
Tobacco |
1,011,234 |
841,834 |
639,812 |
|||||||||
Other |
74,791 |
74,377 |
67,219 |
|||||||||
Prepaid income taxes |
13,842 |
28,015 |
27,866 |
|||||||||
Deferred income taxes |
40,588 |
24,438 |
22,052 |
|||||||||
Other current assets |
80,683 |
127,086 |
142,755 |
|||||||||
Total current assets |
1,738,592 |
1,737,956 |
1,673,247 |
|||||||||
Property, plant and equipment |
||||||||||||
Land |
16,868 |
17,249 |
17,275 |
|||||||||
Buildings |
239,177 |
239,194 |
239,913 |
|||||||||
Machinery and equipment |
580,026 |
565,985 |
562,597 |
|||||||||
836,071 |
822,428 |
819,785 |
||||||||||
Less: accumulated depreciation |
(530,731) |
(531,696) |
(523,239) |
|||||||||
305,340 |
290,732 |
296,546 |
||||||||||
Other assets |
||||||||||||
Goodwill and other intangibles |
99,220 |
99,537 |
99,453 |
|||||||||
Investments in unconsolidated affiliates |
82,341 |
95,095 |
95,305 |
|||||||||
Deferred income taxes |
12,358 |
27,760 |
14,562 |
|||||||||
Other noncurrent assets |
60,975 |
89,349 |
91,794 |
|||||||||
254,894 |
311,741 |
301,114 |
||||||||||
Total assets |
$ |
2,298,826 |
$ |
2,340,429 |
$ |
2,270,907 |
||||||
See accompanying notes. |
CONSOLIDATED BALANCE SHEETS (in thousands of dollars) | ||||||||||||
|
|
| ||||||||||
2014 |
2013 |
2014 | ||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||||
Current liabilities |
||||||||||||
Notes payable and overdrafts |
$ |
116,771 |
$ |
72,341 |
$ |
62,905 |
||||||
Accounts payable and accrued expenses |
146,516 |
196,255 |
212,422 |
|||||||||
Accounts payable—unconsolidated affiliates |
12,500 |
32,216 |
65 |
|||||||||
Customer advances and deposits |
65,450 |
59,779 |
15,869 |
|||||||||
Accrued compensation |
20,469 |
23,905 |
31,772 |
|||||||||
Income taxes payable |
12,596 |
15,741 |
15,694 |
|||||||||
Current portion of long-term obligations |
— |
115,000 |
116,250 |
|||||||||
Total current liabilities |
374,302 |
515,237 |
454,977 |
|||||||||
Long-term obligations |
370,000 |
245,000 |
240,000 |
|||||||||
Pensions and other postretirement benefits |
73,052 |
92,762 |
85,081 |
|||||||||
Other long-term liabilities |
34,077 |
36,348 |
34,457 |
|||||||||
Deferred income taxes |
42,843 |
59,772 |
45,500 |
|||||||||
Total liabilities |
894,274 |
949,119 |
860,015 |
|||||||||
Shareholders' equity |
||||||||||||
|
||||||||||||
Preferred stock: |
||||||||||||
Series A Junior Participating Preferred Stock, no par value, 500,000 shares authorized, none issued or outstanding |
— |
— |
— |
|||||||||
Series B 6.75% Convertible Perpetual Preferred Stock, no par value, 220,000 shares authorized, 219,596 shares issued and outstanding (219,999 at |
212,633 |
213,023 |
213,023 |
|||||||||
Common stock, no par value, 100,000,000 shares authorized, 22,839,717 shares issued and outstanding (23,216,312 at |
205,699 |
204,104 |
206,446 |
|||||||||
Retained earnings |
997,380 |
982,109 |
993,093 |
|||||||||
Accumulated other comprehensive loss |
(47,168) |
(40,135) |
(34,332) |
|||||||||
Total |
1,368,544 |
1,359,101 |
1,378,230 |
|||||||||
Noncontrolling interests in subsidiaries |
36,008 |
32,209 |
32,662 |
|||||||||
Total shareholders' equity |
1,404,552 |
1,391,310 |
1,410,892 |
|||||||||
Total liabilities and shareholders' equity |
$ |
2,298,826 |
$ |
2,340,429 |
$ |
2,270,907 |
||||||
See accompanying notes. |
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) | ||||||||
Nine Months Ended | ||||||||
2014 |
2013 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ |
74,086 |
$ |
127,946 |
||||
Adjustments to reconcile net income to net cash used by operating activities: |
||||||||
Depreciation |
26,355 |
29,058 |
||||||
Amortization |
1,635 |
1,244 |
||||||
Net provision for losses on advances and guaranteed loans to suppliers |
668 |
9,081 |
||||||
Foreign currency remeasurement loss (gain), net |
14,231 |
14,649 |
||||||
Equity in net loss (income) of unconsolidated affiliates, net of dividends |
2,001 |
5,530 |
||||||
Gain on favorable outcome of excise tax case in |
— |
(81,619) |
||||||
Restructuring costs |
4,493 |
4,708 |
||||||
Other, net |
(2,720) |
7,105 |
||||||
Changes in operating assets and liabilities, net |
(122,372) |
(131,853) |
||||||
Net cash used by operating activities |
(1,623) |
(14,151) |
||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of property, plant and equipment |
(43,207) |
(30,846) |
||||||
Proceeds from sale of property, plant and equipment |
3,791 |
1,497 |
||||||
Net cash used by investing activities |
(39,416) |
(29,349) |
||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Issuance (repayment) of short-term debt, net |
57,075 |
(36,725) |
||||||
Issuance of long-term obligations |
370,000 |
175,000 |
||||||
Repayment of long-term obligations |
(356,250) |
(207,500) |
||||||
Dividends paid to noncontrolling interests |
(1,977) |
(1,962) |
||||||
Issuance of common stock |
187 |
457 |
||||||
Repurchase of perpetual convertible preferred stock |
(349) |
— |
||||||
Repurchase of common stock |
(20,473) |
(14,145) |
||||||
Dividends paid on convertible perpetual preferred stock |
(11,137) |
(11,137) |
||||||
Dividends paid on common stock |
(35,485) |
(34,880) |
||||||
Debt issuance costs and other |
(2,985) |
(875) |
||||||
Net cash used by financing activities |
(1,394) |
(131,767) |
||||||
Effect of exchange rate changes on cash |
(784) |
(730) |
||||||
Net decrease in cash and cash equivalents |
(43,217) |
(175,997) |
||||||
Cash and cash equivalents at beginning of year |
163,532 |
367,864 |
||||||
Cash and cash equivalents at end of period |
$ |
120,315 |
$ |
191,867 |
||||
See accompanying notes. |
NOTE 1. BASIS OF PRESENTATION
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended |
Nine Months Ended | |||||||||||||||
(in thousands, except share and per share data) |
2014 |
2013 |
2014 |
2013 | ||||||||||||
Basic Earnings Per Share |
||||||||||||||||
Numerator for basic earnings per share |
||||||||||||||||
Net income attributable to |
$ |
53,039 |
$ |
38,585 |
$ |
68,781 |
$ |
122,338 |
||||||||
Less: Dividends on convertible perpetual preferred stock |
(3,712) |
(3,712) |
(11,137) |
(11,137) |
||||||||||||
Less: Cost in excess of carrying value on repurchases of convertible perpetual preferred stock |
(18) |
— |
(18) |
— |
||||||||||||
Earnings available to |
49,309 |
34,873 |
57,626 |
111,201 |
||||||||||||
Denominator for basic earnings per share |
||||||||||||||||
Weighted average shares outstanding |
23,095,861 |
23,216,145 |
23,165,553 |
23,246,396 |
||||||||||||
Basic earnings per share |
$ |
2.13 |
$ |
1.50 |
$ |
2.49 |
$ |
4.78 |
||||||||
Diluted Earnings Per Share |
||||||||||||||||
Numerator for diluted earnings per share |
||||||||||||||||
Earnings available to |
$ |
49,309 |
$ |
34,873 |
$ |
57,626 |
$ |
111,201 |
||||||||
Add: Dividends on convertible perpetual preferred stock (if conversion assumed) |
3,712 |
3,712 |
11,137 |
11,137 |
||||||||||||
Add: Cost in excess of carrying value on repurchases of convertible perpetual preferred stock |
18 |
— |
18 |
— |
||||||||||||
Earnings available to |
53,039 |
38,585 |
68,781 |
122,338 |
||||||||||||
Denominator for diluted earnings per share |
||||||||||||||||
Weighted average shares outstanding |
23,095,861 |
23,216,145 |
23,165,553 |
23,246,396 |
||||||||||||
Effect of dilutive securities (if conversion or exercise assumed) |
||||||||||||||||
Convertible perpetual preferred stock |
4,852,940 |
4,824,320 |
4,845,818 |
4,818,274 |
||||||||||||
Employee share-based awards |
342,216 |
323,947 |
328,060 |
323,867 |
||||||||||||
Denominator for diluted earnings per share |
28,291,017 |
28,364,412 |
28,339,431 |
28,388,537 |
||||||||||||
Diluted earnings per share |
$ |
1.87 |
$ |
1.36 |
$ |
2.43 |
$ |
4.31 |
NOTE 3. SEGMENT INFORMATION
The principal approach used by management to evaluate the Company's performance is by geographic region, although the dark air-cured and oriental tobacco businesses are each 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 the pretax earnings of unconsolidated affiliates.
Operating results for the Company's reportable segments for each period presented in the consolidated statements of income were as follows:
Three Months Ended |
Nine Months Ended | |||||||||||||||
(in thousands of dollars) |
2014 |
2013 |
2014 |
2013 | ||||||||||||
SALES AND OTHER OPERATING REVENUES |
||||||||||||||||
Flue-cured and burley leaf tobacco operations: |
||||||||||||||||
|
$ |
118,844 |
$ |
105,430 |
$ |
203,850 |
$ |
250,548 |
||||||||
Other regions (1) |
604,100 |
616,038 |
1,173,341 |
1,442,908 |
||||||||||||
Subtotal |
722,944 |
721,468 |
1,377,191 |
1,693,456 |
||||||||||||
Other tobacco operations (2) |
35,110 |
46,334 |
116,451 |
158,743 |
||||||||||||
Consolidated sales and other operating revenues |
$ |
758,054 |
$ |
767,802 |
$ |
1,493,642 |
$ |
1,852,199 |
||||||||
OPERATING INCOME |
||||||||||||||||
Flue-cured and burley leaf tobacco operations: |
||||||||||||||||
|
$ |
15,864 |
$ |
7,728 |
$ |
21,821 |
$ |
18,622 |
||||||||
Other regions (1) |
78,958 |
65,527 |
90,044 |
102,797 |
||||||||||||
Subtotal |
94,822 |
73,255 |
111,865 |
121,419 |
||||||||||||
Other tobacco operations (2) |
(1,316) |
1,373 |
2,584 |
8,881 |
||||||||||||
Segment operating income |
93,506 |
74,628 |
114,449 |
130,300 |
||||||||||||
Deduct: Equity in pretax loss (earnings) of unconsolidated affiliates (3) |
527 |
(1,789) |
(3,391) |
(1,755) |
||||||||||||
Restructuring costs (4) |
(1,143) |
(3,400) |
(4,493) |
(4,708) |
||||||||||||
Add: Other income (5) |
— |
— |
— |
81,619 |
||||||||||||
Consolidated operating income |
$ |
92,890 |
$ |
69,439 |
$ |
106,565 |
$ |
205,456 |
(1) |
Includes |
(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) |
Equity in pretax (earnings) loss of unconsolidated affiliates is included in segment operating income (Other Tobacco Operations segment), but is reported below consolidated operating income and excluded from that total in the consolidated statements of income and comprehensive income. |
(4) |
Restructuring costs are excluded from segment operating income, but are included in consolidated operating income in the consolidated statements of income and comprehensive income. |
(5) |
Other income represents the gain on the favorable outcome of the IPI tax credit case in |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/universal-corporation-reports-improved-third-quarter-results-300030145.html
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