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May 27, 2010 at 12:00 AM EDT

Universal Corporation Reports Record Annual Earnings


    Fiscal Year 2010
    Diluted earnings per share up 31%, to $5.68 versus $4.32 last year.
    Revenues down 2% on lower volumes offset by pricing and mix.
    Operating income up 23%, to $257 million, on continuing good operations.

    Fourth Fiscal Quarter
    Diluted earnings per share up 88%, to $0.90 versus $0.48 last year.
    Revenues up slightly to $567 million.
    Operating income up by 84%, to $43 million.
    Later shipments this year benefited the quarter

George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE: UVV), announced that diluted earnings per share for the year ended March 31, 2010, were $5.68, up 31% from last year's results of $4.32 per diluted share. Net income improved by 28%, to a record $168 million. Results for fiscal year 2009 had been overshadowed by large currency losses in South America. Those losses were not repeated in fiscal year 2010, accounting for a large portion of the change. Revenues were down by about 2%, reflecting lower volumes in several areas, offset by improved sales mix as lower priced by-products constituted a smaller proportion of total sales. Lower volumes were primarily attributable to shipment delays this year in some regions, lower trading volumes in North America, and last year's accelerated shipments of dark tobacco.

For the fourth fiscal quarter, results of $0.90 per diluted share were up 88% compared to the prior year, largely because of volume increases in Africa and North America, as most shipments that had been delayed earlier in the year were completed. Revenues were nearly flat, as the increased shipments in Africa and North America were offset by lower volumes in South America where shipments took place earlier in the year, by lower volumes of dark tobacco due to the effect of last year's accelerated shipments, and by lower oriental tobacco shipments that are delayed until next year. Lower priced by-products also formed a large portion of volumes sold.



Fiscal Year 2010

Operating income for the flue-cured and burley operations was up 27%, to $240 million, which is a record for the group. The $51 million increase was primarily related to lower currency costs, but the year also saw much higher Asian trading volumes and the benefits of management's focus on improving the profitability of smaller operations that had been marginal performers in past years. Revenue for this group was off slightly as lower volumes in most regions were largely offset by the Asian increases.

In the North America segment, the effects of lower U.S. trading volumes, lower sales of carryover crops, and a smaller Canadian crop were more than offset by improvements in smaller operations, which included better experience with farmer receivables and improved pricing. The segment's operating income increased 19%, to $57 million. The volume reductions were primarily in sales of lamina rather than by-products, and the combination of lower volumes and sales mix cause revenues to decline by 14%.

Results for the Other Regions segment improved by 30%, to $183 million, largely on the strength of lower currency costs in fiscal year 2010. The reduction in currency costs primarily benefited South American operations where the rapid strengthening of the U.S. dollar in fiscal year 2009 caused a loss in value of local currency balances, primarily related to farmer receivables. The U.S. dollar remained relatively strong through the following spring and reduced the cost of the crop sold in fiscal year 2010. Asian trading volumes increased for the second consecutive year. African results were down slightly as delayed shipments related to logistical issues hampered performance, despite significant catch-up shipments late in the year. In Europe, higher green leaf costs proved difficult to recover in sales prices, although improvement in smaller operations benefited the region. Revenues for the Other Regions segment increased, based primarily on the higher Asian trading volumes.

Fourth Quarter

In the fourth quarter of fiscal year 2010, operating income for flue-cured and burley operations was nearly $40 million, more than double the performance during the same period last year. Revenues for the group, at $495 million, were up 15% due to the increase in volumes caused by catch-up shipments from North America and Africa. Operating income for the North America segment improved on the increased volumes. Results for the Other Regions segment increased by nearly $22 million, primarily due to the increased African shipments, although better experience on farmer receivables also benefited the segment, and each region showed some improvement over the prior year. Revenues for the Other Regions segment increased by 17% compared to last year's fourth quarter, as the effect of higher African shipments was only partly offset by lower volumes in South America, where shipments were completed earlier than last year.


Results for the Other Tobacco Operations segment were down by 5%, or about $1.9 million, compared to last year, mainly due to lower earnings from the dark tobacco group. Near the end of fiscal year 2009, the dark tobacco operations experienced a surge in sales as customers accelerated purchases in anticipation of the enactment of U.S. excise tax increases. The dark tobacco group also incurred costs to consolidate their U.S. processing operations in fiscal year 2010. The oriental tobacco joint venture, which is accounted for on an equity basis, benefited from a decrease in interest expense.

Segment revenues were lower for both the quarter and the fiscal year. Dark tobacco revenues declined on reduced volumes compared to last year's accelerated shipments. Although the oriental tobacco joint venture is not a consolidated operation, it sells some leaf to a consolidated Universal subsidiary for import to customers in the United States. The revenue from those sales is included in revenues for Other Tobacco Operations. Some of those sales have been carried over into fiscal year 2011 and reduced fiscal year 2010 revenues in this segment for the fourth quarter and for the fiscal year.

For the fourth quarter, Other Tobacco Operations results fell by more than 50%. Most of the decline was related to last year's accelerated shipments of dark tobacco, which particularly affected the fourth quarter, but the oriental tobacco joint venture also saw fourth quarter comparisons fall this year on the delayed shipments in the United States.


Selling, general, and administrative expenses decreased by about $4 million, or 5%, in the quarter and $24 million, or 8%, in the fiscal year, compared to the same periods last year. The reduction for the quarter was mainly related to lower provisions on direct and guaranteed farmer loans in Brazil. The primary factor in the reduced expense for the year was lower currency remeasurement and exchange losses, which were down $45 million. In both the quarter and the fiscal year, there were several smaller offsetting items related a number of areas, including legal and professional fees, salaries, benefits, incentive compensation, and lower gains on the gain of property and equipment.

Compared to last year, interest expense was about $2.5 million lower in the quarter and $11 million lower for the fiscal year, largely due to the reduction in short-term borrowing rates during the year. About 70% of the Company's debt is based on variable interest rates. The rate reduction also reduced interest income during the year.

Income tax expense increased by $22 million as a slightly higher effective tax rate was applied to higher income before taxes. Although the rate is higher than last year's, it remained below the U.S. statutory rate in fiscal year 2010, primarily because of the reversal of liabilities previously recorded for uncertain tax positions based on the expiration of statutes of limitations for the related tax years and other factors. Those adjustments more than offset an accrual to record U.S. income taxes on earnings that were previously considered to be permanently reinvested offshore, as well as other smaller adjustments.

As disclosed in prior periodic reports on Form 10-Q, the Company has engaged in settlement negotiations with the staff of the Securities and Exchange Commission (the "SEC") and representatives of the Department of Justice ("DOJ") to resolve investigations into alleged violations of the Foreign Corrupt Practices Act. Those negotiations have resulted in agreements in principle being reached with representatives of the DOJ and the staff of the SEC. The final resolution of this matter remains subject to the completion of definitive agreements and the approval and execution of those agreements by the DOJ and the SEC. In addition, each settlement is subject to the approval of a federal district court with jurisdiction over the matter. There is no assurance that the settlements will be approved by the DOJ, SEC, or federal district courts. Based on the agreements in principle that have been reached to date, the resolution of this matter with the DOJ and the SEC is expected to include injunctive relief, disgorgement and prejudgment interest, fines, penalties, and the retention of an independent compliance monitor. Based in part on the progress of the matter and consultation with outside counsel, we have recorded accruals from time to time since the matter arose that are adequate to satisfy the estimated financial settlement we expect with the resolution of the matter. We do not expect the financial settlement to have a material effect on our financial condition or results of operations.


Mr. Freeman stated, "We had an outstanding year. Each of our regional operations produced strong results based on careful attention to costs and close cooperation with our customers. We have created new efficiencies in our dark tobacco operations, completing our Lancaster, Pennsylvania, factory upgrade and expansion. The project was completed on time and within budget, and the factory is performing above our expectations. We are continuing to benefit from cost controls and global coordination, and we are very pleased with our performance for the fiscal year.

"Looking ahead, we have several observations about the economy and our industry. The global economic situation continues to be unpredictable, with financial market volatility affecting currency rates in all regions and possibly reducing capital availability. In light of that volatility, we will continue to manage our financial resources conservatively.

"Although the crop quality is good, flue-cured crops in Brazil to be sold in fiscal year 2011 have decreased because of excess rains there, and dry conditions have reduced the African burley crops to some extent. Although crops there remain large, burley production in other regions also declined. Overall burley production will be down by nearly 8% for fiscal year 2011, and flue-cured production outside China should increase by about 2%. While there have been no significant increases in leaf production and worldwide uncommitted dealer inventories remain near seasonal lows, lower consumption patterns outside of Asia are likely to reduce demand for leaf.

"We have been working closely with our customers this year to respond to their changing requirements. In recent months, we have seen an increasing customer focus on costs. In the intermediate term, because of those cost reduction efforts, we expect that some U.S. contracts for processing tobacco will be renewed at lower volume levels, under different terms or conditions, or both, at their expiration in May 2011. That change will reduce margins and volumes handled in fiscal year 2012. If that business is not replaced at similar margins, the change could represent as much as half of the operating income of our North America segment. It could also result in a decision to reduce our processing capacity in the United States. The North Carolina factory is state of the art, and we will use this opportunity to continue to expand our business with existing and new customers there. In addition, U.S. leaf is becoming more competitive in the world market.

"Recent customer efforts to procure leaf directly from farmers may change parts of our business. As we reported last summer, Japan Tobacco announced steps to enhance their direct leaf procurement capabilities by acquiring and entering joint ventures with smaller leaf merchants. They enumerated several factors that prompted their moves, including the desire to enhance internal expertise in leaf procurement, actively manage the leaf supply chain, and work more directly with tobacco growers. That effort will reduce volumes in our North America segment and in Malawi and Brazil in our Other Regions segment. We have been working to replace those volumes, and although we are encouraged by results so far, some regions will be affected in fiscal year 2011.

"The Japan Tobacco activities are consistent with a recurrent theme of manufacturers wanting to get closer to tobacco farmers for many stated reasons, including political considerations and potential regulatory compliance. Several of our customers made a similar move in the United States nearly 10 years ago. Our challenge continues to be to adapt our way of doing business to meet customer needs, and we have been working with some of our customers to examine our arrangements in certain markets. That process is ongoing and is likely to produce some changes in the near term. Any changes or new arrangements are likely to entail more structured dealings than we have had in the past and to include long-term supply or service agreements. Some customers may purchase green tobacco from us or from farmers in markets they deem to be strategic, and through long-term agreements, rely on us for individual services, such as agronomy, logistics, and processing. Most of our customers do not utilize the entire run of the crop, so these new arrangements are likely to be supplemented by traditional purchases of processed leaf tobacco from us or other dealers.

"We believe that these customer efforts are likely to strengthen our relationships over the long term because we believe that, as an independent leaf dealer, we add significant value to the system, providing expertise in dealing with large numbers of farmers and providing a clearinghouse for various qualities of leaf produced in each crop. Our key challenge in the coming year is to adapt our business model to meet our customers' evolving needs while continuing to provide stability of supply and the quality that distinguishes our products and services."

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, 2010, 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, 2010.

At 5:00 p.m. (Eastern Time) on May 27, 2010, the Company will host a conference call to discuss these results. Those wishing to listen to the call may do so by visiting at that time. A replay of the webcast will be available at that site until August 4, 2010. A taped replay of the call will also be available through June 17, 2010, by dialing (800) 642-1687. The confirmation number to access the replay is 77814387.

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, 2010, were $2.5 billion. For more information on Universal Corporation, visit its web site at


    (In thousands of dollars, except per share data)

                            Three Months Ended           Fiscal Year Ended
                            ------------------           -----------------
                                March 31,                    March 31,
                                ---------                    ---------
                             2010         2009          2010            2009
                             ----         ----          ----            ----
    Sales and other
     revenues            $566,503     $563,638    $2,491,738      $2,554,659
    Costs and
        Cost of goods
         sold             455,609      468,442     1,949,473       2,035,318
        Selling, general
         expenses          68,267       72,058       285,056         309,409
                           ------       ------       -------         -------
    Operating income       42,627       23,138       257,209         209,932
        Equity in pretax
         earnings of
         affiliates         5,347        7,751        22,376          20,543
        Interest income       327          743         1,253           2,305
        Interest expense    3,923        6,417        24,210          35,631
                            -----        -----        ------          ------
    Income before
     income taxes          44,378       25,215       256,628         197,149
    Income taxes           20,983       12,554        86,283          64,588
                           ------       ------        ------          ------
    Net income             23,395       12,661       170,345         132,561

    Less:  net
     (income) loss
     attributable to
     interests in
     subsidiaries           3,046      3,101      (1,948)        (822)
                            -----        -----        ------            ----
    Net income
     attributable to
     Corporation           26,441       15,762       168,397         131,739
    Dividends on
       preferred stock     (3,713)      (3,713)      (14,850)        (14,850)
                           ------       ------       -------         -------
     available to
     shareholders         $22,728    $12,049    $153,547     $116,889
                          =======      =======      ========        ========
    Earnings per
     attributable to
        Basic               $0.93        $0.48         $6.21           $4.57
                            =====        =====         =====           =====
        Diluted             $0.90        $0.48         $5.68           $4.32
                            =====        =====         =====           =====

    See accompanying notes.


                                                       March 31,
    (in thousands of dollars)                            2010        2009
                                                         ----        ----
    Current assets
         Cash and cash equivalents                   $245,953    $212,626
         Accounts receivable, net                     266,960     263,383
         Advances to suppliers, net                   167,400     214,282
         Accounts receivable --unconsolidated
          affiliates                                   11,670      20,371
         Inventories --at lower of cost or market:
              Tobacco                                 812,186     586,136
              Other                                    52,952      60,712
         Prepaid income taxes                          13,514      13,181
         Deferred income taxes                         47,074      68,264
         Other current assets                          75,367      64,964
                                                       ------      ------
              Total current assets                  1,693,076   1,503,919
    Property, plant and equipment
         Land                                          16,036      15,773
         Buildings                                    266,350     251,875
         Machinery and equipment                      532,824     492,214
                                                      -------     -------
                                                      815,210     759,862
              Less accumulated depreciation          (485,723)   (447,575)
                                                     --------    --------
                                                      329,487     312,287
    Other assets
         Goodwill and other intangibles               105,561     106,097
         Investments in unconsolidated affiliates     106,336     103,987
         Deferred income taxes                         30,073      17,376
         Other noncurrent assets                      106,507      94,510
                                                      -------      ------
                                                      348,477     321,970
                                                      -------     -------
              Total assets                         $2,371,040  $2,138,176

    See accompanying notes.


                                                          March 31,
    (in thousands of dollars)                             2010        2009
                                                          ----        ----
    Current liabilities
         Notes payable and overdrafts                 $177,013    $168,608
         Accounts payable and accrued
          expenses                                     259,576     236,837
         Accounts payable-unconsolidated
          affiliates                                     6,464      19,191
         Customer advances and deposits                107,858      14,162
         Accrued compensation                           30,097      24,710
         Income taxes payable                           18,991       6,867
         Current portion of long-term
          obligations                                   15,000      79,500
                                                        ------      ------
              Total current liabilities                614,999     549,875
    Long-term obligations                              414,764     331,808
    Pensions and other postretirement
     benefits                                           96,888      91,248
    Other long-term liabilities                         69,886      79,159
    Deferred income taxes                               46,128      52,842
                                                        ------      ------
              Total liabilities                      1,242,665   1,104,932
    Shareholders' equity
      Universal Corporation:
         Preferred stock:
           Series A Junior Participating
            Preferred Stock, no par value,
              authorized, none issued or
               outstanding                                   -           -
           Series B 6.75% Convertible Perpetual
            Preferred Stock, no par value,
              shares authorized, 219,999 shares
               issued and outstanding (219,999 at
               March 31, 2009)                         213,023     213,023
         Common stock, no par value,
          100,000,000 shares authorized,
          24,325,228 shares issued and
              outstanding (24,999,127 at March 31,
               2009)                                   195,001     194,037
         Retained earnings                             767,213     686,960
         Accumulated other comprehensive loss          (52,667)    (64,547)
              Total Universal Corporation
               shareholders' equity                  1,122,570   1,029,473
      Noncontrolling interests in
       subsidiaries                                      5,805       3,771
                                                         -----       -----
              Total shareholders' equity             1,128,375   1,033,244
                                                     ---------   ---------
              Total liabilities and shareholders'
               equity                               $2,371,040  $2,138,176

    See accompanying notes.


                                                       Fiscal Year Ended
                                                           March 31,
    (in thousands of dollars)                          2010          2009
                                                       ----          ----
    Cash Flows From Operating Activities:
         Net income                                $170,345      $132,561
         Adjustments to reconcile net income to
          net cash provided by
         operating activities:
           Depreciation                              41,288        40,761
           Amortization                               2,208         1,029
           Provision for losses on advances and
            guaranteed loans to suppliers            18,514        26,908
           Currency remeasurement (gain) loss, net    9,309        45,987
           Other, net                                16,254        22,074
           Changes in operating assets and
            liabilities, net                        (95,684)    (170,254)
                                                    -------      --------
              Net cash provided by operating
               activities                           162,234        99,066
    Cash Flows From Investing Activities:
         Purchase of property, plant and
          equipment                                 (57,577)      (35,656)
         Purchases of short-term investments              -        (9,658)
         Maturities and sales of short-term
          investments                                     -        68,848
         Proceeds from sale of property, plant
          and equipment                               5,019        15,084
         Other, net                                     536         3,500
                                                        ---         -----
           Net cash provided (used) by investing
            activities                              (52,022)       42,118
    Cash Flows From Financing Activities:
         Issuance (repayment) of short-term
          debt, net                                  (5,250)       59,934
         Issuance of long-term debt                  99,208             -
         Repayment of long-term debt                (79,500)            -
         Dividends paid to noncontrolling
          interests                                    (104)         (104)
         Issuance of common stock                       729            37
         Repurchase of common stock                 (32,194)    (111,073)
         Dividends paid on convertible perpetual
          preferred stock                           (14,850)      (14,850)
         Dividends paid on common stock             (45,882)      (45,938)
         Other                                       (1,193)            -
           Net cash used by financing activities    (79,036)    (111,994)
                                                    -------      --------
    Effect of exchange rate changes on cash           2,151        (2,634)
                                                      -----        ------
    Net increase in cash and cash
     equivalents                                     33,327        26,556
    Cash and cash equivalents at beginning
     of year                                        212,626       186,070
                                                    -------       -------
    Cash and cash equivalents at end of year       $245,953      $212,626
                                                   ========      ========

    See accompanying notes.


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. This information 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, 2010.


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 March 31, 2010, the Company's total exposure under guarantees issued by its operating subsidiary in Brazil for banking facilities of farmers in that country was approximately $86 million, net of the accrual recorded for the fair value of the guarantees. About 75% 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 March 31, 2010, was the face amount, $112 million including unpaid accrued interest ($104 million as of March 31, 2009). The fair value of the guarantees was a liability of approximately $26 million at March 31, 2010 ($35 million at March 31, 2009). In addition to these guarantees, the Company has other contingent liabilities totaling approximately $57 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.


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

                                Three Months Ended         Fiscal Year Ended
                                ------------------         -----------------
                                     March 31,                 March 31,
                                     ---------                 ---------
    (in thousands,
     except per share
     data)                       2010          2009      2010          2009
    -----------------            ----          ----      ----          ----
    Basic Earnings Per
    Numerator for basic
     earnings per share
       Net income
        attributable to
        Corporation           $26,441       $15,762  $168,397      $131,739
       Less:  Dividends on
        preferred stock        (3,713)       (3,713) (14,850)      (14,850)
                               ------        ------   -------       -------
       Earnings available
        to Universal
        Corporation common
          for calculation of
           basic earnings per
           share               22,728        12,049   153,547       116,889
                               ------        ------   -------       -------
     Denominator for
      basic earnings per
        Weighted average
         shares outstanding    24,455        24,991    24,732        25,570
                               ------        ------    ------        ------
     Basic earnings per
      share                     $0.93         $0.48     $6.21         $4.57
                                =====         =====     =====         =====
    Diluted Earnings
     Per Share
    Numerator for
     diluted earnings
     per share
       Earnings available
        to Universal
        Corporation common
        shareholders          $22,728       $12,049  $153,547      $116,889
       Add:  Dividends on
        preferred stock
          conversion assumed)   3,713             -    14,850        14,850
                                -----           ---    ------        ------
       Earnings available
        to Universal
        Corporation common
          for calculation of
           diluted earnings
           per share           26,441        12,049   168,397       131,739
                               ------        ------   -------       -------
    Denominator for
     diluted earnings
     per share:
        Weighted average
         shares outstanding    24,455        24,991    24,732        25,570
        Effect of dilutive
         securities (if
         conversion or
         exercise assumed)
            preferred stock     4,739             -     4,733         4,718
           Employee share-
            based awards          270           122       197           178
                                  ---           ---       ---           ---
        Denominator for
         diluted earnings
         per share             29,464        25,113    29,662        30,466
                               ------        ------    ------        ------
    Diluted earnings
     per share                  $0.90         $0.48     $5.68         $4.32
                                =====         =====     =====         =====


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
                                                        March 31,
    (in thousands of dollars)                       2010           2009
    -------------------------                       ----           ----

       Flue-cured and burley leaf tobacco
            North America                       $169,887       $152,627
            Other regions (1)                    324,856        278,131
                                                 -------        -------
                 Subtotal                        494,743        430,758
       Other tobacco operations (2)               71,760        132,880
                                                  ------        -------
       Consolidated sales and other operating
        revenues                                $566,503       $563,638
                                                ========       ========
       Flue-cured and burley leaf tobacco
            North America                        $24,926        $20,792
            Other regions (1)                     14,807         (6,909)
                                                  ------         ------
                 Subtotal                         39,733         13,883
       Other tobacco operations (2)                8,241         17,006
                                                   -----         ------
       Segment operating income                   47,974         30,889

       Less: Equity in pretax earnings of
        unconsolidated affiliates (3)              5,347          7,751
                                                   -----          -----
       Consolidated operating income             $42,627        $23,138

                                                    Fiscal Year Ended
                                                        March 31,
    (in thousands of dollars)                        2010             2009
    -------------------------                        ----             ----

       Flue-cured and burley leaf tobacco
            North America                        $357,195         $416,899
            Other regions (1)                   1,895,829        1,848,430
                                                ---------        ---------
                 Subtotal                       2,253,024        2,265,329
       Other tobacco operations (2)               238,714          289,330
                                                  -------          -------
       Consolidated sales and other operating
        revenues                               $2,491,738       $2,554,659
                                               ==========       ==========
       Flue-cured and burley leaf tobacco
            North America                         $57,006          $48,010
            Other regions (1)                     182,513          140,476
                                                  -------          -------
                 Subtotal                         239,519          188,486
       Other tobacco operations (2)                40,066           41,989
                                                   ------           ------
       Segment operating income                   279,585          230,475

       Less: Equity in pretax earnings of
        unconsolidated affiliates (3)              22,376           20,543
                                                   ------           ------
       Consolidated operating income             $257,209         $209,932

    (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