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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 27, 1998
(Date of earliest event reported)
UNIVERSAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Virginia 1-652 54-0414210
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1501 North Hamilton Street 23230
Richmond, Virginia (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(804) 359-9311
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Item 5. Other Events.
The press release issued by the Registrant on October 27, 1998 and
attached hereto as Exhibit 99 is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99 Press release issued by the Registrant on October 27, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
UNIVERSAL CORPORATION
(Registrant)
Date: October 29, 1998 By: /s/ William J. Coronado
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William J. Coronado, Controller
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Exhibit Index
Exhibit
Number Document
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99 Press release issued by the Registrant on October 27, 1998
Contact: Release:
KAREN M.L. WHELAN 2:30 p.m. Eastern Time
Phone: (804) 359-9311
Fax: (804) 254-3594
email: [email protected]
UNIVERSAL CORPORATION ANNOUNCES FIRST QUARTER RESULTS
RICHMOND, VA, OCTOBER 27, 1998 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation, announced today that timing of shipments was a major factor in the
somewhat lower earnings recorded for the first quarter of fiscal year 1999. Net
income for the quarter ended September 30, 1998, was $27.1 million compared to a
record $32.8 million reported in the first quarter of fiscal year 1998. On a
diluted basis, this equates to 78 cents per share compared to 93 cents per share
a year ago. Gross revenues were $879 million compared to $1 billion in the first
quarter of fiscal year 1998. The company has continued its share purchase
program, which was announced on May 6, 1998, and, to date, has purchased 1.6
million shares of Universal common stock at a total price of approximately $58.7
million. The program provides for purchases of up to $100 million.
Earnings from a number of the regional tobacco operations were
adversely affected by significant shipment timing differences relative to the
same quarter a year ago. This includes the United States, Africa, and the dark
air-cured companies. Earnings in Argentina were negatively impacted by the
effect of lower margins due to the quality of the crop. Brazilian results,
however, were up in the period as a higher proportion of the smaller 1998 crop
was shipped in the first quarter.
Non-tobacco results for the quarter were essentially level compared
with last year. Lumber and building products margins continued to be under
pressure from flat sales volumes and lower prices. This has been offset by
effective efforts to control costs and the elimination of unprofitable export
activities. Tea continued to perform well and results were also higher in
confectionery sunflower seeds.
The outlook for the balance of the year remains good, although timing
issues as well as variations in the relative earnings contributions of the
company's operating territories could still affect quarterly comparisons. Higher
tobacco earnings should be recorded in the United States and Africa reflecting
larger volumes expected in both areas. However, the U.S. burley crop has been
affected by dry weather in recent weeks and both quantity and quality of the
crop are uncertain at this time. On the other hand, Brazilian results should be
M O R E
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Universal Corporation
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somewhat lower because of the significant declines in last year's flue-cured and
burley crops due to excessive rains. Dark tobacco earnings will also be down for
the year, due to lower leaf prices resulting from a surplus of certain types of
cigar leaf and the impact of heavy rains in Indonesia which have significantly
reduced cigar wrapper yields and leaf quality. Wrapper tobacco continues to be
in short supply.
Improved results are expected from Universal's lumber and building
products operations in the Netherlands as prices appear to be stabilizing,
particularly for softwood, and recent dollar/guilder exchange rate developments
have been favorable. At the same time, concerns are beginning to be expressed
that the problems in Asia, the former Soviet Union and Latin America could lead
to an economic slow down in Europe in the months ahead, which could affect
lumber usage. Agri-products are expected to do well for the year.
Since the company's last report, the world economic situation has
continued to deteriorate, which has the possibility of impacting numerous
businesses, including the tobacco merchant business. However, at this writing
prospects remain good for the remainder of the year and management is optimistic
that earnings from continuing operations in the range of $3.70 to $3.90 per
share can be achieved.
The company cautions readers that the statements contained herein
regarding expected earnings and expectations for the company's performance are
forward-looking statements based upon management's current knowledge and
assumptions about future events, including anticipated levels of demand for the
company's products and services, costs incurred in providing these products and
services, and timing of shipments to customers. Lumber earnings could also be
affected by a number of factors, including the translation effects of currency
rate changes and unusual weather conditions in the Netherlands. Actual results,
therefore could vary from those expected. For more details on factors that could
affect expectations, see the company's Annual Report on Form 10-K for the year
ended June 30, 1998, as filed with the Securities and Exchange Commission.
Universal Corporation is a diversified company with operations in tobacco,
lumber, and agri-products. Its gross revenues for the fiscal year that ended on
June 30, 1998, were approximately $4.3 billion. For more information, visit
Universal's web site at www.universalcorp.com.
M O R E
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Universal Corporation
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<TABLE>
UNIVERSAL CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended September 30
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(In thousands of dollars, except per share data) 1998 1997
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<S> <C> <C>
Sales and other operating revenues $879,285 $1,023,156
Costs and expenses
Cost of goods sold 742,701 880,921
Selling, general and administrative expenses 78,314 78,437
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Operating income 58,270 63,798
Equity in pretax earnings of unconsolidated affiliates 570 3,745
Interest expense (15,542) (13,802)
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Income before income taxes and other items 43,298 53,741
Income taxes 16,021 21,306
Minority interests 220 (338)
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Net income $27,057 $32,773
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Earnings per share $ .79 $ .93
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Diluted earnings per share $ .78 $ .93
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Common shares for diluted earnings per share 34,483,843 35,329,597
</TABLE>
M O R E
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Universal Corporation
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NOTES:
1. The company's operations are seasonal; therefore, the results of operations
for the three-month period ended September 30, 1998, are not necessarily
indicative of results to be expected for the year ending June 30, 1999. All
adjustments necessary to fairly state the results for such period have been
included and were of a normal recurring nature.
2. Contingent liabilities: At September 30, 1998, total exposure under
guarantees issued for banking facilities of unconsolidated affiliates was
$10 million. Other contingent liabilities approximate $45 million and
relate principally to performance bonds and Common Market guarantees. The
company's Brazilian subsidiaries have been notified by the tax authorities
of proposed adjustments to the income tax returns filed in prior years. The
total adjustments, including penalties and interest, approximate $50
million. The company believes the Brazilian tax returns were filed in
compliance with the applicable tax code. The numerous proposed adjustments
vary in complexity and amount. While it is not feasible to predict the
precise amount or timing of each proposed adjustment, the company believes
that the ultimate disposition will not have a material adverse effect on
the company's consolidated financial position or results of operations.
3. The lower estimated effective tax rate is fiscal year 1999 is due to the
anticipated mix of foreign and domestic earnings and management's current
assessment of pending and contested tax issues.
4. As of July 1, 1998, the company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." The adoption of this
statement had no impact on the company's net income or shareholders'
equity. The following table presents the calculation of comprehensive
income as it applies to Universal:
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Three months ended September 30. 1998 1997
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(in thousands)
Net income $27,057 $32,773
Foreign currency translation adjustment 1,514 (6,887)
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Comprehensive income $28,571 $25,886
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