ECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[ X ] Annual report pursuant to section 15(d) of the Securities Exchange Act of
1934 [fee required] for the fiscal year ending December 31, 1998.
OR
[ ] Transition report pursuant to section 15(d) of the Securities Exchange
Act of 1934 [no fee required]
Commission file number 1-652
A. Full title of the Plan:
EMPLOYEES' STOCK PURCHASE PLAN OF UNIVERSAL LEAF TOBACCO COMPANY,
INCORPORATED AND DESIGNATED AFFILIATED COMPANIES
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principle executive office:
UNIVERSAL CORPORATION
1501 NORTH HAMILTON STREET
RICHMOND, VIRGINIA 23260
(804) 359-9311
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
EMPLOYEES' STOCK PURCHASE PLAN
OF UNIVERSAL LEAF TOBACCO
COMPANY, INCORPORATED AND
DESIGNATED AFFILIATED COMPANIES
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<S> <C>
DATE: June 16, 1999 /s/ Hartwell H. Roper
---------------- ------------------------------------------
Hartwell H. Roper
Executive Vice President and Chief Financial Officer
Universal Leaf Tobacco Company, Inc.
</TABLE>
2
<PAGE>
Audited Financial Statements
and Supplemental Schedules
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Audited Financial Statements
and Supplemental Schedules
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Page
Report of Independent Auditors...........................................................................1
Financial Statements
Statements of Net Assets Available for Plan Benefits, With Fund Information..............................2
Statements of Changes in Net Assets Available for Plan Benefits,
With Fund Information..................................................................................3
Notes to Financial Statements............................................................................4
Supplemental Schedules Schedules
Line 27a - Schedule of Assets Held for Investment Purposes...............................................1
Line 27d - Schedule of Reportable Transactions...........................................................2
</TABLE>
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
Human Resources Policy and Planning Team
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
We have audited the accompanying financial statements and supplemental schedules
of the Employees' Stock Purchase Plan of Universal Leaf Tobacco Company,
Incorporated and Designated Affiliated Companies (the Plan) as of December 31,
1998 and 1997 and for the year ended December 31, 1998 as listed in the table of
contents. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for plan
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statement of net assets available
for plan benefits and the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and Fund Information
have been subjected to the auditing procedures applied in our audits of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Richmond, Virginia
June 16, 1999
1
<PAGE>
<TABLE>
<CAPTION>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Statements of Net Assets Available for Plan Benefits, With Fund Information
December 31, 1998
------------------------------------------------------------------------------
Fund Information
--------------------------------------------------------------
Non-Participant
Participant Directed Directed
------------------------------------------- ------------------
LandAmerica
Universal Financial Universal
Corporation Group, Inc. Fixed Corporation
Common Common Income Common
Stock Fund Stock Fund Fund Stock Fund Total
------------------------------------------- ------------------ ----------------
<S> <C>
Common stock of Universal
Corporation, at market:
1,217,673 shares $19,453,905 $ - $ - $23,316,859 $42,770,764
Common stock of LandAmerica
Financial Group, Inc., at market:
26,096 shares - 1,456,483 - - 1,456,483
Investment in a fund consisting
of guaranteed investment
contracts; 982,381 units - - 982,381 - 982,381
Temporary cash investments 1,760 - - 2,024 3,784
------------------------------------------- ------------------ ----------------
Net assets available for plan benefits $19,455,665 $1,456,483 $982,381 $23,318,883 $45,213,412
=========================================== ================== ================
December 31, 1997
------------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------
Non-Participant
Participant Directed Directed
------------------------------------------ -----------------
LandAmerica
Universal Financial Universal
Corporation Group, Inc. Fixed Corporation
Common Common Income Common
Stock Fund Stock Fund Fund Stock Fund Total
------------------------------------------ ----------------- ----------------
Common stock of Universal
Corporation, at market:
1,259,808 shares $24,098,005 $ - $ - $27,708,261 $51,806,266
Common stock of Lawyers
Title Corporation, at market:
31,469 shares - 989,306 - - 989,306
Investment in a fund consisting
of guaranteed investment
contracts; 854,755 units - - 854,755 - 854,755
Temporary cash investments - - 14,744 - 14,744
------------------------------------------- ------------------ ----------------
Net assets available for plan benefits $24,098,005 $989,306 $869,499 $27,708,261 $53,665,071
=========================================== ================== ================
</TABLE>
See accompanying notes.
2
<PAGE>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Available for Plan Benefits, With Fund Information
Year ended December 31, 1998
----------------------------------------------------------------------------------
Fund Information
-----------------------------------------------------------------
Non-Participant
Participant Directed Directed
----------------------------------------------- -----------------
LandAmerica
Universal Financial Universal
Corporation Group, Inc. Fixed Corporation
Common Common Income Common
Stock Fund Stock Fund Fund Stock Fund Total
----------------------------------------------- ----------------- ----------------
<S> <C>
Investment income:
Net appreciation (depreciation)
in market value of investments $ (3,577,173) $ 770,475 $ - $ (4,158,549) $(6,965,247)
Cash dividends 650,324 - - 758,238 1,408,562
Interest 4,798 - 58,210 5,426 68,434
----------------------------------------------- ----------------- ----------------
(2,922,051) 770,475 58,210 (3,394,885) (5,488,251)
Contributions:
Employer - - - 1,705,946 1,705,946
Employee 1,589,207 - 116,739 - 1,705,946
----------------------------------------------- ----------------- ----------------
1,589,207 - 116,739 1,705,946 3,411,892
Withdrawals and forfeitures of
employees' accounts (3,320,079) (280,157) (62,067) (2,712,997) (6,375,300)
Transfer among funds 10,583 (23,141) - 12,558 -
----------------------------------------------- ----------------- ----------------
Net increase (decrease) (4,642,340) 467,177 112,882 (4,389,378) (8,451,659)
Net assets available for plan benefits:
December 31, 1997 24,098,005 989,306 869,499 27,708,261 53,665,071
=============================================== ================= ================
December 31, 1998 $19,455,665 $ 1,456,483 $982,381 $23,318,883 $45,213,412
=============================================== ================= ================
</TABLE>
See accompanying notes.
3
<PAGE>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Notes to Financial Statements
Years ended December 31, l998 and 1997
1. Description of the Plan
A complete description of Plan provisions including those relating to vesting,
withdrawals and distributions is contained in the Summary Plan Description and
the Plan document which has been filed with the Securities and Exchange
Commission. Copies of these documents and the prospectus relating to the Plan
are available from the Universal Corporation Benefits Department. The following
summary should be read in conjunction with the aforementioned documents.
General
The Plan is a defined contribution plan sponsored by Universal Leaf Tobacco
Company, Incorporated (the Sponsor) for the benefit of certain salaried
employees of the sponsor and designated affiliated companies (Employers). The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
Contributions
After one year of service, employees may elect to contribute 1% to 5% of their
total pay (including overtime and bonuses) by means of monthly payroll
deductions. Employers match 100% of employee contributions except to the extent
that the employer contribution is reduced by forfeitures from withdrawing
participants.
Employees may elect to invest in the Universal Corporation Common Stock Fund,
Fixed Income Fund or to divide their contributions equally between the two
funds. Employers' contributions are invested only in the Universal Corporation
Common Stock Fund.
Participant accounts
Each participant's account consists of participant's contributions, the
Employer's matching contribution and credit from forfeitures and an allocation
of the Plan's investment income. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's account.
4
<PAGE>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Vesting
Participants are fully vested in participant contributions and in Employer
contributions in the event of retirement, disability or death. Otherwise,
vesting in the Employer contributions occurs according to the following
schedule:
Years of service Vesting percentage
--------------------------------------- --------------------------------------
0-4 0%
5 100%
Benefits
Participants who retire or become disabled may receive a distribution in a
single lump sum or in annual installments over a period not to exceed ten years.
Termination
While the sponsor has not expressed any intent to terminate the Plan, it is free
to do so at any time, subject to the provisions of ERISA. In the event of Plan
termination, participants will become fully vested in their accounts.
LandAmerica Financial Group, Inc. Shares
During October 1991, each participant elected to either sell or hold all
LandAmerica Financial Group, Inc. (formerly Lawyers Title Corporation) shares
distributed to them as a dividend from the spin-off from Universal Corporation.
Pursuant to an IRS Ruling and applicable Treasury Regulations, participants were
required to allocate their tax basis in the Universal Corporation Common Stock
held at the time of the distribution between their Universal Corporation Common
Stock and LandAmerica Financial Group, Inc. Common Stock (including any
fractional share interest) in proportion to their relative fair market values at
that time. Based on the average of the high and low trading prices of Universal
Corporation Common Stock and
5
<PAGE>
1. Description of the Plan (continued)
LandAmerica Financial Group, Inc. Common Stock on October 1, 1991, 95.343
percent of the basis was allocated to Universal Corporation Common Stock and
4.657 percent was allocated to LandAmerica Financial Group, Inc. Common Stock.
Participants continuing to hold LandAmerica Financial Group, Inc. shares may
elect to sell 100% of their holdings as part of their regular semi-annual
elections and have the proceeds invested in Universal Corporation Common Stock.
No additional investments in LandAmerica Financial Group, Inc. Common Stock are
permitted under the Plan.
2. Summary of Significant Accounting Policies
Investments
The Plan's investments are held by a bank-administered trust fund which changed
from Signet Trust Company to Wachovia during 1998. Investments in the Common
Stock Funds are carried at market value based upon quotations from the New York
Stock Exchange. Dividends are recorded on the record date, and interest is
accrued as earned.
Assets of the Fixed Income Fund are primarily invested in the Stable Value Fund
I, a pooled fund of guaranteed investment contracts issued by life insurance
companies and managed by Wachovia Trust Company. The guaranteed investment
contracts are valued at contract value, which approximates market value. The
rate of return of the fund is based on the crediting rate of the underlying
guaranteed investment contracts. These contracts generally provide for a fixed
rate of return over the term of the contract. During 1998 the average yield for
the fund was 6.26% (6.5% in 1997), and at December 31, 1998 the crediting rating
was 6.0% (6.5% at December 31, 1997).
Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
6
<PAGE>
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Notes to Financial Statements (continued)
3. Income Taxes
The Plan has been determined by the Internal Revenue Service to be qualified
under Section 401(a) of the Internal Revenue Code and the related trust to be
exempt from taxation under Section 501(a). Continued qualification of the Plan
will depend on continued operation under the approved form. The Plan has been
amended since receiving the tax determination letter; however, Universal Leaf
Tobacco Company, Incorporated is not aware of any series of events or course of
actions that may have adversely affected the qualified status of the Plan.
Until such time as a participant or his beneficiary withdraws from the Plan, no
income tax is payable by the participant on contributions made by his employer
on his behalf or interest and dividends added to his account. The income tax
ramifications to employees with respect to the Plan are described in the
Prospectus covering the Plan which is available to all employees.
4. Related Party Transactions
The administrative expenses of the Plan, which include Trustee's fees of $44,997
and $53,357 during the years ended December 31, l998 and 1997, respectively, are
paid by the Sponsor and are not included in the accompanying financial
statements.
Under the provisions of the Plan, shares of Universal Corporation Common Stock
may be purchased from employees, including officers, at the closing price on the
New York Stock Exchange on the date of purchase. Purchases from employees
totaled $604,995 and $962,736 during the years ended December 31, 1998 and 1997,
respectively. Included in these amounts are purchases from officers which
amounted to $54,755 and $157,453 during the years ended December 31, l998 and
1997, respectively.
7
<PAGE>
5. Year 2000 Issue (Unaudited)
The Sponsor has organized a task force to coordinate and monitor global Year
2000 status. Systems and equipment may malfunction due to the inability to
recognize a date ending with the digits "00." The Sponsor has completed an
analysis of its hardware and computer systems, has begun modifying or replacing
non-compliant systems and has also begun assessing the Year 2000 compliance of
its key suppliers. The evaluation and implementation of corrective actions are
expected to be completed by September 30, 1999. The Sponsor does not expect that
its Year 2000 project will have a significant impact on plan operations.
8
<PAGE>
Supplemental Schedules
<PAGE>
Schedule 1
Line 27a - Schedule of Assets Held for
Investment Purposes
<PAGE>
Schedule 1
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Description of Investment
Including Maturity Date,
Rate of Interest,
Identity of Issue, Borrower, Collateral, Par or Maturity Market
Lessor or Similar Party Value Cost Value
- -------------------------------------------------------- ----------------------------------------------------------------
<S> <C>
Universal Corporation Common Stock Fund
Common stock of Universal Corporation* 1,217,673 $27,823,015 $42,770,764
Temporary cash investments 3,784 3,784 3,784
-----------------------------------
$27,826,799 $42,774,548
===================================
LandAmerica Financial Group, Inc.
Common Stock Fund
Common stock of LandAmerica Financial
Group, Inc. 26,096 $ 92,051 $ 1,456,483
Fixed Income Fund
Investments in a fund consisting of guaranteed
investment contracts 982,381 $ 982,381 $ 982,381
*Indicates party-in-interest to the Plan.
</TABLE>
<PAGE>
Schedule 2
Line 27d - Schedule of Reportable
Transactions
<PAGE>
Schedule 2
Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated
and Designated Affiliated Companies
Line 27d- Schedule of Reportable Transactions
December 31, 1998
<TABLE>
<CAPTION>
(h) Current
Value of Asset (i) Net
(a) Identity of (c) Purchase (d) Selling (g) Cost of on Transaction Gain
Party Involved (b) Description Price Price Asset Date or (Loss)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
- ------------------------------------------------------------------------
** Universal Stock $4,695,651 - $4,695,651 $4,695,651 -
First Union The Virtus Money Market Fund 1,419,696 - 1,419,696 1,419,696 -
- 1,288,060 1,288,060 1,288,060 -
First Union Evergreen Select Money Market Fund 2,081,236 - 2,081,236 2,081,236 -
- 2,399,962 2,399,962 2,399,962 -
Wachovia DTF Short Term Investment Fund 2,349,505 - 2,349,505 2,349,505 -
- 2,032,111 2,032,111 2,032,111 -
</TABLE>
There were no category (i), (ii), or (iv) reportable transactions during 1998.
Columns (e) and (f) are not applicable.
** Transactions made on market.
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-21781) pertaining to the Employees' Stock Purchase Plan of Universal
Leaf Tobacco Company, Incorporated and Designated Affiliated Companies and in
the related Prospectus of our report dated June 16, 1999, with respect to the
financial statements and schedules of the Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated and Designated Affiliated Companies
included in this Annual Report (Form 11-K) for the year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
Richmond, Virginia
June 16, 1999
