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: May 5, 1999
(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
Richmond, Virginia 23230
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(804) 359-9311
<PAGE>
Item 5. Other Events.
The press release issued by the Registrant on May 5, 1999 attached
hereto as Exhibit 99.1 is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
No. Description
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99.1 Press Release announcing third quarter earnings.
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*Filed Herewith
<PAGE>
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: May 6, 1999 By: /s/ William J. Coronado
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William J. Coronado
Controller and Vice President
<PAGE>
Exhibit Index
Exhibit
Number Document
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99.1 Press Release announcing third quarter earnings.
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*Filed Herewith
EXHIBIT 99.1
Contact: Release:
KAREN M.L. WHELAN MAY 5, 1999
Phone: (804) 359-9311 4:00 P.M. Eastern Time
Fax: (804) 254-3594
UNIVERSAL CORPORATION ANNOUNCES EARNINGS
RICHMOND, VA, May 5, 1999 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation, announced today that the company's earnings remain on course for
the year although, on a comparative basis, results for the quarter ended March
31, 1999, are slightly lower. Net income for the three-month period ended March
31, 1999, was $29.4 million, or 88 cents per diluted share, compared to $31.5
million, or 89 cents per diluted share, for 1998's third quarter. For the nine
months, net income was $97.8 million, or $2.90 per share, compared to $102.4
million, or $2.89 per share, in fiscal year 1998. Gross revenues for the quarter
were higher at $1.22 billion compared to $1.15 billion last year, and for the
nine months were $3.40 billion versus $3.44 billion a year ago.
During both the quarter and the nine-month period, tobacco earnings
comparisons were negatively impacted by a number of factors including lower
volumes handled in Brazil out of the smaller 1998 flue-cured and burley crops
and quality issues in Argentina. Timing of shipments was also a factor in a
number of regions.
Earnings were higher in the United States for the quarter due to larger
volumes processed and increased export shipments. For the nine months, however,
U. S. earnings declined, despite larger volumes handled, due to the mix of
business including lower export shipments and a reduction in the quantity of
tobacco processed for the stabilization pools. Differences in the timing of
shipments reduced quarterly earnings from Africa and delayed recognition of
Oriental leaf sales from a number of origins. Dark tobacco results were down for
the quarter and for the nine months reflecting a slowdown in filler and binder
sales and leaf quality problems in Indonesia and Brazil due to adverse weather.
Shipment delays also impacted these operations in the quarter.
Non-tobacco earnings were up for both the quarter and the nine months
due primarily to improving lumber and building products margins and higher
plywood and hardwood prices. Last year, lumber results were adversely impacted
by simultaneous declines in softwood, hardwood and plywood prices. Sales volumes
continued to be below levels for the comparable periods a year ago due to the
disruption of construction activity in Holland caused by excessive rains over
the past six months. The performance of on-going agri-products operations was
comparable to last year's good results .
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The company's earnings for the quarter and the nine months also
benefited from lower borrowing levels, which reduced interest expense, and a
lower tax rate. As of March 31, 1999, total debt, excluding customer advances,
had declined by about $170 million compared to March 31, 1998. The effective tax
rate was 34 percent in the quarter and 36 percent for the nine months reflecting
the expected mix of foreign and domestic earnings, the realization of tax
benefits and management's continuing assessment of outstanding tax issues. The
company's effective tax rate in fiscal year 1998 was approximately 40 percent.
On April 27, 1999, a subsidiary of Universal announced the
rationalization and consolidation of several operations in the United States.
The actions are expected to provide greater efficiency and yield annual savings
that are at least equal to their cost. The cost of the consolidation is
estimated to be between $3 million and $4 million before taxes. The Company
believes that it will recognize those costs primarily in its fourth fiscal
quarter.
For the year to date, the company has continued to perform well despite
considerable market uncertainty. Margins in some areas have been pressured by
excess leaf supply, occasioned by financial and economic conditions in Southeast
Asia and the former Soviet Union, declining consumption in the United States and
a general buildup in uncommitted inventories. However, management believes that
as a result of its "right sizing" policy, the company has held its inventories
to appropriate levels and has not been forced to take significant write-downs in
order to dispose of excess stocks or to reflect the current market values of
those stocks. At the same time, management has continued efforts to reduce
costs, improve efficiency, and strengthen strategic partnerships. As a result of
the success of these efforts, management continues to expect that 1999 will be a
good year for the company and that it will achieve earnings from ongoing
operations in line with management's current projections.
Through April 15, 1999, Universal had purchased 2,756,875 shares of the
company's stock for $94.7 million pursuant to a share repurchase program first
announced in May 1998. A total of $200 million has been authorized for that
program.
The company cautions readers that the statements contained herein
regarding expected earnings 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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<TABLE>
UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands, except per-share amounts)
Three Months
1999 1998
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<S> <C> <C>
Sales and other operating revenues $1,222,814 $1,152,696
Costs and expenses
Cost of goods sold 1,080,062 995,291
Selling, general and administrative 87,631 90,952
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Operating income
Equity in pretax earnings of unconsolidated affiliates 5,239 5,599
Interest expense 12,848 16,585
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Income before income taxes and other items
Income taxes 15,962 21,192
Minority interests 2,196 2,729
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Net income $ 29,354 $ 31,546
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Earnings per share $.88 $.89
Diluted earnings per share $.88 $.89
Denominator for earnings per share (weighted average shares)
Basic 33,193,954 35,298,742
Diluted 33,206,198 35,568,970
</TABLE>
See accompanying notes.
-- M O R E --
<PAGE>
<TABLE>
UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands, except per-share amounts)
<CAPTION>
Nine Months
1999 1998
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<S> <C> <C>
Sales and other operating revenues $3,399,818 $3,441,009
Costs and expenses
Cost of goods sold 2,951,950 2,969,702
Selling, general and administrative 251,615 256,531
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Operating income
Equity in pretax earnings of unconsolidated affiliates 7,021 10,856
Interest expense 41,536 46,266
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Income before income taxes and other items
Income taxes 58,226 71,189
Minority interests 5,677 5,773
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Net income $ 97,835 $ 102,404
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Earnings per share $2.90 $2.91
Diluted earnings per share $2.90 $2.89
Denominator for earnings per share (weighted average shares)
Basic 33,722,844 35,202,716
Diluted 33,772,047 35,428,867
</TABLE>
See accompanying notes.
-- M O R E --
<PAGE>
NOTES
1.) The operations of domestic and foreign tobacco, lumber and building
products, and agri-products are seasonal. Therefore, the results of operations
for the periods ended March 31, 1999, are not necessarily indicative of results
to be expected for the year ending June 30, 1999. All adjustments necessary to
state fairly the results for such period have been included and were of a normal
recurring nature. Certain amounts in prior year statements have been
reclassified to conform to current year's presentation.
2.)Contingencies: At March 31, 1999, total exposure under guarantees issued for
banking facilities of unconsolidated affiliates was approximately $14 million.
Other contingent liabilities approximate $41 million and relate principally to
performance bonds, Common Market guarantees, and accounts receivable sold with
recourse. 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 proposed adjustments, including penalties and interest,
approximate $40 million; however, recent currency fluctuations and possible
interest rate changes could affect that amount. The company believes the
Brazilian tax returns filed were in compliance with the applicable tax code. The
numerous proposed adjustments vary in complexity and amounts. 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. At March 31, 1999, the company had outstanding short-term loans of
$43 million and long-term loans of $17 million to a farmer cooperative in
Argentina. The loans are secured by tobacco and liens on real property,
processing machinery and equipment and other assets of the cooperative. Upon
export of the tobacco, which is usually in less than twelve months, the
short-term loans should be recovered. The long-term loans are scheduled for
repayment over the next nine years. Ultimate collection of the loans is
contingent upon the ability of the farmers to produce competitively priced
tobacco suitable for export, the financial management of the cooperative and the
value of the assets pledged as security for the loans.
3.) As of July 1, 1998, the company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). The adoption of
this statement had no impact on the company's net income or shareholders'
equity. SFAS 130 establishes new rules for the reporting and display of
comprehensive income and its components. SFAS 130 requires foreign currency
translation adjustments to be included in other comprehensive income. Amounts in
prior year financial statements have been reclassified to conform to SFAS 130.
Three Months Nine Months
Periods ended March 31, 1999 1998 1999 1998
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(in millions)
Net income $29 $32 $97 $102
Foreign currency translation adjustment (4) (7) 6 (13)
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Comprehensive income $25 $25 $103 $89
4) The lower estimated effective tax rate in fiscal year 1999 is due to the
anticipated mix of foreign and domestic earnings, realization of tax benefits,
and management's current assessment of pending and contested tax issues.
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