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Universal Corporation
P.O. Box 25099 Richmond, VA 23260 o phone: (804) 359-9311 o fax (804) 254-3594
PRESS RELEASE
CONTACT RELEASE
Karen M. L. Whelan Immediately
Phone: (804) 359-9311
Fax: (804) 254-3594
Email: [email protected]
Universal Corporation Reports Fiscal Year Earnings
Richmond, VA, August 10, 2000 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation, announced today that earnings for the company's fiscal year
that ended on June 30, 2000, were $113.8 million or $3.77 per diluted
share. In its fourth fiscal quarter, the company earned $19.7 million or
$.69 per diluted share. Results for the quarter and the year included
restructuring charges of approximately $11 million before taxes ($7
million after taxes or $.23 per diluted share for the year). During the
prior fiscal year, the company earned $127.3 million ($3.80 per diluted
share) for the year and $29.4 million ($.91 per diluted share) for the
quarter.
Revenues declined from $4 billion in fiscal year 1999 to $3.4 billion
in the year that ended on June 30, 2000. The decline was mainly
attributable to the lower volumes of U.S. tobacco handled from smaller
U.S. crops. For the quarter, revenues were up slightly to about $614
million from $605 million in the prior year.
Although earnings from the company's tobacco operations were down for
both the quarter and the fiscal year, management believes that the company
performed well under the difficult conditions that have characterized
world tobacco markets during the year. The volume of tobacco that
Universal purchased and processed in the United States declined
significantly as a result of much smaller U. S. flue-cured and burley
crops. Total U.S. flue-cured and burley marketings during the company's
fiscal year 2000 declined by 14% compared to the previous year. On the
other hand, the company's aggregate volumes of flue-cured and burley
tobaccos handled from markets outside the United States increased for the
year, led by Brazil, which had a large flue-cured crop. African volumes
were lower due to smaller crops in Zimbabwe and Tanzania. Dark tobacco
volumes were adversely affected by delayed shipments from Indonesia and
the Dominican Republic, and by the lower quality of Indonesian wrapper and
binder tobaccos.
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The weakness in U.S. markets and prospects for a continuing decline in
U.S. crops, as they continue to be less competitive in world markets, led
the company to close some operations in the United States and to reduce
its workforce. These closures, while painful, were necessary to better
match Universal's production capacity with the anticipated smaller crops.
Accordingly, Universal recognized a restructuring charge of almost $11
million before taxes in its fourth fiscal quarter.
Results in lumber and building products distribution continue to
demonstrate good growth due to improved volumes despite the continued
impact of a strong U. S. dollar on both revenues and earnings of this
guilder-based operation. Results of the agri-products business lagged last
year's performance because of adverse conditions in world markets for tea
and confectionery sunflower seeds, which affected both volumes and
margins. Low world prices and reduced sales to Russia and the Middle East
affected tea markets, while severe price competition from Argentina and
China contributed to the decline in confectionery sunflower seeds.
Universal's stock repurchase program is continuing. Since May 1998, the
company has purchased nearly 8 million shares leaving approximately 28.1
million shares outstanding at June 30, 2000. Of the $300 million
authorized, the company has spent $211.6 million.
Mr. Harrell stated, "Universal has performed extremely well this year,
given the very challenging environment. But for the restructuring costs,
earnings per share would have been well ahead of those of fiscal year
1999. Revenues have suffered in response to the impact on leaf demand of
continuing economic difficulties in parts of Asia and the former Soviet
Union and higher cigarette prices and excise taxes in the United States.
While current world leaf production is lower, large unsold stocks held by
the U.S. Stabilization Cooperative and some dealers have created very
competitive conditions. We are cautiously optimistic about our growth
prospects for the coming year. We see some potential for improvement in
demand from Asia, Russia, and Eastern Europe, and the rate of decline in
U.S. cigarette sales has diminished. These factors, together with lower
crops in some production areas, could help reduce excess supplies.
Although we are concerned about the political and economic turmoil in
Zimbabwe, at this time we do not anticipate any significant impact on
fiscal year 2001 earnings. Conditions in our lumber and building products
business are good with strong volume although the continued strength of
the U.S. dollar could adversely affect their results. That we have done so
well in today's environment is a credit to our dedicated employees and
strong customer relationships."
The company cautions readers that any forward-looking statements
contained herein are based upon management's current knowledge and
assumptions about future events, including anticipated levels of demand
for and supply of the company's products and services, costs incurred in
providing these products and services, timing of shipments to customers,
and general economic, political, market, and weather conditions. Lumber
and building products earnings are also affected by changes in exchange
rates between the U.S. dollar and the guilder (Euro). Actual results,
therefore, could vary from those expected. For more details on factors
that could affect expectations, see the Management's Discussion and
Analysis section of the company's Annual Report on Form 10-K for the year
ended June 30, 1999, as filed with the Securities and Exchange Commission.
For more information, visit Universal's web site at www.universalcorp.com.
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<TABLE>
UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JUNE 30, 2000 AND 1999
(Dollars in thousands, except per-share amounts)
<CAPTION>
Three Months
2000 1999
----- ----
<S> <C> <C>
Sales and other operating revenues $614,114 $605,085
Costs and expenses
Cost of goods sold 454,535 442,469
Selling, general and administrative 104,593 104,313
Restructuring costs 10,958
-------- --------
Operating income 44,028 58,303
Equity in pretax earnings of unconsolidated affiliates 4,424 7,045
Interest expense 16,395 15,301
-------- --------
Income before income taxes and other items 32,057 50,047
Income taxes 11,510 17,737
Minority interests 850 2,869
-------- --------
Net income $ 19,697 $ 29,441
======== ========
Earnings per share $.69 $.91
Diluted earnings per share $.69 $.91
Denominator for earnings per share (weighted average shares)
Basic 28,532,200 32,574,621
Diluted 28,533,683 32,587,722
See accompanying notes.
</TABLE>
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<TABLE>
UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
(Dollars in thousands, except per-share amounts)
<CAPTION>
Year
2000 1999
---- ----
<S> <C> <C>
Sales and other operating revenues $3,430,762 $4,004,903
---------- ----------
Costs and expenses
Cost of goods sold 2,832,750 3,394,419
Selling, general and administrative 353,130 355,928
Restructuring costs 10,958
---------- ----------
Operating income 233,924 254,556
Equity in pretax earnings of unconsolidated affiliates 12,532 14,066
Interest expense 56,869 56,837
---------- ----------
Income before income taxes and other items 189,587 211,785
Income taxes 68,221 75,963
Minority interests 7,561 8,546
---------- ----------
Net income $ 113,805 $ 127,276
========== ==========
Earnings per share $3.77 $3.81
Diluted earnings per share $3.77 $3.80
Denominator for earnings per share (weighted average shares)
Basic 30,199,037 33,436,575
Diluted 30,205,017 33,476,753
</TABLE>
See accompanying notes.
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NOTES
1. Certain amounts in prior year statements have been reclassified to
conform to current year's presentation.
2. Contingencies: At June 30, 2000, total exposure under guarantees
issued for banking facilities of unconsolidated affiliates and
suppliers was approximately $53 million. Other contingent liabilities
approximate $30 million. 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 contingent
liability, including penalties and interest, approximates $23 million.
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.
3. Comprehensive Income
<TABLE>
<CAPTION>
Periods ended June 30 Three months Year
------------ ----
(in thousands) 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $19,697 $29,441 $113,805 $127,276
Foreign currency translation adjustment (7,095) (12,508) (21,140) (6,453)
------- ------- -------- --------
Comprehensive income $12,602 $16,933 $ 92,665 $120,823
======= ======= ======== ========
4. Reportable Segment Data (in thousands)
Sales and other operating revenues Three months Year
------------ ----
Periods ended June 30, 2000 1999 2000 1999
---- ---- ---- ----
Tobacco $358,582 $340,237 $2,401,644 $2,944,762
Lumber and building products 134,957 138,286 543,850 547,794
Agri-products 120,575 126,562 485,268 512,347
-------- -------- ---------- ----------
Total $614,115 $605,085 $3,430,762 $4,004,903
======== ======== ========== ==========
Operating income Three months Year
------------ ----
Periods ended June 30, 2000 1999 2000 1999
---- ---- ---- ----
Tobacco $42,432 $57,870 $223,471 $240,561
Lumber and building products 6,335 6,584 26,029 24,427
Agri-products 3,649 3,918 14,403 17,538
------- ------- -------- --------
Total segments 52,416 68,372 263,903 282,526
Less: Corporate expenses 3,964 3,024 17,447 13,904
Equity in pretax earnings of
unconsolidated affiliates 4,424 7,045 12,532 14,066
------- ------- -------- --------
Operating income $44,028 $58,303 $233,924 $254,556
======= ======= ======== ========
</TABLE>
5. During the quarters ended June 30, 2000 and 1999, the company recorded
approximately $7 million and $6 million, respectively, in charges
related to tobacco inventory valuation. Such charges were
approximately $10 million for each of fiscal years 2000 and 1999.
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