UNIVERSAL CORPORATION LOGO
P.O. Box 25099 Richmond, VA 23260 o phone: (804) 359-9311 o fax (804) 254-3594
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PRESS RELEASE
CONTACT RELEASE
Karen M. L. Whelan 4:30 p.m. Eastern Time
Phone: (804) 359-9311
Fax: (804) 254-3594
Email: investor@universalleaf.com
Universal Corporation Reports Higher Second Quarter Earnings
Richmond, VA, February 1, 2001 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation, announced today that the company's earnings improved in the second
quarter of fiscal year 2001, in line with management's expectation. Net income
for the three-month period ended December 31, 2000, was $27.9 million, or $1.01
per diluted share, compared to $26.1 million, or $.85 per diluted share, in the
second quarter of fiscal year 2000. Net income for the six months was $52.8
million, or $1.90 per diluted share, compared to $55.7 million, or $1.78 per
diluted share last year. Earnings per share in both periods benefited from a
reduction in the average shares outstanding as a result of the Company's
continuing share repurchase program. As of December 31, 2000, the Company had
purchased approximately 9 million shares, for a total cost of about $240 million
out of the $300 million authorized. Gross revenues were $1 billion dollars for
the quarter and $1.6 billion for the six months compared to $1 billion for the
three months and $1.8 billion for the first six months of fiscal year 2000.
Tobacco earnings were higher in the quarter and year to date primarily in
response to lower costs in the United States associated with operating fewer
processing facilities. Foreign tobacco operations continued to perform well,
although quarterly comparisons were impacted by delayed shipments from Zimbabwe
due to the late opening of the auctions in that country. Universal expects the
bulk of Zimbabwe's shipments to take place before the end of this fiscal year.
Dark tobacco volumes were negatively affected in the quarter by shipment delays.
Those shipments should occur later in this fiscal year.
Non-tobacco earnings grew slightly in the quarter but continued to lag last
year's performance for the six months. The appreciation of the dollar against
the euro (up 19% for the quarter and 16% for the six months) severely penalized
the company's lumber and building products operations, which are euro-based. In
euro terms, the overall performance of these operations was good. Agri-products
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Universal Corporation
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were higher in the quarter, reflecting improved market conditions for tea and
dried fruit and nuts. However, very competitive conditions for confectionery
sunflower seeds continued in the quarter and adversely affected results for the
quarter and the six months.
Commenting on the quarter, Mr. Harrell said, "We reported to you three months
ago that a number of factors were combining to increase the volatility of
quarterly earnings and to make quarterly earnings comparisons more difficult,
including timing of shipments and currency fluctuations, particularly the euro.
Nevertheless, we are pleased that in spite of these challenges, Universal was
able to achieve a good earnings performance in the quarter." Looking to the
remainder of the fiscal year, he noted, "World market conditions are beginning
to improve for tobacco as leaf demand appears to be strengthening and unsold
leaf inventories are declining. In addition, the U.S. dollar has weakened
against the euro recently, which suggests more favorable earnings translations
going forward for our lumber and building products distribution businesses.
Although uncertainties remain, we expect to have a successful year."
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, changes in market structure, 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 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, 2000, as filed with the Securities and
Exchange Commission. For more information, visit Universal's web site at
www.universalcorp.com.
At 9:00 a.m. (Eastern Time) on February 2, 2001, the company will host a
conference call to discuss these results. Those wishing to listen to the call
may do so by visiting www.streetevents.com or www.universalcorp.com at that
time. A replay of the call will also be available for seven days at those web
sites or by dialing 888-203-1112, pass code 717286.
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Universal Corporation
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED DECEMBER 31, 2000 AND 1999
(Dollars in thousands, except per-share amounts)
Three Months
2000 1999
----- ----
Sales and other operating revenues $995,062 $1,032,453
Costs and expenses
Cost of goods sold 853,756 891,657
Selling, general and administrative 78,151 81,389
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Operating income 63,155 59,407
Equity in pretax earnings of unconsolidated affiliates 523 (674)
Interest expense 17,279 14,764
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Income before income taxes and other items 46,399 43,969
Income taxes 15,550 15,829
Minority interests 2,987 1,992
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Net income $ 27,862 $ 26,148
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Earnings per share $1.02 $ .85
Diluted earnings per share $1.01 $ .85
Denominator for earnings per share (weighted average shares)
Basic 27,428,352 30,806,630
Diluted 27,528,106 30,809,151
See accompanying notes.
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Universal Corporation
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
(Dollars in thousands, except per-share amounts)
Six Months
2000 1999
---- ----
Sales and other operating revenues $1,645,827 $1,819,459
Costs and expenses
Cost of goods sold 1,382,938 1,552,708
Selling, general and administrative 147,798 155,763
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Operating income 115,091 110,988
Equity in pretax earnings of unconsolidated affiliates 1,872 5,922
Interest expense 32,108 26,540
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Income before income taxes and other items 84,855 90,370
Income taxes 30,548 32,533
Minority interests 1,480 2,187
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Net income $ 52,827 $ 55,650
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Earnings per share $1.90 $1.78
Diluted earnings per share $1.90 $1.78
Denominator for earnings per share (weighted average shares)
Basic 27,741,728 31,247,956
Diluted 27,794,335 31,258,548
See accompanying notes.
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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- and six-month periods ended December 31, 2000, are not
necessarily indicative of results to be expected for the year ending June
30, 2001. 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's financial statements have been reclassified to
conform to the current year's presentation.
2. Contingencies: At December 31, 2000, total exposure under guarantees issued
for banking facilities of unconsolidated affiliates and suppliers was
approximately $49 million. Other contingent liabilities approximated $17
million and related to performance bonds, value-added tax 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
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 (in thousands)
- ------------------------------------------------------ ----------------------------- -------------------------------
Three months Six months
- ------------------------------------------------------ ----------------------------- -------------------------------
Periods ended December 31, 2000 1999 2000 1999
- ------------------------------------------------------ ------------- --------------- -------------- ----------------
Net income $27,862 $26,148 $52,827 $55,650
Foreign currency translation adjustment (10,151) (4,661) (9,926) (3,838)
- ------------------------------------------------------ ------------- --------------- -------------- ----------------
Comprehensive income $17,711 $21,487 $42,901 $51,812
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4. Reportable segment data (in thousands)
- ------------------------------------------------- ------------------------------- --------------------------------
Sales and other operating revenues Three months Six months
- ------------------------------------------------- --------------- --------------- ---------------- ---------------
Periods ended December 31, 2000 1999 2000 1999
- ------------------------------------------------- --------------- --------------- ---------------- ---------------
Tobacco $758,076 $ 767,945 $1,160,321 $1,281,718
Lumber and building products 123,038 138,801 252,700 280,822
Agri-products 113,948 125,707 232,806 256,919
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Total $995,062 $1,032,453 $1,645,827 $1,819,459
================================================= =============== =============== ================ ===============
- --------------------------------------------------- ----------------------------- --------------------------------
Operating income Three months Six months
- --------------------------------------------------- ------------ ---------------- --------------- ----------------
Periods ended December 31, 2000 1999 2000 1999
- --------------------------------------------------- ------------ ---------------- --------------- ----------------
Tobacco $58,411 $52,964 $105,191 $102,213
Lumber and building products 6,100 6,724 13,750 15,533
Agri-products 4,053 3,578 7,810 8,636
------------ ---------------- --------------- ----------------
Total segments 68,564 63,266 126,751 126,386
Less: Corporate expenses 4,886 4,533 9,788 9,472
Equity in pretax earnings of
unconsolidated affiliates 523 (674) 1,872 5,922
- --------------------------------------------------- ------------ ---------------- --------------- ----------------
Operating income $63,155 $59,407 $115,091 $110,988
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