Universal Corporation Logo
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 5:00 p.m. Eastern Time
Phone: (804) 359-9311
Fax: (804) 254-3594
Email: investor@universalleaf.com
Universal Corporation Reports Third Quarter Earnings
Richmond, VA, May 3, 2001 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal Corporation,
announced today that the Company's net income for the third quarter which ended
March 31, 2001, was $35.9 million, or $1.31 per diluted share, compared to $38.5
million, or $1.29 per diluted share, a year ago. Third quarter earnings were
particularly strong last year due, in large part, to the acceleration of tobacco
shipments by customers, particularly from Africa. Third quarter comparisons this
year were impacted by tobacco shipment delays from Zimbabwe, Indonesia, and the
Dominican Republic as well as by lower volumes from the smaller U.S. crops. For
the nine months, net income was $88.7 million, or $3.20 per diluted share,
compared to $94.1 million, or $3.06 per diluted share, in the comparable period
of fiscal year 2000. The higher earnings per share for the quarter and the nine
months reflect the continued benefit from the Company's share repurchase
program. As of March 31, 2001, the Company had purchased 9.2 million shares for
$247 million out of the total $300 million program authorized by the Company's
Board of Directors. The Company had approximately 27.3 million shares
outstanding at the end of the quarter.
Gross revenues for the quarter and the nine months, respectively, were $756
million and $2.4 billion, compared to $1.0 billion and $2.8 billion last year.
The decline in revenues was due to a number of factors including shipment
timing; lower volumes handled in the United States, where crops have decreased
in response to lower demand; and the impact of the strong dollar on the
Company's Dutch lumber operations. In addition, fiscal year 2001 revenues have
been reduced as a result of the shift in the United States to direct purchasing
of leaf by manufacturers. Because the Company continued to process the tobacco,
the effect of this change on its results of operations was not material.
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In tobacco, Universal's world market share and competitive position remain very
strong. Tobacco earnings, however, for both the quarter and the nine-month
period were affected by shipment timing issues. Deliveries from Africa have been
delayed this year due to the late opening of the tobacco markets in Zimbabwe
last spring. Universal expects that the remaining African shipments will be
completed during this fiscal year. Some dark air-cured leaf shipments from
Indonesia and the Dominican Republic have also been postponed at the request of
customers. A number of these shipments could be deferred into the next fiscal
year. Nine-month comparisons were also affected by the inclusion last year of
the gain on the sale of a joint venture in the first quarter of fiscal year
2000.
Non-tobacco earnings declined slightly in the quarter and remained below last
year's levels for the nine months. In the agri-products group, Universal's tea,
merchandising, and dried fruit and nut distribution businesses had good
quarters, while confectionary sunflower seeds continued to suffer from very
competitive world market conditions. Lumber and building products results were
negatively impacted by the continued strength of the U. S. dollar in both the
three-month and nine-month periods.
The outlook for the remainder of the fiscal year is positive. The overall
tobacco market environment has improved due to a decrease in the unsold leaf
inventories that have been overhanging world markets for the last eighteen
months, and smaller flue-cured and burley crops in a number of countries. These
factors suggest a much improved supply and demand situation for the months
ahead. Attractive quality crops are currently being marketed in Brazil and
Zimbabwe, and good demand is now forecast for those crops. The situation in the
United States continues to be uncertain, with little likelihood that the actions
needed to reverse the downward trend in production and exports of U. S.
flue-cured and burley tobaccos will be forthcoming, which in part explains the
good demand the Company is experiencing in Brazil and Zimbabwe.
Universal's lumber and building products distribution companies will continue to
be significantly affected by the dollar/euro relationship. These companies have
continued to perform well this fiscal year despite the very strong appreciation
of the dollar. Conditions have been very challenging for a number of the
Company's agri-products companies but, overall, the group will have another
solid year.
While year end results can still be affected by a number of factors, including
shipment timing in the case of tobacco and currency fluctuations for the
Company's lumber distribution businesses, Universal now expects to achieve
earnings on a per share basis in the range of $3.95 to $4.15 per share.
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
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Management's Discussion 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 May 4, 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.universalcorp.com at that time. A replay of the call will also be
available for seven days at this web site or by dialing 888-203-1112, pass code
414443.
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED MARCH 31, 2001 AND 2000
(Dollars in thousands, except per-share amounts)
Three Months
2001 2000
---- ----
Sales and other operating revenues $756,168 $1,001,207
Costs and expenses
Cost of goods sold 605,880 846,271
Selling, general and administrative 76,198 76,028
------- -------
Operating income 74,090 78,908
Equity in pretax earnings of unconsolidated affiliates 3,720 2,186
Interest expense 14,982 13,934
------ ------
Income before income taxes and other items 62,828 67,160
Income taxes 22,618 24,178
Minority interests 4,343 4,524
------ ------
Net income $35,867 $38,458
======= =======
Earnings per share $ 1.32 $ 1.29
Diluted earnings per share $ 1.31 $ 1.29
Denominator for earnings per share (weighted average shares)
Basic 27,267,852 29,748,157
Diluted 27,431,200 29,749,409
See accompanying notes.
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000
(Dollars in thousands, except per-share amounts)
Nine Months
2001 2000
---- ----
Sales and other operating revenues $2,401,995 $2,820,666
Costs and expenses
Cost of goods sold 1,988,818 2,398,979
Selling, general and administrative 223,996 231,791
---------- ----------
Operating income 189,181 189,896
Equity in pretax earnings of unconsolidated affiliates 5,592 8,108
Interest expense 47,090 40,474
------ ------
Income before income taxes and other items 147,683 157,530
Income taxes 53,166 56,711
Minority interests 5,823 6,711
----- -----
Net income $88,694 $94,108
======= =======
Earnings per share $ 3.22 $ 3.06
Diluted earnings per share $ 3.20 $ 3.06
Denominator for earnings per share (weighted average shares)
Basic 27,586,075 30,751,659
Diluted 27,675,595 30,759,137
See accompanying notes.
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NOTES
1. The Company has seasonal operations in tobacco, lumber and building
products, and agri-products. Therefore, the results of operations for
the quarter and the nine months ended March 31, 2001, 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 March 31, 2001, total exposure under guarantees issued
for banking facilities of unconsolidated affiliates and suppliers was
approximately $45 million. Other contingent liabilities approximated $25
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 Nine months
- ------------------------------------------------------ ----------------------------- -------------------------------
Periods ended March 31, 2001 2000 2001 2000
------- ------- ------- --------
Net income $35,867 $38,458 $88,694 $ 94,108
Foreign currency translation adjustment 10,948 (10,207) 1,022 (14,045)
------- ------- ------- --------
Comprehensive income $46,815 $28,251 $89,716 $ 80,063
======= ======= ======= ========
4. Reportable segment data (in thousands)
Sales and other operating revenues Three months Nine months
- --------------------------------------------------- ----------------------------- --------------------------------
Periods ended March 31, 2001 2000 2001 2000
-------- ---------- ---------- ----------
Tobacco $522,828 $765,365 $1,683,149 $2,047,081
Lumber and building products 118,882 128,069 371,582 408,892
Agri-products 114,458 107,773 347,264 364,693
-------- ---------- ---------- ----------
Total $756,168 $1,001,207 $2,401,995 $2,820,666
======== ========== ========== ==========
Operating income Three months Nine months
- --------------------------------------------------- ----------------------------- --------------------------------
Periods ended March 31, 2001 2000 2001 2000
------- ------- -------- --------
Tobacco $75,734 $77,084 $180,925 $181,039
Lumber and building products 4,181 5,380 17,931 19,694
Agri-products 3,663 2,640 11,473 10,754
------- ------- -------- --------
Total segments 83,578 85,104 210,329 211,487
Less: Corporate expenses 5,768 4,010 15,556 13,483
Equity in pretax earnings of
unconsolidated affiliates 3,720 2,186 5,592 8,108
- --------------------------------------------------- ------------ ---------------- --------------- ----------------
Operating income $74,090 $78,908 $189,181 $189,896
- --------------------------------------------------- ------------ ---------------- --------------- ----------------
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