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 Immediately
Phone: (804) 359-9311
Fax: (804) 254-3594
Email: investor@universalleaf.com
Universal Corporation Reports Fiscal Year Earnings
Richmond, VA, August 2, 2001 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation (NYSE: UVV), announced today that net earnings for the fiscal year
ended June 30, 2001, were $112.7 million or $4.08 per diluted share. In its
fourth fiscal quarter, the company earned $24.0 million or $.87 per diluted
share. Results for the quarter and the year included restructuring charges of
approximately $8.7 million before taxes ($5.6 million after taxes or $.21 per
diluted share). During the prior fiscal year, the company earned $113.8 million
($3.77 per diluted share) for the year and $19.7 million ($.69 per diluted
share) for the quarter. Last year's fourth quarter results included
restructuring charges of $11.0 million ($.25 per diluted share after taxes),
which reduced annual results by $.23 per diluted share after taxes.
"We are very pleased with our performance in a year when the company
has continued to rationalize its operations around the world in response to a
changing market environment," said Mr. Harrell. As a result of reductions in the
size of and prospects for the tobacco crop in Poland, the company will close one
processing plant there and streamline its agronomy and leaf purchasing
operations. In addition, direct contracting with farmers led by major domestic
manufacturers in the United States has caused the company to restructure its
leaf purchasing operations, necessitating a reduction in personnel in the United
States. Management expects these actions to provide the operational efficiencies
necessary to retain the company's position as leading leaf merchant in both
markets. Accordingly, in its fourth fiscal quarter, Universal recognized
restructuring charges of almost $9 million before taxes.
Revenues declined from $3.4 billion in fiscal year 2000 to $3.0 billion
in the year ended June 30, 2001, primarily due to the effect of smaller U.S.
crops and the change in U.S. market structure. Manufacturers purchased a
significant portion of the U.S. burley crop directly from growers under contract
arrangements. Although that change caused a reduction in Universal's
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purchasing volumes, the company continued to process its normal share of the
crop. For the quarter, revenues were about $616 million compared to $585 million
in the prior year as African tobaccos were shipped later in this fiscal year.
Results for Universal's tobacco segment improved slightly compared to
last year. The favorable impact of increased volumes from the larger crops in
Africa was offset by the effect of smaller crops in the United States, Brazil,
Poland, and Hungary. The volume of tobacco that Universal processed in the
United States declined in fiscal year 2001 as a result of a 27% reduction in
U.S. flue-cured and burley crops. Shipment timing made comparisons for the
oriental tobacco joint venture more difficult during this fiscal year as old
crop shipments benefited results for fiscal year 2000. Market conditions
improved during the year in most areas, although a world oversupply of filler
grades of dark air-cured tobacco continues to have a negative effect on the
company's results. Earnings for the tobacco segment in the fourth quarter were
exceptionally strong as the large Zimbabwean crop was shipped later this year
than last, due to delays in marketing that crop. Carryover shipments of dark
tobacco also benefited the quarter, but these benefits were partially offset by
delays in shipments of Asian tobacco. The effects of smaller crops in Eastern
Europe also reduced results in the quarter.
Results in lumber and building products distribution improved in local
currency for the quarter and the year, but U.S. dollar earnings for the year
fell on translation as the euro weakened by 13%. During the fourth quarter, U.S.
dollar results for this operation improved, reflecting the continuation of
favorable sale trends and a smaller decline in the euro. Although tea markets
showed improvement during the year, results of the agri-products business lagged
last year's performance because of continued competitive pressures in sunflower
seeds and adverse conditions in the company's rubber markets.
Universal's stock repurchase program is continuing. Since May 1998, the
company has purchased over 9.3 million shares leaving approximately 27.2 million
shares outstanding at June 30, 2001. Of the $300 million authorized, the company
had spent about $253 million by June 30, 2001.
Mr. Harrell stated, "We are extremely pleased that the implementation
of our strategy and hard work by our employees around the world have continued
to provide the level and quality of earnings that we expect. Our operations have
performed very well in view of the changing market conditions."
He continued, "Turning to the future, the prospect of smaller crops
again for fiscal year 2002 in major exporting markets other than the United
States could mean less than optimal supply in some areas. We continue to be
concerned about political and economic conditions in Zimbabwe; however, the
current crop is adequate to meet demand this year, and it is being delivered to
the markets. Early data on seed sales suggest that next year's Zimbabwe crop
will be similar in size to that of this year. U.S. crops are expected to be
stable for the first time since 1997. We recently announced our decision to
invest over $130 million in a new
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state-of-the-art processing facility and the upgrade of a second facility in the
United States to ensure that we can meet our customers' requirements at the
highest level of efficiency. These facilities will become fully operational in
fiscal years 2003 and 2004. We are confident that continued implementation of
our strategy will lead to another 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, 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.
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JUNE 30
(Dollars in thousands, except per-share amounts)
2001 2000
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Sales and other operating revenues $615,584 $585,321
Costs and expenses
Cost of goods sold 470,091 445,616
Selling, general and administrative 87,147 84,719
Restructuring costs 8,745 10,958
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Operating income 49,601 44,028
Equity in pretax earnings of unconsolidated affiliates 4,597 4,424
Interest expense 14,486 16,395
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Income before income taxes and other items 39,712 32,057
Income taxes 13,170 11,510
Minority interests 2,567 850
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Net income $23,975 $19,697
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Earnings per share $.88 $.69
Diluted earnings per share $.87 $.69
Denominator for earnings per share (weighted
average shares)
Basic 27,351,929 28,532,200
Diluted 27,525,358 28,533,683
See accompanying notes.
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UNIVERSAL CORPORATION
UNAUDITED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30
(Dollars in thousands, except per-share amounts)
2001 2000
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Sales and other operating revenues $3,017,579 $3,405,987
Costs and expenses
Cost of goods sold 2,486,275 2,862,616
Selling, general and administrative 283,777 298,489
Restructuring costs 8,745 10,958
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Operating income 238,782 233,924
Equity in pretax earnings of unconsolidated affiliates 10,189 12,532
Interest expense 61,576 56,869
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Income before income taxes and other items 187,395 189,587
Income taxes 66,336 68,221
Minority interests 8,390 7,561
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Net income $ 112,669 $ 113,805
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Earnings per share $4.09 $3.77
Diluted earnings per share $4.08 $3.77
Denominator for earnings per share (weighted
average shares)
Basic 27,534,027 30,199,037
Diluted 27,644,525 30,205,017
See accompanying notes.
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NOTES
1. Presentation
Certain amounts in prior year statements have been reclassified to conform
to current year's presentation.
2. Contingencies
At June 30, 2001, total exposure under guarantees issued for banking
facilities of suppliers was approximately $39 million. Other contingent
liabilities approximated $42 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
$18 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. Reportable Segment Data (in thousands)
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Sales and other operating revenues Three months Year
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Periods ended June 30, 2001 2000 2001 2000
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Tobacco $378,931 $329,788 $2,062,080 $2,376,869
Lumber and building products 127,033 134,958 498,615 543,850
Agri-products 109,620 120,575 456,884 485,268
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Total $615,584 $585,321 $3,017,579 $3,405,987
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Operating income Three months Year
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Periods ended June 30, 2001 2000 2001 2000
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Tobacco $58,632 $53,390 $239,557 $234,429
Lumber and building products 7,596 6,335 25,527 26,029
Agri-products 2,230 3,649 13,703 14,403
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Total segments $68,458 $63,374 $278,787 $274,861
Less: Corporate expenses 5,515 3,964 21,071 17,447
Equity in pretax earnings of
unconsolidated affiliates 4,597 4,424 10,189 12,532
Restructuring costs 8,745 10,958 8,745 10,958
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Operating income $49,601 $44,028 $238,782 $233,924
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