RICHMOND, Va., May 23, 2018 /PRNewswire/ -- George C. Freeman, III, Chairman, President, and
Chief Executive Officer of Universal Corporation (NYSE: UVV),
reported that net income for the fiscal year ended March 31, 2018, was $105.7
million, or $4.14 per diluted
share, compared with $106.3 million,
or $0.88 per diluted share for the
same period of the prior fiscal year. The fiscal year 2017
results included a one-time reduction of earnings available to
common shareholders of $74.4 million,
or $2.99 per diluted share, from the
conversion for cash of the remaining outstanding shares of our
Series B 6.75% Convertible Perpetual Preferred Stock under the
mandatory conversion in January 2017.
That reduction, the effect of a reduction in income tax expense
from the enactment of the Tax Cuts and Jobs Act in December 2017, and certain other non-recurring
items are detailed in Other Items below. Excluding those items,
diluted earnings per share for fiscal year 2018 of $3.96 decreased by $0.01 compared to the same period last year.
Operating income of $171.5 million
for the year ended March 31, 2018,
decreased by $6.9 million compared to
the year ended March 31, 2017.
Segment operating income was $180.6
million for the year ended March 31,
2018, a decrease of $7.9
million, compared to the year ended March 31, 2017, as improved results in our Other
Regions and Other Tobacco Operations segments were offset by
declines in our North America
segment. Revenues of $2.0 billion for
fiscal year 2018 were down only 1.8% compared to fiscal year 2017,
as lower volumes, primarily in Africa, were largely offset by higher sales
prices and processing revenues.
Net income for the fourth quarter ended March 31, 2018, was $30.5
million, or $1.20 per diluted
share, compared with net income for the prior year's fourth fiscal
quarter of $32.9 million, or a loss
of $1.64 per diluted share. Results
for the quarter ended March 31, 2017,
also included the one-time reduction of earnings available to
common shareholders of $74.4 million,
or $2.90 per diluted share, discussed
above. That one-time reduction and certain other non-recurring
items are detailed in Other Items below. Excluding those items,
diluted earnings per share for the quarter ended March 31, 2018, of $1.44 increased by $0.16 compared to the same period last year.
Operating income of $60.3 million for
the quarter ended March 31, 2018, was
up $0.5 million compared to the
quarter ended March 31, 2017. Segment
operating income was $62.8 million
for the fourth quarter of fiscal year 2018, an increase of
$2.3 million, compared to the same
period last fiscal year, on modest improvements in the Other
Regions and Other Tobacco Operations segments, partially offset by
declines in the North America
segment. Consolidated revenues decreased by $42.5 million to $607.5
million for the three months ended March 31, 2018, compared to the same period in
the prior year, on lower sales volumes, partly offset by higher
processing revenues and green leaf prices.
Mr. Freeman stated, "We are pleased with our good results for
fiscal year 2018. Net income remained steady at about $106 million, despite modestly lower lamina
volumes and a slight decline in operating income to $171 million, compared to fiscal year 2017. We
also continued to grow our market share and expand the services we
provide our customers, including gaining new multi-year processing
commitments in Brazil. In
addition, we rewarded our shareholders by increasing our dividend
rate last November and returning almost $55
million through dividends and repurchasing about
$22 million, or 2%, of our
outstanding common stock. Fiscal year 2018 was not without its
challenges as fewer carryover crop sales and shipment delays in
North America, African burley crop
sizes that were down more than 40% over the prior year, and a
$10 million reduction in income from
the timing of receipt of distributions of unconsolidated
subsidiaries compared to the prior fiscal year, negatively impacted
our results. However, we did benefit from a return to normal crop
volumes in Brazil, and the
resultant gains from higher volumes and lower factory unit costs
there.
"Although our working capital requirements were higher in fiscal
year 2018, we maintained our strong balance sheet. Our uncommitted
inventory levels, at March 31, 2018,
remained within our target range, and we are currently using some
of our cash balances to fund the fiscal year 2019 crop. We expect
our working capital requirements will be higher in fiscal year 2019
due to the recovery of the African burley crops and strong demand
for wrapper tobacco, which has a longer life cycle.
"The next crop cycle, which will be reflected in our fiscal year
2019 results, has begun with green tobacco purchases in
Brazil. Farmer deliveries there
are a little slower this year, but the crop quality is very good.
We are also seeing the recovery of African burley production
volumes and improved North American shipments, and if the global
leaf market remains stable, we expect higher total sales volumes
for fiscal year 2019.
"We are celebrating the 100th anniversary of our
company this year. For one hundred years, we have had a rich
history of adapting to change, finding innovative solutions to
serve our customers and meet their leaf tobacco needs, and
achieving results that benefit all of our stakeholders. Although we
operate in a mature industry, our mission is to remain the world's
leading independent leaf tobacco supplier. In recent years, we have
increased our market share and enhanced the range of services we
provide to certain customers, including direct buying, agronomic
support, and specialized processing services. We are continually
exploring options to capitalize on the strengths of our core
competencies and seek growth opportunities in and related to
tobacco and our global operations. As we move into our next 100
years, we will continue our commitment to leadership in setting
industry standards, operating with transparency, providing products
that are responsibly-sourced, and investing in and strengthening
the communities where we operate."
The Company also announced an enhanced capital allocation
strategy and an increased dividend in a separate press release
today.
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
OTHER REGIONS:
Operating income for the Other Regions segment improved by
$3.9 million to $147.3 million for the fiscal year ended
March 31, 2018, compared to the
fiscal year ended March 31, 2017. The
improvement was driven by lower selling, general, and
administrative expenses and higher processing revenues, largely
offset by lower sales volumes and other revenues from the receipt
of distributions from unconsolidated affiliates. In South America, total lamina sales volumes were
up for the fiscal year ended March 31,
2018, on higher current crop sales partly offset by reduced
carryover crop sales. The higher current year crop volumes also
increased processing revenues and improved margins from reduced
factory unit costs there. Results for the Africa region for the year ended March 31, 2018, compared to the prior year, were
down due to lower African burley production levels this year.
Earnings improved for the Asia
region primarily on stronger sales and for the Europe region on stronger sales and favorable
exchange rates. Selling, general, and administrative costs for the
segment were lower for fiscal year 2018, mostly from net foreign
currency remeasurement gains compared with losses in fiscal year
2017, partially offset by an unfavorable comparison due to the
reversal of value-added tax reserves in the second quarter of
fiscal year 2017. Revenues for the Other Regions segment for the
fiscal year ended March 31, 2018,
were up $59.2 million to $1.5 billion compared to the fiscal year ended
March 31, 2017, as higher sales
prices and processing revenues as well as a better product mix
offset lower sales volumes and other revenues from the receipt of
distributions from unconsolidated affiliates.
Segment operating income for the Other Regions segment for the
quarter ended March 31, 2018,
increased by $1.7 million to
$48.6 million, compared with the
fourth quarter of fiscal year 2017, principally on higher volumes
and better product mix in South
America. Improvements in the South
America region were largely offset by volume declines in the
Africa region due to lower burley
production in fiscal year 2018. Selling, general, and
administrative costs were slightly lower in the quarter ended
March 31, 2018, compared to quarter
ended March 31, 2017, mainly on lower
customer claims and an allowance on a value-added tax credit offset
by net foreign currency remeasurement losses compared with gains in
the prior year quarter. Revenues for the Other Regions segment
increased by $11.8 million to
$442.3 million for the quarter ended
March 31, 2018, compared to the
quarter ended March 31, 2017, as
higher sales prices and a more favorable product mix outweighed
volume declines.
NORTH AMERICA:
North America segment operating
income of $23.2 million for the year,
and $9.3 million for the quarter
ended March 31, 2018, were down by
$11.9 million and $4.4 million, respectively, compared with the
same periods in the previous year. The decline for the fiscal year
was driven by lower sales volumes. In the
United States, volumes were down primarily due to large
prior crop carryover sales last year and some delayed customer
shipments in the fourth fiscal quarter due to reduced
transportation availability, while results for Guatemala and Mexico were affected by lower volumes and less
favorable margins. In the quarter ended March 31, 2018, sales volumes were down compared
to the quarter ended March 31, 2017,
largely on the delayed customer shipments. Selling, general and
administrative costs were lower for both the year and quarter ended
March 31, 2018, compared with the
same periods in fiscal year 2017, on reduced compensation costs and
lower customer claims. Segment revenues were down by $107.7 million to $308.7
million and by $72.5 million
to $97.2 million, respectively, for
the year and quarter ended March 31,
2018, compared with the same periods in the prior fiscal
year, on the lower volumes.
OTHER TOBACCO OPERATIONS:
The Other Tobacco Operations segment operating income increased
by $0.1 million to $10.1 million for the year and by $5.0 million to $4.8
million for the quarter ended March
31, 2018, compared with the same periods last fiscal year.
For fiscal year 2018, earnings were lower for the dark tobacco
operations, compared to the prior fiscal year, mostly driven by
lower sales in Indonesia on the
lack of wrapper tobacco availability from the weather damaged crop.
Indonesian wrapper volumes and quality recovered in the subsequent
crop, which will be available for sale in fiscal year 2019.
Earnings were higher for the dark tobacco operations for the
quarter ended March 31, 2018,
compared to the quarter ended March 31,
2017, on higher sales volumes and better product mix.
Earnings for the oriental joint venture increased for the fiscal
year and quarter ended March 31,
2018, largely on higher sales volumes. Results for the joint
venture for fiscal year 2018 also included gains on the sale of
idle assets offset by higher currency remeasurement losses from the
devaluation of the Turkish lira. Operating results for the Special
Services group were up slightly for the year and quarter ended
March 31, 2018, compared with the
prior fiscal year periods. Selling, general, and administrative
costs for the segment were up modestly for fiscal year 2018
compared to fiscal year 2017 on higher currency remeasurement
losses, and were down marginally in the quarter ended March 31, 2018, compared to the same quarter in
the prior fiscal year. Revenues for the Other Tobacco Operations
segment increased by $11.3 million to
$243.1 million for the year and by
$18.1 million to $68.0 million for the quarter ended March 31, 2018, compared to the same periods in
fiscal year 2017, mainly on higher sales prices in our dark tobacco
operations.
OTHER ITEMS:
Cost of goods sold declined by about 1% to $1.7 billion and by about 8% to $491.0 million for the fiscal year and quarter
ended March 31, 2018, respectively,
compared with the same periods in fiscal year 2017. For both
periods, the decrease was in line with similar percentage declines
in revenues. Selling, general, and administrative costs decreased
by $11.5 million to $200.5 million and by $2.6
million to $56.2 million for
the year and quarter ended March 31,
2018, respectively, compared to the prior fiscal year
periods. The decrease in fiscal year 2018 was largely on net
foreign currency remeasurement gains compared with losses in fiscal
year 2017, mainly in Africa,
partly offset by an unfavorable comparison due to the reversal of
value-added tax reserves in the second quarter of fiscal year 2017.
In the quarter ended March 31, 2018,
the decline primarily reflected a combination of lower customer
claims and incentive compensation, largely offset by an allowance
on a value-added tax credit and by net foreign currency
remeasurement losses compared with gains in the prior year
quarter.
The consolidated effective income tax rates for the quarter and
year ended March 31, 2018, were
approximately 42% and 30%, respectively. Those rates include the
effects of the changes in U.S. corporate income tax law under the
Tax Cuts and Jobs Act of 2017 that were recorded under the SEC's
"provisional" classification upon enactment of the new law in the
third fiscal quarter ended December 31,
2017, as well as adjustments made to the "provisional"
accounting in the quarter ended March 31,
2018, due to the collection and analysis of additional
information for certain foreign subsidiaries, as well as additional
clarifying guidance issued with respect to the new law. The effects
of the new law mainly represent changes to deferred tax assets and
liabilities, as well as the reduction of the U.S. tax liability on
undistributed foreign earnings. As a result of the adjustments to
the earlier provisional accounting, our earnings for the quarter
ended March 31, 2018, included a
$6.0 million increase to income tax
expense ($0.24 per share), while our
earnings for the year ended March 31,
2018 included a $4.5 million
($0.18 per share) net reduction of
income tax expense from the new law after those adjustments. The
consolidated effective income tax rates for the quarter and fiscal
year ended March 31, 2017 were
approximately 35% and 34%, respectively. Income taxes for those
periods were lower than the 35% federal statutory rate at that
time, due to a combination of lower net effective tax rates on
income from certain foreign subsidiaries, and effects of changes in
local currency exchange rates on deferred income tax balances.
Going forward, our consolidated effective tax rate will be
heavily dependent on the tax rates of the individual countries in
which we operate, the mix of our pretax earnings from those
countries, and the prevailing rates of exchange of their local
currencies with the U.S. dollar. The mix of pretax earnings and
local currency exchange rates in particular can change
significantly between annual and quarterly reporting periods based
on crop sizes, market conditions, and economic factors. We expect
these changes will make our effective tax rate more volatile from
year-to-year and quarter-to-quarter than it has been in the past.
Based on our current mix of pretax earnings and current exchange
rates, our average effective tax rate should generally be in the
range of 28% to 32%. However, the actual effective tax rate could
be above or below this level, with significant variations possible
based on exchange rate changes.
In December 2016, 111,072 shares
of the Series B 6.75% Convertible Perpetual Preferred Stock were
converted into approximately 2.5 million shares of the Company's
common stock. In January 2017, the
Company completed a mandatory cash conversion of the remaining
107,418 outstanding shares of the preferred stock in accordance
with the original terms of the preferred shares. Although the
conversions of the preferred stock did not impact the Company's net
income, the cash conversions in January
2017 resulted in a one-time reduction of retained earnings
of approximately $74.4 million during
the fourth quarter ended March 31, 2017, and a corresponding
one-time reduction of earnings available to common shareholders for
the fiscal year ending March 31, 2017 for purposes of
determining the amounts reported for basic and diluted earnings per
share. The effects of the conversions on diluted earnings per share
for the fiscal year and three months ended March 31, 2017,
were ($2.99) and ($2.90), respectively.
Results for the year ended March 31,
2017 included restructuring and impairment costs of
$4.4 million ($0.10 per diluted share), and for the three
months ended March 31, 2017, included
restructuring costs of $0.5 million
($0.02 per diluted share).
Additional information
Amounts included in the previous discussion are attributable to
Universal Corporation and exclude earnings related to
non-controlling interests in subsidiaries. In addition, the total
for segment operating income (loss) referred to in this discussion
is a non-GAAP measure. This measure is not a financial measure
calculated in accordance with GAAP and should not be considered as
a substitute for net income (loss), operating income (loss), cash
from operating activities or any other operating performance
measure calculated in accordance with GAAP, and it may not be
comparable to similarly titled measures reported by other
companies. A reconciliation of the total for segment operating
income (loss) to consolidated operating income (loss) is provided
in Note 3. Segment Information, included in this earnings release.
The Company evaluates its segment performance excluding certain
significant charges or credits. The Company believes this measure,
which excludes items that it believes are not indicative of its
core operating results, provides investors with important
information that is useful in understanding its business results
and trends.
This information includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. The Company cautions readers that any statements contained
herein regarding earnings and expectations for its performance are
forward-looking statements based upon management's current
knowledge and assumptions about future events, including
anticipated levels of demand for and supply of its products and
services; costs incurred in providing these products and services;
timing of shipments to customers; changes in market structure;
government regulation, including the impact of regulations on
tobacco products; product taxation; changes in U.S. federal income
tax rates and legislation; industry consolidation and evolution;
changes in global supply and demand positions for tobacco products;
and general economic, political, market, and weather conditions.
Actual results, therefore, could vary from those expected. A
further list and description of these risks, uncertainties, and
other factors can be found in the Company's Annual Report on Form
10-K for the fiscal year ended March 31,
2017, and in other documents the Company files with the
Securities and Exchange Commission. This information should be read
in conjunction with the Annual Report on Form 10-K for the
fiscal years ended March 31, 2017, and March 31, 2018, which is expected to be filed
later this week.
At 5:00 p.m. (Eastern Time) on
May 23, 2018, 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 webcast will be available at that site
through August 6, 2018. A taped
replay of the call will be available through June 6, 2018, by dialing (855) 859-2056. The
confirmation number to access the replay is 1754119.
Headquartered in Richmond,
Virginia, Universal Corporation is the leading global leaf
tobacco supplier and conducts business in more than 30 countries.
Its revenues for the fiscal year ended March
31, 2018, were $2.0 billion.
For more information on Universal Corporation, visit its website at
www.universalcorp.com.
UNIVERSAL
CORPORATION
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(in thousands of
dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Fiscal Year
Ended
March 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Sales and other
operating revenues
|
|
$
|
607,496
|
|
|
$
|
650,030
|
|
|
$
|
2,033,947
|
|
|
$
|
2,071,218
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
490,999
|
|
|
530,845
|
|
|
1,661,999
|
|
|
1,676,539
|
Selling, general and
administrative expenses
|
|
56,219
|
|
|
58,868
|
|
|
200,461
|
|
|
211,969
|
Restructuring and
impairment costs
|
|
-
|
|
|
499
|
|
|
-
|
|
|
4,359
|
Operating
income
|
|
60,278
|
|
|
59,818
|
|
|
171,487
|
|
|
178,351
|
Equity in pretax
earnings of unconsolidated affiliates
|
|
2,489
|
|
|
149
|
|
|
9,125
|
|
|
5,774
|
Interest
income
|
|
324
|
|
|
281
|
|
|
1,686
|
|
|
1,397
|
Interest
expense
|
|
3,705
|
|
|
3,844
|
|
|
15,621
|
|
|
16,284
|
Income before income
taxes
|
|
59,386
|
|
|
56,404
|
|
|
166,677
|
|
|
169,238
|
Income
taxes
|
|
25,064
|
|
|
19,954
|
|
|
50,509
|
|
|
56,732
|
Net income
|
|
34,322
|
|
|
36,450
|
|
|
116,168
|
|
|
112,506
|
Less: net income
attributable to noncontrolling interests in
subsidiaries
|
|
(3,804)
|
|
|
(3,581)
|
|
|
(10,506)
|
|
|
(6,202)
|
Net income
attributable to Universal Corporation
|
|
30,518
|
|
|
32,869
|
|
|
105,662
|
|
|
106,304
|
Dividends on
Universal Corporation convertible perpetual
preferred stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11,061)
|
Cost in excess of
carrying value on conversion/repurchase of
convertible perpetual preferred
stock
|
|
-
|
|
|
(74,353)
|
|
|
-
|
|
|
(74,353)
|
Earnings (loss)
available to Universal Corporation common
shareholders
|
|
$
|
30,518
|
|
|
$
|
(41,484)
|
|
|
$
|
105,662
|
|
|
$
|
20,890
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Universal Corporation
common shareholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.21
|
|
|
$
|
(1.64)
|
|
|
$
|
4.18
|
|
|
$
|
0.89
|
Diluted
|
|
$
|
1.20
|
|
|
$
|
(1.64)
|
|
|
$
|
4.14
|
|
|
$
|
0.88
|
|
See accompanying
notes.
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
234,128
|
|
|
$
|
283,993
|
|
Accounts receivable,
net
|
|
377,119
|
|
|
439,288
|
|
Advances to suppliers,
net
|
|
122,786
|
|
|
103,750
|
|
Accounts
receivable-unconsolidated affiliates
|
|
2,040
|
|
|
2,373
|
|
Inventories-at lower
of cost or market:
|
|
|
|
|
Tobacco
|
|
679,428
|
|
|
565,943
|
|
Other
|
|
69,301
|
|
|
68,087
|
|
Prepaid income
taxes
|
|
16,032
|
|
|
16,713
|
|
Other current
assets
|
|
88,209
|
|
|
81,252
|
|
Total current
assets
|
|
1,589,043
|
|
|
1,561,399
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
Land
|
|
23,180
|
|
|
22,852
|
|
Buildings
|
|
271,757
|
|
|
266,802
|
|
Machinery and
equipment
|
|
634,660
|
|
|
597,213
|
|
|
|
929,597
|
|
|
886,867
|
|
Less accumulated
depreciation
|
|
(605,803)
|
|
|
(569,527)
|
|
|
|
323,794
|
|
|
317,340
|
|
Other
assets
|
|
|
|
|
Goodwill and other
intangibles
|
|
98,927
|
|
|
98,888
|
|
Investments in
unconsolidated affiliates
|
|
89,302
|
|
|
78,457
|
|
Deferred income
taxes
|
|
17,118
|
|
|
25,422
|
|
Other noncurrent
assets
|
|
50,448
|
|
|
41,899
|
|
|
|
255,795
|
|
|
244,666
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,168,632
|
|
|
$
|
2,123,405
|
|
|
See accompanying
notes.
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
45,421
|
|
|
$
|
59,133
|
|
Accounts payable and
accrued expenses
|
|
163,763
|
|
|
153,515
|
|
Accounts
payable-unconsolidated affiliates
|
|
16,072
|
|
|
7,231
|
|
Customer advances and
deposits
|
|
7,021
|
|
|
11,007
|
|
Accrued
compensation
|
|
27,886
|
|
|
32,007
|
|
Income taxes
payable
|
|
7,557
|
|
|
5,103
|
|
Current portion of
long-term debt
|
|
-
|
|
|
-
|
|
Total current
liabilities
|
|
267,720
|
|
|
267,996
|
|
|
|
|
|
|
Long-term
debt
|
|
369,086
|
|
|
368,733
|
|
Pensions and other
postretirement benefits
|
|
64,843
|
|
|
80,689
|
|
Other long-term
liabilities
|
|
45,955
|
|
|
31,424
|
|
Deferred income
taxes
|
|
35,726
|
|
|
47,985
|
|
Total
liabilities
|
|
783,330
|
|
|
796,827
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Universal
Corporation:
|
|
|
|
|
Preferred
stock:
|
|
|
|
|
Series A
Junior Participating Preferred Stock, no par value, 500,000 shares
authorized,
none issued or
outstanding
|
|
-
|
|
|
-
|
|
Common
stock, no par value, 100,000,000 shares authorized, 24,930,725
shares issued
and outstanding
(25,274,506 at March 31, 2017)
|
|
321,559
|
|
|
321,207
|
|
Retained
earnings
|
|
1,080,934
|
|
|
1,034,841
|
|
Accumulated other
comprehensive loss
|
|
(60,064)
|
|
|
(69,559)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,342,429
|
|
|
1,286,489
|
|
Noncontrolling
interests in subsidiaries
|
|
42,873
|
|
|
40,089
|
|
Total shareholders'
equity
|
|
1,385,302
|
|
|
1,326,578
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,168,632
|
|
|
$
|
2,123,405
|
|
|
See accompanying
notes.
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
116,168
|
|
|
$
|
112,506
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
34,836
|
|
|
35,911
|
|
Provision for losses
(recoveries) on advances and guaranteed loans to
suppliers
|
|
3,730
|
|
|
(857)
|
|
Inventory
write-downs
|
|
7,687
|
|
|
10,866
|
|
Stock-based
compensation expense
|
|
7,610
|
|
|
6,475
|
|
Foreign currency
remeasurement loss (gain), net
|
|
(184)
|
|
|
9,269
|
|
Deferred income
taxes
|
|
(11,132)
|
|
|
16,626
|
|
Equity in net income
of unconsolidated affiliates, net of dividends
|
|
(1,521)
|
|
|
396
|
|
Restructuring and
impairment costs
|
|
-
|
|
|
4,359
|
|
Other, net
|
|
(6,167)
|
|
|
(4,463)
|
|
Changes in
operating assets and liabilities, net:
|
|
(67,782)
|
|
|
59,227
|
|
Net
cash provided by operating activities
|
|
83,245
|
|
|
250,315
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(34,037)
|
|
|
(35,630)
|
|
Proceeds from sale of
property, plant and equipment
|
|
5,194
|
|
|
2,174
|
|
Other
|
|
(550)
|
|
|
(398)
|
|
Net
cash used by investing activities
|
|
(29,393)
|
|
|
(33,854)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
Issuance (repayment)
of short-term debt, net
|
|
(18,159)
|
|
|
(5,349)
|
|
Dividends paid to
noncontrolling interests in subsidiaries
|
|
(7,350)
|
|
|
(4,200)
|
|
Conversion of
convertible perpetual preferred stock
|
|
-
|
|
|
(178,365)
|
|
Repurchase of common
stock
|
|
(21,610)
|
|
|
-
|
|
Dividends paid on
convertible perpetual preferred stock
|
|
-
|
|
|
(11,061)
|
|
Dividends paid on
common stock
|
|
(54,699)
|
|
|
(49,828)
|
|
Other
|
|
(2,828)
|
|
|
(2,441)
|
|
Net
cash used by financing activities
|
|
(104,646)
|
|
|
(251,244)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
929
|
|
|
(671)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(49,865)
|
|
|
(35,454)
|
|
Cash and cash
equivalents at beginning of year
|
|
283,993
|
|
|
319,447
|
|
Cash and Cash
Equivalents at End of Year
|
|
$
|
234,128
|
|
|
$
|
283,993
|
|
|
Non-cash Financing
Transaction - The consolidated financial statements for the fiscal
year ended March 31, 2017 include a non-cash
reclassification of $107.6 million from preferred stock to common
stock to reflect the conversion of 111,072 shares of the
Company's
outstanding Series B 6.75% Convertible Perpetual Preferred Stock
into common stock.
|
|
See accompanying
notes.
|
NOTE 1. BASIS OF PRESENTATION
Universal Corporation, with its subsidiaries ("Universal" or the
"Company"), is the leading global leaf supplier. Because of the
seasonal nature of the Company's business, the results of
operations for any fiscal quarter will not necessarily be
indicative of results to be expected for other quarters or a full
fiscal year. All adjustments necessary to state fairly the results
for the period have been included and were of a normal recurring
nature. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2017.
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Fiscal Year
Ended
March 31,
|
(in thousands,
except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Basic Earnings
(Loss) Per Share
|
|
|
|
|
|
|
|
|
Numerator for
basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
Net income
attributable to Universal Corporation
|
|
$
|
30,518
|
|
|
$
|
32,869
|
|
|
$
|
105,662
|
|
|
$
|
106,304
|
|
Less: Dividends on
convertible perpetual preferred stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11,061)
|
|
Less: Cost in excess
of carrying value on conversion or repurchase of
convertible perpetual preferred
stock
|
|
-
|
|
|
(74,353)
|
|
|
-
|
|
|
(74,353)
|
|
Earnings (loss)
available to Universal Corporation common shareholders
for
calculation of basic earnings per
share
|
|
$
|
30,518
|
|
|
$
|
(41,484)
|
|
|
$
|
105,662
|
|
|
$
|
20,890
|
|
|
|
|
|
|
|
|
|
|
Denominator for
basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
25,125,776
|
|
|
25,273,741
|
|
|
25,274,975
|
|
|
23,433,860
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings (loss) per share
|
|
$
|
1.21
|
|
|
$
|
(1.64)
|
|
|
$
|
4.18
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share
|
|
|
|
|
|
|
|
|
Numerator for
diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
Earnings (loss)
available to Universal Corporation common shareholders
for
calculation of diluted earnings per
share
|
|
$
|
30,518
|
|
|
$
|
(41,484)
|
|
|
$
|
105,662
|
|
|
$
|
20,890
|
|
|
|
|
|
|
|
|
|
|
Denominator for
diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
25,125,776
|
|
|
25,273,741
|
|
|
25,274,975
|
|
|
23,433,860
|
|
Effect of dilutive
securities (if conversion or exercise assumed)
|
|
|
|
|
|
|
|
|
Employee and
outside director share-based awards
|
|
265,855
|
|
|
-
|
|
|
233,169
|
|
|
336,228
|
|
Denominator for
diluted earnings (loss) per share
|
|
25,391,631
|
|
|
25,273,741
|
|
|
25,508,144
|
|
|
23,770,088
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
$
|
1.20
|
|
|
$
|
(1.64)
|
|
|
$
|
4.14
|
|
|
$
|
0.88
|
|
NOTE 3. SEGMENT INFORMATION
The principal approach used by management to evaluate the
Company's performance is by geographic region, although the dark
air-cured and oriental tobacco businesses are each evaluated on the
basis of their worldwide operations. The Company evaluates the
performance of its segments based on operating income (loss) after
allocated overhead expenses, plus equity in the pretax earnings of
unconsolidated affiliates.
Operating results for the Company's reportable segments for each
period presented in the consolidated statements of income were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Fiscal Year
Ended
March 31,
|
(in thousands of
dollars)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
Flue-Cured and Burley
Leaf Tobacco Operations:
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
97,247
|
|
|
$
|
169,769
|
|
|
$
|
308,691
|
|
|
$
|
416,438
|
|
Other
Regions (1)
|
|
442,261
|
|
|
430,417
|
|
|
1,482,188
|
|
|
1,422,991
|
|
Subtotal
|
|
539,508
|
|
|
600,186
|
|
|
1,790,879
|
|
|
1,839,429
|
|
Other Tobacco
Operations (2)
|
|
67,988
|
|
|
49,844
|
|
|
243,068
|
|
|
231,789
|
|
Consolidated sales
and other operating revenues
|
|
$
|
607,496
|
|
|
$
|
650,030
|
|
|
$
|
2,033,947
|
|
|
$
|
2,071,218
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
Flue-Cured and Burley
Leaf Tobacco Operations:
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
9,333
|
|
|
$
|
13,747
|
|
|
$
|
23,220
|
|
|
$
|
35,151
|
|
Other
Regions (1)
|
|
48,641
|
|
|
46,950
|
|
|
147,263
|
|
|
143,349
|
|
Subtotal
|
|
57,974
|
|
|
60,697
|
|
|
170,483
|
|
|
178,500
|
|
Other Tobacco
Operations (2)
|
|
4,793
|
|
|
(231)
|
|
|
10,129
|
|
|
9,984
|
|
Segment operating
income
|
|
62,767
|
|
|
60,466
|
|
|
180,612
|
|
|
188,484
|
|
Deduct:
Equity in pretax earnings of unconsolidated
affiliates (3)
|
|
(2,489)
|
|
|
(149)
|
|
|
(9,125)
|
|
|
(5,774)
|
|
Restructuring and
impairment
costs (4)
|
|
-
|
|
|
(499)
|
|
|
-
|
|
|
(4,359)
|
|
Consolidated
operating income
|
|
$
|
60,278
|
|
|
$
|
59,818
|
|
|
$
|
171,487
|
|
|
$
|
178,351
|
|
|
|
(1)
|
Includes South
America, Africa, Europe, and Asia regions, as well as inter-region
eliminations.
|
|
|
(2)
|
Includes Dark
Air-Cured, Special Services, and Oriental, as well as intercompany
eliminations. Sales and other operating revenues for this
reportable segment include limited amounts for Oriental because the
business is accounted for on the equity method and its financial
results consist principally of equity in the pretax earnings of the
unconsolidated affiliate.
|
|
|
(3)
|
Equity in pretax
earnings of unconsolidated affiliates is included in segment
operating income (Other Tobacco Operations segment), but is
reported below consolidated operating income and excluded from that
total in the consolidated statements of income.
|
|
|
(4)
|
Restructuring and
impairment costs are excluded from segment operating income, but
are included in consolidated operating income in the consolidated
statements of income.
|
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SOURCE Universal Corporation