UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| x | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
For the Period Ended December 31, 2003
OR
| ¨ | Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
For the Transition Period From to
Commission file number 1-652
UNIVERSAL CORPORATION
(Exact name of Registrant as specified in its charter)
| VIRGINIA | 54-0414210 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
| 1501 North Hamilton Street, Richmond, Virginia | 23230 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code - (804) 359-9311
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock as of the latest practicable date:
Common Stock, no par value – 25,141,364 shares outstanding as of January 30, 2004
PART I. FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Three and Six Months Ended December 31, 2003 and 2002
(In thousands of dollars, except share and per share data)
| THREE MONTHS |
SIX MONTHS |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Sales and other operating revenues |
$ | 801,011 | $ | 708,578 | $ | 1,587,612 | $ | 1,365,854 | ||||||||
| Costs and expenses |
||||||||||||||||
| Cost of goods sold |
640,893 | 576,644 | 1,287,901 | 1,102,215 | ||||||||||||
| Selling, general and administrative expenses |
83,621 | 74,942 | 163,560 | 142,141 | ||||||||||||
| Restructuring costs |
— | — | — | 13,498 | ||||||||||||
| Operating income |
76,497 | 56,992 | 136,151 | 108,000 | ||||||||||||
| Equity in pretax earnings (loss) of unconsolidated affiliates |
(1,880 | ) | (1,448 | ) | 1,896 | 94 | ||||||||||
| Interest expense |
12,198 | 11,798 | 23,274 | 22,282 | ||||||||||||
| Income before income taxes and other items |
62,419 | 43,746 | 114,773 | 85,812 | ||||||||||||
| Income taxes |
22,471 | 15,528 | 41,318 | 30,463 | ||||||||||||
| Minority interests |
2,581 | 1,475 | 1,660 | 129 | ||||||||||||
| Net income |
$ | 37,367 | $ | 26,743 | $ | 71,795 | $ | 55,220 | ||||||||
| Earnings per common share - basic |
$ | 1.49 | $ | 1.04 | $ | 2.88 | $ | 2.14 | ||||||||
| Earnings per common share - diluted |
$ | 1.48 | $ | 1.04 | $ | 2.85 | $ | 2.13 | ||||||||
| Retained earnings - beginning of period |
$ | 592,673 | $ | 569,059 | ||||||||||||
| Net income |
71,795 | 55,220 | ||||||||||||||
| Cash dividends declared ($.75 - 2003, $.70 - 2002) |
(18,781 | ) | (17,891 | ) | ||||||||||||
| Purchase of common stock, net of shares issued |
(3,268 | ) | (31,591 | ) | ||||||||||||
| Retained earnings - end of period |
$ | 642,419 | $ | 574,797 | ||||||||||||
See accompanying notes.
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
| December 31, 2003 |
December 31, 2002 |
June 30, 2003 | |||||||
| (Unaudited) | (Unaudited) | ||||||||
| ASSETS |
|||||||||
| Current |
|||||||||
| Cash and cash equivalents |
$ | 135,793 | $ | 149,477 | $ | 44,659 | |||
| Accounts receivable |
356,835 | 222,338 | 370,784 | ||||||
| Advances to suppliers |
124,870 | 121,609 | 115,928 | ||||||
| Accounts receivable - unconsolidated affiliates |
6,681 | 4,243 | 7,595 | ||||||
| Inventories - at lower of cost or market: |
|||||||||
| Tobacco |
565,635 | 548,391 | 529,736 | ||||||
| Lumber and building products |
134,190 | 84,913 | 140,647 | ||||||
| Agri-products |
82,276 | 66,574 | 82,527 | ||||||
| Other |
28,969 | 28,973 | 30,377 | ||||||
| Prepaid income taxes |
4,031 | 18,109 | 12,375 | ||||||
| Deferred income taxes |
6,249 | 6,637 | 6,168 | ||||||
| Other current assets |
23,613 | 20,727 | 34,201 | ||||||
| Total current assets |
1,469,142 | 1,271,991 | 1,374,997 | ||||||
| Property, plant and equipment - at cost |
|||||||||
| Land |
59,105 | 34,631 | 57,310 | ||||||
| Buildings |
348,153 | 291,648 | 338,115 | ||||||
| Machinery and equipment |
689,277 | 575,700 | 639,157 | ||||||
| 1,096,535 | 901,979 | 1,034,582 | |||||||
| Less accumulated depreciation |
552,073 | 466,360 | 521,201 | ||||||
| 544,462 | 435,619 | 513,381 | |||||||
| Other assets |
|||||||||
| Goodwill and other intangibles |
132,853 | 125,629 | 132,903 | ||||||
| Investments in unconsolidated affiliates |
92,510 | 82,722 | 90,119 | ||||||
| Deferred income taxes |
51,900 | 47,085 | 45,466 | ||||||
| Other noncurrent assets |
89,085 | 89,835 | 86,208 | ||||||
| 366,348 | 345,271 | 354,696 | |||||||
| $ | 2,379,952 | $ | 2,052,881 | $ | 2,243,074 | ||||
See accompanying notes.
2
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
| December 31, 2003 |
December 31, 2002 |
June 30, 2003 |
||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current |
||||||||||||
| Notes payable and overdrafts |
$ | 172,393 | $ | 124,656 | $ | 265,742 | ||||||
| Accounts payable |
329,872 | 307,430 | 361,058 | |||||||||
| Accounts payable - unconsolidated affiliates |
4,783 | 4,159 | 2,073 | |||||||||
| Customer advances and deposits |
111,973 | 109,180 | 42,093 | |||||||||
| Accrued compensation |
30,691 | 17,730 | 31,959 | |||||||||
| Income taxes payable |
15,726 | 25,673 | 20,969 | |||||||||
| Current portion of long-term obligations |
64,418 | 183,365 | 100,387 | |||||||||
| Total current liabilities |
729,856 | 772,193 | 824,281 | |||||||||
| Long-term obligations |
775,358 | 514,527 | 614,994 | |||||||||
| Postretirement benefits other than pensions |
40,989 | 39,335 | 40,305 | |||||||||
| Other long-term liabilities |
98,059 | 74,432 | 96,522 | |||||||||
| Deferred income taxes |
18,691 | 25,387 | 12,348 | |||||||||
| Minority interests |
33,356 | 23,927 | 34,346 | |||||||||
| Shareholders’ equity |
||||||||||||
| Preferred stock, no par value, authorized 5,000,000 shares, none issued or outstanding |
||||||||||||
| Common stock, no par value, authorized 100,000,000 shares, 24,983,745 issued and outstanding shares (25,278,217 at December 31, 2002, and 24,920,083 at June 30, 2003) |
94,912 | 87,920 | 90,665 | |||||||||
| Retained earnings |
642,419 | 574,797 | 592,673 | |||||||||
| Accumulated other comprehensive loss |
(53,688 | ) | (59,637 | ) | (63,060 | ) | ||||||
| Total shareholders’ equity |
683,643 | 603,080 | 620,278 | |||||||||
| $ | 2,379,952 | $ | 2,052,881 | $ | 2,243,074 | |||||||
See accompanying notes.
3
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended December 31, 2003 and 2002
(In thousands of dollars)
| SIX MONTHS |
||||||||
| 2003 |
2002 |
|||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 71,795 | $ | 55,220 | ||||
| Depreciation |
26,000 | 23,000 | ||||||
| Amortization |
2,000 | 2,000 | ||||||
| Other adjustments to reconcile net income to net cash provided by operating activities |
(4,000 | ) | 14,000 | |||||
| Changes in operating assets and liabilities |
11,339 | (27,746 | ) | |||||
| Net cash provided by operating activities |
107,134 | 66,474 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchase of property, plant and equipment |
(38,000 | ) | (61,000 | ) | ||||
| Net cash used in investing activities |
(38,000 | ) | (61,000 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Repayment of short-term debt, net |
(93,000 | ) | (2,000 | ) | ||||
| Issuance of long-term debt |
203,000 | 138,000 | ||||||
| Repayment of long-term debt |
(69,500 | ) | — | |||||
| Issuance of common stock |
4,000 | — | ||||||
| Purchases of common stock |
(3,500 | ) | (32,000 | ) | ||||
| Dividends paid |
(19,000 | ) | (18,000 | ) | ||||
| Net cash provided by financing activities |
22,000 | 86,000 | ||||||
| Net increase in cash and cash equivalents |
91,134 | 91,474 | ||||||
| Cash and cash equivalents at beginning of year |
44,659 | 58,003 | ||||||