ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
FOR THE FISCAL YEAR ENDED MARCH 31, 2012 | ||
OR | ||
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
FOR THE TRANSITION PERIOD FROM ______________TO_______________ |
Virginia (State or other jurisdiction of incorporation or organization) | 54-0414210 (I.R.S. Employer Identification Number) | |
9201 Forest Hill Avenue, Richmond, Virginia (Address of principal executive offices) | 23235 (Zip Code) |
Title of each class Common Stock, no par value | Name of each exchange on which registered New York Stock Exchange |
Item No. | Page | |
A. | The Company |
• | Strategic market position. We work closely with both our customers and suppliers to ensure that we deliver a product that meets our customers' needs and promotes a strong sustainable supplier base. We believe that developing and maintaining these relationships is particularly valuable in the leaf tobacco industry where volume at an appropriate price is a key factor in long-term profitability. Balancing these relationships allows us to optimize our inventory levels to reduce risk during market downturns by enabling us to target our tobacco production contracts against customer purchase indications. Our challenge is to adapt our business model to meet our customers' evolving needs while continuing to provide stability of supply of compliant products and the high level of service that distinguishes our company. |
• | Strong local management. We operate with strong local management. We believe that having strong local management in each leaf tobacco origin helps us better identify and adjust to constantly changing market conditions and provides us with specific market knowledge quickly. We believe that this, coupled with global coordination, is a key factor in our ability to continue to deliver the high quality, competitively priced products that our customers expect. |
• | Compliant products. We focus on sourcing a compliant product that meets customer requirements in a competitive, yet sustainable manner. We sponsor programs to educate farmers in good agricultural practices, the reduction of non-tobacco related materials, product traceability, environmental sustainability, and social responsibility, among others. |
• | Diversified sources. We strive to maintain diversified sources of leaf tobacco to minimize reliance on any one sourcing area. We operate in over 30 countries on five continents and maintain a presence in all major flue-cured, burley, oriental, and dark air-cured tobacco growing regions in the world. Our global reach allows us to meet our customers' diverse and dynamic leaf requirements and helps minimize the impact of crop failures or other localized supply interruptions. |
• | Financial strength. We believe that our financial strength is important, because it enables us to fund our business efficiently and make investments in our business when appropriate opportunities are identified. We believe that lower interest and capital costs give us a competitive advantage. Our financial strength also affords us financial flexibility in dealing with customer requirements and market changes. We work to sustain our creditworthiness. |
B. | Description of Business |
C. | Employees |
D. | Research and Development |
E. | Patents, etc. |
F. | Government Regulation, Environmental Matters, and Other Matters |
• | trends in the global consumption of cigarettes, |
• | trends in sales of cigars and other tobacco products, and |
• | levels of competition among our customers. |
• | weather and natural disasters, including any adverse weather conditions that may result from climate change, |
• | crop infestation and disease, |
• | availability of crop inputs, |
• | volume of annual tobacco plantings and yields realized by farmers, |
• | farmer elections to grow crops other than tobacco, |
• | elimination of government subsidies to farmers, and |
• | demographic shifts that change the number of farmers or the amount of land available to grow tobacco. |
• | excess residues of crop protection agents, |
• | non-tobacco related materials, and |
• | genetically modified organisms. |
• | restrictions on the use of tobacco products in public places and places of employment, |
• | legislation authorizing the U.S. Food and Drug Administration (the “FDA”) to regulate the manufacturing and marketing of tobacco products, |
• | increases in the federal, state, and local excise taxes on cigarettes and other tobacco products, and |
• | the policy of the U.S. government to link certain federal grants to the enforcement of state laws restricting the sale of tobacco products. |
Location | Principal Use | Building Area | |||
(Square Feet) | |||||
Flue-Cured and Burley Leaf Tobacco Operations: | |||||
North America: | |||||
United States | |||||
Nash County, North Carolina | Factory and storages | 1,312,000 | |||
Other Regions: | |||||
Brazil | |||||
Santa Cruz | Factory and storages | 2,386,000 | |||
Joinville (1) | Factory and storages | 964,000 | |||
Malawi | |||||
Lilongwe | Factory and storages | 942,000 | |||
Mozambique | |||||
Tete | Factory and storages | 748,000 | |||
Philippines | |||||
Agoo, La Union | Factory and storages | 672,000 | |||
Tanzania | |||||
Morogoro | Factory and storages | 803,000 | |||
Zimbabwe | |||||
Harare (2) | Factory and storages | 1,445,000 | |||
Other Tobacco Operations: | |||||
United States | |||||
Lancaster, Pennsylvania | Factory and storages | 793,000 |
(1) | Leased from a third party. |
(2) | Owned by an unconsolidated subsidiary. |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
2012 | ||||||||||||||||
Cash dividends declared | $ | 0.48 | $ | 0.48 | $ | 0.49 | $ | 0.49 | ||||||||
Market price range | High | 45.72 | 41.48 | 47.38 | 48.60 | |||||||||||
Low | 36.94 | 35.11 | 35.78 | 44.88 | ||||||||||||
2011 | ||||||||||||||||
Cash dividends declared | $ | 0.47 | $ | 0.47 | $ | 0.48 | $ | 0.48 | ||||||||
Market price range | High | 55.92 | 44.82 | 43.34 | 43.72 | |||||||||||
Low | 38.38 | 35.44 | 37.05 | 37.74 |
Period (1) | Total Number of Shares Repurchased | Average Price Paid Per Share (2) | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (3) | Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) | ||||||||||
January 1, 2012 to January 31, 2012 | — | $ | — | — | $ | 100,000,000 | ||||||||
February 1, 2012 to February 29, 2012 | — | — | — | — | ||||||||||
March 1, 2012 to March 31, 2012 | — | — | — | — | ||||||||||
Total | — | $ | — | — | $ | 100,000,000 |
(1) | Repurchases are based on the date the shares were traded. This presentation differs from the consolidated statement of cash flows, where the cost of share repurchases is based on the date the transactions were settled. |
(2) | Amounts listed for average price paid per share include broker commissions paid in the transactions. |
(3) | A stock repurchase plan, which was authorized by our Board of Directors, became effective and was publicly announced on November 8, 2011. This stock repurchase plan authorizes the purchase of up to $100 million in common stock in open market or privately negotiated transactions, subject to market conditions and other factors. This stock repurchase program will expire on the earlier of November 15, 2013, or when we have exhausted the funds authorized for the program. |
Fiscal Year Ended March 31, | |||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
(in thousands, except per share data, ratios, and number of shareholders) | |||||||||||||||||||
Summary of Operations | |||||||||||||||||||
Sales and other operating revenues | $ | 2,446,877 | $ | 2,571,527 | $ | 2,491,738 | $ | 2,554,659 | $ | 2,145,822 | |||||||||
Income from continuing operations | $ | 100,819 | $ | 164,550 | $ | 170,345 | $ | 132,561 | $ | 116,484 | |||||||||
Income (loss) from discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | (145 | ) | ||||||||
Net income | $ | 100,819 | $ | 164,550 | $ | 170,345 | $ | 132,561 | $ | 116,339 | |||||||||
Net income attributable to Universal Corporation (1) | $ | 92,057 | $ | 156,565 | $ | 168,397 | $ | 131,739 | $ | 119,156 | |||||||||
Earnings available to Universal Corporation common shareholders | $ | 77,207 | $ | 141,715 | $ | 153,547 | $ | 116,889 | $ | 104,306 | |||||||||
Return on beginning common shareholders’ equity | 7.9 | % | 15.6 | % | 18.8 | % | 13.0 | % | 12.8 | % | |||||||||
Earnings (loss) per share attributable to Universal Corporation common shareholders: | |||||||||||||||||||
Basic: | |||||||||||||||||||
From continuing operations | $ | 3.32 | $ | 5.94 | $ | 6.21 | $ | 4.57 | $ | 3.83 | |||||||||
From discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | (0.01 | ) | ||||||||
Net income | $ | 3.32 | $ | 5.94 | $ | 6.21 | $ | 4.57 | $ | 3.82 | |||||||||
Diluted: | |||||||||||||||||||
From continuing operations | $ | 3.25 | $ | 5.42 | $ | 5.68 | $ | 4.32 | $ | 3.71 | |||||||||
From discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | (0.01 | ) | ||||||||
Net income | $ | 3.25 | $ | 5.42 | $ | 5.68 | $ | 4.32 | $ | 3.70 | |||||||||
Financial Position at Year End | |||||||||||||||||||
Current ratio | 4.31 | 3.08 | 2.75 | 2.74 | 3.33 | ||||||||||||||
Total assets | $ | 2,266,919 | $ | 2,227,867 | $ | 2,371,040 | $ | 2,138,176 | $ | 2,186,761 | |||||||||
Long-term obligations | $ | 392,500 | $ | 320,193 | $ | 414,764 | $ | 331,808 | $ | 402,942 | |||||||||
Working capital | $ | 1,297,921 | $ | 1,065,883 | $ | 1,078,077 | $ | 954,044 | $ | 1,028,732 | |||||||||
Total Universal Corporation shareholders’ equity | $ | 1,183,451 | $ | 1,185,606 | $ | 1,122,570 | $ | 1,029,473 | $ | 1,115,631 | |||||||||
General | |||||||||||||||||||
Ratio of earnings to fixed charges | 7.53 | 9.41 | 9.43 | 5.54 | 4.66 | ||||||||||||||
Ratio of earnings to combined fixed charges and preference dividends | 4.07 | 5.17 | 5.29 | 3.55 | 3.16 | ||||||||||||||
Number of common shareholders | 1,408 | 1,447 | 1,518 | 1,597 | 1,708 | ||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||
Basic | 23,228 | 23,859 | 24,732 | 25,570 | 27,263 | ||||||||||||||
Diluted | 28,339 | 28,888 | 29,662 | 30,466 | 32,186 | ||||||||||||||
Dividends per share of convertible perpetual preferred stock (annual) | $ | 67.50 | $ | 67.50 | $ | 67.50 | $ | 67.50 | $ | 67.50 | |||||||||
Dividends per share of common stock (annual) | $ | 1.94 | $ | 1.90 | $ | 1.86 | $ | 1.82 | $ | 1.78 | |||||||||
Book value per common share | $ | 41.73 | $ | 41.85 | $ | 37.39 | $ | 32.66 | $ | 33.23 |
(1) | We hold less than a 100% financial interest in certain consolidated subsidiaries, and a portion of net income is attributable to the noncontrolling interests in those subsidiaries. |
• | Fiscal Year 2012 – a $49.1 million charge to accrue a fine and accumulated interest imposed jointly on the Company and Deltafina, S.p.A. (“Deltafina”), an Italian subsidiary, by the European Commission related to tobacco buying practices in Italy. The charge reflected a September 2011 appeals court decision rejecting Deltafina's application to reinstate its immunity in the case. No income tax benefit was recorded on the non-deductible fine portion of the charge. In addition to that charge, we recorded restructuring costs of $11.7 million, including approximately $8.6 million for employee termination benefits, primarily related to our operations in the U.S. and South America, and $3.1 million for costs to exit a supplier arrangement in Europe. Results for the year also included a gain of $11.1 million on the sale of land and buildings in Brazil that were most recently used for storage activities and a $9.6 million gain on insurance settlement proceeds to replace factory and equipment lost in a fire at a plant in Europe. On a combined basis, the net effect of these items decreased income before income taxes by $40.0 million and net income by $40.3 million, or $1.42 per diluted share. |
• | Fiscal Year 2011 – $7.4 million reversal of a portion of a charge recorded in fiscal year 2005 to accrue a fine imposed by the European Commission on Deltafina, S.p.A., our subsidiary in Italy, related to tobacco buying practices in Spain. The reversal reflected a favorable European Union’s General Court decision in Deltafina’s appeal of the fine. We also recorded a $19.4 million gain on the assignment of farmer contracts and sale of related assets in Brazil to an operating subsidiary of a major customer. In addition to those items, which benefited fiscal year 2011 earnings, we recorded $21.5 million in restructuring and impairment costs during the year. A significant portion of those costs related to our decision to close our leaf tobacco processing operations in Canada and sell the assets of those operations. Restructuring charges were also recorded to recognize costs associated with voluntary early retirement offers in our U.S. operations and additional voluntary and involuntary separations in various other locations. On a combined basis, the net effect of these items increased income before income taxes by $5.3 million, and increased net income by $3.3 million, or about $0.12 per diluted share. |
• | Fiscal Year 2009 – $50.6 million in losses from currency remeasurement and exchange, primarily caused by the effect of the rapid devaluation of the Brazilian currency between June and December 2008. The effect of these losses was a reduction in net income of $32.9 million, or $1.08 per diluted share. |
• | Fiscal Year 2008 – $29.3 million in gains from currency remeasurement and exchange, reflecting the general strengthening of world currencies against the U.S. dollar and mark-to-market gains realized on forward contracts to hedge tobacco purchases in Brazil. We also recorded $12.9 million in restructuring costs, consisting partly of $7.9 million in severance and voluntary termination benefits associated with the downsizing of our operations in Canada, the release of farm managers and workers employed in flue-cured tobacco growing projects that we exited in Zambia and Malawi, a workforce reduction in our operations in Malawi, a decision to close and consolidate a sales and logistics office in Europe, and other cost reduction initiatives at several smaller locations. In addition, restructuring costs included $5.0 million of curtailment losses associated with actions taken to terminate a small defined benefit pension plan and freeze another small plan. We also recorded a separate charge of $7.8 million to accrue an obligation established by Malawi court rulings that required employers there to provide severance benefits in addition to company-sponsored pension benefits in employee retirement or termination situations. Those rulings also expanded the qualified compensation on which the severance benefit was based. In addition to these costs, our results for the fiscal year included a gain of $6.5 million on the sale of surplus timberland in Brazil. On a combined basis, the net effect of these items increased income before noncontrolling interest and income taxes by $15.1 million, and increased income from continuing operations and net income by $10.3 million, or $0.32 per diluted share. |
Fiscal Year Ended March 31, | ||||||||
(in millions of dollars, except per share amounts) | 2012 | 2011 | ||||||
(Charges) and gains | ||||||||
(Charge for) reversal of European Commission fines in Italy and Spain (1) | $ | (49.1 | ) | $ | 7.4 | |||
Restructuring and impairment costs, primarily in the United States, South America, and Europe (2) | (11.7 | ) | (21.5 | ) | ||||
Gain on fire loss insurance settlement in Europe (3) | 9.6 | — | ||||||
Gain on sale of facility in Brazil (4) | 11.1 | — | ||||||
Gain on assignment of farmer contracts and sale of related assets in Brazil (5) | — | 19.4 | ||||||
Total effect on operating income | $ | (40.1 | ) | $ | 5.3 | |||
Total effect on net income | $ | (40.3 | ) | $ | 3.3 | |||
Total effect on diluted earnings per share | $ | (1.42 | ) | $ | 0.12 | |||
(in thousands of dollars) | Total | 2013 | 2014-2015 | 2016-2017 | After 2017 | ||||||||||||||
Notes payable and long-term debt (1) | $ | 582,218 | $ | 166,165 | $ | 348,842 | $ | 67,211 | $ | — | |||||||||
Operating lease obligations | 43,576 | 15,851 | 13,351 | 8,229 | 6,145 | ||||||||||||||
Inventory purchase obligations: | |||||||||||||||||||
Tobacco | 613,919 | 597,731 | 16,188 | — | — | ||||||||||||||
Agricultural materials | 45,483 | 45,483 | — | — | — | ||||||||||||||
Other purchase obligations | 12,928 | 12,892 | 36 | — | — | ||||||||||||||
Total | $ | 1,298,124 | $ | 838,122 | $ | 378,417 | $ | 75,440 | $ | 6,145 |
(1) | Includes interest payments. Interest payments on $128.0 million of variable rate debt were estimated based on rates as of March 31, 2012. The Company has entered interest rate swaps that effectively convert the interest payments on the $98.8 million outstanding balance of its amortizing bank term loan from variable to fixed. The fixed rate has been used to determine the contractual interest payments for all periods. |
• | Discount rate – The discount rate is based on investment yields on a hypothetical portfolio of actual long-term corporate bonds rated AA that align with the cash flows for our benefit obligations. |
• | Salary scale – The salary scale assumption is based on our long-term actual experience for salary increases, the near-term outlook, and expected inflation. |
• | Expected long-term return on plan assets – The expected long-term return on plan assets reflects asset allocations and investment strategy adopted by the Pension Investment Committee of the Board of Directors. |
• | Retirement and mortality rates – Retirement rates are based on actual plan experience along with our near-term outlook. Early retirement assumptions are based on our actual experience. Mortality rates are based on standard group annuity (RP-2000) mortality tables which have been updated to reflect improvements in projected life expectancy. |
• | Healthcare cost trend rates – For postretirement medical plan obligations and costs, we make assumptions on future inflationary increases in medical costs. These assumptions are based on our actual experience, along with third-party forecasts of long-term medical cost trends. |
(in thousands of dollars) | Effect on 2012 Projected Benefit Obligation Increase (Decrease) | Effect on 2013 Annual Expense Increase (Decrease) | |||||
Changes in Assumptions for Pension Benefits | |||||||
Discount Rate: | |||||||
1% increase | $ | (31,759 | ) | $ | (3,307 | ) | |
1% decrease | 38,667 | 3,869 | |||||
Salary Scale: | |||||||
1% increase | 6,572 | 1,602 | |||||
1% decrease | (6,218 | ) | (1,504 | ) | |||
Long-Term Rate of Return on Assets: | |||||||
1% increase | — | (1,873 | ) | ||||
1% decrease | — | 1,872 | |||||
Changes in Assumptions for Other Postretirement Benefits | |||||||
Discount Rate: | |||||||
1% increase | (4,461 | ) | (514 | ) | |||
1% decrease | 5,328 | (207 | ) | ||||
Healthcare Cost Trend Rate: | |||||||
1% increase | 1,777 | 93 | |||||
1% decrease | (1,617 | ) | (80 | ) |
Fiscal Year Ended March 31, | |||||||||||
(in thousands of dollars, except per share data) | 2012 | 2011 | 2010 | ||||||||
Sales and other operating revenues | $ | 2,446,877 | $ | 2,571,527 | $ | 2,491,738 | |||||
Costs and expenses | |||||||||||
Cost of goods sold | 1,974,885 | 2,063,194 | 1,949,473 | ||||||||
Selling, general and administrative expenses | 251,639 | 259,042 | 285,056 | ||||||||
Other income | (20,703 | ) | (19,368 | ) | — | ||||||
Restructuring and impairment costs | 11,661 | 21,504 | — | ||||||||
Charge for (reversal of) European Commission fines in Italy & Spain | 49,091 | (7,445 | ) | — | |||||||
Operating income | 180,304 | 254,600 | 257,209 | ||||||||
Equity in pretax earnings of unconsolidated affiliates | 3,195 | 8,634 | 22,376 | ||||||||
Interest income | 1,314 | 2,723 | 1,253 | ||||||||
Interest expense | 22,835 | 23,058 | 24,210 | ||||||||
Income before income taxes | 161,978 | 242,899 | 256,628 | ||||||||
Income taxes | 61,159 | 78,349 | 86,283 | ||||||||
Net income | 100,819 | 164,550 | 170,345 | ||||||||
Less: net income attributable to noncontrolling interests in subsidiaries | 8,762 | 7,985 | 1,948 | ||||||||
Net income attributable to Universal Corporation | 92,057 | 156,565 | 168,397 | ||||||||
Dividends on Universal Corporation convertible perpetual preferred stock | (14,850 | ) | (14,850 | ) | (14,850 | ) | |||||
Earnings available to Universal Corporation common shareholders | $ | 77,207 | $ | 141,715 | $ | 153,547 | |||||
Earnings per share attributable to Universal Corporation common shareholders: | |||||||||||
Basic | $ | 3.32 | $ | 5.94 | $ | 6.21 | |||||
Diluted | $ | 3.25 | $ | 5.42 | $ | 5.68 |
Fiscal Year Ended March 31, | |||||||||||
(in thousands of dollars) | 2012 | 2011 | 2010 | ||||||||
Net income | $ | 100,819 | $ | 164,550 | $ | 170,345 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments, net of income taxes | (8,158 | ) | 7,297 | 4,701 | |||||||
Foreign currency hedge adjustment, net of income taxes | (3,424 | ) | 2,961 | 13,386 | |||||||
Interest rate hedge adjustment, net of income taxes | (727 | ) | — | — | |||||||
Pension and other postretirement benefit plan adjustments, net of income taxes | (23,195 | ) | (2,258 | ) | (6,017 | ) | |||||
Total other comprehensive income (loss), net of income taxes | (35,504 | ) | 8,000 | 12,070 | |||||||
Total comprehensive income | 65,315 | 172,550 | 182,415 | ||||||||
Less: comprehensive income attributable to noncontrolling interests | (8,843 | ) | (8,094 | ) | (2,138 | ) | |||||
Comprehensive income attributable to Universal Corporation | $ | 56,472 | $ | 164,456 | $ | 180,277 |
March 31, | |||||||
(in thousands of dollars) | 2012 | 2011 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 261,699 | $ | 141,007 | |||
Accounts receivable, net | 390,790 | 335,575 | |||||
Advances to suppliers, net | 135,317 | 160,616 | |||||
Accounts receivable—unconsolidated affiliates | 7,370 | 10,433 | |||||
Inventories—at lower of cost or market: | |||||||
Tobacco | 682,095 | 742,422 | |||||
Other | 53,197 | 48,647 | |||||
Prepaid income taxes | 20,819 | 18,661 | |||||
Deferred income taxes | 51,025 | 47,009 | |||||
Other current assets | 88,317 | 73,864 | |||||
Total current assets | 1,690,629 | 1,578,234 | |||||
Property, plant and equipment | |||||||
Land | 17,087 | 14,851 | |||||
Buildings | 228,982 | 257,380 | |||||
Machinery and equipment | 537,031 | 555,316 | |||||
783,100 | 827,547 | ||||||
Less accumulated depreciation | (479,908 | ) | (510,844 | ) | |||
303,192 | 316,703 | ||||||
Other assets | |||||||
Goodwill and other intangibles | 99,266 | 99,546 | |||||
Investments in unconsolidated affiliates | 93,312 | 115,478 | |||||
Deferred income taxes | 23,634 | 18,177 | |||||
Other noncurrent assets | 56,886 | 99,729 | |||||
273,098 | 332,930 | ||||||
Total assets | $ | 2,266,919 | $ | 2,227,867 |
March 31, | |||||||
(in thousands of dollars) | 2012 | 2011 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Notes payable and overdrafts | $ | 128,016 | $ | 149,291 | |||
Accounts payable and accrued expenses | 187,790 | 213,014 | |||||
Accounts payable—unconsolidated affiliates | 295 | 4,154 | |||||
Customer advances and deposits | 16,832 | 8,426 | |||||
Accrued compensation | 30,659 | 30,201 | |||||
Income taxes payable | 12,866 | 12,265 | |||||
Current portion of long-term obligations | 16,250 | 95,000 | |||||
Total current liabilities | 392,708 | 512,351 | |||||
Long-term obligations | 392,500 | 320,193 | |||||
Pensions and other postretirement benefits | 140,529 | 102,858 | |||||
Other long-term liabilities | 90,609 | 50,213 | |||||
Deferred income taxes | 44,583 | 42,847 | |||||
Total liabilities | 1,060,929 | 1,028,462 | |||||
Shareholders’ equity | |||||||
Universal Corporation: | |||||||
Preferred stock: | |||||||
Series A Junior Participating Preferred Stock, no par value, 500,000 shares authorized, none issued or outstanding | — | — | |||||
Series B 6.75% Convertible Perpetual Preferred Stock, no par value, 220,000 shares authorized, 219,999 shares issued and outstanding (219,999 at March 31, 2011) | 213,023 | 213,023 | |||||
Common stock, no par value, 100,000,000 shares authorized, 23,257,175 shares issued and outstanding (23,240,503 at March 31, 2011) | 196,135 | 191,608 | |||||
Retained earnings | 854,654 | 825,751 | |||||
Accumulated other comprehensive loss | (80,361 | ) | (44,776 | ) | |||
Total Universal Corporation shareholders' equity | 1,183,451 | 1,185,606 | |||||
Noncontrolling interests in subsidiaries | 22,539 | 13,799 | |||||
Total shareholders' equity | 1,205,990 | 1,199,405 | |||||
Total liabilities and shareholders' equity | $ | 2,266,919 | $ | 2,227,867 |
Fiscal Year Ended March 31, | |||||||||||
(in thousands of dollars) | 2012 | 2011 | 2010 | ||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income | $ | 100,819 | $ | 164,550 | $ | 170,345 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation | 42,158 | 43,654 | 41,288 | ||||||||
Amortization | 1,708 | 1,618 | 2,208 | ||||||||
Provision for losses on advances and guaranteed loans to suppliers | 11,930 | 18,666 | 18,514 | ||||||||
Inventory write-downs | 8,324 | 8,539 | 1,266 | ||||||||
Stock-based compensation expense | 5,987 | 5,893 | 6,133 | ||||||||
Foreign currency remeasurement loss (gain), net | 2,253 | (4,424 | ) | 9,309 | |||||||
Deferred income taxes | 6,770 | (1,044 | ) | 13,755 | |||||||
Equity in net income of unconsolidated affiliates, net of dividends | 14,658 | (3,731 | ) | (3,037 | ) | ||||||
Gain on fire loss insurance settlement | (9,592 | ) | — | — | |||||||
Gain on sale of property in Brazil | (11,111 | ) | — | — | |||||||
Gain on assignment of farmer contracts and sale of related assets | — | (19,368 | ) | — | |||||||
Restructuring and impairment costs | 11,661 | 21,504 | — | ||||||||
Charge for (reversal of) European Commission fines in Italy and Spain | 49,091 | (7,445 | ) | — | |||||||
Other, net | 1,719 | 2,381 | (1,863 | ) | |||||||
Changes in operating assets and liabilities, net: | |||||||||||
Accounts and notes receivable | (25,480 | ) | (79,648 | ) | 11,096 | ||||||
Inventories and other assets | 31,907 | 75,146 | (215,865 | ) | |||||||
Income taxes | (1,535 | ) | (3,631 | ) | 2,142 | ||||||
Accounts payable and other accrued liabilities | (53,487 | ) | (67,206 | ) | 14,679 | ||||||
Customer advances and deposits | 12,006 | (101,236 | ) | 92,264 | |||||||
Net cash provided by operating activities | 199,786 | 54,218 | 162,234 | ||||||||
Cash Flows From Investing Activities: | |||||||||||
Purchase of property, plant and equipment | (38,174 | ) | (39,129 | ) | (57,577 | ) | |||||
Proceeds from assignment of farmer contracts and sale of related assets | — | 34,946 | — | ||||||||
Proceeds from sale of property, plant and equipment | 18,366 | 5,575 | 5,019 | ||||||||
Proceeds from fire loss insurance settlement | 9,933 | — | — | ||||||||
Other, net | — | 260 | 536 | ||||||||
Net cash (used) provided by investing activities | (9,875 | ) | 1,652 | (52,022 | ) | ||||||
Cash Flows From Financing Activities: | |||||||||||
Repayment of short-term debt, net | (17,388 | ) | (39,350 | ) | (5,250 | ) | |||||
Issuance of long-term obligations | 100,000 | — | 99,208 | ||||||||
Repayment of long-term obligations | (96,250 | ) | (15,000 | ) | (79,500 | ) | |||||
Dividends paid to noncontrolling interests | (103 | ) | (100 | ) | (104 | ) | |||||
Issuance of common stock | 134 | — | 729 | ||||||||
Repurchase of common stock | (4,004 | ) | (46,929 | ) | (32,194 | ) | |||||
Dividends paid on convertible perpetual preferred stock | (14,850 | ) | (14,850 | ) | (14,850 | ) | |||||
Dividends paid on common stock | (44,711 | ) | (45,321 | ) | (45,882 | ) | |||||
Proceeds from termination of interest rate swap agreements | 13,388 | — | — | ||||||||
Debt issuance costs and other | (3,539 | ) | — | (1,193 | ) | ||||||
Net cash used by financing activities | (67,323 | ) | (161,550 | ) | (79,036 | ) | |||||
Effect of exchange rate changes on cash | (1,896 | ) | 734 | 2,151 | |||||||
Net increase (decrease) in cash and cash equivalents | 120,692 | (104,946 | ) | 33,327 | |||||||
Cash and cash equivalents at beginning of year | 141,007 | 245,953 | 212,626 | ||||||||
Cash and Cash Equivalents at End of Year | $ | 261,699 | $ | 141,007 | $ | 245,953 | |||||
Supplemental information—cash paid for: | |||||||||||
Interest | $ | 20,462 | $ | 23,622 | $ | 24,961 | |||||
Income taxes, net of refunds | $ | 51,625 | $ | 79,724 | $ | 82,934 |
Universal Corporation Shareholders | ||||||||||||||||||||||||
(in thousands of dollars) | Series B 6.75% Convertible Perpetual Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interests | Total Shareholders' Equity | ||||||||||||||||||
Fiscal Year Ended March 31, 2012 | ||||||||||||||||||||||||
Balance at beginning of year | $ | 213,023 | $ | 191,608 | $ | 825,751 | $ | (44,776 | ) | $ | 13,799 | $ | 1,199,405 | |||||||||||
Changes in preferred and common stock | ||||||||||||||||||||||||
Issuance of common stock | — | 259 | — | — | — | 259 | ||||||||||||||||||
Repurchase of common stock | — | (661 | ) | — | — | — | (661 | ) | ||||||||||||||||
Accrual of stock-based compensation | — | 5,987 | — | — | — | 5,987 | ||||||||||||||||||
Withholding of shares from stock-based compensation for grantee income taxes | (1,584 | ) | — | — | — | (1,584 | ) | |||||||||||||||||
Dividend equivalents on RSUs | — | 526 | — | — | — | 526 | ||||||||||||||||||
Changes in retained earnings | ||||||||||||||||||||||||
Net income | — | — | 92,057 | — | 8,762 | 100,819 | ||||||||||||||||||
Cash dividends declared | ||||||||||||||||||||||||
Series B 6.75% convertible perpetual preferred stock ($67.50 per share) | — | — | (14,850 | ) | — | — | (14,850 | ) | ||||||||||||||||
Common stock ($1.94 per share) | — | — | (44,951 | ) | — | — | (44,951 | ) | ||||||||||||||||
Repurchase of common stock | — | — | (2,827 | ) | — | — | (2,827 | ) | ||||||||||||||||
Dividend equivalents on RSUs | — | — | (526 | ) | — | — | (526 | ) | ||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income taxes | — | — | — | (8,239 | ) | 81 | (8,158 | ) | ||||||||||||||||
Foreign currency hedge adjustment, net of income taxes | — | — | — | (3,424 | ) | — | (3,424 | ) | ||||||||||||||||
Interest rate hedge adjustment, net of income taxes | — | — | — | (727 | ) | — | (727 | ) | ||||||||||||||||
Pension and other postretirement benefit plan adjustments, net of income taxes | — | — | — | (23,195 | ) | — | (23,195 | ) | ||||||||||||||||
Other changes in noncontrolling interests | ||||||||||||||||||||||||
Dividends paid to noncontrolling shareholders | — | — | — | — | (103 | ) | (103 | ) | ||||||||||||||||
Balance at end of year | $ | 213,023 | $ | 196,135 | $ | 854,654 | $ | (80,361 | ) | $ | 22,539 | $ | 1,205,990 |
Universal Corporation Shareholders | ||||||||||||||||||||||||
(in thousands of dollars) | Series B 6.75% Convertible Perpetual Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interests | Total Shareholders' Equity | ||||||||||||||||||
Fiscal Year Ended March 31, 2011 | ||||||||||||||||||||||||
Balance at beginning of year | $ | 213,023 | $ | 195,001 | $ | 767,213 | $ | (52,667 | ) | $ | 5,805 | $ | 1,128,375 | |||||||||||
Changes in preferred and common stock | ||||||||||||||||||||||||
Repurchase of common stock | — | (8,995 | ) | — | — | — | (8,995 | ) | ||||||||||||||||
Accrual of stock-based compensation | — | 5,893 | — | — | — | 5,893 | ||||||||||||||||||
Withholding of shares from stock-based compensation for grantee income taxes | — | (724 | ) | — | — | — | (724 | ) | ||||||||||||||||
Dividend equivalents on RSUs | — | 433 | — | — | — | 433 | ||||||||||||||||||
Changes in retained earnings | ||||||||||||||||||||||||
Net income | — | — | 156,565 | — | 7,985 | 164,550 | ||||||||||||||||||
Cash dividends declared | ||||||||||||||||||||||||
Series B 6.75% convertible perpetual preferred stock ($67.50 per share) | — | — | (14,850 | ) | — | — | (14,850 | ) | ||||||||||||||||
Common stock ($1.90 per share) | — | — | (45,043 | ) | — | — | (45,043 | ) | ||||||||||||||||
Repurchase of common stock | — | — | (37,701 | ) | — | — | (37,701 | ) | ||||||||||||||||
Dividend equivalents on RSUs | — | — | (433 | ) | — | — | (433 | ) | ||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income taxes | — | — | — | 7,188 | 109 | 7,297 | ||||||||||||||||||
Foreign currency hedge adjustment, net of income taxes | — | — | — | 2,961 | — | 2,961 | ||||||||||||||||||
Pension and other postretirement benefit plan adjustments, net of income taxes | — | — | — | (2,258 | ) | — | (2,258 | ) | ||||||||||||||||
Other changes in noncontrolling interests | ||||||||||||||||||||||||
Dividends paid to noncontrolling shareholders | — | — | — | — | (100 | ) | (100 | ) | ||||||||||||||||
Balance at end of year | $ | 213,023 | $ | 191,608 | $ | 825,751 | $ | (44,776 | ) | $ | 13,799 | $ | 1,199,405 |
Universal Corporation Shareholders | ||||||||||||||||||||||||
(in thousands of dollars) | Series B 6.75% Convertible Perpetual Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interests | Total Shareholders' Equity | ||||||||||||||||||
Fiscal Year Ended March 31, 2010 | ||||||||||||||||||||||||
Balance at beginning of year | $ | 213,023 | $ | 194,037 | $ | 686,960 | $ | (64,547 | ) | $ | 3,771 | $ | 1,033,244 | |||||||||||
Changes in preferred and common stock | ||||||||||||||||||||||||
Issuance of common stock | — | 1,183 | — | — | — | 1,183 | ||||||||||||||||||
Repurchase of common stock | — | (5,853 | ) | — | — | — | (5,853 | ) | ||||||||||||||||
Accrual of stock-based compensation | — | 6,133 | — | — | — | 6,133 | ||||||||||||||||||
Withholding of shares from stock-based compensation for grantee income taxes | — | (888 | ) | — | — | — | (888 | ) | ||||||||||||||||
Dividend equivalents on RSUs | — | 389 | — | — | — | 389 | ||||||||||||||||||
Changes in retained earnings | ||||||||||||||||||||||||
Net income | — | — | 168,397 | — | 1,948 | 170,345 | ||||||||||||||||||
Cash dividends declared | ||||||||||||||||||||||||
Series B 6.75% convertible perpetual preferred stock ($67.50 per share) | — | — | (14,850 | ) | — | — | (14,850 | ) | ||||||||||||||||
Common stock ($1.86 per share) | — | — | (45,815 | ) | — | — | (45,815 | ) | ||||||||||||||||
Repurchase of common stock | — | — | (27,090 | ) | — | — | (27,090 | ) | ||||||||||||||||
Dividend equivalents on RSUs | — | — | (389 | ) | — | — | (389 | ) | ||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income taxes | — | — | — | 4,511 | 190 | 4,701 | ||||||||||||||||||
Foreign currency hedge adjustment, net of income taxes | — | — | — | 13,386 | — | 13,386 | ||||||||||||||||||
Pension and other postretirement benefit plan adjustments, net of income taxes | — | — | — | (6,017 | ) | — | (6,017 | ) | ||||||||||||||||
Other changes in noncontrolling interests | ||||||||||||||||||||||||
Dividends paid to noncontrolling shareholders | — | — | — | — | (104 | ) | (104 | ) | ||||||||||||||||
Balance at end of year | $ | 213,023 | $ | 195,001 | $ | 767,213 | $ | (52,667 | ) | $ | 5,805 | $ | 1,128,375 |
Fiscal Year Ended March 31, | ||||||||
(in thousands) | 2012 | 2011 | 2010 | |||||
Preferred Shares Outstanding: | ||||||||
Series B 6.75% Convertible Perpetual Preferred Stock: | ||||||||
Balance at beginning of year | 220 | 220 | 220 | |||||
Issuance of convertible perpetual preferred stock | — | — | — | |||||
Repurchase of convertible perpetual preferred stock | — | — | — | |||||
Balance at end of year | 220 | 220 | 220 | |||||
Common Shares Outstanding: | ||||||||
Balance at beginning of year | 23,241 | 24,325 | 24,999 | |||||
Issuance of common stock and exercise of stock options and SARs | 97 | 28 | 70 | |||||
Repurchase of common stock | (80 | ) | (1,113 | ) | (744 | ) | ||
Balance at end of year | 23,257 | 23,241 | 24,325 |
Fiscal Year Ended March 31, | |||||||||||
Unconsolidated Affiliates | 2012 | 2011 | 2010 | ||||||||
Equity in pretax earnings reported in the consolidated statements of income | $ | 3,195 | $ | 8,634 | $ | 22,376 | |||||
Less: Equity in income taxes | (1,130 | ) | (3,651 | ) | (7,356 | ) | |||||
Equity in net income | 2,065 | 4,983 | 15,020 | ||||||||
Less: Dividends received on investments (1) | (16,723 | ) | (1,252 | ) | (11,983 | ) | |||||
Equity in net income, net of dividends, reported in the consolidated statements of cash flows | $ | (14,658 | ) | $ | 3,731 | $ | 3,037 |
(1) | In accordance with the applicable accounting guidance, dividends received from unconsolidated affiliates accounted for on the equity method that represent a return on capital (i.e., a return of earnings on a cumulative basis) are presented as operating cash flows in the consolidated statements of cash flows. |
March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Foreign currency translation adjustments | |||||||||||
Before income taxes | $ | (12,331 | ) | $ | (819 | ) | $ | (10,854 | ) | ||
Allocated income taxes | 481 | (2,792 | ) | 54 | |||||||
Foreign currency hedge adjustment | |||||||||||
Before income taxes | (1,449 | ) | 3,819 | (736 | ) | ||||||
Allocated income taxes | 507 | (1,337 | ) | 258 | |||||||
Interest rate hedge adjustment | |||||||||||
Before income taxes | (1,119 | ) | — | — | |||||||
Allocated income taxes | 392 | — | — | ||||||||
Pension and other postretirement benefit plan adjustments | |||||||||||
Before income taxes | (102,833 | ) | (66,851 | ) | (63,362 | ) | |||||
Allocated income taxes | 35,991 | 23,204 | 21,973 | ||||||||
Total accumulated other comprehensive loss, net of income taxes | $ | (80,361 | ) | $ | (44,776 | ) | $ | (52,667 | ) |
• | Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), which was issued in June 2011. This guidance requires companies to present the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05,” to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income or loss to net income alongside their respective components of net income and other comprehensive income. All other provisions of ASU 2011-05, which are to be applied retrospectively, are effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. Universal adopted ASU 2011-05 during the fourth quarter of fiscal year 2012. The Company elected to present two separate but consecutive statements. |
• | FASB Accounting Standards Update 2011-04, “Fair Value Measurement” (“ASU 2011-04”), which was issued in May 2011. The primary focus of ASU 2011-04 is the convergence of accounting requirements for fair value measurements and related financial statement disclosures under U.S. GAAP and International Financial Reporting Standards (“IFRS”). While ASU 2011-04 does not significantly change existing guidance for measuring fair value, it does require additional disclosures about fair value measurements and changes the wording of certain requirements in the guidance to achieve consistency with IFRS. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011, and is required to be applied prospectively. Universal adopted ASU 2011-04 during the fourth quarter of fiscal year 2012. The adoption of ASU 2011-04 did not have a material effect on the Company’s financial statements. |
• | FASB Accounting Standards Update 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”), adopted effective April 1, 2011. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a multiple-deliverable arrangement. It also requires additional disclosures about methods and assumptions used to evaluate multiple-deliverable arrangements and to identify the significant deliverables within those arrangements. The adoption of ASU 2009-13 did not have a material effect on the Company’s financial statements. |
(in thousands of dollars) | Employee Termination Benefits | Pension Curtailment and Settlement Costs | Other Restructuring Costs | Impairment of Property, Plant and Equipment | Total | |||||||||||||||
Fiscal Year 2011 Costs: | ||||||||||||||||||||
Closure of processing facility in Canada | $ | 2,412 | $ | 4,081 | $ | — | $ | 5,632 | $ | 12,125 | ||||||||||
Other restructuring and cost reduction initiatives | 8,743 | — | 636 | — | 9,379 | |||||||||||||||
Total | 11,155 | 4,081 | 636 | 5,632 | 21,504 | |||||||||||||||
Fiscal Year 2012 Costs: | ||||||||||||||||||||
Other restructuring and cost reduction initiatives | 8,564 | — | 3,097 | — | 11,661 | |||||||||||||||
Total | 8,564 | — | 3,097 | — | 11,661 | |||||||||||||||
Total costs - fiscal years 2011 and 2012 | $ | 19,719 | $ | 4,081 | $ | 3,733 | $ | 5,632 | $ | 33,165 |
(in thousands of dollars) | Employee Termination Benefits | Other Costs | Total | |||||||||
Fiscal Year 2011 Activity: | ||||||||||||
Costs charged to expense | $ | 11,155 | $ | 636 | $ | 11,791 | ||||||
Payments | (4,769 | ) | (411 | ) | (5,180 | ) | ||||||
Balance at March 31, 2011 | 6,386 | 225 | 6,611 | |||||||||
Fiscal Year 2012 Activity: | ||||||||||||
Costs charged to expense | 8,564 | 3,097 | 11,661 | |||||||||
Payments | (13,679 | ) | (3,031 | ) | (16,710 | ) | ||||||
Balance at March 31, 2012 | $ | 1,271 | $ | 291 | $ | 1,562 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Basic Earnings Per Share | |||||||||||
Numerator for basic earnings per share | |||||||||||
Net income attributable to Universal Corporation | $ | 92,057 | $ | 156,565 | $ | 168,397 | |||||
Less: Dividends on convertible perpetual preferred stock | (14,850 | ) | (14,850 | ) | (14,850 | ) | |||||
Earnings available to Universal Corporation common shareholders for calculation of basic earnings per share | 77,207 | 141,715 | 153,547 | ||||||||
Denominator for basic earnings per share | |||||||||||
Weighted average shares outstanding | 23,228 | 23,859 | 24,732 | ||||||||
Basic earnings per share | $ | 3.32 | $ | 5.94 | $ | 6.21 | |||||
Diluted Earnings Per Share | |||||||||||
Numerator for diluted earnings per share | |||||||||||
Earnings available to Universal Corporation common shareholders | $ | 77,207 | $ | 141,715 | $ | 153,547 | |||||
Add: Dividends on convertible perpetual preferred stock (if conversion assumed) | 14,850 | 14,850 | 14,850 | ||||||||
Earnings available to Universal Corporation common shareholders for calculation of diluted earnings per share | 92,057 | 156,565 | 168,397 | ||||||||
Denominator for diluted earnings per share | |||||||||||
Weighted average shares outstanding | 23,228 | 23,859 | 24,732 | ||||||||
Effect of dilutive securities (if conversion or exercise assumed) | |||||||||||
Convertible perpetual preferred stock | 4,772 | 4,750 | 4,733 | ||||||||
Employee share-based awards | 339 | 279 | 197 | ||||||||
Denominator for diluted earnings per share | 28,339 | 28,888 | 29,662 | ||||||||
Diluted earnings per share | $ | 3.25 | $ | 5.42 | $ | 5.68 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Current | |||||||||||
United States | $ | 2,871 | $ | 18,052 | $ | 12,246 | |||||
State and local | (2,064 | ) | 2,290 | 3,357 | |||||||
Foreign | 53,582 | 59,051 | 56,925 | ||||||||
54,389 | 79,393 | 72,528 | |||||||||
Deferred | |||||||||||
United States | 4,796 | (43 | ) | 4,134 | |||||||
State and local | 444 | (226 | ) | 247 | |||||||
Foreign | 1,530 | (775 | ) | 9,374 | |||||||
6,770 | (1,044 | ) | 13,755 | ||||||||
Total | $ | 61,159 | $ | 78,349 | $ | 86,283 |
Fiscal Year Ended March 31, | ||||||||
2012 | 2011 | 2010 | ||||||
Statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal benefit | (0.7 | ) | 0.6 | 0.9 | ||||
Change in classification of permanently reinvested earnings | — | — | 1.4 | |||||
Change in valuation allowance on deferred tax assets | 0.7 | (0.2 | ) | — | ||||
Nondeductible European Commission fine | 8.6 | — | — | |||||
Dividends received from deconsolidated operations | (1.8 | ) | — | — | ||||
Other, including changes in liabilities recorded for uncertain tax positions | (4.0 | ) | (3.2 | ) | (3.7 | ) | ||
Effective income tax rate | 37.8 | % | 32.2 | % | 33.6 | % |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
United States | $ | 21,773 | $ | 32,826 | $ | 48,675 | |||||
Foreign | 140,205 | 210,073 | 207,953 | ||||||||
Total | $ | 161,978 | $ | 242,899 | $ | 256,628 |
March 31, | |||||||
2012 | 2011 | ||||||
Liabilities | |||||||
Foreign withholding taxes | $ | 14,192 | $ | 16,692 | |||
Undistributed earnings | 46,010 | 34,015 | |||||
Goodwill | 30,851 | 31,515 | |||||
All other | 20,998 | 22,386 | |||||
Total deferred tax liabilities | $ | 112,051 | $ | 104,608 | |||
Assets | |||||||
Employee benefit plans | $ | 69,373 | $ | 50,761 | |||
Reserves and accruals | 45,793 | 51,841 | |||||
Deferred income | 8,098 | 9,035 | |||||
Deferred compensation | 3,035 | 5,055 | |||||
All other | 17,144 | 9,927 | |||||
Total deferred tax assets | 143,443 | 126,619 | |||||
Valuation allowance | (4,620 | ) | (3,427 | ) | |||
Net deferred tax assets | $ | 138,823 | $ | 123,192 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Continuing operations | $ | 61,159 | $ | 78,349 | $ | 86,283 | |||||
Other comprehensive income | (18,296 | ) | 3,210 | 6,520 | |||||||
Direct adjustments to shareholders' equity | (285 | ) | 159 | (454 | ) | ||||||
Total | $ | 42,578 | $ | 81,718 | $ | 92,349 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Liability for uncertain tax positions, beginning of year | $ | 9,223 | $ | 22,184 | $ | 22,740 | |||||
Additions: | |||||||||||
Related to tax positions for the current year | 262 | 1,184 | 9,609 | ||||||||
Related to tax positions for prior years | 1,072 | 77 | 574 | ||||||||
Reductions: | |||||||||||
Related to tax positions for prior years | — | (205 | ) | (1,674 | ) | ||||||
Due to settlements with tax jurisdictions | (698 | ) | (12,765 | ) | (1,552 | ) | |||||
Due to lapses of statutes of limitations | (1,213 | ) | (1,571 | ) | (4,802 | ) | |||||
Other reductions | — | — | (4,041 | ) | |||||||
Effect of currency rate movement | (733 | ) | 319 | 1,330 | |||||||
Liability for uncertain tax positions, end of year | $ | 7,913 | $ | 9,223 | $ | 22,184 |
March 31, | |||||||
2012 | 2011 | ||||||
Medium-term notes | $ | 310,000 | $ | 415,193 | |||
Amortizing bank term loan | 98,750 | — | |||||
Total outstanding | 408,750 | 415,193 | |||||
Less current portion | (16,250 | ) | (95,000 | ) | |||
Long-term obligations | $ | 392,500 | $ | 320,193 |
Fiscal Year Ended March 31, | ||||||||||||
(in millions) | 2012 | 2011 | 2010 | |||||||||
Tobacco purchases | $ | 182.5 | $ | 235.2 | $ | 238.6 | ||||||
Processing costs | 48.3 | 48.5 | 41.4 | |||||||||
Total | $ | 230.8 | $ | 283.7 | $ | 280.0 |
Fiscal Year Ended March 31, | ||||||||||||
(in thousands of dollars) | 2012 | 2011 | 2010 | |||||||||
Fair Value Hedges - Interest Rate Swap Agreements | ||||||||||||
Derivative | ||||||||||||
Gain (loss) recognized in earnings | $ | 3,195 | $ | 428 | $ | (2,043 | ) | |||||
Location of gain (loss) recognized in earnings | Interest expense | |||||||||||
Hedged Item | ||||||||||||
Description of hedged item | Fixed rate long-term debt | |||||||||||
Gain (loss) recognized in earnings | $ | (3,195 | ) | $ | (428 | ) | $ | 2,043 | ||||
Location of gain (loss) recognized in earnings | Interest expense | |||||||||||
Cash Flow Hedges - Interest Rate Swap Agreements | ||||||||||||
Derivative | ||||||||||||
Effective Portion of Hedge | ||||||||||||
Gain (loss) recorded in accumulated other comprehensive loss | $ | (1,119 | ) | $ | — | $ | — | |||||
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | $ | — | $ | — | $ | — | ||||||
Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings | Interest expense | |||||||||||
Ineffective Portion of Hedge | ||||||||||||
Gain (loss) recognized in earnings | $ | — | $ | — | $ | — | ||||||
Location of gain (loss) recognized in earnings | Selling, general and administrative expenses | |||||||||||
Hedged Item | ||||||||||||
Description of hedged item | Floating rate interest payments on term loan | |||||||||||
Cash Flow Hedges - Forward Foreign Currency Exchange Contracts | ||||||||||||
Derivative | ||||||||||||
Effective Portion of Hedge | ||||||||||||
Gain (loss) recorded in accumulated other comprehensive loss | $ | 2,652 | $ | 2,476 | $ | 7,174 | ||||||
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | $ | 5,882 | $ | 100 | $ | (14,844 | ) | |||||
Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings | Cost of goods sold | |||||||||||
Ineffective Portion and Early De-designation of Hedges | ||||||||||||
Gain (loss) recognized in earnings | $ | 857 | $ | 113 | $ | 1,442 | ||||||
Location of gain (loss) recognized in earnings | Selling, general and administrative expenses | |||||||||||
Hedged Item | ||||||||||||
Description of hedged item | Forecast purchases of tobacco in Brazil | |||||||||||
Derivatives Not Designated as Hedges - Forward Foreign Currency Exchange Contracts | ||||||||||||
Gain (loss) recognized in earnings | $ | 1,829 | $ | 2,594 | $ | 1,275 | ||||||
Location of gain (loss) recognized in earnings | Selling, general and administrative expenses |
Derivatives in a Fair Value Asset Position | Derivatives in a Fair Value Liability Position | |||||||||||||||||||
Balance Sheet Location | Fair Value as of March 31, | Balance Sheet Location | Fair Value as of March 31, | |||||||||||||||||
(in thousands of dollars) | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Derivatives Designated as Hedging Instruments | ||||||||||||||||||||
Interest rate swap agreements designated as fair value hedges | Other non-current assets | $ | — | $ | 10,193 | Long-term obligations | $ | — | $ | — | ||||||||||
Interest rate swap agreements designated as cash flow hedges | Other non-current assets | — | — | Other long-term liabilities | 1,119 | — | ||||||||||||||
Forward foreign currency exchange contracts | Other current assets | 83 | 2,400 | Accounts payable and accrued expenses | 925 | — | ||||||||||||||
Total | $ | 83 | $ | 12,593 | $ | 2,044 | $ | — | ||||||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||
Forward foreign currency exchange contracts | Other current assets | $ | 273 | $ | 1,222 | Accounts payable and accrued expenses | $ | 427 | $ | 243 | ||||||||||
Total | $ | 273 | $ | 1,222 | $ | 427 | $ | 243 |
Level | Description | |
1 | quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date; | |
2 | quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and | |
3 | unobservable inputs for the asset or liability. |
March 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Money market funds | $ | 48,546 | $ | — | $ | — | $ | 48,546 | |||||||
Trading securities associated with deferred compensation plans | 19,803 | — | — | 19,803 | |||||||||||
Forward foreign currency exchange contracts | — | 356 | — | 356 | |||||||||||
Total assets | $ | 68,349 | $ | 356 | $ | — | $ | 68,705 | |||||||
Liabilities | |||||||||||||||
Guarantees of bank loans to tobacco growers | $ | — | $ | — | $ | 5,932 | $ | 5,932 | |||||||
Interest rate swap agreements | — | 1,119 | — | 1,119 | |||||||||||
Forward foreign currency exchange contracts | — | 1,352 | — | 1,352 | |||||||||||
Total liabilities | $ | — | $ | 2,471 | $ | 5,932 | $ | 8,403 | |||||||
March 31, 2011 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Money market funds | $ | 108,832 | $ | — | $ | — | $ | 108,832 | |||||||
Trading securities associated with deferred compensation plans | 20,899 | — | — | 20,899 | |||||||||||
Interest rate swap agreements | — | 10,193 | — | 10,193 | |||||||||||
Forward foreign currency exchange contracts | — | 3,622 | — | 3,622 | |||||||||||
Total assets | $ | 129,731 | $ | 13,815 | $ | — | $ | 143,546 | |||||||
Liabilities | |||||||||||||||
Guarantees of bank loans to tobacco growers | $ | — | $ | — | $ | 20,699 | $ | 20,699 | |||||||
Forward foreign currency exchange contracts | — | 243 | — | 243 | |||||||||||
Total liabilities | $ | — | $ | 243 | $ | 20,699 | $ | 20,942 |
Fiscal Year Ended March 31, | |||||||
2012 | 2011 | ||||||
Balance at beginning of year | $ | 20,699 | $ | 25,997 | |||
Transfer to allowance for loss on direct loans to farmers (removal of prior crop year and other loans from portfolio) | (18,305 | ) | (14,724 | ) | |||
Transfer from allowance for loss on direct loans to farmers (addition of current crop year loans) | 4,279 | 7,559 | |||||
Transfer of guarantees to assignee of farmer contracts (see Note 14) | — | (1,110 | ) | ||||
Change in discount rate and estimated collection period | 780 | 1,389 | |||||
Currency remeasurement | (1,521 | ) | 1,588 | ||||
Balance at end of year | $ | 5,932 | $ | 20,699 |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||||||
Discount rates: | |||||||||||||||||
Benefit cost for plan year | 5.50 | % | 6.00 | % | 7.75 | % | 5.50 | % | 6.00 | % | 7.75 | % | |||||
Benefit obligation at end of plan year | 4.60 | % | 5.50 | % | 6.00 | % | 4.40 | % | 5.50 | % | 6.00 | % | |||||
Expected long-term return on plan assets: | |||||||||||||||||
Benefit cost for plan year | 8.00 | % | 8.00 | % | 7.75 | % | 4.30 | % | 4.30 | % | 4.30 | % | |||||
Benefit obligation at end of plan year | 8.00 | % | 8.00 | % | 8.00 | % | 4.30 | % | 4.30 | % | 4.30 | % | |||||
Salary scale | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | |||||
Healthcare cost trend rate | N/A | N/A | N/A | 7.80 | % | 8.00 | % | 8.30 | % |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Actuarial present value of benefit obligation: | |||||||||||||||
Accumulated benefit obligation | $ | 278,128 | $ | 236,701 | $ | — | $ | — | |||||||
Projected benefit obligation | 302,632 | 262,085 | 48,784 | 43,888 | |||||||||||
Change in projected benefit obligation: | |||||||||||||||
Projected benefit obligation, beginning of year | $ | 262,085 | $ | 243,760 | $ | 43,888 | $ | 43,429 | |||||||
Service cost | 4,614 | 4,835 | 591 | 787 | |||||||||||
Interest cost | 13,959 | 14,168 | 2,636 | 2,534 | |||||||||||
Effect of discount rate change | 34,292 | 15,174 | 5,205 | 2,245 | |||||||||||
Foreign currency exchange rate changes | (1,733 | ) | 1,626 | — | — | ||||||||||
Curtailment | — | 966 | — | — | |||||||||||
Settlements | — | (8,483 | ) | — | — | ||||||||||
Other | 5,975 | 5,411 | 529 | (1,222 | ) | ||||||||||
Benefit payments | (16,560 | ) | (15,372 | ) | (4,065 | ) | (3,885 | ) | |||||||
Projected benefit obligation, end of year | $ | 302,632 | $ | 262,085 | $ | 48,784 | $ | 43,888 | |||||||
Change in plan assets: | |||||||||||||||
Plan assets at fair value, beginning of year | $ | 195,715 | $ | 182,792 | $ | 3,284 | $ | 3,499 | |||||||
Actual return on plan assets | 15,451 | 26,077 | 146 | 238 | |||||||||||
Employer contributions | 6,259 | 9,211 | 3,697 | 3,432 | |||||||||||
Settlements | — | (8,483 | ) | — | — | ||||||||||
Foreign currency exchange rate changes | (1,340 | ) | 1,490 | — | — | ||||||||||
Benefit payments | (16,560 | ) | (15,372 | ) | (4,065 | ) | (3,885 | ) | |||||||
Plan assets at fair value, end of year | $ | 199,525 | $ | 195,715 | $ | 3,062 | $ | 3,284 | |||||||
Funded status: | |||||||||||||||
Funded status of the plans, end of year | $ | (103,107 | ) | $ | (66,370 | ) | $ | (45,722 | ) | $ | (40,604 | ) |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Non-current asset (reported in other noncurrent assets) | $ | 1,424 | $ | 1,493 | $ | — | $ | — | |||||||
Current liability (included in accounts payable and accrued expenses) | (6,511 | ) | (2,098 | ) | (3,213 | ) | (3,511 | ) | |||||||
Non-current liability (reported as pensions and other postretirement benefits) | (98,020 | ) | (65,765 | ) | (42,509 | ) | (37,093 | ) | |||||||
Amounts recognized in the consolidated balance sheets | $ | (103,107 | ) | $ | (66,370 | ) | $ | (45,722 | ) | $ | (40,604 | ) |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
For plans with a projected benefit obligation in excess of plan assets: | |||||||||||||||
Aggregate projected benefit obligation | $ | 294,325 | $ | 257,240 | $ | 48,784 | $ | 43,888 | |||||||
Aggregate fair value of plan assets | 189,795 | 189,378 | 3,062 | 3,284 | |||||||||||
For plans with an accumulated benefit obligation in excess of plan assets: | |||||||||||||||
Aggregate accumulated benefit obligation | 270,569 | 232,342 | N/A | N/A | |||||||||||
Aggregate fair value of plan assets | 189,795 | 189,378 | N/A | N/A |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||
Fiscal Year Ended March 31, | Fiscal Year Ended March 31, | ||||||||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||||||||||||
Components of net periodic benefit cost: | |||||||||||||||||||||||
Service cost | $ | 4,614 | $ | 4,835 | $ | 3,815 | $ | 591 | $ | 787 | $ | 581 | |||||||||||
Interest cost | 13,959 | 14,168 | 14,899 | 2,636 | 2,534 | 2,789 | |||||||||||||||||
Expected return on plan assets | (14,958 | ) | (14,938 | ) | (13,687 | ) | (134 | ) | (144 | ) | (152 | ) | |||||||||||
Curtailment loss | — | 966 | — | — | — | — | |||||||||||||||||
Settlement cost | — | 3,119 | 4,640 | — | — | — | |||||||||||||||||
Net amortization and deferral | 6,309 | 3,937 | 1,387 | (335 | ) | (253 | ) | (1,083 | ) | ||||||||||||||
Net periodic benefit cost | $ | 9,924 | $ | 12,087 | $ | 11,054 | $ | 2,758 | $ | 2,924 | $ | 2,135 |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Change in net actuarial loss (gain): | |||||||||||||||
Net actuarial loss (gain), beginning of year | $ | 75,138 | $ | 73,301 | $ | (6,722 | ) | $ | (7,452 | ) | |||||
Losses (gains) arising during the year | 39,461 | 5,996 | 1,475 | 478 | |||||||||||
Reclassification adjustments during the year | (6,428 | ) | (4,159 | ) | 603 | 252 | |||||||||
Net actuarial loss (gain), end of year | 108,171 | 75,138 | (4,644 | ) | (6,722 | ) | |||||||||
Change in prior service cost (benefit): | |||||||||||||||
Prior service cost (benefit), beginning of year | (3,393 | ) | (3,145 | ) | — | — | |||||||||
Prior service cost arising during the year | — | — | 750 | — | |||||||||||
Reclassification adjustments during the year | 313 | (248 | ) | (250 | ) | — | |||||||||
Prior service cost (benefit), end of year | (3,080 | ) | (3,393 | ) | 500 | — | |||||||||
Total amounts in accumulated other comprehensive loss at end of year, before income taxes | $ | 105,091 | $ | 71,745 | $ | (4,144 | ) | $ | (6,722 | ) |
Actual Allocation | |||||||||||||||
Target Allocation | March 31, | ||||||||||||||
Major Asset Category | Range | 2012 | 2011 | ||||||||||||
Domestic equity securities | 44.0 | % | 37 | % | — | 51 | % | 45.5 | % | 45.6 | % | ||||
International equity securities | 13.0 | % | 10 | % | — | 16 | % | 12.1 | % | 13.6 | % | ||||
Fixed income securities (1) | 33.0 | % | 26 | % | — | 40 | % | 32.3 | % | 31.2 | % | ||||
Alternative investments: | |||||||||||||||
Real estate funds | 5.0 | % | 3 | % | — | 7 | % | 5.4 | % | 4.7 | % | ||||
Hedge funds | 5.0 | % | 3 | % | — | 7 | % | 4.7 | % | 4.9 | % | ||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
(1) | Actual amounts include high yield securities and cash balances held for the payment of benefits. |
Fiscal Year: | Pension Benefits | Other Postretirement Benefits | |||||
2013 | $ | 26,356 | $ | 3,213 | |||
2014 | 16,750 | 3,274 | |||||
2015 | 14,878 | 3,329 | |||||
2016 | 18,203 | 3,353 | |||||
2017 | 19,183 | 3,404 | |||||
2018 - 2022 | 100,682 | 16,424 |
• | Domestic and international equity securities: |
▪ | Common stock: Shares of common stock are valued at the unadjusted official closing price as defined by the most active market, or at the most recent trade price of the security at the close of the active market. Secondary pricing sources are used when one of these primary sources is not available. Instances requiring secondary pricing sources are reviewed for evidence of inactive, delisted, bankrupt, or suspended equities. |
▪ | Commingled funds and common collective trusts: These assets are valued at the net asset value of shares held at the valuation date, based on the quoted market prices of the underlying assets of the funds or trusts. The investments are valued using the Net Asset Value of the fund or trust as a practical expedient for fair market value. These investment vehicles hold equity securities and cash. |
• | Fixed income securities: Some fixed income investments are held through mutual funds for which an active market is available (Level 1). Other fixed income investments are valued at an estimated price that a dealer would pay for a similar security on the valuation date using observable market inputs (Level 2). These measures may include yield curves for similarly rated securities. Small amounts of cash are held in common collective trusts. Fixed income securities include insurance assets, which are valued based on an actuarial calculation (Level 3). |
• | Alternative investments: Real estate assets are valued using valuation models that incorporate income and market approaches, including external appraisals, to derive fair values. The hedge fund allocation is a fund of hedge funds and is valued by the manager based on the net asset value of each fund. These models use significant unobservable inputs and are classified as Level 3 within the fair value hierarchy. |
March 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Domestic equity securities | $ | 26,025 | $ | 55,420 | $ | — | $ | 81,445 | |||||||
International equity securities | 20,935 | — | — | 20,935 | |||||||||||
Fixed income securities (1) | 21,470 | 51,708 | 6,083 | 79,261 | |||||||||||
Alternative investments: | |||||||||||||||
Real estate fund | — | — | 8,358 | 8,358 | |||||||||||
Hedge fund | — | — | 9,526 | 9,526 | |||||||||||
Total investments | $ | 68,430 | $ | 107,128 | $ | 23,967 | $ | 199,525 |
March 31, 2011 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Domestic equity securities | $ | 27,300 | $ | 52,768 | $ | — | $ | 80,068 | |||||||
International equity securities | 23,925 | — | — | 23,925 | |||||||||||
Fixed income securities (1) | 16,974 | 52,425 | 5,362 | 74,761 | |||||||||||
Alternative investments: | |||||||||||||||
Real estate fund | — | — | 8,338 | 8,338 | |||||||||||
Hedge fund | — | — | 8,623 | 8,623 | |||||||||||
Total investments | $ | 68,199 | $ | 105,193 | $ | 22,323 | $ | 195,715 |
(1) | Includes high yield securities and cash and cash equivalent balances. |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Number of shares repurchased | 80,191 | 1,113,125 | 743,876 | ||||||||
Cost of shares repurchased (in thousands of dollars) | $ | 3,488 | $ | 46,696 | $ | 32,942 | |||||
Weighted-average cost per share | $ | 43.49 | $ | 41.95 | $ | 44.28 |
Shares | Weighted-Average Exercise Price | Weighted-Average Contractual Term (in years) | Aggregate Intrinsic Value | ||||||||||
Fiscal Year Ended March 31, 2010: | |||||||||||||
Outstanding at beginning of year | 719,557 | $ | 50.41 | ||||||||||
Granted | 253,800 | 35.30 | |||||||||||
Exercised | (132,892 | ) | 36.09 | ||||||||||
Cancelled/expired | (8,667 | ) | 24.69 | ||||||||||
Outstanding at end of year | 831,798 | 48.36 | |||||||||||
Fiscal Year Ended March 31, 2011: | |||||||||||||
Granted | 153,600 | 39.71 | |||||||||||
Cancelled/expired | (62,800 | ) | 62.66 | ||||||||||
Outstanding at end of year | 922,598 | 45.94 | |||||||||||
Fiscal Year Ended March 31, 2012: | |||||||||||||
Granted | 170,400 | 37.86 | |||||||||||
Exercised | (195,948 | ) | 35.82 | ||||||||||
Cancelled/expired | (41,200 | ) | 59.25 | ||||||||||
Outstanding at end of year | 855,850 | $ | 46.01 | 6.08 | $ | 4,023 | |||||||
Exercisable at end of year | 521,444 | $ | 51.28 | 4.54 | $ | 1,078 | |||||||
Expected to vest in future periods | 334,406 | $ | 37.79 | 8.49 | $ | 2,944 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Total intrinsic value of stock options and SARs exercised | $ | 1,745 | $ | — | $ | 2,238 | |||||
Total fair value of SARs vested | $ | 1,713 | $ | 1,849 | $ | 1,611 |
RSUs | Restricted Stock | PSAs | ||||||||||||||||||
Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Grant Date Fair Value | |||||||||||||||
Fiscal Year Ended March 31, 2010: | ||||||||||||||||||||
Unvested at beginning of year | 149,130 | $ | 49.84 | 74,900 | $ | 41.08 | 30,466 | $ | 45.96 | |||||||||||
Granted | 73,589 | 35.93 | 17,550 | 39.76 | 63,450 | 29.67 | ||||||||||||||
Vested | (14,955 | ) | 47.21 | (7,700 | ) | 40.41 | — | — | ||||||||||||
Forfeited | — | — | — | — | (897 | ) | 45.96 | |||||||||||||
Unvested at end of year | 207,764 | 32.50 | 84,750 | 40.87 | 93,019 | 34.85 | ||||||||||||||
Fiscal Year Ended March 31, 2011: | ||||||||||||||||||||
Granted | 63,992 | 41.40 | — | — | 38,400 | 33.95 | ||||||||||||||
Vested | (24,940 | ) | 46.35 | (7,000 | ) | 41.96 | — | — | ||||||||||||
Unvested at end of year | 246,816 | 44.07 | 77,750 | 40.77 | 131,419 | 34.59 | ||||||||||||||
Fiscal Year Ended March 31, 2012: | ||||||||||||||||||||
Granted | 84,290 | 38.28 | — | — | 57,383 | 35.56 | ||||||||||||||
Vested | (39,827 | ) | 35.94 | (10,350 | ) | 37.52 | (44,352 | ) | 45.96 | |||||||||||
Forfeited | — | — | — | — | (1,984 | ) | 33.30 | |||||||||||||
Unvested at end of year | 291,279 | $ | 43.72 | 67,400 | $ | 41.91 | 142,466 | $ | 31.45 |
Fiscal Year Ended March 31, | ||||||
2012 | 2011 | 2010 | ||||
Assumptions: | ||||||
Expected term | 5 years | 5 years | 5 years | |||
Expected volatility | 35.80% | 35.30 | % | 39.00% | ||
Expected dividend yield | 5.07% | 4.73 | % | 5.21% | ||
Risk-free interest rate | 1.66% | 2.36 | % | 2.51% | ||
Resulting fair value of SARs granted | $7.46 | $8.35 | $7.85 |
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
Total stock-based compensation expense | $ | 5,987 | $ | 5,893 | $ | 6,133 | |||||
Income tax benefit recorded on stock-based compensation expense | $ | 2,095 | $ | 2,063 | $ | 2,147 |
March 31, | |||||||
2012 | 2011 | ||||||
Flue-cured and burley leaf tobacco operations: | |||||||
North America | $ | 44,802 | $ | 32,640 | |||
Other regions | 310,489 | 269,613 | |||||
Subtotal | 355,291 | 302,253 | |||||
Other tobacco operations | 35,499 | 33,322 | |||||
Consolidated accounts receivable, net | $ | 390,790 | $ | 335,575 |
Sales and Other Operating Revenues | Operating Income | ||||||||||||||||||||||
Fiscal Year Ended March 31, | Fiscal Year Ended March 31, | ||||||||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||||||||||||
Flue-cured and burley leaf tobacco operations: | |||||||||||||||||||||||
North America | $ | 314,248 | $ | 340,366 | $ | 357,195 | $ | 30,037 | $ | 59,278 | $ | 57,006 | |||||||||||
Other regions (1) | 1,893,388 | 1,944,410 | 1,895,829 | 180,670 | 169,989 | 182,513 | |||||||||||||||||
Subtotal | 2,207,636 | 2,284,776 | 2,253,024 | 210,707 | 229,267 | 239,519 | |||||||||||||||||
Other tobacco operations (2) | 239,241 | 286,751 | 238,714 | 12,841 | 28,658 | 40,066 | |||||||||||||||||
Segment total | 2,446,877 | 2,571,527 | 2,491,738 | 223,548 | 257,925 | 279,585 | |||||||||||||||||
Deduct: | |||||||||||||||||||||||
Equity in pretax earnings of unconsolidated affiliates (3) | (3,195 | ) | (8,634 | ) | (22,376 | ) | |||||||||||||||||
Restructuring and impairment costs (4) | (11,661 | ) | (21,504 | ) | — | ||||||||||||||||||
Charge for (reversal of) European Commission fines (4) | (49,091 | ) | 7,445 | — | |||||||||||||||||||
Add: | |||||||||||||||||||||||
Other income (4) | 20,703 | 19,368 | — | ||||||||||||||||||||
Consolidated total | $ | 2,446,877 | $ | 2,571,527 | $ | 2,491,738 | $ | 180,304 | $ | 254,600 | $ | 257,209 | |||||||||||
Segment Assets | Goodwill | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||||||||||||
Flue-cured and burley leaf tobacco operations: | |||||||||||||||||||||||
North America | $ | 256,546 | $ | 289,950 | $ | 362,008 | $ | — | $ | — | $ | — | |||||||||||
Other regions (1) | 1,712,970 | 1,612,558 | 1,649,349 | 96,564 | 96,543 | 102,224 | |||||||||||||||||
Subtotal | 1,969,516 | 1,902,508 | 2,011,357 | 96,564 | 96,543 | 102,224 | |||||||||||||||||
Other tobacco operations (2) | 297,403 | 325,359 | 359,683 | 1,713 | 1,713 | 1,713 | |||||||||||||||||
Segment and consolidated totals | $ | 2,266,919 | $ | 2,227,867 | $ | 2,371,040 | $ | 98,277 | $ | 98,256 | $ | 103,937 | |||||||||||
Depreciation and Amortization | Capital Expenditures | ||||||||||||||||||||||
Fiscal Year Ended March 31, | Fiscal Year Ended March 31, | ||||||||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||||||||||||
Flue-cured and burley leaf tobacco operations: | |||||||||||||||||||||||
North America | $ | 10,201 | $ | 11,866 | $ | 11,953 | $ | 438 | $ | 3,080 | $ | 12,105 | |||||||||||
Other regions (1) | 29,475 | 28,541 | 26,710 | 32,059 | 34,324 | 31,283 | |||||||||||||||||
Subtotal | 39,676 | 40,407 | 38,663 | 32,497 | 37,404 | 43,388 | |||||||||||||||||
Other tobacco operations (2) | 4,190 | 4,865 | 4,833 | 5,677 | 1,725 | 14,189 | |||||||||||||||||
Segment and consolidated totals | $ | 43,866 | $ | 45,272 | $ | 43,496 | $ | 38,174 | $ | 39,129 | $ | 57,577 |
(1) | Includes South America, Africa, Europe, and Asia regions, as well as inter-region eliminations. |
(2) | Includes Dark Air-Cured, Oriental and Special Services, as well as inter-company eliminations. Oriental does not contribute significantly to the reported amounts for sales and other operating revenues, goodwill, depreciation and amortization, or capital expenditures because its financial results consist principally of equity in the pretax earnings of an unconsolidated affiliate. The investment in the unconsolidated affiliate is included in segment assets and was approximately $89.7 million, $110.8 million, and $101.4 million, at March 31, 2012, 2011, and 2010, respectively. |
(3) | Item is included in segment operating income, but is not included in consolidated operating income. |
(4) | Item is not included in segment operating income, but is included in consolidated operating income. |
Geographic Data | Sales and Other Operating Revenues | ||||||||||
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
United States | $ | 315,610 | $ | 340,313 | $ | 305,390 | |||||
Belgium | 210,425 | 345,774 | 469,067 | ||||||||
Germany | 210,791 | 267,087 | 199,768 | ||||||||
All other countries | 1,710,051 | 1,618,353 | 1,517,513 | ||||||||
Consolidated total | $ | 2,446,877 | $ | 2,571,527 | $ | 2,491,738 | |||||
Long-Lived Assets | |||||||||||
Fiscal Year Ended March 31, | |||||||||||
2012 | 2011 | 2010 | |||||||||
United States | $ | 75,330 | $ | 88,910 | $ | 100,698 | |||||
Brazil | 139,484 | 141,535 | 156,961 | ||||||||
Mozambique | 50,475 | 53,854 | 50,045 | ||||||||
All other countries | 137,169 | 131,950 | 128,921 | ||||||||
Consolidated total | $ | 402,458 | $ | 416,249 | $ | 436,625 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Fiscal Year Ended March 31, 2012 | |||||||||||||||
Sales and other operating revenues | $ | 479,465 | $ | 641,026 | $ | 672,420 | $ | 653,966 | |||||||
Gross profit | 94,358 | 119,426 | 147,105 | 111,103 | |||||||||||
Net income (loss) | 17,322 | (7,997 | ) | 61,602 | 29,892 | ||||||||||
Net income (loss) attributable to Universal Corporation | 15,888 | (8,039 | ) | 58,453 | 25,755 | ||||||||||
Earnings (loss) available to Universal Corporation common shareholders after dividends on convertible perpetual preferred stock | 12,176 | (11,752 | ) | 54,741 | 22,042 | ||||||||||
Earnings (loss) per share attributable to Universal Corporation common shareholders: | |||||||||||||||
Basic | 0.52 | (0.51 | ) | 2.36 | 0.95 | ||||||||||
Diluted | 0.52 | (0.51 | ) | 2.06 | 0.91 | ||||||||||
Cash dividends declared per share of convertible perpetual preferred stock | 16.88 | 16.87 | 16.88 | 16.87 | |||||||||||
Cash dividends declared per share of common stock | 0.48 | 0.48 | 0.49 | 0.49 | |||||||||||
Market price range of common stock: | |||||||||||||||
High | 45.72 | 41.48 | 47.38 | 48.60 | |||||||||||
Low | 36.94 | 35.11 | 35.78 | 44.88 | |||||||||||
Fiscal Year Ended March 31, 2011 | |||||||||||||||
Sales and other operating revenues | $ | 538,916 | $ | 664,188 | $ | 688,208 | $ | 680,215 | |||||||
Gross profit | 102,237 | 133,274 | 154,044 | 118,778 | |||||||||||
Net income | 24,418 | 53,783 | 57,585 | 28,764 | |||||||||||
Net income attributable to Universal Corporation | 25,320 | 51,831 | 52,298 | 27,116 | |||||||||||
Earnings available to Universal Corporation common shareholders after dividends on convertible perpetual preferred stock | 21,608 | 48,118 | 48,586 | 23,403 | |||||||||||
Earnings per share attributable to Universal Corporation common shareholders: | |||||||||||||||
Basic | 0.89 | 2.00 | 2.05 | 1.00 | |||||||||||
Diluted | 0.87 | 1.78 | 1.82 | 0.95 | |||||||||||
Cash dividends declared per share of convertible perpetual preferred stock | 16.88 | 16.87 | 16.88 | 16.87 | |||||||||||
Cash dividends declared per share of common stock | 0.47 | 0.47 | 0.48 | 0.48 | |||||||||||
Market price range of common stock: | |||||||||||||||
High | 55.92 | 44.82 | 43.34 | 43.72 | |||||||||||
Low | 38.38 | 35.44 | 37.05 | 37.74 |
Note: | Earnings per share amounts for each fiscal year may not equal the total of the four quarterly amounts due to differences in weighted-average outstanding shares for the respective periods and to the fact that the Company’s convertible perpetual preferred stock may be antidilutive for some periods. |
• | First Quarter 2012 – restructuring costs of $6.9 million that included approximately $3.8 million for employee termination benefits, primarily related to the Company’s U.S. operations, and $3.1 million of costs incurred to exit a supplier arrangement in Europe in response to market changes. The restructuring costs reduced net income attributable to Universal Corporation by $4.4 million and diluted earnings per share by $0.19. The Company also recorded a $9.6 million gain on insurance settlement proceeds to replace factory and equipment lost in a fire at a plant in Europe. The gain on insurance settlement proceeds increased net income attributable to Universal Corporation by $6.2 million and diluted earnings per share by $0.27. |
• | Second Quarter 2012 – restructuring costs of $3.0 million primarily related to voluntary and involuntary terminations in the Company’s operations in the U.S. and South America that reduced net income attributable to Universal Corporation by $1.9 million and diluted earnings per share by $0.08. In addition, the Company recorded a charge of $49.1 million to accrue a fine and accumulated interest imposed jointly on the Company and Deltafina, S.p.A. (“Deltafina”), its Italian subsidiary, by the European Commission related to tobacco buying practices in Italy. The charge reflected a September 2011 appeals court decision rejecting Deltafina’s application to reinstate its immunity in the case. The charge reduced net income attributable to Universal Corporation by $46.2 million and diluted earnings per share by $1.85. Deltafina has appealed the September 2011 appeals court decision to the next court level. |
• | Third Quarter 2012 – a gain of $11.1 million on the sale of land and buildings in Brazil that were most recently used for storage activities. The gain increased net income attributable to Universal Corporation by $7.2 million and diluted earnings per share by $0.25. |
• | Fourth Quarter 2012 – restructuring costs of approximately $1.4 million primarily related to voluntary and involuntary separations in various locations. The restructuring costs reduced net income attributable to Universal Corporation by $0.9 million and diluted earnings per share by $0.03. |
• | First Quarter 2011 – restructuring costs of $0.9 million associated with voluntary early retirement offers aimed at reducing costs in the Company’s U.S. operations. The restructuring costs reduced net income attributable to Universal Corporation by approximately $0.6 million and diluted earnings per share by $0.02. |
• | Second Quarter 2011 – a $7.4 million reversal of a portion of a charge recorded in fiscal year 2005 to accrue a fine imposed by the European Commission on Deltafina related to tobacco buying practices in Spain. The reversal reflected a favorable court decision in Deltafina’s appeal of the fine and increased net income attributable to Universal Corporation by $4.8 million and diluted earnings per share by $0.17. The Company also recorded restructuring costs of approximately $2.0 million primarily related to voluntary early retirement offers in the Company’s U.S. operations and voluntary and involuntary separations in various other locations. The restructuring costs reduced net income attributable to Universal Corporation by $1.3 million and diluted earnings per share by $0.05. |
• | Third Quarter 2011 – a $19.4 million gain on the assignment of farmer contracts and sale of related assets in Brazil to an operating subsidiary of one of the Company’s major customers. The gain increased net income attributable to Universal Corporation by $12.6 million and diluted earnings per share by $0.44. The Company also recorded restructuring and impairment costs totaling $11.0 million during the quarter. Those costs primarily related to a decision to close the Company’s leaf tobacco processing operations in Canada and sell the assets of the operations, but they also included costs associated with initiatives to restructure and downsize activities at various other locations. The restructuring and impairment costs reduced net income attributable to Universal Corporation by $7.5 million and diluted earnings per share by $0.26. |
• | Fourth Quarter 2011 – restructuring and impairment costs totaling $7.5 million. The restructuring costs included pension curtailment and settlement charges related to the termination of a defined benefit pension plan with the closing of the operations in Canada, as well as costs associated with voluntary early retirement offers in the Company’s U.S. operations and voluntary and involuntary separations in various other locations. The restructuring and impairment costs reduced net income attributable to Universal Corporation by $4.8 million and diluted earnings per share by $0.17. |
Name and Age | Position | Business Experience During Past Five Years | ||
G. C. Freeman, III (49) | Chairman, President and Chief Executive Officer | Mr. Freeman was elected Chairman of the Board in August 2008, Chief Executive Officer effective April 2008, President in December 2006, and Vice President in November 2005. Mr. Freeman served as General Counsel and Secretary from February 2001 until November 2005 and has been employed with the Company since 1997. | ||
W. K. Brewer (53) | Executive Vice President and Chief Operating Officer | Mr. Brewer was elected Executive Vice President and Chief Operating Officer in August 2008, Vice President of Universal Corporation in August 2007, and Executive Vice President of Universal Leaf Tobacco Company, Incorporated (“Universal Leaf”) in March 2006. Mr. Brewer served as President of Universal Leaf North America U.S., Inc. from January 2002 until March 2006. He has been employed with the Company since 1977. | ||
D. C. Moore (56) | Senior Vice President and Chief Financial Officer | Mr. Moore was elected Senior Vice President and Chief Financial Officer effective September 2008. Mr. Moore served as Vice President and Chief Administrative Officer from April 2006 until September 2008, as Senior Vice President of Universal Leaf from September 2005 until April 2006, and as Managing Director of Universal Leaf International SA from April 2002 until September 2005. He has been employed with the Company since 1978. | ||
R. M. Paul (54) | Executive Vice President, Universal Leaf Tobacco Company, Inc. | Mr. Paul has served as Executive Vice President, Universal Leaf, with responsibility for sales activities, since March 2006. He has been employed with the Company since 1979. | ||
T. G. Broome (58) | Executive Vice President, Universal Leaf Tobacco Company, Inc. | Mr. Broome was elected Executive Vice President, Universal Leaf, with responsibility for sales activities, in April 2011. From September 1998 through March 2011, Mr. Broome served as Senior Vice President-Sales. He has been employed with the Company since 1994. | ||
P. D. Wigner (43) | Vice President, General Counsel, Secretary & Chief Compliance Officer | Mr. Wigner was elected Chief Compliance Officer in November 2007, Vice President in August 2007, and General Counsel and Secretary in November 2005. Mr. Wigner served as Senior Counsel of Universal Leaf from November 2004 until November 2005. He has been employed with the Company since 2003. | ||
J. A. Huffman (50) | Senior Vice President, Information and Planning, Universal Leaf Tobacco Company, Inc. | Mr. Huffman was elected Senior Vice President, Information and Planning, Universal Leaf, in August 2007. From September 2003 to August 2007, Mr. Huffman served as Senior Vice President. From September 2002 to September 2003, Mr. Huffman served as Vice President and Controller. He has been employed with the Company since 1996. | ||
C. C. Formacek (52) | Vice President and Treasurer | Ms. Formacek was elected Vice President and Treasurer effective April 2012. Ms. Formacek served as Treasurer of Universal Leaf from April 2011 through March 2012. She joined the Company in September 2009 and served as Assistant Treasurer of Universal Leaf from that time through March 2011. Ms. Formacek formerly served as Treasurer of Chesapeake Corporation from January 2005 through July 2009. | ||
R. M. Peebles (54) | Vice President and Controller | Mr. Peebles was elected Vice President and Controller in April 2011. Mr. Peebles joined the Company in September 2003 and served as Controller from that time through March 2011. |
Plan Category | Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (1) | ||||||||
Equity compensation plans approved by shareholders: | |||||||||||
1994 Amended and Restated Stock Option Plan for Non-Employee Directors | 5,000 | $ | 41.66 | — | |||||||
1997 Executive Stock Plan | 1,000 | 35.81 | — | ||||||||
2002 Executive Stock Plan | 364,984 | 56.15 | 124,240 | (2) | |||||||
2007 Stock Incentive Plan | 918,611 | 39.04 | 1,012,803 | (3) | |||||||
Equity compensation plans not approved by shareholders (4) | — | — | — | ||||||||
Total | 1,289,595 | $ | 43.89 | 1,137,043 |
(1) | Amounts exclude any securities to be issued upon exercise of outstanding options, warrants, and rights. |
(2) | The 2002 Executive Stock Plan permits grants of stock options and stock appreciation rights, and awards of common stock, restricted stock, and phantom stock/restricted stock units. Of the 124,240 shares of common stock remaining available for future issuance under that plan, none are available for awards of common stock or restricted stock. |
(3) | The 2007 Stock Incentive Plan permits grants of stock options and stock appreciation rights, and awards of common stock, restricted stock, and phantom stock/restricted stock units. Of the 1,012,803 shares of common stock remaining available for future issuance under that plan, 283,895 shares are available for awards of common stock, restricted stock units, or restricted stock. |
(4) | All of the Company’s equity compensation plans have been approved by shareholders. |
(a) | The following are filed as part of this Annual Report: |
1. | Financial Statements. |
2. | Financial Statement Schedules. |
3. | Exhibits. The exhibits are listed in the Exhibit Index immediately following the signature pages to this Annual Report. |
(b) | Exhibits |
Description | Balance at Beginning of Period | Net Additions (Reversals) Charged to Expense | Additions Charged to Other Accounts | Deductions (a) | Balance at End of Period | |||||||||||||||
(in thousands of dollars) | ||||||||||||||||||||
Fiscal Year Ended March 31, 2010: | ||||||||||||||||||||
Allowance for doubtful accounts (deducted from accounts receivable and other noncurrent assets) | $ | 6,037 | $ | 697 | $ | — | $ | 123 | $ | 6,857 | ||||||||||
Allowance for supplier accounts (deducted from advances to suppliers and other noncurrent assets) | 28,164 | 18,514 | — | 9,565 | 56,243 | |||||||||||||||
Allowance for recoverable taxes (deducted from other current assets and other noncurrent assets) | 12,257 | 3,174 | — | 2,162 | 17,593 | |||||||||||||||
Fiscal Year Ended March 31, 2011: | ||||||||||||||||||||
Allowance for doubtful accounts (deducted from accounts receivable and other noncurrent assets) | $ | 6,857 | $ | (681 | ) | $ | — | $ | (573 | ) | $ | 5,603 | ||||||||
Allowance for supplier accounts (deducted from advances to suppliers and other noncurrent assets) | 56,243 | 18,666 | — | 29 | 74,938 | |||||||||||||||
Allowance for recoverable taxes (deducted from other current assets and other noncurrent assets) | 17,593 | 3,785 | — | 748 | 22,126 | |||||||||||||||
Fiscal Year Ended March 31, 2012: | ||||||||||||||||||||
Allowance for doubtful accounts (deducted from accounts receivable and other noncurrent assets) | $ | 5,603 | $ | 4,244 | $ | — | $ | (1,540 | ) | $ | 8,307 | |||||||||
Allowance for supplier accounts (deducted from advances to suppliers and other noncurrent assets) | 74,938 | 11,929 | — | (12,485 | ) | 74,382 | ||||||||||||||
Allowance for recoverable taxes (deducted from other current assets and other noncurrent assets) | 22,126 | 2,564 | — | 29 | 24,719 | |||||||||||||||
(a) | Includes direct write-offs of assets and currency remeasurement. |
UNIVERSAL CORPORATION | |||
May 25, 2012 | |||
By: | /s/ GEORGE C. FREEMAN, III | ||
George C. Freeman, III Chairman, President, and Chief Executive Officer |
Signature | Title | Date | ||
/s/ GEORGE C. FREEMAN, III | Chairman, President, Chief Executive Officer, and Director | May 25, 2012 | ||
George C. Freeman, III | (Principal Executive Officer) | |||
/s/ DAVID C. MOORE | Senior Vice President and Chief Financial Officer | May 25, 2012 | ||
David C. Moore | (Principal Financial Officer) | |||
/s/ ROBERT M. PEEBLES | Vice President and Controller | May 25, 2012 | ||
Robert M. Peebles | (Principal Accounting Officer) | |||
/s/ JOHN B. ADAMS, JR. | Director | May 25, 2012 | ||
John B. Adams, Jr. | ||||
/s/ CHESTER A. CROCKER | Director | May 25, 2012 | ||
Chester A. Crocker | ||||
/s/ CHARLES H. FOSTER, JR. | Director | May 25, 2012 | ||
Charles H. Foster, Jr. | ||||
/s/ THOMAS H. JOHNSON | Director | May 25, 2012 | ||
Thomas H. Johnson | ||||
/s/ EDDIE N. MOORE, JR. | Director | May 25, 2012 | ||
Eddie N. Moore, Jr. | ||||
/s/ JEREMIAH J. SHEEHAN | Director | May 25, 2012 | ||
Jeremiah J. Sheehan | ||||
/s/ ROBERT C. SLEDD | Director | May 25, 2012 | ||
Robert C. Sledd | ||||
/s/ DR. EUGENE P. TRANI | Director | May 25, 2012 | ||
Dr. Eugene P. Trani |
3.1 | Amended and Restated Articles of Incorporation, effective August 9, 2011 (incorporated herein by reference to the Registrant’s Current Report on Form 8-K Registration Statement filed August 9, 2011, File No. 001-00652). | ||
3.2 | Amended and Restated Bylaws (as of August 3, 2010) (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated August 3, 2010, File No. 001-00652). | ||
4.1 | Indenture between the Registrant and Chemical Bank, as trustee (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated February 25, 1991, File No. 001-00652). | ||
4.2 | Specimen Common Stock Certificate (incorporated herein by reference to the Registrant’s Amendment No. 1 to Registrant’s Form 8-A Registration Statement, dated May 7, 1999, File No. 001-00652). | ||
4.3 | Form of Fixed Rate Note due September 26, 2012 (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated September 26, 2002, File No. 001-00652). | ||
4.4 | Form of Fixed Rate Note due December 1, 2014 (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated November 20, 2009, File No. 001-00652). The Registrant, by signing this Report on Form 10-K, agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument which defines the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any unconsolidated subsidiaries for which financial statements are required to be filed, and that authorizes a total amount of securities not in excess of 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. | ||
10.1 | Universal Corporation Restricted Stock Plan for Non-Employee Directors (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1991, File No. 001-00652). | ||
10.2 | Form of Universal Leaf Tobacco Company, Incorporated Executive Life Insurance Agreement (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1994, File No. 001-00652). | ||
10.3 | Universal Leaf Tobacco Company, Incorporated Deferred Income Plan (incorporated herein by reference to the Registrant’s Report on Form 8, dated February 8, 1991, File No. 001-00652). | ||
10.4 | Universal Leaf Tobacco Company, Incorporated Benefit Replacement Plan (incorporated herein by reference to the Registrant’s Report on Form 8, dated February 8, 1991, File No. 001-00652). | ||
10.5 | Universal Leaf Tobacco Company, Incorporated 1994 Benefit Replacement Plan (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1994, File No. 001-00652). | ||
10.6 | Universal Leaf Tobacco Company, Incorporated 1996 Benefit Restoration Plan (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998, File No. 001-00652). | ||
10.7 | Form of Universal Corporation 1994 Stock Option and Equity Accumulation Agreement (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1994, File No. 001-00652). | ||
10.8 | Universal Corporation 1994 Amended and Restated Stock Option Plan for Non-Employee Directors dated October 27, 2003 (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, File No. 001-00652). | ||
10.9 | Form of Universal Corporation Non-Employee Director Non-Qualified Stock Option Agreement (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000, File No. 001-00652). | ||
10.10 | Form of Universal Corporation 1997 Stock Option and Equity Accumulation Agreement, with Schedule of Grants to named executive officers (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, File No. 001-00652). | ||
10.11 | Form of Universal Corporation 1999 Stock Option and Equity Accumulation Agreement, with Schedule of Grants to Executive Officers (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.12 | Form of Amendment to Stock Option and Equity Accumulation Agreements dated December 31, 1999 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.13 | Form of Universal Corporation 2000 Special Non-Qualified Stock Option Agreement, with Schedule of Grants and Exercise Loans to named executive officers (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000, File No. 001-00652). | ||
10.14 | Form of Amendment to Stock Option and Equity Accumulation Agreements dated March 15, 1999 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.15 | Form of Amendment to Stock Option and Equity Accumulation Agreements dated December 8, 2000 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.16 | Form of Amendment to Stock Option and Equity Accumulation Agreements dated June 11, 2001 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.17 | Form of Amendment to Non-Qualified Stock Option Agreements dated June 11, 2001 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.18 | Form of Amendment to 2000 Special Non-Qualified Stock Option Agreements dated June 15, 2001 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-00652). | ||
10.19 | Form of 2001 Non-Qualified Stock Option Agreement, with Schedule of Grants to Executive Officers (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002, File No. 001-00652). | ||
10.20 | Form of 2002 Stock Option and Equity Accumulation Agreement, with Schedule of Grants to Executive Officers (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003, File No. 001-00652). | ||
10.21 | Form of 2002 Non-Qualified Stock Option Agreement, with Schedule of Grants to Executive Officers (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003, File No. 001-00652). | ||
10.22 | Form of 2005 Non-Qualified Stock Option Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 9, 2005, File No. 001-00652). | ||
10.23 | Universal Leaf Tobacco Company, Incorporated 1994 Deferred Income Plan, amended and restated as of September 1, 1998 (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, File No. 001-00652). | ||
10.24 | Universal Corporation Outside Directors’ Deferred Income Plan, restated as of October 1, 1998 (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, File No. 001-00652). | ||
10.25 | Form of Universal Corporation 1997 Restricted Stock Agreement with Schedule of Awards to named executive officers (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, File No. 001-00652). | ||
10.26 | Revised Form of Universal Corporation Non-Employee Director Restricted Stock Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated June 9, 2010, File No. 001-00652). | ||
10.27 | Form Change of Control Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed November 10, 2008, File No. 001-00652). | ||
10.28 | Universal Corporation Director’s Charitable Award Program (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998, File No. 001-00652). | ||
10.29 | Universal Corporation 1997 Executive Stock Plan, as amended on August 7, 2003 (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2003, File No. 001-00652). | ||
10.30 | Universal Corporation 2002 Executive Stock Plan, as amended on August 7, 2003 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003, file no. 001-00652). | ||
10.31 | Form of Restricted Stock Units Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 1, 2006, File No. 001-00652). | ||
10.32 | Form of Restricted Stock Units Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed November 10, 2008, File No. 001-00652). | ||
10.33 | Form of Stock Appreciation Rights Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 1, 2006, File No. 001-00652). | ||
10.34 | Form Stock Appreciation Rights Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed May 28, 2008, File No. 001-00652). | ||
10.35 | Form Performance Share Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 3, 2008, File No. 001-00652). | ||
10.36 | Form Restricted Stock Unit Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 3, 2008, File No. 001-00652). | ||
10.37 | Form Stock Appreciation Rights Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed June 3, 2008, File No. 001-00652). | ||
10.38 | Form Performance Share Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed March 23, 2009, File No. 001-00652). | ||
10.39 | Purchase and Sale Agreement, dated July 6, 2006, by and between the Registrant, Deli Universal, Inc., NVDU Acquisition B.V., and N.V. Deli Universal (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed July 11, 2006, File No. 001-00652). | ||
10.4 | Form of Amended Employee Grantor Trust Enrollment Agreement dated December 29, 2006, between Universal Leaf Tobacco Company, Incorporated and named executive officers (Allen B. King, George C. Freeman, III, and Hartwell H. Roper) (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed January 5, 2007, File No. 001-00652). | ||
10.41 | Universal Corporation 2007 Amended and Restated Stock Incentive Plan effective August 4, 2011 (incorporated herein by reference to Exhibit A to the Registrant’s definitive proxy statement filed June 30, 2011, File No. 001-00652). | ||
10.42 | Universal Corporation Executive Officer Annual Incentive Plan, as amended (incorporated herein by reference to the Registrant's definitive proxy statement filed June 25, 2009, File No. 001-00652). | ||
10.43 | Form of Universal Corporation 2010 Restricted Stock Agreement with Schedule of Awards to named executive officers (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2010, File No. 001-00652). | ||
10.44 | Form of Universal Corporation Stock Appreciation Rights Agreement for executive officers (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2010, File No. 001-00652). | ||
10.45 | Form of Universal Corporation Performance Share Award Agreement (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2010, File No. 001-00652). | ||
10.46 | Universal Leaf Tobacco Company, Incorporated Deferred Income Plan III, amended and restated as of December 31, 2008 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2010, File No. 001-00652). | ||
10.47 | Universal Corporation Outside Directors' Deferred Income Plan III, amended and restated as of December 31, 2008, and amended as of February 1, 2010 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2010, File No. 001-00652). | ||
10.48 | Form of Universal Corporation 2011 Restricted Stock Units Agreement (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2011, File No. 001-00652). | ||
10.49 | Form of Universal Corporation Stock Appreciation Rights Agreement for executive officers (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2011, File No. 001-00652). | ||
10.50 | Form of Universal Corporation Performance Share Award Agreement (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2011, File No. 001-00652). | ||
10.51 | Plea Agreement between Universal Leaf Tobacos Ltda., Universal Corporation and the United States Department of Justice (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed August 6, 2010, File No. 001-00652). | ||
10.52 | Non-Prosecution Agreement between Universal Corporation and the United States Department of Justice (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed August 6, 2010, File No. 001-00652). | ||
10.53 | Consent of Defendant Universal Corporation and Final Judgment as to Defendant Universal Corporation (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed August 6, 2010, File No. 001-00652). | ||
10.54 | Credit Agreement dated November 3, 2011, among the Registrant, as Borrower; the Lenders from time to time party thereto; and JPMorgan Chase Bank, N.A., as Administrative Agent, SunTrust Bank, as Syndication Agent and AgFirst Farm Credit Bank and The Royal Bank of Scotland plc as Co-Documentation Agents (incorporated herein by reference to the Registrant's Current Report on Form 8-K filed November 8, 2011). | ||
12 | Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preference Dividends.* | ||
21 | Subsidiaries of the Registrant.* | ||
23 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.* | ||
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
32.1 | Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.* | ||
32.2 | Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.* | ||
101 | Interactive Data File (Annual Report on Form 10-K, for the fiscal year ended March 31, 2012, furnished in XBRL (eXtensible Business Reporting Language)). | ||
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for each of the three years ended March 31, 2012, 2011 and 2010, (ii) the Consolidated Statements of Comprehensive Income for each of the three years ended March 31, 2012, 2011 and 2010, (iii) the Consolidated Balance Sheets at March 31, 2012 and 2011, (iv) the Consolidated Statement of Cash Flows for each of the three years ended March 31, 2012, 2011 and 2010, (v) the Consolidated Statement of Shareholders’ Equity for each of the three years ended March 31, 2012, 2011 and 2010, (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and (vii) Schedule II - Valuation and Qualifying Accounts, tagged as blocks of text. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
Fiscal Year Ended March 31, | ||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
(in thousands, except for ratios) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
Pretax income before equity in pretax earnings (loss) of | ||||||||||||||||||||
of unconsolidated affiliates | $ | 158,783 | $ | 234,265 | $ | 234,252 | $ | 176,606 | $ | 166,782 | ||||||||||
Fixed charges (net of interest capitalized) | 26,882 | 27,845 | 29,226 | 40,797 | 48,014 | |||||||||||||||
Distribution of earnings from unconsolidated affiliates | 16,724 | — | 11,983 | 8,680 | 9,189 | |||||||||||||||
Total Earnings | $ | 202,389 | $ | 262,110 | $ | 275,461 | $ | 226,083 | $ | 223,985 | ||||||||||
Fixed Charges and Preference Dividends | ||||||||||||||||||||
Interest expense | $ | 22,835 | $ | 23,058 | $ | 24,210 | $ | 35,631 | $ | 41,908 | ||||||||||
Interest capitalized | — | — | — | — | — | |||||||||||||||
Amortization of premiums, discounts, and debt issuance costs | 1,334 | 1,260 | 1,837 | 948 | 1,767 | |||||||||||||||
Interest component of rent expense | 2,713 | 3,527 | 3,179 | 4,218 | 4,339 | |||||||||||||||
Total Fixed Charges | 26,882 | 27,845 | 29,226 | 40,797 | 48,014 | |||||||||||||||
Dividends on convertible perpetual preferred stock (pretax) | 22,846 | 22,846 | 22,846 | 22,846 | 22,846 | |||||||||||||||
Total Fixed Charges and Preference Dividends | $ | 49,728 | $ | 50,691 | $ | 52,072 | $ | 63,643 | $ | 70,860 | ||||||||||
Ratio of Earnings to Fixed Charges | 7.53 | 9.41 | 9.43 | 5.54 | 4.66 | |||||||||||||||
Ratio of Earnings to Combined Fixed Charges and | ||||||||||||||||||||
Preference Dividends | 4.07 | 5.17 | 5.29 | 3.55 | 3.16 |
Organized under law of | |
UNIVERSAL CORPORATION | Virginia |
Beleggings-en Beheermaatschappij "De Amstel" B. V. | Netherlands |
Blending Services International, Inc. | Virginia |
CA Bautz GmbH | Germany |
Casa Export, Limited | Virginia |
Casalee-Transtobac (Pvt) Ltd. | Zimbabwe |
CATSCO, Inc. | British Virgin Isles |
Continental Tobacco S.A. | Switzerland |
Deli Universal, Inc. | Virginia |
Deli-HTL Tabak Maatschappij B. V. | Netherlands |
Deltafina, S.p.A. | Italy |
Deutsch-holandische Tabakgesellschaft mbH | Germany |
Ermor Tabarama-Tabacos do Brasil Ltda. | Brazil |
Gebrueder Kulenkampff GmbH | Germany |
Global Laboratory Services, Inc. | Virginia |
Harkema Services, Inc. | Virginia |
Indoco International B.V. | Netherlands |
Industria AG | Switzerland |
Inetab-Kaubeck, SRL | Dominican Republic |
Itofina, S.A. | Switzerland |
L’Agricola, S.r.L. | Italy |
Lancaster Leaf Tobacco Company of Pennsylvania, Inc. | Virginia |
Limbe Leaf Tobacco Company Limited | Malawi |
Mozambique Leaf Tobacco Import & Export Limitada | Mozambique |
Simcoe Leaf Tobacco Company Limited | Canada |
Tabacalera San Fernando S.R.L. | Paraguay |
Tabacos Del Pacifico Norte, S.A. De C.V. | Mexico |
TAES, S.L. | Spain |
Tanzania Leaf Tobacco Co., Ltd | Tanzania |
Tanzania Tobacco Processors Ltd. | Tanzania |
Toutiana, S.A. | Switzerland |
ULT Hungary Limited | Hungary |
Ultoco, S.A. | Switzerland |
Universal Finance B.V. | Netherlands |
Universal Leaf (Asia) Pte Ltd. | Singapore |
Universal Leaf North America U. S., Inc. | North Carolina |
Universal Leaf Philippines Inc. | Philippines |
Universal Leaf South Africa (Pty) Limited | South Africa |
Universal Leaf Tabacos Ltda. | Brazil |
Universal Leaf Tabacos S. A. | Argentina |
Universal Leaf Tobacco Company, Inc. | Virginia |
Universal Leaf Tobacco Poland Sp. z.o.o. | Poland |
Zambia Leaf Tobacco Co., Ltd. | Zambia |
Zimbabwe Leaf Tobacco Company (Private) Limited | Zimbabwe |
Zimleaf Holdings (Private) Limited | Zimbabwe |
Registration Statement Number | Description | |
33-56719 | Form S-8 | |
333-39297 | Form S-8 | |
333-43522 | Form S-3 | |
333-101825 | Form S-8 | |
333-103155 | Form S-3 | |
333-130061 | Form S-3 | |
333-145205 | Form S-8 | |
333-155639 | Form S-3 | |
333-178170 | Form S-3 |
1. | I have reviewed this annual report on Form 10-K of Universal Corporation for the period ended March 31, 2012; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ George C. Freeman, III | |
George C. Freeman, III | |
Chairman, President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Universal Corporation for the period ended March 31, 2012; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David C. Moore | |
David C. Moore | |
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ George C. Freeman, III | |
George C. Freeman, III | |
Chairman, President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David C. Moore | |
David C. Moore | |
Senior Vice President and Chief Financial Officer |
Leases (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Leases [Abstract] | |||
Rent expense on operating leases | $ 20.6 | $ 21.8 | $ 20.8 |
Operating leases minimum payment in 2013 | 15.9 | ||
Operating leases minimum payment in 2014 | 7.5 | ||
Operating leases minimum payment in 2015 | 5.9 | ||
Operating leases minimum payment in 2016 | 4.8 | ||
Operating leases minimum payment in 2017 | 3.4 | ||
Operating leases minimum payment after 2017 | $ 6.1 |
Earnings Per Share (Computation Of Basic And Diluted Earnings (Loss) Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Sep. 30, 2010
|
Jun. 30, 2010
|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Numerator for basic earnings per share | |||||||||||
Net income attributable to Universal Corporation | $ 25,755 | $ 58,453 | $ (8,039) | $ 15,888 | $ 27,116 | $ 52,298 | $ 51,831 | $ 25,320 | $ 92,057 | $ 156,565 | $ 168,397 |
Less: Dividends on convertible perpetual preferred stock | (14,850) | (14,850) | (14,850) | ||||||||
Earnings available to Universal Corporation common shareholders for calculation of basic earnings per share | 22,042 | 54,741 | (11,752) | 12,176 | 23,403 | 48,586 | 48,118 | 21,608 | 77,207 | 141,715 | 153,547 |
Denominator for basic earnings per share | |||||||||||
Weighted average shares outstanding | 23,228 | 23,859 | 24,732 | ||||||||
Basic earnings per share | $ 0.95 | $ 2.36 | $ (0.51) | $ 0.52 | $ 1.00 | $ 2.05 | $ 2.00 | $ 0.89 | $ 3.32 | $ 5.94 | $ 6.21 |
Numerator for diluted earnings per share | |||||||||||
Earnings available to Universal Corporation common shareholders | 22,042 | 54,741 | (11,752) | 12,176 | 23,403 | 48,586 | 48,118 | 21,608 | 77,207 | 141,715 | 153,547 |
Add: Dividends on convertible perpetual preferred stock (if conversion assumed) | 14,850 | 14,850 | 14,850 | ||||||||
Earnings available to Universal Corporation common shareholders for calculation of diluted earnings per share | $ 92,057 | $ 156,565 | $ 168,397 | ||||||||
Denominator for diluted earnings per share: | |||||||||||
Weighted average shares outstanding | 23,228 | 23,859 | 24,732 | ||||||||
Effect of dilutive securities (if conversion or exercise assumed) Convertible perpetual preferred stock | 4,772 | 4,750 | 4,733 | ||||||||
Employee share-based awards | 339 | 279 | 197 | ||||||||
Denominator for diluted earnings per share | 28,339 | 28,888 | 29,662 | ||||||||
Diluted earnings per share | $ 0.91 | $ 2.06 | $ (0.51) | $ 0.52 | $ 0.95 | $ 1.82 | $ 1.78 | $ 0.87 | $ 3.25 | $ 5.42 | $ 5.68 |
Pension And Other Postretirement Benefit Plans (Components Of Company's Net Periodic Benefit Cost) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Pension Benefits [Member]
|
|||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | $ 4,614 | $ 4,835 | $ 3,815 |
Interest cost | 13,959 | 14,168 | 14,899 |
Expected return on plan assets | (14,958) | (14,938) | (13,687) |
Curtailment loss | 0 | 966 | 0 |
Settlement cost | 0 | 3,119 | 4,640 |
Net amortization and deferral | 6,309 | 3,937 | 1,387 |
Net periodic benefit cost | 9,924 | 12,087 | 11,054 |
Other Postretirement Benefits [Member]
|
|||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 591 | 787 | 581 |
Interest cost | 2,636 | 2,534 | 2,789 |
Expected return on plan assets | (134) | (144) | (152) |
Curtailment loss | 0 | 0 | 0 |
Settlement cost | 0 | 0 | 0 |
Net amortization and deferral | (335) | (253) | (1,083) |
Net periodic benefit cost | $ 2,758 | $ 2,924 | $ 2,135 |
Long-Term Obligations (Schedule Of Long-Term Obligations) (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Mar. 31, 2011
|
---|---|---|
Debt Instrument [Line Items] | ||
Total outstanding | $ 408,750 | $ 415,193 |
Less current portion | (16,250) | (95,000) |
Long-term obligations | 392,500 | 320,193 |
Medium-Term Notes Due From 2012 To 2014 At Various Rates [Member]
|
||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 310,000 | 415,193 |
Amortizing Bank Term Loan Maturing November 2016 [Member]
|
||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 98,750 | $ 0 |
European Commission Fines And Other Legal And Tax Matters (Details)
|
3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2010
USD ($)
|
Mar. 31, 2012
USD ($)
|
Mar. 31, 2011
USD ($)
|
Mar. 31, 2010
USD ($)
|
Oct. 31, 2004
Deltafina's [Member]
EUR (€)
|
Oct. 31, 2004
Tabacos Espanoles S.A [Member]
EUR (€)
|
Oct. 31, 2004
Five Companies Active In The Raw Spanish Tobacco Processing Market [Member]
EUR (€)
|
Sep. 30, 2004
Spain [Member]
USD ($)
|
Sep. 30, 2004
Spain [Member]
EUR (€)
|
Sep. 30, 2010
Spain [Member]
USD ($)
|
Sep. 30, 2010
Spain [Member]
EUR (€)
|
Sep. 08, 2010
Spain [Member]
EUR (€)
|
Sep. 09, 2011
Italy [Member]
USD ($)
|
Sep. 09, 2011
Italy [Member]
EUR (€)
|
Nov. 15, 2005
Italy [Member]
EUR (€)
|
|
Loss Contingencies [Line Items] | |||||||||||||||
Charge recorded to accrue European Commission fines | $ 49,091,000 | $ (7,445,000) | $ 0 | $ 14,900,000 | € 12,000,000 | $ 49,100,000 | |||||||||
Fines imposed by European Commission | 11,880,000 | 108,000 | 20,000,000 | 30,000,000 | 30,000,000 | ||||||||||
Accumulated interest on European Commission fine | 5,900,000 | ||||||||||||||
General Court decision reduced European Commission fine amount | 6,120,000 | ||||||||||||||
Not justified percentage of European Commission's corresponding increase of the underlying fine | 50.00% | ||||||||||||||
Reversed European Commission fine previously recorded | (7,400,000) | 7,400,000 | 5,760,000 | ||||||||||||
Accrued interest income returned on the European Commission fine escrow funds | $ 1,200,000 |
Derivatives And Hedging Activities (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
|
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Derivatives And Hedging Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Amount of Forward Contracts |
|
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Effect Of Derivative Financial Instruments On The Consolidated Statements Of Income |
|
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Effect Of Derivative Financial Instruments On The Consolidated Balance Sheets |
|
Executive Stock Plans And Stock-Based Compensation (Intrinsic Value And Fair Value of SARs) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Total intrinsic value of stock options and SARs exercised | $ 1,745 | $ 0 | $ 2,238 |
Total fair value of SARs vested | $ 1,713 | $ 1,849 | $ 1,611 |
Pension And Other Postretirement Benefit Plans (Estimated Future Benefit Payments) (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
---|---|
Pension Benefits [Member]
|
|
2013 | $ 26,356 |
2014 | 16,750 |
2015 | 14,878 |
2016 | 18,203 |
2017 | 19,183 |
2018 - 2022 | 100,682 |
Other Postretirement Benefits [Member]
|
|
2013 | 3,213 |
2014 | 3,274 |
2015 | 3,329 |
2016 | 3,353 |
2017 | 3,404 |
2018 - 2022 | $ 16,424 |
Unaudited Quarterly Financial Data (Unaudited Quarterly Financial Data) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Sep. 30, 2010
|
Jun. 30, 2010
|
Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Sales and other operating revenues | $ 653,966 | $ 672,420 | $ 641,026 | $ 479,465 | $ 680,215 | $ 688,208 | $ 664,188 | $ 538,916 | $ 2,446,877 | $ 2,571,527 | $ 2,491,738 |
Gross profit | 111,103 | 147,105 | 119,426 | 94,358 | 118,778 | 154,044 | 133,274 | 102,237 | |||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 29,892 | 61,602 | (7,997) | 17,322 | 28,764 | 57,585 | 53,783 | 24,418 | 100,819 | 164,550 | 170,345 |
Net income attributable to Universal Corporation | 25,755 | 58,453 | (8,039) | 15,888 | 27,116 | 52,298 | 51,831 | 25,320 | 92,057 | 156,565 | 168,397 |
Earnings available to Universal Corporation common shareholders | $ 22,042 | $ 54,741 | $ (11,752) | $ 12,176 | $ 23,403 | $ 48,586 | $ 48,118 | $ 21,608 | $ 77,207 | $ 141,715 | $ 153,547 |
Basic | $ 0.95 | $ 2.36 | $ (0.51) | $ 0.52 | $ 1.00 | $ 2.05 | $ 2.00 | $ 0.89 | $ 3.32 | $ 5.94 | $ 6.21 |
Diluted | $ 0.91 | $ 2.06 | $ (0.51) | $ 0.52 | $ 0.95 | $ 1.82 | $ 1.78 | $ 0.87 | $ 3.25 | $ 5.42 | $ 5.68 |
Cash dividends declared per share of convertible perpetual preferred stock | $ 16.87 | $ 16.88 | $ 16.87 | $ 16.88 | $ 16.87 | $ 16.88 | $ 16.87 | $ 16.88 | $ 67.50 | $ 67.50 | $ 67.50 |
Common stock, cash dividends declared per share | $ 0.49 | $ 0.49 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.47 | $ 0.47 | $ 1.94 | $ 1.90 | $ 1.86 |
Market price range of common stock, high | $ 48.60 | $ 47.38 | $ 41.48 | $ 45.72 | $ 43.72 | $ 43.34 | $ 44.82 | $ 55.92 | $ 48.60 | $ 43.72 | |
Market price range of common stock, low | $ 44.88 | $ 35.78 | $ 35.11 | $ 36.94 | $ 37.74 | $ 37.05 | $ 35.44 | $ 38.38 | $ 44.88 | $ 37.74 |
Income Taxes (Schedule Of U.S. And Foreign Components Of Income Before Income Taxes And Other Items) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Income Tax Disclosure [Abstract] | |||
United States | $ 21,773 | $ 32,826 | $ 48,675 |
Foreign | 140,205 | 210,073 | 207,953 |
Total | $ 161,978 | $ 242,899 | $ 256,628 |
Common And Preferred Stock (Schedule Of Repurchases Of Shares) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
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Mar. 31, 2011
|
Mar. 31, 2010
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Common and Preferred Stock [Abstract] | |||
Number of shares repurchased | 80,191 | 1,113,125 | 743,876 |
Cost of shares repurchased (in thousands of dollars) | $ 3,488 | $ 46,696 | $ 32,942 |
Weighted-average cost per share | $ 43.49 | $ 41.95 | $ 44.28 |
Operating Segments (Operating Results For The Company's Reportable Segments) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
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Dec. 31, 2011
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Sep. 30, 2011
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Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Sep. 30, 2010
|
Jun. 30, 2010
|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | $ 653,966 | $ 672,420 | $ 641,026 | $ 479,465 | $ 680,215 | $ 688,208 | $ 664,188 | $ 538,916 | $ 2,446,877 | $ 2,571,527 | $ 2,491,738 |
Operating Income | 180,304 | 254,600 | 257,209 | ||||||||
Equity in pretax earnings of unconsolidated affiliates | (3,195) | (8,634) | (22,376) | ||||||||
Restructuring and impairment costs | (11,661) | (21,504) | 0 | ||||||||
Charge for (reversal of) European Commission fines in Italy and Spain | (49,091) | 7,445 | 0 | ||||||||
Other income | 20,703 | 19,368 | 0 | ||||||||
Segment Assets | 2,266,919 | 2,227,867 | 2,266,919 | 2,227,867 | 2,371,040 | ||||||
Goodwill | 98,277 | 98,256 | 98,277 | 98,256 | 103,937 | ||||||
Depreciation and Amortization | 43,866 | 45,272 | 43,496 | ||||||||
Capital Expenditures | 38,174 | 39,129 | 57,577 | ||||||||
Operating Segments [Member]
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 2,446,877 | 2,571,527 | 2,491,738 | ||||||||
Operating Income | 223,548 | 257,925 | 279,585 | ||||||||
Flue-Cured And Burley Leaf Tobacco Operations [Member]
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 2,207,636 | 2,284,776 | 2,253,024 | ||||||||
Operating Income | 210,707 | 229,267 | 239,519 | ||||||||
Segment Assets | 1,969,516 | 1,902,508 | 1,969,516 | 1,902,508 | 2,011,357 | ||||||
Goodwill | 96,564 | 96,543 | 96,564 | 96,543 | 102,224 | ||||||
Depreciation and Amortization | 39,676 | 40,407 | 38,663 | ||||||||
Capital Expenditures | 32,497 | 37,404 | 43,388 | ||||||||
Other Tobacco Operations [Member]
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 239,241 | 286,751 | 238,714 | ||||||||
Operating Income | 12,841 | 28,658 | 40,066 | ||||||||
Segment Assets | 297,403 | 325,359 | 297,403 | 325,359 | 359,683 | ||||||
Goodwill | 1,713 | 1,713 | 1,713 | 1,713 | 1,713 | ||||||
Depreciation and Amortization | 4,190 | 4,865 | 4,833 | ||||||||
Capital Expenditures | 5,677 | 1,725 | 14,189 | ||||||||
North America [Member] | Flue-Cured And Burley Leaf Tobacco Operations [Member]
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 314,248 | 340,366 | 357,195 | ||||||||
Operating Income | 30,037 | 59,278 | 57,006 | ||||||||
Segment Assets | 256,546 | 289,950 | 256,546 | 289,950 | 362,008 | ||||||
Goodwill | 0 | 0 | 0 | 0 | 0 | ||||||
Depreciation and Amortization | 10,201 | 11,866 | 11,953 | ||||||||
Capital Expenditures | 438 | 3,080 | 12,105 | ||||||||
Other Regions [Member] | Flue-Cured And Burley Leaf Tobacco Operations [Member]
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 1,893,388 | 1,944,410 | 1,895,829 | ||||||||
Operating Income | 180,670 | 169,989 | 182,513 | ||||||||
Segment Assets | 1,712,970 | 1,612,558 | 1,712,970 | 1,612,558 | 1,649,349 | ||||||
Goodwill | 96,564 | 96,543 | 96,564 | 96,543 | 102,224 | ||||||
Depreciation and Amortization | 29,475 | 28,541 | 26,710 | ||||||||
Capital Expenditures | $ 32,059 | $ 34,324 | $ 31,283 |
Executive Stock Plans And Stock-Based Compensation (Assumptions Used To Estimate Grant Date Fair Value Of SARs) (Details) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term, years | 5 | 5 | 5 |
Expected volatility | 35.80% | 35.30% | 39.00% |
Expected dividend yield | 5.07% | 4.73% | 5.21% |
Risk-free interest rate | 1.66% | 2.36% | 2.51% |
Resulting fair value of SARs granted | $ 7.46 | $ 8.35 | $ 7.85 |
Operating Segments (Schedule Of Sales And Long-Lived Assets By Country) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
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Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Sep. 30, 2010
|
Jun. 30, 2010
|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | $ 653,966 | $ 672,420 | $ 641,026 | $ 479,465 | $ 680,215 | $ 688,208 | $ 664,188 | $ 538,916 | $ 2,446,877 | $ 2,571,527 | $ 2,491,738 |
Long-Lived Assets | 402,458 | 416,249 | 402,458 | 416,249 | 436,625 | ||||||
United States [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 315,610 | 340,313 | 305,390 | ||||||||
Long-Lived Assets | 75,330 | 88,910 | 75,330 | 88,910 | 100,698 | ||||||
Belgium [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 210,425 | 345,774 | 469,067 | ||||||||
Germany [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 210,791 | 267,087 | 199,768 | ||||||||
Brazil [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Long-Lived Assets | 139,484 | 141,535 | 139,484 | 141,535 | 156,961 | ||||||
Mozambique [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Long-Lived Assets | 50,475 | 53,854 | 50,475 | 53,854 | 50,045 | ||||||
All Other Countries [Member]
|
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Segment Reporting Information [Line Items] | |||||||||||
Sales and Other Operating Revenues | 1,710,051 | 1,618,353 | 1,517,513 | ||||||||
Long-Lived Assets | $ 137,169 | $ 131,950 | $ 137,169 | $ 131,950 | $ 128,921 |
Nature Of Operations And Significant Accounting Policies Nature of Operations and Significant Accounting Policies (Policies)
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Mar. 31, 2012
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Nature of Operations and Signficant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature Of Operations [Policy Text Block] | Nature of Operations Universal Corporation, which together with its subsidiaries is referred to herein as “Universal” or the “Company,” is the leading global leaf tobacco merchant and processor. The Company conducts business in more than 30 countries, primarily in major tobacco-producing regions of the world. |
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Consolidation, Policy [Policy Text Block] | Consolidation The consolidated financial statements include the accounts of Universal Corporation and all domestic and foreign subsidiaries in which the Company maintains a controlling financial interest. Control is generally determined based on a voting interest of greater than 50%, such that Universal controls all significant corporate activities of the subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation. The equity method of accounting is used for investments in companies where Universal Corporation has a voting interest of 20% to 50%. These investments are accounted for under the equity method because Universal exercises significant influence over those companies, but not control. The Company's 49% ownership interest in Socotab L.L.C., a leading processor and leaf merchant of oriental tobaccos with operations located principally in Europe, is the primary investment accounted for under the equity method. Investments where Universal has a voting interest of less than 20% are not significant and are accounted for under the cost method. Under the cost method, the Company recognizes earnings upon its receipt of dividends to the extent they represent a distribution of retained earnings. The Company received dividends totaling $16.7 million in fiscal year 2012 and $12.0 million in fiscal year 2010 from companies accounted for under the equity method. No dividends were received from those companies in fiscal year 2011. In fiscal year 2006, the Company deconsolidated its operations in Zimbabwe under accounting requirements that apply under certain conditions to foreign subsidiaries that are subject to foreign exchange controls and other government restrictions. Since that time, the investment has been accounted for using the cost method, as required under the accounting guidance. The investment in the Zimbabwe operations was zero at March 31, 2012 and 2011. The Company has a net foreign currency translation loss associated with the Zimbabwe operations of approximately $7.2 million, which remains a component of accumulated other comprehensive loss. As a regular part of its reporting, the Company reviews the conditions that resulted in the deconsolidation of the Zimbabwe operations to confirm that such accounting treatment is still appropriate. Dividends from the Zimbabwe operations are recorded in income in the period received. |
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Investment, Policy [Policy Text Block] | Investments in Unconsolidated Affiliates The Company’s equity method investments and its cost method investments, which include its Zimbabwe operations, are non-marketable securities. Universal reviews such investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recovered. For example, the Company would review such an investment for impairment if the investee were to lose a significant customer, suffer a large reduction in sales margins, experience a major change in its business environment, or undergo any other significant change in its normal business. In assessing the recoverability of equity or cost method investments, the Company follows the applicable accounting guidance in determining the fair value of the investments. In most cases, this involves the use of discounted cash flow models (Level 3 of the fair value hierarchy under the accounting guidance). If the fair value of an equity or cost method investee is determined to be lower than its carrying value, an impairment loss is recognized. The determination of fair value using discounted cash flow models is normally not based on observable market data from independent sources and therefore requires significant management judgment with respect to estimates of future operating earnings and the selection of an appropriate discount rate. The use of different assumptions could increase or decrease estimated future operating cash flows, and the discounted value of those cash flows, and therefore could increase or decrease any impairment charge related to these investments. In its consolidated statements of income, the Company reports its proportionate share of earnings of unconsolidated affiliates accounted for on the equity method based on the pretax earnings of those affiliates, as permitted under the applicable accounting guidance. All applicable foreign and U.S. income taxes are provided on these earnings and reported as a component of consolidated income tax expense. For unconsolidated affiliates located in foreign jurisdictions, repatriation of the Company’s share of the earnings through dividends is assumed in determining income tax expense. The following table provides a reconciliation of (1) equity in the pretax earnings of unconsolidated affiliates, as reported in the consolidated statements of income to (2) equity in the net income of unconsolidated affiliates, net of dividends, as reported in the consolidated statements of cash flows for the fiscal years ended March 31, 2012, 2011, and 2010:
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Earnings Per Share, Policy [Policy Text Block] | Earnings per Share The Company calculates basic earnings per share based on earnings available to common shareholders after payment of dividends on the Company’s Series B 6.75% Convertible Perpetual Preferred Stock. The calculation uses the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed in a similar manner using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential common shares are outstanding dilutive stock options and stock appreciation rights that are assumed to be exercised, unvested restricted stock units and performance share awards that are assumed to be fully vested and paid out in shares of common stock, and shares of convertible perpetual preferred stock that are assumed to be converted when the effect is dilutive. In periods when the effect of the convertible perpetual preferred stock is dilutive and these shares are assumed to be converted into common stock, dividends paid on the preferred stock are excluded from the calculation of diluted earnings per share. Calculations of earnings per share for the fiscal years ended March 31, 2012, 2011, and 2010, are provided in Note 4. |
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Cash and Cash Equivalents [Policy Text Block] | Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less at the time of purchase are classified as cash equivalents. |
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Advances to Suppliers [Policy Text Block] | Advances to Suppliers In some regions where the Company operates, it provides agronomy services and seasonal advances of seed, fertilizer, and other supplies to tobacco farmers for crop production, or makes seasonal cash advances to farmers for the procurement of those inputs. These advances are short term, are repaid upon delivery of tobacco to the Company, and are reported in advances to suppliers in the consolidated balance sheets. Primarily in Brazil, the Company has made long-term advances to tobacco farmers to finance curing barns and other farm infrastructure. In addition, due to low crop yields and other factors, in some years individual farmers may not deliver sufficient volumes of tobacco to fully repay their seasonal advances, and the Company may extend repayment of those advances into the following crop year. The long-term portion of advances is included in other noncurrent assets in the consolidated balance sheets. Both the current and the long-term portions of advances to suppliers are reported net of allowances recorded when the Company determines that amounts outstanding are not likely to be collected. Short-term and long-term advances to suppliers totaled $225.0 million at March 31, 2012 and $271.4 million at March 31, 2011. The related valuation allowances totaled $74.4 million at March 31, 2012, and $74.9 million at March 31, 2011, and were estimated based on the Company’s historical loss information and crop projections. The allowances were increased by provisions for estimated uncollectible amounts of approximately $11.9 million in fiscal year 2012, $18.7 million in fiscal year 2011, and $18.5 million in fiscal year 2010. These provisions are included in selling, general, and administrative expenses in the consolidated statements of income. Interest on advances is recognized in earnings upon the farmers’ delivery of tobacco in payment of principal and interest. Accrual of interest is discontinued when an advance is not expected to be fully collected. Advances on which interest accrual had been discontinued totaled approximately $59.9 million at March 31, 2012, and $76.0 million at March 31, 2011. |
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Inventory, Policy [Policy Text Block] | Inventories Tobacco inventories are valued at the lower of cost or market. Raw materials primarily consist of unprocessed leaf tobacco, which is clearly identified by type and grade at the time of purchase. The Company tracks the costs associated with this tobacco in the final product lots, and maintains this identification through the time of sale. This method of cost accounting is referred to as the specific cost or specific identification method. The predominant cost component of the Company’s inventories is the cost of the unprocessed tobacco. Direct and indirect processing costs related to these raw materials are capitalized and allocated to inventory in a systematic manner. The Company does not capitalize any interest or sales-related costs in inventory. Freight costs are recorded in cost of goods sold. Other inventories consist primarily of seed, fertilizer, packing materials, and other supplies, and are valued principally at the lower of average cost or market. |
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Recoverable Value-Added Tax Credits [Policy Text Block] | Recoverable Value-Added Tax Credits In many foreign countries, the Company’s local operating subsidiaries pay significant amounts of value-added tax (“VAT”) on purchases of unprocessed and processed tobacco, crop inputs, packing materials, and various other goods and services. In some countries, VAT is a national tax, and in other countries it is assessed at the state level. Items subject to VAT vary from jurisdiction to jurisdiction, as do the rates at which the tax is assessed. When tobacco is sold to customers in the country of origin, the operating subsidiaries generally collect VAT on those sales. The subsidiaries are normally permitted to offset their VAT payments against the collections and remit only the incremental VAT collections to the tax authorities. When tobacco is sold for export, VAT is normally not assessed. In countries where tobacco sales are predominately for export markets, VAT collections generated on downstream sales are often not sufficient to fully offset the subsidiaries’ VAT payments. In those situations, unused VAT credits can accumulate. Some jurisdictions have procedures that allow companies to apply for refunds of unused VAT credits from the tax authorities, but the refund process often takes an extended period of time and it is not uncommon for refund applications to be challenged or rejected in part on technical grounds. Other jurisdictions may permit companies to sell or transfer unused VAT credits to third parties in private transactions, although approval for such transactions must normally be obtained from the tax authorities, limits on the amounts that can be transferred are usually imposed, and the proceeds realized may be heavily discounted from the face value of the credits. Due to these factors, local operating subsidiaries in some countries can accumulate significant balances of VAT credits over time. The Company reviews these balances on a regular basis and records valuation allowances on the credits to reflect amounts that are not expected to be recovered, as well as discounts anticipated on credits that are expected to be sold or transferred. At March 31, 2012 and 2011, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $82 million and $75 million, respectively, and the related valuation allowances totaled approximately $25 million and $22 million, respectively. The net balances are reported in other current assets and other noncurrent assets in the consolidated balance sheets. In June 2011, tax authorities in Brazil completed an audit of inter-state VAT filings by the Company’s operating subsidiary there and issued assessments for tax, penalties, and interest for tax periods from 2006 through 2009 totaling approximately $26 million based on the exchange rate for the Brazilian currency at March 31, 2012. Management of the operating subsidiary and outside counsel believe that errors were made by the tax authorities in determining portions of the assessment and that various defenses support the subsidiary’s positions. Accordingly, the subsidiary took steps to contest the full amount of the assessment. As of March 31, 2012, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessments had been reduced to approximately $20 million. The subsidiary is continuing to contest the full remaining amount of the assessment. No liability has been recorded at March 31, 2012, as no loss is considered probable at this time. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property, Plant and Equipment Depreciation of plant and equipment is based upon historical cost and the estimated useful lives of the assets. Depreciation is calculated using the straight-line method. Buildings include tobacco processing and blending facilities, offices, and warehouses. Machinery and equipment consists of processing and packing machinery and transport, office, and computer equipment. Estimated useful lives range as follows: buildings—15 to 40 years; processing and packing machinery—3 to 11 years; transport equipment—3 to 10 years; and office and computer equipment—3 to 10 years. Where applicable, the Company capitalizes related interest costs during periods that property, plant and equipment are being constructed or made ready for service. No interest was capitalized in fiscal years 2012, 2011, or 2010. |
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Goodwill and Intangible Assets, Policy [Policy Text Block] | Goodwill and Other Intangibles Goodwill and other intangibles principally consist of the excess of the purchase price of acquired companies over the fair value of the net assets. Goodwill is carried at the lower of cost or fair value. The Company follows the applicable fair value accounting guidance in determining the fair value of goodwill. This primarily involves the use of discounted cash flow models (Level 3 of the fair value hierarchy in the accounting guidance). The calculations in these models are normally not based on observable market data from independent sources and therefore require significant management judgment with respect to estimates of future operating earnings and the selection of an appropriate discount rate. The use of different assumptions could increase or decrease estimated future operating cash flows, and the discounted value of those cash flows, which could increase or decrease any impairment charge related to goodwill. Reporting units are distinct operating subsidiaries or groups of subsidiaries that typically compose the Company’s business in a specific country or location. Goodwill is allocated to reporting units based on the country or location to which a specific acquisition relates, or by allocation based on expected future cash flows if the acquisition relates to more than one country or location. The majority of the Company’s goodwill relates to its reporting unit in Brazil. No charges for goodwill impairment were recorded in fiscal years 2012, 2011, or 2010. During the third quarter of fiscal year 2011, goodwill was reduced by approximately $5.8 million to reflect amounts allocated to leaf procurement activities associated with farmer contracts and related assets that were conveyed to an operating subsidiary of one of the Company’s major customers (see Note 14). |
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Impairment or Disposal of Long-Lived Intangible Assets, Impairment, Policy [Policy Text Block] | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events, changes in business conditions, or other circumstances provide an indication that such assets may be impaired. Potential impairment is initially assessed by comparing management’s undiscounted estimates of future cash flows from the use or disposition of the assets to their carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge is recorded to reduce the carrying value of the asset to its fair value determined in accordance with the accounting guidance. In many cases, this involves the use of discounted cash flow models that are not based on observable market data from independent sources (Level 3 of the fair value hierarchy under the accounting guidance). As discussed in Note 2, the Company recorded an impairment charge of $5.6 million in the third quarter of fiscal year 2011 in connection with its decision to close its leaf tobacco processing facility in Simcoe, Ontario, Canada and sell the related assets. No significant charges for the impairment of long-lived assets were recorded during fiscal years 2012 or 2010. |
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Income Tax, Policy [Policy Text Block] | Income Taxes The Company provides deferred income taxes on temporary differences between the book and tax basis of its assets and liabilities. Those differences arise principally from employee benefit accruals, depreciation, deferred compensation, undistributed earnings of unconsolidated affiliates, undistributed earnings of foreign subsidiaries, goodwill, and valuation allowances on farmer advances and value-added tax credits. As discussed in Note 5, during fiscal year 2010, the Company changed the classification of undistributed earnings of certain foreign subsidiaries that had previously been designated as permanently reinvested. Approximately $3.5 million in deferred U.S. income taxes were recorded on those earnings effective with this change. At March 31, 2012 and 2011, the Company had no undistributed earnings of consolidated foreign subsidiaries classified as permanently reinvested. |
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Accumulated Other Comprehensive Income (Loss) [Policy Text Block] | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) is reported in the consolidated balance sheets and the consolidated statements of changes in shareholders’ equity and consists of:
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Values of Financial Instruments The fair values of the Company’s long-term obligations, disclosed in Note 7, have been estimated using market prices where they are available and discounted cash flow models based on current incremental borrowing rates for similar classes of borrowers and borrowing arrangements. The carrying amount of all other assets and liabilities that qualify as financial instruments approximates fair value. |
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Derivatives, Policy [Policy Text Block] | Derivative Financial Instruments The Company recognizes all derivatives on the balance sheet at fair value. Interest rate swaps and forward foreign currency exchange contracts are used from time to time to reduce interest rate and foreign currency risk. The Company enters into such contracts only with counterparties of good standing. The credit exposure related to non-performance by the counterparties and the Company is considered in determining the fair values of the derivatives, and the effect is not material to the financial statements or operations of the Company. Additional disclosures related to the Company’s derivatives and hedging activities are provided in Note 9. |
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Foreign Currency Transactions and Translations Policy [Policy Text Block] | Translation and Remeasurement of Foreign Currencies The financial statements of foreign subsidiaries having the local currency as the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates applicable to each reporting period for results of operations. Adjustments resulting from translation of financial statements are reflected as a separate component of comprehensive income or loss. The financial statements of foreign subsidiaries having the U.S. dollar as the functional currency, with certain transactions denominated in a local currency, are remeasured into U.S. dollars. The remeasurement of local currency amounts into U.S. dollars creates remeasurement gains and losses that are included in earnings as a component of selling, general, and administrative expense. The Company recognized net remeasurement losses of $2.3 million in fiscal year 2012, net remeasurement gains of $4.4 million in fiscal year 2011, and net remeasurement losses of $9.3 million in fiscal year 2010. Foreign currency transactions and forward foreign currency exchange contracts that are not designated as hedges generate gains and losses when they are settled or when they are marked to market under the prescribed accounting guidance. These transaction gains and losses are also included in earnings as a component of selling, general, and administrative expenses. The Company recognized net foreign currency transaction gains of $4.2 million in fiscal year 2012, net transaction gains of $1.7 million in fiscal year 2011, and net transaction gains of $4.0 million in fiscal year 2010. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Revenue from the sale of tobacco is recognized when title and risk of loss is transferred to the customer and the earnings process is complete. Substantially all sales revenue is recorded based on the physical transfer of products to customers. A large percentage of the Company’s sales are to major multinational manufacturers of consumer tobacco products. The Company works closely with those customers to understand and plan for their requirements for volumes, styles, and grades of leaf tobacco from its various growing regions, and extensive coordination is maintained on an ongoing basis to determine and satisfy their requirements for physical shipment of processed tobacco. In most cases, customers request shipment within a relatively short period of time after the tobacco is processed and packed. The customers also specify, in sales contracts and in shipping documents, the precise terms for transfer of title and risk of loss for the tobacco. Customer returns and rejections are not significant, and the Company’s sales history indicates that customer-specific acceptance provisions are consistently met upon transfer of title and risk of loss. While most of the Company’s revenue consists of tobacco that is purchased from farmers, processed and packed in its factories, and then sold to customers, some revenue is earned from processing tobacco owned by customers. These arrangements usually exist in specific markets where the customers contract directly with farmers for leaf production, and they have accounted for less than 5% of total revenue on an annual basis through the fiscal year ended March 31, 2012. Processing and packing of leaf tobacco is a short-duration process. Under normal operating conditions, raw tobacco that is placed into the production line exits as processed and packed tobacco within one hour, and is then transported to customer-designated storage facilities. The revenue for these services is recognized when processing is completed, and the Company’s operating history indicates that customer requirements for processed tobacco are consistently met upon completion of processing. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation Share-based payments, such as grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and performance share awards, are measured at fair value and reported as expense in the financial statements over the requisite service period. Additional disclosures related to stock-based compensation are included in Note 13. |
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Use of Estimates, Policy [Policy Text Block] | Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
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Accounting Pronouncements [Policy Text Block] | Accounting Pronouncements Pronouncements Recently Adopted During the fiscal year ended March 31, 2012, Universal adopted the following key accounting pronouncements:
Pronouncements to be Adopted in Future Periods In September 2011, the FASB issued Accounting Standards Update 2011-08, “Testing for Goodwill Impairment” (“ASU 2011-08”). The objective of ASU 2011-08 is to simplify the process of testing for goodwill impairment by permitting companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Companies will only be required to calculate the fair value of a reporting unit if the qualitative evaluation indicates that it is more likely than not that the fair value is less than the carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with earlier adoption permitted. The Company is currently evaluating the new guidance but does not expect it to have a significant effect on its financial statements. |
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Reclassifications [Policy Text Block] | Reclassifications Certain prior year amounts have been reclassified to conform to the current year’s presentation. |
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details)
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12 Months Ended | ||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Income Tax Disclosure [Abstract] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | (0.70%) | 0.60% | 0.90% |
Change in classification of permanently reinvested earnings | 0.00% | 0.00% | 1.40% |
Change in valuation allowance on deferred tax assets | 0.70% | (0.20%) | 0.00% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense | 8.60% | 0.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Deductions, Dividends | (1.80%) | 0.00% | 0.00% |
Other, including changes in liabilities recorded for uncertain tax positions | (4.00%) | (3.20%) | (3.70%) |
Effective income tax rate | 37.80% | 32.20% | 33.60% |
Nature Of Operations And Significant Accounting Policies (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Accounting Policies [Abstract] | |||
Translation adjustments, Before income taxes | $ (12,331) | $ (819) | $ (10,854) |
Translation adjustments, Allocated income taxes | 481 | (2,792) | 54 |
Foreign currency hedge adjustment, Before income taxes | (1,449) | 3,819 | (736) |
Foreign currency hedge adjustment, Allocated income taxes | 507 | (1,337) | 258 |
Interest rate hedge adjustment, before income taxes | (1,119) | ||
Interest rate hedge adjustment, allocated income taxes | 392 | ||
Pension and other postretirement benefit plan adjustment, Before income taxes | (102,833) | (66,851) | (63,362) |
Pension and other postretirement benefit plan adjustment, Allocated income taxes | 35,991 | 23,204 | 21,973 |
Total accumulated other comprehensive loss | $ (80,361) | $ (44,776) | $ (52,667) |
Common And Preferred Stock (Narrative) (Details) (USD $)
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12 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Mar. 31, 2012
Minimum [Member]
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Mar. 31, 2012
Maximum [Member]
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Nov. 30, 2009
2009 Program [Member]
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Nov. 30, 2011
2011 Program [Member]
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Mar. 31, 2012
Equity Program Remaining Authorization [Member]
2011 Program [Member]
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Mar. 31, 2012
Series A Junior Participating Preferred Stock [Member]
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Mar. 31, 2011
Series A Junior Participating Preferred Stock [Member]
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Mar. 31, 2012
Series B 6.75% Convertible Perpetual Preferred Stock [Member]
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Mar. 31, 2011
Series B 6.75% Convertible Perpetual Preferred Stock [Member]
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Mar. 31, 2010
Series B 6.75% Convertible Perpetual Preferred Stock [Member]
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Mar. 31, 2009
Series B 6.75% Convertible Perpetual Preferred Stock [Member]
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Mar. 31, 2006
Series B 6.75% Convertible Perpetual Preferred Stock [Member]
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Class of Stock [Line Items] | |||||||||||||||
Common stock, shares authorized | 100,000,000 | ||||||||||||||
Common stock, shares issued | 23,257,175 | ||||||||||||||
Authorized for repurchase of outstanding common shares | $ 4,004,000 | $ 46,929,000 | $ 32,194,000 | $ 150,000,000 | $ 100,000,000 | ||||||||||
Stock repurchased during period, value | 3,488,000 | 46,696,000 | 32,942,000 | 70,000,000 | 100,000,000 | ||||||||||
Weighted-average cost per share | $ 43.49 | $ 41.95 | $ 44.28 | $ 44.02 | |||||||||||
Number of shares repurchased | 80,191 | 1,113,125 | 743,876 | 1,589,701 | |||||||||||
Preferred stock, shares authorized | 5,000,000 | 500,000 | 500,000 | 220,000 | 220,000 | ||||||||||
Preferred stock, shares issued | 0 | 0 | 219,999 | 219,999 | 220,000 | ||||||||||
Preferred stock, shares outstanding | 0 | 0 | 219,999 | 219,999 | 219,999 | 219,999 | |||||||||
Dividend common stock | $ 0.43 | ||||||||||||||
Preferred stock liquidation price | $ 1,000 | ||||||||||||||
Common stock program expiration date | Nov. 01, 2011 | Nov. 15, 2013 | |||||||||||||
Series B 6.75% convertible perpetual preferred stock, quarterly dividend rate | 6.75% | ||||||||||||||
Preferred stock exceeding percentage on closing price | 135.00% | ||||||||||||||
Preferred stock, conversion period | March 15, 2013 | March 15, 2018 | |||||||||||||
Preferred stock, conversion rate | 21.7365 | ||||||||||||||
Preferred shares, conversion price | $ 46.01 |
Commitments And Other Matters (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Commitments And Other Matters [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accounts Receivable By Repotable Operating Segment | At March 31, 2012 and 2011, net accounts receivable by reportable operating segment were as follows:
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Summary Of Income Statement Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Balance Sheet Information | OTE 14. COMMITMENTS AND OTHER MATTERS Commitments The Company enters into contracts to purchase tobacco from farmers in a number of the countries in which it operates. The majority of these contracts are with farmers in Brazil and several African countries. Most contracts cover one annual growing season. Primarily with the farmer contracts in Brazil, the Company provides seasonal financing to support the farmers’ production of their crops or guarantees their financing from third-party banks. At March 31, 2012, the Company had contracts to purchase approximately $614 million of tobacco, $600 million of which represented volumes to be delivered during the coming fiscal year. These amounts are estimates since actual quantities purchased will depend on crop yields, and prices will depend on the quality of the tobacco delivered and other market factors. Tobacco purchase obligations have been partially funded by advances to farmers and other suppliers, which totaled approximately $135 million at March 31, 2012. The Company withholds payments due to farmers on delivery of the tobacco to satisfy repayment of the seasonal or long-term financing it provided to the farmers. As noted above and discussed in more detail below, the Company also has arrangements to guarantee bank loans to farmers, primarily in Brazil, and payments are also withheld on delivery of tobacco to satisfy repayment of those loans. In addition to its contractual obligations to purchase tobacco, the Company had commitments related to agricultural materials, approved capital expenditures, and various other requirements that approximated $58 million at March 31, 2012. Guarantees and Other Contingent Liabilities Guarantees of bank loans to growers for crop financing and construction of curing barns or other tobacco producing assets are industry practice in Brazil and support the farmers’ production of tobacco there. At March 31, 2012, the Company’s total exposure under guarantees issued by its operating subsidiary in Brazil for banking facilities of farmers in that country was approximately $20 million ($26 million face amount including unpaid accrued interest, less $6 million recorded for the fair value of the guarantees). About 90% of these guarantees expire within one year, and all of the remainder expire within two years. As noted above, the subsidiary withholds payments due to the farmers on delivery of tobacco and forwards those payments to the third-party banks. Failure of farmers to deliver sufficient quantities of tobacco to the subsidiary to cover their obligations to the third-party banks could result in a liability for the subsidiary under the related guarantees; however, in that case, the subsidiary would have recourse against the farmers. The maximum potential amount of future payments that the Company’s subsidiary could be required to make at March 31, 2012, was the face amount, $26 million including unpaid accrued interest ($73 million as of March 31, 2011). The fair value of the guarantees was a liability of approximately $6 million at March 31, 2012, and $21 million at March 31, 2011. In addition to these guarantees, the Company has other contingent liabilities totaling approximately $4 million. Major Customers A material part of the Company’s business is dependent upon a few customers. For the fiscal years ended March 31, 2012, 2011 and 2010, revenue from Philip Morris International, Inc. was approximately $610 million, $750 million, and $700 million, respectively. For the same periods, Imperial Tobacco Group, PLC accounted for revenue of approximately $360 million, $320 million, and $250 million, respectively, and Japan Tobacco, Inc. accounted for revenue of approximately $213 million, $340 million, and $575 million, respectively. These customers primarily do business with various affiliates in the Company’s flue-cured and burley leaf tobacco operations. The loss of, or substantial reduction in business from, either customer would have a material adverse effect on the Company. Accounts Receivable The Company’s operating subsidiaries perform credit evaluations of customers’ financial condition prior to the extension of credit. Generally, accounts receivable are unsecured and are due within 30 days. When collection terms are extended for longer periods, interest and carrying costs are usually recovered. Credit losses are provided for in the financial statements, and historically such amounts have not been material. The allowance for doubtful accounts was approximately $8.3 million and $5.6 million at March 31, 2012 and 2011, respectively. At March 31, 2012 and 2011, net accounts receivable by reportable operating segment were as follows:
Sale of Property in Brazil In November 2011, the Company sold land and buildings in Brazil that were formerly used for processing, storage, and office activities in exchange for $9.4 million in cash and two warehouses having an aggregate fair value of approximately $11.2 million. The transaction resulted in a gain of $11.1 million, which is reported in other income in the consolidated statement of income. In the consolidated statement of cash flows, the cash proceeds received in the transaction are included in proceeds from the sale of property, plant, and equipment in cash flows from investing activities. The fair value of the warehouses received was excluded from the statement of cash flows since it was non-cash consideration. Fire Loss Insurance Settlement In June 2011, an operating subsidiary of the Company in Europe completed settlement of an insurance claim related to a fire in 2010 that destroyed a portion of its facility and temporarily suspended factory operations. The Company and its subsidiary maintained general liability, business interruption, and replacement cost property insurance coverage on the facility. As part of the final settlement, the subsidiary received approximately $9.9 million of insurance proceeds to cover the cost of reconstructing the damaged portion of the facility and replacing equipment that was destroyed in the fire. A gain of approximately $9.6 million was recorded on the involuntary conversion of those assets in the quarter ended June 30, 2011, and is reported in other income in the consolidated statement of income. In addition, the subsidiary received insurance proceeds totaling approximately $6.9 million for business interruption related to the fire. Approximately $4.8 million of the business interruption recovery was recognized in earnings in fiscal year 2011, and the remaining $2.1 million was recognized in the quarter ended June 30, 2011. In the consolidated statement of cash flows, the insurance proceeds attributable to the property and equipment destroyed in the fire are reported in cash flows from investing activities. All other insurance proceeds received during fiscal year 2011 or with the final claim settlement in fiscal year 2012 have been reported in cash flows from operating activities. Reconstruction of the facility was completed by the first quarter of fiscal year 2012, and the factory is fully operational. Assignment of Farmer Contracts and Sale of Related Assets in Brazil In October 2010, Universal’s operating subsidiary in Brazil completed the assignment of tobacco production contracts with approximately 8,100 farmers to Philip Morris Brasil Industria e Comercio (“PMB”), a subsidiary of Philip Morris International (“PMI”). As part of the transaction, PMB acquired various related assets, including seasonal crop advances outstanding from the farmers. PMB also assumed the Company’s obligations under guarantees of bank loans to the farmers for crop financing. Subsequently, the Company also entered into an agreement to process tobaccos bought directly by PMB from farmers beginning with the 2011 crop year. In addition, the Company continues to sell processed leaf from Brazil to PMI and its subsidiaries. The Company received total cash proceeds of approximately $34.9 million from the assignment of farmer contracts and sale of related assets in fiscal year 2011 and recorded a gain of approximately $19.4 million, which was reported in other income in the consolidated statement of income. The determination of the gain included approximately $5.8 million of goodwill associated with the activities conveyed. Statutory Severance and Pension Obligations in Malawi In fiscal year 2008, the Company’s operating subsidiary in Malawi recorded a charge to accrue statutory severance obligations based on court rulings that found the severance benefits payable to employees upon retirement, death, involuntary termination, or termination by mutual agreement under the Malawi Employment Act of 2000, even in cases where employees are covered by a company-sponsored pension benefit. Because the effect of the court rulings was to entitle some employees to both private pension benefits and statutory severance benefits in cases of normal retirement, some of the rulings were appealed to higher courts. Effective June 1, 2011, new Employment and Pension legislation was enacted into law in Malawi. The new legislation changed prior law related to statutory severance benefits by eliminating the requirement to pay those benefits to employees in cases of normal retirement. At the same time, the legislation created a new requirement to provide pension benefits to employees who meet specified service criteria. The pension benefit to which employees are entitled under the new law enacted June 1, 2011 is generally equivalent to the accumulated statutory severance benefit under the old law, but it considers any pension or gratuity benefits previously or currently provided to employees under a company’s private pension programs. The Company’s operating subsidiary in Malawi has historically provided pension and gratuity payments to specified employee groups that reduce or offset the pension obligations provided under the new law. The Malawi subsidiary accounted for the enactment of the new legislation in its financial statements during the quarter ended June 30, 2011 by reversing approximately $4 million of the statutory severance liability no longer required under the new law. |
Income Taxes (Reconciliation Of the Gross Liability For Uncertain Tax Positions) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Income Tax Disclosure [Abstract] | |||
Liability for uncertain tax positions, beginning of year | $ 9,223 | $ 22,184 | $ 22,740 |
Additions: Related to tax positions for the current year | 262 | 1,184 | 9,609 |
Additions: Related to tax positions for prior years | 1,072 | 77 | 574 |
Reductions: Related to tax positions for prior years | 0 | (205) | (1,674) |
Reductions: Due to settlements with tax jurisdictions | (698) | (12,765) | (1,552) |
Reductions: Due to lapses of statutes of limitations | (1,213) | (1,571) | (4,802) |
Reductions: Other reductions | 0 | 0 | (4,041) |
Reductions: Effect of currency rate movement | (733) | 319 | 1,330 |
Liability for uncertain tax positions, end of year | $ 7,913 | $ 9,223 | $ 22,184 |
Derivatives And Hedging Activities (Effect Of Derivative Financial Instruments On The Consolidated Statements Of Income) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Derivatives Designated As Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swap Agreements [Member] | Interest Expense [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in earnings | $ 3,195 | $ 428 | $ (2,043) |
Derivatives Designated As Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swap Agreements [Member] | Interest Expense [Member] | Floating Rate Long-Term Debt [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in earnings | (3,195) | (428) | 2,043 |
Derivatives Designated As Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swap Agreements [Member] | Interest Expense [Member] | Floating Rate Long-Term Debt [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recorded in accumulated other comprehensive loss | (1,119) | 0 | 0 |
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | 0 | 0 | 0 |
Derivatives Designated As Hedges [Member] | Cash Flow Hedges [Member] | Interest Rate Swap Agreements [Member] | Selling, General And Administrative Expenses [Member] | Floating Rate Interest Payments On Term Loan [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in earnings from ineffective portion and early de-designation of cash flow hedges | 0 | 0 | 0 |
Derivatives Designated As Hedges [Member] | Cash Flow Hedges [Member] | Forward Foreign Currency Exchange Contracts [Member] | Cost Of Goods Sold [Member] | Forecast Purchases Of Tobacco In Brazil [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recorded in accumulated other comprehensive loss | 2,652 | 2,476 | 7,174 |
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | 5,882 | 100 | (14,844) |
Derivatives Designated As Hedges [Member] | Cash Flow Hedges [Member] | Forward Foreign Currency Exchange Contracts [Member] | Selling, General And Administrative Expenses [Member] | Forecast Purchases Of Tobacco In Brazil [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in earnings from ineffective portion and early de-designation of cash flow hedges | 857 | 113 | 1,442 |
Derivatives Not Designated As Hedges [Member] | Forward Foreign Currency Exchange Contracts [Member] | Selling, General And Administrative Expenses [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in earnings | $ 1,829 | $ 2,594 | $ 1,275 |
Earnings Per Share (Narrative) (Details) (USD $)
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12 Months Ended | ||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2010
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Earnings Per Share [Abstract] | |||
Stock appreciation rights and stock options, number of shares | 348,451 | 622,801 | 404,800 |
Weighted-average exercise price | $ 56.75 | $ 53.44 | $ 58.96 |
Nature Of Operations And Significant Accounting Policies
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Mar. 31, 2012
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Nature of Operations and Signficant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature Of Operations And Significant Accounting Policies | NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Universal Corporation, which together with its subsidiaries is referred to herein as “Universal” or the “Company,” is the leading global leaf tobacco merchant and processor. The Company conducts business in more than 30 countries, primarily in major tobacco-producing regions of the world. Consolidation The consolidated financial statements include the accounts of Universal Corporation and all domestic and foreign subsidiaries in which the Company maintains a controlling financial interest. Control is generally determined based on a voting interest of greater than 50%, such that Universal controls all significant corporate activities of the subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation. The equity method of accounting is used for investments in companies where Universal Corporation has a voting interest of 20% to 50%. These investments are accounted for under the equity method because Universal exercises significant influence over those companies, but not control. The Company's 49% ownership interest in Socotab L.L.C., a leading processor and leaf merchant of oriental tobaccos with operations located principally in Europe, is the primary investment accounted for under the equity method. Investments where Universal has a voting interest of less than 20% are not significant and are accounted for under the cost method. Under the cost method, the Company recognizes earnings upon its receipt of dividends to the extent they represent a distribution of retained earnings. The Company received dividends totaling $16.7 million in fiscal year 2012 and $12.0 million in fiscal year 2010 from companies accounted for under the equity method. No dividends were received from those companies in fiscal year 2011. In fiscal year 2006, the Company deconsolidated its operations in Zimbabwe under accounting requirements that apply under certain conditions to foreign subsidiaries that are subject to foreign exchange controls and other government restrictions. Since that time, the investment has been accounted for using the cost method, as required under the accounting guidance. The investment in the Zimbabwe operations was zero at March 31, 2012 and 2011. The Company has a net foreign currency translation loss associated with the Zimbabwe operations of approximately $7.2 million, which remains a component of accumulated other comprehensive loss. As a regular part of its reporting, the Company reviews the conditions that resulted in the deconsolidation of the Zimbabwe operations to confirm that such accounting treatment is still appropriate. Dividends from the Zimbabwe operations are recorded in income in the period received. The Company holds less than a 100% financial interest in certain consolidated subsidiaries. The net income and shareholders’ equity attributable to the noncontrolling interests in these subsidiaries are reported on the face of the consolidated financial statements. During fiscal years 2010, 2011, and 2012, there were no changes in the Company’s ownership percentage in any of these subsidiaries. Investments in Unconsolidated Affiliates The Company’s equity method investments and its cost method investments, which include its Zimbabwe operations, are non-marketable securities. Universal reviews such investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recovered. For example, the Company would review such an investment for impairment if the investee were to lose a significant customer, suffer a large reduction in sales margins, experience a major change in its business environment, or undergo any other significant change in its normal business. In assessing the recoverability of equity or cost method investments, the Company follows the applicable accounting guidance in determining the fair value of the investments. In most cases, this involves the use of discounted cash flow models (Level 3 of the fair value hierarchy under the accounting guidance). If the fair value of an equity or cost method investee is determined to be lower than its carrying value, an impairment loss is recognized. The determination of fair value using discounted cash flow models is normally not based on observable market data from independent sources and therefore requires significant management judgment with respect to estimates of future operating earnings and the selection of an appropriate discount rate. The use of different assumptions could increase or decrease estimated future operating cash flows, and the discounted value of those cash flows, and therefore could increase or decrease any impairment charge related to these investments. In its consolidated statements of income, the Company reports its proportionate share of earnings of unconsolidated affiliates accounted for on the equity method based on the pretax earnings of those affiliates, as permitted under the applicable accounting guidance. All applicable foreign and U.S. income taxes are provided on these earnings and reported as a component of consolidated income tax expense. For unconsolidated affiliates located in foreign jurisdictions, repatriation of the Company’s share of the earnings through dividends is assumed in determining income tax expense. The following table provides a reconciliation of (1) equity in the pretax earnings of unconsolidated affiliates, as reported in the consolidated statements of income to (2) equity in the net income of unconsolidated affiliates, net of dividends, as reported in the consolidated statements of cash flows for the fiscal years ended March 31, 2012, 2011, and 2010:
Earnings per Share The Company calculates basic earnings per share based on earnings available to common shareholders after payment of dividends on the Company’s Series B 6.75% Convertible Perpetual Preferred Stock. The calculation uses the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed in a similar manner using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential common shares are outstanding dilutive stock options and stock appreciation rights that are assumed to be exercised, unvested restricted stock units and performance share awards that are assumed to be fully vested and paid out in shares of common stock, and shares of convertible perpetual preferred stock that are assumed to be converted when the effect is dilutive. In periods when the effect of the convertible perpetual preferred stock is dilutive and these shares are assumed to be converted into common stock, dividends paid on the preferred stock are excluded from the calculation of diluted earnings per share. Calculations of earnings per share for the fiscal years ended March 31, 2012, 2011, and 2010, are provided in Note 4. Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less at the time of purchase are classified as cash equivalents. Advances to Suppliers In some regions where the Company operates, it provides agronomy services and seasonal advances of seed, fertilizer, and other supplies to tobacco farmers for crop production, or makes seasonal cash advances to farmers for the procurement of those inputs. These advances are short term, are repaid upon delivery of tobacco to the Company, and are reported in advances to suppliers in the consolidated balance sheets. Primarily in Brazil, the Company has made long-term advances to tobacco farmers to finance curing barns and other farm infrastructure. In addition, due to low crop yields and other factors, in some years individual farmers may not deliver sufficient volumes of tobacco to fully repay their seasonal advances, and the Company may extend repayment of those advances into the following crop year. The long-term portion of advances is included in other noncurrent assets in the consolidated balance sheets. Both the current and the long-term portions of advances to suppliers are reported net of allowances recorded when the Company determines that amounts outstanding are not likely to be collected. Short-term and long-term advances to suppliers totaled $225.0 million at March 31, 2012 and $271.4 million at March 31, 2011. The related valuation allowances totaled $74.4 million at March 31, 2012, and $74.9 million at March 31, 2011, and were estimated based on the Company’s historical loss information and crop projections. The allowances were increased by provisions for estimated uncollectible amounts of approximately $11.9 million in fiscal year 2012, $18.7 million in fiscal year 2011, and $18.5 million in fiscal year 2010. These provisions are included in selling, general, and administrative expenses in the consolidated statements of income. Interest on advances is recognized in earnings upon the farmers’ delivery of tobacco in payment of principal and interest. Accrual of interest is discontinued when an advance is not expected to be fully collected. Advances on which interest accrual had been discontinued totaled approximately $59.9 million at March 31, 2012, and $76.0 million at March 31, 2011. Inventories Tobacco inventories are valued at the lower of cost or market. Raw materials primarily consist of unprocessed leaf tobacco, which is clearly identified by type and grade at the time of purchase. The Company tracks the costs associated with this tobacco in the final product lots, and maintains this identification through the time of sale. This method of cost accounting is referred to as the specific cost or specific identification method. The predominant cost component of the Company’s inventories is the cost of the unprocessed tobacco. Direct and indirect processing costs related to these raw materials are capitalized and allocated to inventory in a systematic manner. The Company does not capitalize any interest or sales-related costs in inventory. Freight costs are recorded in cost of goods sold. Other inventories consist primarily of seed, fertilizer, packing materials, and other supplies, and are valued principally at the lower of average cost or market. Recoverable Value-Added Tax Credits In many foreign countries, the Company’s local operating subsidiaries pay significant amounts of value-added tax (“VAT”) on purchases of unprocessed and processed tobacco, crop inputs, packing materials, and various other goods and services. In some countries, VAT is a national tax, and in other countries it is assessed at the state level. Items subject to VAT vary from jurisdiction to jurisdiction, as do the rates at which the tax is assessed. When tobacco is sold to customers in the country of origin, the operating subsidiaries generally collect VAT on those sales. The subsidiaries are normally permitted to offset their VAT payments against the collections and remit only the incremental VAT collections to the tax authorities. When tobacco is sold for export, VAT is normally not assessed. In countries where tobacco sales are predominately for export markets, VAT collections generated on downstream sales are often not sufficient to fully offset the subsidiaries’ VAT payments. In those situations, unused VAT credits can accumulate. Some jurisdictions have procedures that allow companies to apply for refunds of unused VAT credits from the tax authorities, but the refund process often takes an extended period of time and it is not uncommon for refund applications to be challenged or rejected in part on technical grounds. Other jurisdictions may permit companies to sell or transfer unused VAT credits to third parties in private transactions, although approval for such transactions must normally be obtained from the tax authorities, limits on the amounts that can be transferred are usually imposed, and the proceeds realized may be heavily discounted from the face value of the credits. Due to these factors, local operating subsidiaries in some countries can accumulate significant balances of VAT credits over time. The Company reviews these balances on a regular basis and records valuation allowances on the credits to reflect amounts that are not expected to be recovered, as well as discounts anticipated on credits that are expected to be sold or transferred. At March 31, 2012 and 2011, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $82 million and $75 million, respectively, and the related valuation allowances totaled approximately $25 million and $22 million, respectively. The net balances are reported in other current assets and other noncurrent assets in the consolidated balance sheets. In June 2011, tax authorities in Brazil completed an audit of inter-state VAT filings by the Company’s operating subsidiary there and issued assessments for tax, penalties, and interest for tax periods from 2006 through 2009 totaling approximately $26 million based on the exchange rate for the Brazilian currency at March 31, 2012. Management of the operating subsidiary and outside counsel believe that errors were made by the tax authorities in determining portions of the assessment and that various defenses support the subsidiary’s positions. Accordingly, the subsidiary took steps to contest the full amount of the assessment. As of March 31, 2012, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessments had been reduced to approximately $20 million. The subsidiary is continuing to contest the full remaining amount of the assessment. No liability has been recorded at March 31, 2012, as no loss is considered probable at this time. Property, Plant and Equipment Depreciation of plant and equipment is based upon historical cost and the estimated useful lives of the assets. Depreciation is calculated using the straight-line method. Buildings include tobacco processing and blending facilities, offices, and warehouses. Machinery and equipment consists of processing and packing machinery and transport, office, and computer equipment. Estimated useful lives range as follows: buildings—15 to 40 years; processing and packing machinery—3 to 11 years; transport equipment—3 to 10 years; and office and computer equipment—3 to 10 years. Where applicable, the Company capitalizes related interest costs during periods that property, plant and equipment are being constructed or made ready for service. No interest was capitalized in fiscal years 2012, 2011, or 2010. Goodwill and Other Intangibles Goodwill and other intangibles principally consist of the excess of the purchase price of acquired companies over the fair value of the net assets. Goodwill is carried at the lower of cost or fair value. The Company follows the applicable fair value accounting guidance in determining the fair value of goodwill. This primarily involves the use of discounted cash flow models (Level 3 of the fair value hierarchy in the accounting guidance). The calculations in these models are normally not based on observable market data from independent sources and therefore require significant management judgment with respect to estimates of future operating earnings and the selection of an appropriate discount rate. The use of different assumptions could increase or decrease estimated future operating cash flows, and the discounted value of those cash flows, which could increase or decrease any impairment charge related to goodwill. Reporting units are distinct operating subsidiaries or groups of subsidiaries that typically compose the Company’s business in a specific country or location. Goodwill is allocated to reporting units based on the country or location to which a specific acquisition relates, or by allocation based on expected future cash flows if the acquisition relates to more than one country or location. The majority of the Company’s goodwill relates to its reporting unit in Brazil. No charges for goodwill impairment were recorded in fiscal years 2012, 2011, or 2010. During the third quarter of fiscal year 2011, goodwill was reduced by approximately $5.8 million to reflect amounts allocated to leaf procurement activities associated with farmer contracts and related assets that were conveyed to an operating subsidiary of one of the Company’s major customers (see Note 14). Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events, changes in business conditions, or other circumstances provide an indication that such assets may be impaired. Potential impairment is initially assessed by comparing management’s undiscounted estimates of future cash flows from the use or disposition of the assets to their carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge is recorded to reduce the carrying value of the asset to its fair value determined in accordance with the accounting guidance. In many cases, this involves the use of discounted cash flow models that are not based on observable market data from independent sources (Level 3 of the fair value hierarchy under the accounting guidance). As discussed in Note 2, the Company recorded an impairment charge of $5.6 million in the third quarter of fiscal year 2011 in connection with its decision to close its leaf tobacco processing facility in Simcoe, Ontario, Canada and sell the related assets. No significant charges for the impairment of long-lived assets were recorded during fiscal years 2012 or 2010. Income Taxes The Company provides deferred income taxes on temporary differences between the book and tax basis of its assets and liabilities. Those differences arise principally from employee benefit accruals, depreciation, deferred compensation, undistributed earnings of unconsolidated affiliates, undistributed earnings of foreign subsidiaries, goodwill, and valuation allowances on farmer advances and value-added tax credits. As discussed in Note 5, during fiscal year 2010, the Company changed the classification of undistributed earnings of certain foreign subsidiaries that had previously been designated as permanently reinvested. Approximately $3.5 million in deferred U.S. income taxes were recorded on those earnings effective with this change. At March 31, 2012 and 2011, the Company had no undistributed earnings of consolidated foreign subsidiaries classified as permanently reinvested. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) is reported in the consolidated balance sheets and the consolidated statements of changes in shareholders’ equity and consists of:
Fair Values of Financial Instruments The fair values of the Company’s long-term obligations, disclosed in Note 7, have been estimated using market prices where they are available and discounted cash flow models based on current incremental borrowing rates for similar classes of borrowers and borrowing arrangements. The carrying amount of all other assets and liabilities that qualify as financial instruments approximates fair value. Derivative Financial Instruments The Company recognizes all derivatives on the balance sheet at fair value. Interest rate swaps and forward foreign currency exchange contracts are used from time to time to reduce interest rate and foreign currency risk. The Company enters into such contracts only with counterparties of good standing. The credit exposure related to non-performance by the counterparties and the Company is considered in determining the fair values of the derivatives, and the effect is not material to the financial statements or operations of the Company. Additional disclosures related to the Company’s derivatives and hedging activities are provided in Note 9. Translation and Remeasurement of Foreign Currencies The financial statements of foreign subsidiaries having the local currency as the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates applicable to each reporting period for results of operations. Adjustments resulting from translation of financial statements are reflected as a separate component of comprehensive income or loss. The financial statements of foreign subsidiaries having the U.S. dollar as the functional currency, with certain transactions denominated in a local currency, are remeasured into U.S. dollars. The remeasurement of local currency amounts into U.S. dollars creates remeasurement gains and losses that are included in earnings as a component of selling, general, and administrative expense. The Company recognized net remeasurement losses of $2.3 million in fiscal year 2012, net remeasurement gains of $4.4 million in fiscal year 2011, and net remeasurement losses of $9.3 million in fiscal year 2010. Foreign currency transactions and forward foreign currency exchange contracts that are not designated as hedges generate gains and losses when they are settled or when they are marked to market under the prescribed accounting guidance. These transaction gains and losses are also included in earnings as a component of selling, general, and administrative expenses. The Company recognized net foreign currency transaction gains of $4.2 million in fiscal year 2012, net transaction gains of $1.7 million in fiscal year 2011, and net transaction gains of $4.0 million in fiscal year 2010. Revenue Recognition Revenue from the sale of tobacco is recognized when title and risk of loss is transferred to the customer and the earnings process is complete. Substantially all sales revenue is recorded based on the physical transfer of products to customers. A large percentage of the Company’s sales are to major multinational manufacturers of consumer tobacco products. The Company works closely with those customers to understand and plan for their requirements for volumes, styles, and grades of leaf tobacco from its various growing regions, and extensive coordination is maintained on an ongoing basis to determine and satisfy their requirements for physical shipment of processed tobacco. In most cases, customers request shipment within a relatively short period of time after the tobacco is processed and packed. The customers also specify, in sales contracts and in shipping documents, the precise terms for transfer of title and risk of loss for the tobacco. Customer returns and rejections are not significant, and the Company’s sales history indicates that customer-specific acceptance provisions are consistently met upon transfer of title and risk of loss. While most of the Company’s revenue consists of tobacco that is purchased from farmers, processed and packed in its factories, and then sold to customers, some revenue is earned from processing tobacco owned by customers. These arrangements usually exist in specific markets where the customers contract directly with farmers for leaf production, and they have accounted for less than 5% of total revenue on an annual basis through the fiscal year ended March 31, 2012. Processing and packing of leaf tobacco is a short-duration process. Under normal operating conditions, raw tobacco that is placed into the production line exits as processed and packed tobacco within one hour, and is then transported to customer-designated storage facilities. The revenue for these services is recognized when processing is completed, and the Company’s operating history indicates that customer requirements for processed tobacco are consistently met upon completion of processing. Stock-Based Compensation Share-based payments, such as grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and performance share awards, are measured at fair value and reported as expense in the financial statements over the requisite service period. Additional disclosures related to stock-based compensation are included in Note 13. Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Accounting Pronouncements Pronouncements Recently Adopted During the fiscal year ended March 31, 2012, Universal adopted the following key accounting pronouncements:
Pronouncements to be Adopted in Future Periods In September 2011, the FASB issued Accounting Standards Update 2011-08, “Testing for Goodwill Impairment” (“ASU 2011-08”). The objective of ASU 2011-08 is to simplify the process of testing for goodwill impairment by permitting companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Companies will only be required to calculate the fair value of a reporting unit if the qualitative evaluation indicates that it is more likely than not that the fair value is less than the carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with earlier adoption permitted. The Company is currently evaluating the new guidance but does not expect it to have a significant effect on its financial statements. Reclassifications Certain prior year amounts have been reclassified to conform to the current year’s presentation. |