SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: August 3, 2010
(Date of earliest event reported)

UNIVERSAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Virginia
 
001-00652
 
54-0414210
(State or Other Jurisdiction
 
(Commission File Number)
 
(IRS Employer
of Incorporation)
  
 
  
Identification No.)

9201 Forest Hill Avenue
 
23235
Richmond, Virginia
 
(Zip Code)
(Address of Principal Executive Offices)
  
 

Registrant's telephone number, including area code:
(804) 359-9311
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 

Item 2.02.        Results of Operations and Financial Condition.

The Registrant issued a press release on August 3, 2010, discussing its results for the quarter ended June 30, 2010.  The press release is attached as Exhibit 99.2 and is incorporated by reference into this Item 2.02.

Item 5.03         Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On August 3, 2010, the Board of Directors of the Registrant amended and restated the Registrant’s Amended and Restated Bylaws, which changes are effective as of August 3, 2010.  The Amended and Restated Bylaws were amended to change the date of the annual meeting of shareholders of the Registrant from the first Tuesday in August of each year to the second Tuesday in August of each year, or such other day as the Board of Directors shall determine.
 
The preceding description is qualified in its entirety by reference to the Amended and Restated Bylaws, as amended, which are included as Exhibit 3.1 to this Report and is incorporated herein by reference.
 
Item 8.01.        Other Events.

On August 3, 2010, the Registrant issued a press release announcing quarterly dividends for the Registrant’s common stock and preferred stock.  The press release is furnished as Exhibit 99.1 to this Report and is incorporated herein by reference.

Item 9.01.        Financial Statements and Exhibits.

(d)
Exhibits.
       
 
No.
 
Description
 
3.1
 
Amended and Restated Bylaws, effective as of August 3, 2010.*
       
 
99.1
 
Press release dated August 3, 2010, announcing quarterly dividends.*
       
 
99.2
 
Press release dated August 3, 2010, announcing results for the quarter ended June 30, 2010.*

_________
*Filed Herewith

 
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
UNIVERSAL CORPORATION
 
(Registrant)
     
Date: August 3, 2010
By:
/s/ Preston D. Wigner
   
Preston D. Wigner
   
Vice President, General Counsel, Secretary,
and Chief Compliance Officer

 
 

 

Exhibit Index

Exhibit
   
Number
 
Document
     
3.1
 
Amended and Restated Bylaws, effective as of August 3, 2010.*
     
99.1
 
Press release dated August 3, 2010, announcing quarterly dividends.*
     
99.2
  
Press release dated August 3, 2010, announcing results for the quarter ended June 30, 2010.*

__________
*Filed Herewith

 
 

 


August 3, 2010
 
AMENDED AND RESTATED BYLAWS
OF
UNIVERSAL CORPORATION

******

ARTICLE I
 
Shareholders
 
Section 1 .  Shareholders shall be those persons in whose names shares of the Company are registered in its share transfer records, and a listing of the names drawn from such records as of a record date shall serve as conclusive evidence as to those shareholders eligible to vote their shares at any meeting of the shareholders.
 
Section 2 .  Certificates evidencing shares of the Company shall only be issued for one or more full shares.  Transfers of stock shall be made on the books of the Company only by the Shareholders of such stock, or by attorney lawfully constituted in writing, and, in the case of stock represented by a certificate, upon surrender of the certificate.
 
Section 3 .  The share transfer records of the Company shall not be closed following the declaration of a dividend on either the preferred or common shares.  A record date shall be established in the resolution declaring such dividend or dividends and the transfer agent shall prepare a listing of the names of all the shareholders entitled to such dividend without actually closing the share transfer records for the transfer of shares.
 
Section 4 .  Shares of the Company’s stock may be certificated or uncertificated, as provided under Virginia law.  All certificates of stock of the Company shall be numbered and shall be entered in the books of the Company as they are issued.  They shall exhibit the holder’s name and number of shares and shall be signed by the Chairman of the Board, the President, or a Vice President of the Company and by its Secretary, or by any two officers duly authorized to perform this function by the Board of Directors.  Any or all of the signatures on the certificate may be a facsimile.
 
Section 5 .  The annual meeting of the shareholders of the Company shall be held at its principal office located in Richmond, Virginia, or at such other place within or without the Commonwealth of Virginia as may from time to time be designated by the Board of Directors, on the second Tuesday in August of each year, or on such other day as shall be fixed by the Board of Directors, for the purpose of electing Directors and for the transaction of such other business as may properly come before the meeting.
 
In order for business to be properly brought before an annual meeting of shareholders, it must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder.  For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Company.  To be timely, a shareholder’s notice must be delivered to or mailed and received at the principal office of the Company, not less than 60 days nor more than 90 days prior to the meeting.  A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Company’s share transfer records, of the shareholder proposing such business, (iii) the class and number of shares of the Company which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business.  Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 5.  The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that an item of business was not properly brought before the meeting in accordance with the provisions of this Section 5, and shall not be transacted.

 

 

Notwithstanding the foregoing provisions of this Section 5, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 5.
 
Section 6 .  At the call of the Chairman of the Board, the President, or by order of the Board of Directors, a special meeting of the shareholders of the Company may be held at such time and place as shall be designated in the notice of the meeting.
 
Section 7 .  Written notice of an annual or special meeting of the shareholders shall be mailed to each shareholder of record entitled to vote under the provisions of the Articles of Incorporation of the Company as now in existence or as may be subsequently amended, at the address as it appears on the share transfer records of the Company, not less than ten nor more than sixty days before the meeting date, except as may otherwise be required by law.  Notice of a special meeting shall state the purpose or purposes for which the meeting is called.  Notice of any meeting of shareholders may be waived in writing or by attendance at the meeting in person or by proxy.
 
Section 8 .  At all meetings of the shareholders, a majority of the shares entitled to vote at the record date for such meeting, represented in person or by proxy, shall constitute a quorum, provided that when a specified item of business is required to be voted on by one or more classes of shares, voting as a class, the holders of a majority of the shares of each such class shall constitute a quorum for the transaction of such specified item of business.  If no quorum shall be present, the meeting may, without further notice, be adjourned from time to time until a quorum shall be present.   At all meetings of the shareholders, a shareholder may vote by proxy executed in writing (or in such manner prescribed by the Virginia Stock Corporation Act) by the shareholder, or by the shareholder’s duly authorized attorney-in-fact.
 
Section 9 .  The Chairman of the Board shall preside at all meetings of the shareholders and, in his absence, the President shall preside.  All meetings of the shareholders shall be attended by the Secretary of the Company, and he shall, ex officio be the Secretary of such meetings.  In his absence, a Secretary pro tempore may be appointed.
 
ARTICLE II
 
Board of Directors
 
Section 1 .  Only persons who are nominated in accordance with the procedures set forth in this Section 1 shall be eligible to serve as Directors.  Nominations of persons for election to the Board of Directors of the Company may be made at an annual meeting of the shareholders (a) by or at the direction of the Board of Directors or (b) by any shareholder of the Company who is a shareholder of record at the time of giving notice provided for in this Section 1, who shall be entitled to vote for the election of Directors at the meeting and who complies with the notice procedures set forth in this Section 1.  Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Company.  To be timely, a shareholder’s notice shall be delivered to or mailed and received at the principal office of the Company not less than 60 days nor more than 90 days prior to the meeting.  Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in the solicitation of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (b) as to the shareholder giving the notice (i) the name and address, as they appear on the Company’s share transfer records, of such shareholder and (ii) the class and number of shares of the Company which are beneficially owned by such shareholder.  At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the Company that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee.  No person shall be eligible for election as a Director of the Company unless nominated in accordance with the procedures set forth in this Section 1.  The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the provisions of this Section 1 and the defective nomination shall be disregarded.  Notwithstanding the foregoing provisions of this Section 1, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 1.

 
2

 

Section 2 .  The Board of Directors shall hold its meetings at such times and at such places within or without the Commonwealth of Virginia as it may from time to time designate, or if the Board has fixed no place, then at the principal office of the Company located in the City of Richmond, Virginia.  A meeting may be called at any time by the Chairman, the President or by any three Directors.  Meetings of the Board of Directors shall be held at least quarterly.
 
Section 3 .  Immediately following the annual meeting of the shareholders at which the Directors are elected, an organizational meeting of the Board of Directors shall be held for the purpose of electing the officers of the Company and for the transaction of any other business which may be brought before it relating to the management of the business and affairs of the Company.  No notice other than this Bylaw provision shall be required for the holding of this organizational meeting and for the transaction of business at such meeting or any adjournment thereof.
 
Regular meetings of the Board of Directors may be held at such designated times and places as may be determined by the Board of Directors, and the notices of such regular meetings shall be in such form as may be prescribed by the Board of Directors.
 
Notice of the time and place of special meetings of the Board of Directors shall be given to each Director by the Secretary of the Company or in his absence or inability to act, by the President, or by the Treasurer or by such other officer as may be designated by the Executive Committee, orally or in writing, in person or by mail, private courier, telephone, telegraph, teletype, or other similar form of wire or wireless communication.
 
Notice of any meeting, regular or special, shall be deemed to have been duly given if delivered in whatever form and in sufficient time to permit the Director to whom the notice is given and received to attend the meeting using the ordinary and usual means of transportation normally available to the Director.
 
If upon the request of any three Directors, the Secretary or other designated officer of the Company shall fail or refuse to call a meeting of the Board of Directors, then the call may be given provided it is in writing and signed by the three Directors requesting the meeting.  Such notice, when so given to each other member of the Board of Directors, shall be deemed to be proper notice of the meeting.
 
Section 4 .  A majority of the number of Directors fixed by the Bylaws shall constitute a quorum, but if upon a call for a meeting, there shall not be a quorum present, the Directors present may adjourn the meeting from time to time until a quorum is present.  All questions coming before the Board of Directors shall be determined by the majority vote of the Directors present.

 
3

 

ARTICLE III
 
Committees
 
Section 1 .  The Board of Directors may designate three or more of their number, of whom the Chief Executive Officer shall ex officio be a member, to constitute an Executive Committee, which shall have and exercise all the powers of the Board that may be lawfully delegated, including the power to authorize the seal of the Company to be affixed to such documents as may require it.  The acts and records of the Executive Committee shall at all times be subject to the supervision and control of the Board of Directors when in session.  A majority of the number of members of the Executive Committee shall constitute a quorum, and all questions coming before the Executive Committee shall be determined by the majority vote of the members of the Committee.
 
Section 2 .  The Board of Directors shall elect from their number a Finance Committee that shall have such membership requirements, duties and responsibilities as set forth in the Finance Committee Charter adopted by the Board of Directors.
 
Section 3 .  The Board of Directors shall elect from their number an Audit Committee that shall have such membership requirements, duties and responsibilities as set forth in the Audit Committee Charter adopted by the Board of Directors.
 
Section 4 .  The Board of Directors shall elect from their number an Executive Compensation and Nominating Committee that shall have such membership requirements, duties and responsibilities as set forth in the Executive Compensation and Nominating Committee Charter adopted by the Board of Directors.
 
Section 5 .  The Board of Directors shall elect from their number a Pension Investment Committee that shall have such membership requirements, duties and responsibilities as set forth in the Pension Investment Committee Charter adopted by the Board of Directors.
 
This authority shall not cause the Pension Investment Committee to assume the role of “plan administrator”, “trustee”, or “custodian” for any employee benefit plan.
 
Section 6 .  The Board of Directors may establish and charge with appropriate duties such other committees as it may deem necessary or desirable.
 
ARTICLE IV
 
Officers
 
Section 1 .  The Board of Directors, at the organizational meeting following the annual meeting of the shareholders, shall elect the Chief Executive Officer, such officers as may be required by law, and such other officers as they may deem proper.  From time to time and as necessary, additional officers may be elected by the Board of Directors.
 
Section 2 .  The term of office of all officers shall be one year and until their respective successors are elected.  Any officer may be removed from office by the Board of Directors at any time and with or without cause, unless otherwise stated by agreement in writing duly authorized by the Board of Directors.  The officers of the Company shall have such duties as generally pertain to their respective offices, as well as such powers and duties as from time to time shall be conferred upon them by the Board of Directors.
 
Section 3 .  In case of the absence or inability to act or disqualification of any officer, his duties shall be discharged by his associate or assistant officer, and if there be none and no other provision has been made therefor, the Board of Directors shall delegate his powers and duties to another officer or shall appoint some other person to act in his stead.
 
ARTICLE V
 
Emergency Provisions
 
Section 1 .  The provisions of this Article shall be effective only in the event of and during the period of an emergency.  An emergency exists for purposes of this Article if a quorum of the Board of Directors cannot be readily assembled because of some catastrophic event.
 
Section 2 .  The officers and employees of the Company shall continue to conduct the affairs of the Company under such guidance from the Directors as may be available, except as to matters which by statute, notwithstanding the existence of the emergency, require approval of the Board of Directors and subject to conformance with any governmental directive during the emergency.

 
4

 

Section 3 .  Any senior officer or Director may call a meeting of the Board of Directors, and those who are present at the meeting shall constitute a quorum of the Board for the full conduct and management of the business and affairs of the Company.  Notice of the meeting given to those Directors, to whom it may readily be given under the existing circumstances, shall be sufficient and may be given by such means as it is feasible at the time, including by publication or by radio.
 
Section 4 .  In the absence, disability or refusal to act of any officer, the Board of Directors may delegate such officer’s powers to any other officer, or to any Director for the time being.
 
ARTICLE VI
 
Checks and Notes
 
Section 1 .  All checks given by the Company in the course of its business shall be signed in such manner as prescribed from time to time by the Finance Committee.
 
Section 2 .  All notes and bonds given by the Company in the course of its business shall be signed by any one of the Treasurer, Secretary, an Assistant Treasurer, or an Assistant Secretary, jointly together with any one of the Chairman, Vice Chairman, President, a Vice President, or by such other persons and in such manner as may be prescribed from time to time by the Finance Committee of the Board of Directors.
 
ARTICLE VII
 
Corporate Seal
 
The corporate seal of the Company shall consist of two concentric circles, around the inner edge of which shall be engraved the words “UNIVERSAL CORPORATION, RICHMOND, VA.” and across the center thereof the word “SEAL” and the figures “1918.”
 
ARTICLE VIII
 
Use of Masculine
 
Whenever a masculine term is used in these Bylaws, it shall be deemed to include the feminine.
 
ARTICLE IX
 
Dividends
 
The Board of Directors may, subject to the provisions of the Articles of Incorporation of the Company, annually, semi-annually, quarterly or monthly, declare dividends as it may deem prudent.
 
ARTICLE X
 
Amendments
 
These Bylaws may be altered, amended or repealed by vote of the majority of the whole number of Directors at any meeting of the Board of Directors, or by the shareholders at any annual meeting of the shareholders of the Company, or at any special meeting when due notice of such proposed amendment has been given, subject to the provisions of the Articles of Incorporation of the Company.

 
5

 


P.O. Box 25099 Richmond, VA 23260 ¨ phone: (804) 359-9311 ¨ fax (804) 254-3594
 

PRESS RELEASE
 
CONTACT
RELEASE
Karen M. L. Whelan
Immediately
Phone:
(804) 359-9311
 
Fax:
(804) 254-3594
 
Email:
investor@universalleaf.com
 
 
Universal Corporation Announces Quarterly Dividends
Richmond, VA • August 03, 2010 / PRNEWSWIRE

George C. Freeman, III, Chairman, President and Chief Executive Officer of Universal Corporation (NYSE:UVV), announced today that the Company’s Board of Directors declared a quarterly dividend of forty-seven cents ($0.47) per share on the common shares of the Company, payable November 8, 2010, to common shareholders of record at the close of business on October 12, 2010.

In addition, the Board of Directors declared a quarterly dividend of $16.875 per share on the Series B 6.75% Convertible Perpetual Preferred Stock (“Series B Preferred Stock”), payable September 15, 2010, to shareholders of record as of 5:00 p.m. Eastern Time on September 1, 2010.

Headquartered in Richmond, Virginia, Universal Corporation is the world's leading tobacco merchant and processor and conducts business in more than 30 countries.  Its revenues from continuing operations for the fiscal year ended March 31, 2010, were $2.5 billion. For more information on Universal Corporation, visit its web site at www.universalcorp.com.

# # #

 
 

 



P.O. Box 25099     Richmond, VA 23260     Phone: (804) 359-9311     Fax: (804) 254-3584
 

PRESS RELEASE

CONTACT:
Karen M. L. Whelan
 
RELEASE:            2:15 p.m. ET
 
Phone: (804) 359-9311
   
 
Fax:      (804) 254-3584
   
 
Email:   investor@universalleaf.com
   

Universal Corporation Reports First Quarter Earnings
Richmond, VA, August 3, 2010 / PRNEWSWIRE

HIGHLIGHTS
 
Later shipping timing reduces quarter results.
Diluted earnings per share decreased to $0.87 versus $1.47 last year.
Operating income at $41 million nears historical first quarter levels.
 

George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE:UVV), announced that net income for the first quarter of fiscal year 2011, which ended on June 30, 2010, was $25.3 million, or $0.87 per diluted share. Those results reflected a 42% decline compared to the same period last year, when income was $43.7 million, or $1.47 per diluted share. Last year’s first quarter results were exceptionally strong, primarily due to the effect of earlier shipments of Brazilian and European tobacco in that quarter. Revenues for the first quarter of fiscal year 2011 of about $539 million were lower by about 13%.
 
Mr. Freeman stated, “Our fiscal year 2011 first quarter results faced difficult comparisons to last year’s very strong initial quarter, but were in line with historical trends for the first quarter. Although we expect shipment timing differences to correct during the remainder of the fiscal year, we face some challenges due to a smaller Brazilian crop, margin pressures in some areas as the cost of leaf increases, decreased customer demand due to softer cigarette sales, and changes in manufacturer sourcing methods.
 
“In June, Philip Morris International announced that, with the help of its two largest leaf suppliers, it will source a portion of its leaf requirements directly from farmers in Brazil, beginning with the crop that will be marketed in our fiscal year 2012. We have not yet completed the transaction with them yet but expect it to be finalized in the fall. Last year, Japan Tobacco Inc. announced its intention to source a portion of its leaf directly in the United States, Brazil, and Malawi, and we expect to see some volume reductions this year related to this initiative. However, we are aggressively working to replace those volumes and have had some success in Brazil and Africa. We have effectively managed change in our business in the past and believe that we are well positioned to respond to it now. We support all of our customers in their strategic endeavors, and we continue to believe that the dealer industry performs a critical function and brings value to the manufacturers. We expect fiscal year 2011 to be challenging, and at this time we remain cautiously optimistic that we will achieve our objectives in reducing costs, replacing volumes, and remaining competitive as we meet the changing needs of our customers. We have made a first step in cost reduction this quarter with a restructuring charge related to a personnel reduction in our U.S. operations. We will continue a strong focus on operating improvements and cost reductions as the year progresses.
 
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Universal Corporation
Page 2

“We estimate that worldwide dealer inventories of flue-cured and burley leaf are about 105 million kilos, compared to 70 million last year. Levels remain well below the long-term average, but we believe there is potential for oversupply in flue-cured tobacco. For this season, lower flue-cured crops in Brazil and the United States are being offset by projected increases in Tanzania and Zimbabwe. The level of manufacturers’ inventory durations and future supply forecasts also affect market balance.”
 
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
 
Operating income for our flue-cured and burley tobacco operations decreased by 44% to $36 million. Similarly, revenues for those operations declined by 17% to $465 million. That performance includes results from our North America and Other Regions segments. Comparisons for the Other Regions segment results were significantly impacted by early shipments in the first quarter last year in South America and Europe. South America volumes this year were also reduced somewhat by the smaller Brazilian crop caused by excess rain. The effect of these changes in South America was mitigated by lower selling, general, and administrative costs in the region on currency benefits and an accrual in the prior year related to our Foreign Corrupt Practices Act (“FCPA”) matter. Results for Europe were also reduced on lower margins this year coupled with the translation effect of the weaker euro. Revenues for the Other Regions segment fell by 23%, primarily reflecting the shipment timing factors. Compared to last year’s first quarter, both revenues and operating income for the North America segment improved in its seasonally low period, driven by increased sales of carryover stocks.
 
OTHER TOBACCO OPERATIONS:
 
The Other Tobacco Operations segment operating income declined by about $3 million due primarily to lower results from the oriental tobacco joint venture. Reduced volumes and lower margins combined with lower currency gains this year depressed results for this business. Dark tobacco results improved slightly as overhead cost savings offset reduced margins and lower volumes in some areas. Revenues for this segment increased by 26% to $74 million primarily related to the timing of customer deliveries by our just-in-time services group and the timing of oriental tobacco shipments into the United States, neither of which had a commensurate effect on segment operating income.
 
OTHER ITEMS:
 
Cost of sales decreased by 8% to $437 million in the quarter on lower volumes shipped, partly offset by higher overall leaf purchasing costs. Selling, general, and administrative costs decreased by 14% due to lower currency remeasurement and exchange losses in the current year, and prior year accruals for costs associated with the FCPA matter. Interest expense was down in part because of interest costs accrued in last year’s quarter related to the FCPA matter. In addition, we benefited from additional fixed to floating rate interest rate swaps entered after last year’s first quarter. The effective income tax rate for the quarter of approximately 34% was comparable to the effective rate for the same quarter last year and lower than the 35% U.S. federal statutory rate.
 
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Universal Corporation
Page 3
 
Additional information
 
This information includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that any statements contained herein regarding earnings and expectations for its performance are forward-looking statements based upon management’s current knowledge and assumptions about future events, including anticipated levels of demand for and supply of its products and services; costs incurred in providing these products and services; timing of shipments to customers; changes in market structure; and general economic, political, market, and weather conditions. Actual results, therefore, could vary from those expected. A further list and description of these risks, uncertainties and other factors can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 20010, and in other documents the Company files with the Securities and Exchange Commission. This information should be read in conjunction with the Annual Report on Form 10-K for the year ended March 31, 2010.
 
At 5:00 p.m. (Eastern Time) on August 3, 2010, the Company will host a conference call to discuss these results. Those wishing to listen to the call may do so by visiting www.universalcorp.com at that time. A replay of the webcast will be available at that site for three months. A taped replay of the call will also be available until August 24, 2010, by dialing (800) 642-1687. The confirmation number to access the replay is 92015856.
 
Headquartered in Richmond, Virginia, Universal Corporation is the world's leading tobacco merchant and processor and conducts business in more than 30 countries. Its revenues for the fiscal year ended March 31, 2010, were $2.5 billion. For more information on Universal Corporation, visit its web site at www.universalcorp.com.
 
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Universal Corporation
Page 4
 
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data)

   
Three Months Ended
June 30,
 
    
2010
   
2009
 
   
(Unaudited)
 
Sales and other operating revenues
  $ 538,916     $ 616,112  
Costs and expenses
               
Cost of goods sold
    436,679       476,748  
Selling, general and administrative expenses
    60,183       69,592  
Restructuring costs
    949        
Operating income
    41,105       69,772  
Equity in pretax earnings of unconsolidated affiliates
    378       3,641  
Interest income
    444       565  
Interest expense
    5,126       8,155  
Income before income taxes and other items
    36,801       65,823  
Income taxes
    12,383       22,019  
Net income
    24,418       43,804  
Less:  net (income) loss attributable to noncontrolling interests in subsidiaries
    902       (59 )
Net income attributable to Universal Corporation
    25,320       43,745  
Dividends on Universal Corporation convertible perpetual preferred stock
    (3,712 )     (3,712 )
Earnings available to Universal Corporation common shareholders
  $ 21,608     $ 40,033  
                 
Earnings per share attributable to Universal Corporation common shareholders:
               
Basic
  $ 0.89     $ 1.60  
Diluted
  $ 0.87     $ 1.47  

See accompanying notes.
 
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Universal Corporation
Page 5
 
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

   
June 30,
2010
   
June 30,
2009
   
March 31,
2010
 
   
(Unaudited)
   
(Unaudited)
       
ASSETS
                 
Current
                 
Cash and cash equivalents
  $ 61,781     $ 131,167     $ 245,953  
Accounts receivable, net
    221,053       229,764       266,960  
Advances to suppliers, net
    122,878       141,383       167,400  
Accounts receivable - unconsolidated affiliates
    42,403       15,654       11,670  
Inventories - at lower of cost or market:
                       
Tobacco
    1,152,427       886,232       812,186  
Other
    66,183       66,851       52,952  
Prepaid income taxes
    14,062       14,238       13,514  
Deferred income taxes
    46,058       43,385       47,074  
Other current assets
    72,042       80,031       75,367  
Total current assets
    1,798,887       1,608,705       1,693,076  
                         
Property, plant and equipment
                       
Land
    15,740       16,002       16,036  
Buildings
    262,468       254,846       266,350  
Machinery and equipment
    535,480       507,681       532,824  
      813,688       778,529       815,210  
Less accumulated depreciation
    (486,576 )     (462,266 )     (485,723 )
      327,112       316,263       329,487  
Other assets
                       
Goodwill and other intangibles
    105,409       106,030       105,561  
Investments in unconsolidated affiliates
    95,494       112,781       106,336  
Deferred income taxes
    28,627       20,393       30,073  
Other noncurrent assets
    101,870       91,297       106,507  
      331,400       330,501       348,477  
                         
Total assets
  $ 2,457,399     $ 2,255,469     $ 2,371,040  

See accompanying notes.
 
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Universal Corporation
Page 6
 
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

   
June 30,
2010
   
June 30,
2009
   
March 31,
2010
 
   
(Unaudited)
   
(Unaudited)
       
LIABILITIES AND SHAREHOLDERS' EQUITY
                 
Current
                 
Notes payable and overdrafts
  $ 298,899     $ 171,125     $ 177,013  
Accounts payable and accrued expenses
    239,451       281,336       259,576  
Accounts payable - unconsolidated affiliates
    977       100       6,464  
Customer advances and deposits
    144,477       57,288       107,858  
Accrued compensation
    17,978       20,818       30,097  
Income taxes payable
    13,958       8,839       18,991  
Current portion of long-term obligations
    5,000       79,500       15,000  
Total current liabilities
    720,740       619,006       614,999  
                         
Long-term obligations
    418,547       329,596       414,764  
                         
Pensions and other postretirement benefits
    98,686       94,219       96,888  
                         
Other long-term liabilities
    65,412       81,639       69,886  
                         
Deferred income taxes
    38,627       51,226       46,128  
                         
Total liabilities
    1,342,012       1,175,686       1,242,665  
                         
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, 5,000,000 shares authorized, 219,999 shares issued and outstanding (219,999 at June 30, 2009, and March 31, 2010)
    213,023       213,023       213,023  
Common stock, no par value, 100,000,000 shares authorized, 24,155,316 shares issued and outstanding (24,901,506 at June 30, 2009, and 24,325,228 at March 31, 2010)
    194,960       195,437       195,001  
Retained earnings
    768,772       712,684       767,213  
Accumulated other comprehensive loss
    (66,242 )     (45,207 )     (52,667 )
Total Universal Corporation shareholders' equity
    1,110,513       1,075,937       1,122,570  
                         
Noncontrolling interests in subsidiaries
    4,874       3,846       5,805  
                         
Total shareholders' equity
    1,115,387       1,079,783       1,128,375  
                         
Total liabilities and shareholders' equity
  $ 2,457,399     $ 2,255,469     $ 2,371,040  

See accompanying notes.
 
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Universal Corporation
Page 7
 
UNIVERSAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)

   
Three Months Ended
June 30,
 
   
2010
   
2009
 
   
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 24,418     $ 43,804  
Adjustments to reconcile net income to net cash used by operating activities:
               
Depreciation
    10,823       9,902  
Amortization
    412       504  
Provisions for losses on advances and guaranteed loans to suppliers
    2,991       583  
Foreign currency remeasurement loss, net
    1,876       6,261  
Restructuring costs
    949        
Other, net
    (1,023 )     13,825  
Changes in operating assets and liabilities, net
    (303,270 )     (126,603 )
Net cash used by operating activities
    (262,824 )     (51,724 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property, plant and equipment
    (13,154 )     (11,158 )
Proceeds from sale of property, plant and equipment, and other
    945       1,813  
Net cash used by investing activities
    (12,209 )     (9,345 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Issuance (repayment) of short-term debt, net
    127,985       (3,124 )
Repayment of long-term obligations
    (10,000 )      
Repurchase of common stock
    (10,933 )     (2,981 )
Dividends paid on convertible perpetual preferred stock
    (3,712 )     (3,712 )
Dividends paid on common stock
    (11,427 )     (11,461 )
Net cash provided (used) by financing activities
    91,913       (21,278 )
                 
Effect of exchange rate changes on cash
    (1,052 )     888  
Net decrease in cash and cash equivalents
    (184,172 )     (81,459 )
Cash and cash equivalents at beginning of year
    245,953       212,626  
Cash and cash equivalents at end of period
  $ 61,781     $ 131,167  

See accompanying notes.
 
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Universal Corporation
Page 8
 
NOTE 1.   BASIS OF PRESENTATION
 
Universal Corporation, with its subsidiaries (“Universal” or the “Company”), is the world’s leading leaf tobacco merchant and processor. Because of the seasonal nature of the Company’s business, the results of operations for any fiscal quarter will not necessarily be indicative of results to be expected for other quarters or a full fiscal year. All adjustments necessary to state fairly the results for the period have been included and were of a normal recurring nature. Certain amounts in prior year statements have been reclassified to conform to the current year presentation. This press release should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2010.
 
NOTE 2.   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 June 30, 2010, the Company’s total exposure under guarantees issued by its operating subsidiary in Brazil for banking facilities of farmers in that country was approximately $46 million ($62 million face amount including unpaid interest, less $16 million recorded for the fair value of the guarantees). About 60% of these guarantees expire within one year, and all of the remainder expire within five years. The subsidiary withholds payments due to the farmers on delivery of tobacco and forwards those payments to 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 June 30, 2010, was the face amount ($62 million) including unpaid accrued interest ($82 million as of June 30, 2009, and $112 million at March 31, 2010). The fair value of the guarantees was a liability of approximately $16 million at June 30, 2010 ($36 million at June 30, 2009, and $26 million at March 31, 2010). In addition to these guarantees, the Company has other contingent liabilities totaling approximately $47 million, primarily related to a bank guarantee that bonds an appeal of a 2006 fine in the European Union.
 
Various subsidiaries of the Company are involved in other litigation and tax examinations incidental to their business activities. While the outcome of these matters cannot be predicted with certainty, management is vigorously defending the claims and does not currently expect that any of them will have a material adverse effect on the Company’s financial position. However, should one or more of these matters be resolved in a manner adverse to management’s current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.
 
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Universal Corporation
Page 9
 
NOTE 3.   EARNINGS PER SHARE
 
The following table sets forth the computation of earnings per share for the periods presented in the consolidated statements of income.
   
Three Months Ended
June 30,
 
(in thousands, except per share data)
 
2010
   
2009
 
             
Basic Earnings Per Share
           
Numerator for basic earnings per share
           
Net income attributable to Universal Corporation
  $ 25,320     $ 43,745  
Less:  Dividends on convertible perpetual preferred stock
    (3,712 )     (3,712 )
Earnings available to Universal Corporation common shareholders
               
for calculation of basic earnings per share
    21,608       40,033  
                 
Denominator for basic earnings per share
               
Weighted average shares outstanding
    24,213       24,985  
                 
Basic earnings per share
  $ 0.89     $ 1.60  
                 
Diluted Earnings Per Share
               
Numerator for diluted earnings per share
               
Earnings available to Universal Corporation common shareholders
  $ 21,608     $ 40,033  
Add:  Dividends on convertible perpetual preferred stock (if
               
conversion assumed)
    3,712       3,712  
Earnings available to Universal Corporation common shareholders
               
for calculation of diluted earnings per share
    25,320       43,745  
                 
Denominator for diluted earnings per share:
               
Weighted average shares outstanding
    24,213       24,985  
Effect of dilutive securities (if conversion or exercise assumed)
               
Convertible perpetual preferred stock
    4,742       4,728  
Employee share-based awards
    260       131  
                 
Denominator for diluted earnings per share
    29,215       29,844  
                 
Diluted earnings per share
  $ 0.87     $ 1.47  
 
For the three months ended June 30, 2010 and 2009, certain employee share-based awards were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. These awards included stock appreciation rights and stock options totaling 657,401 shares at a weighted average exercise price of $52.65 for the quarter ended June 30, 2010, and 959,439 shares at a weighted average exercise price of $46.79 for the quarter ended June 30, 2009.
 
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Universal Corporation
Page 10
 
NOTE 4.   SEGMENT INFORMATION
 
The principal approach used by management to evaluate the Company’s performance is by geographic region, although some components of the business are evaluated on the basis of their worldwide operations. The Company evaluates the performance of its segments based on operating income after allocated overhead expenses (excluding significant non-recurring charges or credits), plus equity in pretax earnings of unconsolidated affiliates.
 
Operating results for the Company’s reportable segments for each period presented in the consolidated statements of income were as follows:
 
   
Three Months Ended
June 30,
 
(in thousands of dollars)
 
2010
   
2009
 
             
SALES AND OTHER OPERATING REVENUES
           
             
Flue-cured and burley leaf tobacco operations:
           
North America
  $ 63,167     $ 36,132  
Other regions (1)
    401,819       521,172  
Subtotal
    464,986       557,304  
Other tobacco operations (2)
    73,930       58,808  
                 
Consolidated sales and other operating revenues
  $ 538,916     $ 616,112  
                 
OPERATING INCOME
               
                 
Flue-cured and burley leaf tobacco operations:
               
North America
  $ 3,692     $ 306  
Other regions (1)
    32,327       63,909  
Subtotal
    36,019       64,215  
Other tobacco operations (2)
    6,413       9,198  
                 
Segment operating income
    42,432       73,413  
                 
Less: Equity in pretax earnings of unconsolidated affiliates (3)
    378       3,641  
   Restructuring costs (4)
    949        
                 
Consolidated operating income
  $ 41,105     $ 69,772  

(1)
Includes South America, Africa, Europe, and Asia regions, as well as inter-region eliminations.
(2)
Includes Dark Air-Cured, Special Services, and Oriental, as well as inter-company eliminations.  Sales and other operating revenues for this reportable segment include limited amounts for Oriental because its financial results consist principally of equity in the pretax earnings of an unconsolidated affiliate.
   
(3)
Item is included in segment operating income, but not included in consolidated operating income.
(4)
Item is not included in segment operating income, but is included in consolidated operating income.
 
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