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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
Reconciliation of Certain Non-GAAP Financial Measures
The following tables set forth certain non-recurring items included in reported results to reconcile adjusted operating income to consolidated operating income and adjusted net income to net income attributable to Universal Corporation:
| Adjusted Operating Income Reconciliation | ||||||||
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Fiscal Year Ended March 31, |
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| (in thousands) | 2021 | 2020 | ||||||
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| As Reported: Consolidated operating income | $ | 147,810 | $ | 126,367 | ||||
| Purchase accounting adjustments(1) | 2,800 | 2,700 | ||||||
| Transaction costs for acquisitions(2) | 3,915 | 4,668 | ||||||
| Fair value adjustment to contingent consideration for FruitSmart acquisition(3) | (4,173 | ) | ||||||
| Restructuring and impairment costs(4) | 22,577 | 7,543 | ||||||
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| Adjusted operating income | $ | 172,929 | $ | 141,278 | ||||
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| Adjusted Net Income and Diluted Earnings Per Share Reconciliation | ||||||||
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Fiscal Year Ended March 31, |
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| (all amounts reported net of income taxes) | 2021 | 2020 | ||||||
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| As Reported: Net income attributable to Universal Corporation | $ | 87,410 | $ | 71,680 | ||||
| Purchase accounting adjustments(1) | 2,800 | 2,133 | ||||||
| Transaction costs for acquisitions(2) | 3,915 | 4,668 | ||||||
| Fair value adjustment to contingent consideration for FruitSmart acquisition(3) | (4,173 | ) | — | |||||
| Restructuring and impairment costs(4) | 17,800 | 6,283 | ||||||
| Interest expense related to an uncertain tax matter at a foreign subsidiary | 1,849 | — | ||||||
| Income tax benefit from dividend withholding tax liability reversal(5) | (4,421 | ) | — | |||||
| Income tax settlement for foreign subsidiary(6) | — | 2,766 | ||||||
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| Adjusted Net income attributable to Universal Corporation | $ | 105,180 | $ | 87,530 | ||||
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| As reported: Diluted earnings per share | $ | 3.53 | $ | 2.86 | ||||
| Adjusted: Diluted earnings per share |
$ | 4.25 | $ | 3.49 | ||||
| (1) | The Company recognized an increase in cost of goods sold in fiscal year 2021 and 2020, relating to the expensing of a fair value adjustments to inventory associated with the initial acquisition accounting for Silva (effective October 1, 2020) and FruitSmart (effective January 1, 2020). |
| (2) | The Company incurred selling, general, and administrative expenses for due diligence and other transaction costs associated with the acquisitions of Silva and FruitSmart. These costs are not deductible for U.S. income tax purposes. |
| (3) | The Company reversed a portion of the contingent consideration liability for the FruitSmart acquisition, as a result of certain performance metrics that did not meet the required threshold stipulated in the purchase agreement. |
| (4) | Restructuring and impairment costs are included in Consolidated operating income in the consolidated statements of income, but excluded for purposes of Adjusted operating income, Adjusted net income attributable to Universal Corporation, and Adjusted diluted earnings per share. See Note 4 for additional information. |
| (5) | The Company recognized an income tax benefit for final U.S. tax regulations on certain dividends paid by foreign subsidiaries in a prior fiscal year. |
| (6) | The Company recognized an income tax settlement charge related to operations at a foreign subsidiary. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| UNIVERSAL CORPORATION (Registrant) | ||||
| Date: May 27, 2021 | By: |
/s/ Preston D. Wigner | ||
| Preston D. Wigner | ||||
| Vice President, General Counsel, and Secretary | ||||
