SEC Comment Letter for UNIVERSAL (UVV) — Sep 6, 2016
UNIVERSAL CORP /VA/ (UVV) (CIK 0000102037)
Date: Sept. 6, 2016 · CIK: 0000102037 · Accession: 0000000000-16-091569
AI Filing Summary & Sentiment
File numbers found in text: 001-00652
Letter
Mail Stop 3561 September 6, 2016 David C. Moore Senior VP and Chief Financial Officer 9201 Forest Hill Avenue Richmond, Virginia 23235
Re: Universal Corp oration Form 10-K for Fiscal Year Ended March 31, 2016 Filed May 27, 2016 File No. 001-00652
Dear Mr. Moore :
We have reviewed your filing and have the following comments. In some of o ur comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 10 -K for Fiscal Year Ended March 31, 2016
General
1. You describe on pages 18, 21 and 23 of the 10 -K your activities in Africa, a r egion that includes Sudan. You state on page 6 that for the fiscal year ended March 31, 2016 British American Tobacco accounted for 10% or more of your revenues. News reports indicate that British American Tobacco acquired a tobacco manufacturer in Sudan in November 2015 and has a subsidiary based in Dubai that covers countries including Syria. Sudan and Syria are designated by the Department of State as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please de scribe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, whether through subsidiaries, affiliates, partners, customers, joint ventures or other direct or indirect arrangements. You should describe any service s, products, information or technology you have provided to Sudan or Syria, directly or indirectly, and any
David C. Moore, Senior VP and CFO Universal Corp oration September 6, 2016 Page 2
agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities they control.
2. Please discus s the materiality of any contacts with Sudan and Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, includi ng the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim period. Also, address materiality in terms of qualitative factors that a reasonable investor would deem import ant in making an investment decision, including the potential impact of corporate activities upon a company's reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S. - designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operation s associated with Sudan and Syria.
Item 7. Management’s Discussion and Analysis Results of Operations Fiscal Year Ended March 31, 2016… North America, page 20
3. We note your disclosure that earnings improved in part as result of a “change in business with Philip Morris International, Inc. in the United States from a toll processing model to sales of processed tobacco.” Please tell us and disclose the differences in the business models, impact on current period earnings, and impact expected in future period s. Refer to Item 303(a)(3) of Regulation S -K and Section s III.B and III. D of Release No. 33-6835 for guidance .
Liquidity and Capital Resources Cash Flow, page 23
4. You disclose that operating cash flows decreased in part due to your change in business with Philip Morris International, Inc. in the United States from a toll processing model to sales of processed tobacco that you purchase. You state that this change in business impacts the timing of earnings recognition, as sales under the new model are recorded when the product ships. Please explain to us how your operating cash was directly impacted by the change in the models. Also, explain to us the reason for the change in the timing of earnings recognition and any change in your accounting treatment between the two models.
David C. Moore, Senior VP and CFO Universal Corp oration September 6, 2016 Page 3
Notes to Consolidated Financial Statements Note 12. Executive Stock Plans and Stock -Based Compensation, page 68
5. You disclose that under th e terms of the RSU awards grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same date as the original RSU grant. P lease tell us your consideration of ASC 260 -10-45-61A and 718-10-55-45 in regard to the effect given to the dividend equivalents in computing your earning s per share.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In responding to our comments, please provide a written stateme nt from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
You may contact Abe Friedman at 202-551-8298 or Doug Jones at 202-551-3309 if you have questions regarding comments on the financial statements and rel ated matters. Please contact me at 202-551-3380 with any other questions.
Sincerely,
/s/ Lyn Shenk
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Mail Stop 3561 September 6, 2016 David C. Moore Senior VP and Chief Financial Officer 9201 Forest Hill Avenue Richmond, Virginia 23235 Re: Universal Corp oration Form 10-K for Fiscal Year Ended March 31, 2016 Filed May 27, 2016 File No. 001-00652 Dear Mr. Moore : We have reviewed your filing and have the following comments. In some of o ur comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 10 -K for Fiscal Year Ended March 31, 2016 General 1. You describe on pages 18, 21 and 23 of the 10 -K your activities in Africa, a r egion that includes Sudan. You state on page 6 that for the fiscal year ended March 31, 2016 British American Tobacco accounted for 10% or more of your revenues. News reports indicate that British American Tobacco acquired a tobacco manufacturer in Sudan in November 2015 and has a subsidiary based in Dubai that covers countries including Syria. Sudan and Syria are designated by the Department of State as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please de scribe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, whether through subsidiaries, affiliates, partners, customers, joint ventures or other direct or indirect arrangements. You should describe any service s, products, information or technology you have provided to Sudan or Syria, directly or indirectly, and any David C. Moore, Senior VP and CFO Universal Corp oration September 6, 2016 Page 2 agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities they control. 2. Please discus s the materiality of any contacts with Sudan and Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, includi ng the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim period. Also, address materiality in terms of qualitative factors that a reasonable investor would deem import ant in making an investment decision, including the potential impact of corporate activities upon a company's reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S. - designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operation s associated with Sudan and Syria. Item 7. Management’s Discussion and Analysis Results of Operations Fiscal Year Ended March 31, 2016… North America, page 20 3. We note your disclosure that earnings improved in part as result of a “change in business with Philip Morris International, Inc. in the United States from a toll processing model to sales of processed tobacco.” Please tell us and disclose the differences in the business models, impact on current period earnings, and impact expected in future period s. Refer to Item 303(a)(3) of Regulation S -K and Section s III.B and III. D of Release No. 33-6835 for guidance . Liquidity and Capital Resources Cash Flow, page 23 4. You disclose that operating cash flows decreased in part due to your change in business with Philip Morris International, Inc. in the United States from a toll processing model to sales of processed tobacco that you purchase. You state that this change in business impacts the timing of earnings recognition, as sales under the new model are recorded when the product ships. Please explain to us how your operating cash was directly impacted by the change in the models. Also, explain to us the reason for the change in the timing of earnings recognition and any change in your accounting treatment between the two models. David C. Moore, Senior VP and CFO Universal Corp oration September 6, 2016 Page 3 Notes to Consolidated Financial Statements Note 12. Executive Stock Plans and Stock -Based Compensation, page 68 5. You disclose that under th e terms of the RSU awards grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same date as the original RSU grant. P lease tell us your consideration of ASC 260 -10-45-61A and 718-10-55-45 in regard to the effect given to the dividend equivalents in computing your earning s per share. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comments, please provide a written stateme nt from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. You may contact Abe Friedman at 202-551-8298 or Doug Jones at 202-551-3309 if you have questions regarding comments on the financial statements and rel ated matters. Please contact me at 202-551-3380 with any other questions. Sincerely, /s/ Lyn Shenk Lyn Shenk Branch Chief Office of Transportation and Leisure