Universal Corporation Reports Fiscal Year and Fourth Quarter 2025 Results

Business Wire

2 days ago

RICHMOND, Va.--(BUSINESS WIRE)--Universal Corporation (NYSE:UVV) ('Universal' or the 'Company'), a global business-to-business agriproducts company, today announced financial results for the full fiscal year and fourth quarter ended March 31, 2025.
Preston D. Wigner, Chairman, President, and Chief Executive Officer of Universal, stated, 'Fiscal year 2025 was an exceptional year for Universal. We executed against our business plan and increased revenue and operating income on a consolidated basis and for both of our operating segments. The improved results for our Tobacco Operations segment were driven by continued strong demand from our customers, successful global tobacco marketing and procurement efforts, as well as improved volumes and quality of burley tobacco crops in Africa. Our Ingredients Operations segment benefited from higher sales volumes, including increases in sales of value-added products, supported by increased capabilities from the growth in our sales, marketing, and product development teams, and the completion of the expansion project at our Lancaster, Pennsylvania facility. We are very encouraged by the interest we are seeing from customers in our newly produced and developed ingredient products.
Mr. Wigner continued, "As I reflect on fiscal year 2025, I thank our employees, customers, shareholders, and other stakeholders for their support throughout the year. As we move into fiscal year 2026, we foresee continued strong demand for tobacco and larger tobacco crops shifting global markets to more balanced tobacco supply positions. We are also continuing our progress with Universal Ingredients and supporting existing and new customers with our platform resources and our expanded and enhanced ingredients facility. I am excited about our prospects for the year ahead as we seek to further maximize and optimize our tobacco business, grow our ingredients business, and strengthen our Company to drive increasing value for all Universal stakeholders."
FINANCIAL HIGHLIGHTS
Change
Fiscal Year Ended March 31,
Change
Consolidated Results
Sales and other operating revenue
$ 702.3
$ 770.9
(9) %
$ 2,947.3
$ 2,748.6
7 %
Cost of goods sold
586.3
619.9
(5) %
2,398.6
2,212.5
8 %
Gross profit margin
19.8 %
24.4 %
-460 bps
18.6 %
19.5 %
-90 bps
Selling, general and administrative expenses
73.2
82.7
(11) %
305.3
310.6
(2) %
Restructuring and impairment costs
—
—
NA
10.6
3.5
200 %
Operating income (as reported)
42.8
68.2
(37) %
232.8
222.0
5 %
Adjusted operating income (Non-GAAP)*
42.8
73.0
(41) %
243.4
230.3
6 %
Net income attributable to Universal Corporation
9.3
40.3
(77) %
95.0
119.6
(21) %
Adjusted net income attributable to Universal Corporation (non-GAAP*)
20.2
44.8
(55) %
116.3
127.1
(8) %
Diluted earnings per share (as reported)
0.37
1.61
(77) %
3.78
4.78
(21) %
Adjusted diluted earnings per share (Non-GAAP)*
0.80
1.79
(55) %
4.63
5.08
(9) %
Segment Results
Tobacco operations sales and other operating revenues
$ 612.6
$ 696.3
(12) %
$ 2,608.7
$ 2,438.8
7 %
Tobacco operations operating income
45.8
73.5
(38) %
240.2
222.4
8 %
Ingredients operations sales and other operating revenues
89.7
74.6
20 %
338.6
309.8
9 %
Ingredients operations operating income
4.4
(1.0)
527 %
12.3
3.9
212 %
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*See Reconciliation of Certain Non-GAAP Financial Measures in Other Items below.
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Fiscal Year 2025 Highlights
Consolidated Results
Revenues up 7% to $2.9 billion on higher tobacco sales prices.
Operating income up 5% to $232.8 million on improved performance in both the Tobacco Operations and Ingredient Operations segments.
Tobacco Operations Segment
Revenues and operating income up 7% and 8%, respectively.
Historically high green tobacco prices.
Tobacco sales prices up 12% with slight decline in tobacco sales volumes of about 4%.
Tobacco Operations segment results reflected:
Strong customer demand;
Successful tobacco procurement and marketing efforts;
Higher quality, better yielding burley crops in Africa;
Higher carryover crop sales;
Weather-reduced crop sizes in Brazil and the United States; and
Higher inventory write-downs.
Outlook
Flue-cured and burley tobacco crops grown outside of China are expected to increase by 20% and 30%, respectively, in fiscal year 2026.
Crop purchases in Brazil in fiscal year 2026 are not following the accelerated patterns seen in fiscal year 2025.
Ingredients Operations Segment
Higher revenues and operating income on increased sales volumes.
Cost of raw materials for certain traditional products were at extremely low levels.
Continued high level of interest in value-added products, reflecting effectiveness of platform investments.
Select Balance Sheet Items, Liquidity, and Debt
Cash balance of $260.1 million at fiscal year-end.
Total debt up $38.4 million at fiscal year-end.
Net debt down $179.6 million at fiscal year-end on more normalized working capital requirements.
Approximately $270 million available under revolving credit facility as of fiscal year-end.
Additional Items
Restructuring and impairment costs of $10.6 million related to previously announced consolidation of the Company's European sheet operations.
Pension settlement charge of $14.1 million
Fourth Quarter 2025 Highlights
Consolidated Results
Revenues and operating income down in the quarter on lower tobacco sales volumes due to earlier shipments in fiscal year 2025.
Tobacco Operations Segment
Tobacco Operations segment results reflected:
Lower sales volumes of approximately 28% quarter-over-quarter on earlier timing of tobacco shipments in fiscal year 2025;
Impact of weather-reduced crops from certain origins; and
Higher inventory write-downs.
Selling, general, and administrative expenses for the Tobacco Operations segment included favorable variances for foreign currency comparisons and the absence of a value-added tax settlement in the prior fiscal year.
Ingredients Operations Segment
Increased sales volumes for certain new products, particularly in the beverage category.
Recent increases in raw material prices for certain traditional products.
Some increased sales due to anticipated tariffs.
Sustainability Update
Mr. Wigner stated, 'As the largest global tobacco leaf merchant, sustainability has been deeply embedded in our DNA. We believe our commitment to setting high standards, promoting a sustainable supply chain, and providing transparency about our sustainability efforts is a strategic part of our business. I am proud of our accomplishments and advances in fiscal year 2025, and I am confident in our ability to leverage our expertise in this area to further strengthen our Company in fiscal year 2026. We believe sustainability is good for our business and represents our good stewardship in the communities in which we operate.'
Universal released its 2024 Sustainability Report in December 2024, highlighting its efforts in strengthening supply chain resiliency, continuing to be a strong partner for its farming communities, and advancing energy efficiency. Universal's business strategy integrates responsible business practices, and the Company believes its commitment to sustainability is a competitive advantage in the global marketplace.
As disclosed in the Company's 2024 Sustainability Report, Universal continues to support its supply chain sustainability goals and has substantially met its existing targets of zero child labor, appropriate labor accommodations, farm worker minimum wage payments, and personal protective equipment access. The Company's leaf technicians made over 1.8 million visits to more than 175,000 contracted farmers to maintain its visibility and traceability in the Company's supply chain. Universal also continues to enhance transparency and collaboration with its stakeholders by reporting to the Sustainable Tobacco Program. Universal has trained over 175,000 farmers on Good Agricultural Practices and Agricultural Labor Practices to advance environmental and human rights best practices throughout the Company's contracted farmer base.
Other Items
Reconciliation of Certain Non-GAAP Financial Measures
References to adjusted operating income (loss), adjusted net income (loss) attributable to Universal Corporation, adjusted diluted earnings (loss) per share, and the total for segment operating income (loss) are references to non-GAAP financial measures. These measures are not financial measures calculated in accordance with generally accepted accounting principals ("GAAP") and should not be considered as substitutes for operating income (loss), net income (loss) attributable to Universal Corporation, diluted earnings (loss) per share, cash from operating activities or any other operating or financial performance measure calculated in accordance with GAAP, and may not be comparable to similarly-titled measures reported by other companies. Reconciliations of adjusted operating income (loss) to consolidated operating (income), adjusted net income (loss) attributable to Universal Corporation to consolidated net income (loss) attributable to Universal Corporation and adjusted diluted earnings (loss) per share to diluted earnings (loss) per share are provided below. In addition, a reconciliation of the total for segment operating income (loss) to consolidated operating income (loss) is provided in Note 3. "Segment Information" to the consolidated financial statements. Management evaluates the consolidated Company and segment performance excluding certain significant charges or credits. Management believes these non-GAAP financial measures, which exclude items that it believes are not indicative of its core operating results, can provide investors with important information that is useful in understanding its business results and trends.
References to net debt, net capitalization, and net debt to net capitalization ratio are also references to non-GAAP financial measures. These measures are not financial measures calculated in accordance with GAAP and should not be considered substitutes for total debt, total capitalization, total debt to total capitalization ratio, or any other operating or financial performance measures calculated in accordance with GAAP, and may not be comparable to similarly-titled measures reported by other companies. Reconciliations of net debt to total debt and net capitalization to total capitalization are provided below to the extent these non-GAAP financial measures are referenced. Management believes these non-GAAP measures are meaningful indicators of liquidity and financial position.
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 and adjusted diluted earnings per share to diluted earnings per share:
(1)
In the fourth quarter of fiscal year 2024, the Company utilized a voluntary government- sponsored value-added tax program in Brazil to settle a previously contested assessment. The Company's participation in the settlement program eliminates any future litigation regarding the matter.
(2)
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 available to Universal Corporation, and Adjusted diluted earnings per share.
(3)
In March 2025, the Company completed a pension de-risking transaction or "pension lift-out" to transfer approximately $47 million of its qualified domestic pension plan obligations and assets to a third-party insurer through the purchase of a non-participating annuity. The obligations transferred to the third-party insurer covered the respective benefit obligations for a subset of retirees currently receiving benefit payments. The transaction triggered settlement accounting that required the Company to immediately recognize a portion of the accumulated comprehensive losses associated with the defined benefit pension plan.
(4)
The income tax effect of Non-GAAP adjustments was determined based on the timing and nature of the specific Non-GAAP adjustments and their relevant jurisdictional income tax rates (foreign, state, and local) and the applicable U.S. federal income tax rates. The Company considers current and deferred income tax rates to calculate the impact to income taxes for the Non-GAAP adjustments.
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The following table reconciles total debt to net debt and net capitalization:
Investor Conference Call
At 5:00 p.m. (Eastern Time) on May 29, 2025, 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 through August 29, 2025. A taped replay of the call will also be available through June 12, 2025, by dialing [phone] (Playback ID: 5786366#).
About Universal Corporation
Universal Corporation (NYSE: UVV) is a global agricultural company with over 100 years of experience supplying products and innovative solutions to meet our customers' evolving needs and precise specifications. Through our diverse network of farmers and partners across more than 30 countries on five continents, we are a trusted provider of high-quality, traceable products. We leverage our extensive supply chain expertise, global reach, integrated processing capabilities, and commitment to sustainability to provide a range of products and services designed to drive efficiency and deliver value to our customers. For more information, visit www.universalcorp.com.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This release includes 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Among other things, these statements include statements made in Mr. Wigner's quotations, statements regarding expectations with respect to our fiscal year 2026 performance, our strategic plans, ingredients business, tobacco business, including expectations with respect to size, shipments and sales and purchases of tobacco crops. These forward-looking statements are generally identified by the use of words such as we 'expect,' 'believe,' 'anticipate,' 'could,' 'should,' 'may,' 'plan,' 'will,' 'predict,' 'estimate,' and similar expressions or words of similar import. These forward-looking statements are based upon management's current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results, performance, or achievements to be materially different from any anticipated results, prospects, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: product purchased not meeting quality and quantity requirements; reliance on a few large customers; anticipated levels of demand for and supply of our products and services; tobacco growing conditions and customer requirements; major shifts in customer requirements for leaf tobacco; higher inflation rates, tariffs and other pressures on costs; weather and other conditions; exposure to certain legal. regulatory and financial risks related to climate change; industry-specific risks related to our plant-based ingredients businesses; disruption of our supply chain for our plant-based ingredients; success in pursuing strategic investments or acquisitions and integration of new businesses and the impact of these new businesses on future results; our ability to maintain effective information technology systems and safeguard confidential information; our inability to attract, develop, retain, motivate, and maintain good relationships with our workforce; our dependence on a seasonal workforce; epidemics, pandemics or similar widespread public health concerns; government efforts to regulate the production and consumption of tobacco products; government actions on the sourcing of leaf tobacco; economic and political conditions in the countries in which we and our customers operate, including the ongoing impacts from international conflicts; sustainability considerations from governments and other stakeholders; changes in tax laws in the countries where we do business; material weaknesses in our internal control over financial reporting; our inability to use a Form S-3 registration statement; failure of our customers or suppliers to repay extensions of credit; changes in exchange rates; changes in interest rates; and low investment performance by our defined benefit pension plan assets and changes in pension plan valuation assumptions. Please also refer to the risks and uncertainties as discussed in Part I, Item 1A. 'Risk Factors' of Universal's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and in Part II, Item 1A. "Risk Factors" in Universal's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, and related disclosures in other filings that Universal files with the SEC and are available on the SEC's website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all of the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. Universal cautions investors not to place undue reliance on any forward-looking statements as these statements speak only as of the date when made, and it undertakes no obligation to update any forward-looking statements made, except as required by law.
See accompanying notes.
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UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
March 31,
2025
2024
ASSETS
Current assets
Cash and cash equivalents
$
260,115
$
55,593
Accounts receivable, net
625,876
525,262
Advances to suppliers, net
169,385
139,064
Accounts receivable—unconsolidated affiliates
7,143
5,385
Inventories—at lower of cost or net realizable value:
Tobacco
806,332
1,070,580
Other
189,610
193,518
Prepaid income taxes
19,595
19,484
Other current assets
78,041
93,655
Total current assets
2,156,097
2,102,541
Property, plant and equipment
Land
26,113
26,244
Buildings
333,398
323,969
Machinery and equipment
723,935
693,868
1,083,446
1,044,081
Less accumulated depreciation
(710,472
)
(678,201
)
372,974
365,880
Other assets
Operating lease right-of-use assets
34,260
32,510
Goodwill, net
213,840
213,869
Other intangibles, net
57,836
68,883
Investments in unconsolidated affiliates
79,317
76,289
Deferred income taxes
16,539
15,181
Pension asset
12,819
11,857
Other noncurrent assets
45,870
50,229
460,481
468,818
Total assets
$
2,989,552
$
2,937,239
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UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
March 31,
2025
2024
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and overdrafts
$
455,039
$
417,217
Accounts payable
98,036
108,727
Accounts payable—unconsolidated affiliates
1,999
1,621
Customer advances and deposits
3,763
17,179
Accrued compensation
44,646
39,766
Income taxes payable
12,586
7,477
Current portion of operating lease liabilities
10,742
10,356
Accrued expenses and other current liabilities
123,350
109,015
Current portion of long-term debt
—
—
Total current liabilities
750,161
711,358
Long-term debt
617,918
617,364
Pensions and other postretirement benefits
35,336
43,251
Long-term operating lease liabilities
20,608
19,302
Other long-term liabilities
22,901
27,902
Deferred income taxes
42,090
39,139
Total liabilities
1,489,014
1,458,316
Shareholders' equity
Universal Corporation:
Preferred stock:
Series A Junior Participating Preferred Stock, no par value, 500,000 shares authorized,
none issued or outstanding
—
—
Common stock, no par value, 100,000,000 shares authorized, 24,715,625 shares issued
and outstanding (24,573,408 at March 31, 2024)
351,626
345,596
Retained earnings
1,186,981
1,173,196
Accumulated other comprehensive loss
(80,051
)
(81,585
)
Total Universal Corporation shareholders' equity
1,458,556
1,437,207
Noncontrolling interests in subsidiaries
41,982
41,716
Total shareholders' equity
1,500,538
1,478,923
Total liabilities and shareholders' equity
$
2,989,552
$
2,937,239
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See accompanying notes.
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UNIVERSAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
Fiscal Year Ended March 31,
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
113,269
$
132,971
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
59,773
58,326
Provision for losses (recoveries) on advances
1,938
14,090
Inventory write-downs
19,769
9,234
Stock-based compensation expense
8,531
12,063
Foreign currency remeasurement loss (gain), net
6,096
5,114
Foreign currency exchange contracts
916
(365
)
Deferred income taxes
1,083
(5,404
)
Equity in net income of unconsolidated affiliates, net of dividends
(3,031
)
(1,239
)
Restructuring and impairment costs
10,573
3,523
Restructuring payments
(1,568
)
(1,181
)
Pension settlement
14,101
—
Other, net
1,406
1,001
Changes in operating assets and liabilities, net:
94,118
(302,765
)
Net cash provided (used) by operating activities
326,974
(74,632
)
Cash Flows From Investing Activities:
Purchase of property, plant and equipment
(62,601
)
(66,013
)
Proceeds from sale of business, less cash of businesses sold
—
3,757
Proceeds from sale of property, plant and equipment
3,783
2,257
Net cash used by investing activities
(58,818
)
(59,999
)
Cash Flows From Financing Activities:
Issuance (repayment) of short-term debt, net
37,696
223,000
Dividends paid to noncontrolling interests in subsidiaries
(17,530
)
(10,572
)
Repurchase of common stock
—
(4,744
)
Dividends paid on common stock
(79,686
)
(78,402
)
Debt issuance costs and other
(3,715
)
(3,607
)
Net cash provided (used) by financing activities
(63,235
)
125,675
Effect of exchange rate changes on cash
(399
)
(141
)
Net increase (decrease) in cash and cash equivalents
204,522
(9,097
)
Cash, restricted cash and cash equivalents at beginning of year
55,593
64,690
Cash, Restricted Cash and Cash Equivalents at End of Year
$
260,115
$
55,593
Expand
See accompanying notes.
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NOTE 1. BASIS OF PRESENTATION
Universal Corporation, with its subsidiaries ('Universal' or the 'Company'), is a global business-to-business agriproducts supplier to consumer product manufacturers. The Company is the leading global leaf tobacco supplier and provides high-quality plant-based ingredients to food and beverage end markets. 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. These financial statements 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, 2025, which the Company expects to file with the SEC on May 30, 2025.
The following table sets forth the computation of basic and diluted earnings per share:
NOTE 3. SEGMENT INFORMATION
Management regularly evaluates the Company's global business activities, including product and service offerings to its customers, as well as senior management's operational and financial responsibilities. Assessments include an analysis of how its Chief Operating Decision Maker ('CODM') measures business performance and allocates resources. As a result of this analysis, senior management has determined the Company conducts operations across two reportable operating segments, Tobacco Operations and Ingredients Operations.
The Tobacco Operations segment activities involve contracting, procuring, processing, packing, storing, and shipping leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products throughout the world. Through various operating subsidiaries located in tobacco-growing countries around the world and significant ownership interests in unconsolidated affiliates, the Company processes and/or sells flue-cured and burley tobaccos, dark air-cured tobaccos, and oriental tobaccos. Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes, and dark air-cured tobaccos are used mainly in the manufacture of cigars, pipe tobacco, and smokeless tobacco products. Some of these tobacco types are also used in the manufacture of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible products. The Tobacco Operations segment also provides physical and chemical product testing for tobacco customers. A substantial portion of the Company's Tobacco Operations' revenues are derived from sales to a limited number of large, multinational cigarette and cigar manufacturers.
The Ingredients Operations segment provides its customers with a broad variety of plant-based ingredients for both human and pet consumption. The Ingredients Operations segment utilizes a variety of value-added manufacturing processes converting raw materials into a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, botanical extracts, and flavorings. Customers for the Ingredients Operations segment include large multinational food and beverage companies, smaller independent manufacturers, and retail organizations. FruitSmart, Inc. ('FruitSmart'), Silva International, Inc. ('Silva'), and Shank's Extracts, LLC d/b/a Universal Ingredients-Shank's ('Universal Ingredients-Shank's') are the primary operations for the Ingredients Operations segment. FruitSmart supplies a broad set of juices, concentrates, pomaces, purees, fruit fibers, seeds, seed powders, and other value-added products to food, beverage, and flavor companies throughout the United States and internationally. Silva procures dehydrated vegetables, fruits, and herbs from around the world and specializes in processing natural materials into custom designed dehydrated vegetable and fruit-based ingredients for a variety of end products. Universal Ingredients-Shank's offers a diversified portfolio of botanical extracts, distillates, natural flavors, and color for industrial and private label customers worldwide, and is known for their significant vanilla expertise. Universal Ingredients - Shank's is also equipped to offer customers custom bottling and packaging for their products.
Universal incurs corporate overhead expenses related to senior management, sales, finance, legal, and other functions that are centralized at its corporate headquarters, as well as functions performed at several sales and administrative offices around the world. These overhead expenses are currently allocated to the reportable operating segments, generally on the basis of projected annual financial and operational performance, including volumes planned to be purchased and/or processed. Management believes this method of allocation is currently representative of the value of the related services provided to the operating segments. The CODM, which has been identified as a group comprised of the Company's Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer, currently evaluates the performance of the operating segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates ("Segment Operating Income"). The CODM also uses Segment Operating Income for planning, forecasting, and allocating capital and other resources to the operating segments.
Operating results for the Company's reportable segments for each period presented in the consolidated statements of income were as follows:
Fiscal Year Ended March 31, 2025
Fiscal Year Ended March 31, 2024
(in thousands of dollars)
Tobacco Operations
Ingredients Operations
Consolidated
Tobacco Operations
Ingredients Operations
Consolidated
Sales and other operating revenues
$
2,608,675
$
338,609
$
2,947,284
$
2,438,775
$
309,798
$
2,748,573
Cost of goods sold
(2,133,063
)
(265,564
)
(2,398,627
)
(1,975,955
)
(236,520
)
(2,212,475
)
Selling, general and administrative expenses
(179,340
)
(48,610
)
(227,950
)
(179,569
)
(56,624
)
(236,193
)
Corporate overhead allocated to the segments
(65,195
)
(12,142
)
(77,337
)
(61,655
)
(12,718
)
(74,373
)
Equity in pretax earnings (loss) of unconsolidated affiliates (1)
9,103
—
9,103
756
—
756
Segment operating income
240,180
12,293
252,473
222,352
3,936
226,288
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates (1)
(9,103
)
(756
)
Restructuring and impairment costs (2)
(10,573
)
(3,523
)
Consolidated operating income
$
232,797
$
222,009
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(1)
Equity in pretax earnings of unconsolidated affiliates is included in reportable segment operating income, but is reported below consolidated operating income and excluded from that total in the consolidated statements of income.
(2)
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