| Strategic alliances. Universal fosters strategic alliances with its major customers to the benefit of all parties. These alliances with major manufacturers are, in its opinion, especially appropriate to the leaf tobacco industry where volume at an appropriate price is a key factor in long-term profitability. Universal works to secure adequate factory volumes in all markets where it operates, but the Company balances that objective with the cost of sourcing incremental volumes in markets where it provides financing to farmers. Alliances permit the optimization of inventory levels to reduce risk of loss during market downturns by enabling the Company to target its tobacco purchases against customer purchase indications. |
| Strong local management. Universal operates with strong local management in major leaf tobacco markets. The Company believes that by having strong local management it can better identify and adjust to changes in market conditions to ensure that the Company continues to deliver the high quality, competitively priced products its customers expect. |
| Diversified sources. Universal strives to maintain diversified sources of leaf tobacco to minimize reliance on any one growing or sourcing area so long as customers are willing to support such diversity. Although proportions vary with relative crop sizes, historically, South America has provided between 25% and 35% of the aggregate volume of flue-cured and burley tobacco that Universal handles, and North America and Africa each have provided between 20% and 30% of that aggregate volume. |
| Low-cost quality producer. Universal’s goal is to be the low-cost producer of quality products and services for its customers. The Company focuses on producing a quality product in a cost-effective manner. Universal sponsors programs in good agricultural practices, reduction of non-tobacco related materials, and social responsibility, among other programs. |
| Financial strength. Universal believes that its financial strength is important, because it enables the Company to fund its business efficiently, make investments in its business when an appropriate opportunity is identified, and affords the Company financial flexibility in meeting the needs of its customers. The Company continually works to improve its credit worthiness. |
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