| 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. |
| 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 react quickly to changes in market conditions to ensure that the Company continues to deliver the high quality, reasonably priced products its customers expect. |
| 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. However, the need for adequate factory volumes must be balanced with the cost of sourcing incremental volumes in markets where the Company 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. |
| Diversified sources. Universal strives to maintain diversified sources of leaf tobacco to minimize reliance on any one area so long as customers are willing to support such diversity. Historically, North America, South America, and Africa each have provided between 20% and 30% of the aggregate volume of flue-cured and burley tobacco that the Company handles. However, because of the decline in Zimbabwe crops in Africa, the South American share increased to about 33% of the aggregate volume that it handled from the 2006 crop. Universal is ending its direct involvement in the production of flue-cured tobacco in Africa as it has experienced unsatisfactory results from its flue-cured growing projects. The Company is taking the necessary steps to reduce its costs there. |
| Financial strength. Universal believes that its financial strength is important, because it enables the Company to fund its business efficiently and make investments in its business when an appropriate opportunity is identified. The Company continually works to improve its credit worthiness. |
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