Good evening. My name is Jerrica and I will be your conference operator today. And this time, I would like to welcome everyone to the Second Quarter Fiscal Year 2017 Conference Call. All lines have been placed on mute to prevent any back ground noise. Thank you. Ms. Candace Formacek you may begin your conference.

Thank you, Jerrica and thank you all for joining us. George Freeman, our Chairman, President and CEO; and David Moore, our Chief Financial Officer are here with me today and they will join me in answering questions after these brief remarks. This call is being webcast live and will be available on our website and on telephone taped replay. It will remain on our website through February 6, 2017. Other than the replay, we have not authorized and disclaim responsibility for any recording, replay or distribution of any transcription of this call. This call is copyrighted and may not be used without our permission. Before I begin to discuss our results, I caution you that we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future and are representative as of today only. Actual results could differ materially from projected or estimated results, and we assume no obligation to update any forward-looking statements. For information on some of the factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2016, as well as our Form 10-Q for the second fiscal quarter of 2017. Such factors include, but are not limited to, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation, changes in currency, industry consolidation and evolution, and changes in market structure or sources. Finally, some of the information I have for you today is based on unaudited allocations and are subject to reclassification. In an effort to provide useful information to investors, our comments today may include non-GAAP financial measures. For details on these measures, including reconciliations to the most comparable GAAP measures, please refer to our current earnings press release. Our improved results for the six months ended…

[Operator Instructions] And your first question comes from the line of Ann Gurkin.

Hi Ann.

Good morning everybody.

Hi Ann.

Nice results.

Thank you.

Thank you.

Wanted to start with, what you just ended on with, Candace about software customer demand and can you share any more insight there, are customers producing inventory levels duration, delaying decisions can you give us any more insight there?

Well, I think if you look at public data on the manufacturers, they are at least in their dollar value of their inventory is coming way down. I don't - some of that’s green pricing, and tobacco pricing, but I think the levels of decrease are greater than that. So, I think you can draw your own assumption from that data.

I think Ann some of that comment also is really intended to indicate that we’re sort of, after two years of an oversupply we are still finding that there is some softness in the demand. So, that it’s not really a - particularly clean cut moving back into an absolute supply demand balance.

Okay and you had alluded to a little bit of this on the last quarter call, you were a little cautious about demand.

Well as we mentioned too in the release, there is some particularly - in certain origins they may be waiting a little bit longer for some customers to make decisions, certainly some of the lower crop size in Brazil is shifting some of their ability to make decisions later in the year, and as we are only into the second fiscal quarter we just like to make sure that that’s clear out there. That there is some movement in timing that we might still see this year.

Okay. The other part of your release that caught my attention is the decline in working capital needs and the continued very favorable cash balance on your balance sheet, can you just comment on priority uses of that cash and would you step up share repurchases, I know you increased the dividend today to shareholders, but it’s very attractive asset, and I was just a bit curious with the expected lower working capital needs from smaller crop sizes, what's the process to use with that cash?

Well I think some of that will go away as we go into a normal Brazil crop. I mean, really was - we bought a lot last - tobacco there than we normally do.

I think that’s really the basic answer there and we haven't really changed or shifted the order for typical priorities. Our dividend as you said is really quite important to us for our shareholders. We do typically have larger cash balances at the end of the year. I think it’s just a bit of an aberration this year that the amounts we need going into smaller crop and also the strength of the dollar is reducing some of that. Both of those things of the crop size we know for sure will turn around. The currency is always a moving target there as well as in other countries. So, we like to have that capacity that gives us liquidity and we think that it’s an advantage to be able to move in areas that we need as we go into the next crop season.

Understand. It just seems like you are in, even more of a favorable position right now, which is good. I was just curious.

I understand.

Okay. And then can you comment about expectations for the crop for next year on terms of plantings, supply and demand for the industry, will be more balanced oversupply, can you give me any kind of your thoughts as we think about next year for fiscal 2018 it would be.

Ann, I would just point you first to the new lease production - global leaf production report that we put out there, I think probably the biggest change of note is certainly a much higher crop size in Brazil, actually moving back even higher than the prior year. So that’s something definitely to be looking at for next year's supply demand balance.

Okay. And then SG&A was down nicely in the quarter, how should I think about that for the year?

Gosh, Ann we always have this talk. Again I think, you will see that there were some reversals of accruals, currency matters although those seems quite difficult to predict, I think what we're seeing is, as long as we have a strong dollar you can't expect some that might or impact your role through and our translations in SG&A, but otherwise there’s nothing big in particular. I think that we’d put out there for you.

Okay. Tax rate for the year?

It’s probably between 33%; and maybe 34%, 34.5%.

Okay. Candace, worldwide uncommitted lease inventory level?

Hang on one second, got that right here for you. Yes, we have the June number, which is 125 million kilos, which is about 10 million up from the March 31.

Okay. Can you give a number for the Q2 reversal for the value-added tax reserves?

I don't have that number actually in front of me Ann, but I think that, you know each of those were a decent portion of the movement. Those were the three biggest items, and I'd have to look at last years to see if we’d put that out there. I don't have that amount.

Okay. And then just hypothetically, if you have consolidation in the industry, how do you position Universal? In the cigarette manufacturers, I should say.

Well I think - well you know there is some consolidation and I think volumes are - cigarette volumes of the majors are declining, or be it not as much perhaps they were in 2013 and 2014, but again is that that trend occurs and we expect it to continue to occur that I think we offer the ability to offer them savings. To be a bridge between - to allow them to achieve economies of scale, and I think there’s plenty of opportunities.

And that certainly fits with what we have been saying and we continue to say that we believe the global leaf supplier is in the best position in order to provide complaintly [ph] to continue with sustainability programs and labor programs, all of the things that are important to the manufacturers would just continue to important and we just see that’s continuing to improve in the future as those opportunities potentially arise.

Okay, that's great. Thank you all for your time.

Thank you, Ann.

Thank you. Have a nice evening.

[Operator Instructions] And there are no further questions at this time.

Great. Thank you, Jerrica and thank you for joining us on our call today.