What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-02-02 · 116 added, 238 removed, 712 unchanged (33% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

(Unaudited) (Unaudited)

Three Months Ended June 30,

Sales and other operating revenues $ 429,822 $ 350,029

2 unchanged sentences

Selling, general and administrative expenses 66,452 49,844

Other income — — ( 2,532 ) ( 4,173 )

Restructuring and impairment costs — 2,024

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24,935,554 24,852,151

Total comprehensive income, net of income taxes $ 45,862 $ 55,681 $ 72,277 $ 84,950

Total comprehensive income (loss), net of income taxes $ ( 1,283 ) $ 12,746

comprehensive (income) loss attributable to noncontrolling interests 4,358 2,416

5 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

June 30, June 30, March 31,

2022 2021 2022

31 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

June 30, June 30, March 31,

2022 2021 2022

21 unchanged sentences

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 24,607,384 shares issued and outstanding at December 31, 2021 ( 24,514,867 at December 31, 2020 and 24,514,867 at March 31, 2021)

Common stock, no par value, 100,000,000 shares authorized 24,605,889 shares issued and outstanding at June 30, 2022 ( 24,577,254 at June 30, 2021 and 24,550,019 at March 31, 2022)

332,520 327,471 330,662

9 unchanged sentences

(in thousands of dollars)

Nine Months Ended December 31,

Three Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Restructuring payments — ( 1,776 )

Change in estimated fair value of contingent consideration for FruitSmart acquisition ( 2,532 ) ( 4,173 )

Other, net 7,001 ( 2,726 )

3 unchanged sentences

Purchase of property, plant and equipment ( 15,070 ) ( 14,428 )

Purchase of business, net of cash held by the business ( 102,462 ) ( 161,095 )

Proceeds from sale of business, net of cash held by the business 1,168 —

Proceeds from sale of property, plant and equipment 292 1,589

Other — ( 800 )

Net cash used by investing activities ( 13,610 ) ( 12,839 )

1 unchanged sentence

Issuance of short-term debt, net 271,663 49,439

Issuance of long-term debt — 150,000

Dividends paid to noncontrolling interests ( 5,145 ) ( 980 )

22 unchanged sentences

and the global economies, markets and supply chains.

At December 31, 2021, it is not possible to predict the overall impact of the ongoing COVID-19 pandemic on the Company's business, financial condition, results of operations and demand for its products and services.

At June 30, 2022, it is not possible to predict the overall impact of the ongoing COVID-19 pandemic on the Company's business, financial condition, results of operations and demand for its products and services.

ACCOUNTING PRONOUNCEMENTS

Recently Adopted Pronouncements

In December 2019, the FASB issued Accounting Standards Update No.

2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” (“ASU 2019-12”).

ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries.

The updated guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The guidance in ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, although early adoption is permitted.

The Company adopted the new standard effective April 1, 2021, which was the beginning of its fiscal year ending March 31, 2022.

There was no material impact to the consolidated financial statements from the adoption of ASU 2019-12.

Pronouncements to be Adopted in Future Periods

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Acquisition of Shank's Extracts, LLC

On October 4, 2021, the Company acquired 100 % of the capital stock of Shank's Extract's, LLC.

On October 4, 2021, the Company acquired 100 % of the capital stock of Shank's Extracts, LLC.

(“Shank's”), a flavors and extracts processing company , for approximately $ 100 million in cash and $ 2.4 million of additional working capital on-hand at the date of acquisition.

The acquisition of Shank's diversifies the Company's product offerings and generates new opportunities for its plant-based ingredients platform.

The purchase price allocation for Shank's as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available.

A portion of the goodwill recorded as part of the acquisition was attributable to the assembled workforce of Shank's.

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Therefore, pro forma information is not presented.

For the three and nine months ended December 31, 2021, the Company incurred $ 0.6 million and $ 2.3 million, respectively, for acquisition-related transaction costs for the purchase of Shank's.

For the fiscal year ended March 31, 2022, the Company incurred $ 2.3 million of acquisition-related transaction costs for the purchase of Shank's.

The acquisition-related costs were expensed as incurred and recorded in selling, general, and administrative expense on the consolidated statements of income.

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The purchase of the land and buildings resulted in the elimination of the $ 8.5 million operating lease right-of-use asset and lease liability recognized on the acquisition date for Shank's.

Acquisition of Silva International, Inc.

On October 1, 2020, the Company acquired 100 % of the capital stock of Silva International, Inc.

(“Silva”), a natural, specialty dehydrated vegetable, fruit, and herb processing company serving global markets, for approximately $ 164 million in cash and $ 5.9 million of additional working capital on-hand at the date of acquisition.

The acquisition of Silva diversifies the Company's product offerings and generates new opportunities for its plant-based ingredients platform.

A portion of the goodwill recorded as part of the acquisition was attributable to the assembled workforce of Silva.

The goodwill recognized for the Silva acquisition is not deductible for U.S.

income tax purposes.

The tax basis of the assets acquired and liabilities assumed did not result in a step-up of tax basis.

The Company determined the Silva operations are not material to the Company’s consolidated results.

Therefore, pro forma information is not presented.

The Company continues to employ one of Silva's selling shareholders and as stipulated in the Silva purchase agreement has transferred $ 6 million to a third-party escrow account that may ultimately be earned by the selling shareholder upon completion of a post-combination service period.

Since the compensation agreement for the selling shareholder who remains employed with the Company includes a post-combination service period, the Company has excluded the entire $ 6 million in the purchase price to be allocated.

The $ 6 million in escrow is recognized as restricted cash in other noncurrent assets on the consolidated balance sheet at December 31, 2021.

The contingent consideration arrangement for the selling shareholder includes a post-combination service requirement and forfeitable payment provisions, therefore under ASC Topic 805, "Business Combinations," must be treated as compensation expense.

This expense is being recognized ratably over the requisite service period in selling, general, and administrative expense on the consolidated statements of income.

For the three and nine months ended December 31, 2021, the Company incurred $ 2.3 million and $ 3.9 million for acquisition-related transaction costs for the purchase of Silva, respectively.

The acquisition-related costs were expensed as incurred and recorded in selling, general, and administrative expense on the consolidated statements of income.

The following table summarizes the preliminary purchase price allocation of the assets acquired and liabilities assumed for the Shank's acquisition and final purchase price allocation for the Silva acquisition.

The following table summarizes the final purchase price allocation of the assets acquired and liabilities assumed for the Shank's acquisition.

(in thousands of dollars)

Shank's Silva

October 4, 2021 October 1, 2020

October 4, 2021

Cash and cash equivalents $ 754

Accounts receivable, net 6,643

Advances to suppliers, net — 3,011

Inventory 15,792

4 unchanged sentences

Developed technology 4,500

Trade names — 7,800

Non-compete agreements 3,000

4 unchanged sentences

Accrued compensation 655

Income taxes payable — 946

Current portion of operating lease liabilities 8,531

Deferred income taxes — 14,419

Total liabilities assumed 15,696

3 unchanged sentences

Restructuring and impairment costs are periodically incurred in connection with those activities.

There were no restructuring and impairment costs incurred for the three months ended June 30, 2022.

Tobacco Operations

As a result of efforts to exit the idled tobacco operations in Tanzania, the Company reevaluated the carrying values of property, plant, and equipment associated with the Tanzania operations.

During the three months ended December 31, 2021, the Company determined the carrying value exceeded the estimated fair value of those assets and recognized a $ 9.4 million impairment charge.

During the three and nine months ended December 31, 2021, the Company also incurred $ 0.6 million and $ 2.2 million of termination costs for the Tobacco Operations segment, respectively.

During the three and nine months ended December 31, 2020, the Company incurred $ 2.6 million of termination and impairment costs associated with restructuring of tobacco buying and administrative operations in Africa, as well as a $ 0.9 million charge for the liquidation of an idled service entity in Tanzania, and $ 0.4 million of termination costs in North America.

During the three months ended June 30, 2021, the Company incurred $ 1.5 million of termination and impairment costs associated with restructuring of tobacco buying and administrative operations in Africa.

Ingredients Operations

During the nine months ended December 31, 2020, the Company committed to a plan to wind-down its subsidiary, Carolina Innovative Food Ingredients, Inc.

("CIFI"), a sweet potato processing operation located in Nashville, North Carolina.

The CIFI operation was a start-up project initially undertaken by the Company in fiscal year 2015.

The decision to wind down CIFI was consistent with the Company’s capital allocation strategy to focus on delivering shareholder value through building and enhancing a plant-based ingredients platform, which includes integrating and exploring the synergies of recently acquired businesses.

The Company determined that CIFI was not a strategic fit for the platform’s long-term objectives.

CIFI’s single-product focused processing facility and ongoing international pricing pressures, among other factors, created challenges that proved insurmountable.

As a result of the decision to wind down the CIFI operations, the Company paid termination benefits totaling approximately $ 0.6 million to employees whose permanent positions were eliminated.

In addition to the termination costs, the Company recognized various other costs associated with the wind-down of the CIFI facility.

These costs include impairments of property, plant, and equipment (including the factory building), as well as inventory and supply write-downs.

The total restructuring and impairment charge for the nine months ended December 31, 2020 for the CIFI operations wind-down was $ 16.1 million.

During the nine months ended December 31, 2021, the Company recognized $ 1.2 million of net gains on the sale of the remaining property, plant, and equipment associated with the wind-down of the CIFI operations that was announced in fiscal year 2021.

A summary of the restructuring and impairment costs recorded for the three and nine months ended December 31, 2021 and December 31, 2020 were as follows:

Three Months Ended December 31, Nine Months Ended December 31,

(in thousands) 2021 2020 2021 2020

Restructuring costs:

Employee termination benefits $ 627 $ 2,625 $ 2,174 $ 2,625

Other — 1,766 ( 24 ) 1,766

Total restructuring costs 627 4,391 2,150 4,391

Impairment costs:

Property, plant and equipment 7,806 13,886 8,307 13,886

Inventory — 1,702 — 1,702

Total impairment costs 7,806 15,588 8,307 15,588

Total restructuring and impairment costs $ 8,433 $ 19,979 $ 10,457 $ 19,979

During the three months ended June 30, 2021, the Company incurred $ 0.5 million of impairment costs on property, plant, and equipment associated with wind-down of our subsidiary, Carolina Innovative Food Ingredients, Inc.

(“CIFI”), a sweet potato processing operation located in Nashville, North Carolina that was announced in fiscal year 2021.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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The Company also earns revenue from processing leaf tobacco owned by customers and from various other services provided to customers.

Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that provide customers with a range of food ingredient products.

Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that

provide customers with a range of food ingredient products.

Payment terms with customers vary depending on customer creditworthiness, product types, services provided, and other factors.

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Transaction prices for the sale of tobaccos are primarily based on negotiated fixed prices, but the Company does have a small number of cost-plus contracts with certain customers.

Cost-plus arrangements provide the Company reimbursement of the cost to purchase and process the

tobacco, plus a contractually agreed-upon profit margin.

Cost-plus arrangements provide the Company reimbursement of the cost to purchase and process the tobacco, plus a contractually agreed-upon profit margin.

The Company utilizes the most likely amount methodology under the accounting guidance to recognize revenue for cost-plus arrangements with customers.

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The following table disaggregates the Company’s revenue by significant revenue-generating category:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2022 2021

10 unchanged sentences

Other Contingent Liabilities (Letters of credit)

The Company had other contingent liabilities totaling approximately $ 1 million at December 31, 2021, primarily related to outstanding letters of credit.

The Company had other contingent liabilities totaling approximately $ 1 million at June 30, 2022, primarily related to outstanding letters of credit.

Value-Added Tax Assessments in Brazil

5 unchanged sentences

In September 2014, tax authorities for the state of Parana issued an assessment for tax, interest, and penalties for periods from 2009 through 2014 totaling approximately $ 11 million.

Those amounts are based on the exchange rate for the Brazilian currency at December 31, 2021.

Those amounts are based on the exchange rate for the Brazilian currency at June 30, 2022.

Management of the operating subsidiary and outside counsel believe that errors were made by the tax authorities for both states in determining all or significant portions of these assessments and that various defenses support the subsidiary’s positions.

With respect to the Santa Catarina assessments, the subsidiary took appropriate steps to contest the full amount of the claims.

As of December 31, 2021, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessment had been reduced.

The reduced assessment, together with the related accumulated interest through the end of the current reporting period, totaled approximately $ 9 million (at the December 31, 2021 exchange rate).

As of June 30, 2022, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessment had been reduced.

The reduced assessment, together with the related accumulated interest through the end of the current reporting period, totaled approximately $ 9 million (at the June 30, 2022 exchange rate).

The subsidiary is continuing to contest the full remaining amount of the assessment.

While the range of reasonably possible loss is zero up to the full $ 9 million remaining assessment with interest, based on the strength of the subsidiary’s defenses, no loss within that range is considered probable at this time and no liability has been recorded at December 31, 2021.

With respect to the Parana assessment, management of the subsidiary and outside counsel challenged the full amount of the claim.

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In December 2015, the Parana tax authorities withdrew the initial claim and subsequently issued a new assessment covering the same tax periods, reflecting a substantial reduction from the original assessment.

In fiscal year 2020, the Parana tax authorities acknowledged the statute of limitations related to claims prior to December 2010 had expired and reduced the assessment to $ 3 million (at the December 31, 2021 exchange rate).

Notwithstanding the reduced assessment, management and outside counsel continue to believe that the new assessment is not supported by the underlying statutes and relevant case law and have challenged the full amount of the claim.

Notwithstanding the reduced assessment, management and outside counsel continue to believe that the new assessment is not supported by the underlying statutes and relevant case law and have

challenged the full amount of the claim.

The range of reasonably possible loss is considered to be zero up to the full $ 3 million assessment.

However, based on the strength of the subsidiary's defenses, no loss within that range is considered probable at this time and no liability has been recorded at December 31, 2021.

However, based on the strength of the subsidiary's defenses, no loss within that range is considered probable at this time and no liability has been recorded at June 30, 2022.

In both states, the process for reaching a final resolution to the assessments is expected to be lengthy, and management is not currently able to predict when either case will be concluded.

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In many sourcing origins where the Company operates, it provides agronomy services and seasonal advances of seed, seedlings, fertilizer, and other supplies to tobacco farmers for crop production, or makes seasonal cash advances to farmers for the procurement of those inputs.

These advances are short term, are repaid upon delivery of tobacco to the Company, and are

reported in advances to suppliers in the consolidated balance sheets.

These advances are short term, are repaid upon delivery of tobacco to the Company, and are reported in advances to suppliers in the consolidated balance sheets.

In several origins, the Company has made long-term advances to tobacco farmers to finance curing barns and other farm infrastructure.

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Both the current and the long-term portions of advances to suppliers are reported net of allowances recorded when the Company determines that amounts outstanding are not likely to be collected.

Short-term and long-term advances to suppliers totaled $ 147 million at December 31, 2021, $ 122 million at December 31, 2020, and $ 144 million at March 31, 2021.

The related valuation allowances totaled $ 17 million at December 31, 2021, $ 16 million at December 31, 2020, and $ 18 million at March 31, 2021, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were increased by net provisions of approximately $ 2.9 million and $ 2.8 million in the nine-month periods ended December 31, 2021 and 2020, respectively.

Short-term and long-term advances to suppliers totaled $ 120 million at June 30, 2022, $ 92 million at June 30, 2021, and $ 153 million at March 31, 2022.

The related valuation allowances totaled $ 17 million at June 30, 2022, $ 18 million at June 30, 2021, and $ 19 million at March 31, 2022, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were increased by net recoveries of approximately $ 42 thousand and $ 328 thousand in the three-month periods ended June 30, 2022 and 2021, respectively.

These net recoveries and provisions are included in selling, general, and administrative expenses in the consolidated statements of income.

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The Company reviews these balances on a regular basis and records valuation allowances on the credits to reflect amounts that are not expected to be recovered, as well as discounts anticipated on credits that are expected to be sold or transferred.

At December 31, 2021, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 65 million ($ 53 million at December 31, 2020, and $ 49 million at March 31, 2021), and the related valuation allowances totaled approximately $ 20 million ($ 18 million at December 31, 2020, and $ 19 million at March 31, 2021).

At June 30, 2022, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 77 million ($ 61 million at June 30, 2021, and $ 67 million at March 31, 2022), and the related valuation allowances totaled approximately $ 22 million ($ 19 million at June 30, 2021, and $ 21 million at March 31, 2022).

The net balances are reported in other current assets and other noncurrent assets in the consolidated balance sheets.

Long-Term Debt

In December 2020, the Company repaid $ 150 million of revolving credit borrowings used to finance the purchase of Silva with term loans under its existing senior unsecured bank credit facility.

The Company increased the borrowings of the senior unsecured five-year and seven-year term loans by $ 75 million each.

At December 31, 2021, the five-year term loan maturing December 2023 and the seven-year term loan maturing December 2025 had outstanding borrowings of $ 225 million and $ 295 million, respectively.

Under the senior unsecured bank credit facility, the additional $ 150 million of terms loans bear interest at variable rates plus a margin based on the Company's credit metrics and interest payments remained unhedged at December 31, 2021.

At June 30, 2022, the Company had a $ 225 million five-year term loan maturing December 2023 and a $ 295 million seven-year term loan maturing December 2025.

Under the senior unsecured bank credit facility, $ 150 million of terms loans bear interest at variable rates plus a margin based on the Company's credit metrics and interest payments remained unhedged at June 30, 2022.

The Company maintains receive-floating/pay-fixed interest rates swap agreements for a portion of the outstanding five and seven-year term loans.

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This stock repurchase plan authorizes the purchase of up to $ 100 million in common and/or preferred stock in open market or privately negotiated transactions through November 15, 2022 or when funds for the program have been exhausted, subject to market conditions and other factors.

The program had $ 100 million of remaining capacity for repurchases of common and/or preferred stock at December 31, 2021.

The program had $ 97 million of remaining capacity for repurchases of common and/or preferred stock at June 30, 2022.

Sale of Idled Tanzania Operations

During the three months ended June 30, 2022, the Company entered into a sales agreement to sell all outstanding common stock, which included all properties, of the idled companies in Tanzania for $ 8.5 million.

The Company received $ 1.3 million when the transaction closed in June 2022.

The remaining proceeds will be received in installments by June 2023.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands, except share and per share data) 2022 2021

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The Company's consolidated effective income tax rate is affected by a number of factors, including the mix and timing of domestic and foreign earnings, discrete items, and the effect of exchange rate changes on taxes.

The consolidated effective income tax rate for the three months and nine months ended December 31, 2021 was 23.4 % and 21.0 %, respectively.

The consolidated effective income tax rate for the three and nine months ended December 31, 2021 was affected by a $ 1.2 million benefit related to finalizing the prior fiscal year U.S.

The consolidated effective income tax rate for the nine months ended December 31, 2021 was affected by a $ 1.7 million benefit related to a final tax law ruling at a foreign subsidiary.

Without these items, the consolidated effective income tax rate for the three and nine months ended December 31, 2021 would have been approximately 25.5 % and 24.3 %, respectively.

The Company's consolidated effective income tax rate for the three and nine months ended December 31, 2020 was 26.5 % and 18.6 %, respectively.

The Company recognized a $ 2.9 million income tax benefit in the three and nine months ended December 31, 2020 related to amending and finalizing of prior fiscal years' consolidated U.S.

income tax returns.

The consolidated income tax rate for the nine months ended December 31, 2020 was affected by a $ 4.4 million net tax benefit for final U.S.

tax regulations issued for hybrid dividends paid by foreign subsidiaries.

Without these discrete items, the consolidated effective income tax rate for the three and nine months ended December 31, 2020 would have been approximately 31.7 % and 29.3 %.

Additionally, for the nine months ended December 31, 2020, the Company recognized $ 1.8 million of interest expense related to a settlement of an uncertain tax position at foreign subsidiary.

The Company's consolidated effective income tax rate for the three months ended June 30, 2022 was 54.6 %.

The consolidated effective income tax rate for the three months ended June 30, 2022 was affected by the sale of the idled Tanzania operations that resulted in $ 1.1 million of additional income taxes.

Without this item, them consolidated effective income tax rate for the three months ended June 30, 2022 would have been approximately 36.2 %.

Additionally, the sale of the idled Tanzania operations resulted in a $ 1.8 million reduction to consolidated interest expense related to the removal of an uncertain tax position.

The Company's consolidated effective income tax rate for the three months ended June 30, 2021 was 23.7 %.

There were no discrete items that impacted the income tax provision for the three months ended June 30, 2021.

GOODWILL AND OTHER INTANGIBLES

The Company's changes in goodwill at December 31, 2021 and 2020 consisted of the following:

(in thousands of dollars) Nine Months Ended December 31,

The Company's changes in goodwill at June 30, 2022 and 2021 consisted of the following:

(in thousands of dollars) Three Months Ended June 30,

Balance at beginning of fiscal year $ 213,998 $ 173,051

Acquisition of business (1)(2)

41,061 53,728

Foreign currency translation adjustment

( 96 ) ( 10 )

Balance at end of period $ 213,902 $ 173,041

(1) On October 4, 2021, the Company acquired 100 % of the capital stock of Shank's for approximately $ 100 million in cash and $ 2.4 million of additional working capital on-hand at the date of acquisition.

The Shank's acquisition resulted in $ 41.1 million of goodwill.

See Note 3 for additional information.

(2) On October 1, 2020, the Company acquired 100 % of the capital stock of Silva for approximately $ 164.0 million in cash and $ 5.9 million of working capital on-hand at the date of acquisition.

The Silva acquisition resulted in $ 46.1 million of goodwill after the final purchase accounting was completed in the three months ended September 30, 2021.

See Note 3 for additional information.

The Company's intangible assets primarily consist of capitalized customer-related intangibles, trade names, proprietary developed technology and noncompetition agreements.

The Company's intangible assets subject to amortization consisted of the following at December 31, 2021 and 2020 and at March 31, 2021:

(in thousands, except useful life) December 31, 2021

The Company's intangible assets subject to amortization consisted of the following at June 30, 2022 and 2021 and at March 31, 2022:

(in thousands, except useful life) June 30, 2022

Useful Life (years) Gross Carrying Value Accumulated Amortization Net Carrying Value

Customer relationships 11 — 13 $ 86,500 $ ( 11,895 ) $ 74,605

11 — 13 $ 86,500 $ ( 8,030 ) $ 78,470

Trade names 5 11,100 ( 4,380 ) 6,720

Developed technology 3 — 13 9,300 ( 4,260 ) 5,040

3 9,300 ( 3,286 ) 6,014

Noncompetition agreements 4 — 5 4,000 ( 1,063 ) 2,937

5 4,000 ( 588 ) 3,412

Other 5 690 ( 640 ) 50

Total intangible assets $ 111,590 $ ( 22,238 ) $ 89,352

December 31, 2020

June 30, 2021

Useful Life (years) Gross Carrying Value Accumulated Amortization Net Carrying Value

Customer relationships 11 — 13 $ 62,500 $ ( 4,710 ) $ 57,790

11 — 13 $ 62,500 $ ( 1,935 ) $ 60,565

Trade names 5 11,100 ( 2,160 ) 8,940

5 11,100 ( 1,050 ) 10,050

Developed technology 3 4,800 ( 2,400 ) 2,400

5 unchanged sentences

Customer relationships (1)

11 — 13 $ 86,500 $ ( 9,963 ) $ 76,537

Trade names 5 11,100 ( 3,825 ) 7,275

Developed technology (1)

3 — 13 9,300 ( 3,773 ) 5,527

Noncompetition agreements (1)

4 — 5 4,000 ( 825 ) 3,175

Other 5 736 ( 679 ) 57

3 unchanged sentences

See Note 3 for additional information.

(2) On October 1, 2020, the Company acquired 100 % of the capital stock of Silva for approximately $ 164.0 million in cash and $ 5.9 million of working capital on-hand at the date of acquisition.

The Silva acquisition resulted in $ 60.8 million of intangible assets.

See Note 3 for additional information.

Intangible assets are amortized on a straight-line basis over the asset's estimated useful economic life as noted above.

The Company's amortization expense for intangible assets for the three and nine months ended December 31, 2021 and 2020 was:

(in thousands of dollars) Three Months Ended December 31, Nine Months Ended December 31,

2020 2021 2020

The Company's amortization expense for intangible assets for the three months ended June 30, 2022 and 2021 was:

(in thousands of dollars) Three Months Ended June 30,

Amortization Expense $ 3,173 $ 2,403

1 unchanged sentence

The amortization expense for other intangible assets is recorded in selling, general, and administrative expenses in the consolidated statements of income.

As of December 31, 2021, the expected future amortization expense for intangible assets is as follows:

As of June 30, 2022, the expected future amortization expense for intangible assets is as follows:

Fiscal Year (in thousands of dollars)

2022 (excluding the nine months ended December 31, 2021)

2023 (excluding the three months ended June 30, 2022)

2027 and thereafter 48,557

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The following table sets forth the right-of-use assets and lease liabilities for operating leases included in the Company’s consolidated balance sheet:

(in thousands of dollars) December 31, 2021 December 31, 2020 March 31, 2021

(in thousands of dollars) June 30, 2022 June 30, 2021 March 31, 2022

Operating lease right-of-use assets $ 41,099 $ 31,281 $ 40,243

3 unchanged sentences

The following table sets forth the location and amount of operating lease costs included in the Company's consolidated statement of income:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2022 2021

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The following table reconciles the undiscounted cash flows to the operating lease liabilities in the Company’s consolidated balance sheet:

(in thousands of dollars) December 31, 2021

(in thousands of dollars) June 30, 2022

Maturity of Operating Lease Liabilities

2022 (excluding the nine months ended December 31, 2021)

2023 (excluding the three months ended June 30, 2022)

2028 and thereafter 8,558

2 unchanged sentences

Total operating lease liabilities $ 39,295

As of December 31, 2021, the Company had no leases that have not yet commenced.

As of June 30, 2022, the Company had no leases that have not yet commenced.

The following table sets forth supplemental information related to operating leases:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands, except lease term and incremental borrowing rate) 2022 2021

4 unchanged sentences

Weighted Average Collateralized Incremental Borrowing Rate 5.81 % 4.12 %

As part of the acquisition of Shank's, the Company recognized $8.5 million of operating lease right-of-use assets and corresponding operating lease liabilities on the opening balance sheet related to leases of Shank's facilities.

The facilities were subsequently purchased in the three months ended December 31, 2021 and therefore excluded from the lease disclosures above.

DERIVATIVES AND HEDGING ACTIVITIES

3 unchanged sentences

In addition, foreign currency exchange rate risk is also managed through strategies that do not involve derivative instruments, such as using local borrowings and other approaches to minimize net monetary positions in non-functional currencies.

The disclosures below provide additional information about the Company’s hedging strategies, the derivative instruments used, and the effects of

these activities on the consolidated statements of income and comprehensive income and the consolidated balance sheets.

The disclosures below provide additional information about the Company’s hedging strategies, the derivative instruments used, and the effects of these activities on the consolidated statements of income and comprehensive income and the consolidated balance sheets.

In the consolidated statements of cash flows, the cash flows associated with all of these activities are reported in net cash provided by operating activities.

2 unchanged sentences

Although no significant ineffectiveness is expected with this hedging strategy, the effectiveness of the interest rate swaps is evaluated on a quarterly basis.

At December 31, 2021, the total notional amount of the interest rate swaps was $ 370 million, which corresponded with the original outstanding balance of the term loans.

At June 30, 2022, the total notional amount of the interest rate swaps was $ 370 million, which corresponded with the original outstanding balance of the term loans.

During the third quarter of fiscal year 2021, the Company converted $ 150 million from the balance in its revolving credit line into the existing term loans, splitting the balance equally between them.

At December 31, 2021, the Company is not hedging the interest payments on the additional $ 150 million of term loans.

At June 30, 2022, the Company is not hedging the interest payments on the additional $ 150 million of term loans.

The increase to the principal balance of the term loans does not have an impact to the effectiveness analysis of the interest rate swap agreements.

2 unchanged sentences

The fair value of the previous swap agreements, approximately $ 5.4 million, was received from the counterparties upon termination and was amortized from accumulated other comprehensive loss into earnings as a reduction of interest expense through the original maturity dates of those agreements.

As of December 31, 2021, the entire deferred gain has been amortized.

As of June 30, 2022, the entire deferred gain has been amortized.

Cash Flow Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Sales of Crop Inputs, Forecast Purchases of Tobacco, and Related Processing Costs

12 unchanged sentences

The aggregate U.S.

dollar notional amount of forward and option contracts entered into for these purposes during the nine-month periods in fiscal years 2022 and 2021 was as follows:

Nine Months Ended December 31,

dollar notional amount of forward and option contracts entered into for these purposes during the three-month periods in fiscal years 2023 and 2022 was as follows:

Three Months Ended June 30,

(in millions of dollars) 2022 2021

2 unchanged sentences

Crop input sales — 20.8

$ 188.0 $ 137.5

Fluctuations in exchange rates and in the amount and timing of fixed-price orders from customers for their purchases from individual crop years routinely cause variations in the U.S.

2 unchanged sentences

As a result, changes in fair values of the forward contracts have been recognized in comprehensive income as they occurred, but only recognized in earnings as a component of cost of goods sold upon sale of the related tobacco to third-party customers.

In fiscal year 2022, only non-deliverable forward contracts were utilized for the sale of 2022 crop year inputs.

Premium payments for option contracts entered into for the sale of crop inputs in fiscal year 2021 were expensed into earnings as incurred.

The table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of December 31, 2021 for cash flows hedges of tobacco purchases and crop input sales will be recognized in earnings.

The table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of June 30, 2022 for cash flows hedges of tobacco purchases and crop input sales are expected to be recognized in earnings.

Hedging Program Crop Year Geographic Location(s) Fiscal Year Earnings

1 unchanged sentence

Tobacco purchases 2022 Brazil, Africa 2023

Tobacco purchases 2021 Brazil, Africa 2022

Tobacco purchases 2021 Brazil 2023

19 unchanged sentences

The contracts are generally arranged to hedge the subsidiary's projected exposure to currency remeasurement risk for specified periods of time, and new contracts are entered as necessary throughout the year to replace previous contracts as they mature.

The Company is currently using forward currency contracts to manage its exposure to currency remeasurement risk in Brazil.

The total notional amounts of contracts outstanding at December 31, 2021 and 2020, and March 31, 2021, were approximately $ 59.6 million, $ 13.3 million, and $ 16.6 million, respectively.

The Company is currently using forward currency contracts to

manage its exposure to currency remeasurement risk in Brazil.

The total notional amounts of contracts outstanding at June 30, 2022 and 2021, and March 31, 2022, were approximately $ 110.1 million, $ 16.7 million, and $ 59.5 million, respectively.

To further mitigate currency remeasurement exposure, the Company’s foreign subsidiaries may utilize short-term local currency financing during certain periods.

6 unchanged sentences

The table below outlines the effects of the Company’s use of derivative financial instruments on the consolidated statements of income:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2022 2021

5 unchanged sentences

Gain on terminated interest rate swaps amortized from accumulated other comprehensive loss into earnings

$ 353 $ 353 $ 1,061 $ 1,061

Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings

20 unchanged sentences

For the interest rate swap agreements, the effective portion of the gain or loss on the derivative is recorded in accumulated other comprehensive loss and any ineffective portion is recorded in selling, general and administrative expenses.

For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases in Brazil and Africa and the crop input sales in Brazil, a net hedge loss of approximately $ 1.3 million remained in accumulated other comprehensive loss at December 31, 2021.

That balance reflects gains and losses on contracts related to the 2023, 2022, 2021, and 2020 Brazil crops, the 2022 and 2021 Africa crops, and the 2022 and 2021 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through December 31, 2021.

Based on the hedging strategy, as the gain or loss is

recognized in earnings, it is expected to be offset by a change in the direct cost for the tobacco or by a change in sales prices if the strategy has been mandated by the customer.

For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases in Brazil and Africa and the crop input sales in Brazil, a net hedge gain of approximately $ 4.8 million remained in accumulated other comprehensive loss at June 30, 2022.

That balance reflects gains and losses on contracts related to the 2023, 2022, and 2021 Brazil crops, the 2022 Africa crop, and the 2022 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through June 30, 2022.

Based on the hedging strategy, as the gain or loss is recognized in earnings, it is expected to

be offset by a change in the direct cost for the tobacco or by a change in sales prices if the strategy has been mandated by the customer.

Generally, margins on the sale of the tobacco will not be significantly affected.

Effect of Derivative Financial Instruments on the Consolidated Balance Sheets

The table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at December 31, 2021 and 2020, and March 31, 2021:

The table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at June 30, 2022 and 2021, and March 31, 2022:

Derivatives in a Fair Value Asset Position Derivatives in a Fair Value Liability Position

1 unchanged sentence

Location Fair Value as of

(in thousands of dollars) December 31, 2021 December 31, 2020 March 31, 2021 December 31, 2021 December 31, 2020 March 31, 2021

(in thousands of dollars) June 30, 2022 June 30, 2021 March 31, 2022 June 30, 2022 June 30, 2021 March 31, 2022

Derivatives Designated as Hedging Instruments

31 unchanged sentences

Recurring Fair Value Measurements

At December 31, 2021 and 2020, and at March 31, 2021, the Company had certain financial assets and financial liabilities that were required to be measured and reported at fair value on a recurring basis.

At June 30, 2022 and 2021, and at March 31, 2022, the Company had certain financial assets and financial liabilities that were required to be measured and reported at fair value on a recurring basis.

These assets and liabilities are listed in the tables below and are classified based on how their values were determined under the fair value hierarchy or the NAV practical expedient:

December 31, 2021

June 30, 2022

Fair Value Hierarchy

5 unchanged sentences

Interest rate swap agreements

— — 4,345 — 4,345

Foreign currency exchange contracts

2 unchanged sentences

$ 334 $ 11,666 $ 13,034 $ — $ 25,034

Interest rate swap agreements

— — 16,658 — 16,658

Foreign currency exchange contracts

2 unchanged sentences

$ — $ — $ 405 $ — $ 405

December 31, 2020

June 30, 2021

Fair Value Hierarchy

27 unchanged sentences

$ 334 $ 13,655 $ 24,068 $ — $ 38,057

Acquisition-related contingent consideration obligations - long-term

$ — $ — $ — $ 2,532 $ 2,532

Interest rate swap agreements

23 unchanged sentences

During the year ended March 31, 2021, the evaluation resulted in a reduction of $ 4.2 million of contingent consideration of the original $ 6.7 million liability recorded.

During the three months ended September 30, 2021, an evaluation of the contingent liability resulted in a reduction of the remaining $ 2.5 million contingent consideration recorded.

During the year ended March 31, 2022, the evaluation of the contingent liability resulted in a reduction of the remaining $ 2.5 million contingent consideration recorded.

Significant judgment is applied to this model and therefore the acquisition-related contingent consideration obligation was classified within Level 3 of the fair value hierarchy.

A reconciliation of the change in the balance of the acquisition-related contingent consideration obligation (Level 3) for the nine months ended December 31, 2021 and 2020 is provided below.

(in thousands of dollars) Nine Months Ended December 31,

A reconciliation of the change in the balance of the acquisition-related contingent consideration obligation (Level 3) for the three months ended June 30, 2022 and 2021 is provided below.

(in thousands of dollars) Three Months Ended June 30,

Balance beginning of year $ — $ 2,532

2 unchanged sentences

Long-term Debt

The following table summarizes the fair and carrying value of the Company’s long-term debt, including the current portion at each of the balance sheet dates December 31, 2021, and 2020 and March 31, 2021:

(in millions of dollars) December 31, 2021 December 31, 2020 March 31, 2021

The following table summarizes the fair and carrying value of the Company’s long-term debt, including the current portion at each of the balance sheet dates June 30, 2022, and 2021 and March 31, 2022:

(in millions of dollars) June 30, 2022 June 30, 2021 March 31, 2022

Fair market value of long term obligations $ 517 $ 517 $ 517

10 unchanged sentences

The Company reviews long-lived assets for impairment whenever events, changes in business conditions, or other circumstances provide an indication that such assets may be impaired.

Due to business changes that affected the leaf tobacco market in Tanzania and the Company's operations there, an impairment charge of the long-lived assets in Tanzania was recorded in fiscal year 2019 to reduce their carrying value to fair value at March 31, 2019.

As a result of efforts to sell the idled Tanzania operations, in the third quarter of fiscal year 2022 an additional impairment charge of $ 9.4 million was recorded.

The remaining long-lived assets consist principally of the Company's office building, processing facility and land.

The aggregate fair value and carrying value of the long-lived assets following the impairment adjustments is approximately $ 3 million at December 31, 2021.

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

2 unchanged sentences

These plans provide retirement benefits based primarily on employee compensation and years of service.

The Company also sponsors defined benefit plans that provide postretirement health and life insurance benefits

for eligible U.S.

The Company also sponsors defined benefit plans that provide postretirement health and life insurance benefits for eligible U.S.

employees attaining specific age and service levels, although postretirement life insurance is no longer provided for active employees.

1 unchanged sentence

Pension Benefits Other Postretirement Benefits

Three Months Ended December 31, Three Months Ended December 31,

(in thousands of dollars) 2021 2020 2021 2020

Service cost $ 1,678 $ 1,603 $ 43 $ 48

Interest cost 2,212 2,403 265 286

Expected return on plan assets ( 3,373 ) ( 3,676 ) ( 21 ) ( 24 )

Net amortization and deferral 976 1,120 ( 115 ) ( 139 )

Net periodic benefit cost

$ 1,493 $ 1,450 $ 172 $ 171

Pension Benefits Other Postretirement Benefits

Nine Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30, Three Months Ended June 30,

(in thousands of dollars) 2022 2021 2022 2021

5 unchanged sentences

$ 1,557 $ 1,500 $ 82 $ 149

During the nine months ended December 31, 2021, the Company made contributions of approximately $ 4.9 million to its pension plans.

Additional contributions of $ 1.3 million are expected during the remaining three months of fiscal year 2022.

During the three months ended June 30, 2022, the Company made contributions of approximately $ 0.9 million to its pension plans.

Additional contributions of $ 3.3 million are expected during the remaining nine months of fiscal year 2023.

STOCK-BASED COMPENSATION

4 unchanged sentences

Awards of restricted stock, RSUs, and PSUs are currently outstanding under the Plan.

The RSUs granted to employees vest in either three or five years from the grant date and are then paid out in shares of common stock.

RSUs awarded prior to fiscal year 2022 vest 5 years after the grant date and those awarded beginning in fiscal year 2022 vest 3 years after the grant date.

After vesting RSUs are paid out in shares of common stock.

Under the 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.

2 unchanged sentences

The Company’s outside directors receive RSUs following the annual meeting of shareholders.

RSUs awarded to outside directors vest in one or three years from the grant date.

RSUs awarded to outside directors prior to fiscal year 2020 vest 3 years after the grant date and those granted beginning in fiscal year 2020 vest 1 year after the grant date.

Restricted shares vest upon the individual’s retirement from service as a director.

During the nine-month periods ended December 31, 2021 and 2020, Universal issued the following stock-based awards, representing the regular annual grants to officers and outside directors of the Company:

Nine Months Ended December 31,

During the three-month periods ended June 30, 2022 and 2021, Universal issued the following stock-based awards, representing the regular annual grants to officers and outside directors of the Company:

Three Months Ended June 30,

Number granted 65,405 58,160

4 unchanged sentences

(1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award.

For employees who are already eligible to retire at the date an award is granted, the total fair value of all non-forfeitable awards is recognized as expense at the date of grant.

For employees who are already eligible to retire at the date an award is granted, the total fair value of all non-forfeitable awards is recognized as expense

at the date of grant.

As a result, Universal typically incurs higher stock compensation expense in the first quarter of each fiscal year when grants are awarded to officers than in the other three quarters.

1 unchanged sentence

The Company accounts for forfeitures of stock-based awards as they occur.

For the nine-month periods ended December 31, 2021 and 2020, the Company recorded total stock-based compensation expense of approximately $ 5.3 million and $ 5.0 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 1.2 million during the remaining three months of fiscal year 2022.

For the three-month periods ended June 30, 2022 and 2021, the Company recorded total stock-based compensation expense of approximately $ 3.7 million and $ 3.0 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 3.6 million during the remaining nine months of fiscal year 2023.

OPERATING SEGMENTS

As a result of recent acquisitions of plant-based ingredients companies, during the three months ended December 31, 2020 management evaluated the Company’s global business activities, including product and service offerings to its customers, as well as senior management’s operational and financial responsibilities.

This assessment included an analysis of how its chief operating decision maker measures business performance and allocates resources.

As a result of this analysis, senior management determined the Company conducts operations across two reportable operating segments, Tobacco Operations and Ingredients Operations.

The Company conducts operations across two reportable operating segments, Tobacco Operations and Ingredients Operations.

The Tobacco Operations segment activities involve selecting, procuring, processing, packing, storing, shipping, and financing leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products throughout the world.

5 unchanged sentences

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, flavors, and extracts.

Customers for the Ingredients Operations segment include large multinational food and beverage companies, smaller independent manufacturers, and retail organizations.

2 unchanged sentences

Silva is primarily a dehydrated product manufacturer of fruit and vegetable based flakes, dices, granules, powders, and blends.

Shank's manufactures flavors and extracts and also offers bottling and custom packaging for customers.

In fiscal year 2021, the Company announced the wind-down of CIFI, a greenfield operation that primarily manufactured both dehydrated and liquid sweet potato products.

Shank's manufactures flavors and botanical extracts and also offers bottling and custom packaging for customers.

The Company currently evaluates the performance of its segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates.

Operating results for the Company’s reportable segments for each period presented in the consolidated statements of income and comprehensive income were as follows.

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2022 2021

8 unchanged sentences

Equity in pretax (earnings) loss of unconsolidated affiliates (1)

( 2,084 ) ( 1,506 ) ( 5,056 ) ( 2,089 )

Restructuring and impairment costs (2)

( 8,433 ) ( 19,979 ) ( 10,457 ) ( 19,979 )

Other income (loss) (3)

— — 2,532 4,173

Consolidated operating income $ 13,266 $ 10,605

2 unchanged sentences

See Note 4 for additional information.

(3) Other income represents the reversal of a portion of the contingent consideration liability associated with the acquisition of FruitSmart.

See Note 12 for additional information.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) attributable to the Company for the nine months ended December 31, 2021 and 2020:

Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2022 2021

10 unchanged sentences

Net gain (loss) on derivative instruments (net of tax (expense) benefit of $ 25 and $( 1,566 ))

Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ 748 and $( 1,914 )) (1)

( 1,611 ) 5,698

Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ 218 and $( 108 )) (1)

Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes ( 2,119 ) 5,982

22 unchanged sentences

CHANGES IN SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS IN SUBSIDIARIES

A reconciliation of the changes in Universal Corporation shareholders’ equity and noncontrolling interests in subsidiaries for the three and nine months ended December 31, 2021 and 2020 is as follows:

Three Months Ended December 31, 2021 Three Months Ended December 31, 2020

A reconciliation of the changes in Universal Corporation shareholders’ equity and noncontrolling interests in subsidiaries for the three months ended June 30, 2022 and 2021 is as follows:

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

(in thousands of dollars) Universal Corporation Non-controlling Interests Total Universal Corporation Non-controlling Interests Total

2 unchanged sentences

Accrual of stock-based compensation 3,682 — 3,682 2,966 — 2,966

Dividend equivalents on RSUs 266 — 266 255 — 255

Changes in retained earnings

Net income 34,940 9,215 44,155 33,273 7,168 40,441

Cash dividends declared

( 19,193 ) — ( 19,193 ) ( 18,877 ) — ( 18,877 )

Dividend equivalents on RSUs ( 266 ) — ( 266 ) ( 254 ) — ( 254 )

Other comprehensive income (loss) 1,721 ( 14 ) 1,707 15,294 ( 54 ) 15,240

Other changes in noncontrolling interests

Dividends paid to noncontrolling shareholders

— ( 2,057 ) ( 2,057 ) — — —

Balance at end of period $ 1,316,004 $ 43,238 $ 1,359,242 $ 1,270,525 $ 46,490 $ 1,317,015

Nine Months Ended December 31, 2021 Nine Months Ended December 31, 2020

(in thousands of dollars) Universal Corporation Non-controlling Interests Total Universal Corporation Non-controlling Interests Total

Balance at beginning of year $ 1,307,299 $ 41,126 $ 1,348,425 $ 1,246,665 $ 42,619 $ 1,289,284

Changes in common stock

Accrual of stock-based compensation 5,289 — 5,289 5,042 — 5,042

Withholding of shares from stock-based compensation for grantee income taxes

10 unchanged sentences

— ( 5,145 ) ( 5,145 ) — ( 980 ) ( 980 )

Other — ( 427 ) ( 427 ) — — —

Balance at end of period $ 1,325,763 $ 34,296 $ 1,360,059 $ 1,303,825 $ 37,730 $ 1,341,555

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements