What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-05-30 compared with 2024-05-29 · 193 added, 226 removed, 1459 unchanged (22% of the section changed)

8 unchanged sentences

Selling, general and administrative expenses 305,287 310,566 277,213

Other income — — ( 2,532 )

Restructuring and impairment costs 10,573 3,523 —

1 unchanged sentence

Equity in pretax earnings of unconsolidated affiliates 9,103 756 2,383

Pension settlement charge 14,101 — —

Other non-operating income 2,569 3,084 1,791

112 unchanged sentences

Restructuring payments ( 1,568 ) ( 1,181 ) —

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

Pension settlement 14,101 — —

Other, net 1,406 1,001 ( 6,249 )

Changes in operating assets and liabilities, net:

Accounts and notes receivable ( 109,681 ) ( 74,657 ) ( 23,185 )

Accounts receivable ( 129,988 ) ( 109,681 ) ( 74,657 )

Inventories 244,732 ( 236,243 ) ( 41,867 )

7 unchanged sentences

Purchase of property, plant and equipment ( 62,601 ) ( 66,013 ) ( 54,674 )

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

Proceeds from sale of business, less cash of businesses sold — 3,757 3,245

16 unchanged sentences

$ 260,115 $ 55,593 $ 64,690

Supplemental Information:

Cash and cash equivalents

$ 55,593 $ 64,690 $ 81,648

Restricted cash (Other noncurrent assets)

Total cash, restricted cash and cash equivalents

$ 55,593 $ 64,690 $ 87,648

Supplemental information—cash paid for:

14 unchanged sentences

Changes in common stock

Repurchase of common stock ( 1,373 ) — — — ( 1,373 )

Accrual of stock-based compensation 8,531 — — — 8,531

44 unchanged sentences

Dividends paid to noncontrolling shareholders — — — ( 10,572 ) ( 10,572 )

Other — — — ( 427 ) ( 427 )

Balance at end of year $ 345,596 $ 1,173,196 $ ( 81,585 ) $ 41,716 $ 1,478,923

28 unchanged sentences

Dividends paid to noncontrolling shareholders — — — ( 10,221 ) ( 10,221 )

Other — — — ( 427 ) ( 427 )

Balance at end of year $ 337,247 $ 1,136,898 $ ( 77,057 ) $ 39,864 $ 1,436,952

23 unchanged sentences

These investments are accounted for under the equity method because Universal exercises significant influence over those companies, but not control.

The Company received no dividends in fiscal year 2024, $ 5.6 million in fiscal year 2023, and $ 4.3 million in fiscal year 2022, from companies accounted for under the equity method.

The Company received $ 4.2 million in fiscal year 2025, no dividends in fiscal year 2024, and $ 5.6 million in fiscal year 2023, from companies accounted for under the equity method.

Investments where Universal has a voting interest of less than 20% are not significant and do not have readily determinable fair values.

1 unchanged sentence

The Company’s 49% ownership interest in Socotab L.L.C.

(“Socotab”), a leading supplier of oriental tobaccos with operations located principally in Eastern Europe and Turkey, is the primary investment accounted for under the equity method.

(“Socotab”), a leading supplier of oriental tobaccos with operations located principally in Eastern Europe and Türkiye, is the primary investment accounted for under the equity method.

The investment in Socotab is an important part of the Company’s overall product and service arrangements with its major customers.

6 unchanged sentences

The Company holds less than a 100% financial interest in certain consolidated subsidiaries.

The net income and shareholders’ equity attributable to the noncontrolling interests in these subsidiaries are reported on the face of the consolidated financial statements.

The net income and shareholders’ equity attributable to the noncontrolling interests in these subsidiaries are reported in the consolidated financial statements.

There were no material changes in the Company’s ownership percentage in any of these subsidiaries during fiscal years 2025, 2024, or 2023.

8 unchanged sentences

The use of different assumptions could increase or decrease estimated future operating cash flows, and the discounted value of those cash flows, and therefore could increase or decrease any impairment charge related to these investments.

During the fiscal year ended March 31, 2022, the Company recognized an immaterial impairment of an investment in an equity method investee in Africa.

In its consolidated statements of income, the Company reports its proportional share of the earnings of unconsolidated affiliates accounted for on the equity method based on the pretax earnings of those affiliates, as permitted under the applicable accounting guidance.

17 unchanged sentences

The Company calculates basic earnings per share based on Net income attributable to Universal Corporation.

The calculation uses the weighted average number of common shares outstanding during each period.

Diluted earnings per share is computed in a similar manner using the weighted average number of common shares and dilutive potential common shares outstanding.

Dilutive potential common shares include unvested restricted stock units and performance share units that are assumed to be fully vested and paid out in shares of common stock.

The calculation uses the weighted average number of shares of common stock outstanding during each period.

Diluted earnings per share is computed in a similar manner using the weighted average number of shares and dilutive potential shares outstanding.

Dilutive potential shares include unvested restricted stock units and performance share units that are assumed to be fully vested and paid out in shares of common stock.

Calculations of earnings per share for the fiscal years ended March 31, 2025, 2024, and 2023, are provided in Note 4.

1 unchanged sentence

All highly liquid investments with a maturity of three months or less at the time of purchase are classified as cash equivalents.

Restricted cash was associated with the acquisition of Silva International, Inc.

("Silva") and was recognized as a component of other noncurrent assets at March 31, 2022.

The restricted cash associated with the Silva acquisition was released to the selling shareholder during the fiscal year ended March 31, 2023.

See Note 2 for more information about the release of restricted cash.

Restricted cash related to the acquisition of Silva International, Inc.

(“Silva”) was released to a selling shareholder in fiscal year ended March 31, 2023.

Advances to Tobacco Suppliers

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

In many sourcing regions where the Company operates, it provides agronomy services and seasonal advances of seed, fertilizer, and other supplies to tobacco farmers for crop production.

These advances are typically 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.

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

In some years, due to low crop yields and other factors, individual farmers may not deliver sufficient volumes of tobacco to fully repay their seasonal advances, and the Company may extend repayment of those advances into future crop years.

6 unchanged sentences

Interest on advances is recognized in earnings upon the farmers’ delivery of tobacco in payment of principal and interest.

Advances on which interest accruals had been discontinued totaled approximately $ 2 million and $ 3 million at March 31, 2024 and 2023, respectively.

Advances on which interest accruals had been discontinued totaled approximately $ 2 million at March 31, 2025 and 2024, respectively.

Inventories are valued at the lower of cost or net realizable value.

Raw materials primarily consist of unprocessed leaf tobacco, which is clearly identified by type and grade at the time of purchase.

The Company tracks the costs associated with this

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tobacco in the final product lots, and maintains this identification through the time of sale.

The Company tracks the costs associated with this tobacco in the final product lots, and maintains this identification through the time of sale.

This method of cost accounting is referred to as the specific cost or specific identification method.

The predominant cost component of the Company’s inventories is the cost of the unprocessed tobacco.

Direct and indirect processing costs related to these raw materials are capitalized and allocated to inventory in a systematic manner.

Direct and indirect processing costs related to these raw materials are capitalized and

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

allocated to inventory in a systematic manner.

The Company does not capitalize any interest or sales-related costs in inventory.

In-bound freight costs are recorded in cost of goods sold.

Other inventories consist primarily of unprocessed and processed food and vegetable ingredients, botanical extracts, seed, fertilizer, packing materials, and other supplies, and are valued using the specific cost method.

Other inventories consist primarily of unprocessed and processed food and beverage ingredients, botanical extracts, seed, fertilizer, packing materials, and other supplies, and are valued using the specific cost method.

Recoverable Value-Added Tax Credits

11 unchanged sentences

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 March 31, 2024 and 2023, the aggregate balances of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 72 million and $ 64 million, respectively, and the related valuation allowances totaled approximately $ 21 million and $ 22 million, respectively.

At March 31, 2025 and 2024, the aggregate balances of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 64 million and $ 72 million, respectively, and the related valuation allowances totaled approximately $ 21 million at both dates.

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

9 unchanged sentences

and office and computer equipment - 3 to 12 years.

Depreciation expense for the fiscal years ended March 31, 2025, 2024, and 2023 was $ 48.7 million, $ 47.1 million, and $ 44.8 million, respectively.

Where applicable and material in amount, the Company capitalizes related interest costs during periods that property, plant and equipment are being constructed or made ready for service.

11 unchanged sentences

Goodwill is carried at the lower of cost or fair value and is reviewed for potential impairment on an annual basis as of the end of the fiscal year.

Reporting units are distinct operating subsidiaries or groups of subsidiaries that typically compose the Company’s business in a specific country or location.

Goodwill is allocated to reporting units based on the country or location to which a

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reporting units are distinct operating subsidiaries or groups of subsidiaries that typically compose the Company’s business in a specific country or location.

Goodwill is allocated to reporting units based on the country or location to which a specific acquisition relates, or by allocation based on expected future cash flows if the acquisition relates to more than one country or location.

specific acquisition relates, or by allocation based on expected future cash flows if the acquisition relates to more than one country or location.

The majority of the Company’s goodwill relates to its reporting unit in Brazil and reporting units in the Ingredients operating segment.

See Notes 2 and 7 for additional information.

See Note 6 for additional information.

Significant adverse changes in the operations or estimated future cash flows for a reporting unit with recorded goodwill could result in an impairment charge.

Accounting Standards Codification Topic 350 ("ASC 350") permits companies to base initial assessments of potential goodwill impairment on qualitative factors, but also allows companies to bypass the qualitative assessment and perform a quantitative assessment.

Accounting Standards Codification Topic 350 (“ASC 350”) permits companies to base initial assessments of potential goodwill impairment on qualitative factors, and the Company elected to use that approach at March 31, 2025.

Those factors did not indicate that it was more likely than not that the fair value of any of the reporting units was less than their respective carrying value, therefore no potential impairment of the Company’s recorded goodwill was noted at March 31, 2025.

ASC 350 also allows companies to bypass the qualitative assessment and perform a quantitative assessment.

The quantitative goodwill assessment consists of comparing the fair value of each reporting unit to the carrying value of that reporting unit.

In the event that the carrying value of the reporting unit exceeds its fair value, an impairment of the reporting unit's goodwill is recognized, up to the amount of goodwill allocated to that reporting unit.

The Company elected to bypass the qualitative assessment and perform a quantitative assessment of goodwill impairment at March 31, 2024.

3 unchanged sentences

Based on this quantitative assessment, the Company determined there was no impairment of goodwill for any of its reporting units as of March 31, 2024.

The Company elected to use the qualitative approach at March 31, 2023.

The qualitative assessment did not indicate that it was more likely than not that the fair value of any of the reporting units was less than their respective carrying value, therefore no potential impairment of the Company's recorded goodwill was noted as of that date.

Other intangibles principally consists of finite lived intangible assets including customer-related intangibles, trade names, developed technology, and noncompetition agreements.

14 unchanged sentences

In periods when fixed-rate obligations are outstanding, fair values are estimated using market prices where they are available or discounted cash flow models based on current incremental borrowing rates for similar classes of borrowers and borrowing arrangements.

The fair values of interest rate swap agreements designated as cash flow hedges and used to fix the variable benchmark rate on outstanding long-term debt are determined separately and recorded in other long-term liabilities.

Except for interest rate swaps and forward foreign currency exchange contracts that are discussed below, the fair values of all other assets and liabilities that qualify as financial instruments approximate their carrying amounts.

19 unchanged sentences

These transaction gains and losses are also included in earnings as a component of selling, general, and administrative expenses.

The Company recognized net foreign currency transaction losses of $ 3.2 million and $ 8.8 million in fiscal years 2024 and 2023, respectively, and net foreign currency transaction gains of $ 18.0 million in fiscal year 2022 .

The Company recognized net foreign currency transaction losses of $ 2.2 million, $ 3.2 million and $ 8.8 million in fiscal years 2025, 2024 and 2023, respectively.

Customer Advances and Deposits

3 unchanged sentences

Revenue is recognized when the Company completes its performance obligation for the transfer of products and services under its contractual arrangements with customers.

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

For sales of tobacco, satisfaction of the performance obligation and recognition of the corresponding revenue is based on the transfer of the ownership and control of the product to the customer.

2 unchanged sentences

The customers typically specify, in sales contracts and in shipping documents, the precise terms for transfer of title and risk of loss for the tobacco.

Customer returns and rejections are not significant, and the Company’s sales history indicates that customer-specific acceptance provisions are consistently met upon transfer of title and risk of loss.

Customer returns and rejections are not historically significant, and the Company’s sales history indicates that customer-specific acceptance provisions are consistently met upon transfer of title and risk of loss.

While most of the Company’s revenue is derived from tobacco that is purchased from farmers, processed and packed in its factories, and then sold to customers, some revenue is earned from processing tobacco owned by customers and from other value-added services.

6 unchanged sentences

The contracts for food ingredients with customers create a performance obligation to transfer the manufactured finished goods to the customer.

Transaction prices for the sale of food ingredients are primarily based on negotiated fixed prices.

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

At the point in time that the customer obtains control over the finished product, which is typically aligned with physical shipment under the contractual terms with the customer, the Company completes its performance obligation and recognizes the revenue for the sale.

10 unchanged sentences

Pronouncements Adopted in Fiscal Year 2023

The Company adopted FASB issued Accounting Standards Update No.

2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” (“ASU 2019-12”) effective April 1, 2021.

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.

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

Pronouncements Adopted in Fiscal Year 2023

In March 2020, the FASB issued Accounting Standards Update No.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2020-04, “Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”).

4 unchanged sentences

There was no material impact to the consolidated financial statements from the adoption of ASU 2020-04.

Accounting Pronouncements to be Adopted in Future Years

Pronouncements Adopted in Fiscal Year 2025

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures" ("ASU 2023-07").

2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosure” (“ASU 2023-0”).

ASU 2023-07 requires additional disclosures about profitability measures utilized by the chief operating decision maker and significant segment expenses.

ASU 2023-07 also requires all annual disclosures regarding profit or loss and assets to be included in interim disclosures.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods in fiscal years beginning after December 15, 2024, although early adoption is permitted.

The Company is currently evaluating the impact of adopting this standard on its operating segments disclosures.

The Company adopted ASU 2023-07 in fiscal year 2025, incorporating additional disclosures in Note 16 for significant segment expenses, including cost of goods sold, selling, general and administrative expenses, and allocated corporate overhead.

Accounting Pronouncements to be Adopted in Future Years

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures" ("ASU 2023-09").

2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosure” (“ASU 2023-09”).

ASU 2023-09 requires additional disclosures reconciling the rates of different categories of income tax (i.e.

2 unchanged sentences

The Company is currently evaluating the impact of adopting this standard on its income tax disclosures.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses” (“ASU 2024-03”).

ASU 2024-03 requires additional disclosures about certain types of costs and expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, although early adoption is permitted.

The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year’s presentation.

BUSINESS COMBINATIONS

Acquisition of Shank's Extracts, LLC

On October 4, 2021 , the Company acquired 100 % of the capital stock of Shank's Extract's, LLC (“Shank's”), a flavors and botanical 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.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The goodwill and intangibles recognized for the Shank's acquisition are deductible for U.S.

income tax purposes.

The transaction was treated as an asset acquisition for U.S.

Federal tax purposes, resulting in a step-up of tax basis to fair value.

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

Therefore, pro forma information is not presented.

For the fiscal year ended March 31, 2022 , the Company incurred $ 2.3 million for 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.

In November 2021, the Company acquired the land and buildings utilized by Shank's operations for $ 13.3 million.

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.

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

Assets October 4, 2021

Cash and cash equivalents $ 754

Accounts receivable, net 6,643

Inventory 15,792

Other current assets 415

Property, plant and equipment 11,000

Operating lease right-of-use assets 8,531

Customer relationships 24,000

Developed technology 4,500

Non-compete agreements 3,000

Goodwill 41,061

Total assets acquired

Accounts payable and accrued expenses 6,159

Customer advances and deposits 351

Accrued compensation 655

Current portion operating lease liabilities 8,531

Total liabilities assumed

Total assets acquired and liabilities assumed

Restricted Cash Release of Deferred Proceeds from Acquisition of Silva International, Inc.

During the three months ended December 31, 2022, the Company released $ 6.0 million, held in a third-party escrow account, to one of Silva's selling shareholders.

The amounts were held in escrow since the date of acquisition, as the employee had a post-combination service requirement with forfeitable payment provisions.

Therefore, under ASC Topic 805, "Business Combinations," the amounts held in escrow were treated as a contingent consideration arrangement and expensed as compensation expense in selling, general, and administrative expense on the consolidated statements of income.

As of December 31, 2022, all amounts have been released to the selling shareholder, who remains employed by the Company, and expensed in the Company's consolidated statements of income.

REVENUE FROM CONTRACTS WITH CUSTOMERS

2 unchanged sentences

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

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

Contract durations and payment terms for all revenue categories generally do not exceed one year.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

creditworthiness, product types, services provided, and other factors.

Contract durations and payment terms for all revenue categories generally do not exceed one year.

Therefore, the Company has applied a practical expedient to not adjust the transaction price for the effects of financing components, as the Company expects that the period from the time the revenue for a transaction is recognized to the time the customer pays for the related good or service transferred will be one year or less.

transaction is recognized to the time the customer pays for the related good or service transferred will be one year or less.

Below is a description of the major revenue-generating categories from contracts with customers.

Tobacco Sales

The majority of the Company’s business involves purchasing leaf tobacco from farmers in the origins where it is grown, processing and packing the tobacco in its factories, and then transferring ownership and control of the tobacco to customers.

The majority of the Company’s business involves purchasing leaf tobacco from farmers in the regions where it is grown, processing and packing the tobacco in its factories, and then transferring ownership and control of the tobacco to customers.

On a much smaller basis, the Company also sources processed tobacco from third-party suppliers for resale to customers.

10 unchanged sentences

The contracts for food ingredients with customers create a performance obligation to transfer the manufactured finished goods to the customer.

Transaction prices for the sale of food ingredients are primarily based on negotiated fixed prices.

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

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

25 unchanged sentences

A material part of the Company’s business is dependent upon a few customers.

The Company’s six largest customers are Altria Group, Inc, British American Tobacco plc, China Tobacco International, Inc., Imperial Brands plc, Japan Tobacco, Inc., and Philip Morris International, Inc.

The Company’s six largest customers are British American Tobacco plc, China Tobacco International, Inc., Eastern Company S.A.E., Imperial Brands plc, Japan Tobacco, Inc., and Philip Morris International, Inc.

In the aggregate, these customers have accounted for approximately 60 % of consolidated revenue for each of the past three fiscal years.

For the fiscal years ended March 31, 2025, 2024, and 2023, revenue from Philip Morris International, Inc.

accounted for revenue of approximately $ 630 million, $ 460 million, and $ 320 million, respectively, Imperial Brands plc accounted for revenue of approximately $ 340 million, $ 430 million, and $ 380 million, respectively, and Japan Tobacco, Inc.

accounted for revenue of approximately $ 480 million, $ 630 million, and $ 460 million, respectively, Imperial Brands plc accounted for revenue of approximately $ 370 million, $ 340 million, and $ 430 million, respectively, and China Tobacco International, Inc.

accounted for revenue of approximately $ 280 million, $ 210 million, and $ 200 million, respectively.

6 unchanged sentences

Tobacco Operations

During the fiscal year ended March 31, 2024, the Company restructured operations at its Global Laboratory Services, Inc ("GLS") facility in Wilson, NC.

GLS provides testing for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors, and has capabilities for testing non-tobacco products.

As a result of the restructuring of the GLS operations, the Company incurred $ 1.8 million of restructuring and impairment costs for the fiscal year ended March 31, 2024.

During the fiscal year ended March 31, 2024, the Company also incurred $ 1.7 million of termination and impairment costs in other areas of the Tobacco Operations segment.

During the fiscal year ended March 31, 2025, the Company began consolidating its European sheet tobacco operations into the Company’s facility in the Netherlands, by initiating a wind-down of activities at its sheet facility in Germany, incurring $ 10.5 million of restructuring and impairment costs.

Additionally, during the fiscal year ended March 31, 2025, the Company also incurred $ 0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment.

Fiscal Year Ended March 31, 2024

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 fiscal year ended March 31, 2022, the Company determined the carrying value exceeded the estimated fair value of those assets and recognized a $ 9.4 million impairment charge.

During the fiscal year ended March 31, 2023, the Company sold all outstanding common stock, which included all properties, of the idled companies in Tanzania for $ 8.5 million.

During the fiscal year ended March 31, 2022, the Company also incurred $ 2.2 million of termination costs for the Tobacco Operations segment.

During the fiscal year ended March 31, 2024, the Company incurred $ 1.8 million of restructuring and impairment costs for its Global Laboratory Services, Inc (“GLS”) facility in Wilson, NC.

GLS provided testing for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors, and had capabilities for testing non-tobacco products.

The restructuring and impairment costs were net of approximately $ 0.2 million of income from the sale of GLS processes and procedures to a third-party buyer.

Additionally, during the fiscal year ended March 31, 2024, the Company also incurred $ 1.7 million of termination and impairment costs in other areas of the Tobacco Operations segment.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Ingredients Operations

During the fiscal year ended March 31, 2022, 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 incurred during the fiscal years ended March 31, 2025, 2024, and 2023 is as follows:

23 unchanged sentences

Balance at March 31, 2025 $ 2,935 $ 271 $ 3,206

Universal continually reviews its business for opportunities to realize efficiencies, reduce costs, and realign its operations in response to business changes.

Universal regularly reviews its business for opportunities to realize efficiencies, reduce costs, and realign its operations in response to business changes.

The Company may incur additional restructuring and impairment costs in future periods as business changes occur and additional cost savings initiatives are implemented.

22 unchanged sentences

$ 3.78 $ 4.78 $ 4.97

I NCOME TAXES

The Company operates in the United States and many foreign countries and is subject to the tax laws of many jurisdictions.

2 unchanged sentences

For fiscal years ended March 31, 2025, 2024, and 2023 the Company’s U.S.

federal statutory tax rate is 21.0 %.

federal statutory tax rate was 21.0 %.

tax system is primarily territorial based after the enactment of the Tax Cuts and Jobs Act of 2017.

6 unchanged sentences

It is not practicable for the Company to quantify any deferred income tax liability that would be attributable to those events.

In various countries in which the Company operates, legislation has been enacted incorporating the Organization for Economic Cooperation and Development’s Global Anti-Base Erosion Pillar Two model rules establishing a 15% global minimum tax.

In certain countries this legislation became effective at the beginning of fiscal year 2025.

The estimated tax impact of such legislation has been included in the provision for income taxes and is not material.

Like GILTI, this is treated as a period cost and does not have any additional deferred taxes related to these new laws.

UNIVERSAL CORPORATION

35 unchanged sentences

The affirmative ruling also resulted in recognition of $ 5.0 million of interest income for the fiscal year ended March 31, 2023.

The tax credits and associated interest income credits are being used to reduce federal non-income tax liabilities through the end of calendar year 2027.

The tax credits were recognized as both current and noncurrent assets on the consolidated balance sheet based on when the credits are expected to be realized.

Additionally, any unused tax credits will earn tax-exempt interest income through the expiration date, which can be used to reduce both non-income tax and income tax liabilities.

The Brazilian federal tax authority has formally acknowledged the tax credits and related interest credits to be used by one of the Company's Brazilian subsidiaries.

The tax credits and associated interest income credits were used to reduce federal non-income tax liabilities through the end of fiscal year 2025 and were exhausted as of March 31, 2025.

The tax credits were recognized as both current and noncurrent assets on the consolidated balance sheet based on when the credits were expected to be realized.

Additionally, the unused tax credits earned tax-exempt interest income through the utilization date, which were used to reduce both non-income tax and income tax liabilities.

The ruling resulted in a net income tax benefit of $ 24.2 million in fiscal year 2023.

The net income tax benefit included a $ 2.4 million income tax provision for U.S.

federal income taxes related to the fiscal year 2018 consolidated federal tax return that will need to be amended.

The Company sold its idled Tanzania operations and recognized $ 1.1 million of income taxes in the fiscal year ended March 31, 2023.

The net income tax benefit of the Brazil tax ruling resulted in a $ 2.4 million income tax provision for U.S.

federal income taxes related to the fiscal year 2018 consolidated federal tax return.

Additionally, the Company sold its idled Tanzania operations and recognized $ 1.1 million of income taxes in the fiscal year ended March 31, 2023.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In fiscal year 2022, the Company recognized a $ 1.7 million benefit related to a final tax law ruling at a foreign subsidiary.

Components of Income Before Income Taxes

21 unchanged sentences

Local currency exchange losses of foreign subsidiaries 4,466 2,075

Interest expense limitation carryforward 6,369 1,434

Foreign tax credit carryforward 8,795 8,196

29 unchanged sentences

The $ 1.7 million settlement in fiscal year 2023 represents the resolution of a tax matter with a foreign tax authority.

The $ 0.8 million settlement in fiscal year 2022 represents the resolution of a tax matter with a local country taxing authority.

The Company accrued $ 0.5 million of the fiscal year 2022 settlement in prior fiscal years.

For fiscal year ended March 31, 2023, the Company recognized $ 1.8 million as a reduction to interest expense related to an uncertain tax position on the Tanzania operations that were sold in fiscal year 2023.

Amounts accrued or reversed for interest were not material for fiscal years 2024 and 2022.

Amounts accrued or reversed for penalties were not material for fiscal years 2024 through 2022, and liabilities recorded for penalties at March 31, 2024 and 2023 also were not material.

Amounts accrued or reversed for interest and penalties were not material for fiscal years 2023 through 2025, and liabilities recorded for penalties at March 31, 2025 and 2024 were also not material.

Universal and its subsidiaries file a U.S.

1 unchanged sentence

states and a number of foreign jurisdictions.

As of March 31, 2024, the Company's earliest open tax year for U.S.

federal income tax purposes was its fiscal year ended March 31, 2018.

Open tax years in U.S.

Federal, state, and foreign jurisdictions range from 3 to 6 years.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

There is an exception for the Company’s U.S.

Federal fiscal year 2018 tax return due to the election on the amended return that extended the statute to 30 years.

GOODWILL AND OTHER INTANGIBLES

5 unchanged sentences

Balance at end of year $ 213,840 $ 213,869

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

23 unchanged sentences

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

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2025, the expected future amortization expense for intangible assets is as follows:

2025 $ 11,073

2030 and thereafter 24,909

2 unchanged sentences

Bank Credit Agreement

On December 15, 2022, the Company entered into a senior unsecured bank credit agreement that included a $ 530 million five-year revolving credit facility (expiring December 15, 2027), a $ 275 million five-year term loan (due December 15, 2027), and a $ 345 million seven-year term loan (due December 15, 2029).

The Company has a senior unsecured bank credit agreement that includes a $ 530 million five-year revolving credit facility (expiring December 15, 2027), a $ 275 million five-year term loan (due December 15, 2027), and a $ 345 million seven-

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

year term loan (due December 15, 2029).

Borrowings under the revolving credit facility bear interest at a variable rate benchmarked to the Secured Overnight Financing Rate (“SOFR”), plus a margin that is based on the Company’s credit measures.

4 unchanged sentences

The credit agreement includes financial covenants that require the Company to maintain a minimum level of tangible net worth and observe limits on debt levels.

The Company was in compliance with those covenants at March 31, 2024.

The Company was in compliance with these financial covenants at March 31, 2025.

Short-Term Credit Facilities

11 unchanged sentences

Long-term debt $ 617,918 $ 617,364

As discussed in Note 8, on December 15, 2022, the Company entered into a bank credit agreement that included a $ 275 million five-year term loan and a $ 345 million seven-year term loan.

As discussed in Note 7, the Company has a bank credit agreement that includes a $ 275 million five-year term loan and a $ 345 million seven-year term loan.

Both term loans were fully funded at closing, require no amortization, and are repayable without penalty prior to maturity.

4 unchanged sentences

With the swap agreements in place, the effective interest rates on the swapped portions of the five-year and seven-year term loans were 5.50 % and 5.65 % at March 31, 2025, respectively.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The weighted average effective interest rates, when taking into consideration both the swapped and unswapped interest payments for all outstanding long-term debt, were 5.96 % and 6.16 % at March 31, 2025 for the five-year and seven-year term loans, respectively.

1 unchanged sentence

Disclosures about the fair value of long-term debt are provided in Note 11.

Shelf Registration

In November 2023, the Company filed an undenominated automatic universal shelf registration statement with the U.S.

Securities and Exchange Commission to provide for the future issuance of an undefined amount of additional debt or equity securities as determined by the Company and offered in one or more prospectus supplements prior to issuance.

The Company, as a lessee, enters into operating leases for land, buildings, equipment, and vehicles.

2 unchanged sentences

If a lease contains a renewal option that the Company is reasonably certain to exercise, the Company accounts for the original lease term and expected renewal term in the calculation of the lease liability and right-of-use asset.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

13 unchanged sentences

(1) Includes variable operating lease costs.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

17 unchanged sentences

6.92 % 6.10 % 5.93 %

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DERIVATIVES AND HEDGING ACTIVITIES

11 unchanged sentences

Those swap agreements, which had an aggregate notional amount of $ 370 million corresponding to a portion of the principal balance on the repaid loans, were terminated concurrent with the inception of the new swap agreements.

The fair value of the previous swap agreements, approximately $ 11.8 million, was received from the counterparties upon termination and

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

is being amortized from accumulated other comprehensive loss into earnings as a reduction of interest expense through the original maturity dates of those agreements.

In February 2019, the Company had receive-floating/pay-fixed interest rate swap agreements that were designated and qualified as cash flow hedges for the two non-amortizing bank loans that were repaid in December 2018 and carried over to hedge the variable interest payments for the two non-amortizing bank loans that were repaid in December 2022.

Those swap agreements were terminated in February 2019.

The fair value of the two swap agreements terminated in February 2019, approximately $ 5.4 million, was received in February 2019 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 March 31, 2024, the entire deferred gain has been amortized.

The fair value of the previous swap agreements, approximately $ 11.8 million, was received from the counterparties upon termination and is being amortized from accumulated other comprehensive loss into earnings as a reduction of interest expense through the original maturity dates of those agreements.

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

11 unchanged sentences

These hedging strategies have been used mainly for tobacco purchases, processing costs, and sales of crop inputs in Brazil, although the Company has also entered into hedges for a portion of the tobacco purchases in Africa.

Additionally, the Company initiated a strategy in Brazil and Mexico to hedge a portion of the forecasted local currency-denominated operating costs in fiscal year 2025 by entering into derivative contracts to buy the local currencies and sell the U.S.

The aggregate U.S.

4 unchanged sentences

Processing costs 16.9 4.9 9.7

Operating costs 28.9 — —

Crop input sales 31.1 30.1 35.2

Total $ 185.7 $ 65.3 $ 92.0

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

8 unchanged sentences

Crop input sales 2025 Brazil 2026

Forward contracts related to processing costs have not been designated as hedges, and gains and losses on those contracts have been recognized in earnings on a mark-to-market basis.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Crop input sales 2024 Brazil 2026

Forward contracts related to processing and operating costs have not been designated as hedges, and gains and losses on those contracts have been recognized in earnings on a mark-to-market basis.

Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Net Local Currency Monetary Assets and Liabilities of Foreign Subsidiaries

53 unchanged sentences

For the outstanding 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, as well as the crop input sales in Brazil, a net hedge loss of approximately $ 0.1 million remained in accumulated other comprehensive loss at March 31, 2024.

That balance reflects gains and losses on contracts related to the 2023 Brazil crops and the 2025 and 2024 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through March 31, 2024.

For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases and crop input sales in Brazil, a net hedge loss of approximately $ 6.0 million remained in accumulated other comprehensive loss at March 31, 2025.

That balance reflects gains and losses on contracts related to the purchase of 2025 Brazil crops and the 2026, 2025, and 2024 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through March 31, 2025.

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.

62 unchanged sentences

Trading securities associated with deferred compensation plans — 12,409 — — 12,409

Interest rate swap agreements — — 6,706 — 6,706

Forward foreign currency exchange contracts — — 322 — 322

Total financial assets measured and reported at fair value $ 145 $ 12,409 $ 7,028 $ — $ 19,582

Interest rate swap agreements $ — $ — $ 3,077 $ — $ 3,077

Forward foreign currency exchange contracts $ — $ — $ 21 $ — $ 21

33 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.

Consolidation of tobacco sheet operations

As discussed in Note 3, during fiscal year 2025, the Company initiated a plan to consolidate the European Sheet tobacco operations into the Company’s facility in the Netherlands.

The Company is in the process of winding down its operations in Germany, resulting in an impairment charge of $ 4.9 million for the long-lived assets in the three-month period ended September 30, 2024, to reduce their carrying value to fair value.

The long-lived assets primarily consist of a processing facility, machinery and equipment, and administrative offices.

As part of the wind-down, the Company also recognized other impairment charges associated with inventory, certain accounts receivable and other assets during the three-month period ended September 30, 2024.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

5 unchanged sentences

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

employees and

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

retirees who have attained specific age and service levels, although postretirement life insurance benefits were discontinued in fiscal year 2015 for all employees who were not already retired.

employees and retirees who have attained specific age and service levels, although postretirement life insurance benefits were discontinued in fiscal year 2015 for all employees who were not already retired.

The health benefits are funded by the Company as the costs of those benefits are incurred.

42 unchanged sentences

Foreign currency exchange rate changes ( 146 ) ( 298 ) ( 325 ) 30

Settlements ( 46,714 ) — — —

Other 232 2,197 247 589

5 unchanged sentences

Employer contributions 3,290 4,257 2,083 1,794

Settlements ( 46,714 ) — — —

Foreign currency exchange rate changes ( 142 ) ( 235 ) — —

35 unchanged sentences

Expected return on plan assets ( 14,874 ) ( 15,504 ) ( 13,630 ) ( 53 ) ( 63 ) ( 76 )

Settlement cost 14,101 — — — — —

Net amortization and deferral 15 659 2,038 ( 662 ) ( 791 ) ( 737 )

1 unchanged sentence

A one-percentage-point increase or decrease in the assumed healthcare cost trend rate would not result in a significant change to the March 31, 2025 APBO or the aggregate service and interest cost components of the net periodic postretirement benefit expense for fiscal year 2026.

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.

The non-cash pension settlement charge of $ 14.1 million was recognized in the Company’s consolidated statements of income for the fiscal year ended March 31, 2025.

UNIVERSAL CORPORATION

10 unchanged sentences

Losses (gains) arising during the year 893 107 ( 221 ) 377

Settlement ( 14,101 ) — — —

Amortization included in net periodic benefit cost during the year ( 170 ) ( 793 ) 658 786

19 unchanged sentences

The assumed long-term rate of return used to calculate annual benefit expense is based on the asset allocation and expected market returns for the respective asset classes.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The weighted–average target pension asset allocation and target ranges at the March 31, 2025 measurement date and the actual asset allocations at the March 31, 2025 and 2024 measurement dates by major asset category were as follows:

8 unchanged sentences

(1) Actual amounts include high yield securities and cash balances held for the payment of benefits.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Universal makes regular contributions to its pension and other postretirement benefit plans.

33 unchanged sentences

Real estate assets are valued using valuation models that incorporate income and market approaches, including external appraisals, to derive fair values.

The hedge fund allocation is a fund of hedge funds and is valued by the manager based on the NAV of each fund.

The hedge fund allocation is a fund of hedge funds

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and is valued by the manager based on the NAV of each fund.

These models use significant unobservable inputs and are classified as Level 3 within the fair value hierarchy.

7 unchanged sentences

Total investments $ 149,079 $ — $ 21,952 $ 171,031

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2024

9 unchanged sentences

Amounts charged to expense for these plans were approximately $ 5.2 million for fiscal year 2025, $ 4.3 million for fiscal year 2024, and $ 3.4 million for fiscal year 2023.

COMMON AND PREFERRED STOCK

CAPITAL STOCK

At March 31, 2025, the Company’s shareholders had authorized 100,000,000 shares of its common stock, and 24,715,625 shares were issued and outstanding.

7 unchanged sentences

Share Repurchase Programs

Universal’s Board of Directors has authorized programs to repurchase outstanding shares of the Company’s capital stock (common and preferred stock).

Universal’s Board of Directors has authorized programs to repurchase outstanding shares of the Company’s common stock.

Under these programs, the Company has made and may continue to make share repurchases from time to time in the open market or in privately negotiated transactions at prices not exceeding prevailing market rates.

1 unchanged sentence

The current program, which replaced an expiring program, was authorized and became effective on November 7, 2024.

It authorizes the purchase of up to $ 100 million of the Company's outstanding common stock and expires on the earlier of November 15, 2024, or when the funds authorized for the program have been exhausted.

It authorizes the purchase of up to $ 100 million of the Company’s outstanding common stock and expires on November 15, 2026.

At March 31, 2025, $ 100 million of the authorization remained available for share repurchases under the current program.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Repurchases of common stock under the programs for fiscal years 2025, 2024, and 2023 were as follows:

6 unchanged sentences

Executive Stock Plans

The Company’s shareholders have approved executive stock plans under which officers, directors, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”), stock appreciation rights (“SARs”), incentive stock options, and non-qualified stock options.

The Company’s shareholders have approved executive stock plans under which directors, officers, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”), stock appreciation rights (“SARs”), incentive stock options, and non-qualified stock options.

Currently, grants are outstanding under the 1997 Executive Stock Plan, the 2002 Executive Stock Plan, the 2007 Stock Incentive Plan, the 2017 Stock Incentive Plan, and the 2023 Stock Incentive Plan.

1 unchanged sentence

New awards may no longer be issued under the 1997, 2002, 2007, and 2017 Plans.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s practice is to award grants of stock-based compensation to officers at the first regularly-scheduled meeting of the Compensation Committee of the Board of Directors (the “Compensation Committee”) in the fiscal year following the public release of the Company’s financial results for the prior fiscal year.

The Company’s practice is to award grants of stock-based compensation to officers at the first regularly-scheduled meeting of the Compensation and Human Resources Committee of the Board of Directors (the “Compensation Committee”) in the fiscal year following the public release of the Company’s financial results for the prior fiscal year.

The Compensation Committee administers the Plan consistently, following previously defined guidelines.

In recent years, the Compensation Committee has awarded only grants of RSUs and PSUs.

7 unchanged sentences

Additionally, restricted stock vests upon the individual’s retirement from service as a director.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

RSUs, Restricted Stock, and PSUs

25 unchanged sentences

Fair value expense for stock-based compensation is recognized ratably over the period from grant date to the earlier of (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 the award is recognized as expense at the date of

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

For the fiscal years ended March 31, 2025, 2024, and 2023, total stock-based compensation expense and the related income tax benefit recognized were as follows:

4 unchanged sentences

At March 31, 2025, the Company had $ 2.7 million of unrecognized compensation expense related to stock-based awards, which will be recognized over a weighted-average period of approximately 0.9 years.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS

2 unchanged sentences

Primarily with the farmer contracts in Brazil, Malawi, Mozambique, the Philippines, Guatemala, and Mexico, the Company provides seasonal financing to support the farmers’ production of their crops.

At March 31, 2024, the Company had contracts to purchase approximately $ 642 million of tobacco to be delivered during the coming fiscal year and $ 189 million of tobacco to be delivered in subsequent years.

At March 31, 2025, the Company had contracts to purchase approximately $ 759 million of tobacco to be delivered during fiscal year 2026 and $ 167 million of tobacco to be delivered in subsequent years.

These amounts are estimates since actual quantities purchased will depend on crop yields, and prices will depend on the quality of the tobacco delivered and other market factors.

8 unchanged sentences

In Brazil, VAT is assessed at the state level when green tobacco is transferred between states.

The Company's operating subsidiary there pays VAT when tobaccos grown in the states of Santa Catarina and Parana are transferred to its factory in the state of Rio Grande do Sul for processing.

The subsidiary received assessments for additional VAT plus interest and penalties from the tax authorities for the states of Santa Catarina and Parana based on audits of the subsidiary's VAT filings for specified periods.

In June 2011, tax authorities for the state of Santa Catarina issued assessments for tax, interest, and penalties for periods from 2006 through 2009 totaling approximately $ 14 million.

In September 2014, tax authorities for the state of Santa Catarina issued a reduced assessment for tax, interest, and penalties for periods from 2009 through 2014.

The subsidiary contested the assessment through a variety of judicial hearings.

In March 2024, the subsidiary elected to participate in a voluntary state government sponsored program that significantly reduced the assessed penalties and interest.

The subsidiary's participation in the program resulted in the matter being settled for $ 5 million and eliminates any further litigation regarding the matter.

The Company’s operating subsidiary in Brazil pays VAT when tobaccos grown in the state of Parana are transferred to its factory in the state of Rio Grande do Sul for processing.

The subsidiary received assessments for additional VAT plus interest and penalties from the tax authorities for the state of Parana based on an audit of the subsidiary’s VAT filings for specified periods.

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 $ 10 million.

6 unchanged sentences

The new assessment totaled approximately $ 3 million at the March 31, 2025 exchange rate, reflecting a substantial reduction from the original $ 10 million assessment.

Notwithstanding the reduction, management and outside counsel continue to believe that the new

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

assessment is not supported by the underlying statutes and relevant case law and have challenged the full amount of the claim.

Notwithstanding the reduction, 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.

8 unchanged sentences

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 measures business performance and allocates resources.

Assessments include an analysis of how its

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

2 unchanged sentences

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 increasingly used in the manufacture of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible 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.

3 unchanged sentences

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

FruitSmart, Silva, and Shank's are the primary operations for the Ingredients Operations segment.

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.

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.

Shank's is also equipped to offer customers custom bottling and packaging for their products.

Universal incurs 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.

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 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.

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.

UNIVERSAL CORPORATION

1 unchanged sentence

Reportable segment data as of, or for, the fiscal years ended March 31, 2025, 2024, and 2023, is as follows:

Sales and Other Operating Revenues Operating Income

Fiscal Year Ended March 31, Fiscal Year Ended March 31,

Fiscal Year Ended March 31, 2025 Fiscal Year Ended March 31, 2024 Fiscal Year Ended March 31, 2023

Tobacco Operations Ingredients Operations Consolidated 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 $ 2,258,260 $ 311,564 $ 2,569,824

Cost of goods sold ( 2,133,063 ) ( 265,564 ) ( 2,398,627 ) ( 1,975,955 ) ( 236,520 ) ( 2,212,475 ) ( 1,871,606 ) ( 239,933 ) ( 2,111,539 )

Selling, general and administrative expenses ( 179,340 ) ( 48,610 ) ( 227,950 ) ( 179,569 ) ( 56,624 ) ( 236,193 ) ( 163,721 ) ( 49,557 ) ( 213,278 )

Corporate overhead allocated to the segments ( 65,195 ) ( 12,142 ) ( 77,337 ) ( 61,655 ) ( 12,718 ) ( 74,373 ) ( 52,427 ) ( 11,508 ) ( 63,935 )

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

9,103 — 9,103 756 — 756 2,383 — 2,383

Tobacco Operations $ 2,438,775 $ 2,258,260 $ 1,835,790 $ 222,352 $ 172,889 $ 157,754

Ingredients Operations 309,798 311,564 267,811 3,936 10,566 16,581

Subtotal 2,748,573 2,569,824 2,103,601 226,288 183,455 174,335

Equity in pretax earnings of unconsolidated affiliates (1)

Segment operating income 240,180 12,293 252,473 222,352 3,936 226,288 172,889 10,566 183,455

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

( 9,103 ) ( 756 ) ( 2,383 )

1 unchanged sentence

( 10,573 ) ( 3,523 ) —

Other income (3)

Consolidated total $ 2,748,573 $ 2,569,824 $ 2,103,601 $ 222,009 $ 181,072 $ 160,315

Consolidated operating income $ 232,797 $ 222,009 $ 181,072

(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) Restructuring and impairment costs are excluded from reportable segment operating income, but are included in consolidated operating income in the consolidated statements of income (see Note 3).

Segment Assets Accounts Receivable, net

17 unchanged sentences

Consolidated total $ 62,601 $ 66,013 $ 54,674 $ 59,773 $ 58,326 $ 57,300

(2) Restructuring and impairment costs are excluded from reportable segment operating income, but are included in consolidated operating income in the consolidated statements of income (see Note 4) .

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

UNIVERSAL CORPORATION

6 unchanged sentences

2025 2024 2023

Belgium $ 552,208 $ 395,616 $ 283,072

United States $ 622,325 $ 547,923 $ 530,467

Belgium 532,479 552,208 395,616

China 293,619 219,979 204,139

Egypt 143,527 18,892 19,465

Philippines 120,648 133,656 149,867

Germany 115,938 95,350 108,844

Indonesia 105,934 117,019 45,089

Poland 99,845 97,723 119,629

Germany 95,350 108,844 93,057

Netherlands 37,501 42,492 51,843

50 unchanged sentences

( 1,008 ) ( 430 ) 1,947

Recognition of net actuarial loss for pension settlement, (net of tax benefit of $(3,257)) (4)

Amortization included in earnings (net of tax benefit of $ 158 , $ 339 , and $ 223 ) (5)

5 unchanged sentences

See Note 10 for additional information.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Gain (loss) on interest rate cash flow hedges is reclassified from accumulated other comprehensive income (loss) to interest expense when the related interest payments are made on the debt for open interest rate swap agreements or as amortized to interest expense over the period to original maturity for terminated swap agreements.

3 unchanged sentences

See Note 12 for additional information.

(4) The Company purchased a non-participating annuity for a limited group of retirees currently receiving benefit payments in the Company’s qualified domestic defined benefit plan.

The transaction triggered settlement accounting that required immediate recognition of a portion of the accumulated other comprehensive losses associated with the qualified defined benefit plan.

See Note 12 for additional information .

(5) This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost.

6 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 29, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 30, 2025 expressed an adverse opinion thereon.

Basis for Opinion

18 unchanged sentences

Management determined the allowance based on assumptions including the assessment of historical loss information and crop projections.

There is uncertainty associated with the assumptions used which could have a significant effect on the allowance estimate.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the allowance on the advances to tobacco suppliers.

For example, we tested controls over the supplier advance approval and Management’s review and approval of the models used to calculate the allowance.

Auditing Management’s estimate for the allowance on advances to tobacco suppliers was complex and involved subjective auditor judgment as the estimate relies on a number of factors that are affected by economic and environmental conditions outside the Company’s control, including but not limited to inclement weather and low crop yields, which could have a significant effect on the allowance estimate.

For example, we tested controls over Management’s review and approval of the models and assumptions used to estimate the allowance.

We also tested controls used by Management to evaluate the data used in making the estimates for completeness and accuracy.

1 unchanged sentence

For example, we compared historical loss information to Management’s estimate of projected crop yield and analyzed the sensitivity of significant assumptions to evaluate the changes in the allowance that would result from changes in the assumptions.

We analyzed subsequent events to identify potential sources of contrary information to Management’s assumptions.

We also analyzed subsequent events to identify potential sources of contrary information to Management’s assumptions.

Allowance for Recoverable Value-Added Tax (“VAT”) Credits

4 unchanged sentences

Some jurisdictions also permit companies to sell or transfer unused VAT credits to third parties in private transactions although the proceeds realized may be heavily discounted from the face value of the credits.

Management applied judgment in calculating the valuation allowance to estimate the credits that are not expected to be recovered.

Management applies judgment in calculating the valuation allowance to estimate the credits that are not expected to be recovered.

Auditing Management’s estimate of the VAT allowance was complex and involved a high degree of subjectivity as the estimate relies on a number of factors including interpretations of applicable tax laws and regulations as well as economic and political conditions outside the Company’s control.

There is uncertainty associated with the assumptions used which could have a significant effect on the estimate.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the allowance on the VAT.

For example, we tested controls over Management’s review and approval of the models used in the allowance and the completeness and accuracy of the data inputs and outputs used in the calculation.

There is uncertainty associated with the significant assumptions, including expected loss rates, which could have a significant effect on the estimate.

For example, we tested controls over Management’s review and approval of the models used in the allowance and the completeness and accuracy of the data used in the calculation.

To test the VAT allowance estimate, our audit procedures included, among others, evaluating the significant assumptions used to estimate the VAT allowance and assessing the historical accuracy of Management’s estimates.

For example, we evaluated whether the historical loss of credits used in Management’s calculation was representative of the current collectability of the credits.

We analyzed the sensitivity of significant assumptions to evaluate the changes in the allowance that that would result from changes in the assumptions and we considered subsequent events to identify potential sources of contrary information to Management’s assumptions.

For example, we evaluated whether the historical loss rates of VAT credits used in Management’s calculation was representative of the current expected loss rates of the VAT credits.

We analyzed the sensitivity of significant assumptions to evaluate the changes in the allowance that would result from changes in the assumptions and we considered subsequent events to identify potential sources of contrary information to Management’s assumptions.

/s/ Ernst & Young LLP

2 unchanged sentences

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm,

on Internal Control Over Financial Reporting

To the Shareholders and the Board of Directors of Universal Corporation

1 unchanged sentence

We have audited Universal Corporation’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Universal Corporation, (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 and our report dated May 29, 2024 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Universal Corporation (the Company) has not maintained effective internal control over financial reporting as of March 31, 2025, based on the COSO criteria.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in controls related to inventory, specifically controls related to the physical counts of inventory and the related inventory reconciliations at certain of its subsidiaries.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)2.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and this report does not affect our report dated May 30, 2025 which expressed an unqualified opinion thereon.

Basis for Opinion

17 unchanged sentences

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

For the three years ended March 31, 2024, there were no changes in independent auditors, nor were there any disagreements between the Company and its independent auditors on any matter of accounting principles, practices, or financial disclosures.

For the three years ended March 31, 2025, there were no changes in the Company’s independent registered public accounting firm, nor were there any disagreements between the Company and its independent registered public accounting firm on any matter of accounting principles, practices, or financial disclosures.

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-K

Item 8. Financial Statements and Supplementary Data