Operating Segments

12 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Operating Segments

OPERATING SEGMENTS

Universal’s operations 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. Through various operating subsidiaries located in tobacco-growing countries around the world and significant ownership interests in unconsolidated affiliates, the Company processes and/or sells flue-cured and burley tobaccos, dark air-cured tobaccos, and oriental tobaccos. 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. A substantial portion of the Company’s revenues are derived from sales to a limited number of large, multinational cigarette manufacturers.

The principal approach used by management to evaluate the Company’s performance is by geographic region, although the dark air-cured and oriental tobacco businesses are each evaluated on the basis of their worldwide operations. Oriental tobacco operations consist principally of a 49% interest in an affiliate, and the performance of those operations is evaluated based on the Company’s equity in the pretax earnings of that affiliate. Under this structure, the Company has the following primary operating segments: North America, South America, Africa, Europe, Asia, Dark Air-Cured, Oriental, and Special Services. North America, South America, Africa, Europe, and Asia are primarily involved in flue-cured and/or burley leaf tobacco operations for supply to cigarette manufacturers. The Dark Air-Cured group supplies dark air-cured tobacco principally to manufacturers of cigars, pipe tobacco, and smokeless tobacco products, and the Oriental business supplies oriental tobacco to cigarette manufacturers. From time to time, the segments may trade in tobaccos that differ from their main varieties, but those activities are not significant to their overall results. Special Services includes the Company's laboratory services business, which provides physical and chemical product testing and smoke testing for customers, as well as its liquid nicotine joint venture and its food and vegetable ingredients business.

The five regional operating segments serving the Company’s cigarette manufacturer customer base share similar characteristics in the nature of their products and services, production processes, class of customer, product distribution methods, and regulatory environment. Based on the applicable accounting guidance, four of the regions – South America, Africa, Europe, and Asia – are aggregated into a single reporting segment, “Other Regions”, because they also have similar economic characteristics. North America is reported as an individual operating segment because its economic characteristics differ from the other regions, generally because its operations require lower working capital investments for crop financing and inventory. The Dark Air-Cured, Oriental and Special Services segments, which have dissimilar characteristics in some of the categories mentioned above, are reported together as “Other Tobacco Operations” because each is below the measurement threshold for separate reporting.

Universal incurs overhead expenses related to senior management, 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 allocated to the various operating segments, generally on the basis of tobacco volumes planned to be purchased and/or processed. Management believes this method of allocation is representative of the value of the related services provided to the operating segments. The Company evaluates the performance of its segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates.

Reportable segment data as of, or for, the fiscal years ended March 31, 2014, 2013, and 2012, is as follows:

	Sales and Other Operating Revenues						Operating Income
	Fiscal Year Ended March 31,						Fiscal Year Ended March 31,
	2014		2013		2012		2014			2013			2012
Flue-cured and burley leaf tobacco operations:
North America	$	348,627	$	334,676	$	314,248	$	23,217		$	19,740		$	30,037
Other Regions(1)	1,932,228		1,871,880		1,893,388		133,447			192,556			180,670
Subtotal	2,280,855		2,206,556		2,207,636		156,664			212,296			210,707
Other Tobacco Operations(2)	261,260		255,143		239,241		18,511			20,461			12,841
Segment total	2,542,115		2,461,699		2,446,877		175,175			232,757			223,548
Deduct:
Equity in pretax earnings of unconsolidated affiliates(3)							(3,897		)	(5,635		)	(3,195		)
Restructuring costs(4)							(6,746		)	(4,113		)	(11,661		)
Charge for European Commission fines (4)							—			—			(49,091		)
Add:
Other income(5)							81,619			—			20,703
Consolidated total	$	2,542,115	$	2,461,699	$	2,446,877	$	246,151		$	223,009		$	180,304
	Segment Assets						Goodwill
	March 31,						March 31,
	2014		2013		2012		2014			2013			2012
Flue-cured and burley leaf tobacco operations:
North America	$	277,028	$	295,785	$	256,546	$	—		$	—		$	—
Other Regions(1)	1,677,654		1,682,581		1,712,970		97,367			96,667			96,564
Subtotal	1,954,682		1,978,366		1,969,516		97,367			96,667			96,564
Other Tobacco Operations(2)	316,225		327,789		297,403		1,713			1,713			1,713
Segment and consolidated totals	$	2,270,907	$	2,306,155	$	2,266,919	$	99,080		$	98,380		$	98,277
	Depreciation and Amortization						Capital Expenditures
	Fiscal Year Ended March 31,						Fiscal Year Ended March 31,
	2014		2013		2012		2014			2013			2012
Flue-cured and burley leaf tobacco operations:
North America	$	6,018	$	11,017	$	10,201	$	2,676		$	2,459		$	438
Other Regions(1)	29,044		30,118		29,475		37,584			24,886			32,059
Subtotal	35,062		41,135		39,676		40,260			27,345			32,497
Other Tobacco Operations (2)	3,838		3,981		4,190		5,589			3,438			5,677
Segment and consolidated totals	$	38,900	$	45,116	$	43,866	$	45,849		$	30,783		$	38,174

⁽¹⁾  Includes South America, Africa, Europe, and Asia regions, as well as inter-region eliminations.

⁽²⁾  Includes Dark Air-Cured, Oriental, and Special Services, as well as inter-company eliminations. Sales and other operating revenues, goodwill, depreciation and amortization, and capital expenditures include limited amounts or no amounts for Oriental because the business is accounted for on the equity method and its financial results consist principally of equity in the pretax earnings of the unconsolidated affiliate. The investment in the unconsolidated affiliate is included in segment assets and was approximately $93.3 million, $91.8 million, and $89.7 million, at March 31, 2014, 2013, and 2012, respectively.

⁽³⁾  Equity in pretax earnings of unconsolidated affiliates is included in segment operating income (Other Tobacco Operations segment), but is reported below consolidated operating income and excluded from that total in the consolidated statements of income.

⁽⁴⁾  Restructuring costs and the fiscal year 2012 charge for European Commission fines are excluded from segment operating income, but are included in consolidated operating income in the consolidated statements of income.

(5) Other income in fiscal year 2014 represents the gain on the favorable outcome of the IPI tax credit case in Brazil (See Note 14). Other income in fiscal year 2012 represents a gain on proceeds received from an insurance settlement for the replacement of factory and equipment lost in a fire at a plant in Europe, as well as a gain on the sale of land and buildings in Brazil. These gains are excluded from segment operating income, but included in consolidated operating income in the consolidated statements of income.

Geographic data as of, or for, the fiscal years ended March 31, 2014, 2013, and 2012, is presented below. Sales and other operating revenues are attributed to individual countries based on the final destination of the shipment. Long-lived assets generally consist of net property, plant, and equipment, goodwill, and other intangibles.

Geographic Data	Sales and Other Operating Revenues
	Fiscal Year Ended March 31,
	2014		2013		2012
United States	$	304,527	$	324,285	$	315,610
Belgium	218,550		203,539		210,425
China	210,956		229,112		210,436
Netherlands	208,031		174,481		164,504
Germany	173,872		128,144		210,791
All other countries	1,426,179		1,402,138		1,335,111
Consolidated total	$	2,542,115	$	2,461,699	$	2,446,877
	Long-Lived Assets
	March 31,
	2014		2013		2012
United States	$	61,347	$	64,235	$	75,330
Brazil	135,359		137,133		139,484
Mozambique	49,543		48,016		50,475
All other countries	149,750		137,132		137,169
Consolidated total	$	395,999	$	386,516	$	402,458