NOTE 15. OPERATING SEGMENTS

Universal's operations involve selecting, buying, 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, Special Services, and Oriental. 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. 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.

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 because they also have similar economic characteristics. North America is reported as an individual operating segment because its economic characteristics are dissimilar to the other regions, as its operations do not require significant working capital investments for crop financing and inventory, and toll processing is an important source of its operating income. The Dark Air-Cured, Special Services and Oriental segments, which have dissimilar characteristics in some of the categories mentioned above, are reported 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 (excluding significant non-recurring charges or credits), plus equity in the pretax earnings of unconsolidated affiliates.

Reportable segment data as of or for the fiscal years ended March 31, 2011, 2010, and 2009, is as follows:

	Sales and Other Operating Revenues						Operating Income
	Fiscal Year Ended March 31,						Fiscal Year Ended March 31,
	2011		2010		2009		2011			2010			2009
Flue-cured and burley leaf tobacco operations:
North America	$	340,366	$	357,195	$	416,899	$	59,278		$	57,006		$	48,010
Other Regions (1)		1,944,410		1,895,829		1,848,430		169,989			182,513			140,476
Subtotal		2,284,776		2,253,024		2,265,329		229,267			239,519			188,486
Other Tobacco Operations (2)		286,751		238,714		289,330		28,658			40,066			41,989
Segment total		2,571,527		2,491,738		2,554,659		257,925			279,585			230,475
Deduct:
Equity in pretax earnings of unconsolidated affiliates (3)								(8,634	)		(22,376	)		(20,543	)
Restructuring and impairment costs (4)								(21,504	)		—			—
Add:
Other income (4)								19,368			—			—
Reversal of European Commission fines (4)								7,445
Consolidated total	$	2,571,527	$	2,491,738	$	2,554,659	$	254,600		$	257,209		$	209,932

	Segment Assets						Goodwill
	March 31,						March 31,
	2011		2010		2009		2011		2010		2009
Flue-cured and burley leaf tobacco operations:
North America	$	289,950	$	362,008	$	295,908	$	—	$	—	$	—
Other Regions (1)		1,612,558		1,649,349		1,535,736		96,543		102,224		102,462
Subtotal		1,902,508		2,011,357		1,831,644		96,543		102,224		102,462
Other Tobacco Operations (2)		325,359		359,683		306,532		1,713		1,713		1,713
Segment and consolidated totals	$	2,227,867	$	2,371,040	$	2,138,176	$	98,256	$	103,937	$	104,175

	Depreciation and Amortization						Capital Expenditures
	Fiscal Year Ended March 31,						Fiscal Year Ended March 31,
	2011		2010		2009		2011		2010		2009
Flue-cured and burley leaf tobacco operations:
North America	$	11,866	$	11,953	$	10,926	$	3,080	$	12,105	$	3,215
Other Regions (1)		28,541		26,710		27,866		34,324		31,283		25,595
Subtotal		40,407		38,663		38,792		37,404		43,388		28,810
Other Tobacco Operations (2)		4,865		4,833		2,998		1,725		14,189		6,846
Segment and consolidated totals	$	45,272	$	43,496	$	41,790	$	39,129	$	57,577	$	35,656

(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. Oriental does not contribute significantly to the reported amounts for sales and other operating revenues, goodwill, depreciation and amortization, or capital expenditures because its financial results consist principally of equity in the pretax earnings of an unconsolidated affiliate. The investment in the unconsolidated affiliate is included in segment assets and was approximately $110.8 million, $101.4 million, and $98.8 million, at March 31, 2011, 2010, and 2009, respectively.

(3)	Item is included in segment operating income, but is not included in consolidated operating income.

(4)	Item is not included in segment operating income, but is included in consolidated operating income.

Geographic data as of, or for, the fiscal years ended March 31, 2011, 2010, and 2009, is presented below. Sales and other operating revenues are attributed to individual countries based on the final destination of the shipment. Long-lived assets consist of net property, plant, and equipment, goodwill, other intangibles, and certain other non-current assets.

Geographic Data
	Sales and Other Operating Revenues
	Fiscal Year Ended March 31,
	2011		2010		2009
United States	$	340,313	$	305,390	$	370,182
Belgium		345,774		469,067		527,807
Germany		267,087		199,768		187,957
All other countries		1,618,353		1,517,513		1,468,713
Consolidated total	$	2,571,527	$	2,491,738	$	2,554,659

	Long-Lived Assets
	Fiscal Year Ended March 31,
	2011		2010		2009
United States	$	91,760	$	103,548	$	96,667
Brazil		141,535		156,961		158,591
Mozambique		53,854		50,045		48,679
All other countries		129,100		126,071		115,067
Consolidated total	$	416,249	$	436,625	$	419,004