{"url_path":"/sec/uvv/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-01","source_url":"https://www.sec.gov/Archives/edgar/data/102037/0001628280-26-039511-index.html","accession_number":"0001628280-26-039511","cik":"0000102037","ticker":"UVV","issuer_name":"UNIVERSAL CORP /VA/","edgar_url":"https://www.sec.gov/Archives/edgar/data/102037/0001628280-26-039511-index.html","primary_entity_key":"0000102037","primary_entity_name":"UNIVERSAL CORP /VA/"},"word_count":22044,"has_tables":true,"body_markdown":"Item 8.  Financial Statements and Supplementary Data     \n\nUNIVERSAL CORPORATION\n\nCONSOLIDATED STATEMENTS OF INCOME\n\nFiscal Year Ended March 31,\n\n(in thousands of dollars, except share and per share data)202620252024\n\nSales and other operating revenues$2,924,470 $2,947,284 $2,748,573 \n\nCosts and expenses\n\nCost of goods sold2,412,454 2,398,627 2,212,475 \n\nSelling, general and administrative expenses300,671 305,287 310,566 \n\nRestructuring and impairment costs1,833 10,573 3,523 \n\nGoodwill impairment41,061 — — \n\nOperating income168,451 232,797 222,009 \n\nEquity in pretax earnings of unconsolidated affiliates3,430 9,103 756 \n\nPension settlement charge— 14,101 — \n\nOther non-operating income2,847 2,569 3,084 \n\nInterest income1,964 3,483 4,504 \n\nInterest expense74,040 79,636 66,273 \n\nIncome before income taxes102,652 154,215 164,080 \n\nIncome taxes46,657 40,946 31,109 \n\nNet income55,995 113,269 132,971 \n\nLess: net income attributable to noncontrolling interests in subsidiaries(23,358)(18,222)(13,373)\n\nNet income attributable to Universal Corporation$32,637 $95,047 $119,598 \n\nEarnings per share:\n\nBasic$1.30 $3.81 $4.81 \n\nDiluted$1.30 $3.78 $4.78 \n\nWeighted average common shares outstanding:\n\nBasic25,037,983 24,947,208 24,851,858 \n\nDiluted25,171,162 25,127,356 25,040,914 \n\nSee accompanying notes.\n\n42\n\nUNIVERSAL CORPORATION     \n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME\n\nFiscal Year Ended March 31,\n\n(in thousands of dollars)202620252024\n\nNet income$55,995 $113,269 $132,971 \n\nOther comprehensive income (loss):\n\nForeign currency translation, net of income taxes4,955 1,750 (1,531)\n\nForeign currency hedge, net of income taxes3,836 (4,298)(5,515)\n\nInterest rate hedge, net of income taxes(2,790)(5,654)3,235 \n\nPension and other postretirement benefit plans, net of income taxes368 9,310 (1,666)\n\nTotal other comprehensive income (loss), net of income taxes6,369 1,108 (5,477)\n\nTotal comprehensive income62,364 114,377 127,494 \n\nLess: comprehensive income attributable to noncontrolling interests(22,788)(17,796)(12,424)\n\nComprehensive income attributable to Universal Corporation$39,576 $96,581 $115,070 \n\nSee accompanying notes.\n\n43\n\nUNIVERSAL CORPORATION     \n\nCONSOLIDATED BALANCE SHEETS\n\nMarch 31,\n\n(in thousands of dollars)20262025\n\nASSETS\n\nCurrent assets\n\nCash and cash equivalents$62,178 $260,115 \n\nAccounts receivable, net563,864 625,876 \n\nAdvances to suppliers, net177,222 169,385 \n\nAccounts receivable—unconsolidated affiliates12,300 7,143 \n\nInventories—at lower of cost or net realizable value:\n\nTobacco832,360 806,332 \n\nOther203,537 189,610 \n\nPrepaid income taxes22,958 19,595 \n\nOther current assets97,278 78,041 \n\nTotal current assets1,971,697 2,156,097 \n\nProperty, plant and equipment\n\nLand26,249 26,113 \n\nBuildings333,416 333,398 \n\nMachinery and equipment759,654 723,935 \n\n1,119,319 1,083,446 \n\nLess accumulated depreciation(746,365)(710,472)\n\n372,954 372,974 \n\nOther assets\n\nOperating lease right-of-use assets37,272 34,260 \n\nGoodwill, net172,695 213,840 \n\nOther intangibles, net48,604 57,836 \n\nInvestments in unconsolidated affiliates82,287 79,317 \n\nDeferred income taxes15,636 16,539 \n\nPension asset16,542 12,819 \n\nOther noncurrent assets49,080 45,870 \n\n422,116 460,481 \n\nTotal assets$2,766,767 $2,989,552 \n\n44\n\nUNIVERSAL CORPORATION     \n\nCONSOLIDATED BALANCE SHEETS—(Continued)\n\nMarch 31,\n\n(in thousands of dollars)20262025\n\nLIABILITIES AND SHAREHOLDERS’ EQUITY\n\nCurrent liabilities\n\nNotes payable and overdrafts$287,564 $455,039 \n\nAccounts payable90,139 98,036 \n\nAccounts payable—unconsolidated affiliates510 1,999 \n\nCustomer advances and deposits3,376 3,763 \n\nAccrued compensation33,234 44,646 \n\nIncome taxes payable17,643 12,586 \n\nCurrent portion of operating lease liabilities11,172 10,742 \n\nAccrued expenses and other current liabilities120,603 123,350 \n\nCurrent portion of long-term debt— — \n\nTotal current liabilities564,241 750,161 \n\nLong-term debt616,727 617,918 \n\nPensions and other postretirement benefits35,471 35,336 \n\nLong-term operating lease liabilities24,359 20,608 \n\nOther long-term liabilities24,925 22,901 \n\nDeferred income taxes39,920 42,090 \n\nTotal liabilities1,305,643 1,489,014 \n\nShareholders’ equity\n\nUniversal Corporation:\n\nPreferred stock:\n\nSeries A Junior Participating Preferred Stock, no par value, 500,000 shares authorized,\n\nnone issued or outstanding\n— — \n\nCommon stock, no par value, 100,000,000 shares authorized, 24,923,496 shares issued\n\nand outstanding (24,715,625 at March 31, 2025)\n351,523 351,626 \n\nRetained earnings1,136,989 1,186,981 \n\nAccumulated other comprehensive loss(73,112)(80,051)\n\nTotal Universal Corporation shareholders' equity1,415,400 1,458,556 \n\nNoncontrolling interests in subsidiaries45,724 41,982 \n\nTotal shareholders' equity1,461,124 1,500,538 \n\nTotal liabilities and shareholders' equity$2,766,767 $2,989,552 \n\nSee accompanying notes.\n\n45\n\nUNIVERSAL CORPORATION     \n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\nFiscal Year Ended March 31,\n\n(in thousands of dollars)202620252024\n\nCash Flows From Operating Activities:\n\nNet income$55,995 $113,269 $132,971 \n\nAdjustments to reconcile net income to net cash provided by operating activities:\n\nDepreciation and amortization53,437 59,773 58,326 \n\nProvision for losses (recoveries) on advances6,258 1,938 14,090 \n\nInventory write-downs51,988 19,769 9,234 \n\nStock-based compensation expense7,115 8,531 12,063 \n\nForeign currency remeasurement loss (gain), net6,708 6,096 5,114 \n\nForeign currency exchange contracts(2,235)916 (365)\n\nDeferred income taxes(961)1,083 (5,404)\n\nEquity in net income of unconsolidated affiliates, net of dividends245 (3,031)(1,239)\n\nGoodwill impairment41,061 — — \n\nRestructuring and impairment costs1,833 10,573 3,523 \n\nRestructuring payments(3,308)(1,568)(1,181)\n\nPension settlement— 14,101 — \n\nOther, net106 1,406 1,001 \n\nChanges in operating assets and liabilities, net:\n\nAccounts receivable39,161 (129,988)(109,681)\n\nInventories(89,521)244,732 (236,243)\n\nOther assets(21,241)9,187 (768)\n\nAccounts payable(12,618)(8,700)20,806 \n\nAccrued expenses and other current liabilities(5,187)(10,269)8,414 \n\nIncome taxes971 2,003 342 \n\nCustomer advances and deposits(707)(12,847)14,365 \n\n  Net cash provided (used) by operating activities129,100 326,974 (74,632)\n\nCash Flows From Investing Activities:\n\nPurchase of property, plant and equipment(48,829)(62,601)(66,013)\n\nProceeds from sale of business, less cash of businesses sold— — 3,757 \n\nProceeds from sale of property, plant and equipment5,873 3,783 2,257 \n\n  Net cash used by investing activities(42,956)(58,818)(59,999)\n\nCash Flows From Financing Activities:\n\nIssuance (repayment) of short-term debt, net(170,069)37,696 223,000 \n\nIssuance of long-term debt89,130 — — \n\nRepayment of long-term debt(89,130)— — \n\nDividends paid to noncontrolling interests in subsidiaries(19,046)(17,530)(10,572)\n\nRepurchase of common stock— — (4,744)\n\nDividends paid on common stock(81,299)(79,686)(78,402)\n\nSettlement costs from termination of interest rate swap agreements(988)— — \n\nDebt issuance costs and other(12,941)(3,715)(3,607)\n\n  Net cash provided (used) by financing activities(284,343)(63,235)125,675 \n\nEffect of exchange rate changes on cash262 (399)(141)\n\nNet increase (decrease) in cash and cash equivalents(197,937)204,522 (9,097)\n\nCash, restricted cash and cash equivalents at beginning of year260,115 55,593 64,690 \n\nCash, Restricted Cash and Cash Equivalents at End of Year\n$62,178 $260,115 $55,593 \n\nSupplemental information—cash paid for:\n\nInterest$71,758 $75,285 $61,084 \n\nIncome taxes, net of refunds$43,117 $38,358 $38,084 \n\nSee accompanying notes.\n\n46\n\nUNIVERSAL CORPORATION\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY\n\n Universal Corporation Shareholders  \n\n(in thousands of dollars)Common\nStockRetained \nEarningsAccumulated\nOther\nComprehensive\nIncome\n(Loss)Non-\ncontrolling\nInterestsTotal\nShareholders'\nEquity\n\nFiscal Year Ended March 31, 2026     \n\nBalance at beginning of year$351,626 $1,186,981 $(80,051)$41,982 $1,500,538 \n\n Changes in common stock\n\nAccrual of stock-based compensation7,115 — — — 7,115 \n\nWithholding of shares from stock-based compensation for grantee income taxes(8,135)— — — (8,135)\n\nDividend equivalents on restricted stock units (RSUs)917 — — — 917 \n\nChanges in retained earnings\n\nNet income— 32,637 — 23,358 55,995 \n\nCash dividends declared on common stock ($3.28 per share)\n— (81,712)— — (81,712)\n\nDividend equivalents on restricted stock units (RSUs)— (917)— — (917)\n\nOther comprehensive income (loss)\n\nForeign currency translation, net of income taxes— — 5,525 (570)4,955 \n\nForeign currency hedge, net of income taxes— — 3,836 — 3,836 \n\nInterest rate hedge, net of income taxes— — (2,790)— (2,790)\n\nPension and other postretirement benefit plans, net of income taxes— — 368 — 368 \n\nOther changes in noncontrolling interests\n\nDividends paid to noncontrolling shareholders— — — (19,046)(19,046)\n\nBalance at end of year$351,523 $1,136,989 $(73,112)$45,724 $1,461,124 \n\n47\n\nUNIVERSAL CORPORATION\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY—(Continued)\n\n Universal Corporation Shareholders  \n\n(in thousands of dollars)Common\nStockRetained \nEarningsAccumulated\nOther\nComprehensive\nIncome\n(Loss)Non-\ncontrolling\nInterestsTotal\nShareholders'\nEquity\n\nFiscal Year Ended March 31, 2025     \n\nBalance at beginning of year$345,596 $1,173,196 $(81,585)$41,716 $1,478,923 \n\n Changes in common stock\n\nAccrual of stock-based compensation8,531 — — — 8,531 \n\nWithholding of shares from stock-based compensation for grantee income taxes(3,715)— — — (3,715)\n\nDividend equivalents on restricted stock units (RSUs)1,214 — — — 1,214 \n\nChanges in retained earnings\n\nNet income— 95,047 — 18,222 113,269 \n\nCash dividends declared on common stock ($3.24 per share)\n— (80,048)— — (80,048)\n\nDividend equivalents on restricted stock units (RSUs)— (1,214)— — (1,214)\n\nOther comprehensive income (loss)\n\nForeign currency translation, net of income taxes— — 2,176 (426)1,750 \n\nForeign currency hedge, net of income taxes— — (4,298)— (4,298)\n\nInterest rate hedge, net of income taxes— — (5,654)— (5,654)\n\nPension and other postretirement benefit plans, net of income taxes— — 9,310 — 9,310 \n\nOther changes in noncontrolling interests\n\nDividends paid to noncontrolling shareholders— — — (17,530)(17,530)\n\nBalance at end of year$351,626 $1,186,981 $(80,051)$41,982 $1,500,538 \n\n48\n\nUNIVERSAL CORPORATION\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY—(Continued)\n\n Universal Corporation Shareholders  \n\n(in thousands of dollars)Common\nStockRetained \nEarningsAccumulated\nOther\nComprehensive\nIncome\n(Loss)Non-\ncontrolling\nInterestsTotal\nShareholders'\nEquity\n\nFiscal Year Ended March 31, 2024\n\nBalance at beginning of year$337,247 $1,136,898 $(77,057)$39,864 $1,436,952 \n\n Changes in common stock\n\nRepurchase of common stock(1,373)— — — (1,373)\n\nAccrual of stock-based compensation12,063 — — — 12,063 \n\nWithholding of shares from stock-based compensation for grantee income taxes(3,607)— — — (3,607)\n\nDividend equivalents on restricted stock units (RSUs)1,266 — — — 1,266 \n\nChanges in retained earnings\n\nNet income— 119,598 — 13,373 132,971 \n\nCash dividends declared on common stock ($3.20 per share)\n(78,663)— — (78,663)\n\nRepurchase of common stock— (3,371)— — (3,371)\n\nDividend equivalents on restricted stock units (RSUs)— (1,266)— — (1,266)\n\nOther comprehensive income (loss)\n\nForeign currency translation, net of income taxes— — (582)(949)(1,531)\n\nForeign currency hedge, net of income taxes— — (5,515)— (5,515)\n\nInterest rate hedge, net of income taxes— — 3,235 — 3,235 \n\nPension and other postretirement benefit plans, net of income taxes— — (1,666)— (1,666)\n\nOther changes in noncontrolling interests\n\nDividends paid to noncontrolling shareholders— — — (10,572)(10,572)\n\nBalance at end of year$345,596 $1,173,196 $(81,585)$41,716 $1,478,923 \n\n49\n\nUNIVERSAL CORPORATION\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY—(Continued)\n\n Fiscal Year Ended March 31,\n\n202620252024\n\nCommon Shares Outstanding:   \n\n    Balance at beginning of year24,715,625 24,573,408 24,555,361 \n\n    Issuance of common stock207,871 142,217 118,047 \n\n    Repurchase of common stock— — (100,000)\n\n    Balance at end of year24,923,496 24,715,625 24,573,408 \n\nSee accompanying notes.\n\n50\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(All dollar amounts are in thousands, except per share amounts or as otherwise noted.)\n\nNOTE 1.  NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES\n\nNature of Operations\n\nUniversal Corporation, which together with its subsidiaries is referred to herein as “Universal” or the “Company,” is a global business-to-business agriproducts company. The Company is the leading global leaf tobacco supplier and provides high-quality plant-based ingredients to food and beverage end markets. The Company conducts its leaf tobacco business in over 30 countries, primarily in major tobacco-producing regions of the world.\n\nConsolidation\n\nThe consolidated financial statements include the accounts of Universal Corporation and all domestic and foreign subsidiaries in which the Company maintains a controlling financial interest. Control is generally determined based on a voting interest of greater than 50%, such that Universal controls all significant corporate activities of the subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation.\n\nThe equity method of accounting is used for investments in companies where Universal Corporation has a voting interest of 20% to 50%. These investments are accounted for under the equity method because Universal exercises significant influence over those companies, but not control. The Company received $1.9 million dividends in fiscal year 2026, $4.2 million in fiscal year 2025, and no dividends in fiscal year 2024, 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. As such, the Company has elected the alternate method of measuring these investments at cost, less any impairment. 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 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. The Company reviews the carrying value of its investments in Socotab and its other unconsolidated affiliates on a regular basis and considers whether any factors exist that might indicate an impairment in value that is other than temporary.\n\nThe Company’s operations in Zimbabwe are deconsolidated under accounting requirements that apply under certain conditions to foreign subsidiaries that are subject to foreign exchange controls and other government restrictions. The investment in the Zimbabwe operations is accounted for at cost and was zero at March 31, 2026 and 2025. The Company has a net foreign currency translation loss associated with the Zimbabwe operations of approximately $7.2 million, which remains a component of accumulated other comprehensive loss at March 31, 2026. As a regular part of its reporting, the Company reviews the conditions that resulted in the deconsolidation of the Zimbabwe operations to confirm that such accounting treatment is still appropriate. Dividends from the Zimbabwe operations are recorded in income in the period received.\n\nThe 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 in the consolidated financial statements. There were no material changes in the Company’s ownership percentage in any of these subsidiaries during fiscal years 2026, 2025, or 2024.\n\nInvestments in Unconsolidated Affiliates\n\nThe Company’s investments in its unconsolidated affiliates, which include its Zimbabwe operations, are non-marketable securities. Universal reviews such investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recovered. For example, the Company would review such an investment for impairment if the investee were to lose a significant customer, suffer a large reduction in sales margins, experience a major change in its business environment, or undergo any other significant change in its normal business. In assessing the recoverability of these investments, the Company follows the applicable accounting guidance in determining the fair value of the investments. In most cases, this involves the use of undiscounted and discounted cash flow models (Level 3 of the fair value hierarchy under the accounting guidance). If the fair value of an unconsolidated investee is determined to be lower than its carrying value, an impairment loss is recognized. The determination of fair value using discounted cash flow models is normally not based on observable market data from independent sources and therefore requires significant management judgment with respect to estimates of future operating earnings and the selection of an appropriate discount rate. 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.\n\nIn 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. All applicable foreign and U.S. income taxes are provided on these earnings and reported as a component of\n\n51\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nconsolidated income tax expense. For unconsolidated affiliates located in foreign jurisdictions, repatriation of the Company’s share of the earnings through dividends is assumed in determining consolidated income tax expense.\n\nThe following table provides a reconciliation of (1) equity in the pretax earnings of unconsolidated affiliates, as reported in the consolidated statements of income to (2) equity in the net income of unconsolidated affiliates, net of dividends, as reported in the consolidated statements of cash flows for the fiscal years ended March 31, 2026, 2025, and 2024:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nEquity in pretax earnings reported in the consolidated statements of income$3,430 $9,103 $756 \n\nLess: Equity in income taxes(1,818)(1,834)483 \n\nEquity in net income1,612 7,269 1,239 \n\nLess: Dividends received on investments (1)\n(1,857)(4,238)— \n\nEquity in net income, net of dividends, reported in the consolidated statements of cash flows$(245)$3,031 $1,239 \n\n(1)    In accordance with the applicable accounting guidance, dividends received from unconsolidated affiliates accounted for on the equity method that represent a return on capital (i.e., a return of earnings on a cumulative basis) are presented as operating cash flows in the consolidated statements of cash flows.\n\nEarnings Per Share\n\n The Company calculates basic earnings per share based on Net income attributable to Universal Corporation. 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.\n\nCalculations of earnings per share for the fiscal years ended March 31, 2026, 2025, and 2024, are provided in Note 4.\n\nCash, Restricted Cash, and Cash Equivalents\n\n All highly liquid investments with a maturity of three months or less at the time of purchase are classified as cash equivalents.\n\nAdvances to Tobacco Suppliers\n\nIn 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 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. The long-term portion of advances is included in other noncurrent assets in the consolidated balance sheets. Both the current and the long-term portions of advances to tobacco suppliers are reported net of allowances recorded when the Company determines that amounts outstanding are not likely to be collected. Short-term and long-term advances to tobacco suppliers totaled approximately $196 million at March 31, 2026 and $189 million at March 31, 2025. The related valuation allowances totaled $16 million at March 31, 2026 and $18 million at March 31, 2025, and were estimated based on the Company’s historical loss information and crop projections. The allowances were increased by net provisions for estimated uncollectible amounts of approximately $6.2 million in fiscal year 2026, $1.9 million in fiscal year 2025, and $14.1 million in fiscal year 2024. These net provisions are included in selling, general, and administrative expenses in the consolidated statements of income. Interest on advances is recognized in earnings as it is earned. Advances on which interest accruals had been discontinued totaled approximately $2 million at both March 31, 2026 and 2025.\n\nInventories\n\nInventories 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 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. The Company does not capitalize any interest or sales-related costs in inventory.\n\n52\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nIn-bound freight costs are recorded in cost of goods sold. 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.\n\nThe Company records inventory write-downs to cost of goods sold for obsolete or unmarketable inventory in an amount equal to the difference between the carrying cost of inventory and the estimated net realizable value based upon assumptions about product demand and market conditions. If ultimate market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. The Company recognized inventory write-downs in fiscal years 2026, 2025, and 2024 of $52.0 million, $19.8 million, and $9.2 million, respectively.\n\nRecoverable Value-Added Tax Credits\n\nIn many foreign countries, the Company’s local operating subsidiaries pay significant amounts of value-added tax (“VAT”) on purchases of unprocessed and processed tobacco, crop inputs, packing materials, and various other goods and services. In some countries, VAT is a national tax, and in other countries it is assessed at the state level. Items subject to VAT vary from jurisdiction to jurisdiction, as do the rates at which the tax is assessed. When tobacco is sold to customers in the country of origin, the operating subsidiaries generally collect VAT on those sales. The subsidiaries are normally permitted to offset their VAT payments against the collections and remit only the incremental VAT collections to the tax authorities. When tobacco is sold for export, VAT is normally not assessed. In countries where tobacco sales are predominantly for export markets, VAT collections generated on downstream sales are often not sufficient to fully offset the subsidiaries’ VAT payments. In those situations, unused VAT credits can accumulate. Some jurisdictions have procedures that allow companies to apply for refunds of unused VAT credits from the tax authorities, but the refund process often takes an extended period of time, and it is not uncommon for refund applications to be challenged or rejected in part on technical grounds. Other jurisdictions may permit companies to sell or transfer unused VAT credits to third parties in private transactions, although approval for such transactions must normally be obtained from the tax authorities, limits on the amounts that can be transferred may be imposed, and the proceeds realized may be heavily discounted from the face value of the credits. Due to these factors, local operating subsidiaries in some countries can accumulate significant balances of VAT credits over time. 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, 2026 and 2025, the aggregate balances of recoverable tax credits held by the Company’s subsidiaries totaled approximately $66 million and $64 million, respectively, and the related valuation allowances totaled approximately $22 million and $21 million at March 31, 2026 and 2025. The net balances are reported in other current assets and other noncurrent assets in the consolidated balance sheets.\n\nProperty, Plant and Equipment\n\nDepreciation of property, plant and equipment is based upon historical cost and the estimated useful lives of the assets. Depreciation is calculated primarily using the straight-line method. Buildings include processing and blending facilities, offices, and warehouses. Machinery and equipment consists of processing and packing machinery and transport, office, and computer equipment. Estimated useful lives range as follows: buildings - 15 to 40 years; processing and packing machinery - 3 to 11 years; transport equipment - 3 to 10 years; and office and computer equipment - 3 to 12 years. Depreciation expense for the fiscal years ended March 31, 2026, 2025, and 2024 was $44.2 million, $48.7 million, and $47.1 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. No interest was capitalized in fiscal years 2026, 2025, or 2024.\n\nLeases\n\nThe Company determines if an arrangement meets the definition of a lease at inception. The Company, as a lessee, enters into operating leases for land, buildings, equipment, and vehicles. For all operating leases with terms greater than 12 months and with fixed payment arrangements, a lease liability and corresponding right-of-use asset are recognized in the balance sheet for the term of the lease by calculating the net present value of future lease payments. On the date of lease commencement, the present value of lease liabilities is determined by discounting the future lease payments by the Company’s collateralized incremental borrowing rate, adjusted for the lease term and currency of the lease payments. 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. Certain of the Company’s leases include both lease and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component, as the Company has elected the practical expedient to group lease and non-lease components for real estate leases.\n\nAdditional disclosures related to the Company’s leases are provided in Note 9.\n\n53\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nGoodwill and Other Intangibles\n\nGoodwill and other intangibles are disclosed in Note 6. Goodwill principally consists of the excess of the purchase price of acquired companies over the fair value of the net assets. 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.\n\nReporting 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 net 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 Note 6 for additional information. Significant adverse changes in the operations or estimated future net cash flows for a reporting unit with recorded goodwill could result in an impairment charge.\n\nAccounting 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, 2026 for all entities with allocated goodwill with the exception of Universal Ingredients–Shank’s. For all entities, except Universal Ingredients–Shank’s, 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, 2026. The Company elected to use the qualitative approach at March 31, 2025 for all entities. 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.\n\nThe goodwill associated with Universal Ingredients–Shank’s was tested utilizing a quantitative approach at March 31, 2026. The quantitative approach was utilized because management determined it was more likely than not that the carrying value exceeded the fair value of the reporting unit based on management's lower internal profitability projections in future years due primarily to the impacts of persistent adverse market conditions for certain new and existing product offerings. ASC 350 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 fair value of Universal Ingredients–Shank’s at March 31, 2026 was assessed using a combination of a discounted cash flow model, comprised of estimates of future net cash flows and discount rates, as well as a market-based approach that considered a subset of peer companies. Based on this quantitative assessment, the Company determined the carrying value of Universal Ingredients–Shank’s at March 31, 2026 exceeded the derived fair value and recognized a $41.1 million non-cash goodwill impairment charge for the fiscal year ended March 31, 2026.\n\nOther intangibles principally consists of finite lived intangible assets including customer-related intangibles, trade names, developed technology, and noncompetition agreements. Intangible assets acquired in a business combination are recorded at fair value using a discounted cash flow approach. A discounted cash flow approach to value intangible assets requires assumptions about the timing, amount, and probability of future net cash flows, as well as the discount rate and market participant considerations. Other intangibles are amortized on a straight-line basis over the intangible asset’s economic life.\n\nImpairment of Long-Lived Assets\n\nThe Company reviews long-lived assets for impairment, disclosed in Note 3 and Note 11, whenever events, changes in business conditions, or other circumstances provide an indication that such assets may be impaired. Potential impairment is initially assessed by comparing management’s undiscounted estimates of future cash flows from the use or disposition of the assets to their carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge is recorded to reduce the carrying value of the asset to its fair value determined in accordance with the accounting guidance. In many cases, this involves the use of discounted cash flow models that are not based on observable market data from independent sources (Level 3 of the fair value hierarchy under the accounting guidance).\n\nIncome Taxes\n\nThe Company provides deferred income taxes on temporary differences between the book and tax basis of its assets and liabilities. Those differences arise principally from employee benefit accruals, depreciation, deferred compensation, undistributed earnings of unconsolidated affiliates, undistributed earnings of foreign subsidiaries, goodwill, intangibles, and valuation allowances on farmer advances and VAT credits. Income taxes provided on pretax amounts recorded in accumulated other comprehensive income (loss) are released when the related pretax amounts are reclassified to earnings. Additional disclosures related to the Company’s income taxes are disclosed in Note 5.\n\n54\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nFair Values of Financial Instruments\n\nThe fair value of the Company’s long-term debt, disclosed in Note 11, approximates the carrying amount since the variable interest rates in the underlying credit agreement reflect the market interest rates that were available to the Company at March 31, 2026. 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 non-current assets. 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.\n\nDerivative Financial Instruments\n\nThe Company recognizes all derivatives on the balance sheet at fair value. Interest rate swaps and forward foreign currency exchange contracts are used from time to time to manage interest rate risk and foreign currency risk. The Company enters into such contracts only with counterparties of good standing. The credit exposure related to non-performance by the counterparties and the Company is considered in determining the fair values of the derivatives, and the effect has not been material to the financial statements or operations of the Company. Additional disclosures related to the Company’s derivatives and hedging activities are provided in Note 10.\n\nTranslation and Remeasurement of Foreign Currencies\n\nThe financial statements of foreign subsidiaries having the local currency as the functional currency are translated into U.S. dollars using exchange rates in effect at period end for assets and liabilities and average exchange rates applicable to each reporting period for results of operations. Adjustments resulting from translation of financial statements are reflected as a separate component of other comprehensive income or loss. The financial statements of foreign subsidiaries having the U.S. dollar as the functional currency, with certain transactions denominated in a local currency, are remeasured into U.S. dollars. The remeasurement of local currency amounts into U.S. dollars creates remeasurement gains and losses that are included in earnings as a component of selling, general, and administrative expenses. The Company recognized net remeasurement losses of $6.7 million, $6.1 million, and $5.1 million in fiscal years 2026, 2025, and 2024, respectively.\n\nForeign currency transactions and forward foreign currency exchange contracts that are not designated as hedges generate gains and losses when they are settled or when they are marked-to-market under the prescribed accounting guidance. 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 gains of $1.9 million in fiscal year 2026 and net foreign currency transaction losses of $2.2 million and $3.2 million in fiscal years 2025 and 2024, respectively.\n\nCustomer Advances and Deposits\n\nFrom time to time, the Company receives advances and deposits from customers for future delivery of finished goods. The advance payments are applied against customer receivables after performance obligations are completed and recognition of revenue is appropriate.\n\nRevenue Recognition\n\nRevenue 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. A large percentage of the Company’s sales are to major multinational manufacturers of consumer tobacco products. The Company works closely with those customers to understand and plan for their requirements for volumes, styles, and grades of leaf tobacco from its various growing regions, and extensive coordination is maintained on an ongoing basis to determine and satisfy their requirements for transfer of ownership and physical shipment of processed tobacco. 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 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.\n\nWhile 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. The arrangements for processing services usually exist in specific markets where the customers contract directly with farmers for leaf production, and they have accounted for less than 5% of total revenue on an annual basis through the fiscal year ended March 31, 2026. Processing and packing of leaf tobacco is a short-duration process. Under normal operating conditions, raw tobacco that is placed into the production line exits as processed and packed tobacco within one hour, and is then\n\n55\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nlater transported to customer-designated storage facilities. The revenue for these services is recognized when the performance obligation is met upon the completion of processing, and the Company’s operating history indicates that customer requirements for processed tobacco are consistently met upon completion of processing.\n\nThe Company has diversified its operations through acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, as well as botanical extracts and flavors. These operations procure raw materials from domestic and international growers and suppliers and through a variety of processing steps (including sorting, cleaning, pressing, mixing, extracting, and blending), manufacture finished goods utilized in both human and pet food. 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, 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.\n\nAdditional disclosures related to the Company’s revenue from contracts with customers are provided in Note 2.\n\nStock-Based Compensation\n\nShare-based payments, such as grants of restricted stock units, performance share units, restricted stock, stock appreciation rights, and stock options, are measured at fair value and reported as expense in the financial statements over the requisite service or performance periods. Additional disclosures related to stock-based compensation are included in Note 14.\n\nEstimates and Assumptions\n\nThe preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.\n\nTrade Receivable Sales\n\nDuring fiscal year 2026, the Company entered into an agreement to sell certain trade receivables, at its discretion, to a third-party financial institution at a discount. The transactions have no recourse and qualify as a true sale, meaning upon receipt of the settlement amount, the associated receivable is removed from the balance sheet and the discount is recognized as an expense in selling, general, and administrative expense on the consolidated statements of income. During the fiscal year ended March 31, 2026, the Company sold $208.7 million of receivables and recorded discounts of $1.8 million.\n\nAccounting Pronouncements\n\nAccounting Pronouncements Adopted in Fiscal Year 2026\n\nIn December 2023, the FASB issued Accounting Standards Update No. 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. federal, state, foreign, etc.) and a disaggregation of taxes paid and refunded. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and for interim periods in fiscal years beginning after December 15, 2025. The Company adopted ASU 2023-09 in fiscal year 2026, incorporating additional income tax disclosures on a prospective basis in Note 5.\n\nAccounting Pronouncements Adopted in Fiscal Year 2025\n\nIn November 2023, the FASB issued Accounting Standards Update No. 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. 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.\n\nAccounting Pronouncements to be Adopted in Future Years\n\nIn 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.\n\n56\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nReclassifications\n\nCertain prior year amounts have been reclassified to conform to the current year’s presentation.\n\nNOTE 2.  REVENUE FROM CONTRACTS WITH CUSTOMERS\n\nThe majority of the Company’s consolidated revenue consists of sales of processed leaf tobacco to customers. The Company also earns revenue from processing leaf tobacco owned by customers and from various other services provided to customers. Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that provide customers with a range of food ingredient products. 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. 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. Below is a description of the major revenue-generating categories from contracts with customers.\n\nTobacco Sales\n\nThe 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. The contracts for tobacco sales with customers create a performance obligation to transfer tobacco to the customer. 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. Cost-plus arrangements provide the Company reimbursement of the cost to purchase and process the tobacco, plus a contractually agreed-upon profit margin. The Company utilizes the most likely amount methodology under the accounting guidance to recognize revenue for cost-plus arrangements with customers. Shipping and handling costs under tobacco sales contracts with customers are treated as fulfillment costs and included in the transaction price. Under agreements with certain customers, the Company will act as the importer of record, incurring various additional costs associated with the import activity, including tariffs, and applying for drawback of those costs when possible. When the agreement with the customer provides for the reimbursement of those fees, the reimbursement is included in the transaction price. Taxes assessed by government authorities on the sale of leaf tobacco products are excluded from the transaction price. At the point in time that the customer obtains control over the tobacco, 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.\n\nIngredient Sales\n\nThe Company has diversified operations through acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, flavors, and botanical extracts. These operations procure raw materials from domestic and international growers and suppliers and through a variety of processing steps including sorting, cleaning, pressing, mixing, extracting, and blending to manufacture finished goods utilized in both human and pet food. 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, 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. 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.\n\nProcessing Revenue\n\nProcessing and packing of customer-owned tobacco and ingredients is a short-duration process. Processing charges are primarily based on negotiated fixed prices per unit of weight processed. Under normal operating conditions, customer-owned raw materials that are placed into the production line exits as processed and packed product and is then later transported to customer-designated transfer locations. The revenue for these services is recognized when the performance obligation is satisfied, which is generally when processing is completed. The Company’s operating history and contract analyses indicate that customer requirements for processed tobacco and food ingredients products are consistently met upon completion of processing.\n\nOther Sales and Revenue from Contracts with Customers\n\nFrom time to time, the Company enters into various arrangements with customers to provide other value-added services that may include blending, chemical and physical testing of products, storage, logistics, sorting, and tobacco cutting services for select manufacturers. These other arrangements and operations are a much smaller portion of the Company’s business, and are separate and distinct contractual agreements from the Company’s tobacco and food ingredients sales or third-party processing\n\n57\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\narrangements with customers. The transaction prices and timing of revenue recognition of these items are determined by the specifics of each contract.\n\nDisaggregation of Revenue from Contracts with Customers\n\nThe following table disaggregates the Company’s revenue by significant revenue-generating category:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nTobacco sales$2,359,961 $2,460,496 $2,268,600 \n\nIngredient sales330,657 321,416 292,291 \n\nProcessing revenue119,076 73,597 82,976 \n\nOther sales and revenue from contracts with customers75,384 67,415 77,777 \n\n   Total revenue from contracts with customers2,885,078 2,922,924 2,721,644 \n\nOther operating sales and revenues39,392 24,360 26,929 \n\n   Consolidated sales and other operating revenues$2,924,470 $2,947,284 $2,748,573 \n\nOther operating sales and revenues consists principally of interest on advances to tobacco suppliers and dividend income from unconsolidated affiliates.\n\nMajor Customers\n\nA 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. 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, 2026, 2025, and 2024, revenue from Philip Morris International Inc. accounted for revenue of approximately $620 million, $480 million, and $630 million, respectively, Imperial Brands plc accounted for revenue of approximately $400 million, $370 million, and $340 million, respectively, and Japan Tobacco, Inc. accounted for revenue of approximately $250 million, $240 million, and $260 million, respectively. These customers do business with various affiliates in the Company’s Tobacco Operations segment. The loss of, or substantial reduction in business from, any of these customers could have a material adverse effect on the Company.\n\nNOTE 3. RESTRUCTURING AND IMPAIRMENT COSTS\n\nDuring the fiscal years ended March 31, 2026, 2025 and 2024, Universal recorded restructuring and impairment costs related to business changes and various initiatives to adjust certain operations and reduce costs. See Note 1 for goodwill impairment for the fiscal year ended March 31, 2026.\n\nFiscal Year Ended March 31, 2026\n\nTobacco Operations\n\nDuring the fiscal year ended March 31, 2026, the Company recognized an additional $0.7 million of restructuring costs and $1.0 million of impairment costs related to the consolidation of its European sheet tobacco operations that began 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 during the fiscal year ended March 31, 2026.\n\nFiscal Year Ended March 31, 2025\n\nTobacco Operations\n\nDuring 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.\n\nFiscal Year Ended March 31, 2024\n\nTobacco Operations\n\nDuring 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\n\n58\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nnon-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.\n\nA summary of the restructuring and impairment costs incurred during the fiscal years ended March 31, 2026, 2025, and 2024 is as follows:\n\nFiscal Years Ended March 31,\n\n202620252024\n\nRestructuring Costs:\n\nEmployee termination benefits$122 $4,342 $1,615 \n\nOther restructuring costs711 1,372 (181)\n\n833 5,714 1,434 \n\nImpairment Costs:\n\nProperty, plant, and equipment and other noncurrent assets1,000 4,859 2,089 \n\nTotal restructuring and impairment costs$1,833 $10,573 $3,523 \n\nA reconciliation of the Company’s liability for employee termination benefits and other restructuring costs for fiscal years 2024 through 2026 is as follows:\n\nEmployee\nTermination\nBenefitsOther CostsTotal\n\nBalance at April 1, 2023$— $— $— \n\nFiscal Year 2024 Activity:\n\nCosts charged to expense1,615 (181)1,434 \n\nPayments and write-offs(1,362)181 (1,181)\n\nBalance at March 31, 2024253 — 253 \n\nFiscal Year 2025 Activity:\n\nCosts charged to expense4,342 1,372 5,714 \n\nPayments and write-offs(1,660)(1,101)(2,761)\n\nBalance at March 31, 20252,935 271 3,206 \n\nFiscal Year 2026 Activity:\n\nCosts charged to expense122 711 833 \n\nPayments and write-offs(2,852)(449)(3,301)\n\nBalance at March 31, 2026$205 $533 $738 \n\nUniversal 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.\n\n59\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nNOTE 4.  EARNINGS PER SHARE\n\nThe following table sets forth the computation of basic and diluted earnings per share:\n\nFiscal Year Ended March 31,\n\n(in thousands, except share and per share data)202620252024\n\nBasic Earnings Per Share\n\nNumerator for basic earnings per share\n\nNet income attributable to Universal Corporation$32,637 $95,047 $119,598 \n\nDenominator for basic earnings per share\n\nWeighted average shares outstanding25,037,983 24,947,208 24,851,858 \n\n Basic earnings per share\n$1.30 $3.81 $4.81 \n\nDiluted Earnings Per Share\n\nNumerator for diluted earnings per share\n\nNet income attributable to Universal Corporation$32,637 $95,047 $119,598 \n\nDenominator for diluted earnings per share:\n\nWeighted average shares outstanding25,037,983 24,947,208 24,851,858 \n\nEffect of dilutive securities\n\n Employee and outside director share-based awards133,179 180,148 189,056 \n\nDenominator for diluted earnings per share25,171,162 25,127,356 25,040,914 \n\nDiluted earnings per share\n$1.30 $3.78 $4.78 \n\nNOTE 5.  INCOME TAXES\n\nThe Company operates in the United States and many foreign countries and is subject to the tax laws of multiple jurisdictions. Changes in tax laws or the interpretation of tax laws can affect the Company’s earnings, as can the resolution of pending and contested tax issues. The Company’s consolidated effective income tax rate is affected by a number of factors, including the mix of domestic and foreign earnings and the effect of exchange rate changes on local taxable income and deferred taxes in foreign countries.\n\nFor fiscal years ended March 31, 2026, 2025, and 2024 the Company’s U.S. federal statutory tax rate was 21.0%. The U.S. tax system is primarily territorial based after the enactment of the Tax Cuts and Jobs Act of 2017. The U.S. tax law imposes a tax on U.S. shareholders on certain low-taxed income earned by controlled foreign corporations, referred to as net controlled foreign corporation tested income (“NCTI”). The Company has made an accounting policy election to account for any additional tax resulting from the NCTI provisions in the year in which it is incurred and has not recorded any deferred taxes on temporary book-tax differences related to this income.\n\nThe Company continues to assume repatriation of all undistributed earnings of its consolidated foreign subsidiaries and has therefore provided for expected foreign withholding taxes on the distribution of those earnings where applicable, net of any U.S. tax credit attributable to those withholding taxes. Brazil enacted new legislation applying a 10% withholding tax on dividends approved after December 31, 2025 to nonresident shareholders. The Company's tax holiday in Mozambique ended on December 31, 2025, increasing the local statutory rate to 32% and the withholding tax on dividends to 20%. The Company has asserted permanent reinvestment of the book basis of certain foreign subsidiaries, and accordingly, no deferred income tax liability has been recorded for any potential taxable gain that may be realized on a future disposition or liquidation of any of those subsidiaries. It is not practicable for the Company to quantify any deferred income tax liability that would be attributable to those events.\n\nIn various countries in which the Company operates, legislation has been enacted incorporating the Organisation for Economic Co-operation and Development’s Global Anti-Base Erosion Pillar Two model rules establishing a 15% global minimum tax. The estimated tax impact of such legislation has been included in the provision for income taxes and is not material. Like NCTI, this is treated as a period cost and does not have any additional deferred taxes related to these new laws.\n\n60\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nIncome Tax Expense\n\nIncome taxes for the fiscal years ended March 31, 2026, 2025, and 2024 consisted of the following: \n\nFiscal Year Ended March 31,\n\n202620252024\n\nCurrent\n\nUnited States$(2,408)$7,038 $5,107 \n\nState and local406 713 696 \n\nForeign49,619 32,112 30,711 \n\n47,617 39,863 36,514 \n\nDeferred\n\nUnited States(8,169)(2,631)(824)\n\nState and local(842)(22)(138)\n\nForeign8,051 3,736 (4,443)\n\n(960)1,083 (5,405)\n\nTotal$46,657 $40,946 $31,109 \n\nForeign taxes include any applicable U.S. tax expense on the earnings of foreign subsidiaries for fiscal years 2025 and 2024.\n\nConsolidated Effective Income Tax Rate\n\nA reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:\n\nMarch 31, 2026\n\nAmountPercentage\n\nTax expense at U.S. federal statutory rate$21,557 21.0 %\n\nState and local income taxes(344)(0.3)%\n\nInternational\n\nBrazil\n\nForeign rate differential8,116 7.9 %\n\nICMS not included in tax base(8,093)(7.9)%\n\nLocal statutory differences4,200 4.1 %\n\nWithholding taxes5,410 5.3 %\n\nDominican Republic\n\nForeign rate differential3,478 3.4 %\n\nWithholding taxes(1,656)(1.6)%\n\nMalawi\n\nForeign rate differential5,179 5.0 %\n\nLocal statutory differences480 0.5 %\n\nWithholding taxes1,031 1.0 %\n\nMexico\n\nForeign rate differential(540)(0.5)%\n\nLocal statutory differences2,515 2.4 %\n\nWithholding taxes216 0.2 %\n\nMozambique\n\nForeign rate differential(8,171)(8.0)%\n\n61\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nLocal statutory differences(1,199)(1.2)%\n\nWithholding taxes(93)(0.1)%\n\nPhilippines\n\nForeign rate differential621 0.6 %\n\nLocal statutory differences208 0.2 %\n\nWithholding taxes1,367 1.3 %\n\nSwitzerland\n\nForeign rate differential(143)(0.1)%\n\nLocal statutory differences121 0.1 %\n\nWithholding taxes2,194 2.1 %\n\nZimbabwe\n\nDividends paid from previously taxed earnings(3,533)(3.4)%\n\nWithholding taxes paid on dividends paid from previously tax earnings2,523 2.5 %\n\nOther international jurisdictions local statutory differences5,100 5.0 %\n\nEffect of cross border tax laws\n\nNet controlled foreign corporation tested income, net of foreign tax credits6,241 6.1 %\n\nBranch income, taxed in U.S., net of foreign tax credits1,557 1.5 %\n\nOther1,833 1.8 %\n\nTax Credits\n\nForeign tax credits(4,455)(4.3)%\n\nNontaxable or nondeductible items817 0.8 %\n\nChanges in unrecognized tax benefits31 — %\n\nOther\n\nAll other89 0.1 %\n\nTotal$46,657 45.5 %\n\nFor the fiscal year ending March 31, 2026, state taxes in Pennsylvania, New Jersey, and Illinois make up the majority (greater than 50%) of the state and local tax category.\n\nFiscal Year Ended March 31,\n\n20252024\n\nU.S. federal statutory tax rate21.0 %21.0 %\n\nState income taxes, net of federal benefit0.4 0.3 \n\nForeign earnings taxed at rates other than the U.S. federal statutory tax rate(3.7)(5.2)\n\nForeign dividend withholding taxes6.7 2.9 \n\nChanges in uncertain tax positions— (0.2)\n\nOther2.2 0.2 \n\nEffective income tax rate26.6 %19.0 %\n\n62\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nComponents of Income Before Income Taxes\n\nThe U.S. and foreign components of income before income taxes were as follows:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nUnited States$(79,551)$5,529 $22,517 \n\nForeign182,203 148,686 141,563 \n\nTotal$102,652 $154,215 $164,080 \n\nDeferred Income Tax Liabilities and Assets\n\nSignificant components of deferred tax liabilities and assets were as follows:\n\nMarch 31,\n\n20262025\n\nLiabilities\n\nForeign withholding taxes$26,928 $20,989 \n\nProperty, plant and equipment15,468 14,730 \n\nUndistributed earnings3,296 3,362 \n\nOperating lease right-of-use assets9,871 8,238 \n\nGoodwill and other intangible assets20,494 30,834 \n\nInterest rate swap16 1,013 \n\nAll other3,535 1,680 \n\nTotal deferred tax liabilities$79,608 $80,846 \n\nAssets\n\nEmployee benefit plans$10,590 $12,624 \n\nReserves and accruals6,472 6,325 \n\nDeferred income4,167 3,989 \n\nOperating lease right-of-use liabilities9,513 7,496 \n\nCurrency translation losses of foreign subsidiaries2,156 2,156 \n\nLocal currency exchange losses of foreign subsidiaries3,018 4,466 \n\nInterest expense limitation carryforward9,008 6,369 \n\nForeign tax credit carryforward11,563 8,795 \n\nCapital loss carryforwards4,055 4,097 \n\nAll other13,368 13,470 \n\nTotal deferred tax assets73,910 69,787 \n\nValuation allowance(18,584)(14,492)\n\nNet deferred tax assets$55,326 $55,295 \n\nAt March 31, 2026, the Company had no material net operating loss carryforwards in either its domestic or foreign operations.\n\n63\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nCombined Income Tax Expense (Benefit)\n\nThe combined income tax expense (benefit) allocable to continuing operations and other comprehensive income was as follows:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nContinuing operations$46,657 $40,946 $31,109 \n\nOther comprehensive loss165 (532)(1,056)\n\nTotal$46,822 $40,414 $30,053 \n\nUncertain Tax Positions\n\nA reconciliation of the beginning and ending balance of the gross liability for uncertain tax positions is as follows:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nLiability for uncertain tax positions, beginning of year$1,006 $1,070 $1,415 \n\nAdditions:\n\nRelated to tax positions for the current year63 71 65 \n\nReductions:\n\nDue to lapses of statutes of limitations(49)(56)(56)\n\nDue to tax settlements— — (311)\n\nEffect of currency rate changes24 (79)(43)\n\nLiability for uncertain tax positions, end of year$1,044 $1,006 $1,070 \n\nThe liability for uncertain tax positions at March 31, 2026 includes approximately $1.0 million that could have an effect on the consolidated effective tax rate if the tax benefits are recognized.\n\nAmounts accrued or reversed for interest and penalties were not material for fiscal years 2024 through 2026, and liabilities recorded for penalties at March 31, 2026 and 2025 were also not material.\n\nUniversal and its subsidiaries file a U.S. federal consolidated income tax return, as well as returns in several U.S. states and a number of foreign jurisdictions. Open tax years in U.S. Federal, state, and foreign jurisdictions range from 3 to 6 years. 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.\n\n64\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nCash Taxes\n\nThe following table provides the cash income taxes paid, net of refunds for the year ended March 31, 2026:\n\nMarch 31, 2026\n\nIncome tax payments (net of refunds):\n\nUnited States:\n\nU.S. Federal $7,602\n\nU.S. State and Local539\n\nTotal United States8,141\n\nForeign:\n\nBrazil4,841\n\nItaly4,715\n\nMalawi7,729\n\nPhilippines4,712\n\nSingapore4,985\n\nZimbabwe2,523\n\nOther Foreign5,471\n\nTotal Foreign34,976\n\nTotal $43,117\n\nNOTE 6.  GOODWILL AND OTHER INTANGIBLES\n\nThe Company’s changes in goodwill at March 31, 2026 and 2025 consisted of the following:\n\nFiscal Year Ended March 31,\n\n20262025\n\nBalance at beginning of year$213,840 $213,869 \n\nGoodwill impairment (1)\n(41,061)— \n\nForeign currency translation adjustment\n(84)(29)\n\nBalance at end of year$172,695 $213,840 \n\n(1)     A $41.1 million non-cash goodwill impairment charge for Universal Ingredients–Shank’s was recognized for the fiscal year ended March 31, 2026. There is no remaining goodwill related to Universal Ingredients–Shank’s at March 31, 2026. See Note 1 for additional information.\n\n65\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nThe Company’s intangible assets primarily consist of capitalized customer-related intangibles, trade names, proprietary developed technology and noncompetition agreements. The Company’s intangible assets subject to amortization consisted of the following at March 31, 2026 and 2025:\n\nMarch 31, 2026\n\n(in thousands, except useful life)Useful Life (Years)Gross Carrying ValueAccumulated AmortizationNet Carrying Value\n\nCustomer relationships11-13$86,500 $(40,885)$45,615 \n\nTrade names511,100 (11,100)— \n\nDeveloped technology139,300 (6,358)2,942 \n\nNoncompetition agreements4-54,000 (4,000)— \n\nOther5694 (647)47 \n\nTotal intangible assets$111,594 $(62,990)$48,604 \n\nMarch 31, 2025\n\nUseful Life (Years)Gross Carrying ValueAccumulated AmortizationNet Carrying Value\n\nCustomer relationships11-13$86,500 $(33,155)$53,345 \n\nTrade names511,100 (10,320)780 \n\nDeveloped technology139,300 (6,012)3,288 \n\nNoncompetition agreements4-54,000 (3,625)375 \n\nOther5802 (754)48 \n\nTotal intangible assets$111,702 $(53,866)$57,836 \n\nIntangible assets are amortized on a straight-line basis over the asset’s estimated useful economic life as noted above.\n\nThe Company’s amortization expense for intangible assets for the fiscal years ended March 31, 2026, 2025, and 2024:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nAmortization Expense$9,124 $11,067 $11,279 \n\nAmortization expense for the developed technology intangible asset is recorded in cost of goods sold in the consolidated income statements of income. The amortization expense for the other intangible assets is recorded in selling, general, and administrative expenses in the consolidated income statements of income.\n\nAs of March 31, 2026, the expected future amortization expense for intangible assets is as follows:\n\nFiscal Year\n\n2027$8,101 \n\n20288,101 \n\n20298,077 \n\n20308,077 \n\n2031 and thereafter16,248 \n\nTotal expected future amortization expense$48,604 \n\nNOTE 7.  CREDIT FACILITIES\n\nBank Credit Agreement\n\nOn December 9, 2025, the Company entered into a new senior unsecured bank credit agreement that replaced its then existing bank credit agreement. In addition to extending the maturity dates of the underlying components of the facility, the new\n\n66\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nagreement includes a $780 million five-year revolving credit facility (expiring December 9, 2030), a $275 million five-year term loan (due December 9, 2030), and a $345 million seven-year term loan (due December 9, 2032). The new facility may be expanded to allow for additional borrowings of up to $300 million under certain conditions. Borrowings under the revolving credit facility bear interest at a variable rate benchmarked to the Secured Overnight Financing Rate (“SOFR”) plus a margin based on the Company’s credit measures. In addition to interest, the Company pays a facility fee on the revolving credit facility. $50 million was outstanding under the revolving credit facility at March 31, 2026. The Company may request that the lenders extend the applicable maturity date for the revolving credit facility, the five-year term loan and/or the seven-year term loan for up to two one-year extensions, subject to satisfaction of certain terms and conditions and consent of the requisite number of lenders. The Company’s obligations under the new bank credit agreement are guaranteed by its subsidiary, Universal Ingredients. The new credit agreement contains financial covenants that require the Company to maintain certain levels of tangible net worth and leverage. These covenants are substantially the same as the covenants in the prior bank credit agreement, and the Company was in compliance with the covenants at March 31, 2026.\n\nShort-Term Credit Facilities\n\nThe Company maintains short-term uncommitted lines of credit in the United States and in a number of foreign countries. Foreign borrowings are generally in the form of overdraft facilities at rates competitive in the countries in which the Company operates. Generally, each foreign line is available only for borrowings related to operations of a specific country. As of March 31, 2026 and 2025, approximately $238 million and $195 million, respectively, were outstanding under these uncommitted lines of credit. The weighted-average interest rates on short-term borrowings outstanding as of March 31, 2026 and 2025 were approximately 5.2% and 6.2%, respectively. At March 31, 2026, the Company and its consolidated affiliates had unused uncommitted lines of credit totaling approximately $465 million.\n\nNOTE 8.  LONG-TERM DEBT\n\nThe Company’s long-term debt at March 31, 2026 and 2025 consisted of the following:\n\nMarch 31,\n\n20262025\n\nSenior bank term loans$620,000 $620,000 \n\nLess: current portion— — \n\nLess: unamortized debt issuance costs(3,273)(2,082)\n\nLong-term debt$616,727 $617,918 \n\nAs discussed in Note 7, on December 9, 2025, the Company entered into a new bank credit agreement that replaced its then existing bank credit agreement. In addition to extending the maturity dates of the underlying components of the facility, the new agreement 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. Under the credit agreement, both term loans bear interest at a variable rate benchmarked to the SOFR plus a margin that is based on the Company’s credit measures.\n\nAs discussed in Note 10, the Company had receive-floating/pay-fixed interest rate swap agreements in place with respect to the prior term loans through December 15, 2027 for the five-year term loan and through December 15, 2029 for the seven-year term loan. These agreements were terminated concurrently with the repayment of the prior term loans and replaced with new interest rate swap agreements that will continue to convert a portion of the variable benchmark rate to a fixed rate on each term loan through their respective maturity dates. With the swap agreements in place, the effective interest rates on the swapped portions of the five-year and seven-year term loans were 5.47% and 6.13% at March 31, 2026, respectively. The weighted average effective interest rates, when taking into consideration both the swapped and unswapped interest payments, were 5.57% and 6.15% at March 31, 2026 for the five-year and seven-year term loans, respectively. Changes in the effective interest rates could result from a change in interest rates on the unhedged interest payments or a change in the Company’s credit measures that impact the applicable credit spreads specified in the underlying loan agreement.\n\nDisclosures about the fair value of long-term debt are provided in Note 11.\n\nNOTE 9. LEASES\n\nThe Company, as a lessee, enters into operating leases for land, buildings, equipment, and vehicles. For all operating leases with terms greater than 12 months and with fixed payment arrangements, a lease liability and corresponding right-of-use asset are recognized in the balance sheet for the term of the lease by calculating the net present value of future lease payments. On the date of lease commencement, the present value of lease liabilities is determined by discounting the future lease payments by\n\n67\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nthe Company’s collateralized incremental borrowing rate, adjusted for the lease term and currency of the lease payments. 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.\n\nThe following table sets forth the right-of-use assets and lease liabilities for operating leases included in the Company’s consolidated balance sheet:\n\nMarch 31, 2026March 31, 2025\n\nAssets\n\n   Operating lease right-of-use assets$37,272 $34,260 \n\nLiabilities\n\n    Current portion of operating lease liabilities$11,172 $10,742 \n\n    Long-term operating lease liabilities24,359 20,608 \n\n          Total operating lease liabilities$35,531 $31,350 \n\nThe following table sets forth the location and amount of operating lease costs included in the Company’s consolidated statement of income:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nIncome Statement Location\n\n   Cost of goods sold$16,220 $14,987 $11,806 \n\n   Selling, general, and administrative expenses9,461 9,572 10,691 \n\n          Total operating lease costs (1)\n$25,681 $24,559 $22,497 \n\n(1)Includes variable operating lease costs.\n\nThe following table reconciles the undiscounted cash flows to the operating lease liabilities in the Company’s consolidated balance sheet:\n\nMarch 31, 2026\n\nFiscal Year Maturity of Operating Lease Liabilities\n\n2027$13,232 \n\n20288,667 \n\n20296,660 \n\n20305,191 \n\n20312,654 \n\n2031 and thereafter7,406 \n\n          Total undiscounted cash flows for operating leases$43,810 \n\n          Less: Imputed interest(8,279)\n\nTotal operating lease liabilities$35,531 \n\nAs of March 31, 2026, the Company had entered into no additional operating leases that have not yet commenced.\n\nThe following table sets forth supplemental information related to operating leases:\n\nFiscal Year Ended March 31,\n\n(in thousands, except lease term and incremental borrowing rate)202620252024\n\nSupplemental Cash Flow Information\n\nCash paid for amounts included in the measurement of operating lease liabilities$16,061 $14,156 $13,898 \n\nRight-of-use assets obtained in exchange for new operating leases16,901 15,406 8,507 \n\nWeighted Average Remaining Lease Term (years)\n5.124.464.59\n\nWeighted Average Collateralized Incremental Borrowing Rate\n7.55 %6.92 %6.10 %\n\n68\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nNOTE 10.  DERIVATIVES AND HEDGING ACTIVITIES\n\nUniversal is exposed to various risks in its worldwide operations and uses derivative financial instruments to manage two specific types of risks – interest rate risk and foreign currency exchange rate risk. Interest rate risk has been managed by entering into interest rate swap agreements, and foreign currency exchange rate risk has been managed by entering into forward foreign currency exchange and option contracts. However, the Company’s policy also permits other types of derivative instruments. In addition, foreign currency exchange rate risk is also managed through strategies that do not involve derivative instruments, such as using local borrowings and other approaches to minimize net monetary positions in non-functional currencies. The disclosures below provide additional information about the Company’s hedging strategies, the derivative instruments used, and the effects of these activities on the consolidated statements of income and comprehensive income and the consolidated balance sheets. In the consolidated statements of cash flows, the cash flows associated with all of these activities are reported in net cash provided by operating activities.\n\nCash Flow Hedging Strategy for Interest Rate Risk\n\nIn December 2025, the Company entered into receive-floating/pay-fixed interest rate swap agreements that were designated and qualify as hedges of the exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on two outstanding non-amortizing bank term loans that were funded as part of a new bank credit facility in December 2025 (see Note 8 for additional information). Although no significant ineffectiveness is expected with this hedging strategy, the effectiveness of the interest rate swaps is evaluated on a quarterly basis. At March 31, 2026, the total notional amount of the interest rate swaps was $310 million, which corresponded to a portion of the aggregate balance of the term loans.\n\nPreviously, the Company entered into receive-floating/pay-fixed interest rate swap agreements in December 2022 that were designated and qualified as cash flow hedges for two non-amortizing bank loans that were repaid concurrent with the entry into the Company's new bank credit facility in December 2025. Those swap agreements, which had an aggregate notional amount of $310 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 $1.0 million, was paid to the counterparties in December 2025 upon termination and is being amortized from accumulated other comprehensive loss into earnings as interest expense through the original maturity dates of those agreements.\n\nCash Flow Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Forecast Purchases of Tobacco, Tobacco Processing Costs, and Crop Input Sales\n\nThe majority of the tobacco production in most countries outside the United States where Universal operates is sold in export markets at prices denominated in U.S. dollars. However, sales of crop inputs (such as seeds and fertilizers) to farmers, purchases of tobacco from farmers and most processing costs (such as labor and energy) in those countries are usually denominated in the local currency. Changes in exchange rates between the U.S. dollar and the local currencies where tobacco is grown and processed affect the ultimate U.S. dollar sales of crop inputs and cost of processed tobacco. From time to time, the Company enters into forward and option contracts to buy U.S. dollars and sell the local currency at future dates that coincide with the sale of crop inputs to farmers. In the case of forecast purchases of tobacco and the related processing costs, the Company enters into forward and option contracts to sell U.S. dollars and buy the local currency at future dates that coincide with the expected timing of a portion of the tobacco purchases and processing costs. These strategies offset the variability of future U.S. dollar cash flows for sales of crop inputs, tobacco purchases, and processing costs for the foreign currency notional amount hedged. 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 2026 by entering into derivative contracts to buy the local currencies and sell the U.S. dollar.\n\nThe aggregate U.S. dollar notional amount of forward and option contracts entered for these purposes during fiscal years 2026, 2025, and 2024 was as follows:\n\nFiscal Year Ended March 31,\n\n(in millions)202620252024\n\nTobacco purchases$60.5 $108.8 $30.3 \n\nProcessing costs11.5 16.9 4.9 \n\nOperating costs21.9 28.9 — \n\nCrop input sales37.7 31.1 30.1 \n\nTotal$131.6 $185.7 $65.3 \n\n69\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nFluctuations 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. dollar notional amount of forward contracts entered into from one year to the next. Contracts related to tobacco purchases and crop input sales were designated and qualified as hedges of the future cash flows associated with the forecast purchases of tobacco. As a result, changes in fair values of the forward contracts have been recognized in comprehensive income as they occurred, but only recognized in earnings as a component of cost of goods sold upon sale of the related tobacco to third-party customers. The Company de-designates ineffective tobacco purchases and crop input sales hedges to selling, general, and administrative expense when the forecasted tobacco purchases or crop input sales are no longer expected to occur.\n\nThe table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of March 31, 2026 for cash flows hedges of tobacco purchases and crop input sales will be recognized in earnings.\n\nHedging ProgramCrop YearGeographic Location(s)Fiscal Year Earnings\n\nTobacco purchases2026Brazil2027\n\nCrop input sales2027Brazil2028\n\nCrop input sales2026Brazil2027\n\nForward 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.\n\nHedging Strategy for Foreign Currency Exchange Rate Risk Related to Net Local Currency Monetary Assets and Liabilities of Foreign Subsidiaries\n\nMost of the Company’s foreign subsidiaries transact the majority of their sales in U.S. dollars and finance the majority of their operating requirements with U.S. dollar borrowings, and therefore use the U.S. dollar as their functional currency. These subsidiaries normally have certain monetary assets and liabilities on their balance sheets that are denominated in the local currency. Those assets and liabilities can include cash and cash equivalents, accounts receivable and accounts payable, advances to farmers and suppliers, deferred income tax assets and liabilities, recoverable VAT, operating lease liabilities, and other items. Net monetary assets and liabilities denominated in the local currency are remeasured into U.S. dollars each reporting period, generating gains and losses that the Company records in earnings as a component of selling, general, and administrative expenses. The level of net monetary assets or liabilities denominated in the local currency normally fluctuates throughout the year based on the operating cycle, but it is most common for monetary assets to exceed monetary liabilities, sometimes by a significant amount. When this situation exists and the local currency weakens against the U.S. dollar, remeasurement losses are generated. Conversely, remeasurement gains are generated on a net monetary asset position when the local currency strengthens against the U.S. dollar. To manage a portion of its exposure to currency remeasurement gains and losses, the Company enters into forward contracts to buy or sell the local currency at future dates coinciding with expected changes in the overall net local currency monetary asset position of the subsidiary. Gains and losses on the forward contracts are recorded in earnings as a component of selling, general, and administrative expenses for each reporting period as they occur, and thus directly offset the related remeasurement losses or gains in the consolidated statements of income for the notional amount hedged. The Company does not designate these contracts as hedges for accounting purposes. The contracts are generally arranged to hedge the subsidiary’s projected exposure to currency remeasurement risk for specified periods of time, and new contracts are entered as necessary throughout the year to replace previous contracts as they mature. The Company is currently using forward currency contracts to manage its exposure to currency remeasurement risk in Brazil. The total notional amounts of contracts outstanding at March 31, 2026 and 2025, were approximately $24.2 million and $17.7 million, respectively. To further mitigate currency remeasurement exposure, the Company’s foreign subsidiaries may utilize short-term local currency financing during certain periods. This strategy, while not involving the use of derivative instruments, is intended to minimize the subsidiary’s net monetary position by financing a portion of the local currency monetary assets with local currency monetary liabilities, thus hedging a portion of the overall position.\n\nSeveral of the Company’s foreign subsidiaries transact the majority of their sales and finance the majority of their operating requirements in their local currency, and therefore use their respective local currencies as the functional currency for reporting purposes. From time to time, these subsidiaries sell tobacco to customers in transactions that are not denominated in the functional currency. In those situations, the subsidiaries routinely enter into forward exchange contracts to offset currency risk for the period of time that a fixed-price order and the related trade account receivable are outstanding with the customer. The contracts are not designated as hedges for accounting purposes.\n\n70\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nEffect of Derivative Financial Instruments on the Consolidated Statements of Income\n\nThe table below outlines the effects of the Company’s use of derivative financial instruments on the consolidated statements of income for the fiscal years ended March 31, 2026, 2025, and 2024.\n\nFiscal Year Ended March 31,\n\n202620252024\n\nCash Flow Hedges - Interest Rate Swap Agreements\n\nDerivative\n\nEffective Portion of Hedge\n\nGain (loss) recorded in accumulated other comprehensive loss$191 $(247)$15,375 \n\nGain (loss) reclassified from accumulated other comprehensive loss into earnings$2,009 $4,676 $5,592 \n\nGain (loss) on terminated interest rate swaps amortized from accumulated other comprehensive loss into earnings$1,968 $2,754 $5,397 \n\nLocation of gain (loss) reclassified from accumulated other comprehensive loss into earningsInterest expense\n\nIneffective Portion of Hedge\n\nGain (loss) recognized in earnings$— $— $— \n\nLocation of gain (loss) recognized in earningsSelling, general and administrative expenses\n\nHedged Item\n\nDescription of hedged itemFloating rate interest payments on term loans\n\nCash Flow Hedges - Forward Foreign Currency Exchange Contracts\n\nDerivative\n\nEffective Portion of Hedge\n\nGain (loss) recorded in accumulated other comprehensive loss$1,202 $(5,708)$2,088 \n\nGain (loss) reclassified from accumulated other comprehensive loss into earnings$(3,519)$218 $7,996 \n\nLocation of gain (loss) reclassified from accumulated other comprehensive loss into earningsCost of goods sold\n\nIneffective Portion and Early De-designation of Hedges\n\nGain (loss) recognized in earnings$— $— $1,138 \n\nLocation of gain (loss) recognized in earningsSelling, general and administrative expenses\n\nHedged Item\n\nDescription of hedged item Forecast purchases of tobacco and sales of crop inputs in Brazil and Africa\n\nDerivatives Not Designated as Hedges -\nForward Foreign Currency Exchange Contracts\n\nGain (loss) recognized in earnings$(1,006)$(563)$(3,484)\n\nLocation of gain (loss) recognized in earningsSelling, general and administrative expenses\n\nFor 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.\n\nFor 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 $1.3 million remained in accumulated other comprehensive loss at March 31, 2026. That balance reflects gains and losses on contracts related to the purchase of 2026 Brazil crops and the 2027 and 2026 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through March 31, 2026. Based on the hedging strategy, as the gain or loss is recognized in earnings, it is expected to be offset by a change in the direct cost for the tobacco or by a change in sales prices if the strategy has been mandated by the customer. Generally, margins on the sale of the tobacco will not be significantly affected.\n\n71\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nEffect of Derivative Financial Instruments on the Consolidated Balance Sheets\n\nThe table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at March 31, 2026 and 2025:\n\nDerivatives in a Fair Value\nAsset PositionDerivatives in a Fair Value\nLiability Position\n\nBalance\nSheet\nLocationFair Value as of March 31,Balance\nSheet\nLocationFair Value as of March 31,\n\n2026202520262025\n\nDerivatives Designated as Hedging Instruments\n\nInterest rate swap agreementsOther\nnon-current\nassets$953 $1,783 Other\nlong-term\nliabilities$— $— \n\nForward foreign currency exchange contractsOther\ncurrent\nassets307 11 Accounts\npayable and\naccrued\nexpenses321 5,228 \n\nTotal$1,260 $1,794 $321 $5,228 \n\nDerivatives Not Designated as Hedging Instruments\n\nForward foreign currency exchange contractsOther\ncurrent\nassets$458 $291 Accounts\npayable and\naccrued\nexpenses$273 $1,440 \n\nTotal$458 $291 $273 $1,440 \n\nSubstantially all of the Company’s forward foreign currency exchange contracts are subject to master netting arrangements, whereby the right to offset occurs in the event of default by a participating party. The Company has elected to present these contracts on a gross basis in the consolidated balance sheets.\n\nNOTE 11.  FAIR VALUE MEASUREMENTS\n\nUniversal measures certain financial and nonfinancial assets and liabilities at fair value based on applicable accounting guidance. The financial assets and liabilities measured at fair value include money market funds, trading securities associated with deferred compensation plans, interest rate swap agreements, forward foreign currency exchange contracts, and guarantees of bank loans to tobacco growers. The application of the fair value guidance to nonfinancial assets and liabilities primarily includes the determination of fair values for goodwill and long-lived assets when indicators of potential impairment are present.\n\nUnder the accounting guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The framework for measuring fair value is based on a fair value hierarchy that distinguishes between observable inputs and unobservable inputs. Observable inputs are based on market data obtained from independent sources. Unobservable inputs require the Company to make its own assumptions about the value placed on an asset or liability by market participants because little or no market data exists.\n\nThere are three levels within the fair value hierarchy.\n\nLevelDescription\n\n1quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date;\n\n2quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and\n\n3unobservable inputs for the asset or liability.\n\n72\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nAs permitted under the accounting guidance, the Company uses net asset value per share (“NAV”) as a practical expedient to measure the fair value of its money market funds. The fair values for those funds are presented under the heading NAV in the tables that follow in this disclosure. In measuring the fair value of liabilities, the Company considers the risk of non-performance in determining fair value. Universal has not elected to report at fair value any financial instruments or any other assets or liabilities that are not required to be reported at fair value under current accounting guidance.\n\nRecurring Fair Value Measurements\n\nAt March 31, 2026 and 2025, the Company had certain financial assets and financial liabilities that were required to be measured and reported at fair value on a recurring basis. These assets and liabilities are listed in the tables below and are classified based on how their values were determined under the fair value hierarchy or the NAV practical expedient:\n\nMarch 31, 2026\n\nFair Value Hierarchy\n\nNAVLevel 1Level 2Level 3Total\n\nAssets\n\nMoney market funds$10 $— $— $— $10 \n\nTrading securities associated with deferred compensation plans— 11,630 — — 11,630 \n\nInterest rate swap agreements— — 953 — 953 \n\nForward foreign currency exchange contracts— — 765 — 765 \n\nTotal financial assets measured and reported at fair value$10 $11,630 $1,718 $— $13,358 \n\nLiabilities\n\nForward foreign currency exchange contracts$— $— $594 $— $594 \n\nTotal financial liabilities measured and reported at fair value$— $— $594 $— $594 \n\nMarch 31, 2025\n\nFair Value Hierarchy\n\nNAVLevel 1Level 2Level 3Total\n\nAssets\n\nMoney market funds$149 $— $— $— $149 \n\nTrading securities associated with deferred compensation plans— 11,313 — — 11,313 \n\nInterest rate swap agreements— — 1,783 — 1,783 \n\nForward foreign currency exchange contracts— — 302 — 302 \n\n Total financial assets measured and reported at fair value$149 $11,313 $2,085 $— $13,547 \n\nLiabilities\n\nForward foreign currency exchange contracts$— $— $6,668 $— $6,668 \n\n Total financial liabilities measured and reported at fair value$— $— $6,668 $— $6,668 \n\nMoney market funds\n\nThe fair value of money market funds, which are reported in cash and cash equivalents in the consolidated balance sheets, is based on NAV, which is the amount at which the funds are redeemable and is used as a practical expedient for fair value. These funds are not classified in the fair value hierarchy, but are disclosed as part of the fair value table above.\n\n73\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nTrading securities associated with deferred compensation plans\n\nTrading securities represent mutual fund investments that are matched to employee deferred compensation obligations. These investments are bought and sold as employees defer compensation, receive distributions, or make changes in the funds underlying their accounts. Quoted market prices (Level 1) are used to determine the fair values of the mutual funds.\n\nInterest rate swap agreements\n\nThe fair values of interest rate swap agreements are determined based on dealer quotes using a discounted cash flow model matched to the contractual terms of each instrument. Since inputs to the model are observable and significant judgment is not required in determining the fair values, interest rate swaps are classified within Level 2 of the fair value hierarchy.\n\nForward foreign currency exchange contracts\n\nThe fair values of forward foreign currency exchange contracts are also determined based on dealer quotes using a discounted cash flow model matched to the contractual terms of each instrument. Since inputs to the model are observable and significant judgment is not required in determining the fair values, forward foreign currency exchange contracts are classified within Level 2 of the fair value hierarchy.\n\nLong-term Debt\n\nThe following table summarizes the fair and carrying value of the Company’s long-term debt, including the current portion at each of the balance sheet dates March 31, 2026 and 2025:\n\nFiscal Year Ended March 31,\n\n(in millions of dollars)20262025\n\nFair market value of long-term obligations$615 $616 \n\nCarrying value of long-term obligations$620 $620 \n\nThe Company estimates the fair value of its long-term debt using Level 2 inputs which are based upon quoted market prices for the same or similar obligations or on calculations that are based on the current interest rates available to the Company for debt of similar terms and maturities. See Note 8 for more information regarding long-term debt.\n\nNonrecurring Fair Value Measurements\n\nAssets and liabilities that are measured at fair value on a nonrecurring basis primarily relate to long-lived assets, right-of-use operating lease assets and liabilities, goodwill and intangibles, and other current and noncurrent assets. These assets and liabilities fair values are evaluated for impairment when potential indicators of impairment exist. Accordingly, the nonrecurring measurement of the fair value of these assets and liabilities are classified within Level 3 of the fair value hierarchy. See Note 1 for discussion of the goodwill impairment at Universal Ingredients–Shank’s.\n\nAcquisition Accounting for Business Combinations\n\nThe Company accounts for acquisitions qualifying under ASC 805, “Business Combinations,” which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair values of consideration transferred and net assets acquired are determined using a combination of Level 2 and Level 3 inputs as specified in the fair value hierarchy in ASC 820, “Fair Value Measurements and Disclosures.” The Company believes that the fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions. The significant assumptions used in determining the fair value include the discount rate and forecasted results (e.g., revenue growth rates and operating profit margins).\n\nLong-Lived Assets\n\nThe 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.\n\nConsolidation of tobacco sheet operations\n\nAs 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 for the fiscal year ended March 31, 2025, 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 in fiscal year 2025. After reassessing the fair value of the\n\n74\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nlong-lived assets associated with the operations in Germany, an additional $1.0 million impairment charge was recognized in fiscal year 2026.\n\nNOTE 12.  PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS\n\nDefined Benefit Plans\n\nDescription of Plans\n\n The Company sponsors several defined benefit pension plans covering salaried and certain hourly employees in the U.S., as well as certain foreign and other employee groups. These plans provide retirement benefits based primarily on employee compensation and years of service. Plan assets consist primarily of equity and fixed income investments. The Company also sponsors defined benefit plans that provide postretirement health and life insurance benefits for eligible U.S. 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. The plan design includes cost-sharing features such as deductibles and coinsurance. The life insurance benefits are funded with deposits to a reserve account held by an insurance company. The Company has the right to amend or discontinue its pension and other postretirement benefit plans at any time.\n\nIn the following disclosures, the term “accumulated benefit obligation” (“ABO”) represents the actuarial present value of estimated future benefit payments earned by participants in the Company’s defined benefit pension plans as of the balance sheet date without regard to the estimated effect of future compensation increases on those benefits. The term does not apply to other postretirement benefits. “Projected benefit obligation” refers to the projected benefit obligation (“PBO”) for pension benefits and the accumulated postretirement benefit obligation (“APBO”) for other postretirement benefits. These amounts represent the actuarial present value of estimated future benefit payments earned by participants in the benefit plans as of the balance sheet date. For pension benefits, the PBO includes the estimated effect of future compensation increases on those benefits.\n\nActuarial Assumptions\n\nAssumptions used for financial reporting purposes to compute net periodic benefit cost and benefit obligations for the Company’s primary defined benefit plans were as follows:\n\nPension BenefitsOther Postretirement Benefits\n\n202620252024202620252024\n\nDiscount rates:\n\nBenefit cost for plan year5.58 %5.27 %5.00 %5.35 %5.17 %4.90 %\n\nBenefit obligation at end of plan year5.87 %5.58 %5.27 %5.54 %5.35 %5.17 %\n\nExpected long-term return on plan assets:\n\nBenefit cost for plan year6.75 %6.30 %6.50 %3.00 %3.00 %3.00 %\n\nSalary scale:\n\nBenefit cost for plan year5.00 %4.00 %4.00 %5.00 %4.00 %4.00 %\n\nBenefit obligation at end of plan year5.00 %5.00 %4.00 %5.00 %5.00 %4.00 %\n\nHealthcare cost trend rateN/AN/AN/A8.95 %8.08 %6.97 %\n\nChanges in the discount rates in the above table reflect prevailing market interest rates at the end of each fiscal year when the benefit obligations are actuarially measured. The expected long-term return on plan assets is developed from financial models used to project future returns on the underlying assets of the funded plans and is reviewed on an annual basis. The healthcare cost trend rate used by the Company is based on a study of medical cost inflation rates that is reviewed and updated annually for continued applicability. The trend assumption of 8.95% in 2026 declines gradually to 4.45% in 2035. The Company has caps in place on postretirement medical benefits that limit its cost for a large segment of the retiree population. As a result, changes to the healthcare cost trend rate have a limited impact on the postretirement medical plan liability and expense.\n\n75\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nBenefit Obligations, Plan Assets, and Funded Status\n\nThe following table reflects the changes in benefit obligations and plan assets in fiscal years 2026 and 2025, as well as the funded status of the plans at March 31, 2026 and 2025:\n\nPension\nBenefitsOther Postretirement Benefits\n\nMarch 31,March 31,\n\n2026202520262025\n\nActuarial present value of benefit obligation:\n\nAccumulated benefit obligation$173,312 $180,725 \n\nProjected benefit obligation180,388 187,918 $17,285 $18,134 \n\nChange in projected benefit obligation:\n\nProjected benefit obligation, beginning of year$187,918 $237,626 $18,134 $20,077 \n\nService cost5,059 5,192 65 75 \n\nInterest cost9,651 11,943 1,038 1,062 \n\nEffect of discount rate change(5,275)(4,710)(157)(469)\n\nForeign currency exchange rate changes— (146)217 (325)\n\nSettlements— (46,714)— — \n\nOther3,481 232 573 247 \n\nBenefit payments(20,446)(15,505)(2,585)(2,533)\n\nProjected benefit obligation, end of year$180,388 $187,918 $17,285 $18,134 \n\nChange in plan assets:\n\nPlan assets at fair value, beginning of year$171,031 $220,336 $1,537 $1,934 \n\nActual return on plan assets13,135 9,766 44 53 \n\nEmployer contributions11,674 3,290 2,084 2,083 \n\nSettlements— (46,714)— — \n\nForeign currency exchange rate changes(577)(142)— — \n\nBenefit payments(20,446)(15,505)(2,585)(2,533)\n\nPlan assets at fair value, end of year$174,817 $171,031 $1,080 $1,537 \n\nFunded status:\n\nFunded status of the plans, end of year$(5,571)$(16,887)$(16,205)$(16,597)\n\nThe Company funds its non-regulated U.S. pension plan, one of its foreign pension plans, and its postretirement medical plans on a pay-as-you-go basis as the benefit payments are incurred. The unfunded PBO for those pension plans and postretirement benefit plans was $21.1 million and $14.2 million, respectively, at March 31, 2026.\n\nThe funded status of the Company’s plans at the end of fiscal years 2026 and 2025 was reported in the consolidated balance sheets as follows:\n\nPension\nBenefitsOther Postretirement Benefits\n\nMarch 31,March 31,\n\n2026202520262025\n\nNoncurrent assets (included in Pension asset)$16,541 $12,819 $— $— \n\nCurrent liability (included in Accrued expenses and other current liabilities)(1,508)(9,497)(1,337)(1,471)\n\nNoncurrent liability (reported as Pensions and other postretirement benefits)(20,604)(20,209)(14,868)(15,126)\n\nAmounts recognized in the consolidated balance sheets$(5,571)$(16,887)$(16,205)$(16,597)\n\n76\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nAdditional information on the funded status of the Company’s plans as of the respective measurement dates for the fiscal years ended March 31, 2026 and 2025, is as follows:\n\nPension\nBenefitsOther Postretirement Benefits\n\nMarch 31,March 31,\n\n2026202520262025\n\nFor plans with a projected benefit obligation in excess of plan assets:\n\nAggregate projected benefit obligation (PBO)$32,924 $39,116 $17,285 $18,134 \n\nAggregate fair value of plan assets10,812 — 1,080 1,537 \n\nFor plans with an accumulated benefit obligation in excess of plan assets:\n\nAggregate accumulated benefit obligation (ABO)30,645 37,352 N/AN/A\n\nAggregate fair value of plan assets10,812 — N/AN/A\n\nNet Periodic Benefit Cost\n\nThe components of the Company’s net periodic benefit cost were as follows:\n\nPension BenefitsOther Postretirement Benefits\n\nFiscal Year Ended March 31,Fiscal Year Ended March 31,\n\n202620252024202620252024\n\nComponents of net periodic benefit cost:\n\nService cost$5,059 $5,192 $5,214 $65 $75 $239 \n\nInterest cost9,651 11,943 11,566 1,038 1,062 1,049 \n\nExpected return on plan assets(12,685)(14,874)(15,504)(42)(53)(63)\n\nSettlement cost— 14,101 — — — — \n\nNet amortization and deferral(79)15 659 (730)(662)(791)\n\nNet periodic benefit cost$1,946 $16,377 $1,935 $331 $422 $434 \n\nA one-percentage-point increase or decrease in the assumed healthcare cost trend rate would not result in a significant change to the March 31, 2026 APBO or the aggregate service and interest cost components of the net periodic postretirement benefit expense for fiscal year 2027.\n\nIn 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.\n\n77\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nAmounts Included in Accumulated Other Comprehensive Loss\n\nAmounts included in accumulated other comprehensive loss at the beginning of the year are amortized as a component of net periodic benefit cost during the year. The amounts recognized in other comprehensive income or loss for fiscal years 2026 and 2025 and the amounts included in accumulated other comprehensive loss at the end of those fiscal years are shown below. All amounts shown are before allocated income taxes.\n\nPension\nBenefitsOther Postretirement Benefits\n\nMarch 31,March 31,\n\n2026202520262025\n\nChange in net actuarial loss (gain):\n\nNet actuarial loss (gain), beginning of year$50,050 $63,428 $(6,732)$(7,169)\n\nLosses (gains) arising during the year(2,460)893 408 (221)\n\nSettlement— (14,101)— — \n\nAmortization included in net periodic benefit cost during the year104 (170)728 658 \n\nNet actuarial loss (gain), end of year47,694 50,050 (5,596)(6,732)\n\nChange in prior service cost (benefit):\n\nPrior service cost (benefit), beginning of year524 369 (27)(31)\n\n   Prior service cost (benefit) arising during the year— — — — \n\nAmortization included in net periodic benefit cost during the year(25)155 3 4 \n\nPrior service cost (benefit), end of year499 524 (24)(27)\n\nTotal amounts in accumulated other comprehensive loss\n\nat end of year, before income taxes\n$48,193 $50,574 $(5,620)$(6,759)\n\nAmounts in the above table reflect the Company and its consolidated subsidiaries. The accumulated other comprehensive loss reported in the consolidated balance sheets also includes pension and other postretirement benefit amounts related to ownership interests in unconsolidated affiliates.\n\nThe Company expects to recognize approximately $0.7 million of the March 31, 2026 net actuarial loss and $0.1 million of the March 31, 2026 prior service benefit in net periodic benefit cost during fiscal year 2027.\n\nAllocation of Pension Plan Assets\n\nThe Company has established, and periodically adjusts, target asset allocations for its investments in its U.S. ERISA-regulated defined benefit pension plan, which represents 94% of consolidated plan assets and 82% of consolidated PBO at March 31, 2026, to balance the needs of liquidity, total return, and risk control. The assets are required to be diversified across asset classes and investment styles to achieve that balance. During the year, the asset allocation is reviewed for adherence to the target policy and rebalanced to the targeted weights. The Company reviews the expected long-term returns of the asset allocation each year to help determine whether changes are needed. The return is evaluated on a weighted-average basis in relation to inflation. 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.\n\nThe weighted–average target pension asset allocation and target ranges at the March 31, 2026 measurement date and the actual asset allocations at the March 31, 2026 and 2025 measurement dates by major asset category were as follows:\n\nActual Allocation\n\nTarget AllocationMarch 31,\n\nMajor Asset CategoryRange20262025\n\nEquity securities30.0 %20 %-40 %29.5 %28.4 %\n\nFixed income securities (1)\n65.0 %55 %-75 %65.3 %63.8 %\n\nAlternative investments5.0 %0 %-10 %5.2 %7.8 %\n\nTotal100.0 %100.0 %100.0 %\n\n(1)Actual amounts include high yield securities and cash balances held for the payment of benefits.    \n\n78\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nUniversal makes regular contributions to its pension and other postretirement benefit plans. As previously noted, for postretirement health benefits, contributions reflect funding of those benefits as they are incurred. The Company expects to make no contributions to its ERISA regulated defined benefit pension plan and $3.4 million to its non-ERISA regulated pension plans in fiscal year 2027.\n\nEstimated future benefit payments to be made from the Company’s plans are as follows:\n\nPension\nBenefitsOther\nPostretirement\nBenefits\n\nFiscal Year\n\n2027$13,154 $1,782 \n\n202816,553 1,708 \n\n202913,383 1,629 \n\n203012,724 1,580 \n\n203114,890 1,557 \n\n2032 - 203668,833 7,318 \n\nFair Values of Pension Plan Assets\n\nAssets held by the Company’s defined benefit pension plans primarily consist of equity securities, fixed income securities, and alternative investments. Equity securities are primarily invested in actively-traded mutual funds with underlying common stock investments in U.S. and foreign companies ranging in size from small to large corporations. Fixed income securities are also held primarily through actively-traded mutual funds with the underlying investments in both U.S. and foreign securities. The methodologies for determining the fair values of the plan assets are outlined below. Where the values are based on quoted prices for the securities in an active market, they are classified as Level 1 of the fair value hierarchy. Where secondary pricing sources are used, they are classified as Level 2 of the hierarchy. Pricing models that use significant unobservable inputs are classified as Level 3.\n\n•Equity securities: Investments in equity securities through actively-traded mutual funds are valued based on the NAVs of the units held in the respective funds, which are determined by obtaining quoted prices on nationally recognized securities exchanges. These securities are classified as Level 1.\n\n•Fixed income securities: Fixed income investments that are held through mutual funds are valued based on the NAVs of the units held in the respective funds, which are determined by obtaining quoted prices on nationally recognized securities exchanges. These securities are classified as Level 1. Other fixed income investments are valued at an estimated price that a dealer would pay for a similar security on the valuation date using observable market inputs and are classified as Level 2. These market inputs may include yield curves for similarly rated securities. Small amounts of cash are held in common collective trusts. Fixed income securities also include insurance assets, which are valued based on an actuarial calculation. Those securities are classified as Level 3.\n\n•Alternative investments: 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. These models use significant unobservable inputs and are classified as Level 3 within the fair value hierarchy.\n\nFair values of the assets of the Company’s pension plans as of March 31, 2026 and 2025, classified based on how their values were determined under the fair value hierarchy are as follows:\n\nMarch 31, 2026\n\nLevel 1Level 2Level 3Total\n\nEquity securities$48,050 $— $— $48,050 \n\nFixed income securities (1)\n93,119 14,331 10,812 118,262 \n\nAlternative investments— — 8,505 8,505 \n\nTotal investments$141,169 $14,331 $19,317 $174,817 \n\n79\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nMarch 31, 2025\n\nLevel 1Level 2Level 3Total\n\nEquity securities$45,008 $— $— $45,008 \n\nFixed income securities (1)\n104,071 — 9,409 113,480 \n\nAlternative investments— — 12,543 12,543 \n\nTotal investments$149,079 $— $21,952 $171,031 \n\n(1)Includes high yield securities and cash and cash equivalent balances.\n\nOther Benefit Plans\n\nUniversal and several subsidiaries offer employer defined contribution savings plans. Amounts charged to expense for these plans were approximately $4.8 million for fiscal year 2026, $5.2 million for fiscal year 2025, and $4.3 million for fiscal year 2024.\n\nNOTE 13.  CAPITAL STOCK\n\nCommon Stock\n\nAt March 31, 2026, the Company’s shareholders had authorized 100,000,000 shares of its common stock, and 24,923,496 shares were issued and outstanding. Holders of the common stock are entitled to one vote for each share held on all matters requiring a vote. Holders of the common stock are also entitled to receive dividends when, as, and if declared by the Company’s Board of Directors. The Board of Directors customarily declares and pays regular quarterly dividends on the outstanding common shares; however, such dividends are at the Board’s full discretion, and there is no obligation to continue them.\n\nPreferred Stock\n\nThe Company is also authorized to issue up to 5,000,000 shares of preferred stock. No preferred stock was outstanding at March 31, 2026.\n\nShare Repurchase Programs\n\nUniversal’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. Programs have been in place continuously throughout fiscal years 2024 through 2026. 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 November 15, 2026. At March 31, 2026, $100 million of the authorization remained available for share repurchases under the current program.\n\nRepurchases of common stock under the programs for fiscal years 2026, 2025, and 2024 were as follows:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nNumber of shares repurchased— — 100,000 \n\nCost of shares repurchased (in thousands of dollars)$— $— $4,744 \n\nWeighted-average cost per share$— $— $47.44 \n\nNOTE 14.  EXECUTIVE STOCK PLANS AND STOCK-BASED COMPENSATION\n\nExecutive Stock Plans\n\nThe 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, 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. Together, these plans are referred to in this disclosure as the “Plans.” Up to 1,250,000 shares may be issued under the 2023 Stock Incentive Plan, with no specific share limit for any of the award types. New awards may no longer be issued under the 1997, 2002, 2007, and 2017 Plans.\n\n80\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nThe 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. Outside directors automatically receive restricted stock units following each annual meeting of shareholders.\n\nRSUs awarded to officers generally vest 3 years after the grant date. After vesting RSUs are paid out in shares of common stock. Under the terms of the RSU awards, grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same vesting date as the original RSU grant. The PSUs vest 3 years from the grant date, are paid out in shares of common stock at the vesting date, and do not carry rights to dividends or dividend equivalents prior to vesting. Shares ultimately paid out under PSU grants are dependent on the achievement of predetermined performance measures established by the Compensation Committee and can range from zero to 150% of the stated award. RSUs awarded to outside directors vest 1 year after the grant date. Additionally, restricted stock vests upon the individual’s retirement from service as a director.\n\nRSUs, Restricted Stock, and PSUs\n\nThe following table summarizes the Company’s RSU, restricted stock, and PSU activity for fiscal years 2024 through 2026:\n\nRSUsRestricted StockPSUs\n\nSharesWeighted-Average\nGrant Date\nFair ValueSharesWeighted-Average\nGrant Date\nFair ValueSharesWeighted-Average\nGrant Date\nFair Value\n\nFiscal Year Ended March 31, 2024:\n\nUnvested at beginning of year382,410 $56.03 11,600 $41.86 160,015 $44.55 \n\nGranted117,103 51.90 — — 65,645 43.01 \n\nVested(109,877)61.75 — — (73,963)34.45 \n\nForfeited— — — — (467)34.33 \n\nUnvested at end of year389,636 53.18 11,600 41.86 151,230 48.22 \n\nFiscal Year Ended March 31, 2025:\n\nGranted157,861 49.36 — — 75,264 38.23 \n\nVested(159,631)56.42 — — (61,829)47.95 \n\nForfeited— — — — — — \n\nUnvested at end of year387,866 50.29 11,600 41.86 164,665 44.54 \n\nFiscal Year Ended March 31, 2026:\n\nGranted133,142 61.53 — — 75,151 55.89 \n\nVested(268,998)50.46 — — (71,816)54.46 \n\nForfeited(2,667)51.56 — — (2,425)42.55 \n\nUnvested at end of year249,343 $56.10 11,600 $41.86 165,575 $45.21 \n\nShares granted and vested in the above table include dividend equivalents on RSUs and any shares awarded above the base grant under the performance provisions of PSUs. Shares forfeited or canceled include any reductions from the base PSU grant under those same performance provisions. The fair values of RSUs, restricted stock, and PSUs are based on the market price of the common stock on the grant date.\n\nStock-Based Compensation Expense\n\nFair 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\n\n81\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\ngrant. For the fiscal years ended March 31, 2026, 2025, and 2024, total stock-based compensation expense and the related income tax benefit recognized were as follows:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nTotal stock-based compensation expense$7,116 $8,531 $12,063 \n\nIncome tax benefit recorded on stock-based compensation expense$1,597 $1,914 $2,713 \n\nAt March 31, 2026, the Company had $3.3 million of unrecognized compensation expense related to stock-based awards, which will be recognized over a weighted-average period of approximately 0.7 years.\n\nNOTE 15.  COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS\n\nCommitments\n\nThe Company enters into contracts to purchase tobacco from farmers in a number of the countries where it operates. Contracts in most countries cover one annual growing season. 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, 2026, the Company had contracts to purchase approximately $699 million of tobacco to be delivered during fiscal year 2027 and $159 million of tobacco to be delivered in subsequent fiscal 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. Tobacco purchase obligations have been partially funded by short-term advances to farmers and other suppliers, which totaled approximately $180 million, net of allowances, at March 31, 2026. The Company withholds payments due to farmers on delivery of the tobacco to satisfy repayment of the financing it provided to the farmers. In addition to its contractual obligations to purchase tobacco, the Company had commitments related to agricultural materials, approved capital expenditures, and various other requirements that approximated $90 million at March 31, 2026.\n\nOther Contingent Liabilities\n\nOther Contingent Liabilities (Letters of credit)\n\nThe Company had other contingent liabilities totaling approximately $1.0 million at March 31, 2026, primarily under outstanding letters of credit.\n\nValue-Added Tax Assessments in Brazil\n\nThe Company’s local operating subsidiaries pay significant amounts of value-added tax (“VAT”) in connection with their operations, which generate tax credits that they normally are entitled to recover through offset, refund, or sale to third parties. In Brazil, VAT is assessed at the state level when green tobacco is transferred between states. The Company’s Brazilian operating subsidiary pays VAT when tobaccos grown outside the state of Rio Grande do Sul are transferred to the factory for processing. The subsidiary received assessments for additional VAT plus interest and penalties from tax authorities for the state of Parana based on audits of the subsidiary’s VAT filings for specified periods. Management of the subsidiary and outside counsel challenged the Parana assessment claims. In July 2025, a final and indisputable favorable ruling was issued by the Brazilian National Treasury Attorney's office declaring the Parana assessment without merit, requiring the state to withdraw and cancel all claims made against the Company's Brazilian operating subsidiary.\n\nOther Legal and Tax Matters\n\nVarious subsidiaries of the Company are involved in other litigation and tax examinations incidental to their business activities. While the outcome of these matters cannot be predicted with certainty, management is vigorously defending the matters and does not currently expect that any of them will have a material adverse effect on the Company’s business or financial position. However, should one or more of these matters be resolved in a manner adverse to management’s current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.\n\nNOTE 16.  OPERATING SEGMENTS\n\nManagement 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 (“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.\n\n82\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nThe Tobacco Operations segment activities involve contracting, procuring, processing, packing, storing, and shipping 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. 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. A substantial portion of the Company’s Tobacco Operations’ revenues are derived from sales to a limited number of large, multinational cigarette and cigar manufacturers.\n\nThe Ingredients Operations segment provides its customers with a broad variety of plant-based ingredients for both human and pet consumption. The Ingredients Operations segment utilizes a variety of value-added manufacturing processes converting raw materials into a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, botanical extracts, flavorings, and colorings. Customers for the Ingredients Operations segment include large multinational food and beverage companies, smaller independent manufacturers, and retail organizations. FruitSmart, Silva, and 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. 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.\n\nUniversal 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 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.\n\n83\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nReportable segment data as of, or for, the fiscal years ended March 31, 2026, 2025, and 2024, is as follows:\n\nFiscal Year Ended March 31, 2026Fiscal Year Ended March 31, 2025Fiscal Year Ended March 31, 2024\n\nTobacco OperationsIngredients OperationsConsolidatedTobacco OperationsIngredients OperationsConsolidatedTobacco OperationsIngredients OperationsConsolidated\n\nSales and other operating revenues$2,576,358 $348,112 $2,924,470 $2,608,675 $338,609 $2,947,284 $2,438,775 $309,798 $2,748,573 \n\nCost of goods sold(2,124,845)(287,609)(2,412,454)(2,133,063)(265,564)(2,398,627)(1,975,955)(236,520)(2,212,475)\n\nSelling, general and administrative expenses(181,476)(45,559)(227,035)(179,340)(48,610)(227,950)(179,569)(56,624)(236,193)\n\nCorporate overhead allocated to the segments(61,928)(11,708)(73,636)(65,195)(12,142)(77,337)(61,655)(12,718)(74,373)\n\nEquity in pretax earnings (loss) of unconsolidated\n\naffiliates (1)\n3,430 — 3,430 9,103 — 9,103 756 — 756 \n\nSegment operating income211,539 3,236 214,775 240,180 12,293 252,473 222,352 3,936 226,288 \n\nDeduct: Equity in pretax (earnings) loss of unconsolidated affiliates (1)\n(3,430)(9,103)(756)\n\nRestructuring and impairment costs (2)\n(1,833)(10,573)(3,523)\n\nGoodwill impairment (3)\n(41,061)— — \n\nConsolidated operating income$168,451 $232,797 $222,009 \n\n(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.\n\n(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).\n\n(3)Goodwill impairment is excluded from reportable segment operating income, but is included in consolidated operating income in the consolidated statements of income (see Note 1).\n\nSegment AssetsAccounts Receivable, net\n\nMarch 31,March 31,\n\n202620252024202620252024\n\nTobacco Operations$2,300,491 $2,436,416 $2,451,895 $508,247 $566,755 $472,357 \n\nIngredients Operations466,276 553,136 485,344 55,617 59,121 52,905 \n\nConsolidated total$2,766,767 $2,989,552 $2,937,239 $563,864 $625,876 $525,262 \n\nGoodwill, netIntangibles, net\n\nMarch 31,Fiscal Year Ended March 31,\n\n202620252024202620252024\n\nTobacco Operations$97,688 $97,772 $97,801 $47 $47 $62 \n\nIngredients Operations\n75,007 116,068 116,068 48,557 57,789 68,821 \n\nConsolidated total$172,695 $213,840 $213,869 $48,604 $57,836 $68,883 \n\nCapital ExpendituresDepreciation and Amortization\n\nFiscal Year Ended March 31,Fiscal Year Ended March 31,\n\n202620252024202620252024\n\nTobacco Operations$34,332 $35,387 $35,173 $32,822 $39,494 $40,267 \n\nIngredients Operations14,497 27,214 30,840 20,615 20,279 18,059 \n\nConsolidated total$48,829 $62,601 $66,013 $53,437 $59,773 $58,326 \n\n84\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nGeographic data as of, or for, the fiscal years ended March 31, 2026, 2025, and 2024, 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.\n\nGeographic DataSales and Other Operating Revenues\n\nFiscal Year Ended March 31,\n\n202620252024\n\nUnited States$659,364 $622,325 $547,923 \n\nBelgium559,625 532,479 552,208 \n\nIndonesia193,543 105,934 117,019 \n\nPoland170,885 99,845 97,723 \n\nChina169,291 293,619 219,979 \n\nPhilippines151,515 120,648 133,656 \n\nGermany65,817 115,938 95,350 \n\nItaly51,904 46,417 47,197 \n\nFrance41,369 22,323 16,669 \n\nNetherlands29,107 37,501 42,492 \n\nMexico22,830 29,073 26,438 \n\nAll other countries809,220 921,182 851,919 \n\nConsolidated total$2,924,470 $2,947,284 $2,748,573 \n\nLong-Lived Assets (net)\n\nMarch 31,\n\n(in thousands)202620252024\n\nUnited States$314,160 $362,701 $355,905 \n\nBrazil139,285 139,497 139,642 \n\nMozambique40,748 39,415 35,845 \n\nAll other countries100,060 103,037 117,240 \n\nConsolidated total$594,253 $644,650 $648,632 \n\n85\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\nNOTE 17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)\n\nThe following table summarizes the changes in the balances for each component of accumulated other comprehensive income (loss) attributable to the Company for the fiscal years ended March 31, 2026, 2025, and 2024:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nForeign currency translation:\n\nBalance at beginning of year$(42,639)$(44,815)$(44,233)\n\nOther comprehensive income (loss) attributable to Universal Corporation:\n\nNet gain (loss) on foreign currency translation4,955 1,750 (1,531)\n\nLess: Net loss on foreign currency translation attributable to noncontrolling interests570 426 949 \n\nOther comprehensive income (loss) attributable to Universal Corporation, net of income taxes5,525 2,176 (582)\n\nBalance at end of year$(37,114)$(42,639)$(44,815)\n\nForeign currency hedge:\n\nBalance at beginning of year$(4,914)$(616)$4,899 \n\nOther comprehensive income (loss) attributable to Universal Corporation:\n\nNet gain (loss) on derivative instruments (net of tax (expense) benefit of $(561), $1,440\n\nand $17)\n2,779 (4,860)(187)\n\nReclassification of net (gain) loss to earnings (net of tax expense (benefit) of $(525), $(75),\n\nand $1,718) (1)\n1,057 562 (5,328)\n\nOther comprehensive income (loss) attributable to Universal Corporation, net of income taxes3,836 (4,298)(5,515)\n\nBalance at end of year$(1,078)$(4,914)$(616)\n\nInterest rate hedge:\n\nBalance at beginning of year$2,834 $8,488 $5,253 \n\nOther comprehensive income (loss) attributable to Universal Corporation:\n\nNet gain (loss) on derivative instruments (net of tax (expense) benefit of $(50), $65,\n\nand $(4,035))\n140 (183)11,340 \n\nReclassification of net (gain) loss to earnings (net of tax expense (benefit) of $1,047, $1,958,\n\nand $2,884) (2)\n(2,930)(5,471)(8,105)\n\nOther comprehensive income (loss) attributable to Universal Corporation, net of income taxes(2,790)(5,654)3,235 \n\nBalance at end of year$44 $2,834 $8,488 \n\nPension and other postretirement benefit plans:\n\nBalance at beginning of year$(35,332)$(44,642)$(42,976)\n\nOther comprehensive income (loss) attributable to Universal Corporation:\n\nNet gain (loss) arising during the year (net of tax (expense) benefit of $(42), $243, and $149) (3)\n200 (1,008)(430)\n\nRecognition of net actuarial loss for pension settlement, (net of tax benefit of $(3,257)) (4)\n— 10,844 — \n\nAmortization included in earnings (net of tax (expense) benefit of $(34), $158, and $339) (5)\n168 (526)(1,236)\n\nOther comprehensive income (loss) attributable to Universal Corporation, net of income taxes368 9,310 (1,666)\n\nBalance at end of year$(34,964)$(35,332)$(44,642)\n\nTotal accumulated other comprehensive income (loss) at end of year$(73,112)$(80,051)$(81,585)\n\n(1)    Gains (losses) on foreign currency cash flow hedges related to forecast purchases of tobacco and crop input sales are reclassified from accumulated other comprehensive income (loss) to cost of goods sold when the tobacco is sold to customers. See Note 10 for additional information.\n\n86\n\nUNIVERSAL CORPORATION\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)\n\n(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. See Note 10 for additional information.\n\n(3)    These items arise from the remeasurement of the assets and liabilities of the Company’s defined benefit pension and other postretirement benefit plans. Those remeasurements are made on an annual basis at the end of the fiscal year. See Note 12 for additional information.\n\n(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.\n\n(5)    This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note 12 for additional information.\n\n87\n\nReport of Ernst & Young LLP, Independent Registered Public Accounting Firm\n\nTo the Shareholders and the Board of Directors of Universal Corporation\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of Universal Corporation (the Company) as of March 31, 2026 and 2025, 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, 2026, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2026, in conformity with U.S. generally accepted accounting principles.\n\nWe 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, 2026, 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 June 1, 2026 expressed an unqualified opinion thereon.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nAllowance for Advances to Tobacco Suppliers\n\nDescription of the Matter\nThe Company’s short-term and long-term advances to tobacco suppliers totaled approximately $196 million as of March 31, 2026, and the allowances totaled $16 million. As discussed in Note 1 of the financial statements, the Company provides agronomy services and seasonal advances of seed, fertilizer, and other supplies to tobacco farmers for crop production. These advances are repaid through the delivery of tobacco to the Company. Management determined the allowance based on assumptions including the assessment of historical loss information and crop projections.\n\nAuditing 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.\n\n88\n\nHow We Addressed the Matter in Our Audit\nWe obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the allowance for advances to tobacco suppliers. 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.\n\nTo test the allowance for advances to tobacco suppliers, our audit procedures included, among others, evaluating the significant assumptions used in the allowance calculation. 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 also analyzed subsequent events to identify potential sources of contrary information to Management’s assumptions.\n\nAllowance for Recoverable Value-Added Tax (“VAT”) Credits\n\nDescription of the Matter\nThe Company’s gross balance of recoverable value-added tax (“VAT”) credits totaled approximately $66 million as of March 31, 2026, and the related allowance totaled approximately $22 million. As discussed in Note 1 of the consolidated financial statements, in many foreign countries, the Company pays and receives a significant amount of VAT on purchases and sales of tobacco and tobacco related material. Items subject to a VAT vary from jurisdiction to jurisdiction as do the rates at which the tax is assessed. Some jurisdictions allow companies to apply for refunds of unused VAT credits from the tax authorities, but the refund process may take an extended period of time and it is not uncommon for refund applications to be challenged or rejected. 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 applies judgment in calculating the valuation allowance to estimate the credits that are not expected to be recovered.\n\nAuditing 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 significant assumptions, including expected loss rates, which could have a significant effect on the estimate.\n\nHow We Addressed the Matter in Our Audit\nWe obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the allowance for recoverable VAT credits. 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.\n\nTo 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 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.\n\nExcess and Obsolete Inventory – Tobacco\n\nDescription of the Matter\nAs discussed in Note 1 of the consolidated financial statements, net tobacco inventory totaled $832 million as of March 31, 2026 and is stated at the lower of its cost or net realizable value. The Company records adjustments when the cost of tobacco inventory is not expected to be fully recoverable.\n\nAuditing Management’s estimate of the net realizable value of its inventory, specifically its adjustments for excess and obsolete dark air-cured tobacco inventory, involved a higher degree of auditor judgment as the estimate is dependent on expectations about current and expected market trends and economic conditions.\n\n89\n\nHow We Addressed the Matter in Our Audit\nWe obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls for estimating its excess and obsolete inventory for dark air-cured tobacco.\n\nTo test excess and obsolete inventory for dark air-cured tobacco, our audit procedures included, among others, evaluating Management’s expectations about future sales, testing the accuracy and completeness of the underlying data used in management's calculation of the net realizable value of inventory, and recalculating the recorded reserve. To evaluate Management’s expectations of future sales, market trends, and economic conditions, we reviewed actual historical sales by crop year, performed inquiries of sales personnel, assessed the historical accuracy of Management’s estimates and performed a sensitivity analysis on significant assumptions.\n\n/s/ Ernst & Young LLP\n\nWe have served as the Company’s auditor since 1971.\n\nRichmond, Virginia\n\nJune 1, 2026\n\n90\n\nReport of Ernst & Young LLP, Independent Registered Public Accounting Firm,\n\nTo the Shareholders and the Board of Directors of Universal Corporation\n\nOpinion on Internal Control over Financial Reporting\n\nWe have audited Universal Corporation’s internal control over financial reporting as of March 31, 2026, 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, 2026, based on the COSO criteria.\n\nWe 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, 2026 and 2025, 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, 2026, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 and our report dated June 1, 2026 expressed an unqualified opinion thereon.\n\nBasis for Opinion\n\nThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.\n\nOur audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.\n\nDefinitions and Limitations of Internal Control Over Financial Reporting\n\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n\n/s/ Ernst & Young LLP\n\nRichmond, Virginia\n\nJune 1, 2026\n\n91"}