Restructuring and Related Activities

9 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Impairment Costs Disclosure

RESTRUCTURING AND IMPAIRMENT COSTS

Universal continually reviews its business for opportunities to realize efficiencies, reduce costs, and realign its operations in response to business changes. Restructuring and impairment costs are periodically incurred in connection with those activities.

Ingredients Operations

During the three months ended December 31, 2020, the Company committed to a plan to wind-down its subsidiary, Carolina Innovative Food Ingredients, Inc. ("CIFI"), a sweet potato processing operation located in Nashville, North Carolina. The CIFI operation was a start-up project initially undertaken by the Company in fiscal year 2015. The decision to wind down CIFI is consistent with the Company’s capital allocation strategy to focus on delivering shareholder value through building and enhancing a plant-based ingredients platform, which includes integrating and exploring the synergies of recently acquired businesses FruitSmart and Silva. The Company determined that CIFI was not a strategic fit for the platform’s long-term objectives. CIFI’s single-product focused processing facility and ongoing international pricing pressures, among other factors, created challenges that proved insurmountable. Sales of existing inventory and certain administrative activities at CIFI will continue into fiscal year 2022, but no manufacturing occurred subsequent to December 31, 2020. As a result of the decision to wind down the CIFI operations, the Company will pay termination benefits totaling approximately $0.6 million to employees whose permanent positions are being eliminated, with termination benefits due to be paid before the end of February 2021. In addition to the termination costs, the Company recognized various other costs associated with the wind-down of the CIFI facility. These costs include impairments of property, plant, and equipment (including the factory building), as well as inventory and

supply write-downs. The restructuring and impairment charge incurred for the CIFI wind-down was $16.1 million for the three and nine months ended December 31, 2020.

Tobacco Operations

During the three and nine months ended December 31, 2020, the Company incurred $2.6 million of termination and impairment costs associated with restructuring of tobacco buying and administrative operations in Africa, as well as a $0.9 million charge for the liquidation of an idled service entity in Tanzania, and $0.4 million of termination benefits in North America. Total restructuring and impairments costs related to the Tobacco Operations segment for the three and nine months ended December 31, 2020 were $3.9 million.

A summary of the restructuring and impairment costs recorded in the quarter ended December 31, 2020 were as follows:

(in thousands)	Three Months Ended December 31, 2020
Restructuring costs:
Employee termination benefits	$	2,625
Other	1,766
Total restructuring costs	4,391
Impairment costs:
Property, plant and equipment	13,886
Inventory	1,702
Total impairment costs	15,588
Total restructuring and impairment costs	$	19,979

For the three and nine months ended December 31, 2020, the restructuring and impairment costs reduced operating income and income before income taxes by $20.0 million, net income attributable to Universal Corporation by $16.1 million, and diluted earnings per share by $0.65.

A reconciliation of the liability for termination benefits through December 31, 2020 is as follows:

(in thousands)	Nine Months Ended December 31, 2020
Balance at April 1, 2020	$	3,404
Costs charged to expense	2,625
Payments	(5,179)
Balance at December 31, 2020	$	850