Restructuring And Impairment Costs

12 Months Ended

Mar. 31, 2012

RESTRUCTURING AND IMPAIRMENT COSTS

During fiscal years 2011 and 2012, Universal recorded restructuring and impairment costs related to initiatives to adjust various operations and reduce costs. A significant portion of the restructuring and impairment charges related to the Company’s November 2010 decision to close its leaf tobacco processing facility in Simcoe, Ontario, Canada. The Company is continuing to buy tobacco grown in Canada, but now processes that leaf at its U.S. factory in North Carolina. The Simcoe processing facility and a separate storage complex were classified as “held for sale” at the date the decision was made to close the operations, and an impairment charge of approximately $5.6 million was recorded in the third quarter of fiscal year 2011 to write those assets down to their fair values, net of selling costs. The sales of both properties were completed during the first quarter of fiscal year 2012 at prices approximating their adjusted book values. All full-time salaried employees at the Simcoe location were terminated by June 30, 2011. During fiscal year 2011, the Company recorded approximately $2.4 million in costs for termination benefits payable to those employees under Canadian law and $4.1 million in pension curtailment and settlement costs related to the termination of the Canadian employees’ defined benefit pension plan. The Canadian operations were included in the North America segment, and revenues and earnings for those operations were not material to that segment in recent years.

In addition to the restructuring and impairment costs related to the decision to close the facility in Canada, the Company has recorded restructuring costs associated with various other cost reduction initiatives during fiscal years 2011 and 2012. A significant portion of those costs represent employee termination benefits associated with voluntary early retirement offers and involuntary separations at the Company’s headquarters and operating locations in the United States, South America, Africa, Europe, and Asia that are part of the North America and Other Regions reportable segments. In addition, during the quarter ended June 30, 2011, the Company recorded approximately $3.1 million in costs related to the termination of its business arrangements with a supplier and processor of tobacco in Europe in response to market changes. That cost relates to an operating subsidiary that is part of the Other Regions reportable segment.

A summary of the restructuring and impairment costs recorded during fiscal years 2011 and 2012 is as follows:



(in thousands of dollars)	Employee Termination Benefits		Pension Curtailment and Settlement Costs		Other Restructuring Costs		Impairment of Property, Plant and Equipment		Total
Fiscal Year 2011 Costs:
Closure of processing facility in Canada	$	2,412	$	4,081	$	—	$	5,632	$	12,125
Other restructuring and cost reduction initiatives	8,743		—		636		—		9,379
Total	11,155		4,081		636		5,632		21,504
Fiscal Year 2012 Costs:
Other restructuring and cost reduction initiatives	8,564		—		3,097		—		11,661
Total	8,564		—		3,097		—		11,661
Total costs - fiscal years 2011 and 2012	$	19,719	$	4,081	$	3,733	$	5,632	$	33,165

A reconciliation of the Company’s liability for the employee termination benefits and other restructuring costs outlined above through March 31, 2012, is as follows:



(in thousands of dollars)	Employee Termination Benefits			Other Costs			Total
Fiscal Year 2011 Activity:
Costs charged to expense	$	11,155		$	636		$	11,791
Payments	(4,769		)	(411		)	(5,180		)
Balance at March 31, 2011	6,386			225			6,611
Fiscal Year 2012 Activity:
Costs charged to expense	8,564			3,097			11,661
Payments	(13,679		)	(3,031		)	(16,710		)
Balance at March 31, 2012	$	1,271		$	291		$	1,562

The employee termination benefits outlined in the tables above relate to approximately 350 total employees, including those affected by the facility closure in Canada. The majority of the restructuring liability at March 31, 2012 will be paid in the early part of fiscal year 2013. Universal continually 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 costs and asset impairment charges in future periods as business changes occur and additional cost savings initiatives are implemented.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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