<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-17506
UST Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-1193986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 661-1100
NONE
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of Common shares ($.50 par value) outstanding at September 30, 1997
184,271,536
<PAGE> 2
UST Inc.
(Registrant)
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Condensed Consolidated Statement of Financial Position -
September 30, 1997 and December 31, 1996 2
Condensed Consolidated Statement of Earnings -
Three and nine months ended September 30, 1997 and 1996 3
Condensed Consolidated Statement of Cash Flows -
Nine months ended September 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Operations and
Financial Condition 9
Part II. Other Information:
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
27. Financial Data Schedule
Signature 13
</TABLE>
(1)
<PAGE> 3
<TABLE>
<CAPTION>
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands, except per share data)
September 30, December 31,
1997 1996
------------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 11,341 $ 54,452
Accounts receivable 78,588 77,855
Inventories:
Leaf tobacco 146,681 136,881
Products in process and finished goods 114,268 117,924
Other materials and supplies 17,395 16,620
---------- ----------
278,344 271,425
Prepaid expenses and other current assets 50,312 40,446
---------- ----------
Total current assets 418,585 444,178
Property, plant and equipment, net 314,162 300,885
Deferred income taxes 11,255 7,626
Other assets 56,026 54,703
---------- ----------
Total assets $ 800,028 $ 807,392
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term obligations $ 46,000 $ 150,000
Accounts payable and accrued expenses 110,282 113,635
Income taxes 29,103 42,918
---------- ----------
Total current liabilities 185,385 306,553
Long-term debt 100,000 100,000
Postretirement benefits other than pensions 73,010 70,209
Other liabilities 45,985 48,610
---------- ----------
Total liabilities 404,380 525,372
Stockholders' equity
Preferred stock - par value $.10 per share:
Authorized - 10 million shares; issued - none
Common stock - par value $.50 per share:
Authorized - 600 million shares;
issued 206,096,536 shares in 1997,
and 204,154,736 shares in 1996 103,048 102,077
Additional paid-in capital 463,779 414,274
Retained earnings 497,376 388,505
---------- ----------
1,064,203 904,856
Less cost of shares in treasury - 21,825,000
shares in 1997 and 20,299,000 shares in 1996 668,555 622,836
---------- ----------
Total stockholders' equity 395,648 282,020
---------- ----------
Total liabilities and stockholders' equity $ 800,028 $ 807,392
========== ==========
Note: The statement of financial position at December 31, 1996 has been derived from the
audited financial statements at that date.
See Notes to Condensed Consolidated Financial Statements.
(2)
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------- ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 360,582 $ 359,485 $1,050,962 $1,027,303
Costs and expenses:
Cost of products sold 74,574 69,892 211,022 200,465
Selling, advertising and administrative 101,367 89,411 300,730 256,391
Interest, net 1,495 1,509 6,544 4,590
---------- ---------- ---------- ----------
Total costs and expenses 177,436 160,812 518,296 461,446
---------- ---------- ---------- ----------
Earnings before income taxes 183,146 198,673 532,666 565,857
Income taxes 68,924 75,016 200,349 216,327
---------- ---------- ---------- ----------
Net earnings $ 114,222 $ 123,657 $ 332,317 $ 349,530
========== ========== ========== ==========
Net earnings per share $ .62 $ .65 $ 1.81 $ 1.81
Cash dividends per common share $.40 1/2 $ .37 $1.21 1/2 $ 1.11
Average number of common shares outstanding
1996 amounts include common stock
equivalents 184,025 191,395 183,752 192,942
See Notes to Condensed Consolidated Financial Statements.
(3)
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine months ended September 30,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities $ 297,708 $ 325,579
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (36,046) (25,796)
Proceeds received from prepayment of royalties 25,732 --
--------- ---------
Net cash used in investing activities (10,314) (25,796)
--------- ---------
FINANCING ACTIVITIES
Repayment of borrowings (104,000) (25,000)
Proceeds from the issuance of common stock 42,524 30,050
Dividends paid (223,310) (208,916)
Common stock repurchased (45,719) (145,904)
--------- ---------
Net cash used in financing activities (330,505) (349,770)
--------- ---------
Decrease in cash and cash equivalents (43,111) (49,987)
Cash and cash equivalents at beginning of year 54,452 69,403
--------- ---------
Cash and cash equivalents at end of period $ 11,341 $ 19,416
========= =========
- ---------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $ 209,774 $ 220,409
Interest 6,911 5,487
- ---------------------------------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
(4)
</TABLE>
<PAGE> 6
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in
Registrant's annual report on Form 10-K for the year ended December 31, 1996.
REPURCHASE OF COMMON STOCK
During 1997, Registrant continued its program to repurchase a portion of its
outstanding common stock, up to a maximum of twenty million shares. As of
December 31, 1996, .5 million shares were repurchased under the current program.
In the first six months of 1997, an additional 1.5 million shares costing $45.7
million were repurchased. Registrant has suspended its stock repurchase program
indefinitely in anticipation of the proposed resolution of regulatory and
litigation issues affecting the United States tobacco industry. (See Other
Matters Note.)
ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share"
and SFAS No. 129 "Disclosure of Information About Capital Structure," both with
effective dates in the fourth quarter of 1997. SFAS No. 128 requires Registrant
to change the method it currently uses to compute earnings per share and
requires restatement of all prior periods. Under the new requirements, the
dilutive effect of stock options are excluded from computing "basic" earnings
per share and remain in the diluted computation. The impact of SFAS No. 128 will
not change earnings per share reported for the third quarter and nine month
periods of 1997 since Registrant was not required to include the dilutive effect
of stock options under the current accounting rules. However, 1996 earnings per
share would have increased by 1 cent to 66 cents per share for the third quarter
and by 5 cents to $1.86 per share for the nine month period. Under SFAS No. 128
diluted earnings per share would have been 62 cents and 65 cents for the third
quarter of 1997 and 1996, respectively, and would have been $1.79 per share and
$1.83 per share for the nine month periods of 1997 and 1996, respectively.
Registrant anticipates no additional disclosure requirements upon adoption of
SFAS No. 129.
(5)
<PAGE> 7
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Also in June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 is effective for the first quarter of 1998,
while SFAS No. 131 is effective for year end financial reporting in 1998 and
additionally on an interim basis thereafter. Both pronouncements require
Registrant to provide additional disclosures and Registrant expects no material
impact upon adoption of these two pronouncements.
CONTINGENCIES
Registrant has been named in certain health care cost reimbursement/third party
recoupment/class action litigation against the major domestic cigarette
companies and others seeking damages and other relief. The complaints in these
cases on their face predominantly relate to the usage of cigarettes; within
that context, certain complaints contain a few allegations relating
specifically to smokeless tobacco products. These actions are in varying stages
of pretrial activities.
Registrant believes that these pending litigation matters will not result in any
material liability for a number of reasons, including the fact that Registrant
has had only limited involvement with cigarettes and Registrant's current
percentage of total tobacco industry sales is relatively small. Prior to 1986,
Registrant manufactured some cigarette products which had a de minimis market
share. From May 1, 1982 to August 1, 1994, Registrant distributed a small volume
of imported cigarettes and is indemnified against claims relating to those
products.
Registrant is named in three actions brought by individual plaintiffs, all of
whom are represented by the same Louisiana attorney, against a number of
smokeless tobacco manufacturers, cigarette manufacturers and certain other
organizations seeking damages and other relief in connection with injuries
allegedly sustained as a result of tobacco usage, including smokeless tobacco
products. Registrant is also named in an action seeking damages and/or other
relief and purports to state a class action on behalf of residents of Louisiana
who have purchased and used smokeless tobacco manufactured by defendants.
Registrant also is named in another action in Illinois seeking damages and other
relief brought by an individual plaintiff and purports to state a class action
"on behalf of himself and all other persons similarly situated" alleging that
his use of Registrant's smokeless tobacco products "resulted in his addiction to
nicotine, increased use of defendants' smokeless tobacco products and gum
deterioration."
Registrant believes, and has been so advised by counsel handling these cases,
that it has a number of meritorious defenses to all such pending litigation.
Except as to Registrant's intention to pursue federal legislation resolving
certain regulatory and litigation issues (See Other Matters Note), all such
cases are, and will continue to be, vigorously defended. Registrant believes
that the ultimate outcome of all such pending litigation will not have a
material adverse effect on the consolidated financial statements of Registrant.
(6)
<PAGE> 8
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
OTHER MATTERS
On August 28, 1996, the Food and Drug Administration (FDA) published regulations
asserting unprecedented jurisdiction over nicotine in tobacco as a "drug" and
purport to regulate smokeless tobacco products as a "medical device." The final
regulations include severe restrictions on the advertising, marketing and
promotion of smokeless tobacco products and will require Registrant to comply
with a wide range of labeling, reporting and other requirements. Registrant and
other smokeless tobacco manufacturers filed suit seeking a judicial declaration
that the FDA has no authority to regulate smokeless tobacco products. On April
25, 1997, a federal district court ruled that the FDA, as a matter of law, is
not precluded from regulating cigarettes and smokeless tobacco as "medical
devices" and implementing certain labeling and access restrictions. Further
trial proceedings are still required to determine whether the FDA, based on the
facts, can prove that smokeless tobacco products fit the statutory definitions
and the restrictions are justified. The court, granting Registrant's motion for
summary judgment, also ruled that the FDA has no authority to implement
restrictions on the advertising and promotion of smokeless tobacco products. The
court issued an injunction to prohibit any of the restrictions (labeling, access
and advertising/promotion) set for August 28, 1997 from taking effect, pending
resolution of any appeals and subsequent proceedings; the court also certified
the ruling for interlocutory appeal on the grounds that it involves "controlling
questions of law as to which there is substantial ground for difference of
opinion." Certain aspects of this ruling have been appealed to the Fourth
Circuit Court of Appeals. Registrant is not able to predict the outcome of the
appeal, or assess the future effect that these FDA regulations, if implemented,
may have on its tobacco business.
On June 20, 1997, Registrant's subsidiary, United States Tobacco Company, along
with other manufacturers in the United States tobacco industry, executed a
Memorandum of Understanding (the "Memorandum") to support the adoption of
federal legislation incorporating the features described in the proposed
resolution attached to the Memorandum. The proposed resolution, if enacted into
law, would achieve a resolution of many of the regulatory and litigation issues
affecting the United States tobacco industry and, thereby, reduce uncertainties
facing the industry and increase stability in business and capital markets.
However, if such legislation were enacted the financial obligations to be
imposed on Registrant are expected to be significant although the precise amount
of such obligations cannot be determined at this time. Discussions with other
tobacco manufacturers, who were participants in the negotiations which led to
the Memorandum, are continuing regarding the allocation of both the initial and
subsequent payments and Registrant's obligations related thereto. Depending on
the amounts required to be paid by Registrant, as well as a number of other
factors, including (i) the timing of any payments and the means used to finance
such payments; (ii) the effect of the legislation on the pricing and consumption
of smokeless tobacco products; and (iii) the impact of the legislation on
Registrant's competitive position in the smokeless tobacco industry, its
financial position could be materially adversely affected in the year of
implementation and the unit volume, operating revenues and operating income of
Registrant could be materially adversely affected in future years. There can be
no assurance that legislation reflecting the proposed resolution or any
legislation will be enacted.
Also, during the fourth quarter, Registrant renewed its 364-day revolving
credit facility in the amount of $87.5 million.
(7)
<PAGE> 9
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
CONSOLIDATED FINANCIAL RESULTS - RECLASSIFIED (in thousands)
During the third quarter Registrant reclassified returned goods as a reduction
to net sales from selling, advertising and administrative expense. This
reclassification has no effect on net earnings or earnings per share amounts.
The table below reflects this reclassification on previously reported amounts.
<TABLE>
<CAPTION>
Third Fourth Year ended
First Quarter Second Quarter Quarter Quarter December 31
----------------- ------------------ ------- ------- -----------
1997 1996 1997 1996 1996 1996 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
AS PREVIOUSLY
REPORTED:
Net sales $340,539 $327,791 $365,107 $350,542 $366,036 $352,478 $1,396,847
Gross profit 275,449 264,266 293,749 283,494 296,144 280,187 1,124,091
Selling, advertising and
administrative expense 110,771 89,266 103,858 88,229 95,962 99,744 373,201
Third Fourth Year ended
First Quarter Second Quarter Quarter Quarter December 31
----------------- ------------------ ------- ------- -----------
1997 1996 1997 1996 1996 1996 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
RECLASSIFIED:
Net sales $334,616 $322,835 $355,764 $344,983 $359,485 $344,402 $1,371,705
Gross profit 269,526 259,310 284,406 277,935 289,593 272,111 1,098,949
Selling, advertising and
administrative expense 104,848 84,310 94,515 82,670 89,411 91,668 348,059
</TABLE>
(8)
<PAGE> 10
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)
Results of Operations
Third quarter and nine months of 1997 compared
with the corresponding periods of 1996
The comparison of consolidated results of Registrant for the third quarter of
1997 to the similar period in 1996 was significantly affected by an additional
shipping day for domestic moist smokeless tobacco products that occurred in the
third quarter of 1996. The effect of the additional shipping day in 1996 in the
nine month period was not as significant as in the third quarter.
Net sales remained stable for the third quarter and increased by 2 percent for
the nine month period as compared with the corresponding periods in the prior
year. On an equivalent shipping day basis net sales for the third quarter of
1997 would have increased approximately 6 percent as compared to the similar
period in 1996. The Tobacco and Other segments posted increased sales for the
nine month period but were lower for the third quarter, while sales for the
Wine segment increased for both periods. Both periods were favorably affected
by higher selling prices for domestic moist smokeless tobacco products and
cigars, partially offset by volume declines for domestic moist smokeless
tobacco and the absence of sales for businesses sold in 1996. The increase in
Wine segment sales for both periods was due to volume gains and higher selling
prices. Domestic unit volume results for moist smokeless tobacco decreased 2.9
percent for the third quarter and 2.1 percent for the nine month period, which
includes the effect of the additional shipping day in 1996. On an equivalent
shipping day basis smokeless unit volume would have increased approximately 3.7
percent for the third quarter and 0.2 percent for the nine month period.
Domestic unit volume for moist smokeless tobacco products for both periods of
1997 included the introduction in selected markets of Red Seal, a new
price/value brand, and special promotional priced four-can pack for Skoal
Wintergreen. Also included in both periods was Copenhagen Long Cut, which was
introduced in the first quarter of 1997. As a result of a number of recently
announced marketing initiatives Registrant's returned goods expense increased
in the third quarter. Accordingly, expenses for returned goods have been
reclassified as a reduction to net sales from selling, advertising and
administrative expense. This reclassification has no effect on net earnings or
earnings per share amounts. All prior period amounts have been revised to
reflect this reclassification. (See Consolidated Financial Results -
Reclassified Note.)
Cost of products sold increased for both the third quarter and nine month
period. Both periods included higher unit costs for domestic moist smokeless
tobacco and unit volume gains for wine, partially offset by the absence of costs
for businesses sold in 1996 and volume declines for domestic moist smokeless
tobacco. The overall gross profit percentage decreased slightly for both periods
due to higher unit costs, partially offset by higher selling prices for domestic
moist smokeless tobacco and higher wine sales with lower gross margins as
compared to moist smokeless tobacco.
Selling, advertising and administrative expenses increased for both the third
quarter and nine month periods for the Tobacco, Wine and Other segments. Selling
and advertising expenses increased for the Tobacco segment in both periods
primarily due to consumer promotions in support of moist smokeless tobacco
products. Increased spending in the Wine segment for both periods was in support
of higher case volume. The increase in the Other segment for both periods
resulted from higher spending for the international operations primarily related
to moist smokeless tobacco market development expenses in Mexico and higher
(9)
<PAGE> 11
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
spending in the cigar business. Also included in the Other segment for the nine
month period is income from the prepayment of royalties received in connection
with a previous divestiture, $25.7 million, approximately 8 cents per share,
substantially offset by a write-down of production costs and prepaid royalties
of $24.1 million as a result of revised sales and marketing strategies by
Registrant's entertainment subsidiary. Administrative and other expenses
increased in both periods primarily due to higher professional fees incurred as
a result of pending legal and regulatory issues as well as a payment resulting
from Registrant's portion of the settlement with the state of Florida in
connection with its health care cost reimbursement litigation. The nine month
period also includes a one-time charge resulting from recording the present
value of future obligations arising under the employment contracts for two
former executive officers.
Net interest expense increased significantly for the nine month period,
primarily due to higher average levels of debt outstanding, and remained stable
for the third quarter.
Net earnings for the third quarter and nine month period decreased 8 percent and
5 percent, respectively, as compared to the corresponding periods in the prior
year. Net earnings per share decreased 5 percent for the third quarter and were
equal for the corresponding nine month period of the prior year. Net earnings
per share amounts for both 1997 periods were favorably affected by lower average
shares outstanding due to the share repurchase program and the fact that
Registrant's common stock equivalents were not included in its 1997 average
shares computation since they did not meet the dilution test. On an equivalent
shipping day basis, net earnings and net earnings per share for the third
quarter would have increased approximately 1 percent and 5 percent,
respectively, as compared to the similar period of 1996.
In the fourth quarter, Registrant has announced its intention to sell its
entertainment subsidiary, and anticipates that any related net earnings effect
will not be material.
Liquidity and Sources of Capital
Changes in Financial Condition Since December 31, 1996
Net cash provided by operating activities represents net income adjusted for the
non-cash items included in the determination of net income as well as changes in
operating assets and liabilities. The decrease in net cash provided by operating
activities as compared to the similar period in the prior year was primarily due
to an increase in inventories and lower net earnings. A primary use of cash in
operations was for purchases of raw material inventories for moist smokeless
tobacco products, wine and cigars of $93.9 million, which were higher than
amounts expended in the corresponding period in the prior year. Registrant
anticipates that total raw material inventory purchases in 1997 will be higher
than amounts expended in 1996.
Net cash used in investing activities resulted from the purchase of property,
plant and equipment, partially offset by the proceeds received from the
prepayment of royalties in connection with a previous divestiture. Registrant
expects the 1997 capital program to approximate $59 million.
(10)
<PAGE> 12
Net cash used in financing activities were amounts expended for dividends, the
repayment of borrowings and the stock repurchase program. Amounts expended for
the stock repurchase program were lower than in the corresponding period of the
prior year and are expected to be lower for the remainder of 1997 due to the
indefinite suspension of the program. (See Other Matters Note.)
Registrant's cash requirements for the remainder of 1997 will be primarily for
dividends. Registrant expects to meet all cash requirements with internally
generated funds augmented by borrowings when necessary. If legislation
implementing the proposed resolution or similar legislation were enacted, the
financial obligations to be imposed on Registrant are expected to be
significant, although the precise amount of such obligations cannot be
determined at this time. (See Other Matters Note.)
Forward-Looking and Cautionary Statements
Reference is made to the section captioned "Cautionary Statement Regarding
Forward-Looking Information" which was filed as part of Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Registrant's 1996 Form 10-K, and to the legal and regulatory initiatives
described in Form 8-K, dated July 3, 1997, regarding important factors that
could cause actual results to differ materially from those contained in any
forward-looking statement made by Registrant, including forward-looking
statements contained in this report.
(11)
<PAGE> 13
UST Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In THE STATE OF FLORIDA, ET AL. V. THE AMERICAN TOBACCO
COMPANY, ET AL. (Civil Action No. CL95-1466AH), Circuit Court,
15th Judicial Circuit, Palm Beach County, Florida, on July 31,
1997, the Court entered an Order dropping Registrant and its
subsidiary, United States Tobacco Company, as parties to
counts I and II of the Third Amended Complaint. On August 25,
1997, the Court entered an Order approving and adopting a
Settlement Agreement between plaintiffs and certain
defendants, including United States Tobacco Company, and
dismissing with prejudice all counts except count III
(non-economic injunctive relief) of the Complaint against
certain defendants, including Registrant and United States
Tobacco Company. On September 15, 1997, United States Tobacco
Company made a payment of approximately $3 million resulting
from its portion of the settlement with the state of Florida
in connection with its health care cost reimbursement
litigation. On September 18, 1997, the Court entered an Order
scheduling a non-jury trial on count III for September 8,
1998.
In MORGAN V. UNITED STATES TOBACCO COMPANY, ET AL. (Civil
Action No. 97cv0280), on February 12, 1997, defendants,
including Registrant's subsidiary, United States Tobacco
Company, filed a notice of removal in the United States
District Court, Western District of Louisiana, Alexandria
Division, thereby removing this action to that court. On
February 28, 1997, plaintiffs filed a motion to remand. On
April 17, 1997, the court denied plaintiffs' motion to remand,
thereby retaining jurisdiction. On July 18, 1997, Registrant
filed a motion to strike plaintiffs' class action
allegations. On August 26, 1997, the court granted the
motion striking the class action allegations.
On November 5, 1997, plaintiff and United States Tobacco
Company entered into a Stipulation of Dismissal providing for
voluntary dismissal without prejudice of this action. On
November 6, 1997, the court entered an Order granting the
dismissal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
On July 3, 1997, Registrant filed a Current Report on Form 8-K
which reported the execution by its subsidiary, United States
Tobacco Company, of a Memorandum of Understanding in support
of a proposed resolution of regulatory and litigation issues
affecting the United States tobacco industry.
(12)
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UST Inc.
(Registrant)
Date November 12, 1997 /s/ Robert T. D'Alessandro
------------------------------- --------------------------
Robert T. D'Alessandro
Senior Vice President and Controller
(Principal Accounting Officer and
Principal Financial Officer)
(13)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS. (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS).
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 11,341
<SECURITIES> 0
<RECEIVABLES> 78,588
<ALLOWANCES> 0
<INVENTORY> 278,344
<CURRENT-ASSETS> 418,585
<PP&E> 547,776
<DEPRECIATION> 233,614
<TOTAL-ASSETS> 800,028
<CURRENT-LIABILITIES> 185,385
<BONDS> 100,000
0
0
<COMMON> 103,048
<OTHER-SE> 292,600
<TOTAL-LIABILITY-AND-EQUITY> 800,028
<SALES> 1,050,962
<TOTAL-REVENUES> 1,050,962
<CGS> 211,022
<TOTAL-COSTS> 211,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,544
<INCOME-PRETAX> 532,666
<INCOME-TAX> 200,349
<INCOME-CONTINUING> 332,317
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 332,317
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 0
</TABLE>
