<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------- ----------------
Commission File Number 0-17506
--------------------------
A: Full title of the plan:
UST INC.
EMPLOYEES' SAVINGS PLAN
B: Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UST INC.
100 West Putnam Avenue
Greenwich, Connecticut 06830
<PAGE> 2
UST Inc.
Employees' Savings Plan
Audited Financial Statements and Schedules
Years ended December 31, 1996 and 1995
with Report of Independent Auditors
<PAGE> 3
UST Inc.
Employees' Savings Plan
(the "Plan")
Audited Financial Statements and Schedules
Years ended December 31, 1996 and 1995
INDEX
<TABLE>
<S> <C>
Report of Independent Auditors .......................................... 1
Audited Financial Statements
Statement of Net Assets Available for Benefits ..................... 2
Statement of Changes in Net Assets Available for Benefits .......... 4
Notes to Financial Statements ...................................... 6
Supplemental Schedules
Assets Held for Investment Purposes ................................ 11
Reportable Transactions ............................................ 13
</TABLE>
<PAGE> 4
Report of Independent Auditors
To the Participants of the
UST Inc.
Employees' Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the UST Inc. Employees' Savings Plan (the "Plan") as of December 31, 1996 and
1995, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The fund information in
the statement of net assets available for benefits and the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Ernst & Young LLP
May 2, 1997
1
<PAGE> 5
UST Inc.
Employees' Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1996
<TABLE>
<CAPTION>
Information by Fund
--------------------------------------------------------------------------
FUNDS PARTICIPANT TOTAL
FUND A FUND B C AND D FUND E FUND F LOAN FUND ALL FUNDS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments (Notes 1 and 4):
Common stock of UST Inc.-at fair value
(cost: $25,862,396) $81,137,869 $ 81,137,869
Group trust funds--at fair value:
Common stock (cost: $4,687,958) $9,660,734 9,660,734
Short-term investments (cost equal
to fair value) $ 988,620 1,065 14,780 1,004,465
Guaranteed investment contracts 16,193,209 16,193,209
Balanced Fund-at fair value
(cost: $2,229,590) $2,407,810 2,407,810
Small Company Fund-at fair value
(cost: $5,863,489) $7,090,248 7,090,248
----------------------------------------------------------------------------------------
Total investments 17,181,829 9,661,799 81,152,649 2,407,810 7,090,248 117,494,335
----------------------------------------------------------------------------------------
Participant loans receivable $3,793,532 3,793,532
Contributions receivable:
Participants 120,675 88,459 104,402 36,164 119,646 469,346
Employer 592 282,977 283,569
Accrued income receivable 1,747 61 1,274 20 67 20,326 23,495
Interfund receivables (payables), net 152,905 128,933 (470,064) 5,007 97,419 85,800 --
----------------------------------------------------------------------------------------
Total assets 17,457,748 9,879,252 81,071,238 2,449,001 7,307,380 3,899,658 122,064,277
----------------------------------------------------------------------------------------
LIABILITIES
Due to participants 79,363 6,171 201,405 1,580 14,400 3,057 305,976
Due to trustee 10,917 3,194 18,412 141 422 33,086
----------------------------------------------------------------------------------------
Net assets available for benefits $17,367,468 $9,869,887 $80,851,421 $2,447,280 $7,292,558 $3,896,601 $121,725,215
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
VALUATION
UNITS PER UNIT AMOUNT
----------------------------------------------------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS
Fund A 1,273,894 $13.63 $ 17,367,468
Fund B 262,825 37.55 9,869,887
Funds C and D 2,496,956 32.38 80,851,421
Fund E 175,863 13.92 2,447,280
Fund F 413,891 17.62 7,292,558
Participant Loan Fund 3,896,601 1.00 3,896,601
------------
$121,725,215
============
</TABLE>
See notes to financial statements.
2
<PAGE> 6
UST Inc.
Employees' Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1995
<TABLE>
<CAPTION>
Information by Fund
--------------------------------------------------------------------------
FUNDS PARTICIPANT TOTAL
FUND A FUND B C AND D FUND E FUND F LOAN FUND ALL FUNDS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments (Notes 1 and 4):
Common stock of UST Inc.-at fair value
(cost: $25,285,348) $88,063,976 $ 88,063,976
Group trust funds--at fair value:
Common stock (cost: $3,842,322) $7,356,044 7,356,044
Short-term investments (cost equal
to fair value) $ 1,343,180 18 1,343,198
Guaranteed investment contracts 16,825,180 16,825,180
Balanced Fund-at fair value
(cost: $1,518,647) $1,654,591 1,654,591
Small Company Fund-at fair value
(cost: $3,633,941) $4,702,851 4,702,851
----------------------------------------------------------------------------------------
Total investments 18,168,360 7,356,044 88,063,994 1,654,591 4,702,851 119,945,840
----------------------------------------------------------------------------------------
Participant loans receivable $3,604,069 3,604,069
Contributions receivable:
Participants 154,229 84,438 137,134 38,767 92,595 507,163
Employer 729 278,717 279,446
Accrued income receivable 7,553 62 858 18 96 18,425 27,012
Interfund receivables (payables), net 115,733 (39,511) (326,628) 32,939 30,867 186,600 --
----------------------------------------------------------------------------------------
Total assets 18,446,604 7,401,033 88,154,075 1,726,315 4,826,409 3,809,094 124,363,530
----------------------------------------------------------------------------------------
LIABILITIES
Due to participants 40,857 27,173 314,300 3,924 7,845 12,262 406,361
Due to trustee 6,491 2,435 29,630 406 1,625 40,587
----------------------------------------------------------------------------------------
Net assets available for benefits $18,399,256 $7,371,425 $87,810,145 $1,721,985 $4,816,939 $3,796,832 $123,916,582
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
VALUATION
UNITS PER UNIT AMOUNT
----------------------------------------------------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS
Fund A 1,427,140 $ 12.89 $ 18,399,256
Fund B 240,340 30.67 7,371,425
Funds C and D 2,631,016 33.38 87,810,145
Fund E 138,897 12.40 1,721,985
Fund F 283,314 17.00 4,816,939
Participant Loan Fund 3,796,832 1.00 3,796,832
------------
$123,916,582
============
</TABLE>
See notes to financial statements.
3
<PAGE> 7
UST Inc.
Employees' Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Information by Fund
--------------------------------------------------------------------------
FUNDS PARTICIPANT TOTAL
FUND A FUND B C AND D FUND E FUND F LOAN FUND ALL FUNDS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
Investment income
Dividends on common stock of UST Inc. $ 3,760,537 $ 3,760,537
Interest and other dividends $ 1,065,557 $ 1,032 10,094 $ 203,646 $ 784 1,281,113
----------------------------------------------------------------------------------------
1,065,557 1,032 3,770,631 203,646 784 5,041,650
Interest on participant loans $243,500 243,500
Net realized and unrealized appreciation
(depreciation) in fair value of
investments:
UST Inc. common stock (2,686,019) (2,686,019)
Group trust funds 1,732,460 52,761 157,849 1,943,070
----------------------------------------------------------------------------------------
Investment income, net 1,065,557 1,733,492 1,084,612 256,407 158,633 243,500 4,542,201
----------------------------------------------------------------------------------------
Contributions
Participants 1,962,955 1,179,593 1,537,478 472,002 1,471,098 6,623,126
Employer 7,427 3,865,260 3,872,687
----------------------------------------------------------------------------------------
1,970,382 1,179,593 5,402,738 472,002 1,471,098 10,495,813
----------------------------------------------------------------------------------------
Total additions to net assets 3,035,939 2,913,085 6,487,350 728,409 1,629,731 243,500 15,038,014
----------------------------------------------------------------------------------------
DEDUCTIONS FROM NET ASSETS
Participant distributions 3,759,084 1,369,355 10,598,041 318,644 664,241 225,507 16,934,872
Administrative expenses 79,488 26,209 169,983 5,528 13,301 294,509
----------------------------------------------------------------------------------------
Total deductions from net assets 3,838,572 1,395,564 10,768,024 324,172 677,542 225,507 17,229,381
----------------------------------------------------------------------------------------
Net (decrease) increase prior to interfund
transfers (802,633) 1,517,521 (4,280,674) 404,237 952,189 17,993 (2,191,367)
Interfund transfers, net (229,155) 980,941 (2,678,050) 321,058 1,523,430 81,776 --
----------------------------------------------------------------------------------------
(Decrease) increase to net assets
available for benefits (1,031,788) 2,498,462 (6,958,724) 725,295 2,475,619 99,769 (2,191,367)
Net assets available for benefits:
Beginning of year 18,399,256 7,371,425 87,810,145 1,721,985 4,816,939 3,796,832 123,916,582
----------------------------------------------------------------------------------------
End of year $17,367,468 $9,869,887 $80,851,421 $2,447,280 $7,292,558 $3,896,601 $121,725,215
========================================================================================
</TABLE>
See notes to financial statements.
4
<PAGE> 8
UST Inc.
Employees' Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Information by Fund
--------------------------------------------------------------------------
FUNDS PARTICIPANT TOTAL
FUND A FUND B C AND D FUND E FUND F LOAN FUND ALL FUNDS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
Investment income
Dividends on common stock of UST Inc. $ 3,515,753 $ 3,515,753
Interest and other dividends $ 1,118,202 $ 761 9,003 $ 96,783 $ 89,549 1,314,298
----------------------------------------------------------------------------------------
1,118,202 761 3,524,756 96,783 89,549 4,830,051
Interest on participant loans $ 209,182 209,182
Net realized and unrealized appreciation
in fair value of investments:
UST Inc. common stock 14,690,229 14,690,229
Group trust funds 1,826,009 161,294 949,629 2,936,932
----------------------------------------------------------------------------------------
Investment income, net 1,118,202 1,826,770 18,214,985 258,077 1,039,178 209,182 22,666,394
----------------------------------------------------------------------------------------
Contributions
Participants 2,234,089 1,107,200 1,955,289 357,936 829,643 6,484,157
Employer 10,604 3,801,892 3,812,496
----------------------------------------------------------------------------------------
2,244,693 1,107,200 5,757,181 357,936 829,643 10,296,653
----------------------------------------------------------------------------------------
Total additions to net assets 3,362,895 2,933,970 23,972,166 616,013 1,868,821 209,182 32,963,047
----------------------------------------------------------------------------------------
DEDUCTIONS FROM NET ASSETS
Participant distributions 3,058,038 610,654 9,453,796 44,247 208,877 57,833 13,433,445
Administrative expenses 46,900 12,408 106,845 2,225 5,443 173,821
----------------------------------------------------------------------------------------
Total deductions from net assets 3,104,938 623,062 9,560,641 46,472 214,320 57,833 13,607,266
----------------------------------------------------------------------------------------
Net increase prior to interfund transfers 257,957 2,310,908 14,411,525 569,541 1,654,501 151,349 19,355,781
Interfund transfers, net (329,481) 414,248 (2,394,353) 402,827 1,756,597 150,162 --
----------------------------------------------------------------------------------------
(Decrease) increase to net assets
available for benefits (71,524) 2,725,156 12,017,172 972,368 3,411,098 301,511 19,355,781
Net assets available for benefits:
Beginning of year 18,470,780 4,646,269 75,792,973 749,617 1,405,841 3,495,321 104,560,801
----------------------------------------------------------------------------------------
End of year $18,399,256 $7,371,425 $87,810,145 $1,721,985 $4,816,939 $ 3,796,832 $123,916,582
========================================================================================
</TABLE>
See notes to financial statements.
5
<PAGE> 9
UST Inc.
Employees' Savings Plan
Notes to Financial Statements
Years Ended December 31, 1996 and 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles and, as such, include amounts based on
judgments and estimates made by management, which may differ from actual
results.
Investments are recorded at fair value. The change in the difference between the
fair value and the cost of investments is reflected as unrealized appreciation
(depreciation) in the aggregate fair value of investments. The realized
appreciation in the aggregate fair value of investments is the difference
between the proceeds received and the average cost of the investments sold.
Proceeds for Funds C and D represent the market value of UST Inc. common stock
on the valuation date of withdrawal ($32.38 - December 31, 1996; $26.88 - May 2,
1997). The guaranteed investment contracts, which are benefit responsive, are
stated at contract value which approximates fair value.
Securities traded on a national securities exchange are valued at the last
reported sales price on the last business day of the year. Investments traded in
the over-the-counter market and listed securities for which no sale was reported
on that date are valued at the average of the last reported bid and ask prices.
The fair value of the participation units owned by the Plan in group trust funds
is based on quoted redemption value on the last business day of the Plan year.
In the event that the Plan is terminated, participants receive the fair value of
their accounts.
2. DESCRIPTION OF PLAN
The Plan is an employee benefit plan established to encourage and assist
employees to adopt a regular savings program and to help provide additional
security for retirement. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
The Plan is a trusteed plan administered by the UST Inc. Employee Benefits
Administration Committee (EBAC). Wachovia Bank of North Carolina is the trustee
for the Plan.
Employees are eligible to participate in the Plan the first day of the month
following the date a year of service has been completed. A year of service shall
be met upon completion of at least 1,000 hours of service during a 12-month
consecutive period measured from the employee's date of hire.
6
<PAGE> 10
UST Inc.
Employees' Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1996 and 1995
2. DESCRIPTION OF PLAN (CONTINUED)
The majority of employees may make an aggregate contribution to the Plan of 2%
to 12% (in 1/2% increments) of base pay, on a before-tax or after-tax basis, of
which the first 6% is subject to a 100% matching contribution by UST Inc. (the
Company). Employees of Stimson Lane Ltd. (Stimson Lane) may make an aggregate
contribution to the Plan of 2% to 12% (in 1/2% increments) of base pay, on a
before-tax or after-tax basis, of which the first 3% of such contribution is
subject to a 50% matching contribution by the Company.
In compliance with federal tax law, the maximum annual contribution for a
participant for the plan years presented is limited to the lesser of $30,000 or
25% of compensation and the maximum annual before-tax contribution was limited
to $9,500 in 1996 and to $9,240 in 1995. The maximum amount of compensation
taken into account under the Plan is limited to $150,000 for any individual.
In accordance with the Plan, participants can direct the investment of their
contributions between Fund A (a fixed income fund, as defined), Fund B (an index
fund, as defined), Fund C (common stock of UST Inc.), Fund E (a balanced fund,
as defined) and Fund F (a small company fund, as defined). The Plan allows
participants who invest in more than one fund to allocate their contributions in
multiples of 5% per fund. The Plan's method of moving existing balances among
funds is the fund transfer method. This method permits Plan participants to
change their existing account balances by transferring amounts from any one
participant-directed fund to any other such fund. During 1996, unit prices for
contributions to and withdrawals from funds A, B, C, E and F ranged from $12.96
to $13.64, from $31.70 to $38.35, from $28.88 to $35.63, from $12.51 to $14.09
and from $16.26 to $20.30, respectively.
Effective November 1, 1996, the Plan was amended to eliminate current
restrictions concerning transactions in the Plan by participants who are
determined to be subject to the short-swing profit recovery rules of Section 16
of the Securities and Exchange Act of 1934, as amended, and to add that such
participants will not be permitted to make elections resulting in an intra-plan
transfer which involves the Company's common stock funds or in a cash
distribution funded by a volitional disposition of the Company's common stock if
such elections are made less than six months after the last election to engage
in an "opposite-way" election, as defined in the Plan.
Company matching contributions are reduced by any forfeited amounts. At the
discretion of the UST Inc. Board of Directors (the Board), additional matching
contributions may be made by the Company. For the years ended December 31, 1996
and 1995, no additional discretionary contributions have been made. Company
matching contributions are invested in common stock of UST Inc. and are
deposited in Fund D. Employees age 59 1/2 or older can direct investment of
Company matching contributions in Fund A rather than Fund D. Employee
contributions are always 100% vested, while vesting of the Company's
contributions generally occurs over a period of five years at a rate of 20% for
each year of service. Months during which a participant is eligible to
participate in the Plan, but chooses not to, will not count toward vesting.
Participants become 100% vested upon death or attainment of age 55.
7
<PAGE> 11
UST Inc.
Employees' Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1996 and 1995
2. DESCRIPTION OF PLAN (CONTINUED)
The Plan includes a loan feature for participants who are employed by the
Company enabling them to borrow from their vested plan balance. Participants may
not obtain a loan if they (i) already have two outstanding loans under the Plan
or (ii) have obtained a loan from the Plan within the six-month period
immediately preceding the application for a new loan. The term of the loan can
range from one to five years as elected by the participant. Loan repayments are
made in equal installments of principal and interest by automatic payroll
deductions starting two months after the effective date of the loan. The maximum
amount the participant can borrow is the lesser of 50% of their vested interest
in the Plan or $50,000 less the highest outstanding loan balance over the
previous twelve months. The minimum loan amount is $1,000. The loan interest
rate is determined on a monthly basis, equal to the average of the prime lending
rate of two local banks. The interest rate is fixed for the term of the loan. In
the event a participant defaults on a Plan loan, the entire unpaid balance of
the loan shall become due and payable immediately.
Employees participating in the Plan are not subject to federal income tax on
amounts contributed to the Plan by the Company or on amounts that such employees
contribute to the Plan on a before-tax basis until such time that their
participating interest in the Plan is distributed to them. In general, a
participating employee is subject to tax on the amount by which the distribution
paid exceeds the amount contributed on an after-tax basis to the Plan.
The Plan permits payment of administrative expenses from Plan assets to the
extent permissible under applicable law. Beginning in July of 1995,
administrative expenses were paid by the Plan. Prior to July 1995 administrative
expenses were paid by the Company. All costs and expenses with regard to the
purchase or sale of investments were paid by the Plan in both years.
The foregoing description of the Plan provides only general information.
Participants should refer to the Summary Plan Description (SPD) for a more
complete description of the Plan's provisions. Copies of the SPD are available
from the Employee Benefits Department.
3. PARTICIPANTS' INTERESTS
A participant's interest in the Plan is based on "Units of Participation", the
value of which is calculated monthly for each fund based on the aggregate fair
value of the fund's investments at each month end. The value of a unit for Funds
A, B, E and F is determined by dividing the fair value of each Fund by the total
number of its outstanding units. The unit value for Funds C and D is equal to
the fair value of one share of common stock of the Company. The Participant Loan
Fund unit value is $1.
A participant obtaining a distribution from the Plan receives the fair value of
his account. If a participant leaves the Company before becoming fully vested in
the employer's contributions to the Plan (value of Fund D), the participant will
forfeit the nonvested portion of the employer's contributions. Such forfeitures
(1996--$55,749; 1995--$63,075) remain in Fund D and are applied to reduce
employer contributions. Under the provisions of the Plan, a participant may, at
the discretion of the EBAC, be permitted to (i) contribute to the Plan certain
distributions received from another qualified employee benefit plan or (ii)
direct the trustee of such other plan to make a trust-to-trust transfer to the
Plan of the participant's account in such other plan.
8
<PAGE> 12
UST Inc.
Employees' Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1996 and 1995
3. PARTICIPANTS' INTERESTS (CONTINUED)
As of December 31, 1996, 1,941 employees were participants in the Plan. The
number of employees participating in each fund at December 31 is as follows:
<TABLE>
<CAPTION>
FUND 1996 1995
---- ---- ----
<S> <C> <C>
A 1,162 1,292
B 930 815
C 1,007 1,081
D 1,831 1,872
E 498 387
F 928 680
Participant Loan 624 644
</TABLE>
The accounting records for Funds C and D are combined, and are not separately
maintained between these two funds. Separate participant records are, however,
maintained for each Fund. A summary of such participant records for 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------------------------- ---------------------------------------------
FUND C FUND D TOTAL Fund C Fund D Total
--------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 1,537,478 $ 1,537,478 $ 1,955,289 $ 1,955,289
Employer $ 3,865,260 3,865,260 $ 3,801,892 3,801,892
--------------------------------------------- ---------------------------------------------
Total Contributions 1,537,478 3,865,260 5,402,738 1,955,289 3,801,892 5,757,181
Investment income 321,832 762,780 1,084,612 3,642,924 14,572,061 18,214,985
Administrative expenses (169,983) (169,983) (106,845) (106,845)
Participant distributions (1,383,033) (9,215,008) (10,598,041) (1,934,010) (7,519,786) (9,453,796)
Interfund transfers, net (2,502,326) (175,724) (2,678,050) (2,330,771) (63,582) (2,394,353)
--------------------------------------------- ---------------------------------------------
Net (decrease) increase (2,196,032) (4,762,692) (6,958,724) 1,266,587 10,790,585 12,017,172
Net assets available for benefits:
Beginning of year 14,915,059 72,895,086 87,810,145 13,688,472 62,104,501 75,792,973
--------------------------------------------- ---------------------------------------------
End of year $ 12,719,027 $ 68,132,394 $ 80,851,421 $ 14,915,059 $ 72,895,086 $ 87,810,145
============================================= =============================================
Units:
Beginning of year 446,894 2,184,122 2,631,016 491,066 2,227,964 2,719,030
============================================= =============================================
End of year 392,805 2,104,151 2,496,956 446,894 2,184,122 2,631,016
============================================= =============================================
</TABLE>
9
<PAGE> 13
UST Inc.
Employees' Savings Plan
Notes to Financial Statements (continued)
Years Ended December 31, 1996 and 1995
4. INVESTMENTS
The fair value, as determined by quoted market prices, of individual investments
that represent 5% or more of net assets available for benefits are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1996 1995
---- ----
<S> <C> <C>
UST Inc. Common Stock; 1996 - 2,506,189 shares;
1995 - 2,638,621 shares $81,137,869 $88,063,976
State Street Bank & Trust Company; Guaranteed
Investment Contract Fund; 1996 - 16,193,209 units;
1995 - 16,825,180 units 16,193,209 16,825,180
State Street Bank & Trust Company; Common Stock
Fund; 1996 - 80,908 shares; 1995 - 75,787 shares 9,660,734 7,356,044
John Hancock Special Equities Fund;
1996 - 282,368 shares; 1995 - 195,139 shares 7,090,248 4,702,851
</TABLE>
Fund A (the fixed income fund, as defined) includes fully benefit responsive
investment contracts with insurance companies and other financial institutions.
Benefit responsive contracts consist of contributions made under the contract
and interest at the contract rate and provide contract value payments for
participant distributions, loans and investment transfers as allowed by the
Plan. There are exceptions for payments to participants who, as a result of a
company event, cease to be employed by the Company. A company event includes a
significant early retirement program, divestiture or other company action that
could be construed as causing increased plan payments to participants.
The interest rates are set at the time of purchase and provide a stated rate of
interest on the principal and accrued interest balance over the life of the
contract. The weighted-average yield for all guaranteed investment contracts was
6.2% in 1996 and 5.9% in 1995. The crediting interest rate for all guaranteed
investment contracts was 6.3% at December 31, 1996 and 6.0% at December 31,
1995.
5. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) and 401(k) of the Internal Revenue Code (IRC) and, therefore, the trust
which holds the assets of the Plan is not subject to tax under Section 501(a) of
the IRC. The EBAC is not aware of any course of action or series of events that
have occurred that might adversely affect the Plan's qualified status.
10
<PAGE> 14
SUPPLEMENTAL SCHEDULES
<PAGE> 15
UST Inc.
Employees' Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, PAR OR TOTAL ALL FUNDS
LESSOR OR SIMILAR PARTY MATURITY VALUE COST FAIR VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UST Inc. 2,506,189 shares --
Common Stock $25,862,396 $81,137,869
-----------------------------
Group Trust Funds:
State Street Bank and Trust Company 80,908 shares --
Common Stock Fund 4,687,958 9,660,734
-----------------------------
State Street Bank and Trust Company 16,377 shares -- Short-term
Investment Fund 16,377 16,377
State Street Bank and Trust Company 988,088 units -- Yield
Enhanced Short-term
Investment Fund 988,088 988,088
-----------------------------
Total 1,004,465 1,004,465
-----------------------------
State Street Bank and Trust Company
Guaranteed Investment Contract Fund:
Allstate Life Insurance Company 548,077 units, 4.94%,
due September 30, 1997 548,077 548,077
Allstate Life Insurance Company 953,899 units, 5.35%,
due June 30, 1998 953,899 953,899
Capital Holding Corp. 1,635,891 units, 5.98%,
due September 30, 1998 1,635,891 1,635,891
Capital Holding Corp. 588,045 units, 6.73%,
due December 31, 1998 588,045 588,045
Capital Holding Corp. 519,979 units, 6.78%,
due December 29, 2000 519,979 519,979
Continental Assurance 1,169,537 units, 8.18%,
due December 30, 1998 1,169,537 1,169,537
Continental Assurance 1,259,738 units, 6.49%,
due April 2, 2001 1,259,738 1,259,738
Hartford Life Insurance Company 619,547 units, 4.76%,
due June 30, 1997 619,547 619,547
Hartford Life Insurance Company 302,205 units, 6.03%,
due December 31, 1997 302,205 302,205
John Hancock Life Insurance Company 746,650 units, 4.95%,
due December 31, 1997 746,650 746,650
</TABLE>
11
<PAGE> 16
UST Inc.
Employees' Savings Plan
Schedule of Assets Held for Investment Purposes (continued)
December 31, 1996
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, PAR OR TOTAL ALL FUNDS
LESSOR OR SIMILAR PARTY MATURITY VALUE COST FAIR VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Metropolitan Life Insurance Company 313,184 units, 6.45%,
due March 31, 1997 $ 313,184 $ 313,184
Metropolitan Life Insurance Company 179,621 units, 6.11%,
due June 30, 1997 179,621 179,621
Metropolitan Life Insurance Company 1,016,537 units, 6.80%,
due June 30, 2000 1,016,537 1,016,537
New York Life Insurance Company 587,670 units, 7.75%,
due March 31, 1999 587,670 587,670
New York Life Insurance Company 1,383,707 units, 6.50%,
due September 30, 1999 1,383,707 1,383,707
Principal Mutual Life Insurance Company 314,167 units, 4.42%,
due December 31, 1997 314,167 314,167
Principal Mutual Life Insurance Company 1,074,761 units, 6.05%,
due June 30, 1999 1,074,761 1,074,761
Principal Mutual Life Insurance Company 588,851 units, 7.85%,
due June 30, 1999 588,851 588,851
The Life Insurance Company of Virginia 584,494 units, 5.33%,
due March 31, 1998 584,494 584,494
The Life Insurance Company of Virginia 771,577 units, 6.82%,
due September 29, 2000 771,757 771,757
Transamerica 1,034,892 units, 7.08%,
due December 31, 2000 1,034,892 1,034,892
------------------------------
Total 16,193,209 16,193,209
------------------------------
American Balanced Fund 165,485 shares
investment fund 2,229,590 2,407,810
John Hancock Special Equities Fund 282,368 shares
investment fund 5,863,489 7,090,248
------------------------------
Total Investments $55,841,107 $117,494,335
==============================
</TABLE>
12
<PAGE> 17
UST Inc.
Employees' Savings Plan
Schedule of Reportable Transactions
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Net Number
Identity of Purchase Selling Gain of
Party Involved Description of Asset Price (1) Price (1) Cost of Asset (Loss) Transactions
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATEGORY (iii)--A SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
State Street Bank and Short-term Investment Fund
Trust Company Shares:
17,392,723 $17,392,723 $17,392,723 -- 224
17,376,364 $17,376,364 17,376,364 -- 165
State Street Bank and Yield Enhanced Short-term
Trust Company Investment Fund Shares:
7,041,851 7,041,851 7,041,851 -- 41
7,396,943 7,396,943 7,396,943 -- 15
UST Inc. Common Stock-Shares:
100,352 3,261,171 3,261,171 -- 12
232,784 7,501,259 2,684,123 $4,817,136 20
</TABLE>
THERE WERE NO CATEGORY (i), (ii) OR (iv) REPORTABLE TRANSACTIONS DURING 1996.
(1) Purchase and selling prices are equal to fair value at dates of acquisition
and disposition, respectively.
13
<PAGE> 18
Consent of Independent Auditors
We consent to the incorporation by reference in Post-Effective Amendment No. 4
to the Registration Statement (Form S-8 No. 2-72410) pertaining to the
Employees' Savings Plan of UST Inc. of our report dated May 2, 1997, with
respect to the financial statements and schedules of the UST Inc. Employees'
Savings Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1996.
ERNST & YOUNG LLP
Stamford, Connecticut
May 5, 1997
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the UST
Inc. Employee Benefits Administration Committee has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
UST INC. EMPLOYEES' SAVINGS PLAN
/s/ ALTON W. ADAMS
----------------------------------------
Alton W. Adams
Chairman, UST Inc. Employee Benefits
Administration Committee
Dated: May 9, 1997
