<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 March 31, 1999
--------------------------------------------
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 March 31, 1999
176,096,046
- -----------
<PAGE> 2
UST Inc.
(Registrant)
INDEX
<TABLE>
<CAPTION>
Page No.
--------
Part I. Financial Information:
<S> <C>
Condensed Consolidated Statement of Financial Position -
March 31, 1999 and December 31, 1998 2
Condensed Consolidated Statement of Earnings -
Three months ended March 31, 1999 and 1998 3
Condensed Consolidated Statement of Cash Flows -
Three months ended March 31, 1999 and 1998 4
Notes To Condensed Consolidated Financial Statements 5
Management's Discussion And Analysis of Operations and
Financial Condition 9
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
27. Financial Data Schedule
Signature 14
</TABLE>
(1)
<PAGE> 3
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 15,072 $ 33,210
Accounts receivable 66,867 63,269
Inventories:
Leaf tobacco 207,881 178,078
Products in process 112,477 110,752
Finished goods 62,015 66,688
Other materials and supplies 18,761 17,116
-------- -------
401,134 372,634
Prepaid expenses and other current assets 22,649 24,653
Deferred income taxes 13,119 13,447
-------- --------
Total current assets 518,841 507,213
Property, plant and equipment, net 339,188 338,695
Other assets 69,927 67,411
-------- --------
Total assets $927,956 $913,319
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt $153,700 $ -
Accounts payable and accrued expenses 97,058 156,699
Income taxes 103,836 40,617
-------- --------
Total current liabilities 354,594 197,316
Long-term debt 100,000 100,000
Postretirement benefits other than pensions 79,323 78,567
Other liabilities 70,526 69,143
Contingencies (see note) - -
--------- --------
Total liabilities 604,443 445,026
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 208,351,246 shares in 1999
and 208,095,836 shares in 1998 104,176 104,048
Additional paid-in capital 514,558 512,089
Retained earnings 718,045 684,489
Accumulated other comprehensive loss (19,063) (18,420)
----------- ----------
1,317,716 1,282,206
Less cost of shares in treasury - 32,255,200 shares in 1999
and 26,008,500 in 1998 994,203 813,913
--------- --------
Total stockholders' equity 323,513 468,293
-------- --------
Total liabilities and stockholders' equity $927,956 $913,319
======== ========
</TABLE>
Note: The statement of financial position at December 31, 1998 has been
derived from the audited financial statements at that date.
See Notes to Condensed Consolidated Financial Statements.
(2)
<PAGE> 4
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Net sales $350,085 $340,164
Costs and expenses
Cost of products sold 61,286 61,951
Excise taxes 5,732 5,917
Selling, advertising and administrative 105,673 91,117
Interest, net 1,065 571
------- -------
Total costs and expenses 173,756 159,556
------- -------
Earnings before income taxes 176,329 180,608
Income taxes 67,869 68,631
-------- --------
Net earnings $108,460 $111,977
======== ========
Net earnings per share
Basic $ .60 $ .60
Diluted $ .60 $ .60
Dividends per share $ .42 $ .40 1/2
Average number of shares
Basic 179,763 185,257
Diluted 180,650 187,448
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(3)
<PAGE> 5
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities $ 89,649 $ 88,835
INVESTING ACTIVITIES
Purchases of property, plant and equipment (9,386) (12,029)
Dispositions of property, plant and equipment 496 17,127
Proceeds from the sale of a business -- 20,152
--------- ---------
Net cash (used in) provided by investing activities (8,890) 25,250
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 153,700 --
Repayment of borrowings -- (10,000)
Proceeds from the issuance of stock 2,597 18,743
Dividends paid (74,904) (75,140)
Stock repurchased (180,290) --
--------- ---------
Net cash used in financing activities (98,897) (66,397)
--------- ---------
(Decrease) increase in cash and cash equivalents (18,138) 47,688
Cash and cash equivalents at beginning of year 33,210 6,927
--------- ---------
Cash and cash equivalents at end of period $ 15,072 $ 54,615
========== =========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $ 4,365 $ 2,803
Interest 1,608 1,413
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(4)
<PAGE> 6
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(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 month period ended March 31, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. 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, 1998.
REPURCHASE OF COMMON STOCK
During 1999, Registrant continued its program to repurchase a portion of its
outstanding stock, up to a maximum of 20 million shares. As of December 31,
1998, 6.4 million shares were repurchased under the current program. Through
March 31, 1999, an additional 6.2 million shares costing $180.3 million were
repurchased.
COMPREHENSIVE INCOME
The main components of comprehensive income for Registrant are net earnings,
foreign currency translation adjustments and additional minimum pension
liability adjustments. During the first quarter of 1999 and 1998, total
comprehensive income, net of taxes, amounted to $107,817,000 and $111,873,000,
respectively.
(5)
<PAGE> 7
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Numerator:
Net earnings $108,460 $111,977
Denominator:
Denominator for basic earnings per share -
weighted-average shares 179,763 185,257
Dilutive effect of stock options 887 2,191
-------- --------
Denominator for diluted earnings per share 180,650 187,448
Basic earnings per share $.60 $.60
Diluted earnings per share $.60 $.60
</TABLE>
Options to purchase 7.9 million shares and 0.3 million shares of common stock
outstanding as of March 31, 1999 and 1998, respectively, were not included in
the computation of diluted earnings per share because their exercise prices were
greater than the average market price of the common shares and, therefore, would
be antidilutive.
SEGMENT INFORMATION
Registrant's reportable segments are Tobacco and Wine. Those business units that
do not meet quantitative reportable thresholds are included in all other
operations. Included in all other operations for both periods is Registrant's
international and cigar operations, while 1998 also includes a divested
business. Interim segment information is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
Net Sales to Unaffiliated Customers: 1999 1998
---- ----
<S> <C> <C>
Tobacco $311,167 $298,820
Wine 32,133 34,011
All other 6,785 7,333
-------- --------
Net sales $350,085 $340,164
======== ========
Operating Profit (Loss):
Tobacco $179,627 $171,633
Wine 2,082 5,465
All other (1,433) 7,975
-------- --------
Operating profit 180,276 185,073
Corporate expenses (2,882) (3,894)
Interest, net (1,065) (571)
-------- --------
Earnings before income taxes $176,329 $180,608
======== ========
</TABLE>
Registrant's identifiable assets did not change significantly from amounts
appearing in the December 31, 1998 Consolidated Segment Information (See Form
10-K for the year then ended).
(6)
<PAGE> 8
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 has been 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 in Illinois seeking damages and other
relief brought by an individual plaintiff and purporting 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' products and gum deterioration."
Registrant is named in an action in North Carolina seeking unspecified damages
brought by an individual plaintiff who alleges that he developed bladder cancer
as a result of his usage of smokeless tobacco products manufactured by
Registrant.
Registrant is also named in an action in San Francisco, California along with
five other smokeless tobacco manufacturers seeking damages and other relief
brought by the City and County of San Francisco and the Environmental Law
Foundation purportedly on behalf of "the residents of San Francisco County and
the general public" alleging violation of The Safe Drinking Water and Toxic
Enforcement Act of 1986, Health and Safety Code Sections 25249.6, et seq.
"Proposition 65") and the California Unfair Competition Act, Business and
Professions Code Sections 17200, et seq. The action alleges, among other things,
that the defendants sold smokeless tobacco products in California without
providing a ". . . 'clear and reasonable' warning that their use results in
multiple exposures to substances known to the State of California to cause
cancer, birth defects and reproductive harm."
Registrant is named in an action in Kentucky seeking more than $400 million in
"actual damages" before trebling, punitive damages and injunctive relief brought
by one of Registrant's competitors alleging that certain actions and practices
of Registrant violate federal antitrust and advertising laws in connection with
the marketing and sale of its moist snuff brands and also alleges various
violations of tort and state law.
(7)
<PAGE> 9
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 willingness to consider alternative solutions for
resolving certain regulatory and litigation issues, 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 position of Registrant, but may have a material
impact on Registrant's consolidated financial results for a particular reporting
period in which resolved.
On August 28, 1996, the Food and Drug Administration (FDA) published regulations
asserting unprecedented jurisdiction over nicotine in tobacco as a "drug" and
purporting to regulate smokeless tobacco products as a "medical device."
Registrant and other smokeless tobacco manufacturers filed suit against the FDA
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. 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 most 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." On August 14, 1998, the Fourth Circuit Court of Appeals ruled in favor
of Registrant and other tobacco product manufacturers stating that the FDA lacks
jurisdiction to regulate tobacco products and that all of the regulations
published by the FDA on August 26, 1996 are invalid. On January 19, 1999, the
FDA filed a petition for certiorari seeking review of the Fourth Circuit's
ruling by the United States Supreme Court. On April 26, 1999, the United States
Supreme Court announced its intention to review that ruling; any decision is not
expected until 2000. 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 smokeless tobacco business.
(8)
<PAGE> 10
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)
RESULTS OF OPERATIONS
FIRST QUARTER 1999 COMPARED WITH THE FIRST QUARTER OF 1998
CONSOLIDATED RESULTS
Consolidated net sales increased 3 percent to $350.1 million, while net earnings
decreased 3 percent to $108.5 million, and basic and diluted earnings per share
of $0.60 remained level with the corresponding period in 1998. 1998 first
quarter results include the effects of a pretax gain of $10.7 million resulting
from the sale of certain commercial agricultural properties and the Registrant's
video entertainment subsidiary. Results also include tobacco settlement related
charges of $3.1 million in 1999 and $4.6 million in 1998. Excluding the effect
of these items, net earnings would have increased 2 percent, while basic and
diluted earnings per share would have increased 5 percent. The consolidated
gross margin percent also increased slightly in 1999, as cost of sales remained
stable. Corporate expenses for 1999 were slightly lower than the corresponding
period in 1998. Net interest expense increased to $1.1 million versus $0.6
million in the prior year, primarily as a result of higher average debt
outstanding.
TOBACCO SEGMENT
Tobacco segment net sales increased 4.1 percent to $311.1 million and accounted
for 88.9 percent of consolidated revenues in 1999. The increase was primarily a
result of higher selling prices and a moderate volume increase for moist
smokeless tobacco products. Unit volume for moist smokeless tobacco products,
net of returned goods, increased 0.8 percent to 149.5 million cans as compared
with the corresponding 1998 period. Returned goods were significantly lower than
in the first quarter of 1998 due to improved management of promotional
activities, primarily an emphasis on the selected distribution of promotional
units. Returned goods for the first quarter of 1998 were adversely affected by
the initial implementation of Registrant's program to enhance product freshness
at retail and several large promotions run in the latter part of the previous
year. Since the program's implementation, the level of product returns has
stabilized.
Cost of products sold decreased slightly in the first quarter primarily as a
result of lower unit cost for moist smokeless tobacco products. Gross profit for
the segment rose 5.3 percent as compared to the similar 1998 period. Higher
selling prices on Registrant's premium-priced brands more than offset volume
increases in lower-priced promotional and price/value products. This resulted in
a modest increase in the gross margin percentage for the segment in the first
quarter.
Selling and advertising expenses for the segment increased for the first
quarter, primarily as a result of higher spending on direct marketing and trade
promotion initiatives. Indirect selling expenses increased due to higher
salaries and related costs attributable to additional sales and support
personnel in the salesforce. Administrative expenses moderately increased during
the period primarily due to higher legal and regulatory spending.
(9)
<PAGE> 11
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
Results for the Tobacco segment include tobacco settlement related charges of
$3.1 million and $4.6 million in the first quarters of 1999 and 1998,
respectively.
Operating profit for the Tobacco segment increased 4.7 percent to $179.6 million
for the first quarter of 1999, as compared to $171.6 million in 1998.
WINE SEGMENT
Wine segment net sales decreased 5.5 percent to $32.1 million for the first
quarter, and accounted for 9.2 percent of consolidated net sales in 1999. The
decrease was primarily attributable to lower premium case unit volume and
reduced selling prices on certain brands. Strong premium case sales in the
fourth quarter of 1998 had a negative effect on first quarter 1999 unit volume
results. Unit volume for Registrant's two leading brands of premium wine,
Columbia Crest and Chateau Ste. Michelle, accounting for approximately 80
percent of the Registrant's total wine sales in 1999, remained stable as
compared with the corresponding 1998 period.
Unit cost for the wine segment increased for the first quarter due to the higher
average costs associated with prior years' harvests used in production. The
increased unit cost, coupled with reduced selling prices, resulted in a decrease
in gross profit percentage for the Wine segment.
Selling, advertising and administrative expenses increased over the
corresponding period in 1998. Selling expenses were even in both periods.
Advertising expenses increased significantly, and were predominantly focused on
the promotion of several of Registrant's premium varietal brands. Administrative
and other expenses were higher primarily due to higher salaries and related
costs.
Operating profit for the Wine segment decreased 61.9 percent to $2.1 million for
the first quarter of 1999, as compared to $5.5 million in 1998.
ALL OTHER OPERATIONS
Sales for all other operations decreased 7.5 percent to $6.8 million and
accounted for 1.9 percent of consolidated revenues in 1999. The decrease was
primarily due to lower unit volume in Registrant's cigar operations as a result
of continued weakness in the domestic premium cigar market. Overall, all other
operations recorded an operating loss of $1.4 million for the first quarter of
1999 as compared to operating profit of $8.0 million in 1998. First quarter
results for 1998 include the effects of the $10.7 million pretax gain on the
sale of certain commercial agricultural properties and Registrant's video
entertainment subsidiary which was reported as a reduction to administrative
expenses.
(10)
<PAGE> 12
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
LIQUIDITY AND SOURCES OF CAPITAL
CHANGES IN FINANCIAL CONDITION SINCE DECEMBER 31, 1998
Net cash provided by operating activities remained stable as compared with the
corresponding period of the prior year. Favorable changes in operating assets
and liabilities were offset by slightly lower net earnings. Net earnings
generated by the tobacco segment and an increase in income taxes payable were
the primary sources of cash, while seasonal purchases of leaf tobacco for moist
smokeless tobacco products and a reduction to accounts payable and accrued
expenses were the primary uses of cash for operations. Registrant anticipates
the overall raw material inventory purchases in 1999, for leaf tobacco and
grapes, will approximate amounts expended in 1998.
Net cash used in investing activities was $8.9 million in 1999 as compared with
net cash provided by investing activities of $25.3 million in 1998. Both periods
included expenditures for property, plant and equipment. The net cash provided
by investing activities in 1998 was a result of the proceeds from the sale of
Registrant's video entertainment subsidiary and dispositions of property, plant
and equipment, primarily the sale of certain commercial agricultural properties.
Registrant expects the 1999 capital program to approximate $72 million.
Net cash used in financing activities increased to $98.9 million in 1999 as
compared to $66.4 million in 1998. The increase in 1999 was primarily due to
cash expended for the repurchase of common stock, partially offset by the
proceeds from additional borrowings. Registrant had suspended its stock
repurchase program during most of 1998. Registrant expects that funds allocated
to its stock repurchase program for the remainder of the year will approximate
amounts expended in the first quarter of 1999.
As of the date of this filing, Registrant is in the process of refinancing a
portion of its total debt with a $200 million long-term debt offering.
YEAR 2000 ISSUE
Based on a risk assessment, Registrant has developed plans to address the year
2000 issue. Registrant's most critical business system was replaced with year
2000 compliant software in 1998 and is currently modifying or replacing other
critical computer systems to become year 2000 compliant. Registrant's year 2000
plan includes both information technology (IT) systems and non-IT systems and a
risk assessment of its major vendors and customers. Remediation and testing of
critical business IT systems are currently in process and these systems are
expected to be year 2000 compliant by June 30, 1999. Remediation and testing of
non-IT systems will also continue, as necessary, during the first half of 1999.
(11)
<PAGE> 13
UST Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
In order to determine the state of readiness and potential effects on its
business, Registrant has surveyed its major vendors and customers. Registrant
has also completed several site visits of its most critical vendors and
customers. Based upon Registrant's inquiries and site visits, it has determined
that its major vendors and customers appear to have adequately addressed the
year 2000 issue. However, Registrant has no assurance that these vendors and
customers will be year 2000 ready.
Based on currently available information, Registrant estimates that the cost to
become year 2000 compliant will not be material.
Incomplete or untimely resolution of the year 2000 issue by Registrant or
critically important customers or vendors could cause delays in Registrant's
ability to manufacture and ship its products, process transactions or engage in
similar normal business activities, which would have a material financial impact
on Registrant's operations. With the implementation of its year 2000 plan,
Registrant believes the year 2000 issue should not pose any significant
operational problems.
Registrant's contingency plans continue to be evaluated and modified as
additional information becomes available. Such plans may include stockpiling or
securing alternate sources of manufacturing supplies in order to minimize the
potential disruption of business operations that may result if Registrant, its
vendors or customers fail to become year 2000 compliant.
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 1998 Form 10-K, and to the report on execution of the Smokeless
Tobacco Master Settlement Agreement on Form 8-K, dated November 25, 1998,
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.
(12)
<PAGE> 14
UST Inc.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1999 Annual Meeting of Stockholders was held on May 4,
1999.
(c) Matters voted upon at the meeting:
<TABLE>
<CAPTION>
Affirmative Negative Broker
Votes Votes Abstentions Non-Votes
---------- -------- ----------- --------
<S> <C> <C> <C> <C>
Ratification
and Approval
of Independent
Auditors
(Proposal No. 2) 159,886,187 313,724 380,418 N/A
Stockholder
Proposal
(Proposal No. 3) 5,513,077 134,956,049 5,131,269 14,979,934
Stockholder
Proposal
(Proposal No. 4) 4,428,479 138,886,036 2,285,878 14,979,936
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three
months ended March 31, 1999.
(13)
<PAGE> 15
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 May 17, 1999 /s/ Robert T. D'Alessandro
-------------------- ------------------------------------
Robert T. D'Alessandro
Senior Vice President and Controller
(Principal Accounting Officer and
Principal Financial Officer)
(14)
<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 entirely by reference
to such financial statements. (In thousands, except per share amounts).
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> $15,072
<SECURITIES> 0
<RECEIVABLES> 66,867
<ALLOWANCES> 0
<INVENTORY> 401,134
<CURRENT-ASSETS> 518,841
<PP&E> 597,426
<DEPRECIATION> 258,238
<TOTAL-ASSETS> 927,956
<CURRENT-LIABILITIES> 354,594
<BONDS> 100,000
0
0
<COMMON> 104,176
<OTHER-SE> 219,337
<TOTAL-LIABILITY-AND-EQUITY> 927,956
<SALES> 350,085
<TOTAL-REVENUES> 350,085
<CGS> 67,018
<TOTAL-COSTS> 67,018
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,065
<INCOME-PRETAX> 176,329
<INCOME-TAX> 67,869
<INCOME-CONTINUING> 108,460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,460
<EPS-PRIMARY> $.60<F1>
<EPS-DILUTED> $.60<F1>
<FN>
<F1>Item Number 5-03(b)(20) amounts present earnings per share - basic and earnings
per share - diluted, respectively.
</FN>
</TABLE>
