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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 18, 2000
UST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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<S> <C> <C>
DELAWARE 0-17506 06-1193986
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C>
100 WEST PUTNAM AVENUE, GREENWICH, CONNECTICUT 06830
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (203) 661-1100
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ITEM 5. OTHER EVENTS.
UST Inc. Results of Operations for the fourth quarter and the year ended
December 31, 1999 and a schedule setting forth its Capitalization and Other
Financial Information are attached hereto as Exhibit 99.1 and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
The following exhibit is filed as part of this report:
99.1 Results of Operations relating to Registrant's fourth quarter and year
ended December 31, 1999 earnings and Registrant's Capitalization and
Other Financial Information as of December 31, 1999.
1
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UST Inc.
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(Registrant)
By: /s/ DEBRA A. BAKER
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Name: Debra A. Baker
Title: Senior Vice President and
Secretary
Date: February 18, 2000
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EXHIBIT 99.1
UST INC.
RESULTS OF OPERATIONS
Fourth quarter 1999 net sales increased 8% to $400.8 million, net earnings
increased 11% to $118.0 million and diluted earnings per share increased 23% to
$.70 as compared to the fourth quarter of 1998.
The Company posted record results for the year ended December 31. Net sales
increased 6% to $1.5 billion, net earnings increased 3% to $469.3 million and
diluted earnings per share increased 10% to $2.68.
The reported net earnings and diluted earnings per share comparison for
1999 was affected by tobacco settlement-related charges. Fourth quarter results
included tobacco settlement-related charges of $1.7 million in 1999 versus $24
million in 1998, while year end results included charges of $9.4 million in 1999
versus $31.7 million in 1998. 1998 year end results also included a gain of
$10.7 million resulting from the sale of certain commercial agricultural
properties and the Company's video entertainment subsidiary.
The Company continued to aggressively repurchase shares, repurchasing 4.4
million shares at a cost of $118 million in the fourth quarter. For the year,
the Company repurchased 16.1 million shares at a cost of $466 million,
representing 9% of the shares outstanding at the beginning of the year.
TOBACCO SEGMENT
In the fourth quarter, net sales increased 5% to $333.4 million, as a
result of higher prices and an increase in net unit volume of 1.3% to 159.4
million cans. Premium volume was off slightly, while non-premium volume
contributed an additional 3.3 million cans to the results.
Cost of products sold increased in the fourth quarter of 1999 and remained
stable for the year end period. At year end, the Company reversed the previously
estimated LIFO benefit when it was determined that the amount did not apply for
financial reporting purposes.
The Tobacco segment experienced a stronger first half of 1999 than
originally anticipated. That, together with aggressive share repurchases,
allowed increased spending in the second half while still achieving the
corporate goal of increasing diluted earnings per share by 8 to 10%.
Accordingly, direct selling and advertising expenses advanced $15.2 million, or
almost 70% in the quarter, as compared to the fourth quarter of 1998. All other
administrative expenses decreased.
Operating profit, including settlement related charges, advanced 17% to
$193.7 million for the quarter.
For the year, net sales increased 5.1% to $1.3 billion, due to increased
prices and a 1.4% increase in net unit volume to 634.4 million cans. Premium
volume was stable, while non-premium volume added 8.6 million cans.
Spending increased significantly for direct selling and advertising.
Administrative expenses were lower primarily due to the decreased tobacco
settlement-related charges.
For the year, operating profit increased 8% to $777.1 million.
WINE SEGMENT
In the fourth quarter, the Wine segment posted a net sales increase of 28%
to $60.4 million, due to a 29% increase in premium case volume. Gross margin
continued to be impacted by higher grape costs. Gross profit grew 19% on the
strength of strong case sales. Direct and indirect selling and
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advertising expenses increased to support the momentum in case sales. Operating
profit for the quarter increased 9% to $10 million.
For the year, net sales increased 17% to $174.3 million, while operating
profit declined 8% to $20 million, principally due to poor first half results.
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UST
CONSOLIDATED SALES AND EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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<CAPTION>
FOURTH QUARTER
--------------------------------
1999 1998 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Net sales................................................ $400,779 $371,546 + 7.9
Cost and expenses
Costs of products sold................................. 92,695 77,710 +19.3
Selling, advertising and administrative................ 111,017 123,757 -10.3
-------- --------
Total costs and expenses............................... 203,712 201,467 + 1.1
-------- --------
Operating income......................................... 197,067 170,079 +15.9
Interest expense (income), net........................... 5,256 (1,609) --
-------- --------
Earnings before income taxes............................. 191,811 171,688 +11.7
Income taxes............................................. 73,769 65,279 +13.0
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Net earnings............................................. $118,042 $106,409 +10.9
======== ========
Net earnings per share:
Basic.................................................. $.70 $.57 +22.8
Diluted................................................ $.70 $.57 +22.8
Cash dividends per common share.......................... $.42 $.40 1/2 + 3.7
Shares outstanding:
Basic.................................................. 169,044 185,288
Diluted................................................ 169,477 186,905
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UST
CONSOLIDATED SALES AND EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1999 1998 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Net sales............................................. $1,512,331 $1,423,246 + 6.3
Cost and expenses
Costs of products sold.............................. 304,275 283,516 + 7.3
Selling, advertising and administrative............. 431,578 407,452 + 5.9
---------- ----------
Total costs and expenses............................ 735,853 690,968 + 6.5
---------- ----------
Operating income...................................... 776,478 732,278 + 6.0
Interest expense (income), net........................ 13,535 (2,187) --
---------- ----------
Earnings before income taxes.......................... 762,943 734,465 + 3.9
Income taxes.......................................... 293,650 279,186 + 5.2
---------- ----------
Net earnings.......................................... $ 469,293 $ 455,279 + 3.1
========== ==========
Net earnings per share:
Basic............................................... $2.69 $2.45 + 9.8
Diluted............................................. $2.68 $2.44 + 9.8
Cash dividends per common share....................... $1.68 $1.62 + 3.7
Shares outstanding:
Basic............................................... 174,355 185,544
Diluted............................................. 175,114 186,880
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UST INC.
CAPITALIZATION AND OTHER FINANCIAL INFORMATION
CAPITALIZATION
The following table sets forth UST's consolidated historical capitalization
as of December 31, 1999.
<TABLE>
<CAPTION>
(UNAUDITED)
AS OF DECEMBER 31, 1999
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(IN THOUSANDS)
<S> <C>
Short-term debt............................................. $ 70,965
Long-term debt.............................................. 411,000
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Total debt.................................................. 481,965
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Total stockholders equity................................... 200,804
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Total capitalization........................................ $682,769
========
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OTHER FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
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<S> <C>
Total assets at December 31, 1999........................... $1,015,648
EBITDA(1) for the year ended December 31, 1999.............. $ 813,491
Interest expense for the year ended December 31, 1999....... $ 15,669
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(1) Earnings before interest, taxes, depreciation and amortization.
