Professional Documents
Culture Documents
UST Exhibits
UST Exhibits
Exhibit 1
Category
Introduction
% 1998
Sales
1998
Average
Retail Cost
per Can
Copenhagen
Full Price
1822
48%
Full Price
1935
Full Price
Skoal Bandits
Full Price
Red Seal
Price Value
Rooster
Full Price
Brands
Description
Competition
$3.13
18%
$2.98
Kodiak (Conwood)
1984
29%
$3.11
Kodiak (Conwood),
Timberwolf (Swedish Match)
and Silver Creek (Helme)
National introduction
in 1983
3%
$3.10
Renegades (Swedish
Match)
1%
$1.29
Timberwolf (Swedish
Match), Cougar, Redwood
(Swisher) and Silver Creek
(Helme)
Test Marketed in
Fourth Qtr 1997;
National introduction
in 1998
<1%
$2.44
Kodiak (Conwood)
Source: Credit Suisse First Boston research dated August 27, 1999.
Exhibit 2
Industry
Premium Market Share %
Price Value Market Share %
1992
1993
1994
1995
1996
1997
1998
7 Yr. CAGR
99.0%
1.0%
97.9%
2.1%
97.2%
2.8%
96.3%
3.7%
94.9%
5.1%
92.7%
7.3%
90.9%
9.1%
89.2%
10.8%
(1.5%)
40.5%
86.2%
84.6%
(1.9%)
84.6%
0.0%
85.1%
0.6%
85.1%
0.0%
83.8%
(1.5%)
83.8%
0.0%
81.7%
(2.5%)
81.7%
0.0%
79.5%
(2.7%)
79.5%
0.0%
78.2%
(1.6%)
78.2%
0.0%
77.2%
(1.3%)
76.6%
0.6%
(1.6%)
11.3%
11.9%
11.3%
0.0%
10.8%
(4.4%)
10.8%
0.0%
11.1%
2.8%
11.1%
0.0%
11.9%
7.2%
11.9%
0.0%
12.8%
7.6%
12.2%
0.6%
13.1%
2.3%
11.8%
1.3%
13.2%
0.8%
11.6%
1.6%
3.9%
2.0%
11.1%
2.0%
0.0%
1.0%
(50.0%)
1.0%
0.0%
1.1%
10.0%
1.0%
0.1%
1.4%
27.3%
0.8%
0.6%
2.3%
64.3%
0.5%
1.8%
3.0%
30.4%
0.3%
2.7%
4.6%
53.3%
0.3%
4.3%
14.3%
2.8%
33.3%
0.0%
2.8%
3.6%
28.6%
0.0%
3.6%
4.5%
25.0%
0.0%
4.5%
4.9%
8.9%
0.0%
4.9%
5.1%
4.1%
0.0%
5.1%
3.8%
(25.5%)
0.0%
3.8%
21.0%
0.0%
1.0%
2.1%
110.0%
0.0%
2.1%
Other Manufacturers
Total Market Share %
0.9%
Increase/(Decrease)%
Premium Market Share %
0.9%
UST Inc. Price Value Market Share % 0.0%
0.0%
(100.0%)
0.0%
0.0%
0.3%
NM
0.3%
0.0%
0.4%
33.3%
0.4%
0.0%
0.5%
25.0%
0.5%
0.0%
0.5%
0.0%
0.5%
0.0%
0.6%
20.0%
0.6%
0.0%
1.2%
100.0%
0.7%
0.5%
4.2%
UST
Total Market Share %
Increase/(Decrease)%
Premium Market Share %
Price Value Market Share %
Conwood
Total Market Share %
Increase/(Decrease)%
Premium Market Share %
Price Value Market Share %
Swedish Match
Total Market Share %
Increase/(Decrease)%
Premium Market Share %
Price Value Market Share %
Swisher
Total Market Share %
Increase/(Decrease)%
Premium Market Share %
Price Value Market Share %
86.2%
0.0%
10.1%
10.1%
0.0%
1.8%
1.8%
0.0%
1.0%
Source: Credit Suisse First Boston Research dated August 27, 1999. Compiled from A.C. Neilson data and estimates.
(1.7%)
-
2.0%
-
(22.6%)
-
21.0%
(3.5%)
-
Exhibit 3
UST Inc. Summary Financial Information--Eleven Years (1988-1998) (in millions, except per share data and ratios)
1988
1989
1990
1991
1992
1993
1994
$ 611.9
437.3
277.9
260.2
(1.1)
261.3
162.2
$ 673.9
488.4
315.0
298.4
(3.2)
301.6
190.5
$ 756.4
564.6
368.6
349.0
(3.2)
352.2
223.3
$ 135.2
-
$ 195.1
-
$ 217.8
-
$ 247.3
-
1995
1996
1997
$ 1,305.8
1,043.6
736.9
707.8
3.2
704.6
429.8
$ 1,371.7
1,098.9
779.2
750.9
6.4
744.5
464.0
$ 1,401.7
1,109.8
749.8
719.3
7.5
703.9
443.9
$ 521.2
-
$ 456.4
-
$ 287.4
$ 8.0
1998
5 Year
CAGR
10 Year
CAGR
$ 0.74
$ 0.71
$ 0.37
50%
$ 72.7
$ 598.0
$ 21.8
$ 30.8
$ 453.3
$ 0.87
$ 0.83
$ 0.46
53%
$ 54.6
$ 630.2
$ 6.8
$ 14.5
$ 482.3
$ 1.04
$ 0.99
$ 0.55
53%
$ 46.6
$ 622.6
$ 3.1
$ 4.8
$ 473.9
$ 1.26
$ 1.20
$ 0.66
52%
$ 41.5
$ 656.5
$ 1.3
$ 482.9
$ 267.9
-
$ 340.7
$ (35.0)
$ 1.49
$ 1.43
$ 0.80
54%
$ 1.67
$ 1.63
$ 0.96
58%
$ 36.4
$ 674.0
$ 516.6
$ 25.3
$ 706.2
$ 40.0
$ 40.0
$ 463.0
$ 399.2
$ 1.92
$ 1.88
$ 1.12
58%
$ 50.7
$ 741.2
$ 125.0
$ 125.0
$ 361.7
$ 2.21
$ 2.17
$ 1.30
59%
$ 69.4
$ 784.0
$ 100.0
$ 200.0
$ 292.8
$ 2.48
$ 2.44
$ 1.48
60%
$ 54.5
$ 806.6
$ 100.0
$ 250.0
$ 281.2
$ 2.41
$ 2.39
$ 1.62
67%
$ 6.9
$ 826.4
$ 100.0
$ 110.0
$ 436.8
$ 1,423.2
1,139.7
785.0
753.3
(2.2)
755.5
467.9
5%
9%
6%
6%
11%
11%
6%
11%
$ 429.5
$ 21.0
5%
12%
9%
9%
11%
13%
13%
16%
5%
13%
$ 2.52
$ 2.50
$ 1.62
64%
$ 33.2
$ 913.3
$ 100.0
$ 100.0
$ 468.3
220.6
219.8
215.2
211.6
209.8
208.5
202.0
194.4
187.4
183.9
185.5
Working Capital
Capital Expenditures3
Dividends Paid
Share Repurchases
$ 221.1
$ 20.8
$ 81.7
$ 67.4
$ 209.3
$ 23.7
$ 101.2
$ 97.5
$ 197.2
$ 37.2
$ 118.3
$ 151.3
$ 210.0
$ 28.4
$ 139.7
$ 184.4
$ 249.0
$ 30.1
$ 168.0
$ 212.6
$ 228.4
$ 54.5
$ 199.7
$ 236.7
$ 221.2
$ 23.7
$ 225.7
$ 298.8
$ 144.8
$ 14.0
$ 252.4
$ 274.8
$ 144.0
$ 36.7
$ 277.3
$ 237.8
$ 275.3
$ 55.8
$ 298.1
$ 45.7
$ 309.9
$ 35.5
$ 301.1
$ 151.6
$ 10.50
$ 6.00
$ 10.25
13.9x
$ 15.38
$ 9.63
$ 15.31
17.6x
$ 18.25
$ 12.38
$ 18.25
17.5x
$ 33.88
$ 16.38
$ 32.75
26.0x
$ 35.38
$ 25.38
$ 32.00
21.5x
$ 32.75
$ 24.38
$ 27.75
16.6x
$ 31.50
$ 23.63
$ 27.88
14.5x
$ 36.00
$ 26.63
$ 33.38
15.1x
$ 35.88
$ 28.25
$ 32.38
13.1x
$ 36.94
$ 25.50
$ 36.94
15.3x
$ 36.88
$ 24.56
$ 34.88
13.8x
Market Equity5
$ 2,260.6
$ 3,366.0
$ 3,926.6
$ 6,930.0
$ 6,713.7
$ 5,785.0
$ 5,630.6
$ 6,487.2
$ 6,066.6
$ 6,794.0
$ 6,470.8
7.2%
23.9%
23.3%
10.1%
17.5%
24.3%
12.3%
17.2%
19.6%
18.8%
19.1%
20.0%
14.9%
17.5%
21.2%
6.3%
11.3%
20.0%
9.7%
11.4%
16.7%
8.5%
10.9%
16.1%
5.0%
8.0%
13.8%
2.2%
(4.3%)
9.5%
1.5%
5.4%
0.0%
71.5%
45.4%
42.5%
26.5%
72.5%
46.7%
44.3%
28.3%
74.6%
48.7%
46.1%
29.5%
74.7%
49.7%
47.2%
29.6%
75.1%
50.9%
48.5%
30.3%
77.5%
53.9%
51.5%
31.7%
79.1%
55.6%
53.2%
32.2%
79.9%
56.4%
54.2%
32.9%
80.1%
56.8%
54.7%
33.8%
79.2%
53.5%
51.3%
31.7%
80.1%
55.2%
52.9%
32.9%
79.7%
55.5%
53.3%
32.7%
77.3%
52.7%
50.4%
31.3%
38.0%
28.3%
4.6%
6.4%
40.7%
31.0%
1.4%
2.9%
46.7%
35.6%
0.6%
1.0%
55.6%
41.6%
0.0%
0.3%
62.5%
47.0%
0.0%
0.0%
71.0%
50.4%
8.0%
8.0%
94.0%
53.5%
25.7%
25.7%
131.3%
56.4%
25.5%
40.6%
161.7%
58.3%
26.2%
47.1%
123.7%
54.4%
18.6%
20.1%
103.4%
53.8%
17.6%
17.6%
122.8%
55.3%
22.7%
30.2%
89.1%
48.2%
12.4%
16.3%
Source: Company annual report for fiscal year ended December 31, 1998 and author's adjustments and calculations.
Before the cumulative effect of accounting changes. Excludes settlement charges and other special charges or non-recurring items. All net income adjustments apply a 40% tax rate.
1
2
Authors' estimates of settlement charges and other special charges or non-recurring items. Does not include effect of accounting changes.
Based upon year-end stock price and basic earnings per share.
Based upon average basic shares outstanding and year-end stock price.
Exhibit 4
% Total
1997
% Total
1998
% Total
$ 1,167.5 85.1%
122.5 8.9%
81.7 6.0%
$ 1,371.7
$ 1,181.8 84.3%
145.0 10.3%
74.9 5.3%
$ 1,401.7
$ 1,245.6 87.5%
148.5 10.4%
29.2 2.1%
$ 1,423.2
$ 745.6 97.6%
17.9 2.3%
0.1 0.0%
$ 763.5
$ 700.4 96.3%
28.2 3.9%
(1.3) (0.2%)
$ 727.3
$ 720.6 96.8%
22.1 3.0%
1.7 0.2%
$ 744.4
63.9%
14.6%
0.1%
59.3%
19.4%
(1.7%)
57.9%
14.9%
5.9%
$ 458.2
194.9
91.6
61.9
$ 806.6
56.8%
24.2%
11.4%
7.7%
$ 468.0
230.9
102.2
25.3
$ 826.4
56.6%
27.9%
12.4%
3.1%
$ 497.6
277.2
87.2
51.3
$ 913.3
54.5%
30.4%
9.5%
5.6%
$ 29.2
12.0
2.7
0.8
$ 44.7
65.3%
26.9%
6.0%
1.8%
$ 29.4
20.1
6.1
2.5
$ 58.2
50.6%
34.6%
10.5%
4.3%
$ 27.7
25.6
2.5
0.5
$ 56.3
49.2%
45.6%
4.4%
0.8%
Depreciation
Tobacco
Wine
Other
Corporate
Total Depreciation
$ 15.8
8.9
1.8
1.6
$ 28.1
56.2%
31.7%
6.4%
5.8%
$ 16.3
10.4
1.8
1.6
$ 30.1
54.0%
34.6%
6.1%
5.3%
$ 16.1
12.0
1.7
1.7
$ 31.4
51.3%
38.1%
5.3%
5.3%
Source: Company annual report for fiscal year ended December 31, 1998 and author's calculations.
Exhibit 5
Summary Financial Information--Selected Tobacco Companies, Fiscal Years Ended in 1998 (in millions, except per share data and ratios)
UST Inc.
DiMon Inc.
Standard
Commercial
Universal Corp
Net Sales
Gross Profit
EBITDA2
EBIT2
Interest Expense (Income)
Pretax Earnings
Net Income
$ 1,423.2
1,139.7
785.0
753.3
(2.2)
755.5
467.9
$ 74,391.0
30,993.0
15,501.0
13,811.0
890.0
12,921.0
7,672.4
$ 93.1
60.9
36.3
29.1
24.9
4.2
1.0
$ 20,563.0
9,493.0
3,602.0
2,467.0
880.0
1,455.0
718.0
$ 2,171.8
266.9
200.2
156.7
83.8
72.9
52.0
$ 429.5
$ 21.0
$ 6,076.4
$ 3,834.0
$ 14.5
-
$ 2,016.0
$ 2,069.0
$ 52.5
$ 16.9
$ (61.3)
-
$ 110.2
$ (16.7)
$ 1.17
$ 1.16
$ 0.66
56%
$ 2.18
$ 2.05
0%
$ 3.71
$ 3.68
$ 1.11
30%
$ 2.52
$ 2.50
$ 1.62
64%
$ 33.2
$ 913.3
$ 100.0
$ 100.0
$ 468.3
$ 3.16
$ 3.14
$ 1.68
53%
$ 4,081.0
$ 59,920.0
$ 12,615.0
$ 14,662.0
$ 16,197.0
$ (7.09)
$ (7.09)
0%
185.5
2,429.0
528.2
$ 309.9
$ 35.5
$ 3,851.0
$ 1,804.0
$ 42.0
$ 0.5
$ 34.88
13.8x
Market Equity6
$ 6,470.8
$ 129,951.5
$ 2.8
$ 260.0
$ 202.6
$ 215.6
$ 39.3
$ (15.4)
Working Capital
Capital Expenditures4
$ 53.50
16.9x
$ 2.22
$ 2.22
$ 2.05
92%
$ 300.0
$ 28,892.0
$ 9,982.0
$ 10,467.0
$ 957.0
$ 7,809.0
323.9
NA
NA
NA
$ 18.7
$ 1,797.5
$ 797.0
$ 1,079.5
$ 0.5
$ 421.9
$ 4,287.2
613.6
329.5
278.4
64.0
231.3
130.4
$ 79.8
$ 2,056.7
$ 263.1
$ 849.6
$ 31.7
$ 547.9
44.5
12.4
35.2
$ (259.0)
$ 576.0
$ 706.4
$ 36.6
$ 219.1
$ 9.7
$ 328.8
$ 90.0
$ 29.69
13.4x
$ 11.25
9.6x
$ 15.94
7.3x
$ 37.38
10.1x
$ 500.3
$ 197.3
$ 9,614.4
$ 1,315.2
Median
(excl.
UST)
Mean
(excl.
UST)
1.5%
3.2%
10.2%
(0.5%)
2.2%
10.2%
4.2%
80.1%
55.2%
52.9%
32.9%
41.7%
20.8%
18.6%
10.3%
65.4%
39.0%
31.3%
1.1%
46.2%
17.5%
12.0%
3.5%
12.3%
9.2%
7.2%
2.4%
9.7%
5.7%
4.4%
1.8%
14.3%
7.7%
6.5%
3.0%
28.0%
13.4%
9.6%
2.7%
31.6%
16.7%
13.3%
3.7%
103.4%
53.8%
17.6%
17.6%
49.3%
13.2%
43.8%
47.5%
NM
0.4%
89.4%
90.0%
8.4%
2.4%
53.2%
54.4%
12.5%
2.7%
65.4%
71.9%
22.5%
3.4%
52.3%
72.3%
25.6%
6.5%
31.2%
59.4%
22.5%
3.1%
52.8%
65.7%
23.7%
4.8%
55.9%
65.9%
1
2
Authors' estimates of settlement charges and other special charges or non-recurring items. Does not include discontinued operations or effect of accounting changes.
Based upon fiscal year-end stock price and basic earnings per share.
Based upon average basic shares outstanding and fiscal year-end stock price.
$ 34.1
$ 839.5
$ 197.1
$ 469.9
$ 30.3
$ 149.6
RJR Nabisco Holdings spun its tobacco business (R.J. Reynolds Tobacco) off to shareholders in 1999.
Exhibit 6
Three-years (1996-1998)
Corporate Credit Rating
Outlook
EBIT interest coverage (x)
EBITDA interest coverage (x)
Fund flow/total debt (%)
Free operating cash flow/total debt (%)
Return on capital (%)
Operating income/sales (%)
Total debt/capital (including ST debt) (%)
Source: Standard & Poor's analysis
Data for 1997-1998.
1
2
Philip Morris
North
Atlantic
Trading
Co.1
RJR Nabisco
DiMon Inc.
A
Stable
B+
Stable
BBBStable
BB+
Negative
11.2
12.7
56.3
41.8
38.4
26.0
49.3
1.3
1.6
6.8
5.6
11.8
38.1
90.6
2.5
3.7
14.5
6.8
10.3
15.6
55.1
2.6
3.3
12.3
10.1
13.4
16.4
67.8
Standard
Commercia
l
Universal Corp
BBPositive
3.3
5.4
6.7
(2.6)
6.6
3.6
77.5
Tobacco
Companies
Median2
UST Inc.
3.0
4.1
13.4
6.2
12.6
16.0
66.8
101.5
105.6
364.0
296.5
140.6
55.7
28.2
AStable
3.5
4.4
18.5
2.9
16.9
7.6
65.8
Exhibit 7
AAA
Investment Grade
AA
A
12.9
18.7
89.7
40.5
30.6
30.9
21.4
31.8
9.2
14.0
67.0
21.6
25.1
25.2
29.3
37.0
AAA
5.60
6.47
AA
5.84
6.76
U.S. Treasury
4.70
5.45
7.2
10.0
49.5
17.4
19.6
17.9
33.3
39.2
BBB
Non-Investment Grade/Speculative
BB
B
CCC
4.1
6.3
32.2
6.3
15.4
15.8
40.8
46.4
2.5
3.9
20.1
1.0
12.6
14.4
55.3
58.5
1.2
2.3
10.5
(4.0)
9.2
11.2
68.8
71.4
(0.9)
0.2
7.4
(25.4)
(8.8)
5.0
71.5
79.4
BB/BB8.72
-
BB
11.19
-
Earnings from continuing operations before interest, taxes, depreciation and amortization/
Gross interest incurred before subtracting capitalized interest and interest income
Net income from continuing operations + depreciation, amortization, deferred income taxes, and other non-cash items/
Long-term debt + current maturities, commercial paper, and other short-term borrowings
Funds from operations - capital expenditures - (+) the increase (decrease) in working capital (excl. changes in cash, marketable securities & ST debt)/
Long-term debt + current maturities, commercial paper, and other short-term borrowings
Operating income/Sales=
Sales minus cost of goods manufactured (before depreciation and amortization), SG&A and R&D costs/
Sales
Long-term debt/Capitalization=
Long-term debt/
Long-term debt + shareholders equity (including preferred stock) + minority interest
Total debt/Capitalization=
Long-term debt + current maturities, commercial paper, and other short-term borrowings/
Long-term debt + current maturities, commercial paper and other ST borrowings + shareholders equity (including preferred stock) + minority interest
Source: Standard & Poor's Credit Week, July 28, 1999, and Standard & Poor's The Outlook, January 6, 1999.
Note: Excludes discussion of operating lease equivalents as defined by S&P for simplification purposes .