UST: UST Puts a Number On the Charge
Today Mid Cap Watch List (Track at Marketocracy) and Large Cap Watch List (Track at Marketocracy) member UST Corp. (UST) announced that it has settled a legal case:
The first quarter 2007 Form 10-Q filed today with the Securities and Exchange Commission, which is available on the Company’s website at http://www.ustinc.com, includes a $93.6 million pretax charge for the California settlement and includes financial statements which supersede the GAAP financial results included in the Company’s earnings release. The after tax impact of the charge was $60 million, or $.37 per diluted share. As reflected in the attached table reconciling GAAP to non-GAAP financial measures, first quarter adjusted diluted earnings per share were not impacted.The inclusion of the charge also had no impact on the Company’s outlook for the year. Accordingly, full year 2007 adjusted non-GAAP diluted earnings per share remains targeted at $3.32 with a range of $3.27 to $3.40. The adjusted non-GAAP target excludes the gain on the sale of the Company’s headquarters, restructuring charges related to Project Momentum and antitrust litigation charges, details of which can be found in the first quarter 10-Q.
When the earnings were initially reported, the company had indicated this was in the works but was unable to put a precise number on the charge. At the time, they described it as an “opportunity” and we said:
The two “opportunities” are a restructuring charge for layoffs the company expects will reduce future expenses and a possible charge related to resolution of antitrust lawsuits currently in mediation. And even though the company raised its own outlook, the new target still falls below the $3.35 level the consensus was already expecting.
When we reviewed the 10K we called it a “solid company that is not especially cheap.” That type of valuation typically requires exceeding expectations to drive the stock price.
Analysts are still expecting $3.35 in adjusted non-GAAP pro-forma earnings per share excluding the bad things that happen to companies from time to time. As far as the earnings under Generally Accepted Accounting Principles, it now looks like that translates into somewhere south of $2.95 - with the remaining shortfall to be determined when the company figures out the scale of the restructuring charge.
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