Cigarette maker Reynolds American 3Q profit falls about 4 pct on charges; adj. profit up 4 pct

Reynolds American Inc., the nation's second-biggest tobacco company, said Tuesday its third-quarter profit fell nearly 4 per cent on charges related to legal cases and other costs.
But the maker of Camel, Pall Mall and Natural American Spirit brand cigarettes said its earnings excluding those items rose nearly 4 per cent as higher prices, productivity gains and selling more of its smokeless tobacco brands that include Grizzly and Kodiak offset cigarette volume declines.
The company remains focused on delivering sustainable growth, "even with a difficult economic and competitive environment," CEO Daniel M. Delen said in a news release.
Reynolds American, based in Winston-Salem, N.C., said its net income fell to $367 million, or 63 cents per share, for the period ended Sept. 30, down from $381 million, or 65 cents per share, a year ago.
Earnings adjusted for the charges related to claims in lawsuits from smokers injured by their cigarette use and other costs were 70 cents per share. Analysts polled by FactSet expected 73 cents per share.
Revenue excluding excise taxes slipped about 2 per cent to $2.2 billion from $2.24 billion, but beat analyst estimates of $2.16 billion.
The company also raised its quarterly dividend by 5.7 per cent. Its shares were steady at $39.37 in premarket trading.
Reynolds American said it sold 6.8 per cent fewer cigarettes than last year's quarter. That compares with its estimate of a total industry decline of 6.4 per cent.
U.S. tobacco companies cautioned last quarter that third-quarter cigarette volume comparisons and profitability would be hurt because wholesalers stocked up more than usual in that period last year.
The company sold less than 1 per cent more of its Camel brand and volumes of Pall Mall grew about 2 per cent.
Camel's market share remained stable at 7.9 per cent of the U.S. market, while Pall Mall's market share grew 0.7 percentage points to 8.6 per cent.
The company has promoted Pall Mall as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment, and has said half the people who try the brand continue using it.
Reynolds American and other tobacco companies are also focusing on cigarette alternatives such as snuff and chewing tobacco for future sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher.
The company sold 7 per cent more of its smokeless tobacco brands and its U.S. market share of the segment grew 1.1 percentage points to 31.6 per cent.
It also tightened its full-year forecast for earnings between $2.63 and $2.68 per share, excluding charges related to legal cases, tax items and other costs.
Analysts expected earnings of $2.65 for the year.
Reynolds American on Tuesday also said its board of directors approved an increase in the quarterly dividend of 3 cents per share, or 5.7 per cent, to 56 cents a share. The new dividend will be paid Jan., 3 to shareholders of record on Dec. 9.

What are the health risks of smokeless tobacco?

Smokeless tobacco has been banned in Minor League Baseball, there are calls to ban it in the majors, and just last week congress made an appeal to players not to use it in the World Series.

In this week's 8 Ways to Prevent Cancer segment, we look at the health risks of chewing tobacco.

It's sometimes perceived as a safer alternative to cigarettes, but there are at least 28 ingredients in smokeless tobacco that cause cancer. There's been a 36 percent increase in use by high school boys since 2003.
Today, 15 percent of all high school boys use it.

"Tobacco has nicotine in it," said Dr. Laura Bierut, a professor of psychology at Washington University School of Medicine and co-director of the outpatient psychiatry clinic. "Whether you smoke tobacco or use smokeless tobacco it is addictive and it's equally addictive regardless of the way you use it."

Addictive and deadly. Lung cancer is less common, but rates of mouth, tongue and esophageal cancer are high.

In fact, pre-cancerous changes can be seen in users long before a tumor appears.

"There's problems with the gums, problems with the teeth," said Dr. Bierut, "so not only is there cancer, but you lose your teeth, you have inflammation of your gums, and it's so important to avoid these types of cancers and problems."

Smokeless tobacco has been linked to baseball for more than 100 years, and in spite of the dangers, there's an on-going debate on whether to ban it from the sport.

In the meantime, appeals to players not to use it, like the one that came at the start of the World Series, are an attempt to send a strong message to young fans.

"Most of these products start being used in the teenaged years," said Dr. Bierut, "so part of the problem is that teenagers are becoming addicted to it, but then it continues on into the 20s and 30s."

Herman Cain Produces Brilliant Tobacco Ad

With Herman Cain leading Mitt Romney 25% to 21% in the latest New York Times/CBS News poll, the next step for the Cain campaign is clear — it's past time to release a weird and creepy campaign advertisement to secure the allegiance of uncommitted primary voters.

Mission accomplished. "We've run a campaign like nobody's ever seen," says the man seen loitering outside an office building in the web ad that went viral on Monday. Watch it once, watch it twice, watch it 999 times and don't miss the :40 mark of this 56 second masterpiece…
Despite suggestions to the contrary, the star of the ad is not a registered sex offender who has managed to upload an "unlisted" (only those with a link may see it) Youtube clip to Cain's campaign account without anyone's knowledge. In fact, the smoking man really is Mark Block, chief of staff and chief operating officer for the Cain campaign, and a former Midwestern campaign operative "banned from politics in Wisconsin for three years and forced to pay a $15,000 fine after being accused by the Wisconsin State Elections Board of violating election law" during a 1997 State Supreme Court campaign.

And Herman Cain is probably not just a sophisticated performance artist intent on punking the GOP electorate, but is actually deeply committed to the goal of a more free/more nicotine-addicted America…

From 1996, when he left the pizza company, until 1999, Mr. Cain ran the National Restaurant Association, a once-sleepy trade group that he transformed into a lobbying powerhouse. He allied himself closely with cigarette makers fighting restaurant smoking bans, spoke out against lowering blood-alcohol limits as a way to prevent drunken driving, fought an increase in the minimum wage and opposed a patients' bill of rights — all in keeping with the interests of the industry he represented….

Under Mr. Cain's leadership, the restaurant association opposed higher taxes on cigarettes and the use of federal money to prosecute cigarette makers for fraud — positions that Matt Myers, president of the Campaign for Tobacco-Free Kids said had little to do with the restaurant business.

So maybe this ad is just a subtle piece of pro-tobacco, anti-nanny state advertising, and anyway, no one is talking about the commercial you managed to produce on your smoke break, are they?

Smoking ban is unnecessary

Recently, the Student Health Advisory Committee started a push to ban smoking on the University of Minnesota’s Twin Cities campus, including outdoor areas. Banning smoking on the Twin Cities campus is a bad idea, and one doesn’t have to be a smoker to oppose it.

First, the policy would be impossible to enforce. The Twin Cities campus is far larger than any of the other University satellite campuses that have banned smoking. Almost any use of the police’s time would be better and more productive than cruising this massive area in search of the odd smoker.

The size of campus would also make it difficult for smokers to get to a place that permitted smoking. Smoking cigarettes is legal — it shouldn’t be unreasonably inconvenient to do so, and one shouldn’t have to leave campus to light up.

The current policy of making smokers stand 25 feet from building entrances is a good compromise. Smokers are out of the way of pedestrians and they have a place to dispose of their cigarette butts. If smoking were banned on campus, people would still smoke, but they’d no longer have designated areas to do so with the ability to dispose of their cigarette butts properly.

Getting a whiff of smoke while walking around campus is an inconvenience, not a public health risk sufficient to ban smoking on the entire campus. Being exposed to the habits of others that one finds distasteful is the cost of living in a diverse society. Everyone not sharing the same habits and behaviors is not something that needs correcting, especially when the system in place already prevents this habit from harming others.

Ohio Supreme Court to hear smoking ban challenge

The Ohio Supreme Court is set to hear arguments Wednesday in a bar owner's challenge to the state's ban on smoking in workplaces.

The ban prohibiting smoking in most indoor, public places was overwhelmingly approved by voters in 2006 and took effect in 2007.

The owner of Zeno's Victorian Village in Columbus challenged the law after the tavern was cited for violations and fined $33,000. It argues the law is unconstitutional.

An appeals court upheld enforcement of the law, saying there was overwhelming evidence that Zeno's owners intentionally violated the ban. That decision reversed a lower court's ruling that tossed the violations and said the state health department exceeded its authority by holding Zeno's responsible for the actions of its patrons.

Boise looks at a smoking law, residents react

A packed house at Boise City Hall Tuesday evening as people for and against a smoking ban in bars, parks and other public areas raise their voices.

Public Information Officer for the Boise Mayor’s office Adam Park says the public comment ended a little after 7:30PM Tuesday night.

It was a mixed bag inside the council chambers as some said the Boise city council should not be allowed to take away the rights of smokers. Others said the issue was clearly a public health concern.

Ashlie Meyer works at China Blue, a local bar and is pregnant.

“It’s not a choice when people are smoking around you and somebody doesn’t smoke. It’s like you don’t have a choice when you are behind a bar or behind a desk you have to sit there and you just have to do your job,” says Ashlie Meyer who works at China Blue, a local bar and is pregnant.

Years ago China Blue made the decision to go smoke free.

“There are a lot of people you don’t see besides the customers, beer reps that have to walk into ten or twenty bars at day. Liquor reps that walk into bars, delivery people insurance people, just people that do business with bars,” said Owner of China Blue Ted Challenger.

It was clear at the meeting though, not all bar owners share that same sediment; Gary Sullivan owns a smoking establishment in Boise and gathered petition signatures to back his side.

“There is all kind of smoking bars and all kinds of smoke free bars. We all have the right to choose and that is what this country is about,” said Sullivan.

The proposed smoking ban would prevent smokers from lighting up in bars, city parks and staying 20 feet away from city owned buildings.

The next step in this process will continue next week. Councilors will review the issue again for a “1st reading.” If the council decides to adopt the proposed smoking ordinance it would take effect January of 2012.

Smoking ordinance fails to get support in council

An attempt to write tighter rules for smoking in Macon failed again to get through City Council on Tuesday, and council members said it may not be back for some time.
The ordinance narrowly passed the council in May, but Mayor Robert Reichert vetoed it and backers couldn’t muster the 10 votes necessary to override the veto. Following a public hearing, a revised ordinance came back to the council’s Public Safety Committee, but it didn’t have enough support there to make the full council’s agenda.

Nevertheless, Councilwoman Nancy White -- one of the ordinance’s co-sponsors -- said at Tuesday’s pre-council meeting that she intended to move for a vote on it anyway. It takes eight votes to disagree with the committee’s recommendation.
Just before the regular council meeting, however, ordinance backers took a quick head count of council supporters and chose not to risk defeat.
“We didn’t have a full house, so we decided not to play cards,” White said afterward. Proponents might have had eight votes, but they couldn’t be sure. Councilwoman Elaine Lucas, who strongly supported the previous version, was absent.
No council member made a motion to take up the ordinance. Both White and Councilman Larry Schlesinger, another co-sponsor, said they don’t expect it to return anytime soon.

Even the intent to bring it up drew a strong reaction from opponents. Councilman Charles Jones, one of six council members to oppose the previous ordinance, said he thought abrogating the council’s usual procedure was unfair.
“I think that you have really misled the citizens of Macon by asking to put this on tonight,” he told White in the pre-council meeting.
But Council President James Timley, though he also opposed the earlier ordinance, said the mechanism to change procedure was legitimate.
“There is a maneuver, and that’s legal. That’s in our rules,” Timley said.
The ordinance would have banned smoking inside all bars and restaurants, near business entrances, and near public playgrounds or park seating areas. But unlike the earlier version, it would allow smoking in other parts of outdoor parks and would not have gone into effect unless Bibb County passed a matching ordinance.
Reichert’s veto in May called for some amendments, including collaboration with the county. Had the ordinance made it through the council Tuesday, he likely would have signed it. Just before the meeting, Reichert described the current version as “acceptable.”

Before it was clear that the smoking ordinance would not come up for a final vote, about 40 people waited in council chambers and half a dozen lined up to speak against it. The crowd applauded when Timley announced it wouldn’t be brought to a vote Tuesday night.
The chamber then nearly emptied, and the drama left as well: Councilmen Mike Cranford, Lonnie Miley and Virgil Watkins also filed out before the rest of the meeting was over.
In other business, the council approved all other items up for a vote. Among those was approval of a 75-cent charge on all purchases of prepaid cell phone minutes to fund the local 911 call center. That’s a new tax which the state will collect anyway, starting Jan. 1.
The only way any of that money can remain in the city is through a council resolution to use it for 911 funding.
Council members also voted to accept a $199,656 AmeriCorps grant for the third year of funding a police cadet recruitment program, and ratified the purchase of E-911 equipment for $995,824. The latter purchase already was budgeted, but the revised deal with Motorola will give the city four microwave dishes instead of three, and nine work consoles instead of eight, for the same price, according to city Information Technology Director Stephen Masteller.