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April,
2005

TOBACCO INDUSTRY NEWS (cont.)

Pride Manufacturing, Tampa Cigar Tip Factory, Closes

Tampa, FL - Pride Manufacturing, a producer of wooden cigar tips based in Guilford, Maine, has closed its small factory in Tampa and laid off its six employees there.

The small, wooden mouthpieces - made of white birch harvested in Maine, Vermont, New Hampshire, and Canada - launched part of the city's cigar industry history. In 1930, Ybor City's cigar factories were part of a thriving cigar industry and atmosphere ripe for innovation. Fletcher Pride and his son, Gene, created what was then a novel cigar accoutrement and made history: They patented and then started producing the first wooden cigar tip, founding Pride Manufacturing in 1930.

Pride Manufacturing began providing the tips for Hav-A-Tampa Jewels, a partnership that lasted long after most of the cigar factories shut down. It was a core business and revenue stream, but actually led to a much larger business producing golf tees. In the 1950s, Pride established an operation in Maine, closer to forests, and relocated it headquarters there. According to Pride Manufacturing, Altadis Group, parent company of Altadis USA and owner of Hav-A-Tampa, has decided to switch to cigar tips produced in China.


Government Bans Lighters on All Flights

Washington, DC - As of April 14, the federal government, as part of a continued crackdown on terrorism, is prohibiting cigarette and cigar lighters on all U.S. and U.S.-bound flights. Lighters will not be permitted past any airport security checkpoints, whether in carry-on or checked luggage.

All types of lighters fall under the security ban, including plastic disposable ones and butane lighters. Matches, however, are not prohibited.

The Transportation Security Administration (TSA), the agency is responsible for security screening at the nation's airports, is now confiscating all detected lighters at security checkpoints. Since they carry flammable liquid, lighters are considered hazardous materials by the TSA, and it is contracting with third-party companies to pick up and dispose of all confiscated lighters.

The ban is part of the Intelligence Reform and Terrorism Prevention Act of 2004, which put a ban on butane lighters. To avoid confusion, though, the TSA placed all lighters on the prohibited items list.


Team Te-Amo's Dana Quigley: Pro Golf Mastercard Champ, Again

Known as the "Ironman" of professional golf's Champions Tour for having competed in 249 consecutive tournaments, Dana Quigley defeated Tom Watson in a sudden death playoff to win the 2005 Mastercard Championship held at the Hualalai Golf Club in Hawaii. Quigley also won this event in 2003 and finished second in 2004. Rarely seen without a Te-Amo cigar, Dana is a member of Altadis U.S.A.'s Team Te-Amo, and, as such, promotes Te-Amo cigars both on and off the golf course. Other Team Te-Amo members include Champions Tour professionals Larry Laoretti, Walter Morgan ,and Tom Wargo.

UST Sees Flat Q1 Results

Greenwich, CN - UST Inc. said that for the quarter ended March 31, 2005, net sales increased 1.7 percent to $440.5 million and net earnings of $121.8 million and diluted earnings per share of $.73 were comparable to the corresponding 2004 period. "Consolidated results for the quarter came in slightly lower than our original projection," said Vincent A. Gierer, Jr., UST chairman and chief executive officer. "Of concern is that our moist smokeless tobacco premium net unit volume trends from mid-March to date are not where we expected them to be. In an effort to improve the trend, we will be making additional investment in promotional activities."

Smokeless Tobacco segment revenue remained stable at $378.7 million on a 2.0 percent decline in moist smokeless tobacco net can sales to 150.6 million for the quarter. Premium net can sales declined 5.3 percent to 130.1 million, while price value net can sales increased 25.5 percent to 20.5 million. The company estimates that approximately 3.7 million cans were shifted from the first quarter 2005 to the fourth quarter 2004 as wholesale and retail customers increased inventories in advance of the January 1, 2005 price increase for premium products. Lower premium can sales and a shift in product mix from premium to price value resulted in lower gross margin.


Reynolds American Q1 Profit Doubles

Winston-Salem, NC - Reynolds American Inc. reported that earnings more than doubled in the first quarter, lifted by higher prices and savings from the merger of R.J. Reynolds Tobacco Co. and Brown & Williamson Tobacco Corp. that created the company last summer. First-quarter income jumped to $281 million, or $1.90 per share, from $122 million, or $1.43 per share, in the year-ago period. Net sales totaled $1.96 billion for the quarter, up 61 percent from $1.22 billion a year earlier. Its volume grew 39.3 percent to reach 24.9 billion units during the period.


SMOKESHOP - April, 2005