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October,
2004

TOBACCO INDUSTRY NEWS (cont.)

Alec Bradley Second Quarter Revenues Up 23%

Dania, FL - Revenues for the three months ended June 30, 2004 were $626,600, an increase of $115,600, or 22.6% from $511,000 for the three months ended June 30, 2003. Gross profit for the three months ended June 30, 2004 increased by 7.6%, from $213,900 to approximately $230,100 compared to the year-earlier period. Gross profit, as a percentage of sales were 36.7% and 41.9% respectively for the three-month periods ending June 30, 2004 and 2003. The decrease in gross profit dollars was directly attributable to the more aggressive sales promotions utilized by the company to increase in sales. The company's gross profit decreased for 2004 as compared to 2003 to $395,300 from $427,400, a decrease of $32,100, or 7.5%, directly attributable to the aggressive sales effort in the second quarter. In addition, first quarter sales during 2004 were detrimentally affected by harsh weather conditions.

Q2 Sales at UST Inc. up 6.5%

Greenwich, CT - For the second quarter of 2004, consolidated net sales increased 6.5 percent to $464.7 million, operating income increased 6.4 percent to $242.8 million, and net earnings increased 14.7 percent to $147.9 million, compared to the corresponding 2003 period. The increases were primarily due to higher selling prices for moist smokeless tobacco products, as well as improved case volume for premium wine. Net unit volume for the quarter included 15.3 million cans of new products launched within the last three years, representing approximately 9.1 percent of total moist smokeless unit volume.

HBI Tobacco Acquires Tobacco Division of Chills

HBI Tobacco, a distributor of RYO/ MYO products, has acquired the tobacco division of the Chills brand. Now included in HBI's catalogue of products are the Pimp Daddy, Americana, and Chills brands of rolling papers, accessories & premium tobacco. To commemorate this event HBI has re-introduced the Pimp Daddy and Chills brands with a whole new look.

RJRT Launches Tobacco Tax Notification Site

Winston-Salem, NC - Business owners and operators searching for ways to oppose cigarette excise tax increases and smoking have a new tool at their disposal from R.J. Reynolds Tobacco Company (RJRT). The company has launched BusinessTobaccoAlliance.com, a Web site where cigarette wholesalers and retailers, restaurant and bar owners and operators, and others can sign up and become more proactive in opposing legislation that hurts their businesses.

"Once registered, business owners will have access to a personalized Web page that lists their state and federal legislators' contact information," said Ron Cole, manager of legislative support for RJRT. "In addition, they'll receive notification when anti-tobacco measures are being considered, as well as gain access to a Tax Impact Calculator enabling them to estimate potential gross profit losses from cigarette tax increases. Once registered, participants will receive information on tobacco-related legislation being considered at the local, state, and federal levels.



SMOKESHOP - October, 2004