R.J. Reynolds Tobacco Company Makes 2006 Master Settlement Agreement Payment
April 17 2006 - 11:55AM
PR Newswire (US)
WINSTON-SALEM, N.C., April 17 /PRNewswire-FirstCall/ -- R.J.
Reynolds Tobacco Company today satisfied its full $2.016 billion
annual payment obligation for 2006 as specified in the Master
Settlement Agreement (MSA). The MSA is an agreement reached in 1998
among 46 states, the District of Columbia, Puerto Rico and four
U.S. territories and the major tobacco companies. As agreed to by
all the signatories, a tobacco company is due a credit against its
annual payment if the disadvantages imposed by the MSA were a
significant factor in the participating manufacturers losing market
share. Last month, an independent economic consulting firm hired by
the states and the tobacco companies made such a determination with
respect to 2003. The MSA provides that the independent
determination is final and a credit is due. The states disagree. As
a result, and following the process specified in the MSA, a portion
of R.J. Reynolds' payment was deposited into a "disputed payments"
account. The approximately $647 million deposited into this special
escrow account will remain there pending final resolution of
application of the credit. "We are following the process that all
parties understood and agreed to when they signed the MSA in 1998,"
says Charles A. Blixt, executive vice president and general counsel
for R.J. Reynolds. "We remain committed to the MSA and will
continue to live up to both the letter and spirit of the
agreement," he said. The states that will ultimately bear the
impact of the credit are those who have not fulfilled their MSA
obligations. R.J. Reynolds believes the MSA requires that binding
arbitration be used to determine which states those are. Two state
courts have ruled that such matters should indeed be arbitrated.
R.J. Reynolds Tobacco Company and its affiliated companies have
made more than $16 billion in settlement payments to the states
since the agreement was signed in 1998. In addition, the MSA
imposes substantial restrictions on the marketing, advertising and
conduct of the participating tobacco companies. R.J. Reynolds
Tobacco Company, an indirect subsidiary of Reynolds American Inc.
(NYSE:RAI), is the second-largest tobacco company in the United
States, manufacturing about one of every three cigarettes sold in
the country. The company's brands include five of the 10
best-selling U.S. cigarette brands: Camel, Kool, Winston, Salem and
Doral. For more information, visit http://www.rjrt.com/.
DATASOURCE: R.J. Reynolds Tobacco Company CONTACT: David Howard of
R.J. Reynolds Tobacco Company, +1-336-741-3489 Web site:
http://www.rjrt.com/
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