As per the reports given by Mike Esterl in The Wall Street Journal, the U.S. cigarette giants namely Altria Group Inc., Reynolds American Inc and Lorillard Inc are expecting to earn more than $1.5 billion in credits after reaching agreement with 17 states which were made earlier because of the dispute over payments in tobacco settlement. According to the agreement, the tobacco companies had agreed to pay more than $200 billion to cover health costs related to smoking.
According to Altria, maker of Marlboro cigarettes and the largest Tobacco Company in US, the 17 states, which also include California and New Jersey, will be able to collect their portion of more than $4 billion from escrow under the deal, but under the 1998 agreement, the states have received more than $85 billion in tobacco company payments. The tobacco company has also estimated credits to its Philip Morris USA unit of total $450 million and expects to record a corresponding increase in its reported pre-tax earnings.
As per the reports, Reynolds, the No. 2 tobacco company by revenue in the U.S., expects its R.J. Reynolds unit will receive more than $1 billion in credits and according to the maker of Camel and Pall Mall cigarettes, it has paid more than $3 billion into escrow accounts.
Reports also say that, Lorillard, which is the third-largest tobacco company and maker of Newport cigarettes, is expecting to receive credits of at least $198 million by next April.
According to Mr. Growe, based on the government data, the 17 states and two territories participating in the agreement represent 46% of industry volume.
Source: Wall Street Journal