Rothmans Reports Loss After Smuggling Settlement

Source from:  news.yahoo.com TORONTO (Reuters) Tue Aug 12 2008 08/14/2008

Rothmans Inc, which is being bought by Philip Morris International Inc, reported a first-quarter loss on Tuesday, hurt by expenses relating to a police investigation into tobacco smuggling. Canada's No. 2 cigarette maker said it lost C$354.4 million ($331 million), or C$5.20 a share, compared to a profit of C$33.8 million, or 49 Canadian cents a share, a year earlier. Rothmans said profits were hurt by expenses relating to a settlement involving its unit Rothmans Benson & Hedges Inc, which in late July admitted to helping smugglers. The police investigation relates to the years 1989 through 1996, the company said, when tobacco was exported from Canada and smuggled back into the country from the United States to avoid higher taxes. Under terms of the settlement, Rothmans will pay a total of C$550 million this year and over the next 10 years. The company said it logged an expense of C$415 million in the quarter to recognize the settlement. In the quarter, adjusted operating earnings were C$35.4 million, or 52 Canadian cents a share, the company said. Analysts expected average earnings of 51 Canadian cents a share before exceptions, according to Reuters Estimates, the company said. Rothmans, known for its Craven A, Rothmans, and Benson & Hedges brands, said revenue fell to C$178.7 million from C$180.1 million. Toronto-based Rothmans is Canada's only publicly traded cigarette maker. In the C$2 billion transaction with Philip Morris announced in July, the company will buy 60 percent of Rothmans, adding to the 40 percent it already owns. Enditem