Mr. Adams: Reynolds American was formed in 2004 as a result of the merger of R.J. Reynolds Tobacco Company and Brown & Williamson. Both of those companies' histories go back many, many years - Reynolds Tobacco for more than 130 years. RAI was formed as a new parent company to basically facilitate the merger between Brown & Williamson and Reynolds Tobacco. At that time, RAI was a cigarette-only company - Brown & Williamson and Reynolds Tobacco only made cigarettes. And the Reynolds side of the business in 2002 also had acquired a company called Santa Fe Natural Tobacco Company. Santa Fe was also a subsidiary of RAI, also focused on cigarettes. So in 2004, RAI had two subsidiaries, R.J. Reynolds and Santa Fe, and our earnings were derived almost solely from the sale of cigarettes. About that time, we began to take a look at the tobacco category as a whole and asking, "How are things evolving? Where do we want to be? What do we need to do?" As a result of that analysis, we came up with a total tobacco strategy, which meant that we want to look at things other than cigarettes. So in 2006, we acquired the Conwood Company, which is a moist snuff company largely. Subsequent to that, in the first quarter of 2009, Reynolds Tobacco nationally rolled out Camel Snus, it currently has about three-tenths of our market share. And later in 2009, Reynolds Tobacco introduced three dissolvable tobacco products into lead markets, Camel Orbs, Sticks and Strips. Just this week we announced we would acquire a Swedish company that makes nicotine replacement therapy products, Niconovum. So our focus has obviously broadened. So that's kind of in a nutshell, the background on Reynolds American. You can find a more comprehensive history of that on our Web site at reynoldsamerican.com. From a financial perspective, we have a dividend policy that we pay out about 75% of our net income in the form of a dividend. That currently sits at $3.60 on an annualized basis. Since the merger, we have paid out more than $4 billion in dividends.
Tickers included in this excerpt: RAI
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.