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Reynolds American 2Q profit climbs 6.7 percent

By WTOP Staff

MICHAEL FELBERBAUM
AP Tobacco Writer

RICHMOND, Va. (AP) — Reynolds American Inc. said Tuesday that its profit rose by 6.7 percent in its second quarter as higher cigarette and smokeless tobacco prices helped to offset a decline in the number of cigarettes it sold.

The Winston Salem, North Carolina-based company said it earned $492 million, or 92 cents per share, in the period ended June 30, up from $461 million, or 84 cents per share, a year ago.

Adjusted earnings were 89 cents per share, topping analyst estimates of 87 cents per share, according to Zacks Investment Research.

The nation’s second-biggest tobacco company reported revenue, excluding excise taxes, of $2.16 billion, down from $2.18 billion a year ago. Wall Street predicted $2.22 billion in revenue.

Its shares rose 28 cents to $56.95 in early trading Tuesday.

Earlier this month, Reynolds announced plans to buy Newport cigarette maker Lorillard Inc. for $25 billion. The tie-up would create a formidable No. 2 tobacco company in the U.S. behind Richmond, Virginia-based Altria Group Inc. It also creates a powerhouse in menthol cigarettes, which are becoming a bigger part of the business and gives the combined company some breathing room even as people smoke fewer cigarettes every year.

The maker of Camel and Pall Mall cigarettes said its R.J. Reynolds Tobacco subsidiary shipped 8 percent less cigarettes during the quarter, compared with an estimated decline of 5.5 percent for the industry as a whole.

Volumes for Camel fell more than 4 percent and volumes for Pall Mall decreased 6 percent. The brands account for more than 60 percent of the company’s total cigarette volume.

But Camel’s market share increased 0.4 percentage points to 10.2 percent of the U.S. market, while Pall Mall’s market share grew 0.1 percentage points to 9.3 percent.

The number of Natural American Spirit cigarettes sold by its Santa Fe Natural Tobacco subsidiary grew nearly 8 percent.

Tobacco companies are also focusing on cigarette alternatives such as snuff, chewing tobacco and electronic cigarettes as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher.

Shipments of its Grizzly and Kodiak smokeless tobacco brands fell less than a percent. The brands had a 34.4 percent share of the U.S. retail market, though that market is tiny compared with cigarettes.

The company said the national rollout of its Vuse brand electronic cigarette is progressing and is in about 21,000 stores. The second wave of the brand’s expansion is set for early September. Reynolds noted it is spending more to expand and promote the brand, which will be its sole e-cigarette once it sells Lorillard’s Blu e-cig brand to U.K.’s Imperial Tobacco as part of the deal.

Reynolds American also narrowed its 2014 adjusted earnings forecast to a range of $3.35 to $3.45 per share. Its previous outlook was $3.30 to $3.45 per share. Analysts polled by FactSet expect $3.35 per share.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .

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AP Business Writer Michelle Chapman contributed to this report from New York.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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