Journalnow.com - Winston-Salem Journal

This year carries with it a continuing stream of lawsuits, and the costs of fighting them and paying settlements continue to affect profitability. RJR reported $369 million in net income on net sales of $7.6 billion in 1999. The company spun off last June from RJR Nabisco.

Winston held 5.2 percent of market share in 1996 and 1997, before slipping to 5.1 percent in 1998, according to the Maxwell Report. To restore Salem's lagging profile, RJR changed its image to seduction with its "Step Inside" campaign. RJR also unveiled its Salem slide- box packaging last year.

Any cigarette price increases will hurt RJR more than Philip Morris, [Martin Feldman] said. He estimates that industry volumes will fall 1.9 percent this year, yet RJR's shipments may decline as much as 3.8 percent to 92.7 billion cigarettes, depending on the timing and frequency of price increases.