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RAI CEO: 'Returning Value in a Challenging Time'
Date:4/30/2008

he first quarter, Camel launched updated packaging and smoother blends for its core styles. Camel's ongoing focus on providing adult smokers with relevant innovations like Camel No. 9 and Camel Signature continued to enhance the brand's marketplace performance. Camel gained 0.5 share points from the prior-year quarter.

Camel's latest innovation, Camel Crush, was introduced in test market in the first quarter. Camel Crush is a unique cigarette that uses R.J. Reynolds' technology to provide adult smokers with the option of changing each cigarette from regular to menthol by crushing a capsule in the filter. This technology has already been introduced in the Japanese market, where it has strong appeal.

Camel Snus, R.J. Reynolds' first effort to broaden Camel's appeal beyond cigarettes, is on track for a second-quarter expansion to nine additional major markets across the United States. Camel Snus, a smoke-free, spitless tobacco product that comes in a small pouch, is currently being tested in eight markets. With continued learning from this test, the company remains optimistic about the potential for this new product.

Kool, the company's second premium-priced growth brand, has remained relatively stable in the highly competitive menthol marketplace. Kool's first-quarter share of market was 3.1 percent.

Pall Mall, a value-priced brand, continued to benefit from its position as a great product that lasts longer. Pall Mall's first-quarter share was up 0.2 percentage points from the prior-year quarter. In the second quarter, Pall Mall plans to introduce more stylish, round-cornered packs.

During the first quarter, R.J. Reynolds' premium-to-value price mix was 63.2 percent, an improvement of 1.2 points from the prior-year period.

R.J. Reynolds' first-quarter operating margin of 23.2 percent was 2.4 percentage points lower than the year-ago quarter, when the timing of promotional expense resulted in an unusually high margin.

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SOURCE Reynolds American Inc.
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