One of the biggest movers of Native American-made cigarettes has filed for federal bankruptcy protection, a month after a court said the wholesaler is responsible for potentially tens of millions of dollars in federal tobacco assessments. The Chapter 11 reorganization filing by Arthur Montour, owner of Native Wholesale Supply on the Seneca Indian Nation’s Cattaraugus Reservation, lists more than $50 million in liabilities by the businessman who has become wealthy by moving billions of cigarettes made on an Ontario reservation to other tribes across the United States.
The company and its Ontario cigarette partners, the subjects of a 2009 investigation by The Buffalo News, also listed as creditors a half-dozen states that have brought various lawsuits against Native Wholesale Supply over its tobacco-distribution practices. But Montour’s biggest creditor — at $43 million — is the U. S. Department of Agriculture, which brought his company to court for failing to pay into a federal trust fund designed to move tobacco growers away from a regulated price market and into a free-market system.
In October, U. S. District Judge Richard J. Arcara ordered Montour’s company to comply with the terms of the Fair and Equitable Tobacco Reform Act of 2004 and pay into the tobacco trust fund. In his company’s Chapter 11 filing with the U. S. Bankruptcy Court in the Western District of New York, Montour listed the $43 million owed to the Agriculture Department as an unsecured claim. Montour acts as a wholesaler of cigarettes — chiefly the Seneca brand—made by Grand River Enterprises, a plant on the Six Nations of the Grand River Indian Reservation in Ohsweken, Ont., near Hamilton.
The cigarettes cross the border near Buffalo and head to various warehouses, including a duty-free zone in Las Vegas, before being sold to tribes across the country. They, in turn, sell the cigarettes tax-free. The cigarettes also are sold by Indian retailers in New York, including most Seneca Nation merchants. Montour, a former Seneca Tribal Council member, had his Perrysburg company incorporated by the Sac and Fox Nation in Oklahoma. Several states have sued Montour’s company for various reasons, including alleged violation of cigarette- shipment laws and sale of cigarettes that do not meet fire-safety standards.
“The [bankruptcy] filing automatically stayed our case against Native Wholesale Supply,” said Diane Clay, Oklahoma Attorney General’s Office spokeswoman. Oklahoma went after Montour’s company in court, alleging that he failed to make required payments into an escrow account created in the wake of a landmark 1998 settlement by 49 states and the nation’s major tobacco companies.
As the U.S. economic downturn continues, no government budget across the nation, at any level, has been spared from cuts. New York state recently had to slash spending by billions. At the federal level, Congress has been forced to make historic cuts in spending. Increasingly, we are working to maintain security with fewer resources.
These challenging fiscal times demand that governments operate efficiently, in part by collecting taxes owed and cutting wasteful spending. Yet every day, the failure to strongly combat the growing crime of contraband cigarette smuggling deprives governments of billions of dollars in tax revenues — siphoned off by terrorist and criminal organizations. Here’s how it works. Cigarette retailers – the corner store, for example — are required by law to buy cigarettes through a licensed wholesaler. That wholesaler must pay the state sales tax revenue — currently $4.35 per pack in New York.
However, as cigarette taxes have risen — in New York, for example, taxes have increased by more than $3.00 per pack in the last decade — store owners often bypass the wholesaler, acquiring and selling counterfeit-stamped cigarettes. This allows the smuggler and retailer to sell at substantial discounts — and still profit thanks to the margin created by unpaid taxes.
In New York, contraband cigarettes are typically trafficked from Southern states, which have lower or no taxes, or across federal tribal lands, where taxes are not collected. Tax-free cigarette sale on tribal lands, estimated to account for as much as one-third of all brand-name cigarette sales in New York, is supposed to be limited to tribal members. Nonetheless, some tribal lands import enough cigarettes to provide every resident man, woman and child with hundreds of packs per day.
Philip Morris International (PM 0.00%) sells cigarettes such as Marlboro and Virginia Slims in 180 countries, generating annual revenues of $75.3 billion.
The stock was floated back in early 2008 -- as a spin-off from Altria Group (MO 0.00%) -- and traded near 50 at that time. Since hitting its bear market low around 33 in 2009, the stock has been driving higher strongly.
The stock's 12-month performance shows the issue appreciating 29% versus a 1% gain for the S&P 500 index.
Its momentum indicator is strongly bullish. And the accumulation-distribution line compliments the price action of the stock. That indicates good buying supporting the breakout. The stock has just moved across key resistance at 73. The move comes with a widening of the spread (daily range from high to low). That is bullish, showing ease of price movement.
PM spent several weeks near the top of base. That was very bullish too. Now the stock has broken out from an 18-week, cup-and-handle base. The move carried the stock to a new all-time high. Net for the upcoming fourth quarter should climb 11% to $1.08 a share from 97 cents a year ago. The highest estimate on the Street is at $1.10 a share. PM has surprised big the prior two quarters, topping the consensus estimate by 14 cents a share and 13 cents. That works out to beating the consensus by 11%. So chances are it could do it again.
Going out to the first quarter of 2012, the Street expects an 11% gain in net to $1.18 a share from $1.06 a year ago. Insider activity is also bullish. Insiders have been buyers of the stock over the past several months. They have done very little selling. We rate PM a good intermediate-term play. It has a beta of 0.87 versus 1.00 for the stock market, which means it is less volatile than the overall market.
The stock yields over 4%. So in addition to its technical breakout, the stock is attractive to those looking a good return.
An 11-year-old boy was so sick of the smell of marijuana in his house that he took pictures of the drug on his phone - and forwarded them to police. A raid on the couple's home in Dakota County, Minnesota revealed eight pounds of marijuana, stuffed into supermarket carrier bags, police say. Probation supervisor Heidi Christine Siebenaler, 40, has been charged with fifth-degree possession of marijuana.
Her husband, Mark Siebenaler, also 40, is charged with possession and intent to distribute, the Star Tribune reported. Mark Siebenaler said the drugs were for medicinal purposes, following a brain injury about 20 years ago. The child sent pictures of cannabis at his home to his biological father, who alerted the authorities.
The couple claimed that Heidi Siebenaler did not know about the drugs, and that the marijuana was kept away from the children. She said: "They said my son couldn't escape the smell of marijuana and had to go outside for a breather. That's not true. I live in this house. Never smelled it before. It makes me sick."
But the 11-year-old told police that the house regularly smells of marijuana smoke. "Often times, he is unable to escape the smell without going outside," the search warrant said.
I haven’t seen any of the actual revenue figures on taxes collected by the state since those new taxes went into effect on July 1, but I have been keeping track of my contribution, or more precisely, my lack of contribution in at least one category — the cigarette tax. As of this week, I have avoided roughly $408 in state taxes since I quit smoking. Overall, the total savings since I quit is $918. That’s what I would have, but haven’t, spent on cigarettes. I mention that this morning for two reasons: First, people keeping ask me how I’m doing; And second, today is the 38th Annual Great American Smokeout.
I haven’t provided any kind of progress report in some time, mostly because I wasn’t really sure how often it was worth mentioning. Where are the benchmarks? Do you update your progress every week, once a month? And I wasn’t really sure if anyone actually cared that much after that first month. But apparently they do. There hasn’t been a week that’s passed when someone hasn’t asked how it’s going. It’s going well. The past Monday marked three months without a cigarette.
I’m not sure if that’s some kind of milestone, but I thought I’d take advantage of the day and provide that little update for those who care. I have no desire to start preaching about the benefits of living a smoke-free existence. It’s not an easy habit to quit, and the level of success that can be achieved depends solely on the individual. One size does not fit all. The methods employed by one person to break the habit may not prove to be as successful for someone else.
Money was not the motivating factor for me, but doing the calculations to determine how much I’m now saving is quite the eye-opener — especially when you see how much of that total cost is just taxes. The state tax on cigarettes is $3.40 per pack. That’s $34 for a carton of cigarettes. That’s what I was giving the state on a weekly basis — but not anymore. And, much to my relief, the state seems to be doing quite well without my money — and it would if you stopped contributing, too.
If you’ve been thinking about quitting but haven’t found the right circumstances yet, today would be a good day. There’s help available at the American Cancer Society’s Web page; visit cancer.org and click the Great American Smokeout link.
Imperial Tobacco, the manufacturer of Golden Virginia tobacco and Lambert & Butler cigarettes, has hit the tobacco wall, according to Nomura, which has downgraded its rating on the stock from buy to reduce. [The] inability to expand margin as cost efficiencies run dry and the need to support sales growth via heightened investment in brands (while suffering lower returns), we term hitting the tobacco wall, the broker said.
Also, to reflect the absence of takeout probability in its valuation as well as the expected medium-term margin declines, the broker has cut its target price by 10% from 2,400p to 2,150p. Investec has reiterated its hold rating on drinks giant SABMiller following the groups first half results which saw margins fall as rising raw material costs began to bite.
Earnings before interest tax and amortisation (EBITA) were up 6% at constant currency prices, although EBITA margin reduced by 10 basis points to 17.2%, which Investec said was modestly below expectations. The target price of 2,475p remains unchanged. Following its disappointing first half results, shares in Mothercare sank over 10% on Thursday morning, with Peel Hunt not helping much as it reiterated its sell rating on the stock.
Mothercare is already in the process of closing around one third of its UK estate. We see no quick option to downsize the remaining space cheaply, while pricing needs permanent investment in our view, said analyst John Stevenson. We believe the outcome for 2012E may deteriorate due to a rebasing of prices and the new strategy kitchen sinking in the first half of 2012 calendar year, he said. With the potential for UK losses to widen further, Peel Hunt remains a seller with a target price of 150p.