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Federal agency fines Kauai tobacco company  

The federal Environmental Protection Agency fined Vector Tobacco Inc. $65,040 for allegedly misusing six pesticides and then failing to keep workers from getting sick, the EPA announced yesterday.

Vector Tobacco, a subsidiary of Vector Tobacco Group of Durham, N.C., has since moved out of the state, agricultural officials added.

The company allegedly misused pesticides 93 times by failing to follow label directions at its research facility in Kekaha in 2005 and 2006, according to the EPA.

However, "Vector Tobacco cooperated and received a settlement with the EPA without admitting the EPA's allegations," said company spokesman Jonathan Doorley.

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• EPA fines tobacco company $65K for violations at Kauai facility  

The U.S. Environmental Protection Agency has fined a North Carolina company for violations at a Kauai facility.

Vector Tobacco, a subsidiary of Vector Tobacco Group of Durham, N.C., was fined $65,040 for allegedly misusing pesticides during application at its agricultural research facility in Kekaha on Kauai in 2005 and 2006, according to the EPA. On 93 occasions, the company failed to follow label directions intended to protect workers from exposure to pesticides.

"Employers of agricultural workers must ensure their employees are provided with information and protections that minimize the risk of potential exposure to pesticides . . .

The company also failed to prevent workers from entering areas where pesticides had recently been applied and then denied them prompt transportation to a medical facility after the workers reported adverse health effects due to the pesticide exposure, the EPA said.

The Hawaii Department of Agriculture discovered the violations during inspections in 2006 and began an investigation. The EPA said Vector Tobacco has shut down the Kekaha facility since the inspections.

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Vector Group Reports Second Quarter 2008 Financial Results 

Vector Group Ltd. (NYSE: VGR) today announced financial results for the three and six months ended June 30, 2008.

Second quarter 2008 revenues were $143.0 million, compared to revenues of $140.4 million in the second quarter of 2007. The Company recorded operating income of $34.3 million in the 2008 second quarter, compared to operating income of $29.2 million in the second quarter of 2007. Net income for the 2008 second quarter was $19.1 million, or $0.25 per diluted common share, compared to net income of $21.4 million, or $0.32 per diluted common share, in the 2007 second quarter.

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Vector Group: Any Smoke Left in Tobacco?  

Vector Group (VGR) is structured as a holding company, with two distinct businesses. The first, and by far the majority of revenue is the sale of discount cigarette brands such as Liggett Select, Grand Prix, Pyramid, Eve, and USA. Also, Vector has designed and marketed a nicotine free cigarette called Qwest. The second business is a residential real estate company, Douglas Elliman Realty LLC, which operates in the New York metropolitan area and is the biggest concern of it's type there. Vector Group owns a 50% stake in Douglas Elliman.

From the grades it's obvious that Vector Group is not a favorite of MagicDiligence. There are a few positives to note. . . .

Lastly, the company has a history of restructuring, side businesses, and a confusing set of financial statements. If you cannot understand a business, it's probably not a good investment for you.

With so many other quality companies on the Magic Formula screen, MagicDiligence recommends steering clear of Vector Group.

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• Vector Group Ltd. Contributes $2.4 Million to Weill Medical College Lung Cancer Detection Program 

Vector Group Ltd., the parent of Liggett Group Inc. tobacco company, announced today that it has donated $2.4 million to provide for the expansion of spiral CT scanning research at the Joan and Sanford I. Weill Medical College of Cornell University in New York City. The project is headed by Dr. Claudia Henschke of Weill Medical College, who has assembled an international, multi-site collaboration for lung cancer screening. . .

Bennett S. LeBow, Chairman and CEO of Vector Group said, ``We are very proud and thankful that we are able to help support this very important cause and believe it's the right thing to do. Spiral CT scanning can potentially save millions of lives a year. We are especially pleased to partner with Weill Cornell Medical College and Dr. Henschke and her esteemed colleagues to further efforts to ensure the availability and reliability of this critical cancer screening method. We hope the other companies in the industry join us in our efforts.'' . .

Dr. Henschke, Professor of Radiology and Chief of Chest Imaging at the Weill Medical College of Cornell University, stated, ``Thanks to the contribution of Mr. Lebow and Vector Group, we have raised the initial funding needed to support this important research and data collection on the effectiveness of spiral CT scanning. In the U.S. alone, there are currently 48 million former smokers and 40 million smokers waiting to be screened by this method. This endowment brings us one step closer to amassing the data needed to ensure that this screening is reliable, affordable and accessible to all who need it going forward.''

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• Tobacco Company Liggett Gave $3.6 Million To Henschke For CT Screening Research (PDF) 

The press release quotes Bennett LeBow, chairman and CEO of Vector Group: . . .

The document is posted at http://www.tobacco.org/news/54637.html. . . .

Over the past four years, Henschke received over $100,000 in grants and contracts from ACS, the society said. This included several $10,000 to $15,000 contributions for the annual meeting of the I-ELCAP, and a $61,850 contract to support the I-ELCAP pathology and cytology evaluation program.

Each time she accepted ACS funds, Henschke signed a document certifying that she didn’t represent a tobacco company or subcontract work to those who do.

The ACS definition of a “tobacco company” contained in each of these documents includes “any company that manufactures tobacco products and is commonly considered to be part of the tobacco industry, including subsidiaries and parent companies, as well as philanthropic foundations and other organizations closely linked with the tobacco industry.” . . .

Though scientists who receive Legacy money are precluded from accepting concurrent funds from tobacco sources, surpluses of funds received from tobacco companies in the past are exempted from this prohibition, Cartwright said.

“The American Legacy Foundation requires grant recipients to agree not to accept tobacco funds or anything else of value from tobacco companies during the Legacy grant period,” she said in an e-mail. “It does not include a look-back provision, i.e., we do not disqualify grantees on the basis that they may have previously received tobacco support. . . .

On March 10, at a gala at the Pierre hotel, Legacy gave Henschke its “Humanitarian in Medicine and Public Health Award.”

In 2007, the Flight Attendant Medical Research Institute gave $8.7 million to Weill Cornell to set up a “multidisciplinary research and clinical program to enhance early detection and treatment of diseases related to secondhand smoke exposure-including cancer, heart disease, emphysema, asthma, chronic bronchitis and osteoporosis.”

The initiative, called the FAMRI-I-ELCAP Collaborative Network, was expected to recruit 5,000 individuals from industries associated with exposure to secondhand smoke.

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• Cigarette Maker Has Conducted 33 GM Tobacco Tests Since '05  

Two days ago, Philip Morris backed NC-State scientists announced they'd genetically engineered tobacco plants to have reduced levels of some carcinogens. Further investigation by Wired.com revealed that the tobacco giant has applied for 34 field test permits for genetically modified tobacco since May of 2005, according to the USDA field trials database. 33 of the permits were issued.

Over the last three years, the USDA received 117 total applications to test GM tobacco strains, including 19 by North Carolina State University, which received $17.5 million from Philip Morris in December 2002 to map the tobacco genome.

Little can be determined about the types of studies that Philip Morris has run because they've labeled the details of their field permit applications, "Confidential Business Information," sealing them from public scrutiny. . . .

Vector Tobacco, which has developed a low-nicotine variety of the crop, has applied for 14 field permits since 2005, although five were rejected. RJ Reynolds has applied for six, and had one denied.

But the scale of the Philip Morris' genetic engineering program caught even staunch anti-GMO groups off-guard. Bill Freese, of Center for Food Safety, commented, "I'm shocked."

Many groups that fight genetically modified organisms focus on genetically modified food or "pharming," or the practice of synthesizing pharmaceuticals in plants. Tobacco, however, is a natural drug crop and falls between the cracks of most watchdog groups.

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• Liggett Group to Introduce Grand Prix Snus 

Vector Group Ltd.'s (NYSE: VGR), subsidiary, Liggett Group, announced today that it plans to introduce Grand Prix snus, a Premium quality pouched tobacco product designed for adult smokers who are interested in smokeless tobacco alternatives to cigarettes. Grand Prix snus will be available in a variety of test markets beginning in May 2008.

The product is the latest addition to the Grand Prix brand, the fastest growing U.S. cigarette brand over the past two years. Grand Prix snus will be sold at value pricing and will be available in three varieties: Original, Spearmint and Wintergreen.

Grand Prix snus will be manufactured in Sweden under an agreement with Snusab, a Stockholm-based manufacturer of premium snus products.

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Vector Group Declares Quarterly Cash Dividend 

Vector Group Ltd. (NYSE: VGR) today announced that it has declared a regular quarterly cash dividend on its common stock of $0.40 per share. The dividend is payable on December 28, 2007 to holders of record as of December 20, 2007.

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Vector Group Paid Lobbyist $200,000 

Vector Group Ltd., which manufactures and sells cigarettes through its subsidiaries, paid Patton Boggs LLP $200,000 to lobby the federal government in the first half of 2007, according to a recent disclosure form.

The firm lobbied on general tobacco issues and related legislation, according to the form posted online Aug. 13 by the Senate's public records office.

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Vector Group to Sell $150 Million of Secured Notes (Update1) 

Vector Group Ltd., a Miami-based cigarette maker, said it plans to sell $150 million of senior secured notes due in 2015.

Proceeds will be used for general corporate purpose, which may include future acquisitions, payment of dividends and refinance of existing debt, the company said in a statement distributed today on Business Wire.

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• Blocking a killer hook  

Public health advocates are within striking distance of a goal that has eluded them for generations: widespread availability of cigarettes with nicotine levels that are too low to become addictive.

They are pinning their hopes on a bill sponsored by Senator Edward M. Kennedy, Democrat of Massachusetts, which would give the Food and Drug Administration sweeping regulatory authority over tobacco products.

That new power would include the ability to reduce cigarettes' harm, which many say eventually could lead to the market being flooded with cigarettes that contain less nicotine -- the chemical component that makes them addictive. While the FDA can regulate nicotine-replacement therapies now, it lacks regulatory oversight over cigarettes and smokeless tobacco, and it can't prevent tobacco sales to youths.

Already, near rolling hills where generations of North Carolina farmers have grown traditional tobacco plants, a small biotech firm has planted tobacco specially engineered to eliminate most nicotine. And tobacco research labs, like one at the University of California, are testing experimental cigarettes in hardcore smokers to see if gradually lowering nicotine helps them kick the habit.

The moves run counter to recent tobacco industry efforts that secretly boosted nicotine in cigarettes. . . .

Benowitz's aim is to reduce nicotine delivery to less than one-tenth of a milligram per cigarette, weaning smokers from the chemical responsible for their urge to light up.

A few years ago, Benowitz tested his theory in a pilot project involving 20 volunteer smokers who smoked at least 10 cigarettes per day and who had smoked at least a decade. . . .

The cigarettes, manufactured by Philip Morris USA for research purposes, look like Marlboros and contain the same levels of tar. . . .

"Three-quarters went back to their regular cigarettes," said Dr. Michael Siegel. "It was an unacceptable cigarette. People were not willing to smoke it."

That's the market peril faced by such companies as 22nd Century Ltd., a New York biotech that tinkered with tobacco to create plants that reduce nicotine levels to almost zero without raising levels of other harmful chemicals.

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Taking constituents out of the process of combustion -- benzene and other things -- are, in fact, the greatest benefit that we can make to health.
Senator Richard Burr, R-NC, who will soon introduce a bill that would lower the level of chemicals in cigarettes that are directly linked to cancer, instead of regulating nicotine levels.

If we get into that trap, we'll be debating this issue for another 200 years. What the industry doesn't want us talking about is nicotine. That's where the profits are.
Gregory N. Connolly, a professor at the Harvard School of Public Health, on removing carcinogenic elements from cigarettes.

Liggett Vector picks Morrisville 

Durham, which grew from a rural whistle-stop to one of the South's most industrialized cities on the success of cigarette manufacturers, is losing one of its last vestiges of the tobacco industry to Wake County.

Liggett Vector Brands, with executives at 1 Park Drive on the Durham side of Research Triangle Park, plans to move to Perimeter Park in Morrisville in October.

The marketing subsidiary of Miami-based Vector Group, which makes cigarette brands Liggett Select, Eve, Jade and the reduced-nicotine Quest in Mebane, agreed to lease 20,000 square feet at 3800 Paramount Parkway, Liggett Vector CEO Ron Bernstein said.

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The Vector Group: Is The Cigarette Industry Burning Out?  

Conclusion

The tobacco industry is obviously in decline, but that still has not stopped tobacco stocks from outperforming the market. There is a lot to like about the Vector Group besides the 8.7% yield. It uses its capital wisely, has a high earnings yield, is owned by Carl Icahn and David Dreman, and 24.5% of its ownership is by insiders. Also, its performance will not suffer in an economic slowdown due to the nature of its product.

One issue with the company that I have encountered is the lawsuits that are currently pending against them, but this is the nature of the business. All of the other cigarette producers are experiencing the same issue. I will be looking to add this to my portfolio once the stock pulls back to the $15-$17 a share range.

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Lower Nicotine Cigarettes May Not Lower Harm (PDF) 

Such “compensatory” behavior may mean that smokers are exposed to as much, if not more, harmful substances than regular cigarettes. Whether smokers alter their smoking behavior with Quest® cigarettes is unknown. • Quest® cigarettes are not marketed for use as a smoking cessation device, nor are any health claims explicitly made in the product’s advertising. As such, Quest® advertising is not regulated by the Food and Drug Administration (FDA). Instead, the content of ads falls under the purview of the Federal Trade Commission (FTC), whose primary goal is to ensure that products are marketed in a manner than is truthful, not misleading, and adequately substantiated.

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