MIAMI (AP) - A jury considering punitive damages for smokers has lots of numbers to choose from based on the testimony of just one witness.

George Mundstock, a University of Miami law school finance professor, estimated the nation's five biggest cigarette makers are worth a total of $157 billion domestically. He said the tobacco companies could raise that amount in six months by Wall Street borrowing or selling themselves. ``In the post-MSA world, things are really looking strikingly rosy,'' he said of tobacco finances, referring to the Master Settlement Agreement between the tobacco industry and states. However, on cross-examination, Mundstock used a different method - which he said he prefers - for assessing how much companies are worth, and he sharply lowered some estimates. He did not give a revised total. The dollar figure is key testimony for a jury considering how much to award 300,000 to 500,000 sick Florida smokers to punish the industry for decades of misconduct. The jury in the case - the nation's first class-action lawsuit by smokers to go to trial - previously ruled that the industry makes a dangerous product. Mundstock estimated the worth of Philip Morris' domestic and foreign cigarette business at $118 billion. But he agreed when company attorney Brad Lerman said, ``They don't have their hands on that cash today.'' After Mundstock testified that Brown and Williamson was worth $22 billion, attorney Gordon Smith said the company was ``going down the tubes'' and pointed to its declining market share. Mundstock said he didn't take that into account when estimating the company's value. Mundstock came up with his original estimation of the companies' value based on the price Philip Morris paid for three Liggett brands last year. To come up with the lower numbers that emerged on cross-examination, he used a complicated cash-flow analysis. For example, when testifying for the smokers, Mundstock said R.J. Reynolds was worth $38 billion. Using the different estimation method under cross-examination, he lowered the figure to $19.6 billion. The industry fears a crippling award even though Florida law does not allow a punitive damages verdict to put a company out of business. The cigarette companies have lost a fight to keep the jury from considering their borrowing power, and the smokers' attorney has stressed the industry's ability to raise prices. Wholesale cigarette prices are up 58 percent and sales are down 9 percent since the tobacco companies settled lawsuits with states in 1998 for $254 billion, Mundstock testified.

<< Prev	CIGoutlet.NET News Home	Next >>