REYNOLDS AMERICAN INC

CIK:0001275283|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2017

Jun. 30, 2016

Jun. 30, 2017

Jun. 30, 2016

Income Statement [Abstract]

Net sales

^[1]

$ 3,290

$ 3,141

$ 6,201

$ 6,003

Net sales, related party

109

Net sales

3,318

3,195

6,267

6,112

Costs and expenses:

Cost of products sold

^[1]

1,278

1,275

2,477

2,440

Selling, general and administrative expenses

478

499

896

964

Gain on divestiture

(4,861)

Amortization expense

Operating income

1,556

1,415

2,882

7,557

Interest and debt expense

150

152

299

326

Interest income

(3)

(2)

(5)

Other expense (income), net

(1)

251

Income before income taxes

1,398

1,266

2,573

6,985

Provision for income taxes

479

470

874

2,624

Net income

$ 919

$ 796

$ 1,699

$ 4,361

Net income per share:

Basic

$ 0.64

$ 0.56

$ 1.19

$ 3.06

Diluted

0.64

0.56

1.19

3.05

Dividends declared per share

$ 0.51

$ 0.42

$ 1.02

$ 0.84

[1]	Excludes excise taxes of $1,083 million and $1,120 million for the three months ended June 30, 2017 and 2016, respectively; and $2,065 million and $2,150 million for the six months ended June 30, 2017 and 2016, respectively.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from (used in) operating activities:
Net income	$ 1,699	$ 4,361
Adjustments to reconcile to net cash flows from (used in) operating activities:
Gain on divestiture		(4,861)
Loss on early extinguishment of debt and related expenses		239
Depreciation and amortization expense	63	61
Deferred income tax expense (benefit)	(10)	104
Pension and postretirement	(88)	(397)
Tobacco settlement accruals	(663)	(1,114)
Income taxes	61	770
Other, net	215	112
Net cash flows from (used in) operating activities	1,277	(725)
Cash flows from (used in) investing activities:
Capital expenditures	(66)	(94)
Proceeds from settlement of investments		182
Proceeds from divestiture		5,015
Other, net	1
Net cash flows from (used in) investing activities	(65)	5,103
Cash flows from (used in) financing activities:
Dividends paid on common stock	(1,384)	(1,113)
Repurchase of common stock	(139)	(149)
Borrowings under revolving credit facility	500
Repayments of borrowings under revolving credit facility	(500)
Early extinguishment of debt		(3,650)
Premiums paid for early extinguishment of debt		(207)
Proceeds from termination of interest rate swaps		66
Debt financing fees		(7)
Excess tax benefit on stock-based compensation plans	29	26
Net cash flows used in financing activities	(1,523)	(5,034)
Effect of exchange rate changes on cash and cash equivalents	18	7
Net change in cash and cash equivalents	(293)	(649)
Cash and cash equivalents at beginning of period	2,051	2,567
Cash and cash equivalents at end of period	1,758	1,918
Income taxes paid, net of refunds	804	1,699
Interest paid	$ 325	$ 378

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 1,758	$ 2,051
Accounts receivable	123	66
Accounts receivable, related party	1	113
Other receivables	11	10
Inventories	1,448	1,645
Other current assets	295	353
Total current assets	3,636	4,238
Property, plant and equipment, net of accumulated depreciation (2017 — $1,534; 2016 — $1,662)	1,338	1,348
Trademarks and other intangible assets, net of accumulated amortization	29,432	29,444
Goodwill	15,992	15,992
Other assets and deferred charges	65	73
Total assets	50,463	51,095
Current liabilities:
Accounts payable	193	221
Tobacco settlement accruals	1,833	2,498
Due to related party		7
Deferred revenue, related party	106	66
Current maturities of long-term debt	1,748	501
Dividends payable on common stock	727	656
Other current liabilities	935	1,036
Total current liabilities	5,542	4,985
Long-term debt (less current maturities)	11,390	12,664
Long-term deferred income taxes, net	9,614	9,607
Long-term retirement benefits (less current portion)	1,768	1,869
Long-term deferred revenue, related party	19	39
Other noncurrent liabilities	244	220
Commitments and contingencies:
Shareholders’ equity:
Common stock (shares issued: 2017 — 1,426,238,791; 2016 — 1,425,824,955)
Paid-in capital	18,197	18,285
Retained earnings	3,980	3,740
Accumulated other comprehensive loss	(291)	(314)
Total shareholders’ equity	21,886	21,711
Total liabilities and shareholders' equity	$ 50,463	$ 51,095