Reynolds American Has Authorized Repurchase Program of about $2.5 billion
Reynolds American Inc. (RAI) declared today that its Executive Board had legalized the repurchase of about $2.5 billion of the company’s outstanding ordinary shares over the next two years.
RAI announced that the new share repurchase program, which will be effective immediately, would be finished by 2014. The given program permits for shares to be purchased from time to time in the free and open market, depending on market terms, or in privately resolved transactions. The company spokesman also declared that British American Tobacco (BAT) will take part in the share repurchase program through its subsidiary enterprise, Brown & Williamson Holdings, Inc.
“The share repurchases program shows our proceeding adherence to returning value to our shareholders,” stated Daniel M. Delen, RAI’s president. This announcement comes after two dividends brought the full dividend growth to approximately 14.3% for the year. Also RAI’s president stated that the company will change its way in which it accounts for pension, implementing the mark-to-market strategy of estimating the actuarial gains and losses during the period when they were incurred.
“The new policy raises transparency of the company by reflecting present market profits, interest rates and health- care costs,” stated Thomas R. Adams, RAI’s chief financial officer. An analysis of pension and postretirement plan is realized each year as of December 31. Any actuarial gains or losses that decreased 10% will be acknowledged during the fourth quarter as a mark-to-market adjustment entered in pension and postretirement expense.
“The change won’t affect cash flow or any funding needs. The company will change prior-years’ financials in order to correspond to the new policy. We continue to control our pension plans as we want to guarantee that are well funded,” Adams said. Following the pension and postretirement accounting change, RAI is examining its fixed full-year earnings per share guidance to $2.77 to $2.82. This guidance excepts the impact of any possible mark-to-market adjustments for the pension and postretirement plans, as well as the effect of the implementation and integration costs, and tax items.
About Reynolds American
Reynolds American is the holding company of R.J. Reynolds Tobacco Company, American Snuff Company and Santa Fe Natural Tobacco Company.
• Reynolds Tobacco Company is the second-biggest U.S. cigarette company. It produces the most popular cigarette brands as: Camel, Pall Mall and Winston.
• American Snuff Company is the world’s second-largest producer of smokeless tobacco products as Kodiak and Grizzly. • Santa Fe Natural Tobacco Company produces additive-free tobacco products.
Materials of RAI’s annual reports, press announcements and other financial estimates and data are available at its official site.