Supplemental Condensed Consolidating Financial Statements (Unaudited) (2006)Full Document 

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Reynolds American Inc.
Supplemental Condensed Consolidating Financial Statements
     On May 31, 2006, Reynolds American Inc., referred to as RAI, completed a private offering of $1.650 billion guaranteed, secured notes in connection with the funding of its acquisition on the same date of a group of companies collectively referred to as the Conwood companies. On June 20, 2006, RAI issued in a private offering $1.289 billion of its guaranteed, secured notes in exchange for notes previously issued by R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR. Separate financial statements and other disclosures have not been presented concerning the guarantors of RAI’s $2.939 billion secured notes, because such information is materially included in the condensed consolidated financial statements (unaudited) contained in RAI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed with the SEC on August 4, 2006, and is not believed to be material to holders of such notes. RAI’s direct, wholly owned subsidiaries and certain of its indirectly owned subsidiaries have fully and unconditionally guaranteed these notes. Because the guarantees are full and unconditional and joint and several, the following condensed consolidating financial statements include: the accounts and activities of RAI, the parent issuer; RJR, R. J. Reynolds Tobacco Company, referred to as RJR Tobacco, Conwood Holdings, Inc. and the Conwood companies, Santa Fe Natural Tobacco Company, Inc., Lane, Limited, R. J. Reynolds Global Products, Inc., RJR Acquisition Corp. and certain of RJR Tobacco’s other subsidiaries, the guarantors; other indirect subsidiaries of RAI which are not guarantors; and elimination adjustments.

 


 

Condensed Consolidating Statements of Income (Unaudited)
(Dollars in Millions)
                                         
    Parent             Non-              
    Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
For the Three Months Ended June 30, 2006
                                       
Net sales
  $     $ 2,165     $ 21     $ (16 )   $ 2,170  
Net sales, related party
          121                   121  
Cost of products sold
          1,285       7       (16 )     1,276  
Selling, general and administrative expenses
    8       375       9             392  
Amortization expense
          7                   7  
 
                             
Operating income (loss)
    (8 )     619       5             616  
Interest and debt expense
    22       30                   52  
Interest income
    (1 )     (22 )                 (23 )
Intercompany interest (income) expense
    (15 )     15                    
Intercompany dividend income
          (10 )           10        
Other (income) expense, net
    3       (2 )     (4 )           (3 )
 
                             
Income (loss) before income taxes
    (17 )     608       9       (10 )     590  
Provision for (benefit from) income taxes
    (5 )     227       1             223  
Equity income from subsidiaries
    388       8             (396 )      
 
                             
Income before extraordinary item
    376       389       8       (406 )     367  
Extraordinary item-gain on acquisition
          9                   9  
 
                             
Net income
  $ 376     $ 398     $ 8     $ (406 )   $ 376  
 
                             
 
                                       
For the Three Months Ended June 30, 2005
                                       
Net sales
  $     $ 1,987     $ 21     $ (17 )   $ 1,991  
Net sales, related party
          112                   112  
Cost of products sold
          1,252       6       (17 )     1,241  
Selling, general and administrative expenses
    8       397       7             412  
Loss on sale of assets
          25                   25  
Amortization expense
 

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