Reynolds American Plans Up to $2.5B Share Buyback

Source from:  AP 11/16/2011

Reynolds American will buy back up to $2.5 billion of its shares over the next two-and-a-half years, the tobacco company said Monday. The repurchase program goes into effect immediately, and is to be completed by mid-2014. The authorization by the company's board allows Reynolds American to purchases shares from time to time on the open market, or through privately negotiated transactions. British American Tobacco PLC will participate in the program to maintain its ownership of about 42 percent of Reynolds American's outstanding shares through its Brown & Williamson Holdings subsidiary, Reynolds American said. Reynolds American also announced an accounting change that will increase its per-share earnings estimate for the full year. The change involves pension and post-retirement plans, and a switch to a "mark-to-market" method to recognize actuarial gains and losses in the period when they were incurred. The new policy is intended to better reflect current market returns, interest rates and health-care costs, Chief Financial Officer Thomas R. Adams said. Reynolds American generally analyzes its pension and post-retirement plan performance annually as of the end of the year. Under the change, any actuarial gains or losses outside a 10 percent range will be recognized during the fourth quarter as a mark-to-market adjustment included in pension and post-retirement expenses. The accounting change will be applied retrospectively to prior periods. As a result of the change, Reynolds American expects adjusted full-year earnings of $2.77 to $2.82 per share. Using the company's previous accounting methodology, Reynolds American had expected $2.63 to $2.68 a share. Analysts surveyed by FactSet had expected $2.64 per share, on average. Shares of Reynolds American Inc. fell 18 cents to $38.72 in midday trading. Enditem