R.J. Reynolds Tobacco Holdings Presents to Consumer Analyst Group of New York
19 February 2004 - 8:19AM
PR Newswire (US)
R.J. Reynolds Tobacco Holdings Presents to Consumer Analyst Group
of New York SCOTTSDALE, Ariz., Feb. 18 /PRNewswire-FirstCall/ -- In
a presentation here to industry analysts and investors, R.J.
Reynolds Tobacco Holdings, Inc. reiterated its commitment to
strengthening and improving its business, and building shareholder
value. The company also reaffirmed the full-year guidance it issued
on Jan. 27. Speaking at the Consumer Analyst Group of New York
(CAGNY) conference, Dianne M. Neal, RJR's chief financial officer,
said that 2003 was a year of reevaluation and transformation for
the company. RJR entered 2003 facing significant challenges, Neal
said, including continuing industry volume declines; permanent
pressure from low-cost competitors; a cost-structure disadvantage;
and a lack of pricing flexibility due to settlement costs and
increased state and federal excise taxes. These factors prompted
the company to undertake a comprehensive business analysis;
announce a new business plan; and enter into an agreement to
combine the U.S. business operations of RJR Tobacco with those of
British American Tobacco's (BAT) Brown & Williamson (B&W)
subsidiary. In September 2003, RJR announced a two-pronged
initiative to drive profit growth: a new brand-portfolio strategy
for RJR Tobacco; and a cost-structure reduction that will enable
RJR to achieve $1 billion in annualized savings by year-end 2005.
The new brand-portfolio strategy adopted by RJR Tobacco focuses on
investing in its two growth brands, Camel and Salem; limiting
investment in Winston and Doral; and emphasizing profit on its
private-label brands. Neal said that RJR's cost-reduction efforts
yielded savings of $400 million in 2003 and are expected to produce
an additional $400 million in savings in 2004. The company is on
track to deliver a $1 billion cost reduction by the end of 2005,
she said. RJR also reaffirmed the full-year guidance it provided in
January. In 2004, Neal said, RJR expects to generate operating
income of $725 million to $775 million, excluding restructuring
charges currently estimated to be approximately $20 million. With
these restructuring charges included, RJR expects operating income
of $705 million to $755 million, net income of $385 million to $415
million and diluted earnings per share of $4.55 to $4.90. The
company expects to end the year with approximately $1.6 billion in
cash. The company's guidance does not include the potential effects
of the pending B&W transaction. Neal reported that the
RJR/B&W business combination is proceeding on schedule. Once it
is complete, current RJR shareholders will retain 58 percent
ownership in the new holding company, Reynolds American Inc.
Combining the U.S. operations of RJR Tobacco and B&W will make
the company a more effective and efficient competitor, Neal said.
RJR expects to achieve synergies of at least $500 million once the
companies are fully integrated. The deal is expected to close in
mid-2004, following receipt of regulatory and shareholder
approvals. Full integration of the two companies is expected to
take 18 to 24 months thereafter, she said. "The company's
restructuring, the implementation of RJR Tobacco's new brand
portfolio strategy and the business combination with B&W are
allon track," Neal said. "We are pleased with the significant
progress we have made toward putting RJR on the right path to
improve business performance and enhance shareholder value in 2004
and the years ahead." Statements included in this news releasewhich
are not historical in nature are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward- looking statements
regarding RJR's future performance and financial results include
risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements.
These risks include the substantial and increasing regulation and
taxation of the cigarette industry; various legal actions,
proceedings and claims relating to the sale, distribution,
manufacture, development, advertising, marketing and claimed health
effects of cigarettes that are pending or may be instituted against
RJR or its subsidiaries; the substantial payment obligations and
limitations on the advertising and marketing of cigarettes under
various litigation settlement agreements; the continuing decline in
volume in the domestic cigarette industry; competition from other
cigarette manufacturers, includingincreased promotional activities
and the growth of the deep-discount category; the success or
failure of new product innovations and acquisitions; the effect of
market conditions on the performance of pension assets and the
return on corporate cash; any potential costs or savings associated
with realigning the cost structure of RJR and its subsidiaries; the
ability to achieve efficiencies in manufacturing and distribution
operations without negatively affecting sales; the cost of tobacco
leaf and other raw materials and other commodities used in
products; the responsiveness of both the trade and consumers to new
products and marketing and promotional programs; and the ratings of
RJR securities. In addition, RJR can give no assurance that the
proposed formation of Reynolds American Inc., the combination of
RJR Tobacco and the U.S. assets, liabilities and operations of
Brown & Williamson Tobacco Corporation, and the related
transactions, will be consummated, or if consummated, that any
expectationsrelating thereto will be realized. Factors that could
affect whether these transactions are consummated include the
satisfaction of regulatory conditions to the business combination
that cannot be waived and the satisfaction or waiver of all other
conditions, including obtaining clearances from U.S. and European
regulatory authorities and RJR shareholders, as well as the receipt
of satisfactory Internal Revenue Service rulings. Due to these
uncertainties and risks, undue reliance should not be placed on
these forward-looking statements, which speak only as of the date
of this news release. Except as provided by federal securities
laws, RJR is not required to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional Information and Where To
Find It Reynolds American Inc., the holding company to be formed in
the proposed business combination, has filed a registration
statement on Form S-4 that includes a preliminary proxy
statement/prospectus and other relevant documents in connection
with the proposed business combination. The registration statement
will be amended to include the year-end 2003 financial statements.
When the registration statement becomes effective, a final proxy
statement/prospectus and other relevant documents will be mailed to
RJR shareholders. INVESTORS AND SECURITY HOLDERS OF RJR ARE ADVISED
TO READ THESE DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS
COMBINATION. Documents filed by RJR and Reynolds American Inc. with
the SEC can be found at the SEC's Web site at http://www.sec.gov/ .
Once available, free copies of the final prospectus/proxy
statement, as well as RJR's and Reynolds American Inc.'s related
filings with the SEC, also may be obtained from RJR by directing a
request to R.J. Reynolds Tobacco Holdings, Inc. at P.O. Box 2866,
Winston-Salem, NC 27102-2866, Attn.: Office of Investor Relations,
or by telephone at (336) 741-5165 or on RJR's Web site,
http://www.rjrholdings.com/ . R.J. Reynolds Tobacco Holdings, Inc.
is the parent company of R.J. Reynolds Tobacco Company and Santa Fe
Natural Tobacco Company, Inc. R.J. Reynolds Tobacco Company is the
second-largest tobacco company in the United States, manufacturing
about one of every four cigarettes sold in the United States.
Reynolds Tobacco's product line includes four of the nation's 10
best-selling cigarette brands: Camel, Winston, Salem and Doral.
Santa Fe Natural Tobacco Company, Inc. manufactures Natural
American Spirit cigarettes and other tobacco products, and markets
them both nationally and internationally. Copies of RJR's news
releases, annual reports, SEC filings and other financial materials
are available on the company's Web site,
http://www.rjrhholdings.com/ . DATASOURCE: R.J. Reynolds Tobacco
Holdings, Inc. CONTACT: Investors, Carole Biermann Wehn,
+1-336-741-5182, or Media, Jan Smith, +1-336-741-6995, both of R.J.
Reynolds Tobacco Holdings, Inc. Web site: http://www.rjrt.com/
http://www.rjrholdings.com/
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