Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 06, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | RAI | |
Entity Registrant Name | REYNOLDS AMERICAN INC | |
Entity Central Index Key | 1,275,283 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 714,550,703 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Income Statement [Abstract] | |||||
Net sales | [1] | $ 2,349 | $ 2,071 | $ 4,324 | $ 3,920 |
Net sales, related party | 54 | 91 | 136 | 177 | |
Net sales | 2,403 | 2,162 | 4,460 | 4,097 | |
Costs and expenses: | |||||
Cost of products sold | [1] | 1,084 | 959 | 1,934 | 1,889 |
Selling, general and administrative expenses | 451 | 364 | 962 | 777 | |
Gain on Divestiture | (3,499) | (3,499) | |||
Amortization expense | 3 | 3 | 6 | 5 | |
Operating income (loss) | [2] | 4,364 | 836 | 5,057 | 1,426 |
Interest and debt expense | 105 | 62 | 196 | 121 | |
Interest income | (1) | (1) | (2) | ||
Other (income) expense, net | 20 | 3 | 1 | ||
Income from continuing operations before income taxes | 4,239 | 775 | 4,859 | 1,306 | |
Provision for income taxes | 2,311 | 283 | 2,542 | 476 | |
Income from continuing operations | 1,928 | 492 | 2,317 | 830 | |
Income from discontinued operations, net of tax | 25 | ||||
Net income | $ 1,928 | $ 492 | $ 2,317 | $ 855 | |
Basic income per share: | |||||
Income from continuing operations | $ 3.39 | $ 0.92 | $ 4.21 | $ 1.55 | |
Income from discontinued operations | 0.05 | ||||
Net income | 3.39 | 0.92 | 4.21 | 1.60 | |
Diluted income per share: | |||||
Income from continuing operations | 3.38 | 0.92 | 4.20 | 1.55 | |
Income from discontinued operations | 0.04 | ||||
Net income | 3.38 | 0.92 | 4.20 | 1.59 | |
Dividends declared per share | $ 0.67 | $ 0.67 | $ 1.34 | $ 1.34 | |
[1] | Excludes excise taxes of $987 million and $927 million for the three months ended June 30, 2015 and 2014, respectively; and $1,827 million and $1,773 million for the six months ended June 30, 2015 and 2014, respectively. | ||||
[2] | The six months ended June 30, 2015, includes a $70 million reduction in cost of goods sold associated with the 2003 NPM Adjustment claim, see “— Cost of Products Sold” in note 1. |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Excise taxes | $ 987 | $ 927 | $ 1,827 | $ 1,773 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 1,928 | $ 492 | $ 2,317 | $ 855 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax (benefit) expense | (20) | 6 | (26) | |
Unrealized gain on long-term investments, net of tax expense | 1 | 2 | ||
Amortization of realized loss on hedging instruments, net of tax | 1 | 1 | 1 | 1 |
Cumulative translation adjustment and other, net of tax (benefit) expense | 10 | (3) | (17) | (2) |
Comprehensive income | $ 1,919 | $ 497 | $ 2,275 | $ 856 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Tax expense (benefit), retirement benefits | $ (12) | $ 4 | $ (16) | |
Tax expense (benefit), unrealized gain on long-term investments | $ 1 | |||
Tax expense (benefit), cumulative translation adjustment and other | $ 2 | $ (1) | $ (10) | $ (1) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from (used in) operating activities: | ||
Net income | $ 2,317 | $ 855 |
Income from discontinued operations, net of tax | (25) | |
Adjustments to reconcile to net cash flows from (used in) continuing operating activities: | ||
Depreciation and amortization | 56 | 51 |
Deferred income tax expense (benefit) | (381) | 15 |
Pension and postretirement | (63) | (63) |
Tobacco settlement | (590) | (480) |
Other, net | (891) | (98) |
Net cash flows from operating activities | 448 | 255 |
Cash flows from (used in) investing activities: | ||
Capital expenditures | (64) | (123) |
Acquisition, net of cash acquired | (17,219) | |
Proceeds from Divestiture | 7,056 | |
Proceeds from termination of joint venture | 35 | |
Other, net | 1 | (24) |
Net cash flows used in investing activities | (10,226) | (112) |
Cash flows from (used in) financing activities: | ||
Dividends paid on common stock | (712) | (699) |
Repurchase of common stock | (40) | (440) |
Proceeds from BAT Share Purchase | 4,673 | |
Issuance of long-term debt | 8,975 | |
Debt issuance costs and financing fees | (64) | |
Principal borrowings under revolving credit facility | 1,400 | 1,000 |
Repayments under revolving credit facility | (1,400) | (200) |
Excess tax benefit on stock-based compensation plans | 15 | 10 |
Net cash flows from (used in) financing activities | 12,847 | (329) |
Effect of exchange rate changes on cash and cash equivalents | (22) | (1) |
Net change in cash and cash equivalents | 3,047 | (187) |
Cash and cash equivalents at beginning of period | 966 | 1,500 |
Cash and cash equivalents at end of period | 4,013 | 1,313 |
Income taxes paid, net of refunds | 645 | 499 |
Interest paid | 159 | $ 125 |
Fair value of equity consideration issued in the Merger | $ 7,555 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 4,013 | $ 966 |
Short-term investments | 347 | |
Accounts receivable | 145 | 116 |
Accounts receivable, related party | 31 | 41 |
Other receivables | 18 | 12 |
Inventories | 1,677 | 1,281 |
Deferred income taxes, net | 935 | 703 |
Other current assets | 285 | 204 |
Total current assets | 7,451 | 3,323 |
Property, plant and equipment, net of accumulated depreciation (2015 — $1,621; 2014 — $1,627) | 1,298 | 1,203 |
Trademarks and other intangible assets, net of accumulated amortization | 28,301 | 2,421 |
Goodwill | 17,019 | 8,016 |
Other assets and deferred charges | 489 | 233 |
Total assets | 54,558 | 15,196 |
Current liabilities: | ||
Accounts payable | 178 | 142 |
Tobacco settlement accruals | 1,982 | 1,819 |
Due to related party | 7 | 1 |
Deferred revenue, related party | 15 | 32 |
Current maturities of long-term debt | 450 | 450 |
Income taxes payable | 2,125 | |
Dividends payable on common stock | 356 | 356 |
Other current liabilities | 1,329 | 744 |
Total current liabilities | 6,442 | 3,544 |
Long-term debt (less current maturities) | 17,550 | 4,633 |
Deferred income taxes, net | 9,813 | 383 |
Long-term retirement benefits (less current portion) | 2,239 | 1,997 |
Other noncurrent liabilities | $ 188 | $ 117 |
Commitments and contingencies: | ||
Shareholders’ equity: | ||
Common stock (shares issued: 2015 — 714,550,703; 2014 — 531,283,513) | $ 0 | $ 0 |
Paid-in capital | 18,447 | 6,200 |
Retained earnings (accumulated deficit) | 285 | (1,314) |
Accumulated other comprehensive loss | (406) | (364) |
Total shareholders’ equity | 18,326 | 4,522 |
Total liabilities and shareholders' equity | $ 54,558 | $ 15,196 |
CONDENSED CONSOLIDATED BALANCE8
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Property, plant and equipment, accumulated depreciation | $ 1,621 | $ 1,627 |
Common stock, shares issued | 714,550,703 | 531,283,513 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Note 1 — Business and Summary of Significant Accounting Policies Overview The condensed consolidated financial statements (unaudited) include the accounts of Reynolds American Inc., referred to as RAI, and its wholly owned subsidiaries. RAI’s wholly owned operating subsidiaries include R. J. Reynolds Tobacco Company; American Snuff Company, LLC, referred to as American Snuff Co.; Santa Fe Natural Tobacco Company, Inc., referred to as SFNTC; R. J. Reynolds Vapor Company, referred to as RJR Vapor; Niconovum USA, Inc; Niconovum AB; SFR Tobacco International GmbH, referred to as SFRTI, and various foreign subsidiaries affiliated with SFRTI. RAI was incorporated as a holding company in the State of North Carolina in 2004, and its common stock is listed on the New York Stock Exchange, referred to as NYSE, under the symbol “RAI.” RAI was created to facilitate the business combination of the U.S. business of Brown & Williamson Holdings, Inc., referred to as B&W, an indirect wholly owned subsidiary of British American Tobacco p.l.c., referred to as BAT, with R. J. Reynolds Tobacco Company on July 30, 2004, with such combination referred to as the B&W business combination. References to RJR Tobacco prior to July 30, 2004, relate to R. J. Reynolds Tobacco Company, a New Jersey corporation and a wholly owned subsidiary of R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR. References to RJR Tobacco on and subsequent to July 30, 2004, relate to the combined U.S. assets, liabilities and operations of B&W and R. J. Reynolds Tobacco Company, a North Carolina corporation. On June 12, 2015, RAI acquired Lorillard, Inc., referred to as Lorillard, in a cash and stock transaction, referred to as the Merger, pursuant to which a wholly owned subsidiary of RAI, referred to as Merger Sub, merged with and into Lorillard, with Lorillard surviving as a wholly owned subsidiary of RAI, all in accordance with an agreement and plan of merger, dated July 15, 2014, among RAI, Merger Sub and Lorillard, referred to as the Merger Agreement. Also on June 12, 2015, a wholly owned subsidiary, referred to as Imperial Sub, of Imperial Tobacco Group, PLC, referred to as Imperial, acquired for approximately $7.1 billion certain assets (1) owned by RAI subsidiaries or affiliates relating to the cigarette brands WINSTON, KOOL and SALEM, and (2) owned by Lorillard subsidiaries or affiliates related to the cigarette brand MAVERICK and the “e-vapor” brand blu (including SKYCIG), as well as Lorillard’s owned and leased real property, and certain transferred employees, together with associated liabilities, all in accordance with (x) an asset purchase agreement, dated July 15, 2014, as amended, referred to as the Asset Purchase Agreement, among RAI and Imperial Sub, and for certain provisions of the Asset Purchase Agreement and as guarantor of certain obligations of Imperial Sub, Imperial, and (y) a transfer agreement, dated July 15, 2014, referred to as the Transfer Agreement, between Lorillard and Imperial Sub. The transactions pursuant to the Asset Purchase Agreement and Transfer Agreement are collectively referred to as the Divestiture. In addition, on June 12, 2015, shortly after the completion of the Merger, Lorillard Tobacco Company, LLC, a wholly owned subsidiary of Lorillard, referred to as Lorillard Tobacco, merged with and into RJR Tobacco, with RJR Tobacco continuing as the surviving entity, referred to as the Lorillard Tobacco Merger. RAI’s reportable operating segments are RJR Tobacco, American Snuff and Santa Fe. The RJR Tobacco segment consists principally of the primary operations of R. J. Reynolds Tobacco Company. The American Snuff segment consists of the primary operations of American Snuff Co. The Santa Fe segment consists of the domestic operations of SFNTC. Included in All Other, among other RAI subsidiaries, are RJR Vapor, Niconovum USA, Inc., Niconovum AB, SFRTI and various foreign subsidiaries affiliated with SFRTI. The segments were identified based on how RAI’s chief operating decision maker allocates resources and assesses performance. Certain of RAI’s operating subsidiaries have entered into intercompany agreements for products or services with other subsidiaries. As a result, certain activities of an operating subsidiary may be included in a different segment of RAI. RAI’s operating subsidiaries primarily conduct their businesses in the United States. Basis of Presentation The accompanying interim condensed consolidated financial statements (unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America, referred to as GAAP, for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair presentation of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany balances have been eliminated. For interim reporting purposes, certain costs and expenses are charged to operations in proportion to the estimated total annual amount expected to be incurred primarily based on sales volumes. The results for the interim period ended June 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The condensed consolidated financial statements (unaudited) should be read in conjunction with the consolidated financial statements and related footnotes, which appear in RAI’s Annual Report on Form 10-K for the year ended December 31, 2014. Certain reclassifications were made to conform prior years’ financial statements to the current presentation. Certain amounts presented in note 11 are rounded in the aggregate and may not sum from the individually presented components. All dollar amounts, other than per share amounts, are presented in millions, except for amounts set forth in note 11 and as otherwise noted. Cost of Products Sold Cost of products sold includes the expenses for the Master Settlement Agreement, referred to as the MSA, and other settlement agreements with the States of Mississippi, Florida, Texas and Minnesota, which together with the MSA are collectively referred to as the State Settlement Agreements; the user fees charged by the U.S. Food and Drug Administration, referred to as the FDA; and the federal tobacco quota assessment that expired in 2014. These expenses were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 State Settlement Agreements $ 571 $ 456 $ 965 $ 912 FDA user fees 38 33 73 67 Federal tobacco quota buyout — 51 — 106 In 2012, RJR Tobacco, Lorillard Tobacco and certain other participating manufacturers, referred to as the PMs, including SFNTC, entered into a term sheet, referred to as the Term Sheet, with 17 states, the District of Columbia and Puerto Rico to settle certain claims related to the MSA non-participating manufacturer adjustment, referred to as the NPM Adjustment. The Term Sheet resolves claims related to volume years from 2003 through 2012 and puts in place a revised method to determine future adjustments from 2013 forward as to jurisdictions that join the agreement. On March 12, 2013, a single, nationwide arbitration panel of three former federal judges, referred to as the Arbitration Panel, hearing the dispute related to the 2003 NPM Adjustment (and related matters) issued an order, referred to as the Order, authorizing the implementation of the Term Sheet. In addition, after the Order, one additional state signed the Term Sheet on April 12, 2013; and, two additional states signed the Term Sheet on May 24, 2013. The Term Sheet is binding on all signatories. Based on the jurisdictions bound by the Term Sheet through December 31, 2013, RJR Tobacco and SFNTC, collectively, will receive credits, currently estimated to total approximately $1.1 billion, with respect to their NPM Adjustment claims for the period from 2003 through 2012. These credits will be applied against annual payments under the MSA over a five-year period, which commenced with the April 2013 MSA payment. As a result of the Lorillard Tobacco Merger, RJR Tobacco will receive approximately $22 million of additional credits, attributable to Lorillard Tobacco, which will be applied against annual payments in 2016 and 2017. In June 2014, two additional states agreed to settle the NPM Adjustment disputes on similar terms as set forth in the Term Sheet, except for certain provisions related to the determination of credits to be received by the PMs. RJR Tobacco and SFNTC, collectively, will receive credits, currently estimated to total approximately $170 million, with respect to their NPM Adjustment claims from 2003 through 2012. The credits related to these two states will be applied against annual payments under the MSA over a five-year period, which effectively commenced with the April 2014 MSA payment. As a result, expenses for the MSA were reduced by approximately $34 million for the three and six months ended June 30, 2014. As a result of the Lorillard Tobacco Merger, RJR Tobacco will receive approximately $5 million of additional credits, attributable to Lorillard Tobacco, which will be applied against annual payments over the next three years. As a result of meeting the performance requirements associated with the Term Sheet, RJR Tobacco and Santa Fe, collectively, recognized credits of $69 million and $91 million for the three months ended June 30, 2015 and 2014, respectively, and $135 million and $154 million for the six months ended June 30, 2015 and 2014, respectively. RJR Tobacco expects to recognize additional credits through 2017, and Santa Fe expects to recognize additional credits through 2016. On September 11, 2013, the Arbitration Panel ruled six states had not diligently enforced their qualifying statutes in 2003 related to the NPM Adjustment. Based on the status of the various challenges filed by the non-diligent states to certain rulings of the Arbitration Panel related to the 2003 NPM Adjustment claim, as of June 30, 2015, two of the non-diligent states are no longer challenging the findings of non-diligence entered against them by the Arbitration Panel. As a result, a certain portion of the NPM Adjustment claim for 2003 from these two states is now certain and can be estimated. Consequently, RJR Tobacco and Santa Fe, collectively, recognized $70 million as a reduction of cost of products sold for the six months ended June 30, 2015. For additional information related to the NPM Adjustment settlement and the 2003 NPM Adjustment claim, see “—Litigation Affecting the Cigarette Industry —State Settlement Agreements—Enforcement and Validity; Adjustments” in note 11. Pension and Postretirement Pension and postretirement benefits require balance sheet recognition of the net asset or liability for the overfunded or underfunded status of defined benefit pension and other postretirement benefit plans, on a plan-by-plan basis, and recognition of changes in the funded status in the year in which the changes occur. Actuarial gains or losses are changes in the amount of either the benefit obligation or the fair value of plan assets resulting from experience different from that assumed or from changes in assumptions. Differences between actual results and actuarial assumptions are accumulated and recognized in the year in which they occur as a mark-to-market adjustment, referred to as an MTM adjustment, to the extent such net gains and losses are in excess of 10% of the greater of the fair value of plan assets or benefit obligations, referred to as the corridor. Actuarial gains and losses outside the corridor are generally recognized annually as of December 31, or when a plan is remeasured during an interim period. Prior service costs of pension benefits, which are changes in benefit obligations due to plan amendments, are amortized on a straight-line basis over the average remaining service period for active employees, or average remaining life expectancies for inactive employees if most of the plan obligations are due to inactive employees. Prior service costs of postretirement benefits, which are changes in benefit obligations due to plan amendments, are amortized on a straight-line basis over the expected service period to full eligibility age for active employees, or average remaining life expectancies for inactive employees if most of the plan obligations are due to inactive employees. The components of the pension benefits and the postretirement benefits are set forth below: For the Three Months Ended June 30, For the Six Months Ended June 30, Postretirement Postretirement Pension Benefits Benefits Pension Benefits Benefits 2015 2014 2015 2014 2015 2014 2015 2014 Service cost $ 7 $ 6 $ — $ — $ 13 $ 11 $ 1 $ 1 Interest cost 67 67 12 13 131 133 24 27 Expected return on plan assets (90 ) (91 ) (3 ) (3 ) (178 ) (181 ) (6 ) (6 ) Amortization of prior service cost (credit) — 1 (10 ) (10 ) 1 2 (21 ) (21 ) Total benefit cost (credit) $ (16 ) $ (17 ) $ (1 ) $ — $ (33 ) $ (35 ) $ (2 ) $ 1 RAI disclosed in its financial statements for the year ended December 31, 2014, that it expects to contribute $109 million to its pension plans in 2015, of which $5 million was contributed during the first six months of 2015. Fair Value Measurement RAI determines the fair value of assets and liabilities, if any, using a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price. The levels of the fair value hierarchy are: Level 1: inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. RAI evaluates its investments for possible impairment based on current economic conditions, credit loss experience and other criteria on a quarterly basis. The evaluation of investments for impairment requires significant judgments, including: the identification of potentially impaired securities; the determination of their estimated fair value; the assessment of whether any decline in estimated fair value is other-than-temporary; and the likelihood of selling before recovery. If there is a decline in a security’s net realizable value that is other-than-temporary and it is not likely to be sold before recovery, the decline is separated into the amount of impairment related to credit loss and the amount of impairment related to all other factors. The decline related to the credit loss is recognized in earnings, while the decline related to all other factors is recognized in accumulated other comprehensive loss. Recently Issued Accounting Pronouncements In January 2015, the Financial Accounting Standards Board, referred to as the FASB, issued amended guidance which simplifies income statement presentation by eliminating the concept of extraordinary items. Previously, events or transactions that were both unusual in nature and infrequent in occurrence for a business entity were considered to be extraordinary items and required separate presentation, net of tax, after income from continuing operations. The guidance does not change the requirement to disclose items which are unusual in nature or infrequent in occurrence as a component of continuing operations or in the footnotes. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted if it is applied from the beginning of the fiscal year of adoption. The adoption of the amended guidance is not expected to have a material impact on RAI’s results of operations, cash flows or financial position. In February 2015, the FASB issued amendments to the consolidation standard that reduce the number of consolidation models. The amended standard changes the way reporting entities examine partnerships and similar entities, evaluate service providers and decision makers as they relate to a variable interest entity, referred to as a VIE, and examine how related party interests in a VIE can affect the consolidation of that VIE. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. RAI is evaluating the effect that this guidance will have on its consolidated financial statements. In April 2015, the FASB issued amended guidance to simplify the presentation of debt issuance costs. The current guidance requires debt issuance costs to be reported on the balance sheet as an asset and amortized as interest expense. The amended guidance requires debt issuance costs be presented as a direct reduction of the debt liability it is associated with similar to the way debt discounts are presented. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The standard requires retrospective application for all prior periods presented. Early adoption is permitted. The adoption of the amended guidance is not expected to have a material impact on RAI’s results of operations, cash flows or financial position. In April 2015, the FASB issued new guidance for determining if an arrangement for cloud services includes a license of software. This new guidance does not change the accounting standard for cloud service providers, but does base the criteria for determining if a license of software is part of the arrangement based on the existing guidance. If a license of software is present in the arrangement, the fee associated with the license portion will be capitalized when the criteria for capitalization of internal-use software are met. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. RAI is evaluating the effect that this guidance will have on its consolidated financial statements. |
Merger, Divestiture and BAT Sha
Merger, Divestiture and BAT Share Purchase | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Merger, Divestiture and BAT Share Purchase | Note 2 — Merger, Divestiture and BAT Share Purchase Merger On June 12, 2015, the Merger was completed, with Merger Sub merging with and into Lorillard and Lorillard surviving as a wholly owned subsidiary of RAI. Pursuant to the Merger Agreement, each share of outstanding Lorillard common stock (other than treasury shares held by Lorillard and any shares of Lorillard common stock owned by any Lorillard subsidiary, RAI or Merger Sub) was converted into the right to receive (1) 0.2909 of a share of RAI common stock plus (2) $50.50 in cash (the foregoing collectively referred to as the Merger Consideration). RAI issued 104,706,847 shares of RAI common stock at a price of $72.15 per share to Lorillard shareholders in the Merger. As a part of the Merger, RAI acquired the premium cigarette brand, NEWPORT, which is the top selling menthol and second largest selling cigarette brand overall in the United States. In addition to NEWPORT, RAI acquired three additional brand families marketed under the KENT, TRUE and OLD GOLD brand names. In accordance with FASB Accounting Standards Codification 805, Business Combinations The table below presents the purchase price along with a preliminary allocation of the purchase price to the assets acquired and liabilities assumed in the Merger. Purchase Price Fair value of RAI common stock issued $ 7,555 Cash paid to Lorillard shareholders at $50.50 per share 18,205 Cash paid for Lorillard stock options and stock appreciation rights 73 Purchase price $ 25,833 Preliminary Allocation of Purchase Price Assets Cash and cash equivalents $ 1,059 Short-term investments 347 Accounts and other receivables 45 Inventories 583 Income tax receivable 114 Other current assets 1,361 Property, plant and equipment 94 Trademarks and other intangible assets 26,242 Goodwill 10,852 Other assets and deferred charges 210 Liabilities Tobacco settlement accruals 753 Other current liabilities 507 Long-term debt (less current maturities) 3,951 Deferred income taxes, net 9,536 Long-term retirement benefits 263 Other noncurrent liabilities 64 Preliminary allocation of purchase price $ 25,833 The allocation of the purchase price reflected in the accompanying financial statements is preliminary and based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the closing date of the Merger pursuant to ASC 805). The measurement period remains open pending the completion of valuation procedures related to acquired assets and assumed liabilities. Goodwill generated from the acquisition is primarily attributable to the establishment of deferred tax liabilities associated with the trademarks acquired and the expected synergies from future growth, and is allocated to the reporting unit that is expected to benefit from these synergies. The $10,852 million allocated to goodwill represents the excess of the preliminary allocation of the purchase price over the fair value of assets acquired and liabilities assumed, which amount has been allocated to the RJR Tobacco segment, and will be non-deductible for tax purposes. The results of operations of the acquired Lorillard brands are included in RAI’s condensed consolidated statements of income from the date of acquisition and include $197 million of total net sales for the three and six months ended June 30, 2015, and are included in the RJR Tobacco segment’s financial results. There was no material impact to net income for the three and six months ended June 30, 2015. Divestiture On June 12, 2015, the Divestiture was completed, and Imperial Sub acquired the cigarette brands WINSTON, KOOL and SALEM, previously owned by RAI subsidiaries and included in the RJR Tobacco segment, as well as the cigarette brand MAVERICK and the “e-vapor” brand blu (including SKYCIG), previously owned by Lorillard subsidiaries, and other assets and certain liabilities, including inventory, fixed assets and employee benefit plans, for an aggregate purchase price of approximately $7.1 billion. A summary of the pre-tax preliminary gain is as follows: Purchase price $ 7,056 Net assets and liabilities divested (1,708 ) Goodwill associated with divested RJR Tobacco brands (1,849 ) Gain on Divestiture $ 3,499 BAT Share Purchase and Other In connection with the Merger and Divestiture, on July 15, 2014, RAI, BAT, and for limited purposes only, B&W, entered into a subscription and support agreement, referred to as the Subscription Agreement, pursuant to which BAT agreed to subscribe for and purchase, directly or indirectly through one or more of its wholly owned subsidiaries, simultaneously with the completion of the Merger and at a price of approximately $4.7 billion in the aggregate, shares of RAI common stock such that BAT, directly or indirectly through its affiliates, would maintain its approximately 42% beneficial ownership in RAI (the foregoing purchase is referred to as the BAT Share Purchase). On June 12, 2015, concurrently with the completion of the Merger and Divestiture and pursuant to the Subscription Agreement, BAT indirectly (through a wholly owned subsidiary) purchased 77,680,259 shares of RAI common stock for approximately $4.7 billion, which was sufficient for BAT and its subsidiaries collectively to maintain their approximately 42% beneficial ownership in RAI. Upon completion of the transactions on June 12, 2015, BAT and its subsidiaries collectively owned 301,014,278 shares, or approximately 42%, of RAI’s outstanding common stock. RAI financed the cash portion of the Merger Consideration and related fees and expenses with (1) the net proceeds from a public offering of $9 billion aggregate principal amount of newly issued RAI senior notes, (2) the proceeds from the Divestiture, (3) the proceeds from the BAT Share Purchase and (4) available cash. Transaction related costs of $39 million and $54 million, for the three and six months ended June 30, 2015, respectively, were expensed as incurred and included in selling, general and administrative expenses in RAI’s condensed consolidated statements of income (unaudited). Pro forma financial information (unaudited) The following unaudited pro forma consolidated financial information presents the combined results of operations of RAI and Lorillard as if the Merger and Divestiture had occurred at the beginning of the earliest period presented and includes non-recurring pro forma adjustments that were directly attributable to the Merger and Divestiture. Pro forma net income includes adjustments for acquisition-related costs. Pro forma net income per share includes the impact of the issuance of RAI common stock in the BAT Share Purchase and as part of the Merger Consideration. For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales $ 3,102 $ 2,884 $ 5,871 $ 5,439 Net income 680 597 1,218 1,065 Net income per share: Basic income per share: Net income $ 0.95 $ 0.83 $ 1.70 $ 1.48 Diluted income per share: Net income $ 0.95 $ 0.83 $ 1.70 $ 1.48 The unaudited pro forma results do not reflect cost savings or synergies from operating efficiencies or the effect of the incremental costs incurred in the Merger or Divestiture. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Merger and Divestiture had occurred at the beginning of the periods presented, nor are they indicative of future results of operations. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Note 3 — Fair Value Fair Value of Financial Assets and Liabilities Financial assets and liabilities carried at fair value were as follows: June 30, 2015 December 31, 2104 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash equivalents $ 3,859 $ — $ — $ 3,859 $ 883 $ — $ — $ 883 Short-term investments: Corporate debt securities — 210 — 210 — — — — U.S. Governmental agency obligations — 71 — 71 — — — — Commercial paper — 27 — 27 — — — — International governmental obligations — 39 — 39 — — — — Other assets and deferred charges: Corporate debt securities — 104 — 104 — — — — U.S. Governmental agency obligations — 28 — 28 — — — — Auction rate securities — — 79 79 — — 79 79 Mortgage-backed security — — 11 11 — — 12 12 Marketable equity security 2 — — 2 2 — — 2 Interest rate swaps — 59 — 59 — — — — There were no transfers between the levels for the six months ended June 30, 2015, or in the year ended December 31, 2014. RAI’s short-term and long-term investments include corporate debt securities, U.S. Government agency obligations, commercial paper and international government obligations. The fair value of these investments, classified as Level 2, utilized quoted prices for identical assets in less active markets or quoted prices for similar assets in active markets. The fair value of the interest rate swaps, classified as Level 2, utilized a market approach model using the notional amount of the interest rate swaps and observable inputs of time to maturity and market interest rates. RAI has investments in auction rate securities linked to corporate credit risk, investments in auction rate securities related to financial insurance companies, an investment in a mortgage-backed security and an investment in a marketable equity security. The unrealized gains and losses, net of tax, were included in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014. The funds associated with the auction rate securities will not be accessible until a successful auction occurs or a buyer is found. In determining if the difference between amortized cost and estimated fair value of the auction rate securities or the mortgage-backed security was deemed either temporarily or other-than-temporarily impaired, RAI evaluated each type of long-term investment using a set of criteria, including decline in value, duration of the decline, period until anticipated recovery, nature of investment, probability of recovery, financial condition and near-term prospects of the issuer, RAI’s intent and ability to retain the investment, attributes of the decline in value, status with rating agencies, status of principal and interest payments and any other issues related to the underlying securities. To assess credit losses, RAI uses historical default rates, debt ratings, credit default swap spreads and recovery rates. RAI has the intent and ability to hold these investments for a period of time sufficient to allow for the recovery in market value. All of the fair values of the auction rate securities, classified as Level 3, are linked to the longer-term credit risk of a diverse range of corporations, including, but not limited to, manufacturing, financial and insurance sectors. The fair value was determined by utilizing an income approach model, which was based upon the weighted average present value of future cash payments, given the probability of certain events occurring within the market. RAI considers the market for its auction rate securities to be inactive. The income approach model utilized observable inputs, including the London interbank offered rate, referred to as LIBOR, based interest rate curves, corporate credit spreads and corporate ratings/market valuations. Additionally, unobservable factors incorporated into the model included default probability assumptions based on historical migration tables, various default recovery rates and how these factors changed as ratings on the underlying collateral migrated from one level to another. As related to the unobservable factors, substantial changes, relative to historical trends, of the levels of corporate defaults or default recovery rates would impact the fair value measurement of these securities. Maturity dates for the auction rate securities begin in 2017. The fair value for the mortgage-backed security, classified as Level 3, utilized a market approach and was based upon the calculation of an overall weighted average valuation, derived from the actual, or modeled, market pricing of the specific collateral. The market approach utilized actual pricing inputs when observable and modeled pricing, based upon changes in observable market pricing, when unobservable. Substantial changes in the observable market pricing would directly impact the unobservable pricing and the fair value measurement of this security. RAI has deemed the market for its mortgage-backed security to be inactive. The maturity of the mortgage-backed security has been extended to March 2016, with the annual option to extend an additional year. Given the underlying collateral and RAI’s intent to continue to extend this security, it is classified as a noncurrent asset. RAI determined the change in the fair value of the investment in a marketable equity security using quoted market prices as of June 30, 2015. Financial assets classified as Level 3 investments were as follows: June 30, 2015 December 31, 2014 Cost Gross Unrealized Loss (1) Estimated Fair Value Cost Gross Unrealized Loss (1) Estimated Fair Value Auction rate securities $ 99 $ (20 ) $ 79 $ 99 $ (20 ) $ 79 Mortgage-backed security 17 (6 ) 11 18 (6 ) 12 $ 116 $ (26 ) $ 90 $ 117 $ (26 ) $ 91 (1) Unrealized losses, net of tax, are reported in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014. The changes in the Level 3 investments during the six months ended June 30, 2015, were as follows: Auction Rate Securities Cost Gross Unrealized Gain (Loss) Estimated Fair Value Balance as of January 1, 2015 $ 99 $ (20 ) $ 79 Balance as of June 30, 2015 $ 99 $ (20 ) $ 79 Mortgage-Backed Security Cost Gross Unrealized Gain (Loss) Estimated Fair Value Balance as of January 1, 2015 $ 18 $ (6 ) $ 12 Redemptions (1 ) — (1 ) Balance as of June 30, 2015 $ 17 $ (6 ) $ 11 Fair Value of Debt The estimated fair value of RAI’s outstanding debt, in the aggregate, was $18.3 billion and $5.4 billion, with an effective average annual interest rate of approximately 4.5%, as of June 30, 2015, and December 31, 2014, respectively. The fair values are based on available market quotes, credit spreads and discounted cash flows, as appropriate. Interest Rate Management From time to time, RAI and RJR have used interest rate swaps to manage interest rate risk on a portion of their respective debt obligations. In 2009, RAI and RJR entered into offsetting floating to fixed interest rate swap agreements in the notional amount of $1.5 billion with maturity dates ranging from June 1, 2012 to June 15, 2017. The floating to fixed interest rate swap agreements were entered into with the same financial institution that held a notional amount of $1.5 billion of fixed to floating interest rate swaps. In September 2011, RAI and RJR terminated the original and offsetting interest rate swap agreements, each with a notional amount of $1.5 billion, and received a total of $186 million cash in exchange for foregoing the future cash inflows associated with these swaps. These actions did not change the effective fixed rate of interest associated with the underlying debt. In September 2013, RAI called for the redemption of, among other RAI notes, the $775 million outstanding principal amount of 7.625% notes due in 2016. Approximately $450 million of this outstanding principal amount was included in the interest rate swap agreements described above. As a result of this action and the maturity of debt in June 2012, RAI had $700 million of previously swapped outstanding fixed rate debt with an effective rate of interest of approximately 3.8%, as of June 30, 2015, and December 31, 2014. In May 2012, RAI entered into forward starting interest rate contracts with an aggregate notional amount of $1 billion. RAI designated those derivatives as cash flow hedges of a future debt issuance, and they were determined to be highly effective at inception. The forward starting interest rate contracts mitigated RAI’s exposure to changes in the benchmark interest rate from the date of inception until the date of the forecasted transaction. On October 31, 2012, RAI completed the sale of $2.55 billion in aggregate principal amount of senior notes, consisting of $450 million of 1.05% senior notes due October 30, 2015, $1.1 billion of 3.25% senior notes due November 1, 2022, and $1 billion of 4.75% senior notes due November 1, 2042. The forward starting interest rate contracts were terminated, and $23 million in associated losses were settled with cash payments to the counterparties. The effective portion of the losses are recorded in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014, and will be amortized over the life of the related debt. The amortization of derivative instruments impacted the condensed consolidated statements of income (unaudited) as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Interest and debt expense $ (4 ) $ (4 ) $ (8 ) $ (8 ) On June 12, 2015, RJR Tobacco assumed the fixed to floating interest rate swap agreements that Lorillard Tobacco held on its 8.125% notes due in 2019. Under the agreement, RJR Tobacco receives interest based on a fixed rate of 8.125% and pays interest based on a floating one-month LIBOR rate plus a spread of 4.625%. The variable rate was 4.812% as of June 30, 2015. The agreements expire in June 2019. The interest rate swap agreements qualify for hedge accounting and were designated as fair value hedges at the date of the Merger. Under the swap agreements, RJR Tobacco receives a fixed rate settlement and pays a variable rate settlement with the difference recorded in interest expense. The difference reduced interest expense by $1 million for the three and six months ended June 30, 2015, respectively. As of June 30, 2015, the fair value hedges were highly effective, with an immaterial gain representing the ineffective portion, that was recorded in other (income) expense, net in the condensed consolidated statements of income (unaudited) for the three and six months ended June 30, 2015. See note 10 for additional information relating to fair value hedges. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 4 — Intangible Assets The changes in the carrying amounts of goodwill by segment were as follows: RJR Tobacco American Snuff Santa Fe All Other Consolidated Goodwill $ 9,065 $ 2,501 $ 197 $ 44 $ 11,807 Accumulated impairment charges (3,763 ) (28 ) — — (3,791 ) Net goodwill balance as of December 31, 2014 5,302 2,473 197 44 $ 8,016 2015 Activity Merger goodwill 10,852 — — — 10,852 Divested goodwill (1,849 ) — — — (1,849 ) 9,003 — — — 9,003 Net goodwill balance as of June 30, 2015 $ 14,305 $ 2,473 $ 197 $ 44 $ 17,019 The carrying amounts and changes therein of trademarks and other intangible assets by segment were as follows: RJR Tobacco American Snuff Santa Fe All Other Consolidated Trademarks Other Trademarks Trademarks Other Trademarks Other Indefinite-lived: Balance as of December 31, 2014 $ 977 $ 99 $ 1,136 $ 155 $ 4 $ 2,268 $ 103 Trademarks acquired in Merger 26,000 — — — — 26,000 — Trademarks divested (344 ) — — — — (344 ) — Other intangibles divested — (12 ) — — — — (12 ) 25,656 (12 ) — — — 25,656 (12 ) Balance as of June 30, 2015 $ 26,633 $ 87 $ 1,136 $ 155 $ 4 $ 27,924 $ 91 Finite-lived: Balance as of December 31, 2014 $ 12 $ 31 $ 7 $ — $ — $ 19 $ 31 Trademarks acquired in Merger 9 — — — — 9 — Customer list acquired in Merger — 233 — — — — 233 Amortization (2 ) (4 ) — — — (2 ) (4 ) 7 229 — — — 7 229 Balance as of June 30, 2015 $ 19 $ 260 $ 7 $ — $ — $ 26 $ 260 Acquisition-related intangible assets include finite-lived trademarks and acquired customer relationships, which are being amortized using the straight-line method over their estimated useful lives, of 5 and 20 years, respectively. In addition, the acquisition-related intangible assets include an indefinite-lived trademark, which is not amortized. Acquisition-related intangible assets are included in the RJR Tobacco segment. Amortization for the three and six months ended June 30, 2015, was $1 million. As part of the Divestiture, RJR Tobacco divested to Imperial Sub the rights to sell WINSTON and SALEM in U.S. overseas military and U.S. duty-free markets. Details of finite-lived intangible assets were as follows: June 30, 2015 December 31, 2014 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer lists $ 233 $ (1 ) $ 232 $ — $ — $ — Contract manufacturing agreements 151 (137 ) 14 151 (135 ) 16 Trademarks 123 (97 ) 26 114 (95 ) 19 Other intangibles 15 (1 ) 14 15 — 15 $ 522 $ (236 ) $ 286 $ 280 $ (230 ) $ 50 The estimated remaining amortization associated with finite-lived intangible assets is expected to be expensed as follows: Year Amount Remainder of 2015 $ 11 2016 22 2017 22 2018 21 2019 15 Thereafter 195 $ 286 |
Restructuring
Restructuring | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring And Related Activities [Abstract] | |
Restructuring | Note 5 — Restructuring In 2012, RAI announced that it and its subsidiaries, RJR Tobacco and RAI Services Company, had completed a business analysis designed to identify resources to reinvest in their businesses. As a result of this initiative, the total U.S. workforce of RAI and its subsidiaries will decline by a net of approximately 10% upon the completion of the restructuring by the end of 2015. Cash payments related to the restructuring will be substantially complete by the end of 2016. As of June 30, 2015, $129 million had been utilized to date. Accordingly, in the condensed consolidated balance sheet (unaudited) as of June 30, 2015, $18 million was included in other current liabilities and $2 million was included in other noncurrent liabilities. The changes in the restructuring liability were as follows: Employee Severance and Benefits Balance as of December 31, 2013 $ 57 Utilized in 2014 (17 ) Balance as of December 31, 2014 40 Utilized in 2015 (20 ) Balance as of June 30, 2015 $ 20 |
Income Per Share
Income Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Income Per Share | Note 6 — Income Per Share The components of the calculation of income per share were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Income from continuing operations $ 1,928 $ 492 $ 2,317 $ 830 Income from discontinued operations — — — 25 Net income $ 1,928 $ 492 $ 2,317 $ 855 Basic weighted average shares, in thousands 568,177 533,311 549,852 535,037 Effect of dilutive potential shares: Restricted stock units 1,527 1,454 1,748 1,787 Diluted weighted average shares, in thousands 569,704 534,765 551,600 536,824 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 7 — Inventories The major components of inventories were as follows: June 30, 2015 December 31, 2014 Leaf tobacco $ 1,312 $ 1,125 Other raw materials 110 90 Work in process 80 72 Finished products 313 171 Other 39 27 Total 1,854 1,485 LIFO allowance (177 ) (204 ) $ 1,677 $ 1,281 RJR Tobacco performs its annual LIFO inventory valuation at December 31. Interim periods represent an estimate of the expected annual valuation. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 — Income Taxes The provision for income taxes from continuing operations was as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Provision for income taxes from continuing operations $ 2,311 $ 283 $ 2,542 $ 476 Effective tax rate 54.5 % 36.5 % 52.3 % 36.4 % The effective tax rate for the three and six months ended June 30, 2015, as compared with the same prior-year period, was unfavorably impacted by an increase in tax attributable to nondeductible acquisition costs, nondeductible goodwill in the amount of $1,849 million associated with the Divestiture and an increase in uncertain tax positions , The effective tax rate for each period differed from the federal statutory rate of 35% due to the domestic manufacturing deduction of the American Jobs Creation Act of 2004, state income taxes and certain nondeductible items. The audit of the 2010 and 2011 tax years by the Internal Revenue Service was closed on February 27, 2014. A tax benefit of $25 million attributable to a decrease in uncertain tax positions was recorded in discontinued operations for the six months ended June 30, 2014. |
Borrowing Arrangements
Borrowing Arrangements | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Borrowing Arrangements | Note 9 — Borrowing Arrangements Credit Agreement In December 2014, RAI entered into a credit agreement, referred to as the Credit Agreement, with a syndicate of lenders, providing for a five-year, $2 billion senior unsecured revolving credit facility, which may be increased to $2.35 billion at the discretion of the lenders upon the request of RAI. The Credit Agreement replaced RAI’s four-year, $1.35 billion senior unsecured revolving credit facility dated October 8, 2013. Subject to certain conditions, RAI is able to use the revolving credit facility under the Credit Agreement for borrowings and issuances of letters of credit at its option, subject to a $300 million sublimit on the aggregate amount of letters of credit. Issuances of letters of credit reduce availability under such revolving credit facility. The Credit Agreement contains restrictive covenants that, among other things: · limit the ability of RAI and its subsidiaries to (1) pay dividends and repurchase stock, (2) engage in transactions with affiliates, (3) create liens and (4) engage in sale-leaseback transactions involving a Principal Property, as defined in the Credit Agreement; · limit the ability of RAI and its Material Subsidiaries, as defined in the Credit Agreement, to sell or dispose of all or substantially all of their assets and engage in specified mergers or consolidations; and · limit the amount of debt that may be incurred by non-guarantor subsidiaries. The Credit Agreement contains two financial covenants – a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant. Under the Credit Agreement, the consolidated leverage ratio may not exceed: · 3.00 to 1.00 as of the last day of any period of four consecutive fiscal quarters, referred to as a Reference Period, ending prior to the closing of the Merger; · 4.50 to 1.00 for the Reference Periods ending on the last day of the fiscal quarter in which the Merger closes and on the last day of the next two succeeding fiscal quarters; · 4.25 to 1.00 for the Reference Periods ending on the last day of the next three succeeding quarters; · 3.75 to 1.00 for the Reference Periods ending on the last day of the next three succeeding quarters; and · 3.50 to 1.00 thereafter. The Credit Agreement provides that the consolidated interest coverage ratio for any Reference Period ending on the last day of a fiscal quarter may not be less than 4.00 to 1.00. The maturity date of the Credit Agreement is December 18, 2019 (which date may be extended, subject to certain terms and conditions, with the agreement of the requisite lenders, in two separate one-year increments). The Credit Agreement contains customary events of default, including upon a change in control (as defined therein), which could result in the acceleration of all amounts and cancellation of all commitments outstanding under the Credit Agreement. The lenders’ obligations under the Credit Agreement to fund borrowings are subject to the accuracy of RAI’s representations and warranties and the absence of any default, provided, however, that the accuracy of RAI’s representation as to the absence of any material adverse effect (as defined in the Credit Agreement) is not a condition to borrowing for the purpose of refinancing maturing commercial paper. Under the terms of the Credit Agreement, RAI is required to pay a facility fee of between 0.100% and 0.275%, based generally on the ratings of RAI’s senior, unsecured, long-term indebtedness, per annum on the lender commitments in respect of the revolving credit facility thereunder. Borrowings under the Credit Agreement bear interest, at the option of RAI, at a rate equal to an applicable margin based generally on the ratings of RAI’s senior, unsecured, long-term indebtedness, plus: · the alternate base rate, which is the higher of (1) the federal funds effective rate from time to time plus 0.5%, (2) the prime rate and (3) the reserve adjusted eurodollar rate for a one month interest period plus 1%; or · the eurodollar rate, which is the reserve adjusted rate at which eurodollar deposits for one, two, three or six months are offered in the interbank eurodollar market. Overdue principal outstanding under the revolving credit facility under the Credit Agreement bears interest at a rate equal to the rate then in effect with respect to such borrowings, plus 2.0% per annum. Any amount besides principal that becomes overdue bears interest at a rate equal to 2.0% per annum in excess of the rate of interest applicable to base rate loans. Certain of RAI’s subsidiaries, including its Material Subsidiaries, have guaranteed, on an unsecured basis, RAI’s obligations under the Credit Agreement. In the first six months of 2015, RAI borrowed and repaid $1.4 billion Bridge Facility In September 2014, RAI entered into a bridge credit agreement, referred to as the Bridge Facility, with a syndicate of lenders, providing for a 364-day senior unsecured term loan in the aggregate principal amount of up to $9 billion. The Bridge Facility was available for the purpose of financing a portion of the Merger Consideration. As described below in note 10, RAI issued notes, in lieu of borrowing any funds under the Bridge Facility, to finance part of the cash portion of the Merger Consideration. By its terms, the Bridge Facility terminated on June 12, 2015. Amortization and fees related to the Bridge Facility were $17 million and $48 million for the three and six months ended June 30, 2015, respectively, and were included in interest and debt expense. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 10 — Long-Term Debt New Notes On June 12, 2015, RAI completed an underwritten public offering of $9.0 billion aggregate principal amount of its senior notes, consisting of $1.25 billion aggregate principal amount of 2.30% Senior Notes due 2018, $1.25 billion aggregate principal amount of 3.25% Senior Notes due 2020, $1.0 billion aggregate principal amount of 4.00% Senior Notes due 2022, $2.5 billion aggregate principal amount of 4.45% Senior Notes due 2025, $750 million aggregate principal amount of 5.70% Senior Notes due 2035 and $2.25 billion aggregate principal amount of 5.85% Senior Notes due 2045. The foregoing RAI notes are collectively referred to as the New Notes. The proceeds from the offering of the New Notes were used to fund part of the cash portion of the Merger Consideration, the unpaid fees and expenses incurred in connection with the Merger and related transactions contemplated by the Merger Agreement, and the payment of certain Lorillard equity awards and certain change of control payments, also as contemplated by the Merger Agreement. The New Notes are unsecured, and are fully and unconditionally guaranteed on a senior unsecured basis by certain of RAI’s subsidiaries, including its material domestic subsidiaries, which are the same guarantors that guarantee its other outstanding senior notes and its Credit Agreement. Any guarantor that is released from its guarantee under the Credit Agreement, or any replacement or refinancing thereof, also will be released automatically from its guarantee of the New Notes and RAI’s other outstanding notes. RAI may redeem the New Notes in whole or in part at any time at the applicable redemption price. If RAI experiences specific kinds of changes of control, accompanied by a certain credit ratings downgrade of any series of New Notes, RAI must offer to repurchase such series. Lorillard Tobacco Notes Immediately prior to the Merger, Lorillard Tobacco had outstanding an aggregate of $3.5 billion in principal amount of senior unsecured notes in seven series, referred to as the Lorillard Tobacco Notes, all of which were guaranteed by Lorillard. In connection with the Lorillard Tobacco Merger, RJR Tobacco assumed Lorillard Tobacco’s obligations under the Lorillard Tobacco Notes and the indenture governing the Lorillard Tobacco Notes, referred to as the Lorillard Tobacco Indenture, and RJR assumed Lorillard’s obligations as guarantor under the Lorillard Tobacco Notes and the Lorillard Tobacco Indenture. RAI’s long-term debt, net of discounts and including adjustments associated with interest rate swaps of $38 million and $48 million as of June 30, 2015 and December 31, 2014, respectively, is below. RJR Tobacco’s long-term debt, including adjustments associated with interest rate swaps of $59 million and adjustments to fair value of $392 million as of June 30, 2015, is below. June 30, 2015 December 31, 2014 RAI 2.30% notes due 2018 $ 1,250 $ — 3.25% notes due 2020 1,250 — 3.25% notes due 2022 1,099 1,099 4.00% notes due 2022 999 — 4.45% notes due 2025 2,492 — 4.75% notes due 2042 992 992 4.85% notes due 2023 550 550 5.70% notes due 2035 747 — 5.85% notes due 2045 2,238 — 6.15% notes due 2043 547 547 6.75% notes due 2017 738 747 7.25% notes due 2037 448 448 7.75% notes due 2018 249 250 Total RAI long-term debt $ 13,599 $ 4,633 RJR Tobacco 2.300% notes due 2017 $ 505 $ — 3.500% notes due 2016 511 — 3.750% notes due 2023 486 — 6.875% notes due 2020 870 — 7.000% notes due 2041 299 — 8.125% notes due 2019* 954 — 8.125% notes due 2040 326 — Total RJR Tobacco long-term debt $ 3,951 $ — Total long-term debt (less current maturities) $ 17,550 $ 4,633 Current maturities of long-term debt 450 450 $ 18,000 $ 5,083 __________________ * The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. As of June 30, 2015, the maturities of RAI and RJR Tobacco’s notes, net of discounts, were as follows: Year RAI RJR Tobacco Total 2015 $ 450 $ — 450 2016 — 500 500 2017 700 500 1,200 2018 1,500 — 1,500 2019 — 750 750 2020 1,250 750 2,000 2022 and thereafter 10,111 1,000 11,111 $ 14,011 $ 3,500 $ 17,511 Exchange Offers and Consent Solicitations On June 11, 2015, RAI commenced (1) private offers to exchange, referred to as the Exchange Offers, any and all (to the extent held by eligible holders) of the Lorillard Tobacco Notes for a series of new RAI senior notes, referred to as the Exchange Notes, having the same interest payment and maturity dates and interest rate provisions as the corresponding series of Lorillard Tobacco Notes, and (2) related consent solicitations, referred to as the Consent Solicitations, of the eligible holders of each series of Lorillard Tobacco Notes to amend the Lorillard Tobacco Indenture, with such amendments referred to as the Indenture Amendments. The Exchange Offers and Consent Solicitations expired on July 10, 2015, referred to as the Expiration Date. Eligible holders who validly tendered, and did not validly withdraw, their Lorillard Tobacco Notes in the Exchange Offers (and thereby gave, and did not validly revoke, their consents to the Indenture Amendments) received, upon settlement of the Exchange Offers and Consent Solicitations on July 15, 2015, Exchange Notes in the same principal amount as the Lorillard Tobacco Notes tendered therefor plus a consent payment of $2.50 per $1,000 principal amount of Lorillard Tobacco Notes tendered. The following table sets forth, as of the Expiration Date, the principal amounts of each series of Lorillard Tobacco Notes that (1) had been validly tendered and not validly withdrawn (and consents thereby validly given and not validly revoked) and (2) were not tendered in the Exchange Offers: Series of Lorillard Tobacco Notes Principal Amount of Lorillard Tobacco Notes Outstanding Prior to Exchange Offers Principal Amount of Lorillard Tobacco Notes Tendered in Exchange Offers Principal Amount of Lorillard Tobacco Notes Not Tendered in Exchange Offers 2.300% notes due 2017 $ 500 $ 447 $ 53 3.500% notes due 2016 500 415 85 3.750% notes due 2023 500 474 26 6.875% notes due 2020 750 641 109 7.000% notes due 2041 250 240 10 8.125% notes due 2019 750 669 81 8.125% notes due 2040 250 237 13 $ 3,500 $ 3,123 $ 377 RJR Tobacco remains the principal obligor of the Lorillard Tobacco Notes that were not tendered in the Exchange Offers, and currently RAI and RJR are the guarantors of such notes. The Exchange Notes are the principal obligations of RAI and are guaranteed by the same guarantors as RAI’s other outstanding senior notes, including the New Notes. Unlike RAI’s outstanding senior notes, including the New Notes and Exchange Notes, the Lorillard Tobacco Notes (with a limited exception for the 3.75% Lorillard Tobacco Notes due 2023) are not redeemable at the option of the issuer prior to maturity. The Exchange Notes were issued in a private offering exempt from, or not subject to, the registration requirements of the federal securities laws. RAI entered into a registration rights agreement, however, upon the settlement of the Exchange Offers, pursuant to which RAI has agreed, among other things, to offer to exchange the Exchange Notes for materially identical notes which have been registered under the Securities Act of 1933. Upon certain defaults under the registration rights agreement, additional interest will accrue on the Exchange Notes. In addition, RAI received the requisite number of consents to adopt the Indenture Amendments, which became operative on the July 15, 2015, settlement date, with respect to each of the seven series of Lorillard Tobacco Notes. The Indenture Amendments: · eliminated substantially all of the restrictive covenants and a bankruptcy event of default for the issuer and the guarantor of the Lorillard Tobacco Notes under the Lorillard Tobacco Indenture; · eliminated the requirement under the Lorillard Tobacco Indenture that the guarantor of the Lorillard Tobacco Notes continue to provide holders of the Lorillard Tobacco Notes with financial statements and other financial information similar to that provided in periodic reports under the Securities Exchange Act of 1934 when it is not subject to such reporting requirements; and · relieved the issuer of the Lorillard Tobacco Notes of the requirement (if any) under the Lorillard Tobacco Indenture that the issuer offer to repurchase the Lorillard Tobacco Notes upon certain change of control events combined with certain credit ratings events to the extent such change of control events relate to, arise out of or are undertaken in connection with the Merger or the Lorillard Tobacco Merger. On June 12, 2015, RJR Tobacco assumed the interest rate swap agreements associated with the 8.125% Lorillard Tobacco Notes due in 2019. The interest rate swap agreements qualify for hedge accounting and were designated as fair value hedges at the date of the Merger. Under the swap agreements, RJR Tobacco receives a fixed rate settlement and pays a variable rate settlement with the difference recorded in interest expense. For derivatives designated as fair value hedges, which relate entirely to hedges of long-term debt, changes in the fair value of the derivatives are recorded in other assets or other liabilities with an offsetting adjustment to the carrying amount of the hedged debt. Any temporary differences in the change in the fair value of the derivatives relative to the change in the fair value of the hedged debt are recorded in other (income) expense, net. At June 30, 2015, the adjusted carrying amount of the hedged debt was $954 million, and the amount included in other assets and deferred charges included in the condensed consolidated balance sheet (unaudited) was $59 See note 2 for additional information on the Merger and note 3 for additional information on interest rate management. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 — Commitments and Contingencies Tobacco Litigation — General Introduction Various legal proceedings or claims, including litigation claiming that cancer and other diseases, as well as addiction, have resulted from the use of, or exposure to, RAI’s operating subsidiaries’ products, are pending or may be instituted against RJR Tobacco (including as successor by merger of Lorillard Tobacco, as detailed below), American Snuff Co. or their affiliates, including RAI, RJR, Lorillard or indemnitees, including B&W. These pending legal proceedings include claims relating to cigarette products manufactured by RJR Tobacco, Lorillard Tobacco or certain of their affiliates or indemnitees, as well as claims relating to smokeless tobacco products manufactured by American Snuff Co. A discussion of the legal proceedings relating to cigarette products is set forth below under the heading “— Litigation Affecting the Cigarette Industry.” All of the references under that heading to tobacco-related litigation, smoking and health litigation and other similar references are references to legal proceedings relating to cigarette products and are not references to legal proceedings involving smokeless tobacco products, and case numbers under that heading include only cases involving cigarette products. The legal proceedings relating to the smokeless tobacco products manufactured by American Snuff Co. are discussed separately under the heading “— Smokeless Tobacco Litigation” below. In connection with the B&W business combination, RJR Tobacco has agreed to indemnify B&W and its affiliates, including its indirect parent, BAT, against certain liabilities, costs and expenses incurred by B&W or its affiliates arising out of the U.S. cigarette and tobacco business of B&W. As a result of this indemnity, RJR Tobacco has assumed the defense of pending B&W-specific tobacco-related litigation, has paid the judgments and costs related to certain pre-business combination tobacco-related litigation of B&W, and has posted bonds on behalf of B&W, where necessary, in connection with cases decided since the B&W business combination. In connection with the Merger and Divestiture, as applicable, RAI and RJR Tobacco undertook certain indemnification obligations. See “— Other Contingencies – Imperial Sub Indemnity” and “— Other Contingencies – Loews Indemnity” below. On June 12, 2015, Lorillard Tobacco was merged with and into RJR Tobacco, with RJR Tobacco as the surviving entity and Lorillard Tobacco ceasing to exist. As a consequence of the Lorillard Tobacco Merger, RJR Tobacco succeeded to Lorillard Tobacco’s liabilities, and RJR Tobacco assumed the defense of pending Lorillard Tobacco litigation and will be responsible for paying judgments, paying costs, and posting bonds relating to Lorillard Tobacco’s litigation. Although Lorillard Tobacco no longer exists as a result of the Lorillard Tobacco Merger, it will remain as a named party in cases pending on the date of the Lorillard Tobacco Merger until courts grant motions to substitute RJR Tobacco for Lorillard Tobacco or the claims are dismissed. Certain Terms and Phrases Certain terms and phrases used in this disclosure may require some explanation. The term “judgment” or “final judgment” refers to the final decision of the court resolving the dispute and determining the rights and obligations of the parties. At the trial court level, for example, a final judgment generally is entered by the court after a jury verdict and after post-verdict motions have been decided. In most cases, the losing party can appeal a verdict only after a final judgment has been entered by the trial court. The term “damages” refers to the amount of money sought by a plaintiff in a complaint, or awarded to a party by a jury or, in some cases, by a judge. “Compensatory damages” are awarded to compensate the prevailing party for actual losses suffered, if liability is proved. In cases in which there is a finding that a defendant has acted willfully, maliciously or fraudulently, generally based on a higher burden of proof than is required for a finding of liability for compensatory damages, a plaintiff also may be awarded “punitive damages.” Although damages may be awarded at the trial court stage, a losing party generally may be protected from paying any damages until all appellate avenues have been exhausted by posting a supersedeas bond. The amount of such a bond is governed by the law of the relevant jurisdiction and generally is set at the amount of damages plus some measure of statutory interest, modified at the discretion of the appropriate court or subject to limits set by court or statute. The term “per curiam” refers to an opinion entered by a court. In most cases, it is used to indicate that the opinion entered is a brief announcement of the court’s decision and is not accompanied by a written opinion. The term “settlement” refers to certain types of cases in which cigarette manufacturers, including RJR Tobacco, B&W and Lorillard Tobacco, have agreed to resolve disputes with certain plaintiffs without resolving the case through trial. The principal terms of certain settlements entered into by RJR Tobacco, B&W and Lorillard Tobacco are explained below under “— Accounting for Tobacco-Related Litigation Contingencies.” Theories of Recovery The plaintiffs seek recovery on a variety of legal theories, including negligence, strict liability in tort, design defect, failure to warn, fraud, misrepresentation, unfair trade practices, conspiracy, medical monitoring and violations of state and federal antitrust laws. In certain of these cases, the plaintiffs claim that cigarette smoking exacerbated injuries caused by exposure to asbestos or, in the case of certain claims asserted against Lorillard Tobacco, that they were injured by exposure to asbestos-containing filters used in one cigarette brand for roughly four years before 1957. The plaintiffs seek various forms of relief, including compensatory and, where available, punitive damages, treble or multiple damages and statutory damages and penalties, creation of medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and other equitable relief. Although alleged damages often are not determinable from a complaint, and the law governing the pleading and calculation of damages varies from jurisdiction to jurisdiction, compensatory and punitive damages have been specifically pleaded in a number of cases, sometimes in amounts ranging into the hundreds of millions and even billions of dollars. Defenses The defenses raised by RJR Tobacco, Lorillard Tobacco, American Snuff Co. and their affiliates and indemnitees include, where applicable and otherwise appropriate, preemption by the Federal Cigarette Labeling and Advertising Act of some or all claims arising after 1969, or by the Comprehensive Smokeless Tobacco Health Education Act for claims arising after 1986, the lack of any defect in the product, assumption of the risk, contributory or comparative fault, lack of proximate cause, remoteness, lack of standing and statutes of limitations or repose. RAI, RJR and Lorillard have asserted additional defenses, including jurisdictional defenses, in many of the cases in which they are named. Accounting for Tobacco-Related Litigation Contingencies In accordance with GAAP, RAI and its subsidiaries, including RJR Tobacco, American Snuff Co. and SFNTC, as applicable, record any loss concerning litigation at such time as an unfavorable outcome becomes probable and the amount can be reasonably estimated on an individual case-by-case basis. For the reasons set forth below, RAI’s management continues to conclude that the loss of any particular pending smoking and health tobacco litigation claim against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees, or the loss of any particular claim concerning the use of smokeless tobacco products against American Snuff Co., when viewed on an individual basis, is not probable, except for the Engle RJR Tobacco and its affiliates believe that they have valid defenses to the smoking and health tobacco litigation claims against them, as well as valid bases for appeal of adverse verdicts against them. RAI, Lorillard, RJR Tobacco, Lorillard Tobacco and their affiliates and indemnitees have, through their counsel, filed pleadings and memoranda in pending smoking and health tobacco litigation that set forth and discuss a number of grounds and defenses that they and their counsel believe have a valid basis in law and fact. With the exception of the Engle Engle RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015 contains accruals for the following Engle Hiott Starr-Blundell Clayton Ward Hallgren Cohen Sikes Thibault Buonomo Mrozek Tullo Koballa Webb Brown U.S. Department of Justice Engle It is the policy of RJR Tobacco and its affiliates to defend tobacco-related litigation claims vigorously; generally, RJR Tobacco and its affiliates and indemnitees do not settle such claims. However, RJR Tobacco and its affiliates may enter into settlement discussions in some cases, if they believe it is in their best interests to do so. Exceptions to this general approach include actions taken pursuant to “offer of judgment” statutes, as described below in “ — Litigation Affecting the Cigarette Industry—Overview,” and Filter Cases, as described below in “— Litigation Affecting the Cigarette Industry—Filter Cases,” as well as other historical examples discussed below. With respect to smoking and health tobacco litigation claims, the only significant settlements reached by RJR Tobacco and B&W involved: • the State Settlement Agreements and the funding by various tobacco companies of a $5.2 billion trust fund contemplated by the MSA to benefit tobacco growers; • the original Broin Broin II · most of the Engle The circumstances surrounding the State Settlement Agreements and the funding of a trust fund to benefit the tobacco growers are readily distinguishable from the current categories of smoking and health cases involving RJR Tobacco, Lorillard Tobacco or their affiliates and indemnitees. The claims underlying the State Settlement Agreements were brought on behalf of the states to recover funds paid for health care and medical and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. The State Settlement Agreements settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and contain releases of various additional present and future claims. In accordance with the MSA, various tobacco companies agreed to fund a $5.2 billion trust fund to be used to address the possible adverse economic impact of the MSA on tobacco growers. A discussion of the State Settlement Agreements, and a table depicting the related payment schedule, is set forth below under “— Litigation Affecting the Cigarette Industry — Health-Care Cost Recovery Cases.” The states were a unique set of plaintiffs and are not involved in any of the smoking and health cases remaining against RJR Tobacco, Lorillard Tobacco or their affiliates and indemnitees. Although RJR Tobacco, Lorillard Tobacco and certain of their affiliates and indemnitees continue to be defendants in health-care cost recovery cases similar in theory to the state cases but involving other plaintiffs, such as Native American tribes and foreign governments, the vast majority of such cases have been dismissed on legal grounds. RJR Tobacco and its affiliates, including RAI, believe that the same legal principles that have resulted in dismissal of health-care cost recovery cases either at the trial court level or on appeal should compel dismissal of the similar pending cases. As with claims that were resolved by the State Settlement Agreements, the other cases settled by RJR Tobacco can be distinguished from existing cases pending against RJR Tobacco, Lorillard Tobacco and their affiliates and indemnitees. The original Broin Broin II The federal Engle Engle Engle Engle Engle Engle Engle In 2010, RJR Tobacco entered into a comprehensive agreement with the Canadian federal, provincial and territorial governments, which resolved all civil claims related to the movement of contraband tobacco products in Canada during the period 1985 through 1999 that the Canadian governments could assert against RJR Tobacco and its affiliates. These claims were separate from any smoking and health tobacco litigation. Also, in 2004, RJR Tobacco and B&W separately settled the antitrust case DeLoach v. Philip Morris Cos., Inc., DeLoach Finally, as discussed under “— Litigation Affecting the Cigarette Industry — State Settlement Agreements—Enforcement and Validity; Adjustments,” RJR Tobacco, B&W and Lorillard Tobacco each has settled certain cases brought by states concerning the enforcement of State Settlement Agreements. Despite legal defenses believed to be valid, these cases were settled to avoid further contentious litigation with the states involved. These enforcement actions involve alleged breaches of State Settlement Agreements based on specific actions taken by particular defendants. Accordingly, any future enforcement actions involving State Settlement Agreements will be reviewed by RJR Tobacco on the merits and should not be affected by the settlement of prior enforcement cases. American Snuff Co. also believes that it has valid defenses to the smokeless tobacco products litigation against it. American Snuff Co. asserted and will continue to assert some or all of these defenses in each case at the time and in the manner deemed appropriate by American Snuff Co. and its counsel. No verdict or judgment has been returned or entered against American Snuff Co. on any claim for personal injuries allegedly resulting from the use of smokeless tobacco products. American Snuff Co. intends to defend vigorously all smokeless tobacco litigation claims asserted against it. No liability for pending smokeless tobacco litigation was recorded in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015. Cautionary Statement Even though RAI’s management continues to conclude that the loss of particular pending smoking and health tobacco litigation claims against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees, or the loss of any particular case concerning the use of smokeless tobacco against American Snuff Co., when viewed on an individual case-by-case basis, is not probable or estimable (except for the Engle Although RJR Tobacco believes that it has valid bases for appeals of adverse verdicts in its pending cases, and RJR Tobacco, Lorillard and RAI believe they have valid defenses to all actions, and intend to defend them vigorously as described above, it is possible that there could be further adverse developments in pending cases, and that additional cases could be decided unfavorably against RAI, RJR Tobacco, Lorillard, Lorillard Tobacco or their affiliates or indemnitees. Determinations of liability or adverse rulings in such cases or in similar cases involving other cigarette manufacturers as defendants, even if such judgments are not final, could have a material adverse effect on the litigation against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees and could encourage the commencement of additional tobacco-related litigation. RJR Tobacco and its affiliates also may enter into settlement discussions in some cases, if they believe it is in their best interests to do so. In addition, a number of political, legislative, regulatory and other developments relating to the tobacco industry and cigarette smoking have received wide media attention. These developments may negatively affect the outcomes of tobacco-related legal actions and encourage the commencement of additional similar litigation. Although it is impossible to predict the outcome of such events on pending litigation and the rate new lawsuits are filed against RJR Tobacco or its affiliates or indemnitees, a significant increase in litigation or in adverse outcomes for tobacco defendants, or difficulties in obtaining the bonding required to stay execution of judgments on appeal, could have a material adverse effect on any or all of these entities. Moreover, notwithstanding the quality of defenses available to RJR Tobacco, Lorillard Tobacco and their affiliates and indemnitees in litigation matters, it is possible that RAI’s results of operations, cash flows or financial position could be materially adversely affected by the ultimate outcome of certain pending litigation matters against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees. Similarly, smokeless tobacco litigation is subject to many uncertainties. Notwithstanding the quality of defenses available to American Snuff Co., it is possible that RAI’s results of operations, cash flows or financial position could be materially adversely affected by the ultimate outcome of certain pending litigation matters against American Snuff Co. Litigation Affecting the Cigarette Industry Overview Introduction. In connection with the B&W business combination, RJR Tobacco agreed to indemnify B&W and its affiliates against, among other things, certain litigation liabilities, costs and expenses incurred by B&W or its affiliates arising out of the U.S. cigarette and tobacco business of B&W. As a result of the Lorillard Tobacco Merger, Lorillard Tobacco was merged into RJR Tobacco with RJR Tobacco the surviving entity, Lorillard Tobacco ceasing to exist, and RJR Tobacco succeeding to Lorillard Tobacco’s liabilities, including Lorillard Tobacco’s litigation liabilities, costs and expenses. Accordingly, the cases discussed below include cases brought against RJR Tobacco, Lorillard Tobacco and their affiliates and indemnitees, including RAI, RJR, B&W and Lorillard. During the second quarter of 2015, 26 tobacco-related cases, including two Engle Engle Broin II The following table lists the categories of the U.S. tobacco-related cases pending against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees as of June 30, 2015, compared with the number of cases pending against RJR Tobacco or its affiliates or indemnitees as of March 31, 2015, as reported in RAI’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015, filed with the SEC on April 20, 2015, and a cross-reference to the discussion of each case type. Case Type RJR Tobacco’s U.S. Case Numbers as of June 30, 2015*** Change in Number of Cases Since March 31, 2015 Increase/(Decrease) Page Reference Individual Smoking and Health 112 12 33 West Virginia IPIC (Number of Plaintiffs)* 1 (approx. 567) No change 35 Engle Progeny (Number of Plaintiffs)** 3,580 (58) (91) 35 Broin 2,545 (10) 47 Class Action 21 1 48 Filter Cases 67 67 51 Health-Care Cost Recovery 2 No change 51 State Settlement Agreements—Enforcement and Validity; Adjustments 28 No change 57 Other Litigation and Developments 14 3 62 * Includes as one case the approximately 567 cases pending as a consolidated action In Re: Tobacco Litigation Individual Personal Injury Cases West Virginia IPIC West Virginia IPIC ** The Engle Engle *** RJR Tobacco's case number increased as a result of the Lorillard Tobacco Merger as follows: Individual Smoking and Health - 6; Class Action - 1; West Virginia IPIC Engle The following cases against RJR Tobacco, B&W and Lorillard Tobacco have attracted significant attention: the Florida state court class-action case, Engle v. R. J. Reynolds Tobacco Co Engle In 2000, a jury in Engle v. Liggett Group Engle In the wake of Engle Engle Engle Engle Engle During the first quarter of 2015, RJR Tobacco and Lorillard Tobacco, together with Philip Morris USA Inc., tentatively settled virtually all of the Engle pro se At the beginning of the Engle Engle Engle Engle Hess v. Philip Morris USA Inc Russo v. Philip Morris USA Inc Engle Graham v. R. J. Reynolds Tobacco Co Engle Graham en banc Thirty-four Engle Koballa Webb Brown Hiott, Starr-Blundell, Clayton, Ward, Hallgren, Cohen, Sikes, Thibault, Buonomo, Mrozek Tullo Hiott, Starr-Blundell, Clayton, Cohen, Buonomo, Hallgren, Sikes, Thibault Plaintiff Case Name RJR Tobacco Allocation of Fault Lorillard Tobacco Allocation of Fault Compensatory Damages (as adjusted) (1) Punitive Damages Appeal Status Hiott 40% — $ 730,000 $ — Notice to invoke jurisdiction of Florida Supreme Court pending Starr-Blundell 10% — 50,000 — Notice to invoke jurisdiction of Florida Supreme Court pending; stayed pending resolution of Soffer v. R. J. Reynolds Tobacco Co. Clayton 10% — 60,000 — Pending – First DCA Cohen 33.3% — 3,330,000 10,000,000 Remanded for partial new trial; notice to invoke jurisdiction of Florida Supreme Court pending Buonomo 77.5% — 4,060,000 25,000,000 Remanded for new trial; notice to invoke jurisdiction of Florida Supreme Court pending; appeal of reinstated punitive damages award pending in Fourth DCA Hallgren 25% — 500,000 750,000 Notice to invoke jurisdiction of Florida Supreme Court pending; stayed pending resolution of Soffer v. R. J. Reynolds Tobacco Co. Sikes 51% — 3,520,000 2,000,000 Notice to invoke jurisdiction of Florida Supreme Court pending Thibault 70% — 1,750,000 1,275,000 First DCA affirmed the judgment, per curiam; notice to invoke the discretionary jurisdiction of Florida Supreme Court pending Totals $ 14,000,000 $ 39,025,000 (1) The following chart reflects verdicts in all other individual Engle Plaintiff Case Name RJR Tobacco Allocation of Fault Lorillard Tobacco Allocation of Fault Compensatory Damages (as adjusted) (1) Punitive Damages Appeal Status Putney 30% — — — Reversed and remanded for further proceedings; notice to invoke jurisdiction of Florida Supreme Court pending Andy Allen 24% — 2,475,000 7,756,000 Reversed and remanded for new trial; new trial completed on November 26, 2014; final judgment has not been entered Jewett 20% 10% — — Reversed and remanded for new trial; new trial has not been scheduled Soffer 40% — 2,000,000 — Pending – Florida Supreme Court Ciccone 30% — 1,000,000 — Pending – Florida Supreme Court Calloway 27% 18% 16,100,000 (2) 29,850,000 Pending – Fourth DCA Hancock 5% — 700 — Fourth DCA affirmed, per curiam James Smith 55% — 600,000 (2) 20,000 Pending – Eleventh Circuit Ballard 55% — 5,000,000 — Notice to invoke jurisdiction of Florida Supreme Court pending Evers 60% 9% 2,036,000 — Punitive damages of $12.4 million set aside by trial court; pending – Second DCA Schoeff 75% — 7,875,000 30,000,000 Pending – Fourth DCA Marotta 58% — 3,480,000 — Pending – Fourth DCA Searcy 30% — 1,000,000 (2) 1,670,000 Pending – Eleventh Circuit Earl Graham 20% — 550,000 — Eleventh Circuit held that federal law impliedly preempts claims for strict liability and negligence based on the defect and negligence findings from Engle Skolnick 30% — — — Fourth DCA set aside judgment and ordered a partial new trial Grossman 75% — 15,350,000 (2) 22,500,000 Pending – Fourth DCA Gafney 33% 33% 3,828,000 — Pending – Fourth DCA Cheeley 50% — 1,500,000 2,000,000 Pending – Fourth DCA Goveia 35% — 297,500 2,250,000 Fifth DCA affirmed per curiam Bowden 30% — 1,500,000 — Pending – First DCA Burkhart 25% 10% 3,500,000 (2) 1,750,000 Pending – Eleventh Circuit Bakst 75% — 4,504,000 14,000,000 Pending – Fourth DCA Robinson 70.5% — 16,900,000 16,900,000 Pending – First DCA Harris 15% 10% 1,223,500 (2) — Post-trial motions are pending (3) Wilcox 70% — 4,900,000 8,500,000 Pending – Third DCA Irimi 14.5% 14.5% — — Defendants' motion for new trial granted; pending - Fourth DCA Hubbird 50% — 3,000,000 (2) 25,000,000 Pending – Third DCA Lourie 3% 7% 137,000 — Pending – Second DCA Kerrivan 31% — 6,046,660 (2) 9,600,000 Post-trial motions are pending (3) Taylor 58% — 4,116,000 (2) 521,000 Pending – First DCA Schleider 70% — 14,700,000 (2) — Pending – Third DCA Perrotto 20% 6% 1,063,000 — Post-trial motions are pending (3) Ellen Gray 50% — 3,000,000 — Post-trial motions are pending (3) Sowers 50% — 2,130,000 — Post-trial motions are pending (3) Zamboni 30% — 102,000 — Final judgment has not been entered Pollari 42.5% — 5,000,000 (2) 1,500,000 Post-trial motions are pending (3) Gore 23% — 1,000,000 — Final judgment has not been entered Ryan 65% — 21,500,000 25,000,000 Post-trial motions are pending (3) Hardin 13% — 100,880 — Post-trial motions are pending (3) McCoy 25% 20% 1,038,400 (4) 6,000,000 Final judgment has not been entered Totals $ 158,553,640 $ 204,817,000 (1) (2) (3) (4) As of June 30, 2015, judgments in favor of the Engle Engle Should RJR Tobacco or Lorillard Tobacco not prevail in any particular individual Engle Engle Engle In the U.S. Department of Justice For a detailed description of these cases, see “— Engle Engle In November 1998, the major U.S. cigarette manufacturers, including RJR Tobacco, B&W and Lorillard Tobacco, entered into the MSA with 46 U.S. states, Washington, D.C. and certain U.S. territories and possessions. These cigarette manufacturers previously settled four other cases, brought on behalf of Mississippi, Florida, Texas and Minnesota, by separate agreements with each state. These State Settlement Agreements: • settled all health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions; • released the major U.S. cigarette manufacturers from various additional present and potential future claims; • imposed future payment obligations in perpetuity on RJR Tobacco, B&W and other major U.S. cigarette manufacturers; and • placed significant restrictions on their ability to market and sell cigarettes and smokeless tobacco products. Payments under the State Settlement Agreements are subject to various adjustments for, among other things, the volume of cigarettes sold, relevant market share and inflation. See “— Health-Care Cost Recovery Cases — State Settlement Agreements” below for a detailed discussion of the State Settlement Agreements, including RAI’s operating subsidiaries’ monetary obligations under these agreements. RJR Tobacco records the allocation of settlement charges as products are shipped. Scheduled Trials. Trial schedules are subject to change, and many cases are dismissed before trial. It is likely that RJR Tobacco, Lorillard Tobacco and other cigarette manufacturers will have an increased number of tobacco-related trials in 2015. There are 33 cases, exclusive of Progeny cases, scheduled for trial as of June 30, 2015 through June 30, 2016, for RJR Tobacco, Lorillard Tobacco or their affiliates and indemnitees: 2 non-smoking and health cases, one class action, four individual smoking and health cases and 26 filter cases. There are approximately 85 Progeny cases against RJR Tobacco B&W and/or Lorillard Tobacco set for trial through June 30, 2016, but it is not known how many of these cases will actually be tried. Trial Results. From January 1, 2012 through June 30, 2015, 123 smoking and health, Progeny and health-care cost recovery cases in which RJR Tobacco, B&W and/or Lorillard Tobacco were defendants were tried, including 10 trials for cases where mistrials were declared in the original proceedings. Verdicts in favor of RJR Tobacco, B&W and Lorillard Tobacco and, in some cases, RJR Tobacco, B&W, Lorillard Tobacco and/or other defendants, were returned in 59 cases, including 18 mistrials, tried in Florida (58) and West Virginia (1). Verdicts in favor of the plaintiffs were returned in 57 cases tried in Florida, one in New York, and one in California. Three cases in Florida were dismissed during trial, but one of those cases continued against Lorillard Tobacco and resulted in a plaintiff verdict. One case in Florida was a retrial only as to the amount of damages. In another case in Florida, the jury entered a partial verdict that did not include compensatory or punitive damages, and post-trial motions are pending. In the second quarter of 2015, five Engle · In Ryan v. R. J. Reynolds Tobacco Co Hess v. Philip Morris USA Inc. · In Russo v. Philip Morris USA Inc. · In Dupre v. Philip Morris USA Inc. · In Ethel Gray v. R. J. Reynolds Tobacco Co. · In Hardin v. R. J. Reynolds Tobacco Co. In addition, since the end of the second quarter of 2015, a decision was entered in the following Engle · In McCoy v. R. J. Reynolds Tobacco Co. For a detailed description of the above-described cases, see “— Engle Engle In the second quarter of 2015, one non- Engle · In Larkin v. R. J. Reynolds Tobacco Co. The following chart reflects the verdicts in the non- Engle Engle Engle Date of Verdict Case Name/Type Jurisdiction Verdict August 17, 2006 United States v. Philip Morris USA, Inc. [Governmental Health-Care Cost Recovery] U.S. District Court, District of Columbia (Washington, DC) RJR Tobacco, B&W and Lorillard Tobacco were found liable for civil RICO claims; were enjoined from using certain brand descriptors and from making certain misrepresentations; and were ordered to make corrective communications on five subjects, including smoking and health and addiction, to reimburse the U.S. Department of Justice appropriate costs associated with the lawsuit, and to maintain document web sites. May 26, 2010 Izzarelli v. R. J. Reynolds Tobacco Co. [Individual] U.S. District Court, District of Connecticut, (Bridgeport, CT) $13.9 million in compensatory damages; 58% of fault assigned to RJR Tobacco, which reduced the award to $8.08 million against RJR Tobacco; $3.97 million in punitive damages. September 13, 2013 DeLisle v. A. W. Chesterton Co. [Filter] Circuit Court, Broward County, (Ft. Lauderdale, FL) $8 million in compensatory damages; 44% of fault assigned to Lorillard Tobacco. July 30, 2014 Major v. Lorillard Tobacco Co. [Individual] Superior Court, Los Angeles County, (Los Angeles, CA) $17.74 million in compensatory damages; 17% of fault assigned to Lorillard Tobacco. July 8, 2015 Larkin v. R. J. Reynolds Tobacco Co. [Individual] Circuit Court, Miami-Dade County, (Miami, FL) $4.96 million in compensatory damages; 62% of fault assigned to RJR Tobacco; $8.5 million in punitive damages. Individual Smoking and Health Cases As of June 30, 2015, 112 individual cases were pending in the United States against RJR Tobacco, B&W (as RJR Tobacco’s indemnitee), Lorillard Tobacco or all three. This category of cases includes smoking and health cases alleging personal injury brought by or on behalf of individual plaintiffs, but does not include the Broin II, Engle West Virginia IPIC Below is a description of the non- Engle On May 26, 2010, the jury returned a verdict in favor of the plaintiff in Izzarelli v. R. J. Reynolds Tobacco Co On June 19, 2013, in Whitney v. R. J. Reynolds Tobacco Co. en banc On July 30, 2014, in Major v. Lorillard Tobacco Co. On July 8, 2015, in Larkin v. R. J. Reynolds Tobacco Co. West Virginia IPIC In began in 1999, in West Virginia state court, as a series of roughly 1,200 individual plaintiff cases making claims with respect to cigarettes manufactured by Philip Morris, Lorillard Tobacco, RJR Tobacco, B&W and The American Tobacco Company The cases were consolidated for a Phase I trial on various defense conduct issues, to be followed in Phase II by individual trials of any claims left standing. Over the years, approximately 600 individual plaintiff claims were dismissed for failure to comply with the case management order, leaving 567 individual cases pending as of April 2013. On April 15, 2013, the Phase I jury trial began and ended with a virtually complete defense verdict on May 15, 2013. The jury found that cigarettes were not defectively designed, were not defective due to a failure to warn prior to July 1, 1969, that defendants were not negligent, did not breach warranties and did not engage in conduct which would warrant punitive damages. The only claim remaining after the verdict was the jury’s finding that all ventilated filter cigarettes manufactured and sold between 1964 and July 1, 1969 were defective for a failure to instruct. In November 2014, the West Virginia Supreme Court affirmed the verdict, issuing an opinion without oral argument. In January 2015, the plaintiffs’ petition for rehearing was denied. On June 8, 2015, the plaintiffs’ petition for writ of certiorari to the U.S. Supreme Court was denied. Also on June 8, 2015, the trial court ruled in favor of the defendants’ contention that there are only 30 plaintiffs remaining who arguably claim to have smoked a ventilated filter cigarette during the relevant period. In addition to the foregoing claims, various plaintiffs in 1999 and 2000 asserted claims against retailers and distributors. Those claims were severed and stayed pending the outcome of Phase I. Also, 41 p |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Note 12 — Shareholders’ Equity Common Stock Paid-In Retained Earnings (Accumulated Deficit) Accumulated Total Shareholders’ Equity Balance as of December 31, 2014 $ — $ 6,200 $ (1,314 ) $ (364 ) $ 4,522 Net income — — 2,317 — 2,317 Retirement benefits, net of $16 million tax benefit — — — (26 ) (26 ) Amortization of realized loss on hedging instruments, net of tax — — — 1 1 Cumulative translation adjustment and other, net of $10 million tax benefit — — — (17 ) (17 ) Dividends - $1.34 per share — — (718 ) — (718 ) Issuance of additional shares as Merger Consideration — 7,555 — — 7,555 Issuance of additional shares for BAT Share Purchase — 4,673 — — 4,673 Common stock repurchased — (40 ) — — (40 ) Equity incentive award plan and stock-based compensation — 44 — — 44 Excess tax benefit on stock-based compensation plans — 15 — — 15 Balance as of June 30, 2015 $ — $ 18,447 $ 285 $ (406 ) $ 18,326 Common Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance as of December 31, 2013 $ — $ 6,571 $ (1,348 ) $ (56 ) $ 5,167 Net income — — 855 — 855 Unrealized gain on long-term investments, net of $1 million tax expense — — — 2 2 Amortization of realized loss on hedging instruments, net of tax — — — 1 1 Cumulative translation adjustment and other, net of $1 million tax benefit — — — (2 ) (2 ) Dividends - $1.34 per share — — (719 ) — (719 ) Common stock repurchased — (440 ) — — (440 ) Equity incentive award plan and stock-based compensation — 21 — — 21 Excess tax benefit on stock-based compensation plans — 10 — — 10 Balance as of June 30, 2014 $ — $ 6,162 $ (1,212 ) $ (55 ) $ 4,895 Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2015, were as follows: Retirement Benefits Unrealized Realized Loss on Hedging Instruments Cumulative Translation Adjustment and Other Total Balance as of December 31, 2014 $ (294 ) $ (14 ) $ (12 ) $ (44 ) $ (364 ) Other comprehensive income (loss) before reclassifications (13 ) — — (17 ) (30 ) Amounts reclassified from accumulated other comprehensive income (loss) (13 ) — 1 — (12 ) Net current-period other comprehensive income (loss) (26 ) — 1 (17 ) (42 ) Balance as of June 30, 2015 $ (320 ) $ (14 ) $ (11 ) $ (61 ) $ (406 ) The components of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2014, were as follows: Retirement Benefits Unrealized Realized Loss on Hedging Instruments Cumulative Translation Adjustment and Other Total Balance as of December 31, 2013 $ (17 ) $ (16 ) $ (13 ) $ (10 ) $ (56 ) Other comprehensive income (loss) before reclassifications 12 2 — (2 ) 12 Amounts reclassified from accumulated other comprehensive income (loss) (12 ) — 1 — (11 ) Net current-period other comprehensive income (loss) — 2 1 (2 ) 1 Balance as of June 30, 2014 $ (17 ) $ (14 ) $ (12 ) $ (12 ) $ (55 ) Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidated statement of income (unaudited) for the three months ended June 30, were as follows: Components Amounts Reclassified Affected Line Item 2015 2014 Defined benefit pension and postretirement plans: Amortization of prior service costs $ (6 ) $ (5 ) Cost of products sold Amortization of prior service costs (4 ) (4 ) Selling, general and administrative expenses (10 ) (9 ) Deferred taxes 3 3 Provision for income taxes Net of tax $ (7 ) $ (6 ) Loss on hedging instruments: Amortization of realized loss $ 1 $ 1 Interest and debt expense Deferred taxes — — Provision for income taxes Net of tax $ 1 $ 1 Total reclassifications $ (6 ) $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidated statement of income (unaudited) for the six months ended June 30, were as follows: Components Amounts Reclassified Affected Line Item 2015 2014 Defined benefit pension and postretirement plans: Amortization of prior service costs $ (11 ) $ (10 ) Cost of products sold Amortization of prior service costs (9 ) (9 ) Selling, general and administrative expenses (20 ) (19 ) Deferred taxes 7 7 Provision for income taxes Net of tax $ (13 ) $ (12 ) Net income Loss on hedging instruments: Amortization of realized loss $ 1 $ 1 Interest and debt expense Deferred taxes — — Provision for income taxes Net of tax $ 1 $ 1 Total reclassifications $ (12 ) $ (11 ) Net income Stock Split On July 27, 2015, RAI’s board of directors approved a two-for-one stock split of RAI’s common stock, in the form of a special 100 percent stock dividend, to be issued on August 31, 2015, to shareholders of record on August 17, 2015. Shareholders of record will receive one additional share of RAI common stock for each share owned. After the stock split, there will be approximately 1.4 billion shares outstanding of RAI common stock. Share Repurchases and Other Restricted stock units granted in March 2012 and May 2014 under the Amended and Restated 2009 Omnibus Incentive Compensation Plan, referred to as the Omnibus Plan, vested in March 2015 and May 2015, respectively, and were settled with the issuance of 1,377,554 shares of RAI common stock. In addition, during the first six months of 2015, at a cost of $40 million, RAI purchased 529,074 shares of RAI common stock that were forfeited and cancelled with respect to tax liabilities associated with restricted stock units vesting under the Omnibus Plan. On February 5, 2015, and May 7, 2015, RAI’s board of directors declared a quarterly cash dividend of $0.67 per common share, or $2.68 on an annualized basis, to shareholders of record as of March 10, 2015 and June 10, 2015, respectively. |
Stock Plans
Stock Plans | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Plans | Note 13 — Stock Plans In February 2015, the board of directors of RAI approved a grant to key employees of RAI and its subsidiaries, effective March 2, 2015, of 693,090 nonvested restricted stock units under the Omnibus Plan. The restricted stock units generally will vest on March 2, 2018. Upon settlement, each grantee will receive a number of shares of RAI’s common stock equal to the product of the number of vested units and a percentage up to 150% based on the average RAI annual incentive award plan score over the three-year period ending December 31, 2017. As an equity-based grant, compensation expense relating to the February 2015 grant under the Omnibus Plan will take into account the vesting period lapsed and will be calculated based on the per share closing price of RAI common stock on the date of grant, or $75.88. Following the vesting date, each grantee will receive a cash dividend equivalent payment equal to the aggregate amount of dividends per share paid on shares of RAI common stock during the performance period multiplied by the actual number of restricted stock units earned by the grantee. In May 2015, the board of directors of RAI approved a grant to a key employee of RAI, effective May 7, 2015, of 108,652 nonvested restricted stock units under the Omnibus Plan. The restricted stock units generally will vest on May 7, 2016. Upon settlement, the grantee will receive a number of shares of RAI’s common stock equal to the product of the number of vested units and a percentage up to 200% based on the overall performance of RAI and its subsidiaries during the one-year performance period beginning May 1, 2015, and ending April 30, 2016, against RAI’s 2015 annual incentive award program metrics and other performance factors. As an equity-based grant, compensation expense relating to the May 2015 grant under the Omnibus Plan will take into account the vesting period lapsed and will be calculated based on the per share closing price of RAI common stock as of the end of each quarter, which was $74.66 as of June 30, 2015. Following the vesting date, the grantee will receive a cash dividend equivalent payment equal to the aggregate amount of dividends per share paid on shares of RAI common stock during the performance period multiplied by the actual number of restricted stock units earned by the grantee. If RAI fails to pay its shareholders cumulative dividends of at least $2.68 per share for the one-year performance period ending April 30, 2016, then the award will be reduced by an amount equal to three times the percentage of the dividend underpayment, up to a maximum reduction of 50%. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Note 14 — Segment Information RAI’s reportable operating segments are RJR Tobacco, American Snuff and Santa Fe. The RJR Tobacco segment consists principally of the primary operations of R. J. Reynolds Tobacco Company, the second largest tobacco company in the United States. The American Snuff segment consists of the primary operations of American Snuff Co. The Santa Fe segment consists of the domestic operations of SFNTC. Included in All Other, among other RAI subsidiaries, are RJR Vapor, Niconovum USA, Inc., Niconovum AB, SFRTI and various foreign subsidiaries affiliated with SFRTI. The segments were identified based on how RAI’s chief operating decision maker allocates resources and assesses performance. Certain of RAI’s operating subsidiaries have entered into intercompany agreements for products or services with other subsidiaries. As a result, certain activities of an operating subsidiary may be included in a different segment of RAI. RJR Tobacco is RAI’s largest reportable operating segment, and its brands include three of the best-selling cigarettes in the United States: NEWPORT, CAMEL and PALL MALL. These brands, and its other brands, including DORAL, MISTY, and CAPRI, are manufactured in a variety of styles and marketed in the United States. As part of its total tobacco strategy, RJR Tobacco offers a smoke-free tobacco product, CAMEL SNUS. RJR Tobacco manages contract manufacturing of cigarette and tobacco products through arrangements with BAT affiliates, and manages the export of tobacco products to certain U.S. territories, U.S. duty-free shops and U.S. overseas military bases. RJR Tobacco also manages the super-premium cigarette brands, DUNHILL and STATE EXPRESS 555, which are licensed from BAT. American Snuff is the second largest smokeless tobacco products manufacturer in the United States. American Snuff’s primary brands include its largest selling moist snuff brands, GRIZZLY and KODIAK. Santa Fe manufactures and markets super-premium cigarettes and other tobacco products under the NATURAL AMERICAN SPIRIT brand in the United States. RJR Vapor is a manufacturer and marketer of digital vapor cigarettes under the VUSE brand name in the United States. Niconovum USA, Inc. and Niconovum AB are marketers of nicotine replacement therapy products in the United States and Sweden, respectively, under the ZONNIC brand name. SFRTI and various foreign subsidiaries affiliated with SFRTI distribute the NATURAL AMERICAN SPIRIT brand outside of the United States. Intersegment revenues and items below the operating income line of the condensed consolidated statements of income (unaudited) are not presented by segment, since they are excluded from the measure of segment profitability reviewed by RAI’s chief operating decision maker. Additionally, information about total assets by segment is not reviewed by RAI’s chief operating decision maker and therefore is not disclosed. Segment Data: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales: RJR Tobacco $ 1,876 $ 1,736 $ 3,484 $ 3,299 American Snuff 218 195 419 379 Santa Fe 218 168 389 303 All Other 91 63 168 116 Consolidated net sales $ 2,403 $ 2,162 $ 4,460 $ 4,097 Operating income (loss): RJR Tobacco (1) $ 727 $ 726 $ 1,315 $ 1,208 American Snuff 130 110 248 212 Santa Fe 125 84 217 149 All Other (35 ) (49 ) (96 ) (88 ) Gain on Divestiture 3,499 — 3,499 — Corporate expense (82 ) (35 ) (126 ) (55 ) Consolidated operating income $ 4,364 $ 836 $ 5,057 $ 1,426 Reconciliation to income from continuing operations before income taxes: Consolidated operating income (1) $ 4,364 $ 836 $ 5,057 $ 1,426 Interest and debt expense 105 62 196 121 Interest income — (1 ) (1 ) (2 ) Other (income) expense, net 20 — 3 1 Income from continuing operations before income taxes $ 4,239 $ 775 $ 4,859 $ 1,306 (1) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 15 — Related Party Transactions RAI and RAI’s operating subsidiaries engage in transactions with affiliates of BAT, which owns approximately 42% of RAI’s outstanding common stock. A summary of balances and transactions with such BAT affiliates is as follows: Balances: June 30, 2015 December 31, 2014 Accounts receivable, related party $ 31 $ 41 Due to related party 7 1 Deferred revenue, related party 15 32 Significant transactions: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales $ 54 $ 91 $ 136 $ 177 Purchases 12 4 14 13 BAT Share Purchase 4,673 — 4,673 — RAI common stock purchases from B&W — 114 — 155 RJR Tobacco sells contract-manufactured cigarettes, tobacco leaf and processed tobacco to BAT affiliates. In December 2012, RJR Tobacco entered into an amendment to its contract manufacturing agreement with a BAT affiliate, which amendment, among other things, requires either party to provide three years’ notice to the other party to terminate the agreement without cause, with any such notice to be given no earlier than January 1, 2016. Net sales to BAT affiliates, primarily cigarettes, represented approximately 2% and 3% of RAI’s total net sales during the three and six months ended June 30, 2015, respectively. Net sales to BAT affiliates, primarily cigarettes, represented approximately 4% of RAI’s total net sales during the three and six months ended June 30, 2014. RJR Tobacco recorded deferred sales revenue relating to leaf sold to BAT affiliates that had not been delivered as of the end of the respective quarter, given that RJR Tobacco has a legal right to bill the BAT affiliates. Leaf sales revenue to BAT affiliates is recognized when the product is shipped to the customer. RJR Tobacco recorded royalty income from the license of capsule technology to BAT affiliates which ended in 2014. RAI’s operating subsidiaries also purchase unprocessed leaf at market prices, and import cigarettes at prices not to exceed manufacturing costs plus 10%, from BAT affiliates. On June 12, 2015, RAI and BAT completed the BAT Share Purchase in connection with the Merger and Divestiture. For additional information, see note 2. |
RAI Guaranteed, Unsecured Notes
RAI Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements | 6 Months Ended |
Jun. 30, 2015 | |
Guarantees [Abstract] | |
RAI Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements | Note 16 — RAI Guaranteed, Unsecured Notes — Condensed Consolidating Financial Statements The following condensed consolidating financial statements relate to the guaranties of RAI’s $14.1 billion unsecured notes. Certain of RAI’s direct, wholly owned subsidiaries and certain of its indirectly owned subsidiaries have fully and unconditionally, and jointly and severally, guaranteed these notes. The following condensed consolidating financial statements include: the accounts and activities of RAI, the parent issuer; RJR, RJR Tobacco, American Snuff Co., SFNTC and certain of RAI’s other subsidiaries, the Guarantors; other direct and indirect subsidiaries of RAI that are not Guarantors; and elimination adjustments. Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 2,320 $ 82 $ (53 ) $ 2,349 Net sales, related party — 54 — — 54 Net sales — 2,374 82 (53 ) 2,403 Cost of products sold — 1,082 53 (51 ) 1,084 Selling, general and administrative expenses 43 348 60 — 451 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 3 — — 3 Operating income (loss) (43 ) 4,643 (234 ) (2 ) 4,364 Interest and debt expense 98 33 2 (28 ) 105 Interest income (28 ) — — 28 — Other (income) expense, net 14 (11 ) 7 10 20 Income (loss) from continuing operations before income taxes (127 ) 4,621 (243 ) (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 2,391 (3 ) — 2,311 Equity income (loss) from subsidiaries 1,978 (207 ) — (1,771 ) — Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 2,029 $ 54 $ (12 ) $ 2,071 Net sales, related party — 91 — — 91 Net sales — 2,120 54 (12 ) 2,162 Cost of products sold — 921 49 (11 ) 959 Selling, general and administrative expenses 17 287 60 — 364 Amortization expense — 3 — — 3 Operating income (loss) (17 ) 909 (55 ) (1 ) 836 Interest and debt expense 62 20 2 (22 ) 62 Interest income (22 ) — (1 ) 22 (1 ) Other (income) expense, net — (10 ) — 10 — Income (loss) from continuing operations before income taxes (57 ) 899 (56 ) (11 ) 775 Provision for (benefit from) income taxes (20 ) 323 (20 ) — 283 Equity income (loss) from subsidiaries 529 3 — (532 ) — Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 4,319 $ 150 $ (145 ) $ 4,324 Net sales, related party — 136 — — 136 Net sales — 4,455 150 (145 ) 4,460 Cost of products sold — 1,951 123 (140 ) 1,934 Selling, general and administrative expenses 62 773 127 — 962 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 6 — — 6 Operating income (loss) (62 ) 5,427 (303 ) (5 ) 5,057 Interest and debt expense 189 50 4 (47 ) 196 Interest income (47 ) (1 ) — 47 (1 ) Other (income) expense, net 15 (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) 5,399 (295 ) (26 ) 4,859 Provision for (benefit from) income taxes (104 ) 2,672 (26 ) — 2,542 Equity income (loss) from subsidiaries 2,432 (187 ) — (2,245 ) — Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,843 $ 97 $ (20 ) $ 3,920 Net sales, related party — 177 — — 177 Net sales — 4,020 97 (20 ) 4,097 Cost of products sold — 1,826 82 (19 ) 1,889 Selling, general and administrative expenses 20 644 113 — 777 Amortization expense — 5 — — 5 Operating income (loss) (20 ) 1,545 (98 ) (1 ) 1,426 Interest and debt expense 121 43 3 (46 ) 121 Interest income (46 ) (1 ) (1 ) 46 (2 ) Other (income) expense, net 2 (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,524 (99 ) (22 ) 1,306 Provision for (benefit from) income taxes (34 ) 546 (36 ) — 476 Equity income (loss) from subsidiaries 918 9 — (927 ) — Income (loss) from continuing operations 855 987 (63 ) (949 ) 830 Income from discontinued operations — 25 — — 25 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (17 ) (1 ) 18 (20 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other 10 10 13 (23 ) 10 Comprehensive income (loss) $ 1,919 $ 2,016 $ (228 ) $ (1,788 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 7 — (7 ) 6 Unrealized gain on long-term investments 1 1 — (1 ) 1 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) 4 (3 ) Comprehensive income (loss) $ 497 $ 585 $ (38 ) $ (547 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (23 ) (1 ) 24 (26 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (27 ) 44 (17 ) Comprehensive income (loss) $ 2,275 $ 2,500 $ (297 ) $ (2,203 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 1 — (1 ) — Unrealized gain on long-term investments 2 2 — (2 ) 2 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (2 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 1,014 $ (65 ) $ (949 ) $ 856 Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (6 ) $ — $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (10 ) — — (10 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) — — 7 — Equity income (loss) from subsidiaries (7 ) (7 ) — 7 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (6 ) $ (7 ) $ — $ 7 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (9 ) — — (9 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — — 6 — Equity income (loss) from subsidiaries (6 ) (6 ) — 6 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (5 ) $ (6 ) $ — $ 6 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (11 ) $ — $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (20 ) — — (20 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) — — 13 — Equity income (loss) from subsidiaries (13 ) (13 ) — 13 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (12 ) $ (13 ) $ — $ 13 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (19 ) — — (19 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — — 12 — Equity income (loss) from subsidiaries (12 ) (12 ) — 12 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (11 ) $ (12 ) $ — $ 12 $ (11 ) Net income Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 827 $ (4 ) $ (500 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (60 ) (3 ) (1 ) (64 ) Return of intercompany investments 185 — — (185 ) — Acquisition, net of cash acquired (18,278 ) 524 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — 7,056 Other, net (710 ) 12 (1 ) 700 1 Net cash flows from (used in) investing activities (11,747 ) 476 531 514 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (479 ) — 479 (712 ) Repurchase of common stock (40 ) — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — 4,673 Issuance of long-term debt 8,975 — — — 8,975 Debt issuance costs and financing fees (64 ) — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — 15 Dividends paid on preferred stock (21 ) — — 21 — Distribution of equity — (185 ) — 185 — Other, net (11 ) 680 30 (699 ) — Net cash flows from (used in) financing activities 12,815 16 30 (14 ) 12,847 Effect of exchange rate changes on cash and cash equivalents — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,319 535 — 3,047 Cash and cash equivalents at beginning of period 102 469 395 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 635 $ (44 ) $ (662 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (41 ) (86 ) 4 (123 ) Proceeds from termination of joint venture — — 35 — 35 Contributions to intercompany investments (32 ) — — 32 — Other, net 143 41 (33 ) (175 ) (24 ) Net cash flows from (used in) investing activities 111 — (84 ) (139 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (637 ) — 637 (699 ) Repurchase of common stock (440 ) — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — 1,000 Repayments under revolving credit facility (200 ) — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — 10 Dividends paid on preferred stock (21 ) — — 21 — Receipt of equity — — 32 (32 ) — Other, net (31 ) (320 ) 176 175 — Net cash flows from (used in) financing activities (381 ) (957 ) 208 801 (329 ) Effect of exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (322 ) 79 — (187 ) Cash and cash equivalents at beginning of period 444 696 360 — 1,500 Cash and cash equivalents at end of period $ 500 $ 374 $ 439 $ — $ 1,313 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Short-term investments — 347 — — 347 Accounts receivable — 84 61 — 145 Accounts receivable, related party — 31 — — 31 Other receivables 772 4,328 432 (5,514 ) 18 Inventories — 1,554 130 (7 ) 1,677 Deferred income taxes, net 4 921 10 — 935 Other current assets 7 275 3 — 285 Total current assets 2,078 9,328 1,566 (5,521 ) 7,451 Property, plant and equipment, net 3 1,263 32 — 1,298 Trademarks and other intangible assets, net — 2,289 26,012 — 28,301 Goodwill — 17,003 16 — 17,019 Long-term intercompany notes receivable 1,603 180 — (1,783 ) — Investment in subsidiaries 36,134 17,760 — (53,894 ) — Other assets and deferred charges 150 383 7 (51 ) 489 Total assets $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 146 $ 29 $ — $ 178 Tobacco settlement accruals — 1,982 — — 1,982 Due to related party — 3 4 — 7 Deferred revenue, related party — 15 — — 15 Current maturities of long-term debt 450 — — — 450 Income taxes payable 2,096 19 14 (4 ) 2,125 Dividends payable on common stock 356 — — — 356 Other current liabilities 4,871 1,922 50 (5,514 ) 1,329 Total current liabilities 7,776 4,087 97 (5,518 ) 6,442 Long-term intercompany notes payable 180 1,280 323 (1,783 ) — Long-term debt (less current maturities) 13,599 3,951 — — 17,550 Deferred income taxes, net — 195 9,664 (46 ) 9,813 Long-term retirement benefits (less current portion) 56 2,113 70 — 2,239 Other noncurrent liabilities 31 156 1 — 188 Shareholders’ equity 18,326 36,424 17,478 (53,902 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 469 $ 395 $ — $ 966 Accounts receivable — 74 42 — 116 Accounts receivable, related party — 41 — — 41 Other receivables 70 1,199 10 (1,267 ) 12 Inventories — 1,198 85 (2 ) 1,281 Deferred income taxes, net 5 688 10 — 703 Other current assets 50 151 1 2 204 Total current assets 227 3,820 543 (1,267 ) 3,323 Property, plant and equipment, net 3 1,170 30 — 1,203 Trademarks and other intangible assets, net — 2,417 4 — 2,421 Goodwill — 7,999 17 — 8,016 Long-term intercompany notes receivable 1,593 190 — (1,783 ) — Investment in subsidiaries 9,598 450 — (10,048 ) — Other assets and deferred charges 101 180 23 (71 ) 233 Total assets $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 128 $ 13 $ — $ 142 Tobacco settlement accruals — 1,819 — — 1,819 Due to related party — 1 — — 1 Deferred revenue, related party — 32 — — 32 Current maturities of long-term debt 450 — — — 450 Dividends payable on common stock 356 — — — 356 Other current liabilities 1,280 682 51 (1,269 ) 744 Total current liabilities 2,087 2,662 64 (1,269 ) 3,544 Long-term intercompany notes payable 190 1,300 293 (1,783 ) — Long-term debt (less current maturities) 4,633 — — — 4,633 Deferred income taxes, net — 450 — (67 ) 383 Long-term retirement benefits (less current portion) 57 1,930 10 — 1,997 Other noncurrent liabilities 33 83 1 — 117 Shareholders’ equity 4,522 9,801 249 (10,050 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 |
RJR Tobacco Guaranteed, Unsecur
RJR Tobacco Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements | 6 Months Ended |
Jun. 30, 2015 | |
RAI Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements | Note 16 — RAI Guaranteed, Unsecured Notes — Condensed Consolidating Financial Statements The following condensed consolidating financial statements relate to the guaranties of RAI’s $14.1 billion unsecured notes. Certain of RAI’s direct, wholly owned subsidiaries and certain of its indirectly owned subsidiaries have fully and unconditionally, and jointly and severally, guaranteed these notes. The following condensed consolidating financial statements include: the accounts and activities of RAI, the parent issuer; RJR, RJR Tobacco, American Snuff Co., SFNTC and certain of RAI’s other subsidiaries, the Guarantors; other direct and indirect subsidiaries of RAI that are not Guarantors; and elimination adjustments. Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 2,320 $ 82 $ (53 ) $ 2,349 Net sales, related party — 54 — — 54 Net sales — 2,374 82 (53 ) 2,403 Cost of products sold — 1,082 53 (51 ) 1,084 Selling, general and administrative expenses 43 348 60 — 451 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 3 — — 3 Operating income (loss) (43 ) 4,643 (234 ) (2 ) 4,364 Interest and debt expense 98 33 2 (28 ) 105 Interest income (28 ) — — 28 — Other (income) expense, net 14 (11 ) 7 10 20 Income (loss) from continuing operations before income taxes (127 ) 4,621 (243 ) (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 2,391 (3 ) — 2,311 Equity income (loss) from subsidiaries 1,978 (207 ) — (1,771 ) — Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 2,029 $ 54 $ (12 ) $ 2,071 Net sales, related party — 91 — — 91 Net sales — 2,120 54 (12 ) 2,162 Cost of products sold — 921 49 (11 ) 959 Selling, general and administrative expenses 17 287 60 — 364 Amortization expense — 3 — — 3 Operating income (loss) (17 ) 909 (55 ) (1 ) 836 Interest and debt expense 62 20 2 (22 ) 62 Interest income (22 ) — (1 ) 22 (1 ) Other (income) expense, net — (10 ) — 10 — Income (loss) from continuing operations before income taxes (57 ) 899 (56 ) (11 ) 775 Provision for (benefit from) income taxes (20 ) 323 (20 ) — 283 Equity income (loss) from subsidiaries 529 3 — (532 ) — Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 4,319 $ 150 $ (145 ) $ 4,324 Net sales, related party — 136 — — 136 Net sales — 4,455 150 (145 ) 4,460 Cost of products sold — 1,951 123 (140 ) 1,934 Selling, general and administrative expenses 62 773 127 — 962 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 6 — — 6 Operating income (loss) (62 ) 5,427 (303 ) (5 ) 5,057 Interest and debt expense 189 50 4 (47 ) 196 Interest income (47 ) (1 ) — 47 (1 ) Other (income) expense, net 15 (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) 5,399 (295 ) (26 ) 4,859 Provision for (benefit from) income taxes (104 ) 2,672 (26 ) — 2,542 Equity income (loss) from subsidiaries 2,432 (187 ) — (2,245 ) — Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,843 $ 97 $ (20 ) $ 3,920 Net sales, related party — 177 — — 177 Net sales — 4,020 97 (20 ) 4,097 Cost of products sold — 1,826 82 (19 ) 1,889 Selling, general and administrative expenses 20 644 113 — 777 Amortization expense — 5 — — 5 Operating income (loss) (20 ) 1,545 (98 ) (1 ) 1,426 Interest and debt expense 121 43 3 (46 ) 121 Interest income (46 ) (1 ) (1 ) 46 (2 ) Other (income) expense, net 2 (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,524 (99 ) (22 ) 1,306 Provision for (benefit from) income taxes (34 ) 546 (36 ) — 476 Equity income (loss) from subsidiaries 918 9 — (927 ) — Income (loss) from continuing operations 855 987 (63 ) (949 ) 830 Income from discontinued operations — 25 — — 25 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (17 ) (1 ) 18 (20 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other 10 10 13 (23 ) 10 Comprehensive income (loss) $ 1,919 $ 2,016 $ (228 ) $ (1,788 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 7 — (7 ) 6 Unrealized gain on long-term investments 1 1 — (1 ) 1 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) 4 (3 ) Comprehensive income (loss) $ 497 $ 585 $ (38 ) $ (547 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (23 ) (1 ) 24 (26 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (27 ) 44 (17 ) Comprehensive income (loss) $ 2,275 $ 2,500 $ (297 ) $ (2,203 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 1 — (1 ) — Unrealized gain on long-term investments 2 2 — (2 ) 2 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (2 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 1,014 $ (65 ) $ (949 ) $ 856 Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (6 ) $ — $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (10 ) — — (10 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) — — 7 — Equity income (loss) from subsidiaries (7 ) (7 ) — 7 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (6 ) $ (7 ) $ — $ 7 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (9 ) — — (9 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — — 6 — Equity income (loss) from subsidiaries (6 ) (6 ) — 6 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (5 ) $ (6 ) $ — $ 6 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (11 ) $ — $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (20 ) — — (20 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) — — 13 — Equity income (loss) from subsidiaries (13 ) (13 ) — 13 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (12 ) $ (13 ) $ — $ 13 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (19 ) — — (19 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — — 12 — Equity income (loss) from subsidiaries (12 ) (12 ) — 12 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (11 ) $ (12 ) $ — $ 12 $ (11 ) Net income Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 827 $ (4 ) $ (500 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (60 ) (3 ) (1 ) (64 ) Return of intercompany investments 185 — — (185 ) — Acquisition, net of cash acquired (18,278 ) 524 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — 7,056 Other, net (710 ) 12 (1 ) 700 1 Net cash flows from (used in) investing activities (11,747 ) 476 531 514 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (479 ) — 479 (712 ) Repurchase of common stock (40 ) — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — 4,673 Issuance of long-term debt 8,975 — — — 8,975 Debt issuance costs and financing fees (64 ) — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — 15 Dividends paid on preferred stock (21 ) — — 21 — Distribution of equity — (185 ) — 185 — Other, net (11 ) 680 30 (699 ) — Net cash flows from (used in) financing activities 12,815 16 30 (14 ) 12,847 Effect of exchange rate changes on cash and cash equivalents — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,319 535 — 3,047 Cash and cash equivalents at beginning of period 102 469 395 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 635 $ (44 ) $ (662 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (41 ) (86 ) 4 (123 ) Proceeds from termination of joint venture — — 35 — 35 Contributions to intercompany investments (32 ) — — 32 — Other, net 143 41 (33 ) (175 ) (24 ) Net cash flows from (used in) investing activities 111 — (84 ) (139 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (637 ) — 637 (699 ) Repurchase of common stock (440 ) — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — 1,000 Repayments under revolving credit facility (200 ) — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — 10 Dividends paid on preferred stock (21 ) — — 21 — Receipt of equity — — 32 (32 ) — Other, net (31 ) (320 ) 176 175 — Net cash flows from (used in) financing activities (381 ) (957 ) 208 801 (329 ) Effect of exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (322 ) 79 — (187 ) Cash and cash equivalents at beginning of period 444 696 360 — 1,500 Cash and cash equivalents at end of period $ 500 $ 374 $ 439 $ — $ 1,313 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Short-term investments — 347 — — 347 Accounts receivable — 84 61 — 145 Accounts receivable, related party — 31 — — 31 Other receivables 772 4,328 432 (5,514 ) 18 Inventories — 1,554 130 (7 ) 1,677 Deferred income taxes, net 4 921 10 — 935 Other current assets 7 275 3 — 285 Total current assets 2,078 9,328 1,566 (5,521 ) 7,451 Property, plant and equipment, net 3 1,263 32 — 1,298 Trademarks and other intangible assets, net — 2,289 26,012 — 28,301 Goodwill — 17,003 16 — 17,019 Long-term intercompany notes receivable 1,603 180 — (1,783 ) — Investment in subsidiaries 36,134 17,760 — (53,894 ) — Other assets and deferred charges 150 383 7 (51 ) 489 Total assets $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 146 $ 29 $ — $ 178 Tobacco settlement accruals — 1,982 — — 1,982 Due to related party — 3 4 — 7 Deferred revenue, related party — 15 — — 15 Current maturities of long-term debt 450 — — — 450 Income taxes payable 2,096 19 14 (4 ) 2,125 Dividends payable on common stock 356 — — — 356 Other current liabilities 4,871 1,922 50 (5,514 ) 1,329 Total current liabilities 7,776 4,087 97 (5,518 ) 6,442 Long-term intercompany notes payable 180 1,280 323 (1,783 ) — Long-term debt (less current maturities) 13,599 3,951 — — 17,550 Deferred income taxes, net — 195 9,664 (46 ) 9,813 Long-term retirement benefits (less current portion) 56 2,113 70 — 2,239 Other noncurrent liabilities 31 156 1 — 188 Shareholders’ equity 18,326 36,424 17,478 (53,902 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 469 $ 395 $ — $ 966 Accounts receivable — 74 42 — 116 Accounts receivable, related party — 41 — — 41 Other receivables 70 1,199 10 (1,267 ) 12 Inventories — 1,198 85 (2 ) 1,281 Deferred income taxes, net 5 688 10 — 703 Other current assets 50 151 1 2 204 Total current assets 227 3,820 543 (1,267 ) 3,323 Property, plant and equipment, net 3 1,170 30 — 1,203 Trademarks and other intangible assets, net — 2,417 4 — 2,421 Goodwill — 7,999 17 — 8,016 Long-term intercompany notes receivable 1,593 190 — (1,783 ) — Investment in subsidiaries 9,598 450 — (10,048 ) — Other assets and deferred charges 101 180 23 (71 ) 233 Total assets $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 128 $ 13 $ — $ 142 Tobacco settlement accruals — 1,819 — — 1,819 Due to related party — 1 — — 1 Deferred revenue, related party — 32 — — 32 Current maturities of long-term debt 450 — — — 450 Dividends payable on common stock 356 — — — 356 Other current liabilities 1,280 682 51 (1,269 ) 744 Total current liabilities 2,087 2,662 64 (1,269 ) 3,544 Long-term intercompany notes payable 190 1,300 293 (1,783 ) — Long-term debt (less current maturities) 4,633 — — — 4,633 Deferred income taxes, net — 450 — (67 ) 383 Long-term retirement benefits (less current portion) 57 1,930 10 — 1,997 Other noncurrent liabilities 33 83 1 — 117 Shareholders’ equity 4,522 9,801 249 (10,050 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 |
RJR Tobacco | |
RAI Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements | Note 17 — RJR Tobacco Guaranteed, Unsecured Notes — Condensed Consolidating Financial Statements The following condensed consolidating financial statements relate to the guaranties of RJR Tobacco’s $3.5 billion unsecured notes, representing the Lorillard Tobacco Notes assumed by RJR Tobacco in connection with the Lorillard Tobacco Merger. RAI and RJR have fully and unconditionally, and jointly and severally, guaranteed these notes. The following condensed consolidating financial statements include: the accounts and activities of RAI, the Parent Guarantor; RJR Tobacco, the Issuer; RJR, a Guarantor; other direct and indirect subsidiaries of RAI that are not Guarantors; and elimination adjustments. Condensed Consolidating Statements of Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 1,875 $ — $ 524 $ (50 ) $ 2,349 Net sales, related party — 54 — — — 54 Net sales — 1,929 — 524 (50 ) 2,403 Cost of products sold — 953 — 180 (49 ) 1,084 Selling, general and administrative expenses 43 375 — 33 — 451 (Gain) loss on Divestiture — 1,891 — (5,390 ) — (3,499 ) Amortization expense — 2 — 1 — 3 Operating income (loss) (43 ) (1,292 ) — 5,700 (1 ) 4,364 Interest and debt expense 98 9 — 27 (29 ) 105 Interest income (28 ) — (1 ) — 29 — Other (income) expense, net 14 — (11 ) 6 11 20 Income (loss) from continuing operations before income taxes (127 ) (1,301 ) 12 5,667 (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 313 — 2,075 — 2,311 Equity income (loss) from subsidiaries 1,978 3,449 1,864 — (7,291 ) — Net income (loss) $ 1,928 $ 1,835 $ 1,876 $ 3,592 $ (7,303 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 1,657 $ — $ 424 $ (10 ) $ 2,071 Net sales, related party — 91 — — — 91 Net sales — 1,748 — 424 (10 ) 2,162 Cost of products sold — 806 — 163 (10 ) 959 Selling, general and administrative expenses 17 318 — 29 — 364 Amortization expense — 1 — 2 — 3 Operating income (loss) (17 ) 623 — 230 — 836 Interest and debt expense 62 6 — 16 (22 ) 62 Interest income (22 ) — — (1 ) 22 (1 ) Other (income) expense, net — — (10 ) (1 ) 11 — Income (loss) from continuing operations before income taxes (57 ) 617 10 216 (11 ) 775 Provision for (benefit from) income taxes (20 ) 226 — 77 — 283 Equity income (loss) from subsidiaries 529 70 460 — (1,059 ) — Income (loss) from continuing operations 492 461 470 139 (1,070 ) 492 Income from discontinued operations — — — — — — Net income (loss) $ 492 $ 461 $ 470 $ 139 $ (1,070 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 3,496 $ — $ 958 $ (130 ) $ 4,324 Net sales, related party — 136 — — — 136 Net sales — 3,632 — 958 (130 ) 4,460 Cost of products sold — 1,711 — 349 (126 ) 1,934 Selling, general and administrative expenses 62 827 — 73 — 962 (Gain) loss on Divestiture — 1,891 — (5,390 ) — (3,499 ) Amortization expense — 3 — 3 — 6 Operating income (loss) (62 ) (800 ) — 5,923 (4 ) 5,057 Interest and debt expense 189 14 — 42 (49 ) 196 Interest income (47 ) (1 ) (2 ) — 49 (1 ) Other (income) expense, net 15 — (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) (813 ) 23 5,893 (25 ) 4,859 Provision for (benefit from) income taxes (104 ) 489 — 2,157 — 2,542 Equity income (loss) from subsidiaries 2,432 3,527 2,252 — (8,211 ) — Net income (loss) $ 2,317 $ 2,225 $ 2,275 $ 3,736 $ (8,236 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,149 $ — $ 793 $ (22 ) $ 3,920 Net sales, related party — 177 — — — 177 Net sales — 3,326 — 793 (22 ) 4,097 Cost of products sold — 1,614 — 297 (22 ) 1,889 Selling, general and administrative expenses 20 697 2 58 — 777 Amortization expense — 2 — 3 — 5 Operating income (loss) (20 ) 1,013 (2 ) 435 — 1,426 Interest and debt expense 121 11 — 37 (48 ) 121 Interest income (46 ) (1 ) (2 ) (1 ) 48 (2 ) Other (income) expense, net 2 — (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,003 21 400 (21 ) 1,306 Provision for (benefit from) income taxes (34 ) 368 — 142 — 476 Equity income (loss) from subsidiaries 918 134 797 — (1,849 ) — Income (loss) from continuing operations 855 769 818 258 (1,870 ) 830 Income from discontinued operations — 25 — — — 25 Net income (loss) $ 855 $ 794 $ 818 $ 258 $ (1,870 ) $ 855 Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 1,835 $ 1,876 $ 3,592 $ (7,303 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (13 ) (14 ) (5 ) 32 (20 ) Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other 10 10 10 10 (30 ) 10 Comprehensive income (loss) $ 1,919 $ 1,832 $ 1,872 $ 3,597 $ (7,301 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 461 $ 470 $ 139 $ (1,070 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 8 8 (1 ) (15 ) 6 Unrealized gain on long-term investments 1 1 1 — (2 ) 1 Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) (2 ) 6 (3 ) Comprehensive income (loss) $ 497 $ 468 $ 477 $ 136 $ (1,081 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,225 $ 2,275 $ 3,736 $ (8,236 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (18 ) (19 ) (5 ) 42 (26 ) Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (16 ) (17 ) 50 (17 ) Comprehensive income (loss) $ 2,275 $ 2,190 $ 2,240 $ 3,714 $ (8,144 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 794 $ 818 $ 258 $ (1,870 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 3 2 (1 ) (4 ) — Unrealized gain on long-term investments 2 2 2 — (4 ) 2 Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (1 ) (1 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 798 $ 821 $ 256 $ (1,875 ) $ 856 Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ (1 ) $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — — (4 ) Selling, general and administrative expenses — (9 ) — (1 ) — (10 ) Deferred taxes — 3 — — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) (1 ) (7 ) — 15 — Equity income (loss) from subsidiaries (7 ) (7 ) (7 ) (1 ) 15 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (6 ) $ (7 ) $ (7 ) $ (1 ) $ 15 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — — (4 ) Selling, general and administrative expenses — (9 ) — — — (9 ) Deferred taxes — 3 — — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — (6 ) — 12 — Equity income (loss) from subsidiaries (6 ) (6 ) (6 ) — 12 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (5 ) $ (6 ) $ (6 ) $ — $ 12 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ (1 ) $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — — (9 ) Selling, general and administrative expenses — (19 ) — (1 ) — (20 ) Deferred taxes — 7 — — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) (1 ) (13 ) — 27 — Equity income (loss) from subsidiaries (13 ) (13 ) (13 ) (1 ) 27 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (12 ) $ (13 ) $ (13 ) $ (1 ) $ 27 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — — (9 ) Selling, general and administrative expenses — (19 ) — — — (19 ) Deferred taxes — 7 — — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — (12 ) — 24 — Equity income (loss) from subsidiaries (12 ) (12 ) (12 ) — 24 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (11 ) $ (12 ) $ (12 ) $ — $ 24 $ (11 ) Net income Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 700 $ 485 $ 208 $ (1,070 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (34 ) — (29 ) (1 ) (64 ) Return of intercompany investments 185 10 184 — (379 ) — Acquisition, net of cash acquired (18,278 ) 524 — 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — — 7,056 Other, net (710 ) 1 8 11 691 1 Net cash flows from (used in) investing activities (11,747 ) 501 192 517 311 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (461 ) (479 ) (110 ) 1,050 (712 ) Repurchase of common stock (40 ) — — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — — 4,673 Issuance of long-term debt 8,975 — — — — 8,975 Debt issuance costs and financing fees (64 ) — — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — — 15 Dividends paid on preferred stock (21 ) — — — 21 — Distribution of equity — (184 ) (185 ) (10 ) 379 — Other, net (11 ) 700 — 2 (691 ) — Net cash flows from (used in) financing activities 12,815 55 (664 ) (118 ) 759 12,847 Effect of exchange rate changes on cash and cash equivalents — — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,256 13 585 — 3,047 Cash and cash equivalents at beginning of period 102 327 3 534 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,583 $ 16 $ 1,119 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 327 $ 607 $ 347 $ (1,352 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (23 ) — (104 ) 4 (123 ) Proceeds from termination of joint venture — — — 35 — 35 Contributions to intercompany investments (32 ) — — — 32 — Return of intercompany investments — 90 21 — (111 ) — Other, net 143 8 10 18 (203 ) (24 ) Net cash flows from (used in) investing activities 111 75 31 (51 ) (278 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (580 ) (637 ) (110 ) 1,327 (699 ) Repurchase of common stock (440 ) — — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — — 1,000 Repayments under revolving credit facility (200 ) — — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — — 10 Dividends paid on preferred stock (21 ) — — — 21 — Receipt of equity — — — 32 (32 ) — Distribution of equity — (21 ) — (90 ) 111 — Other, net (31 ) (20 ) — (152 ) 203 — Net cash flows from (used in) financing activities (381 ) (621 ) (637 ) (320 ) 1,630 (329 ) Effect of exchange rate changes on cash and cash equivalents — — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (219 ) 1 (25 ) — (187 ) Cash and cash equivalents at beginning of period 444 514 2 540 — 1,500 Cash and cash equivalents at end of period $ 500 $ 295 $ 3 $ 515 $ — $ 1,313 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,583 $ 16 $ 1,119 $ — $ 4,013 Short-term investments — 347 — — — 347 Accounts receivable — 71 — 74 — 145 Accounts receivable, related party — 31 — — — 31 Other receivables 772 445 19 4,313 (5,531 ) 18 Inventories — 923 — 761 (7 ) 1,677 Deferred income taxes, net 4 842 1 88 — 935 Other current assets 7 233 — 45 285 Total current assets 2,078 4,475 36 6,400 (5,538 ) 7,451 Property, plant and equipment, net 3 850 — 445 — 1,298 Trademarks and other intangible assets, net — 347 — 27,954 — 28,301 Goodwill — 3,453 10,852 2,714 — 17,019 Long-term intercompany notes receivable 1,603 — 98 180 (1,881 ) — Investment in subsidiaries 36,134 22,039 22,437 — (80,610 ) — Other assets and deferred charges 150 1,046 18 7 (732 ) 489 Total assets $ 39,968 $ 32,210 $ 33,441 $ 37,700 $ (88,761 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 126 $ — $ 49 $ — $ 178 Tobacco settlement accruals — 1,912 — 70 — 1,982 Due to related party — 3 — 4 — 7 Deferred revenue, related party — 15 — — — 15 Current maturities of long-term debt 450 — — — — 450 Income taxes payable 2,096 3 — 30 (4 ) 2,125 Dividends payable on common stock 356 — — — — 356 Other current liabilities 4,871 1,746 3 240 (5,531 ) 1,329 Total current liabilities 7,776 3,805 3 393 (5,535 ) 6,442 Long-term intercompany notes payable 180 — — 1,701 (1,881 ) — Long-term debt (less current maturities) 13,599 3,951 — — — 17,550 Deferred income taxes, net — 1 — 10,540 (728 ) 9,813 Long-term retirement benefits (less current portion) 56 1,992 29 162 — 2,239 Other noncurrent liabilities 31 151 2 4 — 188 Shareholders’ equity 18,326 22,310 33,407 24,900 (80,617 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 32,210 $ 33,441 $ 37,700 $ (88,761 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 327 $ 3 $ 534 $ — $ 966 Accounts receivable — 61 — 55 — 116 Accounts receivable, related party — 41 — — — 41 Other receivables 70 291 20 1,864 (2,233 ) 12 Inventories — 529 — 754 (2 ) 1,281 Deferred income taxes, net 5 611 1 86 — 703 Other current assets 50 118 — 34 2 204 Total current assets 227 1,978 24 3,327 (2,233 ) 3,323 Property, plant and equipment, net 3 765 — 435 — 1,203 Trademarks and other intangible assets, net — 130 — 2,291 — 2,421 Goodwill — 5,302 — 2,714 — 8,016 Long-term intercompany notes receivable 1,593 — 106 190 (1,889 ) — Investment in subsidiaries 9,598 3,060 6,941 — (19,599 ) — Other assets and deferred charges 101 731 18 18 (635 ) 233 Total assets $ 11,522 $ 11,966 $ 7,089 $ 8,975 $ (24,356 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 110 $ — $ 31 $ — $ 142 Tobacco settlement accruals — 1,709 — 110 — 1,819 Due to related party — 1 — — — 1 Deferred revenue, related party — 32 — — — 32 Current maturities of long-term debt 450 — — — — 450 Dividends payable on common stock 356 — — — — 356 Other current liabilities 1,280 1,274 3 423 (2,236 ) 744 Total current liabilities 2,087 3,126 3 564 (2,236 ) 3,544 Long-term intercompany notes payable 190 — — 1,699 (1,889 ) — Long-term debt (less current maturities) 4,633 — — — — 4,633 Deferred income taxes, net — 1 — 1,013 (631 ) 383 Long-term retirement benefits (less current portion) 57 1,822 30 88 — 1,997 Other noncurrent liabilities 33 78 — 6 — 117 Shareholders’ equity 4,522 6,939 7,056 5,605 (19,600 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 11,966 $ 7,089 $ 8,975 $ (24,356 ) $ 15,196 |
Business and Summary of Signi26
Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements (unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America, referred to as GAAP, for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair presentation of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany balances have been eliminated. For interim reporting purposes, certain costs and expenses are charged to operations in proportion to the estimated total annual amount expected to be incurred primarily based on sales volumes. The results for the interim period ended June 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The condensed consolidated financial statements (unaudited) should be read in conjunction with the consolidated financial statements and related footnotes, which appear in RAI’s Annual Report on Form 10-K for the year ended December 31, 2014. Certain reclassifications were made to conform prior years’ financial statements to the current presentation. Certain amounts presented in note 11 are rounded in the aggregate and may not sum from the individually presented components. All dollar amounts, other than per share amounts, are presented in millions, except for amounts set forth in note 11 and as otherwise noted. |
Cost of Products Sold | Cost of Products Sold Cost of products sold includes the expenses for the Master Settlement Agreement, referred to as the MSA, and other settlement agreements with the States of Mississippi, Florida, Texas and Minnesota, which together with the MSA are collectively referred to as the State Settlement Agreements; the user fees charged by the U.S. Food and Drug Administration, referred to as the FDA; and the federal tobacco quota assessment that expired in 2014. These expenses were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 State Settlement Agreements $ 571 $ 456 $ 965 $ 912 FDA user fees 38 33 73 67 Federal tobacco quota buyout — 51 — 106 In 2012, RJR Tobacco, Lorillard Tobacco and certain other participating manufacturers, referred to as the PMs, including SFNTC, entered into a term sheet, referred to as the Term Sheet, with 17 states, the District of Columbia and Puerto Rico to settle certain claims related to the MSA non-participating manufacturer adjustment, referred to as the NPM Adjustment. The Term Sheet resolves claims related to volume years from 2003 through 2012 and puts in place a revised method to determine future adjustments from 2013 forward as to jurisdictions that join the agreement. On March 12, 2013, a single, nationwide arbitration panel of three former federal judges, referred to as the Arbitration Panel, hearing the dispute related to the 2003 NPM Adjustment (and related matters) issued an order, referred to as the Order, authorizing the implementation of the Term Sheet. In addition, after the Order, one additional state signed the Term Sheet on April 12, 2013; and, two additional states signed the Term Sheet on May 24, 2013. The Term Sheet is binding on all signatories. Based on the jurisdictions bound by the Term Sheet through December 31, 2013, RJR Tobacco and SFNTC, collectively, will receive credits, currently estimated to total approximately $1.1 billion, with respect to their NPM Adjustment claims for the period from 2003 through 2012. These credits will be applied against annual payments under the MSA over a five-year period, which commenced with the April 2013 MSA payment. As a result of the Lorillard Tobacco Merger, RJR Tobacco will receive approximately $22 million of additional credits, attributable to Lorillard Tobacco, which will be applied against annual payments in 2016 and 2017. In June 2014, two additional states agreed to settle the NPM Adjustment disputes on similar terms as set forth in the Term Sheet, except for certain provisions related to the determination of credits to be received by the PMs. RJR Tobacco and SFNTC, collectively, will receive credits, currently estimated to total approximately $170 million, with respect to their NPM Adjustment claims from 2003 through 2012. The credits related to these two states will be applied against annual payments under the MSA over a five-year period, which effectively commenced with the April 2014 MSA payment. As a result, expenses for the MSA were reduced by approximately $34 million for the three and six months ended June 30, 2014. As a result of the Lorillard Tobacco Merger, RJR Tobacco will receive approximately $5 million of additional credits, attributable to Lorillard Tobacco, which will be applied against annual payments over the next three years. As a result of meeting the performance requirements associated with the Term Sheet, RJR Tobacco and Santa Fe, collectively, recognized credits of $69 million and $91 million for the three months ended June 30, 2015 and 2014, respectively, and $135 million and $154 million for the six months ended June 30, 2015 and 2014, respectively. RJR Tobacco expects to recognize additional credits through 2017, and Santa Fe expects to recognize additional credits through 2016. On September 11, 2013, the Arbitration Panel ruled six states had not diligently enforced their qualifying statutes in 2003 related to the NPM Adjustment. Based on the status of the various challenges filed by the non-diligent states to certain rulings of the Arbitration Panel related to the 2003 NPM Adjustment claim, as of June 30, 2015, two of the non-diligent states are no longer challenging the findings of non-diligence entered against them by the Arbitration Panel. As a result, a certain portion of the NPM Adjustment claim for 2003 from these two states is now certain and can be estimated. Consequently, RJR Tobacco and Santa Fe, collectively, recognized $70 million as a reduction of cost of products sold for the six months ended June 30, 2015. For additional information related to the NPM Adjustment settlement and the 2003 NPM Adjustment claim, see “—Litigation Affecting the Cigarette Industry —State Settlement Agreements—Enforcement and Validity; Adjustments” in note 11. |
Pension and Postretirement | Pension and Postretirement Pension and postretirement benefits require balance sheet recognition of the net asset or liability for the overfunded or underfunded status of defined benefit pension and other postretirement benefit plans, on a plan-by-plan basis, and recognition of changes in the funded status in the year in which the changes occur. Actuarial gains or losses are changes in the amount of either the benefit obligation or the fair value of plan assets resulting from experience different from that assumed or from changes in assumptions. Differences between actual results and actuarial assumptions are accumulated and recognized in the year in which they occur as a mark-to-market adjustment, referred to as an MTM adjustment, to the extent such net gains and losses are in excess of 10% of the greater of the fair value of plan assets or benefit obligations, referred to as the corridor. Actuarial gains and losses outside the corridor are generally recognized annually as of December 31, or when a plan is remeasured during an interim period. Prior service costs of pension benefits, which are changes in benefit obligations due to plan amendments, are amortized on a straight-line basis over the average remaining service period for active employees, or average remaining life expectancies for inactive employees if most of the plan obligations are due to inactive employees. Prior service costs of postretirement benefits, which are changes in benefit obligations due to plan amendments, are amortized on a straight-line basis over the expected service period to full eligibility age for active employees, or average remaining life expectancies for inactive employees if most of the plan obligations are due to inactive employees. The components of the pension benefits and the postretirement benefits are set forth below: For the Three Months Ended June 30, For the Six Months Ended June 30, Postretirement Postretirement Pension Benefits Benefits Pension Benefits Benefits 2015 2014 2015 2014 2015 2014 2015 2014 Service cost $ 7 $ 6 $ — $ — $ 13 $ 11 $ 1 $ 1 Interest cost 67 67 12 13 131 133 24 27 Expected return on plan assets (90 ) (91 ) (3 ) (3 ) (178 ) (181 ) (6 ) (6 ) Amortization of prior service cost (credit) — 1 (10 ) (10 ) 1 2 (21 ) (21 ) Total benefit cost (credit) $ (16 ) $ (17 ) $ (1 ) $ — $ (33 ) $ (35 ) $ (2 ) $ 1 RAI disclosed in its financial statements for the year ended December 31, 2014, that it expects to contribute $109 million to its pension plans in 2015, of which $5 million was contributed during the first six months of 2015. |
Fair Value Measurement | Fair Value Measurement RAI determines the fair value of assets and liabilities, if any, using a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price. The levels of the fair value hierarchy are: Level 1: inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. RAI evaluates its investments for possible impairment based on current economic conditions, credit loss experience and other criteria on a quarterly basis. The evaluation of investments for impairment requires significant judgments, including: the identification of potentially impaired securities; the determination of their estimated fair value; the assessment of whether any decline in estimated fair value is other-than-temporary; and the likelihood of selling before recovery. If there is a decline in a security’s net realizable value that is other-than-temporary and it is not likely to be sold before recovery, the decline is separated into the amount of impairment related to credit loss and the amount of impairment related to all other factors. The decline related to the credit loss is recognized in earnings, while the decline related to all other factors is recognized in accumulated other comprehensive loss. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2015, the Financial Accounting Standards Board, referred to as the FASB, issued amended guidance which simplifies income statement presentation by eliminating the concept of extraordinary items. Previously, events or transactions that were both unusual in nature and infrequent in occurrence for a business entity were considered to be extraordinary items and required separate presentation, net of tax, after income from continuing operations. The guidance does not change the requirement to disclose items which are unusual in nature or infrequent in occurrence as a component of continuing operations or in the footnotes. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted if it is applied from the beginning of the fiscal year of adoption. The adoption of the amended guidance is not expected to have a material impact on RAI’s results of operations, cash flows or financial position. In February 2015, the FASB issued amendments to the consolidation standard that reduce the number of consolidation models. The amended standard changes the way reporting entities examine partnerships and similar entities, evaluate service providers and decision makers as they relate to a variable interest entity, referred to as a VIE, and examine how related party interests in a VIE can affect the consolidation of that VIE. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. RAI is evaluating the effect that this guidance will have on its consolidated financial statements. In April 2015, the FASB issued amended guidance to simplify the presentation of debt issuance costs. The current guidance requires debt issuance costs to be reported on the balance sheet as an asset and amortized as interest expense. The amended guidance requires debt issuance costs be presented as a direct reduction of the debt liability it is associated with similar to the way debt discounts are presented. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The standard requires retrospective application for all prior periods presented. Early adoption is permitted. The adoption of the amended guidance is not expected to have a material impact on RAI’s results of operations, cash flows or financial position. In April 2015, the FASB issued new guidance for determining if an arrangement for cloud services includes a license of software. This new guidance does not change the accounting standard for cloud service providers, but does base the criteria for determining if a license of software is part of the arrangement based on the existing guidance. If a license of software is present in the arrangement, the fee associated with the license portion will be capitalized when the criteria for capitalization of internal-use software are met. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. RAI is evaluating the effect that this guidance will have on its consolidated financial statements. |
Business and Summary of Signi27
Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Certain Component of Cost of Products Sold | Cost of products sold includes the expenses for the Master Settlement Agreement, referred to as the MSA, and other settlement agreements with the States of Mississippi, Florida, Texas and Minnesota, which together with the MSA are collectively referred to as the State Settlement Agreements; the user fees charged by the U.S. Food and Drug Administration, referred to as the FDA; and the federal tobacco quota assessment that expired in 2014. These expenses were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 State Settlement Agreements $ 571 $ 456 $ 965 $ 912 FDA user fees 38 33 73 67 Federal tobacco quota buyout — 51 — 106 |
Components of Pension Benefits and Postretirement Benefits | The components of the pension benefits and the postretirement benefits are set forth below: For the Three Months Ended June 30, For the Six Months Ended June 30, Postretirement Postretirement Pension Benefits Benefits Pension Benefits Benefits 2015 2014 2015 2014 2015 2014 2015 2014 Service cost $ 7 $ 6 $ — $ — $ 13 $ 11 $ 1 $ 1 Interest cost 67 67 12 13 131 133 24 27 Expected return on plan assets (90 ) (91 ) (3 ) (3 ) (178 ) (181 ) (6 ) (6 ) Amortization of prior service cost (credit) — 1 (10 ) (10 ) 1 2 (21 ) (21 ) Total benefit cost (credit) $ (16 ) $ (17 ) $ (1 ) $ — $ (33 ) $ (35 ) $ (2 ) $ 1 |
Merger, Divestiture and BAT S28
Merger, Divestiture and BAT Share Purchase (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Purchase Price | The table below presents the purchase price along with a preliminary allocation of the purchase price to the assets acquired and liabilities assumed in the Merger. Purchase Price Fair value of RAI common stock issued $ 7,555 Cash paid to Lorillard shareholders at $50.50 per share 18,205 Cash paid for Lorillard stock options and stock appreciation rights 73 Purchase price $ 25,833 |
Allocation of Preliminary Purchase Price to Assets Acquired and Liabilities assumed | Preliminary Allocation of Purchase Price Assets Cash and cash equivalents $ 1,059 Short-term investments 347 Accounts and other receivables 45 Inventories 583 Income tax receivable 114 Other current assets 1,361 Property, plant and equipment 94 Trademarks and other intangible assets 26,242 Goodwill 10,852 Other assets and deferred charges 210 Liabilities Tobacco settlement accruals 753 Other current liabilities 507 Long-term debt (less current maturities) 3,951 Deferred income taxes, net 9,536 Long-term retirement benefits 263 Other noncurrent liabilities 64 Preliminary allocation of purchase price $ 25,833 |
Summary of Pre-tax Preliminary Gain | A summary of the pre-tax preliminary gain is as follows: Purchase price $ 7,056 Net assets and liabilities divested (1,708 ) Goodwill associated with divested RJR Tobacco brands (1,849 ) Gain on Divestiture $ 3,499 |
Pro Forma Financial Information (Unaudited) | The following unaudited pro forma consolidated financial information presents the combined results of operations of RAI and Lorillard as if the Merger and Divestiture had occurred at the beginning of the earliest period presented and includes non-recurring pro forma adjustments that were directly attributable to the Merger and Divestiture. Pro forma net income includes adjustments for acquisition-related costs. Pro forma net income per share includes the impact of the issuance of RAI common stock in the BAT Share Purchase and as part of the Merger Consideration. For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales $ 3,102 $ 2,884 $ 5,871 $ 5,439 Net income 680 597 1,218 1,065 Net income per share: Basic income per share: Net income $ 0.95 $ 0.83 $ 1.70 $ 1.48 Diluted income per share: Net income $ 0.95 $ 0.83 $ 1.70 $ 1.48 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities | Financial assets and liabilities carried at fair value were as follows: June 30, 2015 December 31, 2104 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash equivalents $ 3,859 $ — $ — $ 3,859 $ 883 $ — $ — $ 883 Short-term investments: Corporate debt securities — 210 — 210 — — — — U.S. Governmental agency obligations — 71 — 71 — — — — Commercial paper — 27 — 27 — — — — International governmental obligations — 39 — 39 — — — — Other assets and deferred charges: Corporate debt securities — 104 — 104 — — — — U.S. Governmental agency obligations — 28 — 28 — — — — Auction rate securities — — 79 79 — — 79 79 Mortgage-backed security — — 11 11 — — 12 12 Marketable equity security 2 — — 2 2 — — 2 Interest rate swaps — 59 — 59 — — — — |
Financial Assets Classified as Level 3 Investments | Financial assets classified as Level 3 investments were as follows: June 30, 2015 December 31, 2014 Cost Gross Unrealized Loss (1) Estimated Fair Value Cost Gross Unrealized Loss (1) Estimated Fair Value Auction rate securities $ 99 $ (20 ) $ 79 $ 99 $ (20 ) $ 79 Mortgage-backed security 17 (6 ) 11 18 (6 ) 12 $ 116 $ (26 ) $ 90 $ 117 $ (26 ) $ 91 (1) Unrealized losses, net of tax, are reported in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014. |
Changes in Level 3 Investments | The changes in the Level 3 investments during the six months ended June 30, 2015, were as follows: Auction Rate Securities Cost Gross Unrealized Gain (Loss) Estimated Fair Value Balance as of January 1, 2015 $ 99 $ (20 ) $ 79 Balance as of June 30, 2015 $ 99 $ (20 ) $ 79 Mortgage-Backed Security Cost Gross Unrealized Gain (Loss) Estimated Fair Value Balance as of January 1, 2015 $ 18 $ (6 ) $ 12 Redemptions (1 ) — (1 ) Balance as of June 30, 2015 $ 17 $ (6 ) $ 11 |
Amortization of Net Gain Loss upon Termination of Derivative Instruments Impacted Income Statement | The amortization of derivative instruments impacted the condensed consolidated statements of income (unaudited) as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Interest and debt expense $ (4 ) $ (4 ) $ (8 ) $ (8 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amounts of Goodwill by Segment | The changes in the carrying amounts of goodwill by segment were as follows: RJR Tobacco American Snuff Santa Fe All Other Consolidated Goodwill $ 9,065 $ 2,501 $ 197 $ 44 $ 11,807 Accumulated impairment charges (3,763 ) (28 ) — — (3,791 ) Net goodwill balance as of December 31, 2014 5,302 2,473 197 44 $ 8,016 2015 Activity Merger goodwill 10,852 — — — 10,852 Divested goodwill (1,849 ) — — — (1,849 ) 9,003 — — — 9,003 Net goodwill balance as of June 30, 2015 $ 14,305 $ 2,473 $ 197 $ 44 $ 17,019 |
Carrying Amounts and Changes of Trademarks and Other Intangible Assets by Segment | The carrying amounts and changes therein of trademarks and other intangible assets by segment were as follows: RJR Tobacco American Snuff Santa Fe All Other Consolidated Trademarks Other Trademarks Trademarks Other Trademarks Other Indefinite-lived: Balance as of December 31, 2014 $ 977 $ 99 $ 1,136 $ 155 $ 4 $ 2,268 $ 103 Trademarks acquired in Merger 26,000 — — — — 26,000 — Trademarks divested (344 ) — — — — (344 ) — Other intangibles divested — (12 ) — — — — (12 ) 25,656 (12 ) — — — 25,656 (12 ) Balance as of June 30, 2015 $ 26,633 $ 87 $ 1,136 $ 155 $ 4 $ 27,924 $ 91 Finite-lived: Balance as of December 31, 2014 $ 12 $ 31 $ 7 $ — $ — $ 19 $ 31 Trademarks acquired in Merger 9 — — — — 9 — Customer list acquired in Merger — 233 — — — — 233 Amortization (2 ) (4 ) — — — (2 ) (4 ) 7 229 — — — 7 229 Balance as of June 30, 2015 $ 19 $ 260 $ 7 $ — $ — $ 26 $ 260 |
Details of Finite-Lived Intangible Assets | Details of finite-lived intangible assets were as follows: June 30, 2015 December 31, 2014 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer lists $ 233 $ (1 ) $ 232 $ — $ — $ — Contract manufacturing agreements 151 (137 ) 14 151 (135 ) 16 Trademarks 123 (97 ) 26 114 (95 ) 19 Other intangibles 15 (1 ) 14 15 — 15 $ 522 $ (236 ) $ 286 $ 280 $ (230 ) $ 50 |
Finite Lived Intangible Assets Future Amortization Expense | The estimated remaining amortization associated with finite-lived intangible assets is expected to be expensed as follows: Year Amount Remainder of 2015 $ 11 2016 22 2017 22 2018 21 2019 15 Thereafter 195 $ 286 |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring And Related Activities [Abstract] | |
Schedule of Changes in Restructuring Liability | The changes in the restructuring liability were as follows: Employee Severance and Benefits Balance as of December 31, 2013 $ 57 Utilized in 2014 (17 ) Balance as of December 31, 2014 40 Utilized in 2015 (20 ) Balance as of June 30, 2015 $ 20 |
Income Per Share (Tables)
Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Components of Calculation of Income Per Share | The components of the calculation of income per share were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Income from continuing operations $ 1,928 $ 492 $ 2,317 $ 830 Income from discontinued operations — — — 25 Net income $ 1,928 $ 492 $ 2,317 $ 855 Basic weighted average shares, in thousands 568,177 533,311 549,852 535,037 Effect of dilutive potential shares: Restricted stock units 1,527 1,454 1,748 1,787 Diluted weighted average shares, in thousands 569,704 534,765 551,600 536,824 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | The major components of inventories were as follows: June 30, 2015 December 31, 2014 Leaf tobacco $ 1,312 $ 1,125 Other raw materials 110 90 Work in process 80 72 Finished products 313 171 Other 39 27 Total 1,854 1,485 LIFO allowance (177 ) (204 ) $ 1,677 $ 1,281 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Provision for income Taxes from Continuing Operations | The provision for income taxes from continuing operations was as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Provision for income taxes from continuing operations $ 2,311 $ 283 $ 2,542 $ 476 Effective tax rate 54.5 % 36.5 % 52.3 % 36.4 % |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Instrument [Line Items] | |
Long-Term Debt, Net of Discounts | RAI’s long-term debt, net of discounts and including adjustments associated with interest rate swaps of $38 million and $48 million as of June 30, 2015 and December 31, 2014, respectively, is below. RJR Tobacco’s long-term debt, including adjustments associated with interest rate swaps of $59 million and adjustments to fair value of $392 million as of June 30, 2015, is below. June 30, 2015 December 31, 2014 RAI 2.30% notes due 2018 $ 1,250 $ — 3.25% notes due 2020 1,250 — 3.25% notes due 2022 1,099 1,099 4.00% notes due 2022 999 — 4.45% notes due 2025 2,492 — 4.75% notes due 2042 992 992 4.85% notes due 2023 550 550 5.70% notes due 2035 747 — 5.85% notes due 2045 2,238 — 6.15% notes due 2043 547 547 6.75% notes due 2017 738 747 7.25% notes due 2037 448 448 7.75% notes due 2018 249 250 Total RAI long-term debt $ 13,599 $ 4,633 RJR Tobacco 2.300% notes due 2017 $ 505 $ — 3.500% notes due 2016 511 — 3.750% notes due 2023 486 — 6.875% notes due 2020 870 — 7.000% notes due 2041 299 — 8.125% notes due 2019* 954 — 8.125% notes due 2040 326 — Total RJR Tobacco long-term debt $ 3,951 $ — Total long-term debt (less current maturities) $ 17,550 $ 4,633 Current maturities of long-term debt 450 450 $ 18,000 $ 5,083 __________________ * The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. |
Maturities of RAI and RJR Tobacco's Notes | As of June 30, 2015, the maturities of RAI and RJR Tobacco’s notes, net of discounts, were as follows: Year RAI RJR Tobacco Total 2015 $ 450 $ — 450 2016 — 500 500 2017 700 500 1,200 2018 1,500 — 1,500 2019 — 750 750 2020 1,250 750 2,000 2022 and thereafter 10,111 1,000 11,111 $ 14,011 $ 3,500 $ 17,511 |
Lorillard Notes | |
Debt Instrument [Line Items] | |
Schedule of Exchanged Portion of Notes | The following table sets forth, as of the Expiration Date, the principal amounts of each series of Lorillard Tobacco Notes that (1) had been validly tendered and not validly withdrawn (and consents thereby validly given and not validly revoked) and (2) were not tendered in the Exchange Offers: Series of Lorillard Tobacco Notes Principal Amount of Lorillard Tobacco Notes Outstanding Prior to Exchange Offers Principal Amount of Lorillard Tobacco Notes Tendered in Exchange Offers Principal Amount of Lorillard Tobacco Notes Not Tendered in Exchange Offers 2.300% notes due 2017 $ 500 $ 447 $ 53 3.500% notes due 2016 500 415 85 3.750% notes due 2023 500 474 26 6.875% notes due 2020 750 641 109 7.000% notes due 2041 250 240 10 8.125% notes due 2019 750 669 81 8.125% notes due 2040 250 237 13 $ 3,500 $ 3,123 $ 377 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
U.S. Tobacco-related Cases Pending Against RJR Tobacco or its Affiliates or Indemnities | The following table lists the categories of the U.S. tobacco-related cases pending against RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees as of June 30, 2015, compared with the number of cases pending against RJR Tobacco or its affiliates or indemnitees as of March 31, 2015, as reported in RAI’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015, filed with the SEC on April 20, 2015, and a cross-reference to the discussion of each case type. Case Type RJR Tobacco’s U.S. Case Numbers as of June 30, 2015*** Change in Number of Cases Since March 31, 2015 Increase/(Decrease) Page Reference Individual Smoking and Health 112 12 33 West Virginia IPIC (Number of Plaintiffs)* 1 (approx. 567) No change 35 Engle Progeny (Number of Plaintiffs)** 3,580 (58) (91) 35 Broin 2,545 (10) 47 Class Action 21 1 48 Filter Cases 67 67 51 Health-Care Cost Recovery 2 No change 51 State Settlement Agreements—Enforcement and Validity; Adjustments 28 No change 57 Other Litigation and Developments 14 3 62 * Includes as one case the approximately 567 cases pending as a consolidated action In Re: Tobacco Litigation Individual Personal Injury Cases West Virginia IPIC West Virginia IPIC ** The Engle Engle *** RJR Tobacco's case number increased as a result of the Lorillard Tobacco Merger as follows: Individual Smoking and Health - 6; Class Action - 1; West Virginia IPIC Engle |
Verdicts in Individual Engle Progeny Cases that have been Tried and Remain Pending | The following chart reflects the details related to Hiott , Starr-Blundell, Clayton, Cohen, Buonomo, Hallgren, Sikes, Thibault Plaintiff Case Name RJR Tobacco Allocation of Fault Lorillard Tobacco Allocation of Fault Compensatory Damages (as adjusted) (1) Punitive Damages Appeal Status Hiott 40% — $ 730,000 $ — Notice to invoke jurisdiction of Florida Supreme Court pending Starr-Blundell 10% — 50,000 — Notice to invoke jurisdiction of Florida Supreme Court pending; stayed pending resolution of Soffer v. R. J. Reynolds Tobacco Co. Clayton 10% — 60,000 — Pending – First DCA Cohen 33.3% — 3,330,000 10,000,000 Remanded for partial new trial; notice to invoke jurisdiction of Florida Supreme Court pending Buonomo 77.5% — 4,060,000 25,000,000 Remanded for new trial; notice to invoke jurisdiction of Florida Supreme Court pending; appeal of reinstated punitive damages award pending in Fourth DCA Hallgren 25% — 500,000 750,000 Notice to invoke jurisdiction of Florida Supreme Court pending; stayed pending resolution of Soffer v. R. J. Reynolds Tobacco Co. Sikes 51% — 3,520,000 2,000,000 Notice to invoke jurisdiction of Florida Supreme Court pending Thibault 70% — 1,750,000 1,275,000 First DCA affirmed the judgment, per curiam; notice to invoke the discretionary jurisdiction of Florida Supreme Court pending Totals $ 14,000,000 $ 39,025,000 (1) The following chart reflects verdicts in all other individual Engle Plaintiff Case Name RJR Tobacco Allocation of Fault Lorillard Tobacco Allocation of Fault Compensatory Damages (as adjusted) (1) Punitive Damages Appeal Status Putney 30% — — — Reversed and remanded for further proceedings; notice to invoke jurisdiction of Florida Supreme Court pending Andy Allen 24% — 2,475,000 7,756,000 Reversed and remanded for new trial; new trial completed on November 26, 2014; final judgment has not been entered Jewett 20% 10% — — Reversed and remanded for new trial; new trial has not been scheduled Soffer 40% — 2,000,000 — Pending – Florida Supreme Court Ciccone 30% — 1,000,000 — Pending – Florida Supreme Court Calloway 27% 18% 16,100,000 (2) 29,850,000 Pending – Fourth DCA Hancock 5% — 700 — Fourth DCA affirmed, per curiam James Smith 55% — 600,000 (2) 20,000 Pending – Eleventh Circuit Ballard 55% — 5,000,000 — Notice to invoke jurisdiction of Florida Supreme Court pending Evers 60% 9% 2,036,000 — Punitive damages of $12.4 million set aside by trial court; pending – Second DCA Schoeff 75% — 7,875,000 30,000,000 Pending – Fourth DCA Marotta 58% — 3,480,000 — Pending – Fourth DCA Searcy 30% — 1,000,000 (2) 1,670,000 Pending – Eleventh Circuit Earl Graham 20% — 550,000 — Eleventh Circuit held that federal law impliedly preempts claims for strict liability and negligence based on the defect and negligence findings from Engle Skolnick 30% — — — Fourth DCA set aside judgment and ordered a partial new trial Grossman 75% — 15,350,000 (2) 22,500,000 Pending – Fourth DCA Gafney 33% 33% 3,828,000 — Pending – Fourth DCA Cheeley 50% — 1,500,000 2,000,000 Pending – Fourth DCA Goveia 35% — 297,500 2,250,000 Fifth DCA affirmed per curiam Bowden 30% — 1,500,000 — Pending – First DCA Burkhart 25% 10% 3,500,000 (2) 1,750,000 Pending – Eleventh Circuit Bakst 75% — 4,504,000 14,000,000 Pending – Fourth DCA Robinson 70.5% — 16,900,000 16,900,000 Pending – First DCA Harris 15% 10% 1,223,500 (2) — Post-trial motions are pending (3) Wilcox 70% — 4,900,000 8,500,000 Pending – Third DCA Irimi 14.5% 14.5% — — Defendants' motion for new trial granted; pending - Fourth DCA Hubbird 50% — 3,000,000 (2) 25,000,000 Pending – Third DCA Lourie 3% 7% 137,000 — Pending – Second DCA Kerrivan 31% — 6,046,660 (2) 9,600,000 Post-trial motions are pending (3) Taylor 58% — 4,116,000 (2) 521,000 Pending – First DCA Schleider 70% — 14,700,000 (2) — Pending – Third DCA Perrotto 20% 6% 1,063,000 — Post-trial motions are pending (3) Ellen Gray 50% — 3,000,000 — Post-trial motions are pending (3) Sowers 50% — 2,130,000 — Post-trial motions are pending (3) Zamboni 30% — 102,000 — Final judgment has not been entered Pollari 42.5% — 5,000,000 (2) 1,500,000 Post-trial motions are pending (3) Gore 23% — 1,000,000 — Final judgment has not been entered Ryan 65% — 21,500,000 25,000,000 Post-trial motions are pending (3) Hardin 13% — 100,880 — Post-trial motions are pending (3) McCoy 25% 20% 1,038,400 (4) 6,000,000 Final judgment has not been entered Totals $ 158,553,640 $ 204,817,000 (1) (2) (3) (4) |
Commitments and Contingencies Related to Settlements | Set forth below is the unadjusted tobacco industry settlement payment schedule for 2013 and beyond: 2013 2014 2015 and thereafter First Four States’ Settlements: (1) Mississippi Annual Payment $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 Texas Annual Payment 580 580 580 Minnesota Annual Payment 204 204 204 Remaining Jurisdictions’ Settlement: Annual Payments (1) 8,004 8,004 8,004 Total $ 9,364 $ 9,364 $ 9,364 (1) Subject to adjustments for changes in sales volume, inflation and other factors. All payments are to be allocated among the companies on the basis of relative market share. For further information, see “— State Settlement Agreements — Enforcement and Validity; Adjustments” below. RAI’s operating subsidiaries expenses and payments under the State Settlement Agreements for 2013 and 2014, and the projected expenses and payments for 2015 and beyond, which include the impact of the Merger, are set forth below (2) 2013 2014 2015 2016 2017 2018 and thereafter Settlement expenses $ 1,819 $ 1,917 — Settlement cash payments $ 2,582 $ 1,985 — Projected settlement expenses $>2,400 $>2,900 $>3,200 $>3,200 Projected settlement cash payments $>2,100 $>3,100 $>2,900 $>3,200 (2) Amounts beginning in 2013 reflect the impact of the Term Sheet described below under “— State Settlement Agreements – Enforcement and Validity; Adjustments – Partial Settlement of Certain NPM Adjustment Claims.” |
Disputed Portion of MSA Payment Obligation | The approximate maximum principal amounts of RJR Tobacco’s and Lorillard Tobacco’s shares of the disputed NPM Adjustments for the years 2004 through 2012, as currently calculated by the Independent Auditor, are as follows (the amounts shown below do not include the interest or earnings thereon to which RJR Tobacco and Lorillard Tobacco believe they would be entitled under the MSA and do not reflect any reduction as a result of the Term Sheet described below): Year for which NPM Adjustment calculated 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year in which deduction for NPM Adjustment was taken 2007 2008 2009 2010 2011 2012 2013 2014 2015 RJR Tobacco’s approximate share of disputed NPM Adjustment (millions) $ 562 $ 445 $ 419 $ 435 $ 468 $ 472 $ 470 $ 422 $ 429 Lorillard Tobacco’s approximate share of disputed NPM Adjustment (millions) $ 111 $ 76 $ 73 $ 83 $ 104 $ 107 $ 119 $ 88 $ 97 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Common Stock Paid-In Retained Earnings (Accumulated Deficit) Accumulated Total Shareholders’ Equity Balance as of December 31, 2014 $ — $ 6,200 $ (1,314 ) $ (364 ) $ 4,522 Net income — — 2,317 — 2,317 Retirement benefits, net of $16 million tax benefit — — — (26 ) (26 ) Amortization of realized loss on hedging instruments, net of tax — — — 1 1 Cumulative translation adjustment and other, net of $10 million tax benefit — — — (17 ) (17 ) Dividends - $1.34 per share — — (718 ) — (718 ) Issuance of additional shares as Merger Consideration — 7,555 — — 7,555 Issuance of additional shares for BAT Share Purchase — 4,673 — — 4,673 Common stock repurchased — (40 ) — — (40 ) Equity incentive award plan and stock-based compensation — 44 — — 44 Excess tax benefit on stock-based compensation plans — 15 — — 15 Balance as of June 30, 2015 $ — $ 18,447 $ 285 $ (406 ) $ 18,326 Common Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance as of December 31, 2013 $ — $ 6,571 $ (1,348 ) $ (56 ) $ 5,167 Net income — — 855 — 855 Unrealized gain on long-term investments, net of $1 million tax expense — — — 2 2 Amortization of realized loss on hedging instruments, net of tax — — — 1 1 Cumulative translation adjustment and other, net of $1 million tax benefit — — — (2 ) (2 ) Dividends - $1.34 per share — — (719 ) — (719 ) Common stock repurchased — (440 ) — — (440 ) Equity incentive award plan and stock-based compensation — 21 — — 21 Excess tax benefit on stock-based compensation plans — 10 — — 10 Balance as of June 30, 2014 $ — $ 6,162 $ (1,212 ) $ (55 ) $ 4,895 |
Components of Accumulated Other Comprehensive Loss Net of Tax | The components of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2015, were as follows: Retirement Benefits Unrealized Realized Loss on Hedging Instruments Cumulative Translation Adjustment and Other Total Balance as of December 31, 2014 $ (294 ) $ (14 ) $ (12 ) $ (44 ) $ (364 ) Other comprehensive income (loss) before reclassifications (13 ) — — (17 ) (30 ) Amounts reclassified from accumulated other comprehensive income (loss) (13 ) — 1 — (12 ) Net current-period other comprehensive income (loss) (26 ) — 1 (17 ) (42 ) Balance as of June 30, 2015 $ (320 ) $ (14 ) $ (11 ) $ (61 ) $ (406 ) The components of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2014, were as follows: Retirement Benefits Unrealized Realized Loss on Hedging Instruments Cumulative Translation Adjustment and Other Total Balance as of December 31, 2013 $ (17 ) $ (16 ) $ (13 ) $ (10 ) $ (56 ) Other comprehensive income (loss) before reclassifications 12 2 — (2 ) 12 Amounts reclassified from accumulated other comprehensive income (loss) (12 ) — 1 — (11 ) Net current-period other comprehensive income (loss) — 2 1 (2 ) 1 Balance as of June 30, 2014 $ (17 ) $ (14 ) $ (12 ) $ (12 ) $ (55 ) |
Reclassification Out of Accumulated Other Comprehensive Income Net of Tax | Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidated statement of income (unaudited) for the three months ended June 30, were as follows: Components Amounts Reclassified Affected Line Item 2015 2014 Defined benefit pension and postretirement plans: Amortization of prior service costs $ (6 ) $ (5 ) Cost of products sold Amortization of prior service costs (4 ) (4 ) Selling, general and administrative expenses (10 ) (9 ) Deferred taxes 3 3 Provision for income taxes Net of tax $ (7 ) $ (6 ) Loss on hedging instruments: Amortization of realized loss $ 1 $ 1 Interest and debt expense Deferred taxes — — Provision for income taxes Net of tax $ 1 $ 1 Total reclassifications $ (6 ) $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidated statement of income (unaudited) for the six months ended June 30, were as follows: Components Amounts Reclassified Affected Line Item 2015 2014 Defined benefit pension and postretirement plans: Amortization of prior service costs $ (11 ) $ (10 ) Cost of products sold Amortization of prior service costs (9 ) (9 ) Selling, general and administrative expenses (20 ) (19 ) Deferred taxes 7 7 Provision for income taxes Net of tax $ (13 ) $ (12 ) Net income Loss on hedging instruments: Amortization of realized loss $ 1 $ 1 Interest and debt expense Deferred taxes — — Provision for income taxes Net of tax $ 1 $ 1 Total reclassifications $ (12 ) $ (11 ) Net income |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information Related to Sales, Income, and Assets | Segment Data: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales: RJR Tobacco $ 1,876 $ 1,736 $ 3,484 $ 3,299 American Snuff 218 195 419 379 Santa Fe 218 168 389 303 All Other 91 63 168 116 Consolidated net sales $ 2,403 $ 2,162 $ 4,460 $ 4,097 Operating income (loss): RJR Tobacco (1) $ 727 $ 726 $ 1,315 $ 1,208 American Snuff 130 110 248 212 Santa Fe 125 84 217 149 All Other (35 ) (49 ) (96 ) (88 ) Gain on Divestiture 3,499 — 3,499 — Corporate expense (82 ) (35 ) (126 ) (55 ) Consolidated operating income $ 4,364 $ 836 $ 5,057 $ 1,426 Reconciliation to income from continuing operations before income taxes: Consolidated operating income (1) $ 4,364 $ 836 $ 5,057 $ 1,426 Interest and debt expense 105 62 196 121 Interest income — (1 ) (1 ) (2 ) Other (income) expense, net 20 — 3 1 Income from continuing operations before income taxes $ 4,239 $ 775 $ 4,859 $ 1,306 (1) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Summary of Balances and Transactions | A summary of balances and transactions with such BAT affiliates is as follows: Balances: June 30, 2015 December 31, 2014 Accounts receivable, related party $ 31 $ 41 Due to related party 7 1 Deferred revenue, related party 15 32 Significant transactions: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net sales $ 54 $ 91 $ 136 $ 177 Purchases 12 4 14 13 BAT Share Purchase 4,673 — 4,673 — RAI common stock purchases from B&W — 114 — 155 |
RAI Guaranteed, Unsecured Not40
RAI Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Guarantees [Abstract] | |
Condensed Consolidating Statements of Income | Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 2,320 $ 82 $ (53 ) $ 2,349 Net sales, related party — 54 — — 54 Net sales — 2,374 82 (53 ) 2,403 Cost of products sold — 1,082 53 (51 ) 1,084 Selling, general and administrative expenses 43 348 60 — 451 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 3 — — 3 Operating income (loss) (43 ) 4,643 (234 ) (2 ) 4,364 Interest and debt expense 98 33 2 (28 ) 105 Interest income (28 ) — — 28 — Other (income) expense, net 14 (11 ) 7 10 20 Income (loss) from continuing operations before income taxes (127 ) 4,621 (243 ) (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 2,391 (3 ) — 2,311 Equity income (loss) from subsidiaries 1,978 (207 ) — (1,771 ) — Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 2,029 $ 54 $ (12 ) $ 2,071 Net sales, related party — 91 — — 91 Net sales — 2,120 54 (12 ) 2,162 Cost of products sold — 921 49 (11 ) 959 Selling, general and administrative expenses 17 287 60 — 364 Amortization expense — 3 — — 3 Operating income (loss) (17 ) 909 (55 ) (1 ) 836 Interest and debt expense 62 20 2 (22 ) 62 Interest income (22 ) — (1 ) 22 (1 ) Other (income) expense, net — (10 ) — 10 — Income (loss) from continuing operations before income taxes (57 ) 899 (56 ) (11 ) 775 Provision for (benefit from) income taxes (20 ) 323 (20 ) — 283 Equity income (loss) from subsidiaries 529 3 — (532 ) — Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 4,319 $ 150 $ (145 ) $ 4,324 Net sales, related party — 136 — — 136 Net sales — 4,455 150 (145 ) 4,460 Cost of products sold — 1,951 123 (140 ) 1,934 Selling, general and administrative expenses 62 773 127 — 962 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 6 — — 6 Operating income (loss) (62 ) 5,427 (303 ) (5 ) 5,057 Interest and debt expense 189 50 4 (47 ) 196 Interest income (47 ) (1 ) — 47 (1 ) Other (income) expense, net 15 (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) 5,399 (295 ) (26 ) 4,859 Provision for (benefit from) income taxes (104 ) 2,672 (26 ) — 2,542 Equity income (loss) from subsidiaries 2,432 (187 ) — (2,245 ) — Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,843 $ 97 $ (20 ) $ 3,920 Net sales, related party — 177 — — 177 Net sales — 4,020 97 (20 ) 4,097 Cost of products sold — 1,826 82 (19 ) 1,889 Selling, general and administrative expenses 20 644 113 — 777 Amortization expense — 5 — — 5 Operating income (loss) (20 ) 1,545 (98 ) (1 ) 1,426 Interest and debt expense 121 43 3 (46 ) 121 Interest income (46 ) (1 ) (1 ) 46 (2 ) Other (income) expense, net 2 (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,524 (99 ) (22 ) 1,306 Provision for (benefit from) income taxes (34 ) 546 (36 ) — 476 Equity income (loss) from subsidiaries 918 9 — (927 ) — Income (loss) from continuing operations 855 987 (63 ) (949 ) 830 Income from discontinued operations — 25 — — 25 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 |
Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (17 ) (1 ) 18 (20 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other 10 10 13 (23 ) 10 Comprehensive income (loss) $ 1,919 $ 2,016 $ (228 ) $ (1,788 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 7 — (7 ) 6 Unrealized gain on long-term investments 1 1 — (1 ) 1 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) 4 (3 ) Comprehensive income (loss) $ 497 $ 585 $ (38 ) $ (547 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (23 ) (1 ) 24 (26 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (27 ) 44 (17 ) Comprehensive income (loss) $ 2,275 $ 2,500 $ (297 ) $ (2,203 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 1 — (1 ) — Unrealized gain on long-term investments 2 2 — (2 ) 2 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (2 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 1,014 $ (65 ) $ (949 ) $ 856 |
Reclassification Out of Accumulated Other Comprehensive Income Net of Tax | Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (6 ) $ — $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (10 ) — — (10 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) — — 7 — Equity income (loss) from subsidiaries (7 ) (7 ) — 7 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (6 ) $ (7 ) $ — $ 7 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (9 ) — — (9 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — — 6 — Equity income (loss) from subsidiaries (6 ) (6 ) — 6 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (5 ) $ (6 ) $ — $ 6 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (11 ) $ — $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (20 ) — — (20 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) — — 13 — Equity income (loss) from subsidiaries (13 ) (13 ) — 13 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (12 ) $ (13 ) $ — $ 13 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (19 ) — — (19 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — — 12 — Equity income (loss) from subsidiaries (12 ) (12 ) — 12 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (11 ) $ (12 ) $ — $ 12 $ (11 ) Net income |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 827 $ (4 ) $ (500 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (60 ) (3 ) (1 ) (64 ) Return of intercompany investments 185 — — (185 ) — Acquisition, net of cash acquired (18,278 ) 524 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — 7,056 Other, net (710 ) 12 (1 ) 700 1 Net cash flows from (used in) investing activities (11,747 ) 476 531 514 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (479 ) — 479 (712 ) Repurchase of common stock (40 ) — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — 4,673 Issuance of long-term debt 8,975 — — — 8,975 Debt issuance costs and financing fees (64 ) — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — 15 Dividends paid on preferred stock (21 ) — — 21 — Distribution of equity — (185 ) — 185 — Other, net (11 ) 680 30 (699 ) — Net cash flows from (used in) financing activities 12,815 16 30 (14 ) 12,847 Effect of exchange rate changes on cash and cash equivalents — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,319 535 — 3,047 Cash and cash equivalents at beginning of period 102 469 395 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 635 $ (44 ) $ (662 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (41 ) (86 ) 4 (123 ) Proceeds from termination of joint venture — — 35 — 35 Contributions to intercompany investments (32 ) — — 32 — Other, net 143 41 (33 ) (175 ) (24 ) Net cash flows from (used in) investing activities 111 — (84 ) (139 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (637 ) — 637 (699 ) Repurchase of common stock (440 ) — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — 1,000 Repayments under revolving credit facility (200 ) — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — 10 Dividends paid on preferred stock (21 ) — — 21 — Receipt of equity — — 32 (32 ) — Other, net (31 ) (320 ) 176 175 — Net cash flows from (used in) financing activities (381 ) (957 ) 208 801 (329 ) Effect of exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (322 ) 79 — (187 ) Cash and cash equivalents at beginning of period 444 696 360 — 1,500 Cash and cash equivalents at end of period $ 500 $ 374 $ 439 $ — $ 1,313 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Short-term investments — 347 — — 347 Accounts receivable — 84 61 — 145 Accounts receivable, related party — 31 — — 31 Other receivables 772 4,328 432 (5,514 ) 18 Inventories — 1,554 130 (7 ) 1,677 Deferred income taxes, net 4 921 10 — 935 Other current assets 7 275 3 — 285 Total current assets 2,078 9,328 1,566 (5,521 ) 7,451 Property, plant and equipment, net 3 1,263 32 — 1,298 Trademarks and other intangible assets, net — 2,289 26,012 — 28,301 Goodwill — 17,003 16 — 17,019 Long-term intercompany notes receivable 1,603 180 — (1,783 ) — Investment in subsidiaries 36,134 17,760 — (53,894 ) — Other assets and deferred charges 150 383 7 (51 ) 489 Total assets $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 146 $ 29 $ — $ 178 Tobacco settlement accruals — 1,982 — — 1,982 Due to related party — 3 4 — 7 Deferred revenue, related party — 15 — — 15 Current maturities of long-term debt 450 — — — 450 Income taxes payable 2,096 19 14 (4 ) 2,125 Dividends payable on common stock 356 — — — 356 Other current liabilities 4,871 1,922 50 (5,514 ) 1,329 Total current liabilities 7,776 4,087 97 (5,518 ) 6,442 Long-term intercompany notes payable 180 1,280 323 (1,783 ) — Long-term debt (less current maturities) 13,599 3,951 — — 17,550 Deferred income taxes, net — 195 9,664 (46 ) 9,813 Long-term retirement benefits (less current portion) 56 2,113 70 — 2,239 Other noncurrent liabilities 31 156 1 — 188 Shareholders’ equity 18,326 36,424 17,478 (53,902 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 469 $ 395 $ — $ 966 Accounts receivable — 74 42 — 116 Accounts receivable, related party — 41 — — 41 Other receivables 70 1,199 10 (1,267 ) 12 Inventories — 1,198 85 (2 ) 1,281 Deferred income taxes, net 5 688 10 — 703 Other current assets 50 151 1 2 204 Total current assets 227 3,820 543 (1,267 ) 3,323 Property, plant and equipment, net 3 1,170 30 — 1,203 Trademarks and other intangible assets, net — 2,417 4 — 2,421 Goodwill — 7,999 17 — 8,016 Long-term intercompany notes receivable 1,593 190 — (1,783 ) — Investment in subsidiaries 9,598 450 — (10,048 ) — Other assets and deferred charges 101 180 23 (71 ) 233 Total assets $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 128 $ 13 $ — $ 142 Tobacco settlement accruals — 1,819 — — 1,819 Due to related party — 1 — — 1 Deferred revenue, related party — 32 — — 32 Current maturities of long-term debt 450 — — — 450 Dividends payable on common stock 356 — — — 356 Other current liabilities 1,280 682 51 (1,269 ) 744 Total current liabilities 2,087 2,662 64 (1,269 ) 3,544 Long-term intercompany notes payable 190 1,300 293 (1,783 ) — Long-term debt (less current maturities) 4,633 — — — 4,633 Deferred income taxes, net — 450 — (67 ) 383 Long-term retirement benefits (less current portion) 57 1,930 10 — 1,997 Other noncurrent liabilities 33 83 1 — 117 Shareholders’ equity 4,522 9,801 249 (10,050 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 |
RJR Tobacco Guaranteed, Unsec41
RJR Tobacco Guaranteed, Unsecured Notes - Condensed Consolidating Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Condensed Consolidating Statements of Income | Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 2,320 $ 82 $ (53 ) $ 2,349 Net sales, related party — 54 — — 54 Net sales — 2,374 82 (53 ) 2,403 Cost of products sold — 1,082 53 (51 ) 1,084 Selling, general and administrative expenses 43 348 60 — 451 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 3 — — 3 Operating income (loss) (43 ) 4,643 (234 ) (2 ) 4,364 Interest and debt expense 98 33 2 (28 ) 105 Interest income (28 ) — — 28 — Other (income) expense, net 14 (11 ) 7 10 20 Income (loss) from continuing operations before income taxes (127 ) 4,621 (243 ) (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 2,391 (3 ) — 2,311 Equity income (loss) from subsidiaries 1,978 (207 ) — (1,771 ) — Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 2,029 $ 54 $ (12 ) $ 2,071 Net sales, related party — 91 — — 91 Net sales — 2,120 54 (12 ) 2,162 Cost of products sold — 921 49 (11 ) 959 Selling, general and administrative expenses 17 287 60 — 364 Amortization expense — 3 — — 3 Operating income (loss) (17 ) 909 (55 ) (1 ) 836 Interest and debt expense 62 20 2 (22 ) 62 Interest income (22 ) — (1 ) 22 (1 ) Other (income) expense, net — (10 ) — 10 — Income (loss) from continuing operations before income taxes (57 ) 899 (56 ) (11 ) 775 Provision for (benefit from) income taxes (20 ) 323 (20 ) — 283 Equity income (loss) from subsidiaries 529 3 — (532 ) — Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 4,319 $ 150 $ (145 ) $ 4,324 Net sales, related party — 136 — — 136 Net sales — 4,455 150 (145 ) 4,460 Cost of products sold — 1,951 123 (140 ) 1,934 Selling, general and administrative expenses 62 773 127 — 962 (Gain) loss on Divestiture — (3,702 ) 203 — (3,499 ) Amortization expense — 6 — — 6 Operating income (loss) (62 ) 5,427 (303 ) (5 ) 5,057 Interest and debt expense 189 50 4 (47 ) 196 Interest income (47 ) (1 ) — 47 (1 ) Other (income) expense, net 15 (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) 5,399 (295 ) (26 ) 4,859 Provision for (benefit from) income taxes (104 ) 2,672 (26 ) — 2,542 Equity income (loss) from subsidiaries 2,432 (187 ) — (2,245 ) — Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,843 $ 97 $ (20 ) $ 3,920 Net sales, related party — 177 — — 177 Net sales — 4,020 97 (20 ) 4,097 Cost of products sold — 1,826 82 (19 ) 1,889 Selling, general and administrative expenses 20 644 113 — 777 Amortization expense — 5 — — 5 Operating income (loss) (20 ) 1,545 (98 ) (1 ) 1,426 Interest and debt expense 121 43 3 (46 ) 121 Interest income (46 ) (1 ) (1 ) 46 (2 ) Other (income) expense, net 2 (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,524 (99 ) (22 ) 1,306 Provision for (benefit from) income taxes (34 ) 546 (36 ) — 476 Equity income (loss) from subsidiaries 918 9 — (927 ) — Income (loss) from continuing operations 855 987 (63 ) (949 ) 830 Income from discontinued operations — 25 — — 25 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 |
Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 2,023 $ (240 ) $ (1,783 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (17 ) (1 ) 18 (20 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other 10 10 13 (23 ) 10 Comprehensive income (loss) $ 1,919 $ 2,016 $ (228 ) $ (1,788 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 579 $ (36 ) $ (543 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 7 — (7 ) 6 Unrealized gain on long-term investments 1 1 — (1 ) 1 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) 4 (3 ) Comprehensive income (loss) $ 497 $ 585 $ (38 ) $ (547 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,540 $ (269 ) $ (2,271 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (23 ) (1 ) 24 (26 ) Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (27 ) 44 (17 ) Comprehensive income (loss) $ 2,275 $ 2,500 $ (297 ) $ (2,203 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 1,012 $ (63 ) $ (949 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 1 — (1 ) — Unrealized gain on long-term investments 2 2 — (2 ) 2 Amortization of realized loss on hedging instruments 1 — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (2 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 1,014 $ (65 ) $ (949 ) $ 856 |
Reclassification Out of Accumulated Other Comprehensive Income Net of Tax | Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (6 ) $ — $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (10 ) — — (10 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) — — 7 — Equity income (loss) from subsidiaries (7 ) (7 ) — 7 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (6 ) $ (7 ) $ — $ 7 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — (4 ) Selling, general and administrative expenses — (9 ) — — (9 ) Deferred taxes — 3 — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — — 6 — Equity income (loss) from subsidiaries (6 ) (6 ) — 6 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (5 ) $ (6 ) $ — $ 6 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (11 ) $ — $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (20 ) — — (20 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) — — 13 — Equity income (loss) from subsidiaries (13 ) (13 ) — 13 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (12 ) $ (13 ) $ — $ 13 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — (9 ) Selling, general and administrative expenses — (19 ) — — (19 ) Deferred taxes — 7 — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — — 12 — Equity income (loss) from subsidiaries (12 ) (12 ) — 12 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — 1 Interest and debt expense Deferred taxes — — — — — Provision for income taxes Net of tax 1 — — — 1 Total reclassifications $ (11 ) $ (12 ) $ — $ 12 $ (11 ) Net income |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 827 $ (4 ) $ (500 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (60 ) (3 ) (1 ) (64 ) Return of intercompany investments 185 — — (185 ) — Acquisition, net of cash acquired (18,278 ) 524 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — 7,056 Other, net (710 ) 12 (1 ) 700 1 Net cash flows from (used in) investing activities (11,747 ) 476 531 514 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (479 ) — 479 (712 ) Repurchase of common stock (40 ) — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — 4,673 Issuance of long-term debt 8,975 — — — 8,975 Debt issuance costs and financing fees (64 ) — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — 15 Dividends paid on preferred stock (21 ) — — 21 — Distribution of equity — (185 ) — 185 — Other, net (11 ) 680 30 (699 ) — Net cash flows from (used in) financing activities 12,815 16 30 (14 ) 12,847 Effect of exchange rate changes on cash and cash equivalents — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,319 535 — 3,047 Cash and cash equivalents at beginning of period 102 469 395 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 635 $ (44 ) $ (662 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (41 ) (86 ) 4 (123 ) Proceeds from termination of joint venture — — 35 — 35 Contributions to intercompany investments (32 ) — — 32 — Other, net 143 41 (33 ) (175 ) (24 ) Net cash flows from (used in) investing activities 111 — (84 ) (139 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (637 ) — 637 (699 ) Repurchase of common stock (440 ) — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — 1,000 Repayments under revolving credit facility (200 ) — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — 10 Dividends paid on preferred stock (21 ) — — 21 — Receipt of equity — — 32 (32 ) — Other, net (31 ) (320 ) 176 175 — Net cash flows from (used in) financing activities (381 ) (957 ) 208 801 (329 ) Effect of exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (322 ) 79 — (187 ) Cash and cash equivalents at beginning of period 444 696 360 — 1,500 Cash and cash equivalents at end of period $ 500 $ 374 $ 439 $ — $ 1,313 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,788 $ 930 $ — $ 4,013 Short-term investments — 347 — — 347 Accounts receivable — 84 61 — 145 Accounts receivable, related party — 31 — — 31 Other receivables 772 4,328 432 (5,514 ) 18 Inventories — 1,554 130 (7 ) 1,677 Deferred income taxes, net 4 921 10 — 935 Other current assets 7 275 3 — 285 Total current assets 2,078 9,328 1,566 (5,521 ) 7,451 Property, plant and equipment, net 3 1,263 32 — 1,298 Trademarks and other intangible assets, net — 2,289 26,012 — 28,301 Goodwill — 17,003 16 — 17,019 Long-term intercompany notes receivable 1,603 180 — (1,783 ) — Investment in subsidiaries 36,134 17,760 — (53,894 ) — Other assets and deferred charges 150 383 7 (51 ) 489 Total assets $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 146 $ 29 $ — $ 178 Tobacco settlement accruals — 1,982 — — 1,982 Due to related party — 3 4 — 7 Deferred revenue, related party — 15 — — 15 Current maturities of long-term debt 450 — — — 450 Income taxes payable 2,096 19 14 (4 ) 2,125 Dividends payable on common stock 356 — — — 356 Other current liabilities 4,871 1,922 50 (5,514 ) 1,329 Total current liabilities 7,776 4,087 97 (5,518 ) 6,442 Long-term intercompany notes payable 180 1,280 323 (1,783 ) — Long-term debt (less current maturities) 13,599 3,951 — — 17,550 Deferred income taxes, net — 195 9,664 (46 ) 9,813 Long-term retirement benefits (less current portion) 56 2,113 70 — 2,239 Other noncurrent liabilities 31 156 1 — 188 Shareholders’ equity 18,326 36,424 17,478 (53,902 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 48,206 $ 27,633 $ (61,249 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Issuer Guarantors Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 469 $ 395 $ — $ 966 Accounts receivable — 74 42 — 116 Accounts receivable, related party — 41 — — 41 Other receivables 70 1,199 10 (1,267 ) 12 Inventories — 1,198 85 (2 ) 1,281 Deferred income taxes, net 5 688 10 — 703 Other current assets 50 151 1 2 204 Total current assets 227 3,820 543 (1,267 ) 3,323 Property, plant and equipment, net 3 1,170 30 — 1,203 Trademarks and other intangible assets, net — 2,417 4 — 2,421 Goodwill — 7,999 17 — 8,016 Long-term intercompany notes receivable 1,593 190 — (1,783 ) — Investment in subsidiaries 9,598 450 — (10,048 ) — Other assets and deferred charges 101 180 23 (71 ) 233 Total assets $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 128 $ 13 $ — $ 142 Tobacco settlement accruals — 1,819 — — 1,819 Due to related party — 1 — — 1 Deferred revenue, related party — 32 — — 32 Current maturities of long-term debt 450 — — — 450 Dividends payable on common stock 356 — — — 356 Other current liabilities 1,280 682 51 (1,269 ) 744 Total current liabilities 2,087 2,662 64 (1,269 ) 3,544 Long-term intercompany notes payable 190 1,300 293 (1,783 ) — Long-term debt (less current maturities) 4,633 — — — 4,633 Deferred income taxes, net — 450 — (67 ) 383 Long-term retirement benefits (less current portion) 57 1,930 10 — 1,997 Other noncurrent liabilities 33 83 1 — 117 Shareholders’ equity 4,522 9,801 249 (10,050 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 16,226 $ 617 $ (13,169 ) $ 15,196 |
RJR Tobacco | |
Condensed Consolidating Statements of Income | Condensed Consolidating Statements of Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net sales $ — $ 1,875 $ — $ 524 $ (50 ) $ 2,349 Net sales, related party — 54 — — — 54 Net sales — 1,929 — 524 (50 ) 2,403 Cost of products sold — 953 — 180 (49 ) 1,084 Selling, general and administrative expenses 43 375 — 33 — 451 (Gain) loss on Divestiture — 1,891 — (5,390 ) — (3,499 ) Amortization expense — 2 — 1 — 3 Operating income (loss) (43 ) (1,292 ) — 5,700 (1 ) 4,364 Interest and debt expense 98 9 — 27 (29 ) 105 Interest income (28 ) — (1 ) — 29 — Other (income) expense, net 14 — (11 ) 6 11 20 Income (loss) from continuing operations before income taxes (127 ) (1,301 ) 12 5,667 (12 ) 4,239 Provision for (benefit from) income taxes (77 ) 313 — 2,075 — 2,311 Equity income (loss) from subsidiaries 1,978 3,449 1,864 — (7,291 ) — Net income (loss) $ 1,928 $ 1,835 $ 1,876 $ 3,592 $ (7,303 ) $ 1,928 For the Three Months Ended June 30, 2014 Net sales $ — $ 1,657 $ — $ 424 $ (10 ) $ 2,071 Net sales, related party — 91 — — — 91 Net sales — 1,748 — 424 (10 ) 2,162 Cost of products sold — 806 — 163 (10 ) 959 Selling, general and administrative expenses 17 318 — 29 — 364 Amortization expense — 1 — 2 — 3 Operating income (loss) (17 ) 623 — 230 — 836 Interest and debt expense 62 6 — 16 (22 ) 62 Interest income (22 ) — — (1 ) 22 (1 ) Other (income) expense, net — — (10 ) (1 ) 11 — Income (loss) from continuing operations before income taxes (57 ) 617 10 216 (11 ) 775 Provision for (benefit from) income taxes (20 ) 226 — 77 — 283 Equity income (loss) from subsidiaries 529 70 460 — (1,059 ) — Income (loss) from continuing operations 492 461 470 139 (1,070 ) 492 Income from discontinued operations — — — — — — Net income (loss) $ 492 $ 461 $ 470 $ 139 $ (1,070 ) $ 492 Condensed Consolidating Statements of Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Net sales $ — $ 3,496 $ — $ 958 $ (130 ) $ 4,324 Net sales, related party — 136 — — — 136 Net sales — 3,632 — 958 (130 ) 4,460 Cost of products sold — 1,711 — 349 (126 ) 1,934 Selling, general and administrative expenses 62 827 — 73 — 962 (Gain) loss on Divestiture — 1,891 — (5,390 ) — (3,499 ) Amortization expense — 3 — 3 — 6 Operating income (loss) (62 ) (800 ) — 5,923 (4 ) 5,057 Interest and debt expense 189 14 — 42 (49 ) 196 Interest income (47 ) (1 ) (2 ) — 49 (1 ) Other (income) expense, net 15 — (21 ) (12 ) 21 3 Income (loss) from continuing operations before income taxes (219 ) (813 ) 23 5,893 (25 ) 4,859 Provision for (benefit from) income taxes (104 ) 489 — 2,157 — 2,542 Equity income (loss) from subsidiaries 2,432 3,527 2,252 — (8,211 ) — Net income (loss) $ 2,317 $ 2,225 $ 2,275 $ 3,736 $ (8,236 ) $ 2,317 For the Six Months Ended June 30, 2014 Net sales $ — $ 3,149 $ — $ 793 $ (22 ) $ 3,920 Net sales, related party — 177 — — — 177 Net sales — 3,326 — 793 (22 ) 4,097 Cost of products sold — 1,614 — 297 (22 ) 1,889 Selling, general and administrative expenses 20 697 2 58 — 777 Amortization expense — 2 — 3 — 5 Operating income (loss) (20 ) 1,013 (2 ) 435 — 1,426 Interest and debt expense 121 11 — 37 (48 ) 121 Interest income (46 ) (1 ) (2 ) (1 ) 48 (2 ) Other (income) expense, net 2 — (21 ) (1 ) 21 1 Income (loss) from continuing operations before income taxes (97 ) 1,003 21 400 (21 ) 1,306 Provision for (benefit from) income taxes (34 ) 368 — 142 — 476 Equity income (loss) from subsidiaries 918 134 797 — (1,849 ) — Income (loss) from continuing operations 855 769 818 258 (1,870 ) 830 Income from discontinued operations — 25 — — — 25 Net income (loss) $ 855 $ 794 $ 818 $ 258 $ (1,870 ) $ 855 |
Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statements of Comprehensive Income (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Three Months Ended June 30, 2015 Net income (loss) $ 1,928 $ 1,835 $ 1,876 $ 3,592 $ (7,303 ) $ 1,928 Other comprehensive income (loss), net of tax: Retirement benefits (20 ) (13 ) (14 ) (5 ) 32 (20 ) Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other 10 10 10 10 (30 ) 10 Comprehensive income (loss) $ 1,919 $ 1,832 $ 1,872 $ 3,597 $ (7,301 ) $ 1,919 For the Three Months Ended June 30, 2014 Net income (loss) $ 492 $ 461 $ 470 $ 139 $ (1,070 ) $ 492 Other comprehensive income (loss), net of tax: Retirement benefits 6 8 8 (1 ) (15 ) 6 Unrealized gain on long-term investments 1 1 1 — (2 ) 1 Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (3 ) (2 ) (2 ) (2 ) 6 (3 ) Comprehensive income (loss) $ 497 $ 468 $ 477 $ 136 $ (1,081 ) $ 497 For the Six Months Ended June 30, 2015 Net income (loss) $ 2,317 $ 2,225 $ 2,275 $ 3,736 $ (8,236 ) $ 2,317 Other comprehensive income (loss), net of tax: Retirement benefits (26 ) (18 ) (19 ) (5 ) 42 (26 ) Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (17 ) (17 ) (16 ) (17 ) 50 (17 ) Comprehensive income (loss) $ 2,275 $ 2,190 $ 2,240 $ 3,714 $ (8,144 ) $ 2,275 For the Six Months Ended June 30, 2014 Net income (loss) $ 855 $ 794 $ 818 $ 258 $ (1,870 ) $ 855 Other comprehensive income (loss), net of tax: Retirement benefits — 3 2 (1 ) (4 ) — Unrealized gain on long-term investments 2 2 2 — (4 ) 2 Amortization of realized loss on hedging instruments 1 — — — — 1 Cumulative translation adjustment and other (2 ) (1 ) (1 ) (1 ) 3 (2 ) Comprehensive income (loss) $ 856 $ 798 $ 821 $ 256 $ (1,875 ) $ 856 |
Reclassification Out of Accumulated Other Comprehensive Income Net of Tax | Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ (1 ) $ — $ (6 ) Cost Amortization of prior service costs — (4 ) — — — (4 ) Selling, general and administrative expenses — (9 ) — (1 ) — (10 ) Deferred taxes — 3 — — — 3 Provision for income taxes Defined benefit pension and postretirement plans (7 ) (1 ) (7 ) — 15 — Equity income (loss) from subsidiaries (7 ) (7 ) (7 ) (1 ) 15 (7 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (6 ) $ (7 ) $ (7 ) $ (1 ) $ 15 $ (6 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the three months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (5 ) $ — $ — $ — $ (5 ) Cost of products sold Amortization of prior service costs — (4 ) — — — (4 ) Selling, general and administrative expenses — (9 ) — — — (9 ) Deferred taxes — 3 — — — 3 Provision for income taxes Defined benefit pension and postretirement plans (6 ) — (6 ) — 12 — Equity income (loss) from subsidiaries (6 ) (6 ) (6 ) — 12 (6 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (5 ) $ (6 ) $ (6 ) $ — $ 12 $ (5 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2015, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ (1 ) $ — $ (11 ) Cost Amortization of prior service costs — (9 ) — — — (9 ) Selling, general and administrative expenses — (19 ) — (1 ) — (20 ) Deferred taxes — 7 — — — 7 Provision for income taxes Defined benefit pension and postretirement plans (13 ) (1 ) (13 ) — 27 — Equity income (loss) from subsidiaries (13 ) (13 ) (13 ) (1 ) 27 (13 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (12 ) $ (13 ) $ (13 ) $ (1 ) $ 27 $ (12 ) Net income Details about the reclassifications out of accumulated other comprehensive loss and the affected line items in the condensed consolidating statements of income (unaudited) for the six months ended June 30, 2014, were as follows: Components Amounts Reclassified Affected Line Item Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated Defined benefit pension and postretirement plans: Amortization of prior service costs $ — $ (10 ) $ — $ — $ — $ (10 ) Cost of products sold Amortization of prior service costs — (9 ) — — — (9 ) Selling, general and administrative expenses — (19 ) — — — (19 ) Deferred taxes — 7 — — — 7 Provision for income taxes Defined benefit pension and postretirement plans (12 ) — (12 ) — 24 — Equity income (loss) from subsidiaries (12 ) (12 ) (12 ) — 24 (12 ) Net income (loss) Loss on hedging instruments: Amortization of realized loss 1 — — — — 1 Interest and debt expense Deferred taxes — — — — — — Provision for income taxes Net of tax 1 — — — — 1 Total reclassifications $ (11 ) $ (12 ) $ (12 ) $ — $ 24 $ (11 ) Net income |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2015 Cash flows from (used in) operating activities $ 125 $ 700 $ 485 $ 208 $ (1,070 ) $ 448 Cash flows from (used in) investing activities: Capital expenditures — (34 ) — (29 ) (1 ) (64 ) Return of intercompany investments 185 10 184 — (379 ) — Acquisition, net of cash acquired (18,278 ) 524 — 535 — (17,219 ) Proceeds from Divestiture 7,056 — — — — 7,056 Other, net (710 ) 1 8 11 691 1 Net cash flows from (used in) investing activities (11,747 ) 501 192 517 311 (10,226 ) Cash flows from (used in) financing activities: Dividends paid on common stock (712 ) (461 ) (479 ) (110 ) 1,050 (712 ) Repurchase of common stock (40 ) — — — — (40 ) Proceeds from BAT Share Purchase 4,673 — — — — 4,673 Issuance of long-term debt 8,975 — — — — 8,975 Debt issuance costs and financing fees (64 ) — — — — (64 ) Principal borrowings under revolving credit facility 1,400 — — — — 1,400 Repayments under revolving credit facility (1,400 ) — — — — (1,400 ) Excess tax benefit on stock-based compensation plans 15 — — — — 15 Dividends paid on preferred stock (21 ) — — — 21 — Distribution of equity — (184 ) (185 ) (10 ) 379 — Other, net (11 ) 700 — 2 (691 ) — Net cash flows from (used in) financing activities 12,815 55 (664 ) (118 ) 759 12,847 Effect of exchange rate changes on cash and cash equivalents — — — (22 ) — (22 ) Net change in cash and cash equivalents 1,193 1,256 13 585 — 3,047 Cash and cash equivalents at beginning of period 102 327 3 534 — 966 Cash and cash equivalents at end of period $ 1,295 $ 1,583 $ 16 $ 1,119 $ — $ 4,013 Condensed Consolidating Statements of Cash Flows (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated For the Six Months Ended June 30, 2014 Cash flows from (used in) operating activities $ 326 $ 327 $ 607 $ 347 $ (1,352 ) $ 255 Cash flows from (used in) investing activities: Capital expenditures — (23 ) — (104 ) 4 (123 ) Proceeds from termination of joint venture — — — 35 — 35 Contributions to intercompany investments (32 ) — — — 32 — Return of intercompany investments — 90 21 — (111 ) — Other, net 143 8 10 18 (203 ) (24 ) Net cash flows from (used in) investing activities 111 75 31 (51 ) (278 ) (112 ) Cash flows from (used in) financing activities: Dividends paid on common stock (699 ) (580 ) (637 ) (110 ) 1,327 (699 ) Repurchase of common stock (440 ) — — — — (440 ) Principal borrowings under revolving credit facility 1,000 — — — — 1,000 Repayments under revolving credit facility (200 ) — — — — (200 ) Excess tax benefit on stock-based compensation 10 — — — — 10 Dividends paid on preferred stock (21 ) — — — 21 — Receipt of equity — — — 32 (32 ) — Distribution of equity — (21 ) — (90 ) 111 — Other, net (31 ) (20 ) — (152 ) 203 — Net cash flows from (used in) financing activities (381 ) (621 ) (637 ) (320 ) 1,630 (329 ) Effect of exchange rate changes on cash and cash equivalents — — — (1 ) — (1 ) Net change in cash and cash equivalents 56 (219 ) 1 (25 ) — (187 ) Cash and cash equivalents at beginning of period 444 514 2 540 — 1,500 Cash and cash equivalents at end of period $ 500 $ 295 $ 3 $ 515 $ — $ 1,313 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated June 30, 2015 Assets Cash and cash equivalents $ 1,295 $ 1,583 $ 16 $ 1,119 $ — $ 4,013 Short-term investments — 347 — — — 347 Accounts receivable — 71 — 74 — 145 Accounts receivable, related party — 31 — — — 31 Other receivables 772 445 19 4,313 (5,531 ) 18 Inventories — 923 — 761 (7 ) 1,677 Deferred income taxes, net 4 842 1 88 — 935 Other current assets 7 233 — 45 285 Total current assets 2,078 4,475 36 6,400 (5,538 ) 7,451 Property, plant and equipment, net 3 850 — 445 — 1,298 Trademarks and other intangible assets, net — 347 — 27,954 — 28,301 Goodwill — 3,453 10,852 2,714 — 17,019 Long-term intercompany notes receivable 1,603 — 98 180 (1,881 ) — Investment in subsidiaries 36,134 22,039 22,437 — (80,610 ) — Other assets and deferred charges 150 1,046 18 7 (732 ) 489 Total assets $ 39,968 $ 32,210 $ 33,441 $ 37,700 $ (88,761 ) $ 54,558 Liabilities and shareholders’ equity Accounts payable $ 3 $ 126 $ — $ 49 $ — $ 178 Tobacco settlement accruals — 1,912 — 70 — 1,982 Due to related party — 3 — 4 — 7 Deferred revenue, related party — 15 — — — 15 Current maturities of long-term debt 450 — — — — 450 Income taxes payable 2,096 3 — 30 (4 ) 2,125 Dividends payable on common stock 356 — — — — 356 Other current liabilities 4,871 1,746 3 240 (5,531 ) 1,329 Total current liabilities 7,776 3,805 3 393 (5,535 ) 6,442 Long-term intercompany notes payable 180 — — 1,701 (1,881 ) — Long-term debt (less current maturities) 13,599 3,951 — — — 17,550 Deferred income taxes, net — 1 — 10,540 (728 ) 9,813 Long-term retirement benefits (less current portion) 56 1,992 29 162 — 2,239 Other noncurrent liabilities 31 151 2 4 — 188 Shareholders’ equity 18,326 22,310 33,407 24,900 (80,617 ) 18,326 Total liabilities and shareholders’ equity $ 39,968 $ 32,210 $ 33,441 $ 37,700 $ (88,761 ) $ 54,558 Condensed Consolidating Balance Sheets (Dollars in Millions) Parent Guarantor Issuer Guarantor Non- Guarantors Eliminations Consolidated December 31, 2014 Assets Cash and cash equivalents $ 102 $ 327 $ 3 $ 534 $ — $ 966 Accounts receivable — 61 — 55 — 116 Accounts receivable, related party — 41 — — — 41 Other receivables 70 291 20 1,864 (2,233 ) 12 Inventories — 529 — 754 (2 ) 1,281 Deferred income taxes, net 5 611 1 86 — 703 Other current assets 50 118 — 34 2 204 Total current assets 227 1,978 24 3,327 (2,233 ) 3,323 Property, plant and equipment, net 3 765 — 435 — 1,203 Trademarks and other intangible assets, net — 130 — 2,291 — 2,421 Goodwill — 5,302 — 2,714 — 8,016 Long-term intercompany notes receivable 1,593 — 106 190 (1,889 ) — Investment in subsidiaries 9,598 3,060 6,941 — (19,599 ) — Other assets and deferred charges 101 731 18 18 (635 ) 233 Total assets $ 11,522 $ 11,966 $ 7,089 $ 8,975 $ (24,356 ) $ 15,196 Liabilities and shareholders’ equity Accounts payable $ 1 $ 110 $ — $ 31 $ — $ 142 Tobacco settlement accruals — 1,709 — 110 — 1,819 Due to related party — 1 — — — 1 Deferred revenue, related party — 32 — — — 32 Current maturities of long-term debt 450 — — — — 450 Dividends payable on common stock 356 — — — — 356 Other current liabilities 1,280 1,274 3 423 (2,236 ) 744 Total current liabilities 2,087 3,126 3 564 (2,236 ) 3,544 Long-term intercompany notes payable 190 — — 1,699 (1,889 ) — Long-term debt (less current maturities) 4,633 — — — — 4,633 Deferred income taxes, net — 1 — 1,013 (631 ) 383 Long-term retirement benefits (less current portion) 57 1,822 30 88 — 1,997 Other noncurrent liabilities 33 78 — 6 — 117 Shareholders’ equity 4,522 6,939 7,056 5,605 (19,600 ) 4,522 Total liabilities and shareholders’ equity $ 11,522 $ 11,966 $ 7,089 $ 8,975 $ (24,356 ) $ 15,196 |
Business and Summary of Signi42
Business and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | Jun. 12, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2013 |
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||||||
Asset sale | $ 7,056 | $ 7,056 | |||||
NPM Adjustment credits | $ 170 | $ 1,100 | |||||
Agreement period | 5 years | 5 years | |||||
NPM historical adjustment | $ (34) | $ (34) | |||||
NPM performance adjustment | $ 69 | $ 91 | $ 135 | $ 154 | |||
Defined benefit plan corridor percentage | 10.00% | ||||||
Expected pension contributions, current remaining fiscal year | $ 109 | ||||||
Pension contributions | 5 | ||||||
RJR Tobacco and Santa Fe [Member] | |||||||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||||||
NPM Adjustment credits | 70 | ||||||
Lorillard, Inc. | |||||||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||||||
NPM Additional adjustment credits in 2016 | 22 | ||||||
NPM Additional adjustment credits in 2017 | 22 | ||||||
NPM Additional adjustment credits over next three year | $ 5 |
Certain Component of Cost of Pr
Certain Component of Cost of Products Sold (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accounting Policies [Abstract] | ||||
State Settlement Agreements | $ 571 | $ 456 | $ 965 | $ 912 |
FDA user fees | $ 38 | 33 | $ 73 | 67 |
Federal tobacco quota buyout | $ 51 | $ 106 |
Components of Pension Benefits
Components of Pension Benefits and Postretirement Benefits (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Pension Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 7 | $ 6 | $ 13 | $ 11 |
Interest cost | 67 | 67 | 131 | 133 |
Expected return on plan assets | (90) | (91) | (178) | (181) |
Amortization of prior service cost (credit) | 1 | 1 | 2 | |
Total benefit cost (credit) | (16) | (17) | (33) | (35) |
Postretirement Benefit | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 1 | ||
Interest cost | 12 | 13 | 24 | 27 |
Expected return on plan assets | (3) | (3) | (6) | (6) |
Amortization of prior service cost (credit) | (10) | $ (10) | (21) | (21) |
Total benefit cost (credit) | $ (1) | $ (2) | $ 1 |
Merger, Divestiture and BAT S45
Merger, Divestiture and BAT Share Purchase - Additional Information (Detail) $ / shares in Units, $ in Millions | Jun. 12, 2015USD ($)$ / sharesshares | Jul. 15, 2014USD ($) | Jun. 30, 2015USD ($)$ / shares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)$ / shares | Jun. 30, 2014USD ($) |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 10,852 | |||||
Total net sales | $ 2,403 | $ 2,162 | 4,460 | $ 4,097 | ||
Asset sale | $ 7,056 | 7,056 | ||||
BAT investment | $ 4,700 | $ 4,673 | ||||
BAT ownership | 42.00% | 42.00% | 42.00% | |||
Issuance of long-term debt | $ 8,975 | |||||
Selling, General and Administrative Expenses | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition transaction costs | $ 39 | 54 | ||||
BAT | ||||||
Business Acquisition [Line Items] | ||||||
Common stock shares issued | shares | 77,680,259 | |||||
BAT and Subsidiaries | ||||||
Business Acquisition [Line Items] | ||||||
Common stock shares issued | shares | 301,014,278 | |||||
RJR Tobacco | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 10,852 | |||||
Lorillard, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Conversion ratio of Lorillard common stock to RAI common stock | 0.2909 | |||||
Cash consideration per share | $ / shares | $ 50.50 | $ 50.50 | $ 50.50 | |||
Business acquisition, shares issued | shares | 104,706,847 | |||||
Shares issued, price per share | $ / shares | $ 72.15 | |||||
Total net sales | $ 197 | $ 197 |
Schedule of Preliminary Purchas
Schedule of Preliminary Purchase Price - Lorillard, Inc. $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Business Acquisition [Line Items] | |
Fair value of RAI common stock issued | $ 7,555 |
Cash paid to Lorillard shareholders at $50.50 per share | 18,205 |
Cash paid for Lorillard stock options and stock appreciation rights | 73 |
Purchase price | $ 25,833 |
Schedule of Preliminary Purch47
Schedule of Preliminary Purchase Price (Parenthetical) (Detail) - $ / shares | Jun. 30, 2015 | Jun. 12, 2015 |
Lorillard, Inc. | ||
Business Acquisition [Line Items] | ||
Cash consideration per share | $ 50.50 | $ 50.50 |
Allocation of Preliminary Purch
Allocation of Preliminary Purchase Price to Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Goodwill | $ 17,019 | $ 8,016 |
Liabilities | ||
Long-term debt (less current maturities) | 17,550 | $ 4,633 |
Lorillard, Inc. | ||
Assets | ||
Cash and cash equivalents | 1,059 | |
Short-term investments | 347 | |
Accounts and other receivables | 45 | |
Inventories | 583 | |
Income tax receivable | 114 | |
Other current assets | 1,361 | |
Property, plant and equipment | 94 | |
Trademarks and other intangible assets | 26,242 | |
Goodwill | 10,852 | |
Other assets and deferred charges | 210 | |
Liabilities | ||
Tobacco settlement accruals | 753 | |
Other current liabilities | 507 | |
Long-term debt (less current maturities) | 3,951 | |
Deferred income taxes, net | 9,536 | |
Long-term retirement benefits | 263 | |
Other noncurrent liabilities | 64 | |
Preliminary allocation of purchase price | $ 25,833 |
Summary of Pre-tax Preliminary
Summary of Pre-tax Preliminary Gain (Detail) - USD ($) $ in Millions | Jun. 12, 2015 | Jun. 30, 2015 | Jun. 30, 2015 |
Discontinued Operations And Disposal Groups [Abstract] | |||
Purchase price | $ 7,056 | $ 7,056 | |
Net assets and liabilities divested | (1,708) | ||
Goodwill associated with divested RJR Tobacco brands | (1,849) | ||
Gain on Divestiture | $ 3,499 | $ 3,499 | $ 3,499 |
Pro forma Consolidated Financia
Pro forma Consolidated Financial Information (unaudited) (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Combinations [Abstract] | ||||
Net sales | $ 3,102 | $ 2,884 | $ 5,871 | $ 5,439 |
Net income | $ 680 | $ 597 | $ 1,218 | $ 1,065 |
Basic income per share, Net income | $ 0.95 | $ 0.83 | $ 1.70 | $ 1.48 |
Diluted income per share, Net income | $ 0.95 | $ 0.83 | $ 1.70 | $ 1.48 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Cash and cash equivalents: | ||
Cash equivalents | $ 3,859 | $ 883 |
Short-term investments: | ||
Short-term investments | 347 | |
Other assets and deferred charges: | ||
Mortgage-backed security | 11 | 12 |
Marketable equity security | 2 | 2 |
Interest rate swaps | 59 | |
Level 1 | ||
Cash and cash equivalents: | ||
Cash equivalents | 3,859 | 883 |
Other assets and deferred charges: | ||
Marketable equity security | 2 | 2 |
Level 2 | ||
Other assets and deferred charges: | ||
Interest rate swaps | 59 | |
Level 3 | ||
Other assets and deferred charges: | ||
Mortgage-backed security | 11 | 12 |
Corporate debt securities | ||
Short-term investments: | ||
Short-term investments | 210 | |
Other assets and deferred charges: | ||
Long-term investments | 104 | |
Corporate debt securities | Level 2 | ||
Short-term investments: | ||
Short-term investments | 210 | |
Other assets and deferred charges: | ||
Long-term investments | 104 | |
U.S. Governmental agency obligations | ||
Short-term investments: | ||
Short-term investments | 71 | |
Other assets and deferred charges: | ||
Long-term investments | 28 | |
U.S. Governmental agency obligations | Level 2 | ||
Short-term investments: | ||
Short-term investments | 71 | |
Other assets and deferred charges: | ||
Long-term investments | 28 | |
Commercial paper | ||
Short-term investments: | ||
Short-term investments | 27 | |
Commercial paper | Level 2 | ||
Short-term investments: | ||
Short-term investments | 27 | |
International governmental obligations | ||
Short-term investments: | ||
Short-term investments | 39 | |
International governmental obligations | Level 2 | ||
Short-term investments: | ||
Short-term investments | 39 | |
Auction Rate Securities | ||
Other assets and deferred charges: | ||
Financial assets, fair value | 79 | 79 |
Auction Rate Securities | Level 3 | ||
Other assets and deferred charges: | ||
Financial assets, fair value | $ 79 | $ 79 |
Fair Value - Additional Informa
Fair Value - Additional Information (Detail) - USD ($) | Jun. 12, 2015 | Sep. 30, 2013 | Oct. 31, 2012 | Oct. 31, 2012 | Sep. 30, 2011 | Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2009 | May. 01, 2012 |
Derivative [Line Items] | |||||||||||
Fair value transfers between levels | $ 0 | $ 0 | |||||||||
Estimated fair value of RAI's and RJR's outstanding debt | $ 18,300,000,000 | $ 18,300,000,000 | $ 5,400,000,000 | ||||||||
Debt weighted average interest rate | 4.50% | 4.50% | 4.50% | ||||||||
Notional amount, interest rate contracts | $ 1,000,000,000 | ||||||||||
Proceeds from termination of interest rate swaps | $ 186,000,000 | ||||||||||
Total RAI debt | $ 2,550,000,000 | $ 2,550,000,000 | |||||||||
Associated losses settled with cash payments | $ (23,000,000) | $ (23,000,000) | |||||||||
Lorillard Tobacco | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Jul. 10, 2015 | ||||||||||
7.625% guaranteed, notes due 2016 | |||||||||||
Derivative [Line Items] | |||||||||||
Outstanding principle amount of debt redeemed | $ 775,000,000 | ||||||||||
Debt instrument interest rate | 7.625% | ||||||||||
Debt Covered by Interest Rate Swap Agreement | |||||||||||
Derivative [Line Items] | |||||||||||
Outstanding principle amount of debt redeemed | $ 450,000,000 | ||||||||||
Debt covered by fixed interest rate | $ 700,000,000 | ||||||||||
Derivative fixed rate of interest | 3.80% | 3.80% | 3.80% | ||||||||
1.05% guaranteed, notes due 2015 | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Oct. 30, 2015 | ||||||||||
Debt instrument interest rate | 1.05% | 1.05% | 1.05% | 1.05% | |||||||
Total RAI debt | $ 450,000,000 | $ 450,000,000 | |||||||||
3.25% guaranteed, notes due 2022 | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Nov. 1, 2022 | ||||||||||
Debt instrument interest rate | 3.25% | 3.25% | 3.25% | 3.25% | |||||||
Total RAI debt | $ 1,100,000,000 | $ 1,100,000,000 | |||||||||
4.75% guaranteed, notes due 2042 | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Nov. 1, 2042 | ||||||||||
Debt instrument interest rate | 4.75% | 4.75% | 4.75% | 4.75% | |||||||
Total RAI debt | $ 1,000,000,000 | $ 1,000,000,000 | |||||||||
8.125% guaranteed, notes due 2019 | RJR Tobacco | Lorillard Tobacco | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument interest rate | 8.125% | ||||||||||
Debt instrument description of variable rate basis | one-month LIBOR | ||||||||||
Debt instrument variable rate | 4.812% | ||||||||||
Debt instrument maturity date | 2019-06 | ||||||||||
Decrease in interest expense | $ 1,000,000 | $ 1,000,000 | |||||||||
8.125% guaranteed, notes due 2019 | RJR Tobacco | Lorillard Tobacco | One-month LIBOR | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument variable rate | 4.625% | ||||||||||
Floating to Fixed | |||||||||||
Derivative [Line Items] | |||||||||||
Notional amount, interest rate contracts | $ 1,500,000,000 | ||||||||||
Floating to Fixed | Minimum | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Jun. 1, 2012 | ||||||||||
Floating to Fixed | Maximum | |||||||||||
Derivative [Line Items] | |||||||||||
Debt instrument maturity date | Jun. 15, 2017 | ||||||||||
Fixed to Floating | |||||||||||
Derivative [Line Items] | |||||||||||
Notional amount, interest rate contracts | $ 1,500,000,000 |
Financial Assets Classified as
Financial Assets Classified as Level 3 Investments (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | $ 116 | $ 117 | |
Gross Unrealized Loss | [1] | (26) | (26) |
Estimated Fair Value | 90 | 91 | |
Auction Rate Securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 99 | 99 | |
Gross Unrealized Loss | [1] | (20) | (20) |
Estimated Fair Value | 79 | 79 | |
Mortgage Backed Securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 17 | 18 | |
Gross Unrealized Loss | [1] | (6) | (6) |
Estimated Fair Value | $ 11 | $ 12 | |
[1] | Unrealized losses, net of tax, are reported in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014. |
Changes in Level 3 Investments
Changes in Level 3 Investments (Detail) $ in Millions | 6 Months Ended | |
Jun. 30, 2015USD ($) | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost, Beginning Balance | $ 117 | |
Cost, Ending Balance | 116 | |
Gross Unrealized Gain (Loss), Beginning Balance | [1] | (26) |
Gross Unrealized Gain (Loss), Ending Balance | [1] | (26) |
Estimated Fair Value, Beginning Balance | 91 | |
Estimated Fair Value, Ending Balance | 90 | |
Auction Rate Securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost, Beginning Balance | 99 | |
Cost, Ending Balance | 99 | |
Gross Unrealized Gain (Loss), Beginning Balance | [1] | (20) |
Gross Unrealized Gain (Loss), Ending Balance | [1] | (20) |
Estimated Fair Value, Beginning Balance | 79 | |
Estimated Fair Value, Ending Balance | 79 | |
Mortgage Backed Securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost, Beginning Balance | 18 | |
Redemptions | (1) | |
Cost, Ending Balance | 17 | |
Gross Unrealized Gain (Loss), Beginning Balance | [1] | (6) |
Gross Unrealized Gain (Loss), Ending Balance | [1] | (6) |
Estimated Fair Value, Beginning Balance | 12 | |
Estimated Fair Value, Redemptions | (1) | |
Estimated Fair Value, Ending Balance | $ 11 | |
[1] | Unrealized losses, net of tax, are reported in accumulated other comprehensive loss in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2015, and consolidated balance sheet as of December 31, 2014. |
Amortization of Derivative Inst
Amortization of Derivative Instruments Impacted Income Statement (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | ||||
Interest and debt expense | $ (4) | $ (4) | $ (8) | $ (8) |
Changes in Carrying Amounts of
Changes in Carrying Amounts of Goodwill by Segment (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Goodwill [Line Items] | ||
Goodwill | $ 11,807 | |
Accumulated impairment charges | (3,791) | |
Merger goodwill | $ 10,852 | |
Divested goodwill | (1,849) | |
Goodwill, Translation and Purchase Accounting Adjustments | 9,003 | |
Net goodwill balance | 17,019 | 8,016 |
RJR Tobacco | ||
Goodwill [Line Items] | ||
Goodwill | 9,065 | |
Accumulated impairment charges | (3,763) | |
Merger goodwill | 10,852 | |
Divested goodwill | (1,849) | |
Goodwill, Translation and Purchase Accounting Adjustments | 9,003 | |
Net goodwill balance | 14,305 | 5,302 |
American Snuff | ||
Goodwill [Line Items] | ||
Goodwill | 2,501 | |
Accumulated impairment charges | (28) | |
Net goodwill balance | 2,473 | 2,473 |
Santa Fe | ||
Goodwill [Line Items] | ||
Goodwill | 197 | |
Net goodwill balance | 197 | 197 |
All Other | ||
Goodwill [Line Items] | ||
Goodwill | 44 | |
Net goodwill balance | $ 44 | $ 44 |
Carrying Amount and Changes of
Carrying Amount and Changes of Trademarks and Other Indefinite Lived Assets (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Trademarks | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | $ 2,268 |
Trademarks acquired in Merger | 26,000 |
Trademarks divested | (344) |
Indefinite Lived Intangible Assets Period Increase (Decrease) | 25,656 |
Ending Balance | 27,924 |
Other | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 103 |
Other intangibles divested | (12) |
Indefinite Lived Intangible Assets Period Increase (Decrease) | (12) |
Ending Balance | 91 |
RJR Tobacco | Trademarks | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 977 |
Trademarks acquired in Merger | 26,000 |
Trademarks divested | (344) |
Indefinite Lived Intangible Assets Period Increase (Decrease) | 25,656 |
Ending Balance | 26,633 |
RJR Tobacco | Other | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 99 |
Other intangibles divested | (12) |
Indefinite Lived Intangible Assets Period Increase (Decrease) | (12) |
Ending Balance | 87 |
American Snuff | Trademarks | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 1,136 |
Ending Balance | 1,136 |
Santa Fe | Trademarks | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 155 |
Ending Balance | 155 |
All Other | Other | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 4 |
Ending Balance | $ 4 |
Carrying Amount and Changes o58
Carrying Amount and Changes of Trademarks and Other Assets (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | $ 50 | |||
Amortization | $ (3) | $ (3) | (6) | $ (5) |
Ending Balance | 286 | 286 | ||
Trademarks | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | 19 | |||
Acquired in Merger | 9 | |||
Amortization | (2) | |||
Finite-Lived Intangible Assets, Period Increase (Decrease) | 7 | |||
Ending Balance | 26 | 26 | ||
Other | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | 31 | |||
Acquired in Merger | 233 | |||
Amortization | (4) | |||
Finite-Lived Intangible Assets, Period Increase (Decrease) | 229 | |||
Ending Balance | 260 | 260 | ||
RJR Tobacco | Trademarks | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | 12 | |||
Acquired in Merger | 9 | |||
Amortization | (2) | |||
Finite-Lived Intangible Assets, Period Increase (Decrease) | 7 | |||
Ending Balance | 19 | 19 | ||
RJR Tobacco | Other | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | 31 | |||
Acquired in Merger | 233 | |||
Amortization | (4) | |||
Finite-Lived Intangible Assets, Period Increase (Decrease) | 229 | |||
Ending Balance | 260 | 260 | ||
American Snuff | Trademarks | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Beginning Balance | 7 | |||
Ending Balance | $ 7 | $ 7 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Finite Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 3 | $ 3 | $ 6 | $ 5 |
Trademarks | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Estimated useful lives | 5 years | |||
Amortization of intangible assets | $ 2 | |||
Customer Relationships | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Estimated useful lives | 20 years | |||
Acquired Trademarks and Customer Relationships | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 1 | $ 1 |
Details of Finite-Lived Intangi
Details of Finite-Lived Intangible Assets (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 522 | $ 280 |
Accumulated Amortization | (236) | (230) |
Net | 286 | 50 |
Customer lists | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | 233 | |
Accumulated Amortization | (1) | |
Net | 232 | |
Contract manufacturing agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | 151 | 151 |
Accumulated Amortization | (137) | (135) |
Net | 14 | 16 |
Trademarks | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | 123 | 114 |
Accumulated Amortization | (97) | (95) |
Net | 26 | 19 |
Other finite-lived intangibles | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | 15 | 15 |
Accumulated Amortization | (1) | |
Net | $ 14 | $ 15 |
Finite Lived Intangible Assets
Finite Lived Intangible Assets Future Amortization Expense (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Remainder of 2015 | $ 11 | |
2,016 | 22 | |
2,017 | 22 | |
2,018 | 21 | |
2,019 | 15 | |
Thereafter | 195 | |
Net | $ 286 | $ 50 |
Restructuring - Additional Info
Restructuring - Additional Information (Detail) - Jun. 30, 2015 - USD ($) $ in Millions | Total |
Restructuring And Related Activities [Abstract] | |
Percentage of workforce declination | 10.00% |
Completion date of all cash payments related to restructuring | Dec. 31, 2016 |
Restructuring charge, amount utilized | $ 129 |
Other current liabilities | 18 |
Other noncurrent liabilities | $ 2 |
Schedule of Changes in Restruct
Schedule of Changes in Restructuring Liability (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Restructuring And Related Activities [Abstract] | ||
Beginning Balance | $ 40 | $ 57 |
Utilized | (20) | (17) |
Ending Balance | $ 20 | $ 40 |
Components of Calculation of In
Components of Calculation of Income Per Share (Detail) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Income from continuing operations | $ 1,928 | $ 492 | $ 2,317 | $ 830 |
Income from discontinued operations | 25 | |||
Net income | $ 1,928 | $ 492 | $ 2,317 | $ 855 |
Basic weighted average shares, in thousands | 568,177 | 533,311 | 549,852 | 535,037 |
Effect of dilutive potential shares: | ||||
Restricted stock units | 1,527 | 1,454 | 1,748 | 1,787 |
Diluted weighted average shares, in thousands | 569,704 | 534,765 | 551,600 | 536,824 |
Components of Inventories (Deta
Components of Inventories (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Leaf tobacco | $ 1,312 | $ 1,125 |
Other raw materials | 110 | 90 |
Work in process | 80 | 72 |
Finished products | 313 | 171 |
Other | 39 | 27 |
Total | 1,854 | 1,485 |
LIFO allowance | (177) | (204) |
Inventory Net | $ 1,677 | $ 1,281 |
Provision for income Taxes from
Provision for income Taxes from Continuing Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes from continuing operations | $ 2,311 | $ 283 | $ 2,542 | $ 476 |
Effective tax rate | 54.50% | 36.50% | 52.30% | 36.40% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | |||
Increase in tax attributable to nondeductible acquisition costs, nondeductible goodwill | $ 1,849 | $ 1,849 | |
Decrease in tax attributable to the release of a valuation allowance | $ (37) | $ (37) | |
Federal statutory rate | 35.00% | ||
Income from discontinued operations, net of tax | $ 25 |
Borrowing Arrangements - Additi
Borrowing Arrangements - Additional Information (Detail) - USD ($) | Sep. 30, 2014 | Oct. 08, 2013 | Dec. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 |
Line Of Credit Facility [Line Items] | ||||||
Repayments of Lines of Credit | $ 1,400,000,000 | $ 200,000,000 | ||||
Principal borrowings under revolving credit facility | $ 1,400,000,000 | $ 1,000,000,000 | ||||
Line of Credit facility, average interest rate | 1.37% | |||||
Borrowings outstanding under the Credit Agreement | $ 0 | $ 0 | ||||
Letters of credit outstanding amount | 8,000,000 | 8,000,000 | ||||
Bridge Facility | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit facility under maximum borrowing capacity | $ 9,000,000,000 | |||||
Period of senior unsecured term loan | 364 days | |||||
Termination Date | Jun. 12, 2015 | |||||
Amortization and fees | $ 17,000,000 | $ 48,000,000 | ||||
New Credit Agreement | ||||||
Line Of Credit Facility [Line Items] | ||||||
Period of senior unsecured revolving credit facility | 5 years | |||||
Credit facility under current borrowing capacity | $ 2,000,000,000 | |||||
Credit facility under maximum borrowing capacity | $ 2,350,000,000 | |||||
Credit facility maturity date | Dec. 18, 2019 | |||||
New Credit Agreement | Maximum | As of the last day of any period of four consecutive fiscal quarters, referred to as a Reference Period, ending prior to the closing of the Merger | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of debt to EBITDA | 300.00% | |||||
New Credit Agreement | Maximum | For the Reference Periods ending on the last day of the fiscal quarter in which the Merger closes and on the last day of the next two succeeding fiscal quarters | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of debt to EBITDA | 450.00% | |||||
New Credit Agreement | Maximum | For the Reference Periods ending on the last day of the next three succeeding quarters | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of debt to EBITDA | 425.00% | |||||
New Credit Agreement | Maximum | For the Reference Periods ending on the last day of the next three succeeding quarters | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of debt to EBITDA | 375.00% | |||||
New Credit Agreement | Maximum | There After | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of debt to EBITDA | 350.00% | |||||
New Credit Agreement | Minimum | For any Reference Period ending on the last day of a fiscal quarter | ||||||
Line Of Credit Facility [Line Items] | ||||||
Ratio of EBITDA to interest expense | 400.00% | |||||
Credit Agreement | ||||||
Line Of Credit Facility [Line Items] | ||||||
Period of senior unsecured revolving credit facility | 4 years | |||||
Credit facility under current borrowing capacity | $ 1,350,000,000 | |||||
Credit facility maturity date | Oct. 8, 2013 | |||||
Sublimit on the aggregate amount of letters of credit | $ 300,000,000 | |||||
Interest Rate | 2.00% | |||||
Credit Agreement | Federal Funds Effective Swap Rate | ||||||
Line Of Credit Facility [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 0.50% | |||||
Credit Agreement | Eurodollar | ||||||
Line Of Credit Facility [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 1.00% | |||||
Credit Agreement | Maximum | ||||||
Line Of Credit Facility [Line Items] | ||||||
Pay rate of commitment fee per annum | 0.275% | |||||
Credit Agreement | Minimum | ||||||
Line Of Credit Facility [Line Items] | ||||||
Pay rate of commitment fee per annum | 0.10% |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) | Jun. 12, 2015USD ($) | Jun. 30, 2015USD ($)$ / Note | Dec. 31, 2014USD ($) | |
Debt Instrument [Line Items] | ||||
Adjusted carrying value of hedged debt | $ 954,000,000 | |||
Other Assets and Deferred Charges | ||||
Debt Instrument [Line Items] | ||||
Derivative instrument, amount included in other assets and deferred charges | 59,000,000 | |||
RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 3,951,000,000 | |||
Interest rate swaps | 59,000,000 | |||
Long-term debt, fair value | 392,000,000 | |||
RAI | ||||
Debt Instrument [Line Items] | ||||
Sale of senior debt | 14,100,000,000 | |||
Principal amount | 13,599,000,000 | $ 4,633,000,000 | ||
Interest rate swaps | 38,000,000 | $ 48,000,000 | ||
Lorillard Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 3,500,000,000 | |||
Debt instrument maturity date | Jul. 10, 2015 | |||
Consent payment principal amount | $ 1,000 | |||
Consent payment per $1000 principal amount | $ / Note | 2.50 | |||
Lorillard Tobacco | RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 377,000,000 | |||
Lorillard Tobacco | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 3,123,000,000 | |||
2.30% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 1,250,000,000 | |||
Interest Rate of Debt | 2.30% | |||
Long term debt maturity year | 2,018 | |||
2.30% notes due 2018 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 1,250,000,000 | |||
3.25% notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 1,250,000,000 | |||
Interest Rate of Debt | 3.25% | |||
Long term debt maturity year | 2,020 | |||
3.25% notes due 2020 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 1,250,000,000 | |||
4.00% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 1,000,000,000 | |||
Interest Rate of Debt | 4.00% | |||
Long term debt maturity year | 2,022 | |||
4.00% notes due 2022 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 999,000,000 | |||
4.45% notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 2,500,000,000 | |||
Interest Rate of Debt | 4.45% | |||
Long term debt maturity year | 2,025 | |||
4.45% notes due 2025 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 2,492,000,000 | |||
5.70% notes due 2035 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 750,000,000 | |||
Interest Rate of Debt | 5.70% | |||
Long term debt maturity year | 2,035 | |||
5.70% notes due 2035 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 747,000,000 | |||
5.85% notes due 2045 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 2,250,000,000 | |||
Interest Rate of Debt | 5.85% | |||
Long term debt maturity year | 2,045 | |||
5.85% notes due 2045 | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 2,238,000,000 | |||
3.750% notes due 2023 | RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 486,000,000 | |||
3.750% notes due 2023 | Lorillard Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 500,000,000 | |||
Interest Rate of Debt | 3.75% | |||
Long term debt maturity year | 2,023 | |||
3.750% notes due 2023 | Lorillard Tobacco | RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 26,000,000 | |||
3.750% notes due 2023 | Lorillard Tobacco | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 474,000,000 | |||
8.125% notes due 2019 | RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | [1] | 954,000,000 | ||
8.125% notes due 2019 | Lorillard Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 750,000,000 | |||
Interest Rate of Debt | 8.125% | |||
Long term debt maturity year | 2,019 | |||
8.125% notes due 2019 | Lorillard Tobacco | RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 81,000,000 | |||
8.125% notes due 2019 | Lorillard Tobacco | RAI | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 669,000,000 | |||
Underwritten Public Offering | ||||
Debt Instrument [Line Items] | ||||
Sale of senior debt | $ 9,000,000,000 | |||
[1] | The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. |
Long-Term Debt Net of Discounts
Long-Term Debt Net of Discounts (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Jun. 12, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||||
Total long-term debt (less current maturities) | $ 17,550 | $ 4,633 | ||
Current maturities of long-term debt | 450 | 450 | ||
Total debt | 18,000 | 5,083 | ||
2.30% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | $ 1,250 | |||
3.25% notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 1,250 | |||
4.00% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 1,000 | |||
4.45% notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 2,500 | |||
5.70% notes due 2035 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 750 | |||
5.85% notes due 2045 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | $ 2,250 | |||
RAI | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 13,599 | 4,633 | ||
Total long-term debt (less current maturities) | 13,599 | 4,633 | ||
Current maturities of long-term debt | 450 | 450 | ||
RAI | 2.30% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 1,250 | |||
RAI | 3.25% notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 1,250 | |||
RAI | 3.25% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 1,099 | 1,099 | ||
RAI | 4.00% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 999 | |||
RAI | 4.45% notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 2,492 | |||
RAI | 4.75% notes due 2042 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 992 | 992 | ||
RAI | 4.85% notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 550 | 550 | ||
RAI | 5.70% notes due 2035 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 747 | |||
RAI | 5.85% notes due 2045 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 2,238 | |||
RAI | 6.15% notes due 2043 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 547 | 547 | ||
RAI | 6.75% notes due 2017 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 738 | 747 | ||
RAI | 7.25% notes due 2037 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 448 | 448 | ||
RAI | 7.75% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 249 | $ 250 | ||
RJR Tobacco | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 3,951 | |||
RJR Tobacco | 2.300% notes due 2017 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 505 | |||
RJR Tobacco | 3.500% notes due 2016 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 511 | |||
RJR Tobacco | 3.750% notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 486 | |||
RJR Tobacco | 6.875% notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 870 | |||
RJR Tobacco | 7.000% notes due 2041 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | 299 | |||
RJR Tobacco | 8.125% notes due 2019 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | [1] | 954 | ||
RJR Tobacco | 8.125% notes due 2040 | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt | $ 326 | |||
[1] | The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. |
Long-Term Debt Net of Discoun71
Long-Term Debt Net of Discounts (Parenthetical) (Detail) - Jun. 30, 2015 - 8.125% notes due 2019 | Total |
Debt Instrument [Line Items] | |
Interest rate description | The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. |
Scenario 1 | |
Debt Instrument [Line Items] | |
Debt Instrument interest rate adjusted percentage, maximum | 8.125% |
Scenario 2 | |
Debt Instrument [Line Items] | |
Debt Instrument interest rate adjusted percentage | 8.125% |
Debt Instrument interest rate on adjusted percentage | 2.00% |
Maturities of RAI and RJR Tobac
Maturities of RAI and RJR Tobacco's Notes (Detail) $ in Millions | Jun. 30, 2015USD ($) |
Debt Instrument [Line Items] | |
2,015 | $ 450 |
2,016 | 500 |
2,017 | 1,200 |
2,018 | 1,500 |
2,019 | 750 |
2,020 | 2,000 |
2022 and thereafter | 11,111 |
Long term debt net of discounts, total | 17,511 |
RAI | |
Debt Instrument [Line Items] | |
2,015 | 450 |
2,017 | 700 |
2,018 | 1,500 |
2,020 | 1,250 |
2022 and thereafter | 10,111 |
Long term debt net of discounts, total | 14,011 |
RJR Tobacco | |
Debt Instrument [Line Items] | |
2,016 | 500 |
2,017 | 500 |
2,019 | 750 |
2,020 | 750 |
2022 and thereafter | 1,000 |
Long term debt net of discounts, total | $ 3,500 |
Schedule of Exchanged Portion o
Schedule of Exchanged Portion of Notes (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | |
Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 3,500 | ||
Principal Amount Notes Tendered in Exchange Offers | |||
Debt Instrument [Line Items] | |||
Principal amount | 13,599 | $ 4,633 | |
Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 3,123 | ||
2.300% notes due 2017 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 500 | ||
2.300% notes due 2017 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 447 | ||
3.500% notes due 2016 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 500 | ||
3.500% notes due 2016 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 415 | ||
3.750% notes due 2023 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 500 | ||
3.750% notes due 2023 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 474 | ||
6.875% notes due 2020 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 750 | ||
6.875% notes due 2020 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 641 | ||
7.000% notes due 2041 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 250 | ||
7.000% notes due 2041 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 240 | ||
8.125% notes due 2019 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 750 | ||
8.125% notes due 2019 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 669 | ||
8.125% notes due 2040 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 250 | ||
8.125% notes due 2040 | Principal Amount Notes Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 237 | ||
Principal Amount Notes Not Tendered in Exchange Offers | |||
Debt Instrument [Line Items] | |||
Principal amount | 3,951 | ||
Principal Amount Notes Not Tendered in Exchange Offers | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 377 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 2.300% notes due 2017 | |||
Debt Instrument [Line Items] | |||
Principal amount | 505 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 2.300% notes due 2017 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 53 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 3.500% notes due 2016 | |||
Debt Instrument [Line Items] | |||
Principal amount | 511 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 3.500% notes due 2016 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 85 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 3.750% notes due 2023 | |||
Debt Instrument [Line Items] | |||
Principal amount | 486 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 3.750% notes due 2023 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 26 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 6.875% notes due 2020 | |||
Debt Instrument [Line Items] | |||
Principal amount | 870 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 6.875% notes due 2020 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 109 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 7.000% notes due 2041 | |||
Debt Instrument [Line Items] | |||
Principal amount | 299 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 7.000% notes due 2041 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 10 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 8.125% notes due 2019 | |||
Debt Instrument [Line Items] | |||
Principal amount | [1] | 954 | |
Principal Amount Notes Not Tendered in Exchange Offers | 8.125% notes due 2019 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | 81 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 8.125% notes due 2040 | |||
Debt Instrument [Line Items] | |||
Principal amount | 326 | ||
Principal Amount Notes Not Tendered in Exchange Offers | 8.125% notes due 2040 | Lorillard Tobacco | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 13 | ||
[1] | The interest rate payable on these notes generally is subject to adjustment from time to time (as detailed in the form of these notes) based upon the credit rating assigned to these notes, provided that in no event will (1) the interest rate for these notes be reduced below 8.125% or (2) the total increase in the interest rate on these notes exceed 2.0% above 8.125%. |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 6 Months Ended | |
Jun. 30, 2015USD ($)CaseLegalMatterPlaintiff | Jun. 30, 2014LegalMatter | |
Loss Contingencies [Line Items] | ||
Growers trust fund | $ | $ 5,200 | |
Number of cases pending | 567 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | ||
Loss Contingencies [Line Items] | ||
Number of cases filed | 26 | |
Number of cases pending | 262 | 170 |
Number of cases pending in federal court | 17 | |
Number of cases pending in state court | 227 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | UNITED STATES | ||
Loss Contingencies [Line Items] | ||
Number of cases pending | 245 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Canada | ||
Loss Contingencies [Line Items] | ||
Number of cases pending | 17 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Illinois | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 39 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Maryland | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 36 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Florida | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 30 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | New York | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 21 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Missouri | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 19 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | Delaware | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 16 | |
RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | California | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in state court | 11 | |
Engle | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in federal court | Case | 4,000 | |
Number of cases after initial docket in federal court | Case | 400 | |
Number of cases pending | 3,581 | |
Number of plaintiffs | Plaintiff | 4,590 | |
Number of cases pending in federal court | 442 | |
Number of cases pending in state court | 3,138 | |
Punitive damages | $ | $ 145,000 | |
Number of cases filed but not served | 11 | |
Number of cases tried | 118 | |
Litigation settlement, amount | $ | $ 100 | |
Engle | Lorillard Tobacco | ||
Loss Contingencies [Line Items] | ||
Litigation settlement, amount | $ | $ 15 | |
Engle | RJR Tobacco | ||
Loss Contingencies [Line Items] | ||
Percentage of pending cases settled after initial docket | 90.00% | |
Litigation settlement, amount | $ | $ 42.5 | |
Engle | RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | ||
Loss Contingencies [Line Items] | ||
Number of cases filed | 2 | |
Number of cases pending | 3,581 | |
Number of plaintiffs | Plaintiff | 4,591 | |
Engle | Philip Morris | ||
Loss Contingencies [Line Items] | ||
Litigation settlement, amount | $ | $ 42.5 | |
West Virginia Ipic | ||
Loss Contingencies [Line Items] | ||
Number of plaintiffs | Plaintiff | 567 | |
West Virginia Ipic | RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | ||
Loss Contingencies [Line Items] | ||
Number of plaintiffs | Plaintiff | 567 | |
Broin II | RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | ||
Loss Contingencies [Line Items] | ||
Number of cases pending | 2,545 | |
Tribal Court | RJR Tobacco, Lorillard Tobacco or their affiliates or indemnitees | ||
Loss Contingencies [Line Items] | ||
Number of cases pending | 1 | |
Federal | ||
Loss Contingencies [Line Items] | ||
Number of cases pending in federal court | 2 | |
Number of federal cases settled | 400 | |
Number of federal cases tried | 13 | |
Number of cases filed by different lawyers | 2 |
Categories of U.S. Tobacco-Rela
Categories of U.S. Tobacco-Related Cases Pending against RJR Tobacco (Detail) - 6 months ended Jun. 30, 2015 | LegalMatterPlaintiff | |
Individual Smoking And Health Cases | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 112 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | 12 | |
West Virginia Ipic | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1],[2] | 1 |
Number of plaintiffs | Plaintiff | 567 | |
Increase/ (Decrease) in Number of Plaintiffs | No change | |
Engle | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1],[3] | 3,580 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | [3] | (58) |
Number of plaintiffs | Plaintiff | 4,590 | |
Increase/ (Decrease) in Number of Plaintiffs | Plaintiff | (91) | |
Broin II | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 2,545 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | (10) | |
Class Action | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 21 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | 1 | |
Filter Cases | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 67 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | 67 | |
Healthcare Cost Recovery Cases | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 2 |
Increase/ (Decrease) in Number of Plaintiffs | No change | |
State Settlement Agreements Enforcement And Validity Adjustments | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 28 |
Increase/ (Decrease) in Number of Plaintiffs | No change | |
Other Litigation And Developments | ||
Loss Contingencies [Line Items] | ||
RJR Tobacco’s U.S. Case Numbers as of June 30, 2015 | [1] | 14 |
Change in Number of Cases Since March 31, 2015 Increase/(Decrease) | 3 | |
[1] | RJR Tobacco's case number increased as a result of the Lorillard Tobacco Merger as follows: Individual Smoking and Health - 6; Class Action - 1; West Virginia IPIC - 3; Engle Progeny - 10; Filter Cases - 67. | |
[2] | Includes as one case the approximately 567 cases pending as a consolidated action In Re: Tobacco Litigation Individual Personal Injury Cases, sometimes referred to as West Virginia IPIC cases, described below. The West Virginia IPIC cases have been separated from the Individual Smoking and Health cases for reporting purposes | |
[3] | The Engle Progeny cases have been separated from the Individual Smoking and Health cases for reporting purposes. The number of cases does not reflect the impact of the proposed federal Engle Progeny settlement. |
Categories of U.S. Tobacco-Re76
Categories of U.S. Tobacco-Related Cases Pending against RJR Tobacco (Parenthetical) (Detail) - Jun. 30, 2015 - LegalMatter | Total | |
Loss Contingencies [Line Items] | ||
Number of cases pending | 567 | |
Individual Smoking And Health Cases | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 12 | |
Class Action | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 1 | |
Engle | ||
Loss Contingencies [Line Items] | ||
Number of cases pending | 3,581 | |
Change in number of cases | [1] | (58) |
Filter Cases | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 67 | |
Lorillard Tobacco | Individual Smoking And Health Cases | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 6 | |
Lorillard Tobacco | Class Action | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 1 | |
Lorillard Tobacco | West Virginia Ipic | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 3 | |
Lorillard Tobacco | Engle | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 10 | |
Lorillard Tobacco | Filter Cases | ||
Loss Contingencies [Line Items] | ||
Change in number of cases | 67 | |
[1] | The Engle Progeny cases have been separated from the Individual Smoking and Health cases for reporting purposes. The number of cases does not reflect the impact of the proposed federal Engle Progeny settlement. |
Commitments and Contingencies77
Commitments and Contingencies - Additional Information 1 (Detail) | 1 Months Ended | 6 Months Ended | |
Nov. 30, 1998LegalMatterState | Jun. 30, 2015USD ($)CaseLegalMatter | ||
Loss Contingencies [Line Items] | |||
Payment for litigation settlement | $ | $ 276,400,000 | ||
Payment for attorney fees and interest | $ | 64,100,000 | ||
Payment for compensatory and punitive damages | $ | 212,300,000 | ||
Compensatory Damages (as adjusted) | $ | [1] | 158,553,640 | |
Punitive Damages - Adjusted | $ | 204,817,000 | ||
Engle outstanding judgments | $ | $ 363,370,640 | ||
Number of states involved in MSA | State | 46 | ||
Previously settled cases | 4 | ||
Cases scheduled for trial | 33 | ||
Engle | |||
Loss Contingencies [Line Items] | |||
Number of cases became final | Case | 34 | ||
Cases scheduled for trial | 85 | ||
Number of cases tried | 118 | ||
Nonsmoking And Health Cases | |||
Loss Contingencies [Line Items] | |||
Cases scheduled for trial | 2 | ||
Individual Smoking And Health Cases | |||
Loss Contingencies [Line Items] | |||
Cases scheduled for trial | 4 | ||
Class Action | |||
Loss Contingencies [Line Items] | |||
Cases scheduled for trial | 1 | ||
Filter Cases | |||
Loss Contingencies [Line Items] | |||
Cases scheduled for trial | 26 | ||
Smoking And Health Engle Progeny And Healthcare Cost Recovery Cases | |||
Loss Contingencies [Line Items] | |||
Number of cases tried | 123 | ||
Number of mistrials declared | 10 | ||
Verdicts returned for tobacco companies | 59 | ||
Number of verdicts returned for tobacco companies by mistrial | 18 | ||
Smoking And Health Engle Progeny And Healthcare Cost Recovery Cases | Florida | |||
Loss Contingencies [Line Items] | |||
Number of cases tried | 58 | ||
Verdicts returned for plaintiff | 57 | ||
Number of cases dismissed | 3 | ||
Number of cases continued | 1 | ||
Number of cases under retrial on amount of damages | 1 | ||
Smoking And Health Engle Progeny And Healthcare Cost Recovery Cases | West Virginia | |||
Loss Contingencies [Line Items] | |||
Number of cases tried | 1 | ||
Smoking And Health Engle Progeny And Healthcare Cost Recovery Cases | New York | |||
Loss Contingencies [Line Items] | |||
Verdicts returned for plaintiff | 1 | ||
Smoking And Health Engle Progeny And Healthcare Cost Recovery Cases | California | |||
Loss Contingencies [Line Items] | |||
Verdicts returned for plaintiff | 1 | ||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. |
Verdicts in Individual Engle Pr
Verdicts in Individual Engle Progeny Cases have been Tried and Remain Pending (Detail) - USD ($) | Jun. 30, 2015 | Jun. 18, 2015 | May. 31, 2015 | Apr. 17, 2015 | Mar. 26, 2015 | Mar. 25, 2015 | Feb. 26, 2015 | Feb. 12, 2015 | Jan. 29, 2015 | Nov. 21, 2014 | Nov. 18, 2014 | Nov. 07, 2014 | Oct. 22, 2014 | Oct. 10, 2014 | Sep. 30, 2014 | Aug. 29, 2014 | Aug. 28, 2014 | Jul. 17, 2014 | Jun. 23, 2014 | May. 16, 2014 | Mar. 31, 2014 | Feb. 18, 2014 | Sep. 20, 2013 | Jul. 31, 2013 | May. 31, 2013 | Apr. 01, 2013 | Feb. 11, 2013 | May. 17, 2012 | Mar. 31, 2012 | Jan. 24, 2012 | Aug. 31, 2010 | Jul. 31, 2010 | May. 20, 2010 | Apr. 30, 2010 | Mar. 24, 2010 | ||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | |||||||||||||||||||||||||||||||||||
Punitive Damages | 204,817,000 | ||||||||||||||||||||||||||||||||||||
Verdicts In Individual Cases Pending | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | 14,000,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | 39,025,000 | ||||||||||||||||||||||||||||||||||||
Hiott | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 730,000 | |||||||||||||||||||||||||||||||||||
Hiott | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 40.00% | ||||||||||||||||||||||||||||||||||||
Starr Blundell | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 50,000 | |||||||||||||||||||||||||||||||||||
Starr Blundell | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 10.00% | ||||||||||||||||||||||||||||||||||||
Clayton | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 60,000 | |||||||||||||||||||||||||||||||||||
Clayton | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 10.00% | ||||||||||||||||||||||||||||||||||||
Cohen | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 3,330,000 | [2] | $ 3,330,000 | $ 10,000,000 | |||||||||||||||||||||||||||||||||
Punitive Damages | $ 10,000,000 | $ 10,000,000 | |||||||||||||||||||||||||||||||||||
Cohen | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 33.30% | ||||||||||||||||||||||||||||||||||||
Buonomo | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 4,060,000 | [2] | $ 4,060,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 25,000,000 | $ 15,700,000 | |||||||||||||||||||||||||||||||||||
Buonomo | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 77.50% | ||||||||||||||||||||||||||||||||||||
Hallgren | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 500,000 | [2] | $ 1,000,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 750,000 | $ 750,000 | |||||||||||||||||||||||||||||||||||
Hallgren | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 25.00% | ||||||||||||||||||||||||||||||||||||
Sikes | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 3,520,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 2,000,000 | ||||||||||||||||||||||||||||||||||||
Sikes | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 51.00% | ||||||||||||||||||||||||||||||||||||
Thibault | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 1,750,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 1,275,000 | ||||||||||||||||||||||||||||||||||||
Thibault | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.00% | ||||||||||||||||||||||||||||||||||||
Putney | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | 4,500,000 | ||||||||||||||||||||||||||||||||||||
Punitive Damages | $ 2,500,000 | ||||||||||||||||||||||||||||||||||||
Putney | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Allen | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 2,475,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 7,756,000 | ||||||||||||||||||||||||||||||||||||
Allen | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 24.00% | ||||||||||||||||||||||||||||||||||||
Jewett | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 10.00% | ||||||||||||||||||||||||||||||||||||
Jewett | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||||||||||||||||||||||||
Soffer | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 2,000,000 | |||||||||||||||||||||||||||||||||||
Soffer | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 40.00% | ||||||||||||||||||||||||||||||||||||
Ciccone | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 1,000,000 | |||||||||||||||||||||||||||||||||||
Ciccone | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Calloway | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 16,100,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 29,850,000 | ||||||||||||||||||||||||||||||||||||
Calloway | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 18.00% | 18.00% | |||||||||||||||||||||||||||||||||||
Calloway | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 27.00% | ||||||||||||||||||||||||||||||||||||
Hancock | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 700 | |||||||||||||||||||||||||||||||||||
Hancock | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 5.00% | ||||||||||||||||||||||||||||||||||||
James Smith | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 600,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 20,000 | ||||||||||||||||||||||||||||||||||||
James Smith | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 55.00% | ||||||||||||||||||||||||||||||||||||
Ballard | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 5,000,000 | |||||||||||||||||||||||||||||||||||
Ballard | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 55.00% | ||||||||||||||||||||||||||||||||||||
Evers | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 2,036,000 | |||||||||||||||||||||||||||||||||||
Evers | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 9.00% | 9.00% | |||||||||||||||||||||||||||||||||||
Evers | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 60.00% | ||||||||||||||||||||||||||||||||||||
Schoeff | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 7,875,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 30,000,000 | ||||||||||||||||||||||||||||||||||||
Schoeff | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 75.00% | ||||||||||||||||||||||||||||||||||||
Marotta | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 3,480,000 | |||||||||||||||||||||||||||||||||||
Marotta | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 58.00% | ||||||||||||||||||||||||||||||||||||
Searcy | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 1,000,000 | [1],[3] | $ 6,000,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 1,670,000 | $ 10,000,000 | |||||||||||||||||||||||||||||||||||
Searcy | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Earl Graham | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 550,000 | [1] | $ 550,000 | ||||||||||||||||||||||||||||||||||
Earl Graham | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||||||||||||||||||||||||
Skolnick | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 767,000 | ||||||||||||||||||||||||||||||||||||
Skolnick | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Grossman | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 15,350,000 | [1],[3] | $ 483,682 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 22,500,000 | ||||||||||||||||||||||||||||||||||||
Grossman | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 75.00% | ||||||||||||||||||||||||||||||||||||
Gafney | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 3,828,000 | |||||||||||||||||||||||||||||||||||
Gafney | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 33.00% | 33.00% | |||||||||||||||||||||||||||||||||||
Gafney | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 33.00% | ||||||||||||||||||||||||||||||||||||
Cheeley | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 1,500,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 2,000,000 | ||||||||||||||||||||||||||||||||||||
Cheeley | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 50.00% | ||||||||||||||||||||||||||||||||||||
Goveia | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 35.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 297,500 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 2,250,000 | ||||||||||||||||||||||||||||||||||||
Goveia | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 35.00% | ||||||||||||||||||||||||||||||||||||
Bowden | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 1,500,000 | [1] | $ 1,500,000 | ||||||||||||||||||||||||||||||||||
Bowden | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Burkhart | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 3,500,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 1,750,000 | ||||||||||||||||||||||||||||||||||||
Burkhart | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 10.00% | 10.00% | |||||||||||||||||||||||||||||||||||
Burkhart | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 25.00% | ||||||||||||||||||||||||||||||||||||
Bakst | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 4,504,000 | [1] | $ 4,500,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 14,000,000 | ||||||||||||||||||||||||||||||||||||
Bakst | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 75.00% | ||||||||||||||||||||||||||||||||||||
Robinson | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.50% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 16,900,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 16,900,000 | ||||||||||||||||||||||||||||||||||||
Robinson | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.50% | ||||||||||||||||||||||||||||||||||||
Harris | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3],[4] | $ 1,223,500 | |||||||||||||||||||||||||||||||||||
Harris | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 10.00% | |||||||||||||||||||||||||||||||||||
Harris | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 15.00% | |||||||||||||||||||||||||||||||||||
Wilcox | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 4,900,000 | [1] | $ 4,900,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 8,500,000 | ||||||||||||||||||||||||||||||||||||
Wilcox | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.00% | ||||||||||||||||||||||||||||||||||||
Irimi | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 14.50% | ||||||||||||||||||||||||||||||||||||
Irimi | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 14.50% | 14.50% | |||||||||||||||||||||||||||||||||||
Irimi | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 14.50% | ||||||||||||||||||||||||||||||||||||
Hubbird | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 50.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 3,000,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 25,000,000 | ||||||||||||||||||||||||||||||||||||
Hubbird | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 50.00% | ||||||||||||||||||||||||||||||||||||
Lourie | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 3.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 137,000 | |||||||||||||||||||||||||||||||||||
Lourie | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 7.00% | 7.00% | |||||||||||||||||||||||||||||||||||
Lourie | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 3.00% | ||||||||||||||||||||||||||||||||||||
Kerrivan | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 31.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3],[4] | $ 6,046,660 | |||||||||||||||||||||||||||||||||||
Punitive Damages | [4] | $ 9,600,000 | |||||||||||||||||||||||||||||||||||
Kerrivan | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 31.00% | |||||||||||||||||||||||||||||||||||
Taylor | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 58.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 4,116,000 | |||||||||||||||||||||||||||||||||||
Punitive Damages | $ 521,000 | ||||||||||||||||||||||||||||||||||||
Taylor | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 58.00% | ||||||||||||||||||||||||||||||||||||
Schleider | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 70.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[3],[4] | $ 14,700,000 | |||||||||||||||||||||||||||||||||||
Schleider | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 70.00% | |||||||||||||||||||||||||||||||||||
Perrotto | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[4] | $ 1,063,000 | |||||||||||||||||||||||||||||||||||
Perrotto | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 6.00% | [4] | 6.00% | ||||||||||||||||||||||||||||||||||
Perrotto | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 20.00% | |||||||||||||||||||||||||||||||||||
Ellen Gray | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 50.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[4] | $ 3,000,000 | |||||||||||||||||||||||||||||||||||
Ellen Gray | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 50.00% | |||||||||||||||||||||||||||||||||||
Sowers | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 50.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[4] | $ 2,130,000 | |||||||||||||||||||||||||||||||||||
Sowers | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 50.00% | |||||||||||||||||||||||||||||||||||
Zamboni | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 102,000 | |||||||||||||||||||||||||||||||||||
Zamboni | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 30.00% | ||||||||||||||||||||||||||||||||||||
Pollari | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 42.50% | ||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 5,000,000 | [1],[3],[4] | $ 10,000,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 1,500,000 | [4] | $ 1,500,000 | ||||||||||||||||||||||||||||||||||
Pollari | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 42.50% | |||||||||||||||||||||||||||||||||||
Gore | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 1,000,000 | |||||||||||||||||||||||||||||||||||
Gore | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 23.00% | 23.00% | |||||||||||||||||||||||||||||||||||
Ryan | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 65.00% | 65.00% | |||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | $ 21,500,000 | [1],[4] | $ 21,500,000 | ||||||||||||||||||||||||||||||||||
Punitive Damages | $ 25,000,000 | [4] | $ 25,000,000 | ||||||||||||||||||||||||||||||||||
Ryan | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 65.00% | |||||||||||||||||||||||||||||||||||
Hardin | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | 13.00% | 13.00% | |||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[4] | $ 100,880 | |||||||||||||||||||||||||||||||||||
Hardin | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [4] | 13.00% | |||||||||||||||||||||||||||||||||||
McCoy | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Compensatory Damages (as adjusted) | [1],[5] | $ 1,038,400 | |||||||||||||||||||||||||||||||||||
Punitive Damages | [5] | $ 6,000,000 | |||||||||||||||||||||||||||||||||||
McCoy | Lorillard Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [5] | 20.00% | |||||||||||||||||||||||||||||||||||
McCoy | RJR Tobacco | |||||||||||||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||||||||||||
Allocation of Fault | [5] | 25.00% | |||||||||||||||||||||||||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | ||||||||||||||||||||||||||||||||||||
[2] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. | ||||||||||||||||||||||||||||||||||||
[3] | The court did not apply comparative fault in the final judgment. | ||||||||||||||||||||||||||||||||||||
[4] | Should the pending post-trial motions be denied, RJR Tobacco will likely file a notice of appeal with the appropriate appellate court. | ||||||||||||||||||||||||||||||||||||
[5] | At this time, it is unknown if comparative fault will apply to the final judgment. |
Commitments and Contingencies79
Commitments and Contingencies - Additional Information 2 (Detail) | 1 Months Ended | 6 Months Ended | |||||||||||||
Apr. 30, 2013LegalMatter | Jun. 30, 2015USD ($)LegalMatterPlaintiff | Jul. 15, 2015USD ($) | Jul. 13, 2015USD ($) | Jul. 08, 2015USD ($) | Jul. 01, 2015USD ($) | Jun. 18, 2015USD ($) | May. 31, 2015USD ($) | Apr. 17, 2015USD ($) | Nov. 30, 2014USD ($) | Aug. 31, 2014USD ($) | Aug. 27, 2014USD ($) | Jun. 30, 2014USD ($) | |||
Loss Contingencies [Line Items] | |||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | |||||||||||||
Punitive Damages - Adjusted | $ 204,817,000 | ||||||||||||||
Compensatory damages | $ 0 | ||||||||||||||
Number of cases pending | LegalMatter | 567 | ||||||||||||||
Rjr Tobacco Indemnitee or Three | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of cases pending | LegalMatter | 112 | ||||||||||||||
Engle | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of cases tried | LegalMatter | 118 | ||||||||||||||
Punitive damages | $ 145,000,000,000 | ||||||||||||||
Number of cases pending | LegalMatter | 3,581 | ||||||||||||||
Number of plaintiffs | Plaintiff | 4,590 | ||||||||||||||
Punitive Damages 2 | $ 36,300,000,000 | ||||||||||||||
Punitive Damages 3 | 17,600,000,000 | ||||||||||||||
Punitive Damages 4 | $ 16,300,000,000 | ||||||||||||||
Number of plaintiffs | LegalMatter | 4,591 | ||||||||||||||
Litigation settlement, amount | $ 100,000,000 | ||||||||||||||
Number of cases pending in federal court | LegalMatter | 442 | ||||||||||||||
Engle | Lorillard Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Litigation settlement, amount | $ 15,000,000 | ||||||||||||||
Engle | RJR Tobacco or Lorillard Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of cases tried | LegalMatter | 5 | ||||||||||||||
Engle | RJR Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Litigation settlement, amount | $ 42,500,000 | ||||||||||||||
Engle | Philip Morris | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Litigation settlement, amount | $ 42,500,000 | ||||||||||||||
Ryan | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 35.00% | 35.00% | |||||||||||||
Allocation of Fault | 65.00% | 65.00% | |||||||||||||
Compensatory Damages (as adjusted) | $ 21,500,000 | [1],[2] | $ 21,500,000 | ||||||||||||
Punitive Damages - Adjusted | $ 25,000,000 | [2] | $ 25,000,000 | ||||||||||||
Compensatory damages | $ 21,500,000 | ||||||||||||||
Punitive damages | $ 25,000,000 | ||||||||||||||
Ryan | RJR Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | [2] | 65.00% | |||||||||||||
Hardin | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 87.00% | 87.00% | |||||||||||||
Allocation of Fault | 13.00% | 13.00% | |||||||||||||
Compensatory Damages (as adjusted) | [1],[2] | $ 100,880 | |||||||||||||
Compensatory damages | 776,000 | $ 776,000 | |||||||||||||
Punitive damages | 0 | $ 0 | |||||||||||||
Total damages | $ 100,880 | ||||||||||||||
Hardin | RJR Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | [2] | 13.00% | |||||||||||||
McCoy | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 35.00% | ||||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 1,038,400 | |||||||||||||
Punitive Damages - Adjusted | [3] | 6,000,000 | |||||||||||||
Compensatory damages | 1,500,000 | ||||||||||||||
Punitive damages | $ 3,000,000 | ||||||||||||||
McCoy | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 35.00% | ||||||||||||||
Compensatory damages | $ 1,500,000 | ||||||||||||||
Punitive damages | $ 3,000,000 | ||||||||||||||
McCoy | Other Defendant | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||
McCoy | Other Defendant | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||
McCoy | Lorillard Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | [3] | 20.00% | |||||||||||||
McCoy | Lorillard Tobacco | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 20.00% | ||||||||||||||
McCoy | RJR Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | [3] | 25.00% | |||||||||||||
McCoy | RJR Tobacco | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 25.00% | ||||||||||||||
Larkin | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 38.00% | ||||||||||||||
Compensatory damages | $ 4,960,000 | ||||||||||||||
Punitive damages | $ 8,500,000 | ||||||||||||||
Larkin | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 38.00% | ||||||||||||||
Allocation of Fault | 62.00% | ||||||||||||||
Compensatory damages | $ 4,960,000 | ||||||||||||||
Punitive damages | $ 8,500,000 | ||||||||||||||
Amount of final judgment | $ 13,460,000 | ||||||||||||||
Larkin | RJR Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 62.00% | ||||||||||||||
Individual Smoking And Health Cases | Rjr Tobacco Indemnitee or Three | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of cases pending | LegalMatter | 110 | ||||||||||||||
Environmental Tobacco Smoke | Rjr Tobacco Indemnitee or Three | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of cases pending | LegalMatter | 2 | ||||||||||||||
Izzarelli | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 42.00% | ||||||||||||||
Allocation of Fault | 58.00% | ||||||||||||||
Compensatory damages | $ 13,760,000 | ||||||||||||||
Punitive damages | 3,970,000 | ||||||||||||||
Total damages | 11,950,000 | ||||||||||||||
Judgment interest awarded | 15,800,000 | ||||||||||||||
Judgment Interest Per Day Awarded | 4,000 | ||||||||||||||
Amended Final Judgment | $ 28,100,000 | ||||||||||||||
Major | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of fault to plaintiff | 50.00% | ||||||||||||||
Major | Subsequent Event | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Compensatory damages | $ 135,000 | ||||||||||||||
Amended Final Judgment | 3,780,000 | ||||||||||||||
Major | Subsequent Event | Pre Judgment Interest | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Judgment interest awarded | 1,900,000 | ||||||||||||||
Major | Subsequent Event | Post Judgment Interest | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Judgment Interest Per Day Awarded | $ 1,100 | ||||||||||||||
Major | Lorillard Tobacco | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 17.00% | ||||||||||||||
Total damages | $ 3,900,000 | ||||||||||||||
Bond | $ 9,000,000 | ||||||||||||||
Major | RJR Tobacco and Other Manufacturer | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Allocation of Fault | 33.00% | ||||||||||||||
Compensatory damages | $ 17,740,000 | ||||||||||||||
West Virginia Ipic | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of plaintiff claims dismissed | LegalMatter | 600 | ||||||||||||||
Lawsuits pending | LegalMatter | 567 | ||||||||||||||
Number of plaintiffs | Plaintiff | 567 | ||||||||||||||
Number of plaintiffs | Plaintiff | 7 | ||||||||||||||
Various Smokeless Manufacturers | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of plaintiffs | Plaintiff | 41 | ||||||||||||||
Federal | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Number of federal cases settled | LegalMatter | 400 | ||||||||||||||
Number of federal cases tried | LegalMatter | 13 | ||||||||||||||
Number of cases pending in federal court | LegalMatter | 2 | ||||||||||||||
Number of cases filed by different lawyers | LegalMatter | 2 | ||||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | ||||||||||||||
[2] | Should the pending post-trial motions be denied, RJR Tobacco will likely file a notice of appeal with the appropriate appellate court. | ||||||||||||||
[3] | At this time, it is unknown if comparative fault will apply to the final judgment. |
Commitments and Contingencies80
Commitments and Contingencies - Additional Information 3 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Dec. 31, 2010 | Aug. 31, 2010 | Jul. 31, 2010 | Apr. 30, 2010 | Apr. 26, 2010 | Mar. 24, 2010 | Mar. 10, 2010 | Feb. 25, 2010 | ||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory damages | $ 0 | |||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||||
Punitive Damages - Adjusted | 204,817,000 | |||||||||||||
Grossman | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||
Compensatory damages | $ 15,350,000 | $ 1,900,000 | ||||||||||||
Punitive damages | $ 22,500,000 | $ 0 | ||||||||||||
Allocation of fault to plaintiff | 25.00% | 70.00% | ||||||||||||
Compensatory Damages (as adjusted) | 15,350,000 | [1],[2] | $ 483,682 | |||||||||||
Bond | $ 5,000,000 | $ 484,000 | ||||||||||||
Punitive Damages - Adjusted | 22,500,000 | |||||||||||||
Grossman | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 75.00% | 25.00% | ||||||||||||
Grossman | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 5.00% | |||||||||||||
Cohen | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||
Punitive damages | $ 20,000,000 | |||||||||||||
Allocation of fault to plaintiff | 33.30% | |||||||||||||
Compensatory Damages (as adjusted) | 3,330,000 | [3] | $ 3,330,000 | $ 10,000,000 | ||||||||||
Bond | 2,500,000 | |||||||||||||
Punitive Damages - Adjusted | 10,000,000 | $ 10,000,000 | ||||||||||||
Cohen | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 33.30% | |||||||||||||
Cohen | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 33.30% | |||||||||||||
Putney | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory damages | $ 15,100,000 | |||||||||||||
Punitive damages | $ 2,500,000 | |||||||||||||
Allocation of fault to plaintiff | 35.00% | |||||||||||||
Compensatory Damages (as adjusted) | $ 4,500,000 | |||||||||||||
Bond | $ 2,400,000 | |||||||||||||
Punitive Damages - Adjusted | $ 2,500,000 | |||||||||||||
Putney | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
Putney | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 35.00% | |||||||||||||
Florida | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Florida Bond Cap Total | 200,000,000 | |||||||||||||
Florida Bond Cap Per Case | $ 5,000,000 | |||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||||
[2] | The court did not apply comparative fault in the final judgment. | |||||||||||||
[3] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. |
Commitments and Contingencies81
Commitments and Contingencies - Additional Information 4 (Detail) - USD ($) | Jun. 30, 2015 | Apr. 30, 2015 | Nov. 26, 2014 | Aug. 27, 2014 | Oct. 31, 2011 | May. 31, 2011 | Apr. 26, 2011 | Oct. 15, 2010 | Aug. 31, 2010 | May. 20, 2010 | ||
Loss Contingencies [Line Items] | ||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||
Punitive Damages - Adjusted | 204,817,000 | |||||||||||
Compensatory damages | $ 0 | |||||||||||
Buonomo | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Punitive damages | $ 25,000,000 | |||||||||||
Compensatory Damages (as adjusted) | 4,060,000 | [2] | $ 4,060,000 | |||||||||
Punitive Damages - Adjusted | $ 25,000,000 | $ 15,700,000 | ||||||||||
Allocation of fault to plaintiff | 22.50% | |||||||||||
Compensatory damages | $ 5,200,000 | |||||||||||
Bond | $ 5,000,000 | |||||||||||
Amended Final Judgment | $ 29,100,000 | |||||||||||
Buonomo | RJR Tobacco 2012 | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Allocation of Fault | 77.50% | |||||||||||
Frazier | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||
Andy Allen | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Punitive damages | $ 7,800,000 | $ 17,000,000 | ||||||||||
Punitive Damages - Adjusted | $ 8,100,000 | |||||||||||
Allocation of fault to plaintiff | 70.00% | 40.00% | ||||||||||
Compensatory damages | $ 3,100,000 | $ 6,000,000 | ||||||||||
Bond | $ 3,750,000 | |||||||||||
Allocation of Fault | 24.00% | |||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||
Total damages | $ 19,700,000 | |||||||||||
Andy Allen | RJR Tobacco 2012 | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Allocation of Fault | 45.00% | |||||||||||
Andy Allen | Other Defendant | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Allocation of Fault | 6.00% | 15.00% | ||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||
[2] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. |
Commitments and Contingencies82
Commitments and Contingencies - Additional Information 5 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | May. 31, 2012 | Mar. 31, 2012 | Jan. 24, 2012 | Oct. 17, 2011 | Jul. 15, 2011 | Jun. 16, 2011 | ||
Loss Contingencies [Line Items] | ||||||||||
Compensatory damages | $ 0 | |||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||
Punitive Damages - Adjusted | 204,817,000 | |||||||||
Soffer | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of fault to plaintiff | 60.00% | |||||||||
Compensatory damages | $ 5,000,000 | |||||||||
Total damages | 2,000,000 | |||||||||
Bond | 2,000,000 | |||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||
Punitive damages | $ 0 | |||||||||
Compensatory Damages (as adjusted) | [1] | 2,000,000 | ||||||||
Soffer | RJR Tobacco 2012 | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of Fault | 40.00% | |||||||||
Ciccone | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of fault to plaintiff | 70.00% | |||||||||
Compensatory damages | $ 3,200,000 | |||||||||
Bond | $ 1,000,000 | |||||||||
Punitive damages | $ 50,000 | |||||||||
Compensatory Damages (as adjusted) | [1] | 1,000,000 | ||||||||
Ciccone | RJR Tobacco 2012 | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of Fault | 30.00% | |||||||||
Hallgren | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of fault to plaintiff | 50.00% | |||||||||
Compensatory damages | $ 2,000,000 | |||||||||
Bond | $ 1,300,000 | |||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||
Punitive damages | $ 750,000 | |||||||||
Compensatory Damages (as adjusted) | 500,000 | [2] | $ 1,000,000 | |||||||
Punitive Damages - Adjusted | $ 750,000 | $ 750,000 | ||||||||
Hallgren | RJR Tobacco 2012 | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of Fault | 25.00% | |||||||||
Hallgren | Other Defendant | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Allocation of Fault | 25.00% | |||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||
[2] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. |
Commitments and Contingencies83
Commitments and Contingencies - Additional Information 6 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | Apr. 30, 2013 | Mar. 20, 2013 | Oct. 31, 2012 | Sep. 30, 2012 | Sep. 19, 2012 | Aug. 10, 2012 | Aug. 01, 2012 | May. 17, 2012 | Feb. 29, 2012 |
Loss Contingencies [Line Items] | |||||||||||
Compensatory damages | $ 0 | ||||||||||
Marotta | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 42.00% | ||||||||||
Compensatory damages | $ 3,480,000 | $ 6,000,000 | |||||||||
Punitive damages | $ 0 | ||||||||||
Judgment Sought Against Each Defendant | $ 75,000 | ||||||||||
Marotta | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 58.00% | ||||||||||
Calloway | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 20.50% | ||||||||||
Compensatory damages | $ 20,500,000 | ||||||||||
Bond | $ 1,500,000 | ||||||||||
Share of damages | 25,000,000 | ||||||||||
Calloway | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Punitive damages | $ 12,600,000 | ||||||||||
Allocation of Fault | 18.00% | 18.00% | |||||||||
Bond | $ 1,250,000 | ||||||||||
Calloway | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Punitive damages | $ 17,250,000 | ||||||||||
Allocation of Fault | 27.00% | ||||||||||
Calloway | Other Defendant | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 34.50% | ||||||||||
Hiott | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 60.00% | ||||||||||
Compensatory damages | $ 1,830,000 | ||||||||||
Punitive damages | 0 | ||||||||||
Bond | 730,000 | ||||||||||
Total damages | $ 730,000 | ||||||||||
Hiott | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 40.00% | ||||||||||
Hancock | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 90.00% | ||||||||||
Compensatory damages | $ 110,200 | ||||||||||
Punitive damages | $ 0 | ||||||||||
Total damages | $ 705 | ||||||||||
Hancock | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 5.00% | ||||||||||
Hancock | Other Defendant | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 5.00% | ||||||||||
Baker | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Judgment Sought Against Each Defendant | $ 15,000 |
Commitments and Contingencies84
Commitments and Contingencies - Additional Information 7 (Detail) - USD ($) | Aug. 27, 2014 | Oct. 31, 2013 | Sep. 30, 2013 | Aug. 31, 2013 | Jul. 31, 2013 | Jun. 25, 2013 | Jun. 03, 2013 | Oct. 31, 2012 | Oct. 19, 2012 | Oct. 17, 2012 | Sep. 20, 2012 |
Loss Contingencies [Line Items] | |||||||||||
Compensatory damages | $ 0 | ||||||||||
Sikes | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Punitive damages | $ 2,000,000 | ||||||||||
Allocation of fault to plaintiff | 49.00% | ||||||||||
Compensatory damages | $ 4,100,000 | ||||||||||
Amended Final Judgment | $ 5,500,000 | $ 6,100,000 | |||||||||
Bond | $ 5,000,000 | ||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | ||||||||||
Sikes | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 51.00% | ||||||||||
James Smith | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Punitive damages | $ 20,000 | ||||||||||
Allocation of fault to plaintiff | 45.00% | ||||||||||
Compensatory damages | $ 600,000 | ||||||||||
Bond | $ 620,000 | ||||||||||
Total damages | $ 620,000 | ||||||||||
James Smith | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 55.00% | ||||||||||
Ballard | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 45.00% | ||||||||||
Compensatory damages | $ 8,550,000 | ||||||||||
Amended Final Judgment | $ 5,000,000 | ||||||||||
Bond | $ 5,000,000 | ||||||||||
Amount of final judgment | $ 4,700,000 | ||||||||||
Ballard | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 55.00% |
Commitments and Contingencies85
Commitments and Contingencies - Additional Information 8 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | Nov. 30, 2013 | Sep. 30, 2013 | May. 31, 2013 | Apr. 30, 2013 | Apr. 01, 2013 | Feb. 13, 2013 | Feb. 11, 2013 | ||
Loss Contingencies [Line Items] | |||||||||||
Compensatory damages | $ 0 | ||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | |||||||||
Punitive Damages - Adjusted | 204,817,000 | ||||||||||
Evers | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 31.00% | ||||||||||
Compensatory damages | $ 3,230,000 | ||||||||||
Punitive damages | $ 12,360,000 | ||||||||||
Compensatory Damages (as adjusted) | [1] | $ 2,036,000 | |||||||||
Evers | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 9.00% | 9.00% | |||||||||
Total damages | $ 266,000 | ||||||||||
Bond | $ 266,000 | ||||||||||
Evers | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 60.00% | ||||||||||
Total damages | $ 1,770,000 | ||||||||||
Bond | $ 1,770,000 | ||||||||||
Schoeff | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 25.00% | ||||||||||
Compensatory damages | $ 10,500,000 | ||||||||||
Punitive damages | $ 30,000,000 | 30,000,000 | |||||||||
Total damages | $ 7,880,000 | ||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | ||||||||||
Compensatory Damages (as adjusted) | [1] | $ 7,875,000 | |||||||||
Punitive Damages - Adjusted | 30,000,000 | ||||||||||
Schoeff | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 75.00% | ||||||||||
Searcy | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of fault to plaintiff | 40.00% | ||||||||||
Compensatory damages | $ 6,000,000 | ||||||||||
Punitive damages | 10,000,000 | ||||||||||
Bond | $ 2,200,000 | ||||||||||
Compensatory Damages (as adjusted) | 1,000,000 | [1],[2] | 6,000,000 | ||||||||
Punitive Damages - Adjusted | $ 1,670,000 | $ 10,000,000 | |||||||||
Remitted compensatory damages | $ 1,000,000 | ||||||||||
Remitted punitive damages | $ 1,670,000 | ||||||||||
Searcy | RJR Tobacco 2012 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 30.00% | ||||||||||
Searcy | Other Defendant | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocation of Fault | 30.00% | ||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | ||||||||||
[2] | The court did not apply comparative fault in the final judgment. |
Commitments and Contingencies86
Commitments and Contingencies - Additional Information 9 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2013 | Oct. 31, 2013 | Jul. 31, 2013 | Jun. 14, 2013 | Jun. 04, 2013 | May. 31, 2013 | May. 23, 2013 | May. 02, 2013 | ||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||||
Compensatory damages | $ 0 | |||||||||||||
David Cohen | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 40.00% | |||||||||||||
Compensatory Damages (as adjusted) | $ 617,000 | |||||||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||||||
Compensatory damages | $ 2,060,000 | |||||||||||||
David Cohen | Lorillard Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||
Compensatory Damages (as adjusted) | 411,000 | |||||||||||||
David Cohen | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
David Cohen | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Earl Graham | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 70.00% | |||||||||||||
Compensatory Damages (as adjusted) | 550,000 | [1] | $ 550,000 | |||||||||||
Compensatory damages | $ 2,750,000 | |||||||||||||
Bond | $ 556,000 | |||||||||||||
Earl Graham | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||
Earl Graham | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Starr Blundell | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 80.00% | |||||||||||||
Compensatory Damages (as adjusted) | [2] | $ 50,000 | ||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||
Compensatory damages | $ 500,000 | |||||||||||||
Bond | $ 50,000 | |||||||||||||
Amount of final judgment | $ 50,000 | |||||||||||||
Starr Blundell | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Starr Blundell | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Skolnick | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 40.00% | |||||||||||||
Compensatory Damages (as adjusted) | $ 767,000 | |||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||
Compensatory damages | $ 2,560,000 | |||||||||||||
Bond | $ 767,000 | |||||||||||||
Skolnick | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
Skolnick | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||||
[2] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. |
Commitments and Contingencies87
Commitments and Contingencies - Additional Information 10 (Detail) - USD ($) | Jun. 30, 2015 | Aug. 27, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Jan. 27, 2014 | Nov. 30, 2013 | Sep. 30, 2013 | Sep. 20, 2013 | Jun. 19, 2013 |
Loss Contingencies [Line Items] | |||||||||
Compensatory damages | $ 0 | ||||||||
Thibault | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 30.00% | ||||||||
Compensatory damages | $ 1,750,000 | ||||||||
Punitive damages | 1,280,000 | ||||||||
Total damages | $ 3,030,000 | ||||||||
Bond | $ 3,030,000 | ||||||||
Thibault | RJR Tobacco 2012 | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 70.00% | ||||||||
Gafney | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 34.00% | ||||||||
Compensatory damages | $ 5,800,000 | ||||||||
Total damages | 1,900,000 | ||||||||
Bond | $ 1,900,000 | ||||||||
Judgment Sought Against Each Defendant | $ 15,000 | ||||||||
Gafney | Lorillard Tobacco | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 33.00% | 33.00% | |||||||
Total damages | $ 1,900,000 | ||||||||
Bond | $ 1,900,000 | ||||||||
Gafney | RJR Tobacco 2012 | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 33.00% | ||||||||
Harford | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 82.00% | ||||||||
Compensatory damages | $ 330,000 | ||||||||
Harford | RJR Tobacco 2012 | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 18.00% | ||||||||
Cheeley | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 50.00% | ||||||||
Compensatory damages | $ 1,500,000 | $ 3,000,000 | |||||||
Punitive damages | $ 2,000,000 | 2,000,000 | |||||||
Bond | $ 3,500,000 | ||||||||
Judgment Sought Against Each Defendant | $ 15,000 | ||||||||
Cheeley | RJR Tobacco 2012 | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 50.00% |
Commitments and Contingencies88
Commitments and Contingencies - Additional Information 11 (Detail) - USD ($) | 1 Months Ended | |||||||||||||
Jul. 31, 2014 | Jun. 30, 2015 | Sep. 30, 2014 | Aug. 27, 2014 | Jun. 30, 2014 | May. 16, 2014 | Apr. 30, 2014 | Mar. 31, 2014 | Mar. 26, 2014 | Mar. 17, 2014 | Feb. 27, 2014 | Feb. 18, 2014 | |||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory damages | $ 0 | |||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||||
Goveia | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 30.00% | |||||||||||||
Allocation of Fault | 35.00% | |||||||||||||
Compensatory damages | $ 297,500 | $ 850,000 | ||||||||||||
Punitive damages | 2,250,000 | $ 2,250,000 | ||||||||||||
Bond | $ 2,500,000 | |||||||||||||
Compensatory Damages (as adjusted) | [1] | 297,500 | ||||||||||||
Goveia | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 35.00% | |||||||||||||
Banks | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||
Clayton | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 90.00% | |||||||||||||
Compensatory damages | $ 60,000 | $ 600,000 | ||||||||||||
Punitive damages | $ 0 | |||||||||||||
Bond | $ 223,000 | |||||||||||||
Taxable costs | 163,469 | |||||||||||||
Amount of final judgment | $ 223,469 | |||||||||||||
Compensatory Damages (as adjusted) | [2] | 60,000 | ||||||||||||
Clayton | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Bowden | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 40.00% | |||||||||||||
Compensatory damages | $ 5,000,000 | |||||||||||||
Punitive damages | $ 0 | |||||||||||||
Bond | $ 1,500,000 | |||||||||||||
Compensatory Damages (as adjusted) | 1,500,000 | [1] | $ 1,500,000 | |||||||||||
Bowden | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
Bowden | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||
Burkhart | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 50.00% | |||||||||||||
Compensatory damages | $ 5,000,000 | |||||||||||||
Compensatory Damages (as adjusted) | [1],[3] | $ 3,500,000 | ||||||||||||
Burkhart | Lorillard Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | 10.00% | ||||||||||||
Punitive damages | $ 500,000 | |||||||||||||
Burkhart | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 15.00% | |||||||||||||
Punitive damages | $ 750,000 | |||||||||||||
Burkhart | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 25.00% | |||||||||||||
Punitive damages | $ 1,250,000 | |||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||||
[2] | Compensatory damages are adjusted to reflect the reduction that may be required by the allocation of fault. Punitive damages are not adjusted and reflect the amount of the final judgment(s) signed by the trial court judge(s). The amounts listed above do not include attorneys’ fees or statutory interest. | |||||||||||||
[3] | The court did not apply comparative fault in the final judgment. |
Commitments and Contingencies89
Commitments and Contingencies - Additional Information 12 (Detail) - USD ($) | Jun. 23, 2014 | Jun. 30, 2015 | Mar. 26, 2015 | Feb. 28, 2015 | Jan. 27, 2015 | Oct. 31, 2014 | Sep. 30, 2014 | Aug. 28, 2014 | Aug. 27, 2014 | Jul. 31, 2014 | Jul. 18, 2014 | Jul. 17, 2014 | ||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory damages | $ 0 | |||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||||
Bakst | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 25.00% | |||||||||||||
Compensatory damages | $ 6,000,000 | |||||||||||||
Funeral Expenses | 4,209 | |||||||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||||||
Compensatory Damages (as adjusted) | 4,500,000 | $ 4,504,000 | [1] | |||||||||||
Punitive damages | $ 14,000,000 | |||||||||||||
Bond | $ 5,000,000 | |||||||||||||
Bakst | RJR Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 75.00% | |||||||||||||
Bakst | RJR Tobacco 2012 | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 75.00% | |||||||||||||
Robinson | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 29.50% | |||||||||||||
Allocation of Fault | 70.50% | |||||||||||||
Compensatory damages | $ 16,900,000 | $ 16,900,000 | ||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 16,900,000 | ||||||||||||
Punitive damages | $ 23,600,000,000 | |||||||||||||
Bond | $ 5,000,000 | |||||||||||||
Remitted punitive damages | $ 16,900,000 | |||||||||||||
Robinson | RJR Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 70.50% | |||||||||||||
Harris | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Compensatory Damages (as adjusted) | [1],[2],[3] | $ 1,223,500 | ||||||||||||
Harris | RJR Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | [2] | 15.00% | ||||||||||||
Harris | Survival claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 60.00% | |||||||||||||
Allocation of Fault | 15.00% | |||||||||||||
Compensatory damages | $ 1,300,000 | |||||||||||||
Harris | Wrongful death claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 70.00% | |||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Compensatory damages | $ 400,000 | |||||||||||||
Harris | Lorillard Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | [2] | 10.00% | ||||||||||||
Harris | Lorillard Tobacco | Survival claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Harris | Lorillard Tobacco | Wrongful death claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Harris | Other Defendant | Survival claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 15.00% | |||||||||||||
Harris | Other Defendant | Wrongful death claim | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||
Gore | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 54.00% | |||||||||||||
Compensatory damages | $ 2,000,000 | |||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 1,000,000 | ||||||||||||
Gore | RJR Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 23.00% | 23.00% | ||||||||||||
Gore | Other Defendant | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 23.00% | |||||||||||||
Wilcox | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of fault to plaintiff | 30.00% | |||||||||||||
Allocation of Fault | 70.00% | |||||||||||||
Compensatory damages | $ 7,000,000 | |||||||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||||||
Compensatory Damages (as adjusted) | $ 4,900,000 | [1] | $ 4,900,000 | |||||||||||
Punitive damages | $ 8,500,000 | |||||||||||||
Bond | $ 5,000,000 | |||||||||||||
Projected settlement expenses | $ 8,500,000 | |||||||||||||
Wilcox | RJR Tobacco | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Allocation of Fault | 70.00% | |||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||||
[2] | Should the pending post-trial motions be denied, RJR Tobacco will likely file a notice of appeal with the appropriate appellate court. | |||||||||||||
[3] | The court did not apply comparative fault in the final judgment. |
Commitments and Contingencies90
Commitments and Contingencies - Additional Information 13 (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | Nov. 30, 2014 | Nov. 07, 2014 | Oct. 22, 2014 | Oct. 10, 2014 | Aug. 29, 2014 | Aug. 28, 2014 | Aug. 27, 2014 |
Loss Contingencies [Line Items] | |||||||||
Compensatory damages | $ 0 | ||||||||
Irimi | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 70.00% | ||||||||
Allocation of Fault | 14.50% | ||||||||
Compensatory damages | $ 3,100,000 | ||||||||
Total damages | $ 453,000 | ||||||||
Irimi | Lorillard Tobacco | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 14.50% | 14.50% | |||||||
Total damages | $ 453,000 | ||||||||
Irimi | Other Defendant | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 1.00% | ||||||||
Total damages | $ 31,000 | ||||||||
Hubbird | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 50.00% | ||||||||
Allocation of Fault | 50.00% | ||||||||
Compensatory damages | $ 3,000,000 | ||||||||
Total damages | $ 28,000,000 | ||||||||
Punitive damages | $ 25,000,000 | ||||||||
Bond | 5,000,000 | ||||||||
Lourie | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 63.00% | ||||||||
Allocation of Fault | 3.00% | ||||||||
Compensatory damages | $ 1,370,000 | ||||||||
Bond | $ 41,000 | ||||||||
Lourie | Lorillard Tobacco | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 7.00% | 7.00% | |||||||
Bond | $ 96,000 | ||||||||
Lourie | Other Defendant | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 27.00% | ||||||||
Kerrivan | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 19.00% | ||||||||
Allocation of Fault | 31.00% | ||||||||
Compensatory damages | $ 15,800,000 | ||||||||
Punitive damages | $ 9,600,000 | ||||||||
Kerrivan | Other Defendant | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of Fault | 50.00% | ||||||||
Punitive damages | $ 15,700,000 | ||||||||
Taylor | |||||||||
Loss Contingencies [Line Items] | |||||||||
Allocation of fault to plaintiff | 42.00% | ||||||||
Allocation of Fault | 58.00% | ||||||||
Compensatory damages | $ 4,500,000 | ||||||||
Total damages | 4,640,000 | ||||||||
Punitive damages | 521,000 | ||||||||
Bond | $ 4,640,000 | ||||||||
Judgment Sought Against Each Defendant | $ 15,000 |
Commitments and Contingencies91
Commitments and Contingencies - Additional Information 14 (Detail) | Oct. 31, 1997USD ($) | Jul. 13, 2015USD ($) | Jun. 30, 2015USD ($)LegalMatter | Jun. 18, 2015USD ($) | May. 31, 2015USD ($) | Apr. 17, 2015USD ($) | Mar. 25, 2015USD ($) | Mar. 18, 2015USD ($) | Feb. 28, 2015USD ($) | Feb. 26, 2015USD ($) | Feb. 12, 2015USD ($) | Jan. 29, 2015USD ($) | Dec. 31, 2014USD ($) | Nov. 21, 2014USD ($) | Nov. 18, 2014USD ($) | Aug. 27, 2014USD ($) | ||
Loss Contingencies [Line Items] | ||||||||||||||||||
Compensatory damages | $ 0 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 158,553,640 | ||||||||||||||||
Punitive Damages - Adjusted | 204,817,000 | |||||||||||||||||
Schleider | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 30.00% | |||||||||||||||||
Allocation of Fault | 70.00% | |||||||||||||||||
Compensatory damages | $ 21,000,000 | |||||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1],[2],[3] | $ 14,700,000 | ||||||||||||||||
Schleider | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 70.00% | ||||||||||||||||
Perrotto | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 49.00% | |||||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||||||
Compensatory damages | $ 4,100,000 | |||||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1],[2] | $ 1,063,000 | ||||||||||||||||
Total damages | $ 818,000 | |||||||||||||||||
Perrotto | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 20.00% | ||||||||||||||||
Perrotto | Lorillard Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 6.00% | [2] | 6.00% | |||||||||||||||
Total damages | $ 245,000 | |||||||||||||||||
Perrotto | Other Defendant | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 25.00% | |||||||||||||||||
Ellen Gray | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 50.00% | |||||||||||||||||
Allocation of Fault | 50.00% | |||||||||||||||||
Compensatory damages | $ 6,000,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1],[2] | $ 3,000,000 | ||||||||||||||||
Total damages | $ 3,000,000 | |||||||||||||||||
Punitive damages | $ 0 | |||||||||||||||||
Ellen Gray | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 50.00% | ||||||||||||||||
Sowers | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 50.00% | |||||||||||||||||
Allocation of Fault | 50.00% | |||||||||||||||||
Compensatory damages | $ 4,250,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1],[2] | $ 2,130,000 | ||||||||||||||||
Total damages | 2,130,000 | |||||||||||||||||
Punitive damages | $ 0 | |||||||||||||||||
Sowers | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 50.00% | ||||||||||||||||
Zamboni | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 60.00% | |||||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||||||
Compensatory damages | $ 340,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1] | $ 102,000 | ||||||||||||||||
Punitive damages | $ 0 | |||||||||||||||||
Zamboni | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 30.00% | |||||||||||||||||
Zamboni | Other Defendant | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 10.00% | |||||||||||||||||
Dion | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Judgment Sought Against Each Defendant | $ 15,000 | |||||||||||||||||
Pollari | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 15.00% | |||||||||||||||||
Allocation of Fault | 42.50% | |||||||||||||||||
Compensatory damages | $ 10,000,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | $ 5,000,000 | [1],[2],[3] | 10,000,000 | |||||||||||||||
Punitive damages | 1,500,000 | |||||||||||||||||
Punitive Damages - Adjusted | $ 1,500,000 | [2] | $ 1,500,000 | |||||||||||||||
Pollari | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 42.50% | ||||||||||||||||
Pollari | Other Defendant | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 42.50% | |||||||||||||||||
Ryan | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 35.00% | 35.00% | ||||||||||||||||
Allocation of Fault | 65.00% | 65.00% | ||||||||||||||||
Compensatory damages | $ 21,500,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | $ 21,500,000 | [1],[2] | $ 21,500,000 | |||||||||||||||
Punitive damages | $ 25,000,000 | |||||||||||||||||
Punitive Damages - Adjusted | $ 25,000,000 | [2] | $ 25,000,000 | |||||||||||||||
Ryan | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 65.00% | ||||||||||||||||
Hardin | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 87.00% | 87.00% | ||||||||||||||||
Allocation of Fault | 13.00% | 13.00% | ||||||||||||||||
Compensatory damages | $ 776,000 | $ 776,000 | ||||||||||||||||
Compensatory Damages (as adjusted) | [1],[2] | 100,880 | ||||||||||||||||
Total damages | 100,880 | |||||||||||||||||
Punitive damages | $ 0 | $ 0 | ||||||||||||||||
Hardin | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [2] | 13.00% | ||||||||||||||||
McCoy | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 35.00% | |||||||||||||||||
Compensatory damages | $ 1,500,000 | |||||||||||||||||
Compensatory Damages (as adjusted) | [1],[4] | 1,038,400 | ||||||||||||||||
Punitive damages | 3,000,000 | |||||||||||||||||
Punitive Damages - Adjusted | [4] | $ 6,000,000 | ||||||||||||||||
McCoy | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [4] | 25.00% | ||||||||||||||||
McCoy | Subsequent Event | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of fault to plaintiff | 35.00% | |||||||||||||||||
Compensatory damages | $ 1,500,000 | |||||||||||||||||
Judgment Sought Against Each Defendant | 15,000 | |||||||||||||||||
Punitive damages | $ 3,000,000 | |||||||||||||||||
McCoy | Subsequent Event | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 25.00% | |||||||||||||||||
McCoy | Lorillard Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | [4] | 20.00% | ||||||||||||||||
McCoy | Lorillard Tobacco | Subsequent Event | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||||||
McCoy | Other Defendant | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||||||
McCoy | Other Defendant | Subsequent Event | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Allocation of Fault | 20.00% | |||||||||||||||||
Broin | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Litigation settlement, amount | $ 300,000,000 | |||||||||||||||||
Annual installment of settlement | 100,000,000 | |||||||||||||||||
Fees and expenses | 49,000,000 | |||||||||||||||||
Broin | RJR Tobacco | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Litigation settlement, amount | 86,000,000 | |||||||||||||||||
Broin | Brown And Williamson Holdings Inc | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Litigation settlement, amount | $ 57,000,000 | |||||||||||||||||
Broin II | Florida | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Lawsuits pending | LegalMatter | 2,545 | |||||||||||||||||
Light Case | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Lower range of damages | $ 50,000 | |||||||||||||||||
Upper range of damages | $ 75,000 | |||||||||||||||||
[1] | Unless otherwise noted, compensatory damages in these cases are adjusted to reflect the jury’s allocation of comparative fault. Punitive damages are not so adjusted. The amounts listed above do not include attorneys’ fees or statutory interest that may apply to the judgments. | |||||||||||||||||
[2] | Should the pending post-trial motions be denied, RJR Tobacco will likely file a notice of appeal with the appropriate appellate court. | |||||||||||||||||
[3] | The court did not apply comparative fault in the final judgment. | |||||||||||||||||
[4] | At this time, it is unknown if comparative fault will apply to the final judgment. |
Commitments and Contingencies92
Commitments and Contingencies - Additional Information 15 (Detail) | Jun. 16, 2015USD ($) | Sep. 24, 2014USD ($) | Nov. 30, 1998LegalMatter | Jun. 30, 2015USD ($)CaseLegalMatter | Jun. 30, 2015USD ($)CaseLegalMatter | Aug. 27, 2014USD ($) | Nov. 19, 2013 | Sep. 13, 2013USD ($) | Jun. 19, 2012USD ($) | May. 15, 2012USD ($) | Aug. 24, 2011USD ($) | Aug. 31, 2005USD ($) | Apr. 30, 2005USD ($) |
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | $ 0 | ||||||||||||
Number of cases pending | LegalMatter | 567 | 567 | |||||||||||
Claims resolved, Number | LegalMatter | 4 | ||||||||||||
Mississippi | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Litigation settlement, amount | $ 15,000,000 | ||||||||||||
Payment Sought Under State Settlement Agreement | $ 3,900,000 | ||||||||||||
Damages state settlement agreement 1 | $ 5,000,000 | ||||||||||||
Damages State Settlement Agreement 2 | $ 3,300,000 | $ 3,800,000 | $ 3,800,000 | ||||||||||
Interest Payment Sought Under State Settlement Agreement | $ 3,300,000 | $ 2,700,000 | $ 4,300,000 | ||||||||||
Attorneys' fees awarded as percentage of total amounts awarded to the State | 25.00% | ||||||||||||
Attorneys' fees awarded | $ 4,000,000 | $ 4,900,000 | |||||||||||
Lorillard Tobacco and Lorillard, Inc. | Filter Cases | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of cases pending | Case | 67 | 67 | |||||||||||
Lorillard Tobacco | Filter Cases | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Litigation settlement, amount | $ 49,300,000 | ||||||||||||
Claims resolved, Number | LegalMatter | 178 | ||||||||||||
RJR Tobacco | Mississippi | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | 8,000,000 | ||||||||||||
Light Case | Philip Morris | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | $ 7,100,000,000 | $ 7,100,000,000 | |||||||||||
Punitive damages | 3,000,000,000 | 3,000,000,000 | |||||||||||
Bond | 12,000,000,000 | 12,000,000,000 | |||||||||||
Parsons | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Judgment Sought Against Each Defendant | 1,000,000 | 1,000,000 | |||||||||||
DeLisle | Filter Cases | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | $ 8,000,000 | ||||||||||||
DeLisle | Lorillard Tobacco | Filter Cases | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | $ 3,520,000 | ||||||||||||
Percentage of compensatory damages | 44.00% | ||||||||||||
DOJ | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Deposit Into Court Registry Regarding Public Website | 3,125,000 | 3,125,000 | |||||||||||
Accrued estimated cost for corrective communication | 20,000,000 | ||||||||||||
DOJ | Lorillard Tobacco | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Deposit Into Court Registry Regarding Public Website | $ 650,000 | $ 650,000 | |||||||||||
State Settlement Agreements | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of cases pending in state court | Case | 28 | 28 | |||||||||||
Brown and Williamson Tobacco Corp | Mississippi | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Compensatory damages | $ 10,800,000 |
Commitments and Contingencies R
Commitments and Contingencies Related to Settlements (Detail) - Jun. 30, 2015 - USD ($) $ in Millions | Total | |
2,013 | ||
Remaining Jurisdictions' Settlement: | ||
Annual Payments | [1] | $ 8,004 |
Total | 9,364 | |
Settlement expenses | 1,819 | |
Settlement cash payments | 2,582 | |
2,014 | ||
Remaining Jurisdictions' Settlement: | ||
Annual Payments | [1] | 8,004 |
Total | 9,364 | |
Settlement expenses | 1,917 | |
Settlement cash payments | 1,985 | |
2015 and thereafter | ||
Remaining Jurisdictions' Settlement: | ||
Annual Payments | [1] | 8,004 |
Total | 9,364 | |
2015 | Minimum | ||
Remaining Jurisdictions' Settlement: | ||
Projected settlement expenses | 2,400 | |
Projected settlement cash payments | 2,100 | |
2016 | Minimum | ||
Remaining Jurisdictions' Settlement: | ||
Projected settlement expenses | 2,900 | |
Projected settlement cash payments | 3,100 | |
2017 | Minimum | ||
Remaining Jurisdictions' Settlement: | ||
Projected settlement expenses | 3,200 | |
Projected settlement cash payments | 2,900 | |
2018 and thereafter | Minimum | ||
Remaining Jurisdictions' Settlement: | ||
Projected settlement expenses | 3,200 | |
Projected settlement cash payments | 3,200 | |
Mississippi | 2013 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 136 |
Mississippi | 2014 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 136 |
Mississippi | 2015 and thereafter | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 136 |
Florida | 2013 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 440 |
Florida | 2014 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 440 |
Florida | 2015 and thereafter | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 440 |
Texas | 2013 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 580 |
Texas | 2014 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 580 |
Texas | 2015 and thereafter | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 580 |
Minnesota | 2013 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 204 |
Minnesota | 2014 | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | 204 |
Minnesota | 2015 and thereafter | ||
First Four States' Settlements: | ||
Annual Settlement Payment | [1] | $ 204 |
[1] | Subject to adjustments for changes in sales volume, inflation and other factors. All payments are to be allocated among the companies on the basis of relative market share. For further information, see “— State Settlement Agreements — Enforcement and Validity; Adjustments” below. |
Commitments and Contingencies94
Commitments and Contingencies - Additional Information 16 (Detail) | Sep. 11, 2013USD ($) | Nov. 03, 2011 | Jan. 31, 2009State | Jun. 30, 2015USD ($)Case | Jun. 30, 2015USD ($)Case | Apr. 30, 2007USD ($) | Mar. 31, 2007USD ($) | Dec. 31, 2006State | May. 31, 2006USD ($) | Apr. 30, 2006USD ($) | Nov. 30, 1998State |
Loss Contingencies [Line Items] | |||||||||||
Number of states involved in MSA | State | 46 | ||||||||||
Arbitration Panel ruling | $ 0 | ||||||||||
Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Released MSA Payment | $ 5,000,000 | ||||||||||
Arbitration Panel ruling | $ 35,000,000 | ||||||||||
Npm Adjustment Claim For 2003 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of states seeking declaratory orders for Qualifying Statuses | State | 37 | ||||||||||
Number of states in arbitration for diligent enforcement | State | 52 | ||||||||||
Courts deciding whether dispute is arbitrable | Case | 47 | 47 | |||||||||
Percentage of Allocable shares | 90.00% | ||||||||||
Percentage of Reduction in Ultimate Liability | 20.00% | ||||||||||
Number of states involved in MSA | State | 45 | ||||||||||
Combined allocable shares percentage maximum | 14.00% | ||||||||||
Combined allocable shares percentage | 14.68% | ||||||||||
Arbitration Panel ruling | $ 197,000,000 | ||||||||||
Npm Adjustment Claim For 2003 | Maximum | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Courts deciding whether dispute is arbitrable | Case | 48 | 48 | |||||||||
Npm Adjustment Claim For 2003 | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
MSA Disputed Payment | $ 114,000,000 | ||||||||||
Adjusted MSA Payment | $ 109,000,000 | ||||||||||
Arbitration Panel ruling | $ 47,000,000 | ||||||||||
Reduction in recovery from claims due to modification of judgment reduction method | 13,000,000 | ||||||||||
Npm Adjustment Claim For 2003 | RJR Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
MSA Disputed Payment | $ 647,000,000 | ||||||||||
Adjusted MSA Payment | $ 615,000,000 | ||||||||||
Arbitration Panel ruling | 266,000,000 | ||||||||||
Reduction in recovery from claims due to modification of judgment reduction method | $ 75,000,000 | ||||||||||
Npm Adjustment Claim For 2003 | RJR Tobacco | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Released MSA Payment | $ 32,000,000 | ||||||||||
Florida | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Payment Sought Under State Settlement Agreement | $ 12,400,000 | ||||||||||
Interest Payment Sought Under State Settlement Agreement | $ 17,000,000 |
Commitments and Contingencies95
Commitments and Contingencies - Additional Information 17 (Detail) | May. 19, 2015USD ($) | May. 24, 2013State | Apr. 12, 2013State | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)PlaintiffState | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)PlaintiffState | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jun. 26, 2014State |
Loss Contingencies [Line Items] | |||||||||||
NPM Adjustment credits | $ 170,000,000 | $ 1,100,000,000 | |||||||||
Arbitration Panel ruling | $ 0 | ||||||||||
Number of jurisdictions that have joined the settlement | State | 24 | ||||||||||
Total Cost of FETRA buyout | $ 9,900,000,000 | ||||||||||
17 States Plus District of Columbia and Puerto Rico | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Allocable share of settlement percentage | 42.00% | ||||||||||
Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Arbitration Panel ruling | $ 35,000,000 | ||||||||||
Npm Adjustment Claim For 2009 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Antitrust/CPTEF | 5,000,000 | $ 5,000,000 | |||||||||
Percentage of amount to Fund States' Antitrust/Consumer Protection Tobacco | 47.00% | ||||||||||
Npm Adjustment Claim For 2013 And 2014 | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Antitrust/CPTEF | $ 3,500,000 | ||||||||||
Npm Adjustment Claim For 2013 And 2014 | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Percentage of amount to Fund States' Antitrust/Consumer Protection Tobacco | 20.00% | ||||||||||
Share of payment pertaining to Fund States' Antitrust/Consumer Protection Tobacco | $ 700,000 | ||||||||||
Npm Adjustment Claim For 2013 And 2014 | RJR Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Percentage of amount to Fund States' Antitrust/Consumer Protection Tobacco | 47.00% | ||||||||||
Share of payment pertaining to Fund States' Antitrust/Consumer Protection Tobacco | $ 1,630,000 | ||||||||||
Npm Adjustment Claim For 2011 And 2012 | Lorillard Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Disputed Notices | 185,000,000 | $ 185,000,000 | |||||||||
Npm Adjustment Claim For 2011 And 2012 | RJR Tobacco | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Disputed Notices | $ 888,000,000 | $ 888,000,000 | |||||||||
Settlement Agreement | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of jurisdictions that have joined the settlement | State | 22 | 20 | |||||||||
Number of non-settling states that motions pending to vacate and/or modify the Award | State | 6 | 6 | |||||||||
Settlement Agreement | 20 Jurisdictions Including Oklahoma | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Percentage of Allocable shares | 46.00% | 43.00% | |||||||||
Settlement Agreement | Kentucky And Indiana | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Percentage of Allocable shares | 49.87% | ||||||||||
JTI Judgment | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Judgment Entered Against JTI in Brazil That JTI Believes RJR and RJR Tobacco Liable For | $ 1,850,000 | $ 1,850,000 | |||||||||
West Virginia Ipic | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Loss contingency period of inaction | 15 years | ||||||||||
Number of plaintiffs | Plaintiff | 7 | 7 | |||||||||
FETRA Buyout | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
FETRA payable to Quota tobacco holders | 9,600,000,000 | ||||||||||
Liquidation of Quota tobacco stock | $ 290,000,000 | ||||||||||
Assessment expiry date | Sep. 30, 2014 | ||||||||||
Share of Fetra buyout | $ 2,500,000,000 | $ 2,500,000,000 | |||||||||
Annual expense under FETRA for 2014 | $ 51,000,000 | $ 106,000,000 | |||||||||
RJR Tobacco and Santa Fe [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
NPM Adjustment credits | $ 70,000,000 |
Commitments and Contingencies96
Commitments and Contingencies (Details 1) (Detail) - 6 months ended Jun. 30, 2015 - USD ($) $ in Millions | Total |
State Settlement Payment Expense [Line Items] | |
Year for which NPM Adjustment calculated year one | 2,004 |
Year for which NPM Adjustment calculated year two | 2,005 |
Year for which NPM Adjustment calculated year three | 2,006 |
Year for which NPM Adjustment calculated year four | 2,007 |
Year for which NPM Adjustment Calculated year five | 2,008 |
Year for which NPM Adjustment calculated year six | 2,009 |
Year for which NPM Adjustment calculated year seven | 2,010 |
Year for which NPM Adjustment calculated year eight | 2,011 |
Year for which NPM Adjustment calculated year nine | 2,012 |
Year in which deduction for NPM Adjustment was taken year one | 2,007 |
Year in which deduction for NPM Adjustment was taken year two | 2,008 |
Year in which deduction for NPM Adjustment was taken year three | 2,009 |
Year in which deduction for NPM Adjustment was taken year four | 2,010 |
Year in which deduction for NPM Adjustment was taken year five | 2,011 |
Year in which deduction for NPM Adjustment was taken year six | 2,012 |
Year in which deduction for NPM Adjustment was taken year seven | 2,013 |
Year in which deduction for NPM Adjustment was taken year eight | 2,014 |
Year in which deduction for NPM Adjustment was taken year nine | 2,015 |
Lorillard Tobacco | |
State Settlement Payment Expense [Line Items] | |
Approximate share of disputed NPM adjustment amount year one | $ 111 |
Approximate share of disputed NPM adjustment amount year two | 76 |
Approximate share of disputed NPM adjustment amount year three | 73 |
Approximate share of disputed NPM adjustment amount year four | 83 |
Approximate share of disputed NPM adjustment amount year five | 104 |
Approximate share of disputed NPM adjustment amount year six | 107 |
Approximate share of disputed NPM adjustment amount year seven | 119 |
Approximate share of disputed NPM adjustment amount year eight | 88 |
Approximate share of disputed NPM adjustment amount year nine | 97 |
RJR Tobacco | |
State Settlement Payment Expense [Line Items] | |
Approximate share of disputed NPM adjustment amount year one | 562 |
Approximate share of disputed NPM adjustment amount year two | 445 |
Approximate share of disputed NPM adjustment amount year three | 419 |
Approximate share of disputed NPM adjustment amount year four | 435 |
Approximate share of disputed NPM adjustment amount year five | 468 |
Approximate share of disputed NPM adjustment amount year six | 472 |
Approximate share of disputed NPM adjustment amount year seven | 470 |
Approximate share of disputed NPM adjustment amount year eight | 422 |
Approximate share of disputed NPM adjustment amount year nine | $ 429 |
Shareholders Equity (Detail)
Shareholders Equity (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stockholders Equity Note Disclosure [Line Items] | ||||
Beginning Balance | $ 4,522 | $ 5,167 | ||
Net income | $ 1,928 | $ 492 | 2,317 | 855 |
Retirement benefits, net of tax benefit | (20) | 6 | (26) | |
Unrealized gain on long-term investments, net of tax expense | 1 | 2 | ||
Amortization of realized loss on hedging instruments, net of tax | 1 | 1 | 1 | 1 |
Cumulative translation adjustment and other, net of tax (benefit) expense | 10 | (3) | (17) | (2) |
Dividends | (718) | (719) | ||
Issuance of additional shares as Merger Consideration | 7,555 | |||
Issuance of additional shares for BAT Share Purchase | 4,673 | |||
Common stock repurchased | (40) | (440) | ||
Equity incentive award plan and stock-based compensation | 44 | 21 | ||
Excess tax benefit on stock-based compensation plans | 15 | 10 | ||
Ending Balance | 18,326 | 4,895 | 18,326 | 4,895 |
Paid-in Capital | ||||
Stockholders Equity Note Disclosure [Line Items] | ||||
Beginning Balance | 6,200 | 6,571 | ||
Issuance of additional shares as Merger Consideration | 7,555 | |||
Issuance of additional shares for BAT Share Purchase | 4,673 | |||
Common stock repurchased | (40) | (440) | ||
Equity incentive award plan and stock-based compensation | 44 | 21 | ||
Excess tax benefit on stock-based compensation plans | 15 | 10 | ||
Ending Balance | 18,447 | 6,162 | 18,447 | 6,162 |
Retained Earnings (Accumulated Deficit) | ||||
Stockholders Equity Note Disclosure [Line Items] | ||||
Beginning Balance | (1,314) | (1,348) | ||
Net income | 2,317 | 855 | ||
Dividends | (718) | (719) | ||
Ending Balance | 285 | (1,212) | 285 | (1,212) |
Accumulated Other Comprehensive Loss | ||||
Stockholders Equity Note Disclosure [Line Items] | ||||
Beginning Balance | (364) | (56) | ||
Retirement benefits, net of tax benefit | (26) | |||
Unrealized gain on long-term investments, net of tax expense | 2 | |||
Amortization of realized loss on hedging instruments, net of tax | 1 | 1 | ||
Cumulative translation adjustment and other, net of tax (benefit) expense | (17) | (2) | ||
Ending Balance | $ (406) | $ (55) | $ (406) | $ (55) |
Shareholders Equity (Parentheti
Shareholders Equity (Parenthetical) (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Equity [Abstract] | ||||
Tax expense (benefit), retirement benefits | $ 12 | $ (4) | $ 16 | |
Tax benefit, cumulative translation adjustment and other | $ (2) | $ 1 | $ 10 | $ 1 |
Dividends, per share | $ 0.67 | $ 0.67 | $ 1.34 | $ 1.34 |
Tax expense, unrealized gain on long-term investments | $ 1 |
Components of Accumulated Other
Components of Accumulated Other Comprehensive Loss Net of Tax (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | $ (364) | $ (56) |
Other comprehensive income (loss) before reclassifications | (30) | 12 |
Amounts reclassified from accumulated other comprehensive income (loss) | (12) | (11) |
Net current-period other comprehensive income (loss) | (42) | 1 |
Ending balance | (406) | (55) |
Accumulated Defined Benefit Plans Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (294) | (17) |
Other comprehensive income (loss) before reclassifications | (13) | 12 |
Amounts reclassified from accumulated other comprehensive income (loss) | (13) | (12) |
Net current-period other comprehensive income (loss) | (26) | |
Ending balance | (320) | (17) |
Accumulated Net Unrealized Investment Gain (Loss) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (14) | (16) |
Other comprehensive income (loss) before reclassifications | 2 | |
Net current-period other comprehensive income (loss) | 2 | |
Ending balance | (14) | (14) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (12) | (13) |
Amounts reclassified from accumulated other comprehensive income (loss) | 1 | 1 |
Net current-period other comprehensive income (loss) | 1 | 1 |
Ending balance | (11) | (12) |
Accumulated Translation Adjustment and Other | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (44) | (10) |
Other comprehensive income (loss) before reclassifications | (17) | (2) |
Net current-period other comprehensive income (loss) | (17) | (2) |
Ending balance | $ (61) | $ (12) |
Reclassification Out of Accumul
Reclassification Out of Accumulated Other Comprehensive Loss and Affected Line Items in Condensed Consolidated Statement of Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | [1] | $ (1,084) | $ (959) | $ (1,934) | $ (1,889) |
Selling, general and administrative expenses | (451) | (364) | (962) | (777) | |
Income from continuing operations before income taxes | 4,239 | 775 | 4,859 | 1,306 | |
Interest and debt expense | 105 | 62 | 196 | 121 | |
Provision for income taxes | (2,311) | (283) | (2,542) | (476) | |
Net income | 1,928 | 492 | 2,317 | 855 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (6) | (5) | (12) | (11) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (6) | (5) | (11) | (10) | |
Selling, general and administrative expenses | (4) | (4) | (9) | (9) | |
Income from continuing operations before income taxes | (10) | (9) | (20) | (19) | |
Provision for income taxes | 3 | 3 | 7 | 7 | |
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest and debt expense | 1 | 1 | 1 | 1 | |
Net income | $ 1 | $ 1 | $ 1 | $ 1 | |
[1] | Excludes excise taxes of $987 million and $927 million for the three months ended June 30, 2015 and 2014, respectively; and $1,827 million and $1,773 million for the six months ended June 30, 2015 and 2014, respectively. |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Millions | Jul. 27, 2015shares | Jun. 10, 2015$ / shares | May. 07, 2015$ / shares | Mar. 10, 2015$ / shares | Feb. 05, 2015$ / shares | Jun. 30, 2015$ / shares | Jun. 30, 2014$ / shares | Jun. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2014$ / shares |
Shareholders Equity [Line Items] | |||||||||
Issuance of shares of RAI common stock on settlement | 1,377,554 | ||||||||
Cost of shares purchased that forfeited with respect to tax liabilities associated with restricted stock vesting | $ | $ 40 | ||||||||
Number of shares purchased that forfeited with respect to tax liabilities associated with restricted stock vesting under its LTIP | 529,074 | ||||||||
Cash dividend per share, declared | $ / shares | $ 0.67 | $ 0.67 | $ 1.34 | $ 1.34 | |||||
Quarterly Dividend | |||||||||
Shareholders Equity [Line Items] | |||||||||
Cash dividend per share, declared | $ / shares | $ 0.67 | $ 0.67 | |||||||
Annualized Dividend | |||||||||
Shareholders Equity [Line Items] | |||||||||
Cash dividend per share, declared | $ / shares | $ 2.68 | $ 2.68 | |||||||
Subsequent Event | |||||||||
Shareholders Equity [Line Items] | |||||||||
Common stock, stock split | two-for-one | ||||||||
Stock split ratio | 2 | ||||||||
Stock split special dividend, percentage | 100.00% | ||||||||
Common stock shares outstanding after stock split | 1,400,000,000 |
Stock Plans - Additional Inform
Stock Plans - Additional Information (Detail) - $ / shares | May. 07, 2015 | Mar. 02, 2015 | May. 31, 2015 | Jun. 30, 2015 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Shares available for grant under the Omnibus Plan | 693,090 | |||
Restricted stock unit award adjustment upper end of range | 150.00% | |||
Weighted average grant date fair value outstanding | $ 75.88 | |||
Cumulative dividend threshold | 8.04 | |||
Omnibus Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock unit award adjustment upper end of range | 200.00% | |||
Weighted average grant date fair value outstanding | 74.66 | |||
Cumulative dividend threshold | $ 2.68 | |||
Number of shares granted | 108,652 | |||
Ending date of performance period | Apr. 30, 2016 | Apr. 30, 2016 | ||
Maximum | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock unit award adjustment | 50.00% | |||
Restricted Stock Units | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting date | Mar. 2, 2018 | |||
Restricted Stock Units | Omnibus Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting date | May 7, 2016 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Millions | Jun. 12, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||||
Net sales | $ 2,403 | $ 2,162 | $ 4,460 | $ 4,097 | ||
Operating income (loss) | [1] | 4,364 | 836 | 5,057 | 1,426 | |
Gain on Divestiture | $ 3,499 | 3,499 | 3,499 | |||
Interest and debt expense | 105 | 62 | 196 | 121 | ||
Interest income | (1) | (1) | (2) | |||
Other (income) expense, net | 20 | 3 | 1 | |||
Income from continuing operations before income taxes | 4,239 | 775 | 4,859 | 1,306 | ||
Operating Segments | RJR Tobacco | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 1,876 | 1,736 | 3,484 | 3,299 | ||
Operating income (loss) | [1] | 727 | 726 | 1,315 | 1,208 | |
Operating Segments | American Snuff | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 218 | 195 | 419 | 379 | ||
Operating income (loss) | 130 | 110 | 248 | 212 | ||
Operating Segments | Santa Fe | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 218 | 168 | 389 | 303 | ||
Operating income (loss) | 125 | 84 | 217 | 149 | ||
Operating Segments | All Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 91 | 63 | 168 | 116 | ||
Operating income (loss) | (35) | (49) | (96) | (88) | ||
Corporate, Non-Segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating income (loss) | $ (82) | $ (35) | $ (126) | $ (55) | ||
[1] | The six months ended June 30, 2015, includes a $70 million reduction in cost of goods sold associated with the 2003 NPM Adjustment claim, see “— Cost of Products Sold” in note 1. |
Segment Information (Parentheti
Segment Information (Parenthetical) (Detail) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||
NPM Adjustment credits | $ 170 | $ 1,100 | |
RJR Tobacco | |||
Segment Reporting Information [Line Items] | |||
NPM Adjustment credits | $ 70 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jul. 15, 2014 | |
Related Party Transactions [Abstract] | |||||
Percentage of RAI's outstanding common stock | 42.00% | 42.00% | 42.00% | ||
Revenue percentage from related parties | 2.00% | 4.00% | 3.00% | 4.00% | |
Percentage of maximum purchase price | 10.00% |
Summary of Balances and Transac
Summary of Balances and Transactions (Detail) - USD ($) $ in Millions | Jul. 15, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Related Party Transaction [Line Items] | ||||||
Accounts receivable, related party | $ 31 | $ 31 | $ 41 | |||
Due to related party | 7 | 7 | 1 | |||
Deferred revenue, related party | 15 | 15 | 32 | |||
Net sales | 54 | $ 91 | 136 | $ 177 | ||
BAT Share Purchase | $ 4,700 | 4,673 | ||||
Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Accounts receivable, related party | 31 | 31 | 41 | |||
Due to related party | 7 | 7 | 1 | |||
Deferred revenue, related party | 15 | 15 | $ 32 | |||
Net sales | 54 | 91 | 136 | 177 | ||
Purchases | 12 | 4 | 14 | 13 | ||
BAT Share Purchase | $ 4,673 | $ 4,673 | ||||
RAI common stock purchases from B&W | $ 114 | $ 155 |
RAI Guaranteed Unsecured Notes
RAI Guaranteed Unsecured Notes - Condensed Consolidating Financial Statements (Detail) $ in Billions | Jun. 30, 2015USD ($) |
RAI | |
Condensed Financial Statements Captions [Line Items] | |
RAI's unsecured notes | $ 14.1 |
Condensed Consolidating Stateme
Condensed Consolidating Statements of Income (Detail) - USD ($) $ in Millions | Jun. 12, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | [1] | $ 2,349 | $ 2,071 | $ 4,324 | $ 3,920 | |
Net sales, related party | 54 | 91 | 136 | 177 | ||
Net sales | 2,403 | 2,162 | 4,460 | 4,097 | ||
Cost of products sold | [1] | 1,084 | 959 | 1,934 | 1,889 | |
Selling, general and administrative expenses | 451 | 364 | 962 | 777 | ||
Gain on Divestiture | $ (3,499) | (3,499) | (3,499) | |||
Amortization expense | 3 | 3 | 6 | 5 | ||
Operating income (loss) | [2] | 4,364 | 836 | 5,057 | 1,426 | |
Interest and debt expense | 105 | 62 | 196 | 121 | ||
Interest income | (1) | (1) | (2) | |||
Other (income) expense, net | 20 | 3 | 1 | |||
Income from continuing operations before income taxes | 4,239 | 775 | 4,859 | 1,306 | ||
Provision for income taxes from continuing operations | 2,311 | 283 | 2,542 | 476 | ||
Income from continuing operations | 1,928 | 492 | 2,317 | 830 | ||
Income from discontinued operations | 25 | |||||
Net income | 1,928 | 492 | 2,317 | 855 | ||
RAI | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Selling, general and administrative expenses | 43 | 17 | 62 | 20 | ||
Operating income (loss) | (43) | (17) | (62) | (20) | ||
Interest and debt expense | 98 | 62 | 189 | 121 | ||
Interest income | (28) | (22) | (47) | (46) | ||
Other (income) expense, net | 14 | 15 | 2 | |||
Income from continuing operations before income taxes | (127) | (57) | (219) | (97) | ||
Provision for income taxes from continuing operations | (77) | (20) | (104) | (34) | ||
Equity income (loss) from subsidiaries | 1,978 | 529 | 2,432 | 918 | ||
Income from continuing operations | 492 | 855 | ||||
Net income | 1,928 | 492 | 2,317 | 855 | ||
Guarantors | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | 2,320 | 2,029 | 4,319 | 3,843 | ||
Net sales, related party | 54 | 91 | 136 | 177 | ||
Net sales | 2,374 | 2,120 | 4,455 | 4,020 | ||
Cost of products sold | 1,082 | 921 | 1,951 | 1,826 | ||
Selling, general and administrative expenses | 348 | 287 | 773 | 644 | ||
Gain on Divestiture | (3,702) | (3,702) | ||||
Amortization expense | 3 | 3 | 6 | 5 | ||
Operating income (loss) | 4,643 | 909 | 5,427 | 1,545 | ||
Interest and debt expense | 33 | 20 | 50 | 43 | ||
Interest income | (1) | (1) | ||||
Other (income) expense, net | (11) | (10) | (21) | (21) | ||
Income from continuing operations before income taxes | 4,621 | 899 | 5,399 | 1,524 | ||
Provision for income taxes from continuing operations | 2,391 | 323 | 2,672 | 546 | ||
Equity income (loss) from subsidiaries | (207) | 3 | (187) | 9 | ||
Income from continuing operations | 987 | |||||
Income from discontinued operations | 25 | |||||
Net income | 2,023 | 579 | 2,540 | 1,012 | ||
Guarantors | RJR Tobacco | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Selling, general and administrative expenses | 2 | |||||
Operating income (loss) | (2) | |||||
Interest income | (1) | (2) | (2) | |||
Other (income) expense, net | (11) | (10) | (21) | (21) | ||
Income from continuing operations before income taxes | 12 | 10 | 23 | 21 | ||
Equity income (loss) from subsidiaries | 1,864 | 460 | 2,252 | 797 | ||
Income from continuing operations | 470 | 818 | ||||
Net income | 1,876 | 470 | 2,275 | 818 | ||
Non-Guarantors | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | 82 | 54 | 150 | 97 | ||
Net sales | 82 | 54 | 150 | 97 | ||
Cost of products sold | 53 | 49 | 123 | 82 | ||
Selling, general and administrative expenses | 60 | 60 | 127 | 113 | ||
Gain on Divestiture | 203 | 203 | ||||
Operating income (loss) | (234) | (55) | (303) | (98) | ||
Interest and debt expense | 2 | 2 | 4 | 3 | ||
Interest income | (1) | (1) | ||||
Other (income) expense, net | 7 | (12) | (1) | |||
Income from continuing operations before income taxes | (243) | (56) | (295) | (99) | ||
Provision for income taxes from continuing operations | (3) | (20) | (26) | (36) | ||
Income from continuing operations | (63) | |||||
Net income | (240) | (36) | (269) | (63) | ||
Non-Guarantors | RJR Tobacco | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | 524 | 424 | 958 | 793 | ||
Net sales | 524 | 424 | 958 | 793 | ||
Cost of products sold | 180 | 163 | 349 | 297 | ||
Selling, general and administrative expenses | 33 | 29 | 73 | 58 | ||
Gain on Divestiture | (5,390) | (5,390) | ||||
Amortization expense | 1 | 2 | 3 | 3 | ||
Operating income (loss) | 5,700 | 230 | 5,923 | 435 | ||
Interest and debt expense | 27 | 16 | 42 | 37 | ||
Interest income | (1) | (1) | ||||
Other (income) expense, net | 6 | (1) | (12) | (1) | ||
Income from continuing operations before income taxes | 5,667 | 216 | 5,893 | 400 | ||
Provision for income taxes from continuing operations | 2,075 | 77 | 2,157 | 142 | ||
Income from continuing operations | 139 | 258 | ||||
Net income | 3,592 | 139 | 3,736 | 258 | ||
RJR | RJR Tobacco | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | 1,875 | 1,657 | 3,496 | 3,149 | ||
Net sales, related party | 54 | 91 | 136 | 177 | ||
Net sales | 1,929 | 1,748 | 3,632 | 3,326 | ||
Cost of products sold | 953 | 806 | 1,711 | 1,614 | ||
Selling, general and administrative expenses | 375 | 318 | 827 | 697 | ||
Gain on Divestiture | 1,891 | 1,891 | ||||
Amortization expense | 2 | 1 | 3 | 2 | ||
Operating income (loss) | (1,292) | 623 | (800) | 1,013 | ||
Interest and debt expense | 9 | 6 | 14 | 11 | ||
Interest income | (1) | (1) | ||||
Income from continuing operations before income taxes | (1,301) | 617 | (813) | 1,003 | ||
Provision for income taxes from continuing operations | 313 | 226 | 489 | 368 | ||
Equity income (loss) from subsidiaries | 3,449 | 70 | 3,527 | 134 | ||
Income from continuing operations | 461 | 769 | ||||
Income from discontinued operations | 25 | |||||
Net income | 1,835 | 461 | 2,225 | 794 | ||
Eliminations | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | (53) | (12) | (145) | (20) | ||
Net sales | (53) | (12) | (145) | (20) | ||
Cost of products sold | (51) | (11) | (140) | (19) | ||
Operating income (loss) | (2) | (1) | (5) | (1) | ||
Interest and debt expense | (28) | (22) | (47) | (46) | ||
Interest income | 28 | 22 | 47 | 46 | ||
Other (income) expense, net | 10 | 10 | 21 | 21 | ||
Income from continuing operations before income taxes | (12) | (11) | (26) | (22) | ||
Equity income (loss) from subsidiaries | (1,771) | (532) | (2,245) | (927) | ||
Income from continuing operations | (949) | |||||
Net income | (1,783) | (543) | (2,271) | (949) | ||
Eliminations | RJR Tobacco | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Net sales | (50) | (10) | (130) | (22) | ||
Net sales | (50) | (10) | (130) | (22) | ||
Cost of products sold | (49) | (10) | (126) | (22) | ||
Operating income (loss) | (1) | (4) | ||||
Interest and debt expense | (29) | (22) | (49) | (48) | ||
Interest income | 29 | 22 | 49 | 48 | ||
Other (income) expense, net | 11 | 11 | 21 | 21 | ||
Income from continuing operations before income taxes | (12) | (11) | (25) | (21) | ||
Equity income (loss) from subsidiaries | (7,291) | (1,059) | (8,211) | (1,849) | ||
Income from continuing operations | (1,070) | (1,870) | ||||
Net income | $ (7,303) | $ (1,070) | $ (8,236) | $ (1,870) | ||
[1] | Excludes excise taxes of $987 million and $927 million for the three months ended June 30, 2015 and 2014, respectively; and $1,827 million and $1,773 million for the six months ended June 30, 2015 and 2014, respectively. | |||||
[2] | The six months ended June 30, 2015, includes a $70 million reduction in cost of goods sold associated with the 2003 NPM Adjustment claim, see “— Cost of Products Sold” in note 1. |
Condensed Consolidating Stat109
Condensed Consolidating Statements of Comprehensive Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | $ 1,928 | $ 492 | $ 2,317 | $ 855 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (20) | 6 | (26) | |
Unrealized gain on long-term investments | 1 | 2 | ||
Amortization of realized loss on hedging instruments | 1 | 1 | 1 | 1 |
Cumulative translation adjustment and other | 10 | (3) | (17) | (2) |
Comprehensive income | 1,919 | 497 | 2,275 | 856 |
RAI | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | 1,928 | 492 | 2,317 | 855 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (20) | 6 | (26) | |
Unrealized gain on long-term investments | 1 | 2 | ||
Amortization of realized loss on hedging instruments | 1 | 1 | 1 | 1 |
Cumulative translation adjustment and other | 10 | (3) | (17) | (2) |
Comprehensive income | 1,919 | 497 | 2,275 | 856 |
Guarantors | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | 2,023 | 579 | 2,540 | 1,012 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (17) | 7 | (23) | 1 |
Unrealized gain on long-term investments | 1 | 2 | ||
Cumulative translation adjustment and other | 10 | (2) | (17) | (1) |
Comprehensive income | 2,016 | 585 | 2,500 | 1,014 |
Guarantors | RJR Tobacco | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | 1,876 | 470 | 2,275 | 818 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (14) | 8 | (19) | 2 |
Unrealized gain on long-term investments | 1 | 2 | ||
Cumulative translation adjustment and other | 10 | (2) | (16) | (1) |
Comprehensive income | 1,872 | 477 | 2,240 | 821 |
Non-Guarantors | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | (240) | (36) | (269) | (63) |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (1) | (1) | ||
Cumulative translation adjustment and other | 13 | (2) | (27) | (2) |
Comprehensive income | (228) | (38) | (297) | (65) |
Non-Guarantors | RJR Tobacco | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | 3,592 | 139 | 3,736 | 258 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (5) | (1) | (5) | (1) |
Cumulative translation adjustment and other | 10 | (2) | (17) | (1) |
Comprehensive income | 3,597 | 136 | 3,714 | 256 |
RJR | RJR Tobacco | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | 1,835 | 461 | 2,225 | 794 |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | (13) | 8 | (18) | 3 |
Unrealized gain on long-term investments | 1 | 2 | ||
Cumulative translation adjustment and other | 10 | (2) | (17) | (1) |
Comprehensive income | 1,832 | 468 | 2,190 | 798 |
Eliminations | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | (1,783) | (543) | (2,271) | (949) |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | 18 | (7) | 24 | (1) |
Unrealized gain on long-term investments | (1) | (2) | ||
Cumulative translation adjustment and other | (23) | 4 | 44 | 3 |
Comprehensive income | (1,788) | (547) | (2,203) | (949) |
Eliminations | RJR Tobacco | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Net income (loss) | (7,303) | (1,070) | (8,236) | (1,870) |
Other comprehensive income (loss), net of tax: | ||||
Retirement benefits, net of tax benefit | 32 | (15) | 42 | (4) |
Unrealized gain on long-term investments | (2) | (4) | ||
Cumulative translation adjustment and other | (30) | 6 | 50 | 3 |
Comprehensive income | $ (7,301) | $ (1,081) | $ (8,144) | $ (1,875) |
Reclassification Out of Accu110
Reclassification Out of Accumulated Other Comprehensive Loss and Affected Line Items in Condensed Consolidating Statements of Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | [1] | $ (1,084) | $ (959) | $ (1,934) | $ (1,889) |
Selling, general and administrative expenses | (451) | (364) | (962) | (777) | |
Income from continuing operations before income taxes | 4,239 | 775 | 4,859 | 1,306 | |
Interest and debt expense | 105 | 62 | 196 | 121 | |
Provision for income taxes | (2,311) | (283) | (2,542) | (476) | |
Net income | 1,928 | 492 | 2,317 | 855 | |
RAI | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Selling, general and administrative expenses | (43) | (17) | (62) | (20) | |
Income from continuing operations before income taxes | (127) | (57) | (219) | (97) | |
Interest and debt expense | 98 | 62 | 189 | 121 | |
Provision for income taxes | 77 | 20 | 104 | 34 | |
Equity income (loss) from subsidiaries | 1,978 | 529 | 2,432 | 918 | |
Net income | 1,928 | 492 | 2,317 | 855 | |
Guarantors | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (1,082) | (921) | (1,951) | (1,826) | |
Selling, general and administrative expenses | (348) | (287) | (773) | (644) | |
Income from continuing operations before income taxes | 4,621 | 899 | 5,399 | 1,524 | |
Interest and debt expense | 33 | 20 | 50 | 43 | |
Provision for income taxes | (2,391) | (323) | (2,672) | (546) | |
Equity income (loss) from subsidiaries | (207) | 3 | (187) | 9 | |
Net income | 2,023 | 579 | 2,540 | 1,012 | |
Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Selling, general and administrative expenses | (2) | ||||
Income from continuing operations before income taxes | 12 | 10 | 23 | 21 | |
Equity income (loss) from subsidiaries | 1,864 | 460 | 2,252 | 797 | |
Net income | 1,876 | 470 | 2,275 | 818 | |
Non-Guarantors | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (53) | (49) | (123) | (82) | |
Selling, general and administrative expenses | (60) | (60) | (127) | (113) | |
Income from continuing operations before income taxes | (243) | (56) | (295) | (99) | |
Interest and debt expense | 2 | 2 | 4 | 3 | |
Provision for income taxes | 3 | 20 | 26 | 36 | |
Net income | (240) | (36) | (269) | (63) | |
Non-Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (180) | (163) | (349) | (297) | |
Selling, general and administrative expenses | (33) | (29) | (73) | (58) | |
Income from continuing operations before income taxes | 5,667 | 216 | 5,893 | 400 | |
Interest and debt expense | 27 | 16 | 42 | 37 | |
Provision for income taxes | (2,075) | (77) | (2,157) | (142) | |
Net income | 3,592 | 139 | 3,736 | 258 | |
RJR | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (953) | (806) | (1,711) | (1,614) | |
Selling, general and administrative expenses | (375) | (318) | (827) | (697) | |
Income from continuing operations before income taxes | (1,301) | 617 | (813) | 1,003 | |
Interest and debt expense | 9 | 6 | 14 | 11 | |
Provision for income taxes | (313) | (226) | (489) | (368) | |
Equity income (loss) from subsidiaries | 3,449 | 70 | 3,527 | 134 | |
Net income | 1,835 | 461 | 2,225 | 794 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (6) | (5) | (12) | (11) | |
Reclassification out of Accumulated Other Comprehensive Income | Loss On Hedging Instruments | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest and debt expense | 1 | 1 | 1 | 1 | |
Net income | 1 | 1 | 1 | 1 | |
Reclassification out of Accumulated Other Comprehensive Income | RAI | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (6) | (5) | (12) | (11) | |
Reclassification out of Accumulated Other Comprehensive Income | RAI | Loss On Hedging Instruments | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest and debt expense | 1 | 1 | 1 | 1 | |
Net income | 1 | 1 | 1 | 1 | |
Reclassification out of Accumulated Other Comprehensive Income | Guarantors | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Non-Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (1) | (1) | |||
Reclassification out of Accumulated Other Comprehensive Income | RJR | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (6) | (5) | (11) | (10) | |
Selling, general and administrative expenses | (4) | (4) | (9) | (9) | |
Income from continuing operations before income taxes | (10) | (9) | (20) | (19) | |
Provision for income taxes | 3 | 3 | 7 | 7 | |
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | RAI | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Equity income (loss) from subsidiaries | (7) | (6) | (13) | (12) | |
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | Guarantors | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (6) | (5) | (11) | (10) | |
Selling, general and administrative expenses | (4) | (4) | (9) | (9) | |
Income from continuing operations before income taxes | (10) | (9) | (20) | (19) | |
Provision for income taxes | 3 | 3 | 7 | 7 | |
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Equity income (loss) from subsidiaries | (7) | (6) | (13) | (12) | |
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | Non-Guarantors | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (1) | (1) | |||
Income from continuing operations before income taxes | (1) | (1) | |||
Net income | (1) | (1) | |||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | RJR | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | (5) | (5) | (10) | (10) | |
Selling, general and administrative expenses | (4) | (4) | (9) | (9) | |
Income from continuing operations before income taxes | (9) | (9) | (19) | (19) | |
Provision for income taxes | 3 | 3 | 7 | 7 | |
Equity income (loss) from subsidiaries | (1) | (1) | |||
Net income | (7) | (6) | (13) | (12) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest and debt expense | 1 | 1 | 1 | 1 | |
Net income | 1 | 1 | 1 | 1 | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | RAI | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest and debt expense | 1 | 1 | 1 | 1 | |
Net income | 1 | 1 | 1 | 1 | |
Eliminations | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | 51 | 11 | 140 | 19 | |
Income from continuing operations before income taxes | (12) | (11) | (26) | (22) | |
Interest and debt expense | (28) | (22) | (47) | (46) | |
Equity income (loss) from subsidiaries | (1,771) | (532) | (2,245) | (927) | |
Net income | (1,783) | (543) | (2,271) | (949) | |
Eliminations | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Cost of products sold | 49 | 10 | 126 | 22 | |
Income from continuing operations before income taxes | (12) | (11) | (25) | (21) | |
Interest and debt expense | (29) | (22) | (49) | (48) | |
Equity income (loss) from subsidiaries | (7,291) | (1,059) | (8,211) | (1,849) | |
Net income | (7,303) | (1,070) | (8,236) | (1,870) | |
Eliminations | Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | 7 | 6 | 13 | 12 | |
Eliminations | Reclassification out of Accumulated Other Comprehensive Income | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Net income | 15 | 12 | 27 | 24 | |
Eliminations | Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Equity income (loss) from subsidiaries | 7 | 6 | 13 | 12 | |
Net income | 7 | 6 | 13 | 12 | |
Eliminations | Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | RJR Tobacco | |||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||
Equity income (loss) from subsidiaries | 15 | 12 | 27 | 24 | |
Net income | $ 15 | $ 12 | $ 27 | $ 24 | |
[1] | Excludes excise taxes of $987 million and $927 million for the three months ended June 30, 2015 and 2014, respectively; and $1,827 million and $1,773 million for the six months ended June 30, 2015 and 2014, respectively. |
Condensed Consolidating Stat111
Condensed Consolidating Statements of Cash Flows (Detail) - USD ($) $ in Millions | Jun. 12, 2015 | Jul. 15, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 |
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | $ 448 | $ 255 | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (64) | (123) | |||
Acquisition, net of cash acquired | (17,219) | ||||
Proceeds from termination of joint venture | 35 | ||||
Proceeds from Divestiture | $ 7,056 | 7,056 | |||
Other, net | 1 | (24) | |||
Net cash flows used in investing activities | (10,226) | (112) | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (712) | (699) | |||
Repurchase of common stock | (40) | (440) | |||
Proceeds from BAT Share Purchase | $ 4,700 | 4,673 | |||
Issuance of long-term debt | 8,975 | ||||
Debt issuance costs and financing fees | (64) | ||||
Principal borrowings under revolving credit facility | 1,400 | 1,000 | |||
Repayments under revolving credit facility | (1,400) | (200) | |||
Excess tax benefit on stock-based compensation plans | 15 | 10 | |||
Net cash flows from (used in) financing activities | 12,847 | (329) | |||
Effect of exchange rate changes on cash and cash equivalents | (22) | (1) | |||
Net change in cash and cash equivalents | 3,047 | (187) | |||
Cash and cash equivalents at beginning of period | $ 966 | 966 | 1,500 | ||
Cash and cash equivalents at end of period | 4,013 | 4,013 | 1,313 | ||
RAI | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | 125 | 326 | |||
Cash flows from (used in) investing activities: | |||||
Acquisition, net of cash acquired | (18,278) | ||||
Return of intercompany investments | 185 | ||||
Contributions to intercompany investments | (32) | ||||
Proceeds from Divestiture | 7,056 | ||||
Other, net | (710) | 143 | |||
Net cash flows used in investing activities | (11,747) | 111 | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (712) | (699) | |||
Repurchase of common stock | (40) | (440) | |||
Proceeds from BAT Share Purchase | 4,673 | ||||
Issuance of long-term debt | 8,975 | ||||
Debt issuance costs and financing fees | (64) | ||||
Principal borrowings under revolving credit facility | 1,400 | 1,000 | |||
Repayments under revolving credit facility | (1,400) | (200) | |||
Excess tax benefit on stock-based compensation plans | 15 | 10 | |||
Dividends paid on preferred stock | (21) | (21) | |||
Other, net | (11) | (31) | |||
Net cash flows from (used in) financing activities | 12,815 | (381) | |||
Net change in cash and cash equivalents | 1,193 | 56 | |||
Cash and cash equivalents at beginning of period | 102 | 102 | 444 | ||
Cash and cash equivalents at end of period | 1,295 | 1,295 | 500 | ||
Guarantors | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | 827 | 635 | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (60) | (41) | |||
Acquisition, net of cash acquired | 524 | ||||
Other, net | 12 | 41 | |||
Net cash flows used in investing activities | 476 | ||||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (479) | (637) | |||
Distribution of equity | (185) | ||||
Other, net | 680 | (320) | |||
Net cash flows from (used in) financing activities | 16 | (957) | |||
Net change in cash and cash equivalents | 1,319 | (322) | |||
Cash and cash equivalents at beginning of period | 469 | 469 | |||
Cash and cash equivalents at end of period | 1,788 | 1,788 | 374 | ||
Guarantors | RJR Tobacco | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | 485 | 607 | |||
Cash flows from (used in) investing activities: | |||||
Return of intercompany investments | 184 | 21 | |||
Other, net | 8 | 10 | |||
Net cash flows used in investing activities | 192 | 31 | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (479) | (637) | |||
Distribution of equity | (185) | ||||
Net cash flows from (used in) financing activities | (664) | (637) | |||
Net change in cash and cash equivalents | 13 | 1 | |||
Cash and cash equivalents at beginning of period | 3 | 2 | |||
Cash and cash equivalents at end of period | 16 | 16 | 3 | ||
Non-Guarantors | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | (4) | (44) | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (3) | (86) | |||
Acquisition, net of cash acquired | 535 | ||||
Proceeds from termination of joint venture | 35 | ||||
Other, net | (1) | (33) | |||
Net cash flows used in investing activities | 531 | (84) | |||
Cash flows from (used in) financing activities: | |||||
Receipt of equity | 32 | ||||
Other, net | 30 | 176 | |||
Net cash flows from (used in) financing activities | 30 | 208 | |||
Effect of exchange rate changes on cash and cash equivalents | (22) | (1) | |||
Net change in cash and cash equivalents | 535 | 79 | |||
Cash and cash equivalents at beginning of period | 395 | 395 | |||
Cash and cash equivalents at end of period | 930 | 930 | 439 | ||
Non-Guarantors | RJR Tobacco | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | 208 | 347 | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (29) | (104) | |||
Acquisition, net of cash acquired | 535 | ||||
Proceeds from termination of joint venture | 35 | ||||
Other, net | 11 | 18 | |||
Net cash flows used in investing activities | 517 | (51) | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (110) | (110) | |||
Receipt of equity | 32 | ||||
Distribution of equity | (10) | (90) | |||
Other, net | 2 | (152) | |||
Net cash flows from (used in) financing activities | (118) | (320) | |||
Effect of exchange rate changes on cash and cash equivalents | (22) | (1) | |||
Net change in cash and cash equivalents | 585 | (25) | |||
Cash and cash equivalents at beginning of period | 534 | 540 | |||
Cash and cash equivalents at end of period | 1,119 | 1,119 | 515 | ||
RJR | RJR Tobacco | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | 700 | 327 | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (34) | (23) | |||
Acquisition, net of cash acquired | 524 | ||||
Return of intercompany investments | 10 | 90 | |||
Other, net | 1 | 8 | |||
Net cash flows used in investing activities | 501 | 75 | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | (461) | (580) | |||
Distribution of equity | (184) | (21) | |||
Other, net | 700 | (20) | |||
Net cash flows from (used in) financing activities | 55 | (621) | |||
Net change in cash and cash equivalents | 1,256 | (219) | |||
Cash and cash equivalents at beginning of period | 327 | 514 | |||
Cash and cash equivalents at end of period | $ 1,583 | 1,583 | 295 | ||
Eliminations | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | (500) | (662) | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (1) | 4 | |||
Return of intercompany investments | (185) | ||||
Contributions to intercompany investments | 32 | ||||
Other, net | 700 | (175) | |||
Net cash flows used in investing activities | 514 | (139) | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | 479 | 637 | |||
Dividends paid on preferred stock | 21 | 21 | |||
Receipt of equity | (32) | ||||
Distribution of equity | 185 | ||||
Other, net | (699) | 175 | |||
Net cash flows from (used in) financing activities | (14) | 801 | |||
Eliminations | RJR Tobacco | |||||
Condensed Financial Statements Captions [Line Items] | |||||
Net cash flows from operating activities | (1,070) | (1,352) | |||
Cash flows from (used in) investing activities: | |||||
Capital expenditures | (1) | 4 | |||
Return of intercompany investments | (379) | (111) | |||
Contributions to intercompany investments | 32 | ||||
Other, net | 691 | (203) | |||
Net cash flows used in investing activities | 311 | (278) | |||
Cash flows from (used in) financing activities: | |||||
Dividends paid on common stock | 1,050 | 1,327 | |||
Dividends paid on preferred stock | 21 | 21 | |||
Receipt of equity | (32) | ||||
Distribution of equity | 379 | 111 | |||
Other, net | (691) | 203 | |||
Net cash flows from (used in) financing activities | $ 759 | $ 1,630 |
Condensed Consolidating Balance
Condensed Consolidating Balance Sheets (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ||||||
Cash and cash equivalents | $ 4,013 | $ 966 | $ 966 | $ 1,313 | $ 1,500 | $ 1,500 |
Short-term investments | 347 | |||||
Accounts receivable | 145 | 116 | ||||
Accounts receivable, related party | 31 | 41 | ||||
Other receivables | 18 | 12 | ||||
Inventories | 1,677 | 1,281 | ||||
Deferred income taxes, net | 935 | 703 | ||||
Other current assets | 285 | 204 | ||||
Total current assets | 7,451 | 3,323 | ||||
Property, plant and equipment, net | 1,298 | 1,203 | ||||
Trademarks and other intangible assets, net | 28,301 | 2,421 | ||||
Goodwill | 17,019 | 8,016 | ||||
Other assets and deferred charges | 489 | 233 | ||||
Total assets | 54,558 | 15,196 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 178 | 142 | ||||
Tobacco settlement accruals | 1,982 | 1,819 | ||||
Due to related party | 7 | 1 | ||||
Deferred revenue, related party | 15 | 32 | ||||
Current maturities of long-term debt | 450 | 450 | ||||
Income taxes payable | 2,125 | |||||
Dividends payable on common stock | 356 | 356 | ||||
Other current liabilities | 1,329 | 744 | ||||
Total current liabilities | 6,442 | 3,544 | ||||
Long-term debt (less current maturities) | 17,550 | 4,633 | ||||
Deferred income taxes, net | 9,813 | 383 | ||||
Long-term retirement benefits (less current portion) | 2,239 | 1,997 | ||||
Other noncurrent liabilities | 188 | 117 | ||||
Shareholders’ equity | 18,326 | 4,522 | 4,895 | 5,167 | ||
Total liabilities and shareholders' equity | 54,558 | 15,196 | ||||
RJR Tobacco | ||||||
Assets | ||||||
Goodwill | 14,305 | 5,302 | ||||
RAI | ||||||
Assets | ||||||
Cash and cash equivalents | 1,295 | 102 | 102 | 500 | 444 | 444 |
Other receivables | 772 | 70 | ||||
Deferred income taxes, net | 4 | 5 | ||||
Other current assets | 7 | 50 | ||||
Total current assets | 2,078 | 227 | ||||
Property, plant and equipment, net | 3 | 3 | ||||
Long-term intercompany notes receivable | 1,603 | 1,593 | ||||
Investment in subsidiaries | 36,134 | 9,598 | ||||
Other assets and deferred charges | 150 | 101 | ||||
Total assets | 39,968 | 11,522 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 3 | 1 | ||||
Current maturities of long-term debt | 450 | 450 | ||||
Income taxes payable | 2,096 | |||||
Dividends payable on common stock | 356 | 356 | ||||
Other current liabilities | 4,871 | 1,280 | ||||
Total current liabilities | 7,776 | 2,087 | ||||
Long-term intercompany notes payable | 180 | 190 | ||||
Long-term debt (less current maturities) | 13,599 | 4,633 | ||||
Long-term retirement benefits (less current portion) | 56 | 57 | ||||
Other noncurrent liabilities | 31 | 33 | ||||
Shareholders’ equity | 18,326 | 4,522 | ||||
Total liabilities and shareholders' equity | 39,968 | 11,522 | ||||
Guarantors | ||||||
Assets | ||||||
Cash and cash equivalents | 1,788 | 469 | 469 | 374 | 696 | |
Short-term investments | 347 | |||||
Accounts receivable | 84 | 74 | ||||
Accounts receivable, related party | 31 | 41 | ||||
Other receivables | 4,328 | 1,199 | ||||
Inventories | 1,554 | 1,198 | ||||
Deferred income taxes, net | 921 | 688 | ||||
Other current assets | 275 | 151 | ||||
Total current assets | 9,328 | 3,820 | ||||
Property, plant and equipment, net | 1,263 | 1,170 | ||||
Trademarks and other intangible assets, net | 2,289 | 2,417 | ||||
Goodwill | 17,003 | 7,999 | ||||
Long-term intercompany notes receivable | 180 | 190 | ||||
Investment in subsidiaries | 17,760 | 450 | ||||
Other assets and deferred charges | 383 | 180 | ||||
Total assets | 48,206 | 16,226 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 146 | 128 | ||||
Tobacco settlement accruals | 1,982 | 1,819 | ||||
Due to related party | 3 | 1 | ||||
Deferred revenue, related party | 15 | 32 | ||||
Income taxes payable | 19 | |||||
Other current liabilities | 1,922 | 682 | ||||
Total current liabilities | 4,087 | 2,662 | ||||
Long-term intercompany notes payable | 1,280 | 1,300 | ||||
Long-term debt (less current maturities) | 3,951 | |||||
Deferred income taxes, net | 195 | 450 | ||||
Long-term retirement benefits (less current portion) | 2,113 | 1,930 | ||||
Other noncurrent liabilities | 156 | 83 | ||||
Shareholders’ equity | 36,424 | 9,801 | ||||
Total liabilities and shareholders' equity | 48,206 | 16,226 | ||||
Guarantors | RJR Tobacco | ||||||
Assets | ||||||
Cash and cash equivalents | 16 | 3 | 3 | 2 | ||
Other receivables | 19 | 20 | ||||
Deferred income taxes, net | 1 | 1 | ||||
Total current assets | 36 | 24 | ||||
Goodwill | 10,852 | |||||
Long-term intercompany notes receivable | 98 | 106 | ||||
Investment in subsidiaries | 22,437 | 6,941 | ||||
Other assets and deferred charges | 18 | 18 | ||||
Total assets | 33,441 | 7,089 | ||||
Liabilities and shareholders’ equity | ||||||
Other current liabilities | 3 | 3 | ||||
Total current liabilities | 3 | 3 | ||||
Long-term retirement benefits (less current portion) | 29 | 30 | ||||
Other noncurrent liabilities | 2 | |||||
Shareholders’ equity | 33,407 | 7,056 | ||||
Total liabilities and shareholders' equity | 33,441 | 7,089 | ||||
Non-Guarantors | ||||||
Assets | ||||||
Cash and cash equivalents | 930 | $ 395 | 395 | 439 | $ 360 | |
Accounts receivable | 61 | 42 | ||||
Other receivables | 432 | 10 | ||||
Inventories | 130 | 85 | ||||
Deferred income taxes, net | 10 | 10 | ||||
Other current assets | 3 | 1 | ||||
Total current assets | 1,566 | 543 | ||||
Property, plant and equipment, net | 32 | 30 | ||||
Trademarks and other intangible assets, net | 26,012 | 4 | ||||
Goodwill | 16 | 17 | ||||
Other assets and deferred charges | 7 | 23 | ||||
Total assets | 27,633 | 617 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 29 | 13 | ||||
Due to related party | 4 | |||||
Income taxes payable | 14 | |||||
Other current liabilities | 50 | 51 | ||||
Total current liabilities | 97 | 64 | ||||
Long-term intercompany notes payable | 323 | 293 | ||||
Deferred income taxes, net | 9,664 | |||||
Long-term retirement benefits (less current portion) | 70 | 10 | ||||
Other noncurrent liabilities | 1 | 1 | ||||
Shareholders’ equity | 17,478 | 249 | ||||
Total liabilities and shareholders' equity | 27,633 | 617 | ||||
Non-Guarantors | RJR Tobacco | ||||||
Assets | ||||||
Cash and cash equivalents | 1,119 | 534 | 515 | 540 | ||
Accounts receivable | 74 | 55 | ||||
Other receivables | 4,313 | 1,864 | ||||
Inventories | 761 | 754 | ||||
Deferred income taxes, net | 88 | 86 | ||||
Other current assets | 45 | 34 | ||||
Total current assets | 6,400 | 3,327 | ||||
Property, plant and equipment, net | 445 | 435 | ||||
Trademarks and other intangible assets, net | 27,954 | 2,291 | ||||
Goodwill | 2,714 | 2,714 | ||||
Long-term intercompany notes receivable | 180 | 190 | ||||
Other assets and deferred charges | 7 | 18 | ||||
Total assets | 37,700 | 8,975 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 49 | 31 | ||||
Tobacco settlement accruals | 70 | 110 | ||||
Due to related party | 4 | |||||
Income taxes payable | 30 | |||||
Other current liabilities | 240 | 423 | ||||
Total current liabilities | 393 | 564 | ||||
Long-term intercompany notes payable | 1,701 | 1,699 | ||||
Deferred income taxes, net | 10,540 | 1,013 | ||||
Long-term retirement benefits (less current portion) | 162 | 88 | ||||
Other noncurrent liabilities | 4 | 6 | ||||
Shareholders’ equity | 24,900 | 5,605 | ||||
Total liabilities and shareholders' equity | 37,700 | 8,975 | ||||
RJR | RJR Tobacco | ||||||
Assets | ||||||
Cash and cash equivalents | 1,583 | 327 | $ 295 | $ 514 | ||
Short-term investments | 347 | |||||
Accounts receivable | 71 | 61 | ||||
Accounts receivable, related party | 31 | 41 | ||||
Other receivables | 445 | 291 | ||||
Inventories | 923 | 529 | ||||
Deferred income taxes, net | 842 | 611 | ||||
Other current assets | 233 | 118 | ||||
Total current assets | 4,475 | 1,978 | ||||
Property, plant and equipment, net | 850 | 765 | ||||
Trademarks and other intangible assets, net | 347 | 130 | ||||
Goodwill | 3,453 | 5,302 | ||||
Investment in subsidiaries | 22,039 | 3,060 | ||||
Other assets and deferred charges | 1,046 | 731 | ||||
Total assets | 32,210 | 11,966 | ||||
Liabilities and shareholders’ equity | ||||||
Accounts payable | 126 | 110 | ||||
Tobacco settlement accruals | 1,912 | 1,709 | ||||
Due to related party | 3 | 1 | ||||
Deferred revenue, related party | 15 | 32 | ||||
Income taxes payable | 3 | |||||
Other current liabilities | 1,746 | 1,274 | ||||
Total current liabilities | 3,805 | 3,126 | ||||
Long-term debt (less current maturities) | 3,951 | |||||
Deferred income taxes, net | 1 | 1 | ||||
Long-term retirement benefits (less current portion) | 1,992 | 1,822 | ||||
Other noncurrent liabilities | 151 | 78 | ||||
Shareholders’ equity | 22,310 | 6,939 | ||||
Total liabilities and shareholders' equity | 32,210 | 11,966 | ||||
Eliminations | ||||||
Assets | ||||||
Other receivables | (5,514) | (1,267) | ||||
Inventories | (7) | (2) | ||||
Other current assets | 2 | |||||
Total current assets | (5,521) | (1,267) | ||||
Long-term intercompany notes receivable | (1,783) | (1,783) | ||||
Investment in subsidiaries | (53,894) | (10,048) | ||||
Other assets and deferred charges | (51) | (71) | ||||
Total assets | (61,249) | (13,169) | ||||
Liabilities and shareholders’ equity | ||||||
Income taxes payable | (4) | |||||
Other current liabilities | (5,514) | (1,269) | ||||
Total current liabilities | (5,518) | (1,269) | ||||
Long-term intercompany notes payable | (1,783) | (1,783) | ||||
Deferred income taxes, net | (46) | (67) | ||||
Shareholders’ equity | (53,902) | (10,050) | ||||
Total liabilities and shareholders' equity | (61,249) | (13,169) | ||||
Eliminations | RJR Tobacco | ||||||
Assets | ||||||
Other receivables | (5,531) | (2,233) | ||||
Inventories | (7) | (2) | ||||
Other current assets | 2 | |||||
Total current assets | (5,538) | (2,233) | ||||
Long-term intercompany notes receivable | (1,881) | (1,889) | ||||
Investment in subsidiaries | (80,610) | (19,599) | ||||
Other assets and deferred charges | (732) | (635) | ||||
Total assets | (88,761) | (24,356) | ||||
Liabilities and shareholders’ equity | ||||||
Income taxes payable | (4) | |||||
Other current liabilities | (5,531) | (2,236) | ||||
Total current liabilities | (5,535) | (2,236) | ||||
Long-term intercompany notes payable | (1,881) | (1,889) | ||||
Deferred income taxes, net | (728) | (631) | ||||
Shareholders’ equity | (80,617) | (19,600) | ||||
Total liabilities and shareholders' equity | $ (88,761) | $ (24,356) |
RJR Tobacco Guaranteed Unsecure
RJR Tobacco Guaranteed Unsecured Notes - Condensed Consolidating Financial Statements (Detail) $ in Billions | Jun. 30, 2015USD ($) |
RJR | |
Condensed Financial Statements Captions [Line Items] | |
RAI's unsecured notes | $ 3.5 |