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Reynolds American Inc. (NYSE:RAI)

This company has been moved to the archive! The financial data has not been updated since May 3, 2017.

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity

Reynolds American Inc., common-size consolidated balance sheet: liabilities and stockholders’ equity

Microsoft Excel
Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Accounts payable 0.43 0.34 0.93 1.20 1.13
Tobacco settlement accruals 4.89 5.29 11.97 11.21 15.03
Due to related party 0.01 0.02 0.01 0.00 0.01
Deferred revenue, related party 0.13 0.06 0.21 0.31 0.25
Current maturities of long-term debt 0.98 0.95 2.96 0.00 0.36
Dividends payable on common stock 1.28 0.97 2.34 2.20 1.97
Payroll and employee benefits 0.52 0.39 1.17 1.16 0.78
Pension and other postretirement benefits 0.17 0.17 0.49 0.51 0.45
Marketing and advertising 0.30 0.40 0.88 0.76 0.64
Excise, franchise and property tax 0.34 0.41 1.06 1.02 0.90
Tobacco quota buyout 0.00 0.00 0.00 0.34 0.33
Other 0.69 0.95 1.29 1.25 0.91
Other current liabilities 2.03% 2.32% 4.90% 5.04% 4.01%
Current liabilities 9.76% 9.94% 23.32% 19.97% 22.76%
Long-term debt, less current maturities 24.79 31.83 30.49 33.11 30.41
Long-term deferred income taxes, net 18.80 19.23 2.52 4.27 2.78
Long-term retirement benefits, less current portion 3.66 4.26 13.14 7.93 11.00
Long-term deferred revenue, related party 0.08 0.00 0.00 0.00 0.00
Other noncurrent liabilities 0.43 0.45 0.77 1.18 1.29
Noncurrent liabilities 47.75% 55.77% 46.92% 46.48% 45.49%
Total liabilities 57.51% 65.71% 70.24% 66.45% 68.25%
Common stock 0.00 0.00 0.00 0.00 0.00
Paid-in capital 35.79 34.57 40.80 42.66 43.94
Retained earnings (accumulated deficit) 7.32 0.35 -8.65 -8.75 -10.31
Accumulated other comprehensive loss -0.61 -0.64 -2.40 -0.36 -1.88
Shareholders’ equity 42.49% 34.29% 29.76% 33.55% 31.75%
Total liabilities and shareholders’ equity 100.00% 100.00% 100.00% 100.00% 100.00%

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

Between 2012 and 2016, a significant shift in the capital structure is observed, characterized by a reduction in total liabilities and a corresponding increase in shareholders' equity. Total liabilities decreased from 68.25% of total liabilities and shareholders' equity in 2012 to 57.51% by 2016. Conversely, shareholders' equity grew from 31.75% in 2012 to 42.49% in 2016, indicating a strengthening of the company's solvency position and a reduced reliance on external financing over the five-year period.

Current Liabilities Analysis
Current liabilities experienced a sharp decline, moving from a peak of 23.32% in 2014 to 9.76% by 2016. The primary driver of this reduction was the substantial decrease in tobacco settlement accruals, which dropped from 15.03% in 2012 to 4.89% in 2016. Other current obligations, including accounts payable, payroll and employee benefits, and excise taxes, also saw a general contraction in their relative proportion of the balance sheet starting in 2015.
Noncurrent Liabilities Trends
Noncurrent liabilities showed volatility, peaking at 55.77% in 2015 before settling at 47.75% in 2016. A notable structural shift occurred within this category; long-term retirement benefits declined from 11.00% in 2012 to 3.66% in 2016. This was offset by a dramatic increase in long-term deferred income taxes, which rose from 2.78% in 2012 to 18.80% in 2016, suggesting significant changes in tax accounting or regulatory environments. Long-term debt, less current maturities, remained relatively stable around 30% until 2016, when it declined to 24.79%.
Shareholders' Equity Composition
The most significant improvement in the equity section is the reversal of the accumulated deficit. Retained earnings moved from a deficit of -10.31% in 2012 to a positive balance of 7.32% in 2016. This trend suggests a transition toward sustained profitability and the accumulation of earnings. While paid-in capital decreased as a percentage of the total from 43.94% in 2012 to 35.79% in 2016, the overall growth in shareholders' equity was driven primarily by the recovery of retained earnings.

Overall, the financial position evolved from a high-leverage state with a significant accumulated deficit to a more balanced structure with increased equity and reduced current obligations. The reduction in tobacco-related accruals and the elimination of the retained earnings deficit are the most prominent factors contributing to the improved common-size balance sheet profile.

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