determine the change in net income for 2008 in comparison with the reported net inco 642857

REYNOLDS AMERICAN, INC.*
  CONSOLIDATED STATEMENTS OF INCOME
  (Dollars in Millions, Except Per Share Amounts)

For the Years Ended December 31,

2008

2007

2006

Net   sales1

$8,377

$8,516

$8,010

Net   sales, related party

468

507

500

Net   sales

8,845

9,023

8,510

Costs   and expenses:

Cost of   products sold1,2,3

4,863

4,960

4,803

Selling,   general, and administrative expenses

1,500

1,687

1,658

Amortization   expense

22

23

28

Restructuring   charge

90

1

Trademark   impairment charge

318

65

90

Operating   income

2,052

2,288

1,930

Interest   and debt expense

275

338

270

Interest   income

60

134

136

Gain on   termination of joint venture

328

13

Other   (income) expense, net

37

11

1,809

Income   from continuing operations before income taxes and extraordinary items

2,128

2,073

Provision   for income taxes

790

766

673

Income   from continuing operations before extraordinary item

1,338

1,307

1,136

Extraordinary   item—gain on acquisition

1

74

Net   income

$1,338

$1,308

$1,210

Basic   income per share:

Income   from continuing operations before extraordinary item

$4.58

$4.44

$3.85

Extraordinary   item

0.25

Net   income

$4.58

$4.44

$4.10

Diluted   income per share:

Income   from continuing operations before extraordinary item

$4.57

$4.43

$3.85

Extraordinary   item

0.25

Net   income

$4.57

$4.43

$4.10

Dividends   declared per share

$3.40

$3.20

$2.75

REYNOLDS AMERICAN, INC.
  CONSOLIDATED BALANCE SHEETS
  (Dollars in Millions)

December   31,

2008

2007

Assets

Current   assets:

Cash and   cash equivalents

$2,578

$2,215

Short-term   investments

23

377

Accounts   receivable, net of allowance (2008 – $1; 2007 – $1)

84

73

Accounts   receivable, related party

91

80

Notes   receivable

35

1

Other   receivables

37

25

Inventories

1,170

1,196

Deferred   income taxes, net

838

845

Prepaid   expenses and other

163

180

Total   current assets

5,019

4,992

Property,   plant, and equipment, at cost:

Land and   land improvements

95

96

Buildings   and leasehold improvements

692

682

Machinery   and equipment

1,756

1,738

Construction-in-process

37

74

Total   property, plant, and equipment

2,580

2,590

Less   accumulated depreciation

1,549

1,517

Property,   plant, and equipment, net

1,031

1,073

Trademarks   and other intangible assets, net of accumulated amortization
  (2008 – $619; 2007 – $597)

3,270

3,609

Goodwill

8,174

8,174

Other   assets and deferred charges

660

781

$18,154

$18,629

Liabilities   and Shareholders’ Equity

Current   liabilities:

Accounts   payable

$206

$218

Tobacco   settlement accruals

2,321

2,449

Due to   related party

3

7

Deferred   revenue, related party

50

35

Current   maturities of long-term debt

200

Other   current liabilities

1,143

1,194

Total   current liabilities

3,923

3,903

Long-term   debt (less current maturities)

4,486

4,515

Deferred   income taxes, net

282

1,184

Long-term   retirement benefits (less current portion)

2,836

1,167

Other   noncurrent liabilities

390

394

Commitments   and contingencies:

Shareholders’   equity:

Common   stock (shares issued: 2008 – 291,450,762; 2007 – 295,007,327)

Paid-in   capital

8,463

8,653

Accumulated   deficit

531

873

Accumulated   other comprehensive loss – (Defined benefit pension and
  post-retirement plans: 2008 – $(1,643) and 2007 – $(306), net of tax)

1,695

314

Total   shareholders’ equity

6,237

7,466

$18,154

$18,629