R.J. Reynolds Cuts Outlook, Plans Charge

Tobacco company R.J. Reynolds ( RJR) lowered its earnings outlook Wednesday and said it would cut jobs and take a restructuring charge.

The company, which manufactures Winston, Camel and Salem cigarettes, said it would record a pretax restructuring charge in the fourth quarter of about $235 million. The company also said it would eliminate 635 jobs, or 8% of its total workforce.

Overall, job cuts are expected to save the company about $50 million in 2003 and $75 million in 2004. The reduction in workforce is expected to be completed in the first half of 2003.

"Increased competitive promotional spending, along with the continued growth of deep-discount brands and the effect of higher state excise taxes have created a significantly more challenging business environment," the company said in a press release.

R.J. Reynolds said earnings per share for 2002 are expected to be in a range of $6.05 to $6.10, down from prior guidance of $6.05 to $6.40. Analysts were expecting the company to post a net profit of $6.14 a share, according to Thomson Financial/First Call.

The shares closed up 5% at $40.76 Wednesday.

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