Reynolds American Inc.

1

July / August 2015

Agenda

• Introduction

– Morris Moore – Vice President of Investor Relations, RAI

• Overview

– Susan Cameron – President and Chief Executive Officer, RAI

• Brand portfolio strategies and opportunities

– Debra Crew – President and Chief Commercial Officer, R.J. Reynolds Tobacco

• Financial update

– Andrew Gilchrist – Chief Financial Officer, RAI

• Closing comments / Q&A

– Susan Cameron – President and Chief Executive Officer, RAI

2

Forward-looking information

This presentation contains forward-looking information. Future results or events

can be impacted by a number of factors that could cause actual results to be

materially different from our projections. These factors are listed in RAI’s second-

quarter 2015 earnings release and in the company’s SEC filings. Except as

provided by federal securities laws, RAI is not required to publicly update or revise

any forward-looking statement, whether as a result of new information, future

events or otherwise.

Web Disclosure

RAI’s website, www.reynoldsamerican.com, is the primary source of publicly

disclosed news about RAI and its operating companies. Those wishing to stay on

top of company news are encouraged to sign up for email alerts on our website.

3

All brand references are for RAI’s operating companies’ brands

Adjusted vs. GAAP

RAI management uses ‘adjusted’ (non-GAAP) measurements to set performance goals and

to measure the performance of the overall company, and believes that investors’

understanding of the underlying performance of the company’s continuing operations is

enhanced through the disclosure of these metrics. ‘Adjusted’ (non-GAAP) results are not,

and should not be viewed as, substitutes for ‘reported’ (GAAP) results. A reconciliation of

GAAP to Adjusted results is at the end of this presentation.

4

Overview

Susan Cameron

5

Confidential Draft for Discussion Only

The next stage in our transformation journey

6

Our vision and strategy

in this New World

7

We will achieve

market leadership

the tobacco industry

by transforming

8

9

change

Driving innovation

Redefining tobacco enjoyment

Reducing harm of smoking

Reducing youth tobacco use

Resolving controversial issues

Leading

10

Strong brands in key categories

Leaders in developing innovations

Efficiency and productivity gains

Superior consumer and trade marketing

Highly engaged talent base

strengths Commercial

11

Unique portfolio of iconic brands

Complementary geographic strengths

Stronger competitive position

Increased scale and significant synergies

Significantly strengthens growth profile

right time The right deal at the

Unique portfolio of iconic brands

12

Strong category positions

Strength across price points

Enhanced growth profile

Confidential Draft for Discussion Only

• No. 1 e-cigarette brand in convenience / gas

• Superior technology, expanding e-cig category

Strongest portfolio dynamics in the industry

13

• No. 4 brand in the U.S.

• Largest traditional value brand

• No. 2 brand in the U.S.

• No. 1 menthol brand in the U.S.

• Fastest growing brand in the U.S.

• Super premium

• No. 1 brand in the moist-snuff industry

• Growing share and volume

• No. 3 brand in the U.S.

• Growing market share in premium category

Proven track record of execution

14

Integration Experience

2004 Brown &

Williamson

2006 American

Snuff

2009 Niconovum

2002 Santa Fe Natural

Tobacco

0%

2%

7%

22%

22%

23%

23%

29%

PM

BATS

S&P 500

MO

LO*

IMT

JTI

5%

19%

45%

61%

64%

86%

92%

103%

PM

BATS

IMT

S&P 500

MO

LO*

JTI

98%

106%

116%

122%

217%

262%

271%

279%

BATS

IMT

PM

S&P 500

MO

JTI

LO*

Returning excellent value • RAI’s strong total shareholder return among global peers

15

Year

1 3 5

Through June 30, 2015. * LO data through June 11, 2015. Source: Bloomberg

RAI

RAI RAI

Brand portfolio strategies and opportunities

Debra Crew

16

Competitive landscape

17

89% of combustibles

91% of moist snuff

85% of snus

36% of e-cigarettes

New ‘Big 3’ represent:

Adult consumers reshaping tobacco

• Tobacco consumers (50 million) navigating challenging environment

• 46% open to change, looking for products that better suit their desires

• New cigarette alternatives creating an opportunity for trial and repeat purchase

18

Trends driving consumer choice

19

Seeking

Alternatives to

Cigarettes

Demographics:

Aging

Multicultural

Menthol Value Hunting

Broad strategic plan for combustibles

20

Relevantly positioned

21

Macro-Trend Our Aligned Brands

Multicultural Strong growth among all key demographics

Going Green Unrivaled focus on sustainability

Demanding Authenticity

Focused brands Each with unique, meaningful heritage

Pragmatic Consumption Great value equation with branded offerings

Competing from all sides

22

Non-Menthol Menthol

Unique brand proposition,

on trend with growing

consumer sentiment

High menthol credibility

Diverse, loyal buyer base

Unique product

Deep cultural connection

An American classic with rich

heritage and mass appeal

Highly differentiated

Surging menthol credibility

A great value and

experience for the money A great value and

experience for the money Value

Premium

23

Accelerate awareness

Drive broader retail distribution

Elevate brand and values

Natural American Spirit – Tipping point

1.8%

0.6

1.0

1.4

1.8

2010 2011 2012 2013 2014 2015*

Source: MSA, Inc. shipments to retail

* YTD through June 30, 2015

Share of market

24

Continue ASU30 momentum

Broaden product portfolio

Optimize retail impact

Increase ATC interaction

Newport – Energize and reinforce

13.3%

10.0

11.0

12.0

13.0

14.0

2010 2011 2012 2013 2014 2015*

Source: MSA, Inc. shipments to retail

* YTD through June 30, 2015

Share of market

25

Optimize portfolio offerings

Elevate equity programming

Revamp, upgrade product families

Squarely position in largest segments

Camel – Position to thrive

8.2%

7.0

8.0

2010 2011 2012 2013 2014 2015*

Source: MSA, Inc. shipments to retail

* YTD through June 30, 2015

Share of market

26

Increase proposition awareness, trial

Reinforce quality/value proposition

Balance profitability and market share

Pall Mall – Equity focus

7.9%

6.0

7.0

8.0

9.0

2010 2011 2012 2013 2014 2015*

Share of market

Source: MSA, Inc. shipments to retail

* YTD through June 30, 2015

27

Moist snuff

28

Expand brand equity initiatives

Broaden product, pouch innovation

Enhance retail presence

Grizzly – Continue growth

30.6%

24

26

28

30

32

2010 2011 2012 2013 2014 2015*

Share of market

Source: MSA, Inc. shipments to retail

* YTD through June 30, 2015

Innovation pipeline

29

30

Evolve brand-building efforts

Broaden innovation portfolio

Enhance marketing capabilities

VUSE – Expand market lead

ZONNIC & Revo – Next-generation products

31

Leveraging consumer desire for alternative products

Continue learnings from marketplace

Aligns with tobacco harm reduction

32

Lorillard transaction

Transaction summary – What we bought

• Newport

– #1 menthol brand in U.S., 2014 volume of 32.9 billion units

– 12% premium menthol SOM, 1% value non-menthol SOM

• Kent, True, and Old Gold brands (~0.25% SOM)

• Additional 50,000 merchandizing contracts with retailers

• Database of 5 million adult tobacco consumers

• Added ~75 Lorillard employees, 28 manufacturing lines

33

Transaction summary – What we sold

• Winston, KOOL, Salem, and Maverick cigarette brands

– 2014 volume of 17.8 billion units

– ~7% SOM

• blu eCigs electronic cigarette brand

• Database of 3 million adult tobacco consumers

• 10 manufacturing lines

• All Lorillard facilities and remaining employees transferred

34

Shipments and share of cigarette market

35

64.6

85.3

RAI OpCosPre-Transaction

RAI OpCosPost-Transaction

2014 Annual Volume (B)

25.9

33.6

RAI OpCosPre-Transaction

RAI OpCosPost-Transaction

2014 Share of Market

+ 32% + 7.7 Share Pts

Source: MSA, Inc. shipments to retail, 2014.

WEST

RAI OpCos: 31.5

Newport: 5.6

Camel: 13.3

MIDWEST

RAI OpCos: 33.3

Newport: 10.4

Camel: 8.7

EAST

RAI OpCos: 34.7

Newport: 18.9

Camel: 5.7

SOUTH

RAI OpCos: 34.8

Newport: 16.4

Camel: 5.2

Complementary geographic strengths

36

Source: MSA, Inc. shipments to retail, 2014.

Improved positioning in strongest cigarette categories

37

Source: MSA, Inc. 2014

60%

70%

40

50

60

70

80

%

RAI OpCos

Pre-transaction RAI OpCos

Post-transaction

38%

55%

0

20

40

60

%

RAI OpCos

Pre-transaction

RAI OpCos

Post-transaction

% Menthol Brands Mix % Premium Brands Mix

25%

75%

2004

91%

9%

2014

70%

30%

2014

Enhanced growth profile

38

Stand-Alone Pro Forma

RAI Operating Companies’ Portfolio Market Share

Source: MSA, Inc.

Focus On

Growth Brands

Camel, Pall Mall & NAS All other brands Newport, Camel, Pall Mall & NAS

All other brands

Transaction significantly strengthens cigarette brand profile

39

28%

26%

20

22

24

26

28

30

2009 2014

%

RAI OpCos Pre-Transaction

31%

34%

28

30

32

34

36

2009 2014

%

RAI OpCos Post-Transaction

5-Year Retail Market Share Change

-2 pts +3 pts

Source: MSA, Inc. shipments to retail

Route to market agreement (RTMA) • Provides for 5-month standstill and retail space restrictions in following year

• No restrictions 18 months post-merger

40

• New RJRT and ITG retail programs

• RJRT gets minimum of 8 sq. ft. or

combustible share

• Newport: - Included in new RJRT retail program

- Move into RJRT space

• ITG can negotiate with retailer for

other available space

Months 6 - 17 Months 1- 5

• RJRT operates Lorillard contracts

• Newport stays in place

• ITG obtains facings in Lorillard

space

• ITG can display Winston, Salem,

KOOL in former Lorillard space

• Winston, KOOL, Salem stay in place

if in RJRT space pre-close

Newport opportunities

• Expanding Newport presence in the

West, leveraging Newport strength in

the East with Camel and Pall Mall

• Increasing adult tobacco consumer

interactions through expanded

consumer engagement and retail contact

• Opportunity to broaden Newport product

portfolio with new packaging and/or

brand styles

41

Newport considerations

• Thoughtful and measured decisions

to minimize potential risks

• New sales reps in key geographies

with established relationships limit

disruption potential

• Track record of patience and

deliberate marketing

enhancements with high-

performing brands, e.g., NAS

42

OpCos’ key growth brands enjoy strong ASU30 indices

43

84

131 139

184

269

37

Marlboro RAI OpCos' Brands* NEWPORT CAMEL NAS PALL MALL

* Includes: Newport, Camel, Pall Mall and NAS

Source: Tracker

1994 1999 2004 2009 2014

57%

36% 19%

40%

The ASU30 market leader

44

RAI OpCos Key Growth Brands* Marlboro

* Includes: Newport, Camel, Pall Mall and NAS

Source: Tracker

Vapor

NRTs

Snus

Moist

Cigarettes

A product portfolio fit for the future

45

Positioned to

win

Summary • Strongest and most innovative brand portfolio

• Industry shifts creating opportunity

• Brands, strategies and resources to win

• Accelerating journey to market leadership

46

key brands Powerful

Transformative innovations

Next stage of growth

Financial update

Andrew Gilchrist

47

48

Focused on cost management

Strong balance sheet, cash flow

Leverage of about 3.6x

Maintain financial flexibility

Increase stakeholder value

approach

Disciplined financial

49

Maintain investment grade profile

De-leverage is priority focus

Maintain conservative liquidity

Target dividend payout ratio of 75%

Evaluate share repurchase and dividend target after de-leveraging

objectives

Policy and

Manageable debt profile

50

As of June 30, 2015

Long-term debt of $17.6 billion

Average interest rate of 4.5%

Average maturity of 12.4 years

Transition well under way

• Manufacturing – Consolidate to R.J. Reynolds’s facility in Tobaccoville, NC

– Anticipate no product changes requiring FDA authorization

– Access to sufficient equipment base

• Supply chain – Maintain current Lorillard non-tobacco material vendor base (consolidate over time)

– No expected leaf changes, with potential procurement synergies

– Consolidate distribution supply chain into existing logistics

• R&D and product support – Expertise and capabilities exist at R.J. Reynolds, with some capacity adjustments

– Synergies expected

51

Revenue and cost synergy potential

52

• Cost savings from assumption of Lorillard operations by ITG Brands ($500 MM savings from Day 1)

• Synergies from elimination of redundancies ($300 MM over 18 month transitional period – manufacturing, legal, etc.)

• Approximately $800 million of cost savings on run-rate basis

Cost Savings

• Complementary geographic strengths

• Leverage R.J. Reynolds’ sales force to expand Newport presence

• Increased Northeast presence to benefit Camel & Pall Mall

Revenue Opportunities

• Manufacturing transition began in July 2015

• Integration expected to be completed over next 18 months Implementation

10%

15%

20%

25%

30%

35%

40%

45%

2004 2007 2010 2013 2015 YTD

Proven track record of execution

53

Intense focus on efficiency

Continued productivity improvements

Results reflected in strong operating margin improvement

Source: RAI filings.

RAI Adjusted

Operating Margin

39.8%

Attractive dividend

• Annualized split-adjusted $1.44 per share

• Up 24 percent in last three years, 200 percent since 2004

54

$0.48 $0.53

$0.69 $0.80 $0.85 $0.86

$0.92

$1.08 $1.17

$1.24 $1.34

$1.44*

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q15

*3Q15 annualized

$1,473 ➡ $1,776(MM)

$860 ➡ $1,036(MM)

$1.60 ➡ $1.88

Strong 2015 YTD RAI performance

55

+20.6%

+20.5%

+17.5%

Reconciliation of GAAP to Adjusted results is in Appendix. Adjusted results exclude charges for transaction-related and financing costs for the Lorillard, Inc. acquisition and related divestiture, a gain on divestiture, charges for implementation costs, Engle progeny lawsuits and tobacco-related and other litigation, benefits from the 2003 Non-Participating Manufacturer (NPM) adjustment claim, and a 2014 gain on discontinued operations.

2014 vs.2015 YTD

Adj. EPS

Adj. Net Income

Adj. Operating Income

2015 RAI

Outlook (7/28/15)

56

Revised 2015 earnings guidance

• Adjusted EPS of $1.90 to $2.00 split-adjusted

• Adjusted EPS growth of 11% to 17%

Deal accretion • Accretive in first 12 months

• Strong double-digit accretion second year and

beyond

Guidance excludes charges for transaction-related and financing costs for the Lorillard, Inc. acquisition and related divestiture, a gain on divestiture, charges for implementation costs, Engle progeny lawsuits and tobacco-related and other litigation, and a benefit from the 2003 Non-Participating Manufacturer adjustment claim.

Break

57

Closing comments

Susan Cameron

58

Vision: A powerful intersection

59

The right thing to do

What others expect of us

Value to shareholders

Commercial success

Our strategy is driving success

60

Strong vision

Right businesses

Right brand portfolios

Aligned infrastructure

favorable environment Shaping

Returning value to stakeholders

Poised for

NEW growth

61

62

Appendix

63

2015 2014

Operating Net Diluted Operating Net Diluted

Income Income EPS Income Income EPS

GAAP results 5,057$ 2,317$ 4.20$ 1,426$ 855$ 1.59$

The GAAP results include the following:

Gain on divestiture (3,499) (1,466) (2.66) - - -

2003 NPM Adjustment Claim (70) (43) (0.08) - - -

One-time benefit from the NPM Partial Settlement - - - (34) (21) (0.04)

Implementation costs 104 66 0.12 8 5 0.01

Transaction related costs 54 43 0.08 - - -

Tobacco Related and Other Litigation 19 11 0.02 2 1 -

Financing costs - 38 0.07 - - -

Engle Progeny cases 111 70 0.13 71 45 0.08

Gain on discontinued operations - - - - (25) (0.04)

Total adjustments (3,281) (1,281) (2.32) 47 5 0.01

Adjusted results $ 1,776 $ 1,036 $ 1.88 $ 1,473 $ 860 $ 1.60

Six Months Ended June 30,

REYNOLDS AMERICAN INC.

Reconciliation of GAAP to Adjusted Results

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

RAI management uses "adjusted" (non-GAAP) measurements to set performance goals and to measure the performance of the overall company, and believes that

investors' understanding of the underlying performance of the company's continuing operations is enhanced through the disclosure of these metrics. "Adjusted" (non-

GAAP) results are not, and should not be viewed as, substitutes for "reported" (GAAP) results.