Reynolds American Inc.

Business UpdateDebra Crew, President and COOR.J. Reynolds Tobacco Company

Sept. 7, 2016

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Our transformation journey

Key 2016 YTD accomplishments

Progress on operating companies’ businesses and brands

Financial update and growth outlook

Closing comments / Q&A

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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 2016 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 and Social Media DisclosureRAI’s website, www.reynoldsamerican.com, is the primary source of publicly disclosed news, including our quarterly earnings, about RAI and its operating companies. RAI also uses Twitter to publicly disseminate company news via @RAI_News. It is possible that the information we post could be deemed to be material information. We encourage investors and others to register at www.reynoldsamerican.com to receive alerts when news about the company has been posted, and to follow RAI on Twitter at @RAI_News.

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

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Reported vs. adjusted

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.

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is to achievevisionOur

transforming tobacco

market leadership by

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Key YTD accomplishments

Successfully completed full Newport integration

Accelerated business performance

Increased target dividend payout ratio to 80%, with total dividend increase of 27.8% in 2016

Further reduced long-term debt by $4.1 billion

New $2.0 billion share repurchase program

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Underlying competitive strengths

Range of strong brands across the risk continuum

Leaders in innovation and new product commercialization

Effective and efficient business strategies and operations

Masters of consumer and trade engagement

High-performing work culture drives performance

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accelerating

effortssustainability

ourWe’re

for long-term success

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Current industry dynamics

Stable and positive macroeconomic environment

2016 industry volume outlooko Cigarette decline of about 2%

o Moist-snuff growth of about 3-4%

Migration and poly-use more prevalent

Moderate up-trading to premium

Adult preference for menthol

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Distinctive brands driving growth

• Cigarettes• Moist• Snus• Vapor • NRT

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Strength in cigarettes

42%

55%

73%

93%

ASU30 Share

MentholVolume

PremiumVolume

Drive BrandVolume

Source: MSA, Inc. shipments to retail, six months ended June 30, 2016. ASU30 share - Tracker FY 2015 11

Strong across all key areas

Premium

Value

Menthol

Non-menthol

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Source: MSA, Inc. shipments to retail

Continuing ASU30 momentum

Optimized retail impact

Increasing ATC interaction

Newport – accelerated growth

+0.6

+0.3 +0.4 +0.5+0.6 +0.5

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13

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1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Share of market(ppt. change from prior year)

percent

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Solid Newport growth across U.S.

OPPORTUNITY

SOM: 4.4%

Menthol: +.2

Non Menthol: +.2

EMERGING

SOM: 9.1%

Menthol: +.3

Non Menthol: +.2

CoreSOM: 21.6%Menthol: +.4

Non Menthol: +.2

TOTAL USSOM: 13.9%Menthol: +.4

Non Menthol: +.2

Source: MSA, Inc. shipments to retail, YTD16 vs. YTD15, six months ended June 30. 14

Trade-marketing impact

Pre-Deal 2Q16

Retail contracts 150,000 200,000- Contracts (% of industry volume) 80% 90%

- EDLP contracts (% of industry volume) 60% 70%

Adult smoker engagements per year 2 million 4 million- Newport consumer engagements per year 0 2 million

Newport database of adult smokers 5 million 10 million

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Enhanced in-store presence

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Delivering on Lorillard transaction objectives

Strengthened U.S. cigarette market position

Increased scale, transition of manufacturing

Enhanced growth and margin profile

Significant cost and revenue synergies

Strong financial returns

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Source: MSA, Inc. shipments to retail – six months ended June 30, 2016, Tracker.

Share of market

Increasing brand equity programming

Revamping, upgrading product families

Squarely positioning in largest segments

ASU30 index of 175

8.2%

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8

9

2012 2013 2014 2015 YTD16

Camel – positioned to thrive

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Source: MSA, Inc. shipments to retail, six months ended June 30, 2016 and company estimates.

Increasing proposition awareness, trial

Reinforcing quality / value proposition

Balancing profitability and market share

Pall Mall – focused on equity

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55

60

65

70

75

80

85

90

2010 2011 2012 2013 2014 2015 YTD16

Net Sales per Unit Share of Market

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Share of market

Accelerating awareness

Driving broader retail distribution

Elevating brand and values

ASU30 index of 205

Natural American Spirit – tipping point

2.1%

0

1

2

2012 2013 2014 2015 YTD16

Source: MSA, Inc. shipments to retail – six months ended June 30, 2016, Tracker.

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growRoom to

Below nat’l avg.SOM 2.0 - 3.0 share SOM > 3.0 share

CityNAS SOM

Boulder, CO 13.9%San Francisco, CA 10.2%Portland, OR 9.1%Asheville, NC 7.7%Austin, TX 7.2%New York, NY 5.0%

Source: MSA, Inc. shipments to retail – six months ended June 30, 2016. 21

Share of market

Expanding brand equity initiatives

Broadening product innovation, pouch leadership

Enhancing retail presence

Grizzly – focused on growth

30.7%

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28

30

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2012 2013 2014 2015 YTD16

Source: MSA, Inc. shipments to retail – six months ended June 30, 2016.

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Grizzly Dark Mint rolled out nationally this month

Offers bold flavor, 100% American-grown, dark-fired tobacco

Builds on the success of Grizzly Dark Wintergreen

Expansion of innovative smokeless styles like Dark Mint part of our vision to transform tobacco

Grizzly portfolio expanded

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BASE: 21+ Adult tobacco or e-cigarette consumersSource: Tracker FY 2015

Adult Smokers 21+ 2012 2013 2014 2015

Trial - Vapor 37% 49% 58% 62%

Loyal (Vapor Only) 3% 5% 6% 7%

Innovation essential for vapor growth

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Product approval guidelines will inform our efforts to bring products with potential to reduce risk to market

Working with agency to gain greater clarity on this process

New VUSE product formats in place for newly regulated environment

Committed to working with agency on reasonable regulation that recognizes risk continuum and offers greatest potential to improve public health

FDA deeming rule update

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Prepared for vapor leadership

RAI Innovations Company

‒ Created Jan. 2016 to drive speed-to-market for leading-edge products

R.J. Reynolds / BAT vapor tech-sharing and licensing

‒ World-class vapor expertise and capability

‒ Competitive advantage in tobacco transformation

‒ Agreement signed Dec. 1, 2015

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VUSE – expanding market leadership

VUSE blu Logic MarkTen NJOY

Source: MSA, Inc. shipments to retail – six months ended June 30, 2016. 27

Current Platform

VUSE evolution

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Leading-Edge Innovation

VUSE innovation – VUSE VIBE

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Best-in-class merchandising and marketing support

New products priced in-line with VUSE’s premium position- VUSE Vibe kit/tanks- $19.99/$9.99 MSRP

Consumer engagement and education

Marketing designed to drive trial

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Leading-edge products - ZONNIC

National expansion going smoothly 2016 expanded product line

‒ 40-count gum package

‒ 10-count mini-lozenges

Leveraging consumer desire for alternative products Aligns with tobacco harm reduction

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Leading-edge products - CORE

Utilizes R.J. Reynolds’ heat-not-burn expertise

Test marketed in Japan, evaluating path forward with additional activities

Leveraging consumer desire for alternative products

Continue learnings from marketplace

Aligns with tobacco harm reduction

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Strongest portfolio dynamics in U.S. industry

No. 1 menthol cigarette brand; no. 2 cigarette brand

No. 3 cigarette brand; leading total-tobacco brand

No. 1 value cigarette brand

No. 1 super-premium cigarette brand; fastest growing brand

No. 1 moist-snuff brand in Wintergreen and Pouches

No. 1 vapor brand; superior technology

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EPS +14.9%$3.05 $1.08

Net Income

RAI’s YTD performance

+49.5%$4,361

Operating Margin +5.8ppt.123.6%

$1,549

45.6%

Adjusted GAAP

Year-to-date period is the six months ended June 30.Reconciliation of GAAP to Adjusted results in Appendix 1

Operating Income +56.8%

AdjustedYTD16 vs. YTD15

$7,557 $2,785

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Attractive dividend

2004 2006 2008 2010 2012 2014 3Q16

Annualized rate of $1.84 per share Three increases since Lorillard acquisition

– Up more than 280 percent since 2004

$1.84*

$0.48

*3Q16 annualized

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Full-year earnings guidance*

Adjusted EPS of $2.26 to $2.34

Adjusted EPS growth of 14.1% to 18.2%

* July 26, 2016. Reconciliation of GAAP to Adjusted results in Appendix 1.

RAI’s management cannot estimate on a forward-looking basis the impact of certain income and expense items on its reported EPS because these items, which could be significant, are difficult to predict and may be highly variable. As a result, RAI does not provide a corresponding reported measure for, or reconciliation to, its adjusted EPS guidance.

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Delivering outstanding total shareholder return

Since 2004 …

949%

Through Aug. 31, 2016Source: Bloomberg

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Summary

A much stronger No. 2 U.S. tobacco company

Bringing bold vision and strategy to life

Delivering sustainable growth in key categories

Creating value and compelling shareholder return

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Appendix 1

2016 2015Operating Net Diluted Operating Net Diluted

Income Income EPS Income Income EPS

Reported (GAAP) results 7,557$ 4,361$ 3.05$ 5,057$ 2,317$ 2.10$ Reported (GAAP) results include the following:

Gain on divestitures (4,861) (3,023) (2.11) (3,499) (1,466) (1.33) Implementation costs 28 18 0.01 104 66 0.06

Engle Progeny cases 61 38 0.02 111 70 0.06 Debt and financing costs (1)(2) - 155 0.11 - 38 0.04 2003 NPM Adjustment Claim - - - (70) (43) (0.04) Tobacco Related and Other Litigation - - - 19 11 0.01 Transaction-related costs - - - 54 43 0.04

Total adjustments (4,772) (2,812) (1.97) (3,281) (1,281) (1.16) Adjusted (Non-GAAP) results $ 2,785 $ 1,549 $ 1.08 $ 1,776 $ 1,036 $ 0.94

(1) For the six months ended June 30, 2016, debt and financing costs of $155 million are presented net of an income tax benefit of $88 million.(2) For the three and six months ended June 30, 2015, debt and financing costs of $18 million and $38 million, respectively, are presented net of an income tax

benefit of $11 million and $22 million, respectively.

Six Months Ended June 30,

REYNOLDS AMERICAN INC.Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

(Dollars in Millions, Except Per Share Amounts)(Unaudited)

RAI management uses "adjusted" (Non-GAAP) measurements to set performance goals and as a means 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.

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