RAI’s 1Q14 reflects strong underlying performance

RAI’s 1Q14 reflects strong underlying performance;
Company reaffirms full-year guidance
WINSTON-SALEM, N.C. – April 23, 2014
First Quarter 2014 – At a Glance
 Adjusted EPS: First quarter at $0.72, in line with prior-year quarter
o Excludes gain on discontinued operations; charges for Engle progeny
lawsuits and tobacco-related and other litigation; implementation costs;
and other special items*
 Reported EPS: First quarter at $0.67, down 27.2 percent
 RAI reaffirms 2014 guidance: Adjusted EPS range of $3.30 to $3.45
 Growth on all key brands:
o Camel share up 0.4 pts. at 10.0 percent
o Pall Mall share up 0.3 pts. at 9.5 percent
o Grizzly share up 1.1 pts. at 31.5 percent
o Natural American Spirit share up 0.2 pts. at 1.5 percent
 VUSE Digital Vapor Cigarette takes market-share lead in Utah, remains on
top in Colorado
 RAI announced 6.3 percent dividend increase on Feb. 11
 Susan Cameron elected CEO, effective May 1; Daan Delen to retire
* Special items are detailed in Schedule 2 and include the 2013 one-time benefit from the partial
settlement of the Master Settlement Agreement (MSA) Non-Participating Manufacturer (NPM)
adjustment claims (NPM Partial Settlement).
All references in this release to “reported” numbers refer to GAAP measurements; all “adjusted”
numbers are non-GAAP, as defined in schedules 2 and 3 of this release, which reconcile reported to
adjusted results.
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Reynolds American Inc. (NYSE: RAI) today announced first-quarter 2014 adjusted EPS of $0.72, in
line with the prior-year quarter, as lower cigarette volume and increased investment on the VUSE
Digital Vapor Cigarette expansion offset higher cigarette and moist-snuff pricing. Adjusted EPS
excludes a gain on discontinued operations, charges for Engle progeny lawsuits and tobacco-related
and other litigation, and implementation costs. Reported first-quarter EPS was $0.67, down 27.2
percent.
RAI reaffirmed 2014 adjusted EPS guidance in the range of $3.30 to $3.45, up 3.5 percent to 8.2
percent from 2013’s adjusted EPS of $3.19.
First Quarter 2014 Financial Results – Highlights
(unaudited)
(all dollars in millions, except per-share amounts;
for reconciliations, including GAAP to non-GAAP, see schedules 2 and 3)
For the Three Months
Ended March 31
2014
2013
%
Change
Net sales
$1,935 $1,883 2.8%
Operating income
Reported (GAAP) $ 590 $ 887 (33.5)%
Adjusted (Non-GAAP) 665 690 (3.6)%
Net income
Reported (GAAP) $ 363 $ 508 ( 2 8 . 5 ) %
Adjusted (Non-GAAP) 386 398 (3.0)%
Net income per diluted share
Reported (GAAP) $0.67 $0.92 (27.2)%
Adjusted (Non-GAAP) 0.72 0.72 0.0%
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MANAGEMENT’S PERSPECTIVE
Overview
“Reynolds American’s reportable business segments continued to make excellent progress in
the first quarter, with strong market-share gains on all their key brands,” said Daniel M. Delen,
president and chief executive officer of RAI.
“As we previously noted, R.J. Reynolds Vapor Company is investing heavily in the expansion
of its highly differentiated VUSE Digital Vapor Cigarette this year, and this spending impacted
RAI’s first-quarter earnings and margin as expected,” Delen said.
Delen said that first-quarter performance reflected three key strengths of RAI’s operating
companies — excellence in innovation, superior engagement with adult tobacco consumers
and efficient execution. “These strategies are not just effective for success in a
transformative environment; they also form the core of our companies’ competitive
advantage,” he said.
VUSE digital vapor cigarettes continued to perform extremely well during the quarter, Delen
said. “VUSE is now widely available in Utah stores, its second major market, and I’m pleased
to report that the brand has already captured the dominant share in that state. VUSE also
remains the best-selling vapor product in Colorado.”
Delen said that VUSE is on track for the initial wave of its national distribution this summer,
adding that spending on the brand will continue to build in the second quarter in preparation
for the expansion and increased production capacity.
As noted earlier this year, the projection universe that the company’s vendor uses to estimate
RAI’s operating companies’ retail cigarette and moist-snuff market shares has been revised
for 2014, with the primary focus now on the convenience/gas channel, where the majority of
tobacco products are purchased and brand-support investments are made. This revision
results in higher absolute share levels on some of the companies’ key brands, but does not
affect overall share trends. Prior-year market share data have been restated on this basis for
comparison purposes.
RAI reaffirmed 2014 adjusted EPS growth of 3.5 percent to 8.2 percent over 2013’s adjusted
results.
“I should note that our earnings guidance for the full year reflects the VUSE investment, as
well as the equity-building initiatives on our companies’ key brands, which are key to our
strategy of delivering sustainable growth in an evolving marketplace,” Delen said.
As RAI previously announced on April 16, Susan M. Cameron will succeed Delen as
president and chief executive officer, effective May 1.
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RJR Tobacco
RJR Tobacco’s first-quarter adjusted operating income of $555 million was down 1.4 percent
from the prior-year quarter as lower cigarette volume and the timing of certain sales and
marketing expenses more than offset higher pricing. Adjusted results exclude a charge of $69
million related to Engle progeny lawsuits and $4 million in implementation costs.
RJR Tobacco’s first-quarter adjusted operating margin of 35.5 percent was down 0.5
percentage points from the prior-year quarter.
RJR Tobacco’s first-quarter cigarette shipments declined 3.8 percent from the prior-year
quarter while industry volume declined 2.7 percent. After adjusting for wholesale inventory
changes, RJR Tobacco estimates that its volume was down 5.2 percent in the quarter, while
industry volumes were down approximately 4.4 percent.
RJR Tobacco’s total first-quarter cigarette market share increased 0.1 percentage points from
the prior-year quarter, to 26.7 percent, as gains on the company’s two growth brands more
than offset declines on its other brands.
These growth brands, Camel and Pall Mall, continued their strong performance in the first
quarter, increasing their combined share by 0.7 percentage points from the prior-year quarter,
to 19.4 percent.
Camel increased first-quarter market share by 0.4 percentage points from the prior-year
quarter, to 10.0 percent, largely driven by gains on the brand’s premium menthol styles.
Camel’s menthol market share of 4.2 percent reflected an increase of 0.3 percentage points
in the quarter.
Camel SNUS continued to dominate the growing snus category, maintaining a share of about
80 percent in the first quarter. Camel SNUS gives adult tobacco consumers the freedom to
“Taste It All” and enjoy tobacco pleasure on their own terms.
Once again, the strength of Pall Mall was evident in the quarter, with market share increasing
0.3 percentage points from the prior-year quarter, to 9.5 percent. Pall Mall, which offers a
longer-lasting cigarette at an affordable price, is the nation’s No. 1 value brand by a wide
margin.
American Snuff
A double-digit gain in moist-snuff volume and higher pricing drove growth in American Snuff’s
first-quarter operating income, which increased 9.2 percent from the prior-year quarter, to
$102 million.
American Snuff’s first-quarter operating margin of 55.1 percent saw a modest decline from
the prior-year quarter as the company continued to invest in equity-building initiatives on the
Grizzly brand.
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The company’s first-quarter moist-snuff volume increased 10.7 percent from the prior-year
quarter, outpacing the industry’s growth of about 4 percent. As a result, the company’s firstquarter
moist-snuff market share increased 0.8 percentage points, to 34.6 percent.
American Snuff’s powerful Grizzly brand continues to deliver strong growth in both volume
and market share, dispite the significant increase in competitive promotional levels. American
Snuff increased promotional support on Grizzly in the quarter in response to the increased
competitive activity.
In the first quarter, Grizzly grew market share by 1.1 percentage points from the prior-year
quarter, to 31.5 percent, while the brand’s volume increased by 12.1 percent. Grizzly Wide
Cut Wintergreen was expanded nationally during the quarter, and is proving to be a very
successful addition to the Grizzly product portfolio.
Santa Fe
Santa Fe continued to deliver robust performance, with first-quarter operating income up 24.9
percent from the adjusted prior-year quarter, to $65 million, benefiting from higher volume
and pricing.
Santa Fe’s first-quarter operating margin increased 3.1 percentage points, to 48.3 percent.
Natural American Spirit, now a Top 10 cigarette brand, delivered a market-share gain of 0.2
percentage points from the prior-year quarter, to 1.5 percent, while the brand’s volume
increased 10.7 percent.
The strength of Natural American Spirit, which remains an undiscounted brand in the superpremium
category, lies in its distinctive additive-free natural tobacco styles, including styles
made with organic tobacco, as well as its loyal adult consumer franchise.
FINANCIAL UPDATE
Reynolds American’s first-quarter adjusted EPS of $0.72 was in line with the prior-year
quarter, as cigarette volume declines, increased investment on the VUSE expansion, and the
timing of certain sales and marketing expenses offset higher pricing and the impact of the
share repurchase program.
Adjusted EPS excludes a gain from discontinued operations, charges for Engle progeny
lawsuits and tobacco-related and other litigation, and implementation costs.
On a reported basis, first-quarter EPS was $0.67, down 27.2 percent.
RAI’s adjusted operating margin declined 2.2 percentage points from the prior-year quarter,
to 34.4 percent, reflecting the above-referenced items.
RAI ended the quarter with cash balances of $1.8 billion. On April 15, R.J. Reynolds Tobacco
Company made its MSA payment of $1.5 billion, including $433 million paid into the NPM
disputed funds account.
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During the first quarter, RAI purchased 2.9 million shares for $145 million, bringing total
repurchases under the company’s current program to 50.6 million shares for $2.2 billion.
“I’m pleased by our operating companies’ first-quarter performance, and they are also doing
great work in positioning us for profitable growth over the long term,” Thomas R. Adams,
RAI’s chief financial officer, said. “Taking the investment on VUSE and the equity investments
in our companies’ key brands into account, we have reaffirmed adjusted EPS guidance for
the full year in the range of $3.30 to $3.45.”
Adams noted the company’s Feb. 11 announcement of a 6.3 percent dividend increase to an
annualized $2.68, and said that RAI remained fully committed to finding opportunities to
further enhance shareholder value.
CONFERENCE CALL WEBCAST TODAY
Reynolds American will webcast a conference call to discuss first-quarter 2014 results at
9:00 a.m. Eastern Time on Wednesday, April 23, 2014. The call will be available live online
on a listen-only basis. To register for the call, please go to
http://www.reynoldsamerican.com/events.cfm. A replay of the call will be available on the
site. Investors, analysts and members of the news media can also listen to the live call by
phone, by dialing (877) 390-5533 (toll free) or (678) 894-3969 (international). Remarks made
during the conference call will be current at the time of the call and will not be updated to
reflect subsequent material developments. Although news media representatives will not be
permitted to ask questions during the call, they are welcome to monitor the remarks on a
listen-only basis. Following the call, media representatives may direct inquiries to Jane
Seccombe at (336) 741-5068.
WEB DISCLOSURE
RAI’s website, www.reynoldsamerican.com, is the primary source of publicly disclosed news
about RAI and its operating companies. We use the website as our primary means of
distributing quarterly earnings and other company news. We encourage investors and others
to register at www.reynoldsamerican.com to receive alerts when news about the company
has been posted.
RISK FACTORS
Statements included in this report that are not historical in nature are forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. When used in this document and in documents incorporated by
reference, forward-looking statements include, without limitation, statements regarding
financial forecasts or projections, and RAI and its subsidiaries’ expectations, beliefs,
intentions or future strategies that are signified by the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,”
“potential,” “should” and similar expressions. These statements regarding future events or
the future performance or results of RAI and its subsidiaries inherently are subject to a
variety of risks, contingencies and other uncertainties that could cause actual results,
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performance or achievements to differ materially from those described in or implied by the
forward-looking statements. These risks, contingencies and uncertainties include:
 the substantial and increasing taxation and regulation of tobacco products, including
the regulation of tobacco products by the U.S. Food and Drug Administration (FDA);
 the possibility that the FDA will issue regulations prohibiting menthol as a flavor in
cigarettes, or the possibility that the FDA will require the reduction of nicotine levels or
the reduction or elimination of other constituents;
 the possibility that the FDA will issue regulations extending the FDA’s authority over
tobacco products to e-cigarettes, subjecting e-cigarettes to restrictions on, among
other things, the manufacturing, marketing and sale of such products;
 decreased sales resulting from the future issuance of “corrective communications,”
required by the order in the U.S. Department of Justice case on five subjects, including
smoking and health, and addiction;
 various legal actions, proceedings and claims relating to the sale, distribution,
manufacture, development, advertising, marketing and claimed health effects of
tobacco products that are pending or may be instituted against RAI or its subsidiaries;
 the possibility that reports from the U.S. Surgeon General regarding the negative
health consequences associated with cigarette smoking and second-hand smoke may
result in additional litigation and/or regulation;
 the possibility of being required to pay various adverse judgments in the Engle
Progeny and/or other litigation;
 the substantial payment obligations with respect to cigarette sales, and the substantial
limitations on the advertising and marketing of cigarettes (and of RJR Tobacco’s
smokeless tobacco products) under the State Settlement Agreements;
 the possibility that the Arbitration Panel’s Award reflecting the partial resolution of the
NPM Adjustment disputes will be vacated or otherwise modified;
 the possibility that the Arbitration Panel’s Final Award with respect to the six states
found to be non-diligent in connection with the 2003 NPM Adjustment will be vacated
or otherwise modified;
 the continuing decline in volume in the U.S. cigarette industry and RAI’s dependence
on the U.S. cigarette industry;
 concentration of a material amount of sales with a limited number of customers and
potential loss of these customers;
 competition from other manufacturers, including industry consolidations or any new
entrants in the marketplace;
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 increased promotional activities by competitors, including manufacturers of deepdiscount
cigarette brands;
 the success or failure of new product innovations, including the digital vapor cigarette,
VUSE, which is manufactured and distributed by an RAI subsidiary, RJR Vapor;
 the success or failure of acquisitions or dispositions, which RAI or its subsidiaries may
engage in from time to time;
 the responsiveness of both the trade and consumers to new products, marketing
strategies and promotional programs;
 the reliance on outside suppliers to manage certain non-core business processes;
 the reliance on a limited number of suppliers for certain raw materials;
 the cost of tobacco leaf, and other raw materials and other commodities used in
products;
 the passage of new federal or state legislation or regulation;
 the effect of market conditions on interest rate risk, foreign currency exchange rate risk
and the return on corporate cash, or adverse changes in liquidity in the financial
markets;
 the impairment of goodwill and other intangible assets, including trademarks;
 the effect of market conditions on the performance of pension assets or any adverse
effects of any new legislation or regulations changing pension and postretirement
benefits accounting or required pension funding levels;
 the substantial amount of RAI debt;
 the credit ratings assigned to RAI, and to the senior unsecured long-term debt of RAI;
 changes in RAI’s historical dividend policy;
 the restrictive covenants imposed under RAI’s debt agreements;
 the possibility of natural or man-made disasters or other disruptions, including
disruptions in information technology systems or security breaches, that may adversely
affect manufacturing or other operations and other facilities or data;
 the loss of key personnel or difficulties recruiting and retaining qualified personnel;
 the inability to protect adequately intellectual property rights;
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 the significant ownership interest of Brown & Williamson Holdings, Inc. (B&W), RAI’s
largest shareholder, in RAI and the rights of B&W under the governance agreement
between the companies;
 the expiration of the standstill provisions of the governance agreement on July 30,
2014;
 a termination of the governance agreement or certain provisions of it in accordance
with its terms, including the limitations on B&W’s representation on RAI’s Board and its
board committees;
 RAI’s shareholder rights plan (which, generally, will expire on July 30, 2014) not
applying to British American Tobacco p.l.c. (BAT) and its subsidiaries, except in limited
circumstances; and,
 the expiration of the non-competition agreement between RAI and BAT on July 30,
2014.
Due to these risks, contingencies and other uncertainties, you are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date of this
news release. 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.
ABOUT US
Reynolds American Inc. (NYSE: RAI) is the parent company of R.J. Reynolds Tobacco Company;
American Snuff Company, LLC; Santa Fe Natural Tobacco Company, Inc.; Niconovum USA, Inc.;
Niconovum AB; and R.J. Reynolds Vapor Company.
 R.J. Reynolds Tobacco Company is the second-largest U.S. tobacco company. R.J.
Reynolds’ brands include two of the best-selling cigarettes in the United States: Camel and
Pall Mall. These brands, and its other brands, including Winston, Kool, Doral, Salem, Misty
and Capri, are manufactured in a variety of styles and marketed in the United States.
 American Snuff Company, LLC is the nation’s second-largest manufacturer of smokeless
tobacco products. Its leading brands are Grizzly and Kodiak.
 Santa Fe Natural Tobacco Company, Inc. manufactures and markets Natural American Spirit
100% additive-free natural tobacco products, including styles made with organic tobacco.
 Niconovum USA, Inc. and Niconovum AB market innovative nicotine replacement therapy
products in the United States and Sweden, respectively, under the Zonnic brand name.
 R.J. Reynolds Vapor Company makes and markets VUSE e-cigarettes, a highly differentiated
vapor product.
Copies of RAI’s news releases, annual reports, SEC filings and other financial materials, including risk
factors containing forward-looking information, are available at www.reynoldsamerican.com. To learn
more about how Reynolds American and its operating companies are transforming the tobacco
industry, visit Transforming Tobacco.
(financial and volume schedules follow)
Schedule 1
Three Months Ended
March 31,
2014 2013
Net sales, external $ 1,849 $ 1,802
Net sales, related party 86 81
Net sales 1,935 1,883
Cost of products sold 930 694
Selling, general and administrative expenses 413 301
Amortization expense 2 1
Operating income 590 887
Interest and debt expense 59 62
Interest income (1) (2)
Other (income) expense, net 1 (2)
Income from continuing operations before income taxes 531 829
Provision for income taxes 193 321
Income from continuing operations 338 508
Income from discontinued operations, net of tax 25 -
Net income $ 363 $ 508
Basic net income per share:
Income from continuing operations $ 0.63 $ 0.92
Income from discontinued operations $ 0.05 $ -
Net income $ 0.68 $ 0.92
Diluted net income per share:
Income from continuing operations $ 0.63 $ 0.92
Income from discontinued operations $ 0.04 $ -
Net income $ 0.67 $ 0.92
Basic weighted average shares, in thousands 536,763 551,353
Diluted weighted average shares, in thousands 538,883 553,450
Segment data:
Net sales:
R.J. Reynolds $ 1,563 $ 1,558
American Snuff 184 167
Santa Fe 135 115
All Other 53 43
$ 1,935 $ 1,883
Operating income:
R.J. Reynolds $ 482 $ 758
American Snuff 102 93
Santa Fe 65 54
All Other (39) (4)
Corporate (20) (14)
$ 590 $ 887
Supplemental information:
Excise tax expense $ 846 $ 855
Master Settlement Agreement and other state settlement expense $ 456 $ 268
Federal tobacco buyout expense $ 55 $ 52
FDA fees $ 34 $ 32
REYNOLDS AMERICAN INC.
Condensed Consolidated Statements of Income – GAAP
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
Schedule 2
Operating Net Diluted Operating Net Diluted
Income Income EPS Income Income EPS
GAAP results $ 590 $ 363 $ 0.67 $ 8 87 $ 508 $ 0 .92
The GAAP results include the following:
Engle Progeny cases 69 44 0.08 3 2 -
Gain on discontinued operations – (25) (0.04) – - -
Implementation costs 4 3 0.01 4 3 0.01
Tobacco Related and Other Litigation 2 1 – - – -
One-time benefit from the NPM Partial Settlement – - – (204) (115) (0.21)
Total adjustments 75 23 0.05 (197) (110) (0.20)
Adjusted results $ 665 $ 386 $ 0.72 $ 690 $ 398 $ 0.72
March 31, Dec. 31,
2014 2013
Assets
Cash and cash equivalents $ 1,826 $ 1,500
Other current assets 2,179 2,155
Trademarks and other intangible assets, net 2,415 2,417
Goodwill 8,018 8,011
Other noncurrent assets 1,361 1,319
$ 15,799 $ 15,402
Liabilities and shareholders’ equity
Tobacco settlement accruals $ 2,187 $ 1,727
Other current liabilities 1,493 1,349
Long-term debt (less current maturities) 5,095 5,099
Deferred income taxes, net 682 658
1,199 1,221
Other noncurrent liabilities 130 181
Shareholders’ equity 5,013 5,167
$ 15,799 $ 15,402
REYNOLDS AMERICAN INC.
Reconciliation of GAAP to Adjusted Results
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.
2013
Three Months Ended March 31,
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
2014
Long-term retirement benefits (less current portion)
Condensed Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
Schedule 3
R.J. Reynolds American Snuff Santa Fe R.J. Reynolds American Snuff Santa Fe
GAAP operating income $ 482 $ 102 $ 65 $ 758 $ 93 $ 54
The GAAP results include the following:
Engle Progeny cases 69 – - 3 – -
Implementation costs 4 – - 4 – -
One-time benefit from the NPM Partial Settlement – - – (202) – (2)
Total adjustments 73 – - (195) – (2)
Adjusted operating income $ 555 $ 102 $ 65 $ 563 $ 93 $ 52
Three Months Ended March 31,
2014
The American Snuff segment consists of the primary operations of American Snuff Company, LLC, the second-largest smokeless tobacco products manufacturer in the
United States.
(Dollars in Millions)
(Unaudited)
REYNOLDS AMERICAN INC.
Reconciliation of GAAP to Adjusted Operating Income by Segment
2013
Management uses “adjusted” (non-GAAP) measurements to set performance goals and to measure the performance of the company, and believes that investors’
understanding of the underlying performance of the company’s continuing operations is enhanced through the disclosure of these metrics.
The R.J. Reynolds segment consists of the primary operations of R.J. Reynolds Tobacco Company, the second-largest tobacco company in the United States and
which also manages a contract manufacturing business.
The Santa Fe segment consists of the primary operations of Santa Fe Natural Tobacco Company, Inc., which manufactures Natural American Spirit cigarettes and other
additive-free tobacco products.
Schedule 4
R.J. REYNOLDS CIGARETTE VOLUMES AND RETAIL SHARE OF MARKET
VOLUME (in billions): Three Months Ended
Mar. 31, Change
2014 2013 Units %
Camel 4.9 4.8 0.1 2.5%
Pall Mall 4.8 4.8 (0.0) -0.1%
Total growth brands 9.7 9.6 0.1 1.2%
Other 4.6 5.3 (0.7) -12.9%
Total R.J. Reynolds domestic 14.3 14.9 (0.6) -3.8%
Total premium 8.4 8.7 (0.3) -3.6%
Total value 5.9 6.2 (0.3) -4.1%
Premium/total mix 58.4% 58.3% 0.1%
Industry 61.0 62.7 (1.7) -2.7%
Premium 43.5 44.7 (1.1) -2.6%
Value 17.5 18.1 (0.6) -3.2%
Premium/total mix 71.3% 71.2% 0.1%
RETAIL SHARE OF MARKET *: Three Months Ended
Mar. 31,
2014 2013 Change
Camel 10.0% 9.5% 0.4
Pall Mall 9.5% 9.2% 0.3
Total growth brands 19.4% 18.7% 0.7
Other 7.2% 7.8% (0.6)
Total R.J. Reynolds domestic 26.7% 26.6% 0.1
Amounts are rounded on an individual basis and, accordingly, may not sum in the aggregate.
Industry volume data based on information from Management Science Associates, Inc.
Retail shares of market are as reported by Information Resources Inc./Capstone.
*As noted earlier this year, the projection universe that the company’s vendor uses to estimate RAI’s
operating companies’ retail cigarette market shares has been revised for 2014, with the primary focus now
on the convenience/gas channel, where the majority of tobacco products are purchased and brand-support
investments are made. This revision resulted in higher absolute share levels on some of the companies’
key brands, but does not affect overall share trends.
Schedule 5
AMERICAN SNUFF MOIST-SNUFF VOLUMES
AND RETAIL SHARE OF MARKET
VOLUME (in millions of cans):
Three Months Ended
Mar. 31, Change
2014 2013 Units %
Grizzly 106.4 94.9 11.5 12.1%
Other 10.5 10.7 (0.2) -1.6%
Total moist snuff cans 116.9 105.6 11.3 10.7%
RETAIL SHARE OF MARKET *:
Three Months Ended
Mar. 31,
2014 2013 Change
Grizzly 31.5% 30.4% 1.1
Other 3.1% 3.3% (0.2)
Total retail share of market 34.6% 33.7% 0.8
SANTA FE CIGARETTE VOLUMES
AND RETAIL SHARE OF MARKET
VOLUME (in billions):
Three Months Ended
Mar. 31, Change
2014 2013 Units %
Natural American Spirit 0.8 0.7 0.1 10.7%
RETAIL SHARE OF MARKET *:
Three Months Ended
Mar. 31,
2014 2013 Change
Natural American Spirit 1.5% 1.3% 0.2
Amounts are rounded on an individual basis and, accordingly, may not sum in the aggregate.
Retail shares of market are as reported by Information Resources Inc./Capstone.
*As noted earlier this year, the projection universe that the company’s vendor uses to estimate RAI’s
operating companies’ retail cigarette and moist-snuff market shares has been revised for 2014, with
the primary focus now on the convenience/gas channel, where the majority of tobacco products are
purchased and brand-support investments are made. This revision resulted in higher absolute share
levels on some of the companies’ key brands, but does not affect overall share trends.