Reynolds American (RAI) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

Reynolds American Inc.

P.O. Box 2990

Winston-Salem, NC 27102-2990

Contact:	Investor Relations:	Morris Moore	Media:	Jane Seccombe	RAI 2011-21
		(336) 741-3116		(336) 741-5068

RAI announces $2.5 billion share repurchase program,

pension and postretirement accounting change

WINSTON-SALEM, N.C. – Nov. 14, 2011– Reynolds American Inc. (NYSE: RAI) announced today that its board of directors had authorized the repurchase of up to $2.5 billion of the company’s outstanding common stock over the next two-and-a-half years.

RAI said that the new share repurchase program, which goes into effect immediately, would be completed by mid-2014. The program allows for shares to be purchased from time to time in the open market, depending on market conditions, or in privately negotiated transactions.

The company also announced that British American Tobacco p.l.c. will participate through its wholly owned subsidiary, Brown & Williamson Holdings, Inc., in the share repurchase program, except for repurchases to offset new equity compensation issuances, to maintain its ownership of approximately 42 percent of RAI’s outstanding common stock.

“The share repurchase program clearly demonstrates our continuing commitment to returning value to our shareholders,” said Daniel M. Delen, RAI’s president and chief executive officer. “This announcement comes on top of two dividend increases announced earlier this year, which brought the total dividend increase to 14.3 percent for the year.”

In addition, the company said it is changing the way in which it accounts for pension and postretirement plans, adopting the mark-to-market methodology of accounting that recognizes actuarial gains and losses in the period during which they were incurred.

“The new policy increases transparency at the operating company level by reflecting current market returns, interest rates and health-care costs,” said Thomas R. Adams, RAI’s chief financial officer.

An analysis of pension and postretirement plan performance is generally performed annually as of December 31. Any actuarial gains or losses that fall outside a 10 percent corridor (10 percent of the greater of plan assets or benefit obligations) will be recognized during the fourth quarter as a mark-to-market adjustment included in pension and postretirement expense.

The change in accounting will be applied retrospectively to prior periods. The GAAP and adjusted EPS impact is highlighted in the following table, and is detailed on both a GAAP and adjusted basis in the attached schedules.

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			Full		Full
	Nine Months		Year		Year
GAAP EPS	2011		2010		2009
Previously Reported	$	1.75	$	1.90	$	1.65
Net Accounting Change Impact		.13		.02		(.01	)
Revised GAAP EPS	$	1.88	$	1.92	$	1.64

			Full		Full
	Nine Months		Year		Year
Adjusted EPS	2011		2010		2009
Previously Reported	$	1.96	$	2.49	$	2.32
Net Accounting Change Impact		.13		.14		.04
Revised Adjusted EPS	$	2.09	$	2.63	$	2.36

“The change will not impact cash flow or funding requirements,” Adams said. “The company will adjust prior-years’ financials to be consistent with the new policy. We continue to monitor our pension plans closely to ensure that they remain well funded,” he said.

As a result of the pension and postretirement accounting change, RAI is revising its adjusted full-year EPS guidance to $2.77 to $2.82. This guidance excludes the effect of any potential mark-to-market adjustments for the pension and postretirement plans, as well as the impact of theEngle progeny lawsuits, theScott lawsuit, implementation and integration costs, and tax items.

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 atwww.reynoldsamerican.com to receive alerts when news about the company has been posted.

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.; and Niconovum AB.

• R.J. Reynolds Tobacco Company is the second-largest U.S. tobacco company. The company’s brands include many of the best-selling cigarettes in the U.S., Camel, Pall Mall, Winston, Kool, Doral and Salem.

• American Snuff Company, LLC is the nation’s second-largest manufacturer of smokeless tobacco products. Its leading brands are Grizzly, Kodiak and Levi Garrett.

• Santa Fe Natural Tobacco Company, Inc. manufactures Natural American Spirit cigarettes and other additive-free tobacco products, and manages and markets other super-premium brands.

• Niconovum AB markets innovative nicotine replacement therapy products in Sweden and Denmark under the Zonnic brand name.

Copies of RAI's news releases, annual reports, SEC filings and other financial materials, including risk factors containing forward-looking information, are available atwww.reynoldsamerican.com.

(financial schedules follow)

Schedule 1

REYNOLDS AMERICAN INC.

Historical and MTM Pension/Postretirement Accounting

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

	Nine Months			Full Year
	2011			2010			2009
Historical Accounting
Pension
Amortization of net loss	$	105		$	121		$	99
Other pension expense (income)		(29	)		(7	)		26
Pension expense	$	76		$	114		$	125
Postretirement
Amortization of net loss	$	22		$	19		$	15
Other postretirement expense		23			42			40
Postretirement expense	$	45		$	61		$	55
Operating income	$	1,753		$	2,419		$	1,775
Income from continuing operations before income taxes	$	1,595		$	2,192		$	1,534
Provision for income taxes		571			863			572
Income from continuing operations		1,024			1,329			962
Losses from discontinued operations, net of tax		—			(216	)		—
Net income	$	1,024		$	1,113		$	962
Diluted net income per share	$	1.75		$	1.90		$	1.65
MTM Accounting
Pension
MTM adjustment (1)	$	—		$	3		$	14
Other pension expense (income)		(32	)		9			99
Pension expense (income)	$	(32	)	$	12		$	113
Postretirement
MTM adjustment (1)	$	—		$	107		$	35
Other postretirement expense		23			43			44
Postretirement expense	$	23		$	150		$	79
Operating income	$	1,883		$	2,432		$	1,763
Income from continuing operations before income taxes	$	1,725		$	2,205		$	1,522
Provision for income taxes		623			868			567
Income from continuing operations		1,102		$	1,337		$	955
Losses from discontinued operations, net of tax		—			(216	)		—
Net income	$	1,102		$	1,121		$	955
Diluted net income per share	$	1.88		$	1.92		$	1.64
Diluted weighted average shares, in thousands		585,868			584,854			583,652

(1) Actuarial gains and losses outside a 10% corridor are generally recognized annually as of December 31, and accordingly, are recorded in the fourth quarter.

Schedule 2

REYNOLDS AMERICAN INC.

Historical and MTM Pension/Postretirement Accounting by Quarter

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

	2011									2010
	Q1			Q2			Q3			Q1			Q2			Q3			Q4
Historical Accounting
Pension
Amortization of net loss	$	35		$	35		$	35		$	30		$	30		$	30		$	31
Other pension income		(9	)		(13	)		(7	)		(1	)		(2	)		(2	)		(2	)
Pension expense	$	26		$	22		$	28		$	29		$	28		$	28		$	29
Postretirement
Amortization of net loss	$	7		$	8		$	7		$	5		$	4		$	5		$	5
Other postretirement expense		9			6			8			11			10			11			10
Postretirement expense	$	16		$	14		$	15		$	16		$	14		$	16		$	15
Operating income	$	577		$	541		$	635		$	570		$	620		$	662		$	567
Income from continuing operations before income taxes	$	525		$	489		$	581		$	512		$	551		$	618		$	511
Provision for income taxes		172			185			214			214			210			237			202
Income from continuing operations		353			304			367			298			341			381			309
Losses from discontinued operations, net of tax		—			—			—			(216	)		—			—			—
Net income	$	353		$	304		$	367		$	82		$	341		$	381		$	309
Diluted net income per share	$	0.60		$	0.52		$	0.63		$	0.14		$	0.58		$	0.65		$	0.53
MTM Accounting
Pension
MTM adjustment	$	—		$	—		$	—		$	—		$	—		$	—		$	3
Other pension expense (income)		(11	)		(11	)		(10	)		3			2			2			2
Pension expense (income)	$	(11	)	$	(11	)	$	(10	)	$	3		$	2		$	2		$	5
Postretirement
MTM adjustment	$	—		$	—		$	—		$	—		$	—		$	—		$	107
Other postretirement expense		7			8			8			12			9			11			11
Postretirement expense	$	7		$	8		$	8		$	12		$	9		$	11		$	118
Operating income	$	623		$	580		$	680		$	600		$	651		$	693		$	488
Income from continuing operations before income taxes	$	571		$	528		$	626		$	542		$	582		$	649		$	432
Provision for income taxes		190			201			232			226			223			249			170
Income from continuing operations	$	381		$	327		$	394		$	316		$	359		$	400		$	262
Losses from discontinued operations, net of tax		—			—			—			(216	)		—			—			—
Net income	$	381		$	327		$	394		$	100		$	359		$	400		$	262
Diluted net income per share	$	0.65		$	0.56		$	0.67		$	0.17		$	0.61		$	0.68		$	0.45
Diluted weighted average shares, in thousands		585,647			585,874			586,082			584,339			584,565			585,011			585,501

Schedule 3

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.

	Nine Months			Full Year
	2011			2010		2009
Revised GAAP operating income	$	1,883		$	2,432	$	1,763
Implementation costs		23			60		—
Scott lawsuit		139			—		—
Engle Progeny lawsuits		63			—		—
Asset impairment and exit charges		—			38		—
Goodwill and trademark impairment charges		—			32		567
Restructuring charges		—			—		56
Historical adjustments		225			130		623
MTM adjustment		—			110		49
Revised adjusted operating income	$	2,108		$	2,672	$	2,435
Revised GAAP net income	$	1,102		$	1,121	$	955
Implementation costs		14			37		—
Tax items		(16	)		—		—
Scott lawsuit		88			—		—
Engle Progeny lawsuits		39			—		—
Health-care subsidy tax charge		—			27		—
Asset impairment and exit charges		—			33		—
Goodwill and trademark impairment charges		—			30		356
Restructuring charges		—			—		35
Losses from discontinued operations		—			216		—
Historical adjustments		125			343		391
MTM adjustment		—			69		31
Revised adjusted net income	$	1,227		$	1,533	$	1,377
Revised GAAP net income per diluted share	$	1.88		$	1.92	$	1.64
Implementation costs		0.02			0.06		—
Tax items		(0.03	)		—		—
Scott lawsuit		0.15			—		—
Engle Progeny lawsuits		0.07			—		—
Health-care subsidy tax charge		—			0.05		—
Asset impairment and exit charges		—			0.06		—
Goodwill and trademark impairment charges		—			0.05		0.61
Restructuring charges		—			—		0.06
Losses from discontinued operations		—			0.37		—
Historical adjustments per diluted share		0.21			0.59		0.67
MTM adjustment		—			0.12		0.05
Revised adjusted net income per diluted share	$	2.09		$	2.63	$	2.36

Schedule 4

REYNOLDS AMERICAN INC.

Reconciliation of GAAP to Adjusted Results by Quarter

(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.

	2011							2010
	Q1			Q2		Q3		Q1		Q2		Q3		Q4
Revised GAAP operating income	$	623		$	580	$	680	$	600	$	651	$	693	$	488
Implementation costs		12			3		8		—		17		24		19
Scott lawsuit		—			139		—		—		—		—		—
Engle Progeny lawsuits		—			—		63		—		—		—		—
Asset impairment and exit charges		—			—		—		—		38		—		—
Goodwill and trademark impairment charges		—			—		—		—		—		—		32
Restructuring charges		—			—		—		—		—		—		—
Historical adjustments		12			142		71		—		55		24		51
MTM adjustment		—			—		—		—		—		—		110
Revised adjusted operating income	$	635		$	722	$	751	$	600	$	706	$	717	$	649
Revised GAAP net income	$	381		$	327	$	394	$	100	$	359	$	400	$	262
Implementation costs		7			2		5		—		11		15		11
Tax items		(16	)		—		—		—		—		—		—
Scott lawsuit		—			88		—		—		—		—		—
Engle Progeny lawsuits		—			—		39		—		—		—		—
Health-care subsidy tax charge		—			—		—		27		—		—		—
Asset impairment and exit charges		—			—		—		—		33		—		—
Goodwill and trademark impairment charges		—			—		—		—		—		—		30
Restructuring charges		—			—		—		—		—		—		—
Losses from discontinued operations		—			—		—		216		—		—		—
Historical adjustments		(9	)		90		44		243		44		15		41
MTM adjustment		—			—		—		—		—		—		69
Revised adjusted net income	$	372		$	417	$	438	$	343	$	403	$	415	$	372
Revised GAAP net income per diluted share	$	0.65		$	0.56	$	0.67	$	0.17	$	0.61	$	0.68	$	0.45
Implementation costs		0.01			—		0.01		—		0.02		0.03		0.02
Tax items		(0.02	)		—		—		—		—		—		—
Scott lawsuit		—			0.15		—		—		—		—		—
Engle Progeny lawsuits		—			—		0.06		—		—		—		—
Health-care subsidy tax charge		—			—		—		0.05		—		—		—
Asset impairment and exit charges		—			—		—		—		0.06		—		—
Goodwill and trademark impairment charges		—			—		—		—		—		—		0.05
Restructuring charges		—			—		—		—		—		—		—
Losses from discontinued operations		—			—		—		0.37		—		—		—
Historical adjustments per diluted share		(0.01	)		0.15		0.07		0.42		0.08		0.03		0.07
MTM adjustment		—			—		—		—		—		—		0.12
Revised adjusted net income per diluted share	$	0.64		$	0.71	$	0.74	$	0.59	$	0.69	$	0.71	$	0.64

Schedule 5

REYNOLDS AMERICAN INC.

Reconciliation of GAAP to Adjusted Operating Income by Segment

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 American Snuff segment consists of the primary operations of American Snuff Company, LLC, the second-largest smokeless tobacco products manufacturer in the United States, and Lane, Limited until its sale on February 28, 2011.

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.

					Full Year
	Nine Months 2011				2010				2009
	R.J.		American		R.J.		American		R.J.		American
	Reynolds		Snuff		Reynolds		Snuff		Reynolds		Snuff
GAAP revised operating income	$	1,523	$	255	$	2,084	$	320	$	1,481	$	276
The GAAP results include the following:
Implementation costs included in cost of products sold and selling, general and administrative expenses		16		3		26		20		—		—
Scott lawsuit		139		—		—		—		—		—
Engle Progeny lawsuits		63		—		—		—
Asset impairment and exit charges		—		—		24		—		—		—
Goodwill and trademark impairment charges		—		—		—		32		491		76
Restructuring charges		—		—		—		—		56		—
Historical adjustments		218		3		50		52		547		76
MTM adjustment		—		—		105		2		39		—
Adjusted revised operating income	$	1,741	$	258	$	2,239	$	374	$	2,067	$	352

Schedule 6

REYNOLDS AMERICAN INC.

Reconciliation of GAAP to Adjusted Operating Income by Segment by Quarter

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 American Snuff segment consists of the primary operations of American Snuff Company, LLC, the second-largest smokeless tobacco products manufacturer in the United States, and Lane, Limited until its sale on February 28, 2011.

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.

		$0.0		$0.0		$0.0		$0.0		$0.0		$0.0
	2011
	Q1				Q2				Q3
	R.J.		American		R.J.		American		R.J.		American
	Reynolds		Snuff		Reynolds		Snuff		Reynolds		Snuff
GAAP revised operating income	$	506	$	86	$	457	$	80	$	560	$	89
The GAAP results include the following:
Implementation costs		8		2		3		—		5		1
Scott lawsuit		—		—		139		—		—		—
Engle Progeny lawsuits		—		—		—		—		63		—
Historical adjustments		8		2		142		—		68		1
Adjusted revised operating income	$	514	$	88	$	599	$	80	$	628	$	90

		$0.00.0		$0.00.0		$0.00.0		$0.00.0		$0.00.0		$0.00.0		$0.00.0		$0.00.0
	2010
	Q1				Q2				Q3				Q4
	R.J.		American		R.J.		American		R.J.		American		R.J.		American
	Reynolds		Snuff		Reynolds		Snuff		Reynolds		Snuff		Reynolds		Snuff
GAAP revised operating income	$	498	$	84	$	570	$	75	$	589	$	94	$	427	$	67
The GAAP results include the following:
Implementation costs		—		—		3		11		11		7		12		2
Asset impairment and exit charges		—		—		—		—		—		—		—		32
Goodwill and trademark impairment charges		—		—		24		—		—		—		—		—
Historical adjustments		—		—		27		11		11		7		12		34
MTM adjustment		—		—		—		—		—		—		105		2
Adjusted revised operating income	$	498	$	84	$	597	$	86	$	600	$	101	$	544	$	103