JTI USA Corporate Affairs & Communications

Federation of Tax Administrators August 19, 2014

Small Manufacturer Perspective

Introduction to JTI

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Our goal is clear: To be the most successful and respected tobacco company in the world. We do this by always improving to satisfy the needs of our consumers, being open with the people and communities we work with, and setting the highest possible standards.

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•  Date of establishment: April 1, 1985

•  President and CEO: Mitsuomi Koizumi

•  Operates in Japan’s domestic tobacco market, as well as in beverages, seasonings, processed foods and pharmaceutical businesses

•  Is a global Fortune 500 company

•  48,759 employees globally, including JTI

•  33.3% owned by the Japanese government, making it the largest shareholder

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Our parent company The JT Group

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Global Snapshot JTI today

27,0001

employees

95 offices

25 factories

6 research & development centers

5 tobacco processing facilities

•  JTI is the JT Group’s international tobacco business

•  We employ people in 73 countries around the world

•  We are a leading international tobacco product company created in 1999

•  The Company’s core revenue is USD 11,817 million2

© Copyright JTI 2013

1 As of March 2013 2 Jan-Dec 2012

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Sold in 120 countries with a portfolio strongly represented across most price segments

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Our Global Flagship Brands

Engine brands (outside of the United States)

Stronghold brands (outside of the United States)

Prestige brands (outside of the United States)

* Mevius will be rolled out over the course of 2013

*

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US Leaf & Cigarette Business

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JTI in the United States

JT International U.S.A., Inc. •  122 employees •  HQ in Teaneck, NJ •  Founded in 1986

JT International Leaf Services LLC •  200+ full-time & seasonal

employees •  $150 million in Burley & Virginia

leaf •  Purchases from contract growers

in KY, NC, OH, PA, TN & VA

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US Tobacco Business

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JT International U.S.A., Inc. 1986: JTI USA established in California as a subsidiarity Japan Tobacco

1993: Wave launched

1999: • Joined MSA • JT acquires RJ Reynolds’ non-US tobacco business • Export ‘A’ launched in the US market

2001: JTI USA HQ relocated to New Jersey

2007: JTI acquires Gallaher Tobacco

2009: •  JTI celebrates 10

years of growth & success since the RJR-Int. acquisition

•  President Obama signs the Family Smoking Prevention & Tobacco Control Act

2010: WINGS launched

2013: JTI begins its engagement with FTA

Introducing Nakhla Hookah Tobacco

Being A Small Manufacturer in the United States

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Mosaic of Compliance and Reporting Checkpoints Tobacco Compliance

FDA •  Submissions •  Compliance

Licensing & Permitting •  Federal •  State •  Local

Taxes •  Federal •  State •  Local

MSA •  Registrations •  Certifications

LIP/FSC •  ATF Registration •  State •  Local

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Time, Money and Resources Impact

Finite Resources

Compliance Costs

Staffing

Managing Complexity

Common Concerns

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Responsible Stakeholders & Government Have Similar Interests Impact

Illegal Tobacco Trade

Government • Lost revenue • Enforcement costs • Organized crime

Industry • Supply chain security • Lost profits to illegal operators • Customer concerns

Burden Government

• Managing inflow of data from taxpayers • Adapting to new statutory requirements • Budgetary constraints vs expectations

Industry • Getting it right • Allocating compliance resources •  Integrating compliance into business

Solutions

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How Can We Work Together Making It Work

Cooperation between government and stakeholders is key to understanding the issues we each face living within the operating environment with which we all must cope

E-Solutions must be open and operable

Consolidation of reporting requirements lowers the burden for all stakeholders now and in times of future statutory change

Enterprising Open Challenging