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UNITED STATES

Commission file number: 1-6388

401 North Main Street

(336) 741-5500

(Former name, former address and former fiscal year, if changed from last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES x  NO o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  YES x  NO o

      Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 84,314,003 shares of common stock, par value $.01 per share, as of July 14, 2003

INDEX

PART I — Financial Information

Item 1. Financial Statements

R.J. REYNOLDS TOBACCO HOLDINGS, INC.

1	Excludes excise taxes of $407 million and $452 million for the three months ended June 30, 2003 and 2002, respectively, and $782 million and $880 million for the six months ended June 30, 2003 and 2002, respectively.
2	Includes settlement expense of $512 million and $655 million for the three months ended June 30, 2003 and 2002, respectively, and $974 million and $1,273 million for the six months ended June 30, 2003 and 2002, respectively.

See Notes to Condensed Consolidated Financial Statements

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R.J. REYNOLDS TOBACCO HOLDINGS, INC.

See Notes to Condensed Consolidated Financial Statements

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R.J. REYNOLDS TOBACCO HOLDINGS, INC.

See Notes to Condensed Consolidated Financial Statements

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Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

      The consolidated financial statements include the accounts of R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR, and its wholly owned subsidiaries. RJR’s wholly owned subsidiaries include its operating subsidiaries, R. J. Reynolds Tobacco Company, referred to as RJR Tobacco, and Santa Fe Natural Tobacco Company, Inc., referred to as Santa Fe. RJR also wholly owns RJR Acquisition Corp.

      The equity method is used to account for investments in businesses that RJR does not control, but has the ability to significantly influence operating and financial policies. The cost method is used to account for investments in which RJR does not have the ability to significantly influence operating and financial policies. All material intercompany balances have been eliminated. We have no investments in entities greater than 20% that we account for by the cost method, and we have no investments in non-consolidated entities greater than 50% that we account for by the equity method.

      The accompanying unaudited, interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For interim reporting purposes, certain costs and expenses are charged to operations in proportion to the estimated total annual amount expected to be incurred primarily based on sales volumes. The results for the interim period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

      The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes, which appear in RJR’s Annual Report on Form 10-K for the year ended December 31, 2002. For comparability, certain reclassifications were made to conform prior periods to the current presentation format.

      All dollar amounts are presented in millions unless otherwise noted.

Accounting for Returned Goods

      During the second quarter of 2003, RJR Tobacco announced a revision of its policy related to returned goods, restricting its acceptance of product returns to only unintentionally damaged products. As a result of this revision, RJR Tobacco reduced its reserve for returned goods, which benefited net sales and operating income $54 million during the second quarter of 2003.

Merchandising Fixtures

      During the second quarter of 2003, RJR Tobacco significantly increased its estimate of the portion of fixtures that is salvageable as part of its accelerated replacement of its merchandising fixtures program that was begun in the fourth quarter of 2002. As a result, no additional accelerated amortization is required. Amortization of merchandising fixtures during the first half of 2003 was $45 million, of which $21 million was accelerated amortization. During the first half of 2002, amortization expense was $27 million.

Goodwill

      In April 2003, Santa Fe, through a wholly owned subsidiary, acquired with cash, the externally owned portion of a joint venture, Santa Fe Natural Tobacco Company: Europe GmbH. The cost of the acquisition, net of cash acquired, was $9 million. As a result of the purchase price allocation of this

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acquisition, the changes in the carrying amount of goodwill during the six months ended June 30, 2003 were:

Recently Adopted Accounting Pronouncements

      In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of SFAS No. 123.” SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to that statement’s fair value method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 and Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. The transition and disclosure provisions of this statement are effective for financial statements for fiscal years ending after December 15, 2002.

      RJR adopted the prospective method of transition of SFAS No. 148 effective January 1, 2003. Accordingly, all compensation costs related to employee stock plans that were granted prior to January 1, 2003, will continue to be recognized using the intrinsic value-based method under the provisions of APB No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. However, any compensation costs related to grants or modifications of existing grants subsequent to January 1, 2003 will be recognized under the fair value method of SFAS No. 123, as amended. All compensation costs related to employee stock plans for all grant dates will be disclosed under the provisions of SFAS No. 123, as amended.

      The following table illustrates the effect on net income and income per share if RJR had applied the fair value recognition provisions of SFAS No. 123: