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Estimat~ Retirement Benefits Under tbe Plan as proposed to be amended, the annaal retirement benefits at normal retirement (estlmated upon the basis of actual or a~umed eIeetion of a joint and ~urviwr annuity by each named person) of the persons ~amed in the table u~der "Remuneration" on pages 3 and 4 who did not retire in 1964 would be as follows: Orpheus D. Baxal~, $1~564~; Alfred F. Bnwden, $2~]4f; James J. Cu~nin~am, ~10,379; A. Gordon Find]ay, $14,801; John G. Ha~r, Jr., $16,358; Virgil D. Hager, $26,30] ; Roher~ K. Heim~n, $]1,715; A. LeRoy Janson, $23,54] ; Et:gene F. Mooney, $15,422; John B. Sparrow, $14,935; Silas E. Str~kl~d, $12,915; Geo~e L. Turaer, $20,19g~; Robert B. Walker, $24,720; J~eph Ft. Wa~rhoase, $15153¢; George A. Wi]kin~n, $15,370"; and William B. Yoan~ $14~759~. (Ead~ individual whose benefit is marked with an asterisk has agreed with the Company, in order to hcl]itate ~suanee ~d the :~ove-mentioned ruling of the Internal Revenue Service, to waiw the increase ia benefit attributable to file pr~p~ed amendments and the Company ha~ a~reed to pay outslde the ])]an ~ amou~ equivalent to such increase.) RESOLUTION CONSTITUTING PROPOSAL 3 The resolution constituting Proposal 3 is as follows: RESOLWV, as declared advisable hy the Board of Directors, that the amendments to the Retiremvnt Plan for Employe~ al~d Fvrmer Employees of The American T~hacen Company and Designated Affiliated C~rporations described ia the proxy statement accompanying the notice of tlfi~ Annual Meeting he mid they hereby are approwd and adopted, to be effective a~ of January I, 1965. The vote in favor of Proposal 3 of holders of a majority in interest of the Preferred Stock and af a majority in interest of the Common Stock present at the mccth~ll and voting (each voting as a class) is ~teecssaxy for the adoption thereof. The Management recommends tl~at yo~ vote FOR Proposal 3. MISCELLANEOUS Prompdy a~ter the Annual Meeting ~ockbelders will be mailed a return postcard on which they will be able to indicate their de~ire to receine a copy o~ the summary af th~ meeting. The Company will provide transportation from New York to H~teMon Central High ll~hoo]~ a~d retard, by chartered buse~ at Company expense ]or stockholders of record wbe notify 1ohn W. tI~n~on, Sscrelary, TAe Amerie~ Tobacco Company, 150 Eas~ 42nd Street, New York, N. Y. 10027, in wrying not later th~ March 26, 1965 ttmt they desire suc~ transportation. The chartered buses will leave |rein PIat[orm 172 on the upper level of the Port Authority Bu~ TerminaI, gth Avenue and 41~ Street, New York, New York. between 9:30 A.M. and 10 A~. on April 7, I965 and will return to this ~erminal ~rom Hunlerdon Centred High School after the Jneetin~ Stockholders intending to driee to the meeting should also notif~ Mr. Haxdon in ~Titing at the abeve address so th~tt arx'angement~ ea~ be made to ~tccommo~te theist. Expense of Solicitation. The expense of the solicitation of proxies for this meeting, inc]ucLLng the cost of maillng, will be borne by the Company. In addition to mailing copies of this material to stockholders, the Company wiI~ request persons who ho]d ztock in their names or custody or in the names of nomlnee~ for otbers~ to forward c~pies of such material ~a those pexsons ~or wbem they hold stock of the Company and to request authority ~or the executinn of th~ proxies. To the ext~t n~e~ary in order to a~ure su~cinnt representation at the meetin~ o~eers and some regu~ox employees of the Company will request the return of proxie* by td~houe, telegram or in person. The amount of the ~e~et~beb~rnebytheC~m~anywillde~endu~nthev~ame~fsharesrePresentedbytbepr~x~esreceived rein tl in response to the Notice of Meeting. If proxies ar~ not received promptly, it may be necessary :~or the Company send telegraphic solicitation to those s~ekholder~ who have not re,ended. Stockholders who do not intend to be present at the meeting arc arged to ~nd in their proxies without dean.& Prompt response is be~p~u], ~md your cooperation will be appreeinted. February 9, 1965.

The American Tobacco Company 1964 Annual Report Contents On the Covet: Amerlcan's malor Ciga- rette bza~d, ale created toe £he valied ta~e5 o~ IQday~ di$ctirlin~li~ srnoke~ They are depicted here ~th tile Arncri use cJl ~oh~co long belr~re the ~covery ot {h~ rqew W~rld Hi6hlight~ ...................................... 2 }~resident~ Me55a~ .......... , ................... 3 ~evlcw ~]f lhe Yea1 .............................. 5 Financial Review ............................... 15 St=/temen Is o~ Income and Retai~led Earning~ ............................. 17 ~al~nce Sheets .................................. 18 SIater~n[s LJf 5oul~ ~]~d Application of £und~ .......................... 20 Ni)t~Js [o Financial Statem~rlt~ ..................... 20 Supplemenlary Fir~anc~ar [n~ormation ............... 21 Au(Jilo~s' Cer tificalo ............................ 21 ~n-Year Financ[ar R~view ........................ 22 Dir E-~lor f and O f]ricer~ ............................ 24

The American Tobacco Company A,~D SUBSIDIARI~8 High/ights Per Common Share Net income (based on 25,999,116 shares for 1964 and 26,099,116 shares (or 1963) ............. Dividends paid ................................... 1964 $2.69 1,60 Net sales ............................................ $1,203,428,958 Income, before taxes on income ....................... 148,659,190 Net inct)me ......................................... 73,195,438 Dividends paid (common and preferred) ................. 44,886,292 Portion of net income invested in assets used in the business and to provide for debenture slnkin~ fund requirements ............... 28,309,146 Current assets, December 31 .......................... 723,079,672 Current liabilities, December 31 ........................ 114,383,650 Net working capital, December 31 ...................... 608,696,022 Number of stockholders, December 31 : Common ....................................... 118,935 Preferred ........................................ 5,993 1963 $2.51 1.50 $1,192,3~8:771 146,083,217 68,762,980 42,297,375 26,465,605 734,310,646 128,809,606 605,501,040 112,161 6,476

To Our Shareho/der~ Robert B. Walker, Pte~,dent On behalf of the Board of Directors, [ am pleased to submit the "[964 Annual Report to the shareholders¸ I am grad~ed to repor~ to you ~bat for the year 1964, my first fult year as President, both dollar sale~ arid net income se~ new reco~d~ for The American Tobacco Company and its present/,/ consolidated subsidiaries. We have improved our cornpetltlve positiorl arid we hdv~ won a larger Share @t the domestic cigarette market. This, I believe, is due in part to the {a~.t [h~t we [3ave reor[~anlzed c~ur rrlar- ketirlg group to stimulate a keener marketin[~ orietltation i~1 all del~rtment~ and to achieve greater advertising and selling effidency We have broadened our cigarette ]ine and brought it up to date with a number ot limeiy product chan~es and irLnovations. Included are no {ewer than five ne,,~ ¢rg~aretteg ir~t rod uce~ in 1964: CARLTON, HALF AND t~ALF, a new MONTCLAIR, LUCKY STRIKE Filters, and Filter Tipped Luxury Len[~th PALL MALL¸ Each of these ernbodiecJ t~ew ~r~duct "'firsts" ~ The AmerJ c~n Tobacco Company the ffltF, r ti~, With air vent~ fu~ CARI'ION and MONTCLAIR; the fa- mous HALF AND HALF pipe tobacco offered in cigarette form; [he FlavorTip for LUCKY STRIKE Fil~rs; and the 100 millimeter I.uxu~ Length for PALL MALUs new entry ~n ~he premium- priced market. Last year [ was aisle to report t[l~t ~lter brands had Increased to 12% of our cigarette s~les as against 9.5% in ~962. In 1964 ou~ prod- u~t mix was improved still further, apprc~xl rnately 17% of our cigarelte sales being a~counted for by filter brands. T~ese percent age changes take on added significance when measured a,~ailist our dollar volume of Ciga- rette business alone, whlcll i~ more than $1,125,000,000 anguaIly, representing 9~% of our total sal~ At t~l~ saree ~i;~¢,~ ~e }J.~,e m~tair~ed o~r veery ~trong position in the nonf[It~r cigarette ~eld where our brands--PALL MALLr LUCKY STRIKE and HERBERT TAREY ION-~account for mt2t'e th~t~ b~l~ (2~ ~t~du~try ~a~ it~ thi~ c~eg~3r~, in this country. Our Manufacturing [~partme~l ~ont~nue~ to build with an eye to present ~nd Iuture effi- c/~nef es and ec~r]on~i~, Our ~l~w le~t ~ngcess ing plant on the J~mes River near Richmond re~ched operating e~iiciency I~ yea~ At ~he ~rne sit~ w~ b~ar~ coNstrIJction of a new I~b- oratory to [~ouse t~e ~¢,w Proc~ucts D~vision [t ~S expected to serve ~ two fold purpose: Io expedite the Company's diversdication aims,

and to provide consumers with further innova- tions in cigarette and other tobacco products. The new tacilily wig provide more than twice the working area of our gesearch Laboratory buildlng in Richmond. During the year we announced Ihe election of two outside D~reetors to the Board; the first outside Directors to join the Board in 34 years. This constitutes a significant step forward for us, and I believe that ~t wlJl add outside peF spective and increased objectivity to the delib* orations of your Board of Directors. Since early 1963 we have been studying dl- versiBcabon intensively and on several occa- sions [ have stated to you that we would not hesitate to pursue fruitful opportunities for sound diversification. On February 3, 1965, your Company and Consolidated Foods Cor~ potation announced that the two companies had been having talks about combining the two busJrlesses on a mutually advantageous basis. On that date the Boards of Directors of your Company and of Consolidated Foods ap proved a plan for such combination subiecl to the results of detailed examination of the af- fairs of the respective companies and to ap- proval by their stockholders. The substance of this p{an is outBned on page 7 of this report under "Diversification" Your Management beIieves tbis action [s a constructive step for- ward far The American Tobacco Company and its stockholders Consolidated Foods wc)uJd add to our strlgnB earning power a broad ]inn of fast growing and profitable brand name prnducts in the consumer food tielth By their letters and inquiries, our growing body of slockholder~ bare shown keen interest in the Company's progress on many fronts, and we are gratetul for this. We appreciate, also, the dedication and hard work oiour employees and the ~riendly cooperation ot our customers in the tobacco trade. Detailed accounts of our progress ]n the areas I Bare mentioned above appear in the pages that follow. I believe they wilt inthcate to you that OUr efforts to strengthen our Mall- agement, our c{Jmpe[iBve position, our gnan- cia[ position, and our tulure potenLiaJ have already met with considerable success. january 2% 1965, tvas the Seventy-Fifth Anni- versa~y of the founding of The American Tobacco Company¸ Since 1890 your Company has been a leader in the manufacture nf ciga roues and has a[so been a leadJn~ manufacturer Of smoking tobacco, cigars andr at one ~ime, of chewing tobacco. We mark this anniversary year, not by the slaging ~l celebrations or the issuance of statements, but by e×~rting maxi mum effort to mak~ our record ot progress a continuing One. Robert B. Walker preii(le~t February5,1965

Review of the Year Artfst's concept of the new produ¢I devefopmenl research tacflily, which is in eonstruat{or~ on Ihe Jaraes R{ver tlear Richmc~nd, Virginia. It ~ de~ fgned for ~he devel~pmer~i ot new tobacc.r~ pror/uc~ ~$ w~ll a5 ~lon to.coo product~ Io expedite Ihe Company's dtvetslfication airn~ Sales Dollar sales increased to $%203,428,958, a new record for The American Tobacco Company and ~ts presently consolidated subsidiaries. DO- rz~estic unit cigarette sales were virtually the same as in 1963. Cigarettes: PALL MALL nonfilter kln8 size cigarettes remain the Jargest-seJJing c~gar~t~rTM in the United Stales accordirlg to independent ~st[mates. Despite unfavorable markel ¢ondi- lions for c~garettes generaJly during 1964, part~culady in the fSrst quarler, and despite the foifox of tlew competltive brands, PALL MALL unit sales in 1964 were very close to the 1963 level TAREYTON which pioneered tbe LJse of charcoal in its filter tip in 1954, accelerated iLs r~t~. ot #~ct'e~e ill t~ face of FtEtmE'rou$ ¢o~,~- petlt~ve charcoal brand introductions. Based on independeht analyses, TAREYTON's rate of gain wa~ ~he greatest among all eslablished qigarette bran~Js I~eg~ Jar sr~, non hirer cig,lrettes as a class de- clined again in 1964, and unit sales of LUC~'Y STRIKE Cigarettes were lower in keeping with tills trend. Durin8 the [after half of q964 a new brand, LUCKY STRIKE Filters, met a favorable ceactio~ in tesl areas and ztationa/ int r0clucti0n nf LUCKY STRIKE Filters was begun in lanua~y of this year. Early results are most encouraglng National distribution for HALF AND HALF Filter Cigarettes was achieved in September of last year, following an enth(~siastio reception ~n te~t markets, This unique new product pii3e t~bacco in a filter cigarette--achieved an u nus ually high sales volume for a new brand, Independent surveys indicate that HALF AND H~[.ff's market performance was far and away th~ best of any rl~w cigarette brand intr~dueed in 1964. C~,RLTON Cigarettes, made especially for smokers who s~ek exceptional mildnes~ in a fi[ter cigarette, tirade a s~gnlf~¢ant con[ribution to corporate cigaretl~ sa[es. MONTCLAIR Menthol Cigarettes were changed in 1964 5o as 1o offer to menthol smokers a mi[dr~es~ comparable to lbat of CARLTON. MONTCLAIR also contributed sig nificant[y to the Company's cigarette volume in 1964¸ Another first For your Company ~s our new PALL MALL ~ltel ~pped LuxuryTM Leng~ C~a rette for ~he premlum priced market which was inlr(~duced in the New York Cily area ~11 November of last year, Tbis new cigarette, pack aged in gold, is 100 millimeters in iength. In vle~, of i~s fine ~eceg~t~on in lhe intvoductov/ market, distribution ot PAtL MALL Filter T~pped C~gareLtes is beinS widened¸

Export cigarette sales were lower in 1964 than in 1963 due mainly to reduced require- ments from military inslalJatiuns abroad Cigars: Unitsa]es of ROI-TAN Cigars increased substantially in 1964 and reached a new record high. ROI-TAN continues to be the nation's largest selhng ciga~ in [he 10¢ price class, the only brand to offer seven different shapes at this prlee ROI-TAN also offers Tips, Cigarillos and Trumps in the 5¢ field, and Golfers in the 4¢ field. During most of the year, demand for ROI-TAN small sizes exceeded our production cadacity~ ROI-TAN Premium Choice Cigars, dis- dncbvely boxed to sell in the i~vo for a quarter price class and ROI-TAN Little Cigars, the firsl cigarette size cigar to be marketed by a major cigar producer under one of its principal brand names, were introduced in 1964. In the higher price dassiflcations, LA CORONA, ANTONIO y CLEOPATRA, CABANAS and BOCK y CA continue as the largest-selllng line irt the fine cigar field. Com- bined unit sales of these brands again rose to a new record. Smoking Tobacco: gales of HALF AND HALF Smoking Tobacco, the Company's principal pipe tobacco brand, increased suhstanda[ly during 1964, the rate of increase being greater than Lhat for smoking [obaccos in genera[. This was the fourth successive year in which HALF AND HAI.F's volume has increased. A new packing for I {ALF AND HALF Smoking Tobacco, the polyelhylene Luxury Pouch, was intloduced in mid-1964 and met a fine reception among pipE, smokers; distribution of HALF AND HALF in this new packing is being widened as pro- duction permits HALF AND HALF is the first popu[ar-pbced pipe tobacco to offer this new and modem packing. The Company's principal cigarette, cigar and smoking tobacco brands are listed on page 14, While these brands are made to appeal to many different tastes and preferences, ag are charac- terized by the quality tohaccn and precision manufacture that are traditional with The American Tobacco Company. Ill your own in- terest as stockholders, and for greater smokfng enjoyment throughout the year, your Company urges you to buy these fine products, use them as gifts, and recommend them to your friends who smoke Leaf and Manufacture "Quality of product is essential to continuing success," your Company's guiding policy, be- glns with the purchase ot tobacco leaf. LEFT: Making rnachi~e catcher" monitorl the flow ol finished cigarettes a~ tfiey emerge from the rn~chine, T,5'00 or more perlecl tubes of smoking plea~[/re per r~hlute. BELOW: C~se~ ot PALL MALL C~galenes behl8 loaded i~to a #eight car beside lh~ Reidsville North Cazotina, tactory.

Production Of ~u~-cur~ ~obacco last year totaIed ],382 million pounds, slightly above 1963 production of ],371 mflllon pounds Aver- age market prices were 58.3 cents per pound, about fhe same as ir~ 1963. The U g Govern- ment support price was 57.2 cents per pound compared with 56.6 cents in 1963. Production of Burlpy lnbaceo as of Decem- ber was estimated to total some 631 million pounds as compared with 755 miihon pounds ~n 1963 Through December 22r when markets closed for the HolJdays~ the average price per pound was 6t0 cents compared with a 59.6 cents average for pro Christmas sales in 1963. The government supp()rl price was 58.9 cents per pound compared wilb 58 3 cents per pound in 1963. with an eye to futur~ corporate expanslon~ plans tot two new major facilities were an- nounced ~n fg'o4, First, a new products research facility, to cost between $5 and $6 mi]linn, is being built on a 200 ac re site on the James River near Rich- mond, Virginia The 130,000 square foot labo- ratory wig expedite the Company's dlversif]ca- tion aims and provide consumers with further innovations in cigarette and other tobacco products. Construction started November 23, with eomp[etlon and occupancy scheduled for the fall ot 1965. The new facili~ wH] be in addS- Dan to, and wig not neplace, the Company's major research center in Richmond. Second. a new mulfimillion dollar cigar mare ufacturing plant will be built adiacent to WiJkes-Bar;e, Penns)dvanJa. Const~uctlon i~ scheduled to begin this spring and completion is expected Jn February 1966. When fu]ly opera- tional, the new plant will produce weekly, ROI-TAN~ to meet irlcreasing demand, In 1964 the Company made substantial Drog ~ess in the automation ot its manufacturing facilides Modi~calions were made on e×is~ing machinery to ~ncrease their operalional speed and new, more sophisticated quality control devices ~,ere added, In the Cigar Division, manufacturing effiden- ties were improved and a program is now unde~vay designed to achieve substantial sav- ings in cigar manufacturing costs in 1965. Diversification On February 3, 1965, the Company issued the followirlg statement: "Robert 8 Walker, P resident of The A meri can Tobacco Company, and Nathan Cure ruing% Chairman of the Board of Consoli- dated Foods Corporation, announced thai the companies had been having talks for the purpose ot arriving at terms upon which the two businesses would be com- bined on a mutually advantageous 5asis. "They also announced that the Board of Directors of each com#any had today approved a plan, subject to the results of detailed examination of the affair5 of the respective companies and to approval by their stockholders American would offer to buy up to 25% of Con~lidated's out- standlng Common shares for cash at g53 a share, the approximate equivalent value in shares of American as detailed below Each romamlng sba~e of Consohdated Common stock would be acquired by Amedcan in exchange for ,925 of a share of American Common which at last night's The Hanm~r Division leaf processing pl~#t comhlenced opet#~ions durin~ £t~e Das~ year on ~e same 2gO.acre ~ract of/and where the Company's new product development

close on the New York Stock Exchange IS the equivalent of about $33 a share, plus 1/.~ of a share of new 47§% Preferred stock of American, convertible into American Common at $45 a share, and redeemable after 5 years at 104 wiLh declining prices to 100 in the 10th year. "The plan a~so contemplates that each share of the outstanding 6% Preferred stock of Amedcan would be exchanged for $150 principal amount of a new sub- ordinated debenture. "It is anticipated that Robed B. Walker, President of American, would continue as President and Chief Executive Officer, and that Nathan Cummings, Chairman of Con- solidated, would become Chairman of the ExecuPve Committee." Stockholders will be kept informed of further developments. Smoking and Health During 1964, anti-cigarette activdy was intensi- fied. Some of this activity took on a prohibi- tionist and evangelical character, as distinct from scientific inquiry. Scientific publications disclose many cogent reasons for doubting the valJdlty of the anti- cigarette theory: 1 Despdeyearsofeffortnoonehasinduced tung canoe/ in experimental animals through the use of lobacco or tobacco smoke, although this disease has been ;nduced experimentally through the use of other substances. 2. Despite decades of physical and chemical analysis, no substance or substances haw" been tound in cigarette smoke which can account for Ihe ailmenls sometimes as- cribed to tobacco use, 3. Humau ailments which have been statis- tically associated with cigarette u~e have also been statistically associated w~th ur- ban residence, divorce, sleeping habits, socio-economic level, national orig~n and certain psychological characteristics, Whether smoking habits may reflect in dividuals who are more susceptible to human ailments rather than being a cause ~at such ailments cannot be determined from statistical surveys. 4. A number of popuIaPons distinguished by high rates of cigarette consumption show relatively low mortality rates One such population is the cigarelte [acLory em- ployees of The American Tobacco Corn pany, whose rate of cigarette consump- tion is approximately double the U. S. average and whose mortality rates from all causes, from cancer, from lung cancer and from heart disease have been con s~stently lower than the U, S, average for a period of more than 14 years. The ori8i- hal study of our employees' mortality rates was made by scientists of the U. S. Public HeaJth Service at their requeSl, and the methodology established by them has been followed in ennfi rmatory studies, 5, The vast majori~ of cigarette smokers do not get lung cancer. However~ nonsmok- ers do contract th~s ailment 6. The causes oi lung cancer and of other diseases linked by some with tobacco use, are not known. For many years your Company has supporled objective scientific research intended, in the public interest, to shed 1~8ht on [he subject uf smoking and health. Since 1954 The Council forTobacco Research U.S A (formerJyTobacco Industry Research Committee) has approprlated more than $7,500,000 for independent research at more than 1 O0 medical and scientific institu tions throughout the United States. You~ Com- pany is a major cont/ibutor to C.T.R, ]n 1963 your Company and five other cigarette manu facturers predged $10,000,000 to the American Medical Association for further independent research in this field, Wffhin the Company, our Research Laboratory is continuing its scientific analysis of tobacco and tobacco smoke, begun in 1921, and the results of this and other basic research activity are pubJished in accepted sci- entific journals. Durin8 the 470 years in which Western man has used tobacco and prized it for the pleasure and relaxation it affords, violent anti-tobacco attacks have been made periodicagy and have subsided as the advance of scientific knowledge has disclosed their invalidity. Constant testing in t~ur teseatlch Jaboratories at Richtoot~d, Virginia, ~[lec~s ers~ha~i5 oct n~w p~duc/deve~oprnen~

Current advertisemenls of the Corn~al~y's principal ¢Jg~te({e bran~s are befng brot~fl~t lo ~he at~entfon ot millions ot A~er;cans daffy through new~paper~ and ma~azine~. Personnel In 1964 significant chanoes took place in the Compally's Board of Directors. Tbe Cotrlpany's (irst outside Director Jn 34 years, George H, Woodardt was f.lccled to the Board, Beture year~s end, a second outside DirectorI Alvin R Jennings, was elected and the Compa~ty's Gen oral Counsel, Cyril F, Helsko, was also ~amed a ~irector and a Vice President, The Board was expanded to ]8 members; since 196], the Corn pany has had a 17 mar Board. Tile three new D~re~to[s brln~ to the Con]- party's Board broad experience i~ hnancJa[ con [rol, m&nagef~lent COn$Llit~tion and corporate law. 1~4r. Woodard, President of Well[n~ and Woodard, Inc, has had more than 35 year~ e×- per~ence ]n management consulting, corporate stall functions alrd development e~neering~ Mr JenIlings, formerly Executive Partner of tile ~Ecou ntirlg firm oF Lyb~aad, Ross 8ros & Mont- gonlery, is an accredited CPA ill 13 states and a recipient of the Medal for Distinguished Servi~e Irom tlqe American Institute ot Certified Public Accountants, Mr ~4etsko, ~)rOV]OLls]y a partner in the NewYozk law firm of Chadbourne, Parke, Whiteside & Wolff, has worked on America.n's regal a~aJrs tor the past 24 years and durln~ the past five years has been the Company's Chief CounseJ Mr Hetsko resigned his partnership in the Cbadbou~ne firm on November 5, 1964, {o become the Company's CeneraJ Counsel. Retirees from tile [}r)ar d durin8 the year were D~. Hiram R. Hanmer, tormer Wee Pros[dent, Department o( f~esearch al]d Development, wbo had been a scientist with the Company far 43 years, and George A. wilkinson, Direc- tor, Tax Deparlment, %~ho had served the Com- pany for more tban 28 yea~s. Your Management acknowledges the many contributions made by Messrs. Hanmer and Wilkinson to the prooress of the Company, and ~ishes them happiness in retirement. Marketing During 1964 the Company's Marketing Depart- ment was strengthened and reorganized. A[I ma[ketin6 tunctions ate now directed by a Vice President [n eharge o f mar ketin~. These include sales, advertising, markct research, and new product development. Largely as a result of this reorganization, we were able to take positive and aggressive action ~n broadening our prod- uct fine wilh Ihe introduction of five new c~ga rette brands, and after significant packaging and plOduct innovations on e×istin8 brands. Within the markeb~8 group die establish ment of a separate media department to con tra[ize the purchase of network television lime and national magazine space bas effected im portan[ economies ~n our advertisin~ proorarn. 9