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Including Amoti~an Cigarelle and Cigar Co~apany and all wholIy owned do~aaesti¢ subsidiaries ¢+x,~epl ~J'h+" Alll~ri,~ll Tobacco Co/flparly of the O~ielal, ~nt. As of December 31 ASSETS 1951 Demand deposits in banks and cash on hand ........................... $ 26,409,726 $ 3],992,252 Accounts receivable, customers ......................................... 44,509,503 40,571,157 Leaf tobacco, manufactured stock, operating supplies, etc., at average cost .................... 640,753,11rl 594,543,551 Miscellaneous accounts receivable ......................... 981,557 1,126,911 Total current assets ................. ., ..................... 712,653,906 668,233,871 Investments in securities of unconsolidated subsidiaric.., at amounts not in excess of cost (includes $3,400,000 in "Mmlly owned British subsidiary) (Note 3) ...... 16,500,133 Advances to unconsolidated subsidiaries .................................. 2,046,000 11,704,285 4,400,000 Insurance deposits and miscellaneous investments 2,375,356 2,320,269 Real estate, machinery, fixtures, etc., at cost. less allowance f~r depreciation, 1952, $32,856,525; 1931, $30,732,657 44,479,53g 44,247,672 Prepaid expenses and deferred charges ............................. 4,299,415~ 3,573,877 Brands, trade-marks, patents, good will, ete ................. ] $783,154,349 $734,479,975 I0

LIABILITIES ]95~ Notes payable to banks ...................................... $ 92,000,000 Accrued taxes ........................................................ Accounts payable and accrued expenses ..................... Dividend on preferred stock for quarter ended December 31 Debentures to be redeemed through sinking fund operations (Note 4) .............................................................. 195_~l $1.t0,000,000 48,032,415 50,797,675 9,626,874 11,133,759 790,496 790,496 10,950,000 9,456,000 Total current liabilities ............................. 161,399,785 212,177,930 Debentures (Note 4) .......................... ,, .................. 243,570,000 205,430,000 404,969,785 417,607,930 Minority interest in American Cigarette and Cigar Company .... 1,110,609 1,046,290 CAPITAL Capital stock (Note 5): Preferred, six per cent cumulative, par value $100 per share 52,699,700 52,699,700 Common, par value $25 per share ......................... 161,352,750 136,803,4.50 Excess of net proceeds from sale of common stock over par -9 value (Note 6) .................................. 43,'294,441 20,5 5.~ 1 257,346,891 210,078,741 Retained earnings (Note 2) .......................... 119,727,064 __112'754'074 377.073,955 322,832,815 Less, Treasury stock, at cost (93,713 shares of common stuck sold in 1952) .................................................... 7,007,060 Total 377,073,955 315.025,755 $783,154,349 $734,479,975 I1

l. fncDtdes federal excess profits taxes of $2,065,000 for 1952 and $5,050,000 for 195L Tbe 1952 amount represents a provision of $3,285,000 by a subsldia:ty, less a reduction of $1,220,000 under the carry-back provisions of Ihe Internal Revenue Code due to an unused excess profits tax credit of the Company. 2. Ur~der the provislo~ls of the indenture relatitlg to the Twenty Year 3N Debelltures, due January 1, 3.968, cash dividends declared on eoramon stock and payments made in pur- chasing shares of any class of the Company's stock subsequent to December 3i, 1947, may not exceed the aggregate of $~5,000,000 and consc,lidated net income ealned subsequent to December 31~ 1947, less dividends paid on preferred stock. At December 31, /952, approximately $89,000,000 of retained earathgs wa~ free of this restriction. 3. The net tangible assets applicable to the investmtmts in unconsolidated subgidiaries at December 31, 1.952, amounted t¢ $21,609,877, it,eluding $8,976,221 net assets of tbe British subsidiary translated into d~fllars at appro1~fiate rates of exchange. Dividends and interest of $1.,1.58,071 were received from these investments in 1952; the equity in earnings applicable to such investments amounted to $1,753~689. 4. Debentures outstanding at December 31.,'~952, corr@rise: Pr]nclpa[ Amotm~ Twe~ty yea~ 3%, due April 15, 1962 ............... $ 3.456,000 Twenty year 3%, due January l, 1968 ............. 3,000,000 Twen~.five year 3%, due October 15, 1969 .......... 3,104,000 Twenty-fi~e year 31/x%, due February 1, 1977 ........ 1,390,010 $10,950,0~0 Redeemable Redeemable Within After On~ year~ Dee. 31.1953 $ 62,666,0(10 60:000,000 72~294,000 4~,610,1(10 $243~570,0fl0 * Estimated principal amounts to he redeemed through sinking fund c,peratinns at prices as provided by the indentures. 5. Capital stock at December 31, 1952, comprises: S[l~lres "Authorized Issued Preferred ................................. 540,196 526,997 Common ..................... ~0,(]O0=t)(}O fir454.1~0 6. Tile incrca*e in Excess of net proceeds flora sale of common stock over par value resulted from the sale of ],075,685 shares of common stuck, whlcb included 93,713 shares of treasury stock. 12

The Board of Directors and Stockholders o[ THE AME~ICAN TOBACCO COMPANY. We have examined the consolidated balance sheet o~ TIIE AMERICAN TOBACCO COMPANY as o~ December 31, 1952, and the relamd consolidated statement of income and retained earnings for the year then ended. Tim financiaI statements of American Cigarette and Cigar Company, a consolidated subsidiary, were examined by other independent certified pub]ic accountants. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests o~ the accounting records of the companies (except American Cigarette and Cigar Com- pany) and such other auditing prccodu~s as we considered necessary in the cir- cumstances. We nlade a similar examination for the year 1951. In our opinion, based upon oar examinations and upon the reports of other independent cerii~ed public accomltants, the accompanying balance sheets and related statements of income and retained earnings present fnirly the consolidated position of The American Tobaccn Company and the subsidiaries included therein as of Decem- ber gl, 1952 and 1951, and the consolidated results of their operations for the years then ended, in eon~o~nity wll]l generally accepted accounting principles applied on a consistent basis. LyBRAND, l{OSS BROS. & I~[ONTGOMERY New York, February 2, 1953. 13 L

For years muted December 31 {Jn Thaosand,) ,9s__j= tgs, ,gso 1,42 ,9_._~ NET SALES ......... $I,065,738 $042,552 $871,621 $858,996 $873,467 Cost of sales ........................ 978,021 853,439 785,026 775,712 794,248: OPERATING PROFIT ..... 87,717 89,113 86,595 8.3,284 79,219 Other income -- Net ..... 534 243 1,095' 490 283 88,251 139,356 85,500 83,774 79,502 Interest and related charges 9,899 8,958 8,736 8,952 8,568 lacome before taxes cr~ itteome 78,352 80,398 76,764 74,g22 70,934 Taxes on income .............. 44,283 417,288 35,031 29,147 27,022 NET INCOME ............. 34,069 £;3,110 41,733 45,675 43,912 DIVIDENDS PAID: Preferred .......... Coiili11oll ............ 3,162 3,162 3,162 3,162 3,162 23,934 21.514 21,514. 21,514 20,169 27,096 24,676 24,676 24,676 2.3,331 P~)r~ion of net itm~me irtve~ted in assets used ill the business and to provide for debenture sinking fund requirements ......... $ 6,973 $ 8,434 $ 17,057 $ 20,999 $ 20,581 # Deduction 14 l"

As of December 31 ASSETS l*s~ lts~ Cash ................................... $ 26.410 Accounls receivable, customers ..... 44.809 Inventories ...... 640,753 Miscellaneous accounts receivabie 982 Total current assets ...... ~12,054 Investments in unconsolidated sub- sidiarles ................. Other receivables and investments Plant and equipment- net Prepaid expenses, ere ......... Brands. Lrade-marks, etc ................. Total assets ......... $783.154 (im lhouland$} 19s..~o 194~ lv4s $ 31.992 $ 22.157 $ 17.949 $ 16,176 40,571 36.783 33,128 36.020 594.544 532,679 531,558 514,958 1,127 1.407 1,127 729 668.234 593.026 583,762 567.883 16,500 11,704 12,848 ]4.080 14.446 5.221 6.720 4,801 5.813 4,873 44.480 44.248 43,747 43,507 41.859 4,299 3,574 2.983 3.345 3.515 ., -- -- 54,099 54.099 $734.480 $657.405 $704,606 $686,675 LIABILITIES AND CAPITAL Notes payable ..................... $ 92,000 Accrued taxes .............. 48.032 Accounts payable and accrued ex- penses .................... 9.627 Preferred stock dividend ......... 790 Funded debt due within one year 10.950 Total current liabilities ..... 161.399 Funded debt ..... 243.570 Minority interest .......... 1.111 Capital ........... 257.347 Retained earnings .............. 1t9.727 Treasury siock (deduction) -- Total liaIDilities and capital $783,154 $140,000 $ 73,000 $ 80,000 $ 72,000 50.798 39.942 34.906 34.949 11,134 8.919 7.542 9.487 790 790 790 790 9.456 10.722 9,694 9,211 212.178 133.373 ]32,932 126.387 205,430 215.653 226,375 236~69 1.046 987 865 784 210.079 210,079 210.079 210~79 112.754 104.320 ]41.362 120,363 (7.007) (7.007) (7,007) (7,007) $734,480 $657805 $704,606 $686.675 Ill m

INCORPORATE:E) DIRECTORS 0RpBEU~ D. BAXALy$ ALFNED F. BOWD~N RICHARD J. BOYLAN DOUGLAS W. BRASH~AR T~O~AS P. C0~NORS JAMES R. Coo~ JOHN A, C~OWE JOH~ S. DOWD PRESTON L. FOWLV~R PAN, M. HXaN HIRAM R. ~ANVIER XDMUD[D A. HARVEY HARRY L, HILYARD JOHN R. HUTClllNGS, JR, A. LERoY J~J~sos WILLIAM ~, OGSBUI~¥ J~B F. ~TRICKL%ND OFFICERS PAUL M. HAhN ............. Pr~dem RICI~RD J. BOYLAN ......... Vice Pre~ideng J~.MES R. CooJ: .......... Vice Pr~slden; JOHN A, CROWE .......... Vice Pr~*ident PRESTOI~ L. ]7OWLL~ ........ Vice Pre~iden~ ~MIT~D A. HAItV~X ......... V~C* Pr¢~de~ HA~R'Z L. I~n.'A~D ........... Treasurer A. LxRo~ JA~SO~ ........... AMitor ALFBED F. BOWDEN * . , . . . As~st,~r~t m the Pres~ds,iI JO~N ~. ]~hNLON ........... Secretory J. WE~LR'f D.~LE ......... st~ds~aa~ Av~i~¢ ]~D~/ARD D. ~LAI{ERTY ....... ~g-~lgt~ ~tt~or FKEDERICK ~, K~NNy ....... ~lssixtctit Se~ret~ry JOSEpI~ }{. WATEKDIOI[SE- , ..... Assistant Tteasgrer Executive Office: Corporate Office: Transfer Agent: Registrar: IIi FIFT~ AVENUE, NEW YO~X 3, N. Y, I[7 M~.IN STR~T, FI.EMINCT()~, N. J. GU~ANT~ ~[I~UST COMPANY (12 N£W YOR~, ~EW YORK 15~ iN, Y. C~Y B~< FAa~Ea~ ~UST (:O.~pm~, NEW yORZ~ 15, N. Y. h

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NOTICE OF MEETING Flemington, N. J., March 2, 1953 NOTICE IS HEREBY GIVEN that k~le Anuual Mcoting of the Preferred and Commort Stockholders of TIIE A~aI~II~CAN TOBACCO CoMI~m~r w~]l be hehl at No. 34 Court Street, Flemington, New Jersey, at one-t~rty o'clock in the a~ternoon (Eastern Standard ~me) on Wednesday, April 1, 1953, for the ~ollowing purposes: (1) to elect Directors; (2) to con~der and vote upon a proposal (designated Proposal A and set ~orth in the following proxy state- J merit) made by three stockholders; and (3) to transact such other business as may properly come before the meeting. The Preferred and Common Stock txansfer bo~s will not be closed, but holder~ of Preferred Stock and Common Stock to he cntifled to vote must be holde~ of record at the close o~ business on March 2, 1953. JO~N ~. tigLON, Secretary

PROXY STATEMENT The enclosed proxy is solicited by and on behalf <ff the Management and is revocable in writin$. Proxies in the form enclosed, property executed by stockholders and duly rerurland to the Management and not revoked, will be voted and, if a choice be specified with respect to matters to be acted uport, will 2~e vo~ed in accordance ~'ith such speclficattons. The outstanding number of each class of voting securities of the Company is: Preferred 526,997 shar~s; Commotl 6,454,110 shares. The Preferred Stork is entitled to four votes per share. The Common Stock is entitled to one vote per share. Year First Eleet~l Directol Common ]?referred L940 1,061 62 Alfred 17. Bowden Assistant to the President, The Amedca~ 1951 150 Tobacco ~ompany *Richard J. Boylan Vlce-Presldent, The Amerlca~Tahaeco ~929 2.135 B15 Cmnpany Douglas W. Brashear Vice-President, Amcrieau Suppliers, 1948 220 Iacorporated Thomas P, Cormora Director of Tra~e, Tile American 1946 174 Tnbacco Compaay James K. Coert Vie¢-Presldent, The American TobacQo 1936 783 50 Company John A. CrowQ Vlee-Preslde~t. ']The American Tobacco 1931 720 105 Company John $. Dotal E*ecative VicePreslde~t, American 1946 400 Suppliers, Incorporated Prestc*n L, Fowler Vice-Presidc~t, The Ameriea~ Tobacco 1941 720 100 Company Paut M. Hahn President, The Amerieaa Tobacco 1931 2,504 Company Hiram R. Hanmer Director of Research~ The American 193~ 144 Tobacco Company Edmund A. Harvey Vice.Pre~ideat, The American Tobacco 1932 800 40 Company Harry L Hilyard Treasurer, 39m American Tobacco 1944 350 Company Jahn B. Hutehlngs, Jr. Vice President, American Suppliers, 1951 200 lacorporated A. LeRoy fanson Auditor, The American Tobacco 1948 518 Company Y4Fdiiam II. Ogsbury Assistant Chief of Manulacture, The 1930 150 50 American Tobacco Company Jame~ F. Stricldand President, American Suppliers. 1946 420 Incorporated ELECTION OF DIRECTORS The Board of Directors consists of seventeen members who are elected to ]told office until the next AnnttaI Meeting or until their successors are duly elected and qualified. It is the inteution of the Proxy Committee to vote at this Aunua~ Meeting for the nominees named below. These nominees constitute the present Board and have served as director~ of the Company for the periods commeucahg with the da~s set alter their respect~e names. The Company is informed that these nominees were directly or indirectly the beneficial owners of outstanding securities of the Company at the close of business on February 2, 1953~ as set forth after their respective names. Nara~ P?[neipal Oc~u]Jatiou Or oh~s D. BaxaIya ~ce-Prcsid~nt, The American Tobacco Company of the Orient, Inc,