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ANNUAL REPORT THE AMERICAN TOBACCO COMPANY FOB. THE YEAR ENDED DECEMBER 31, 1946 T WITH CONSOLIDATED BALANCE $~F, ETS AND CONSOLIDATED ............ ~ ............. STATEMXNTS OF INCOME AND $URJ?LU$ Exee=tlve OHce 111 FIFTH AVENUE, NEW YORK 3, N. Y.

ORI*HEtd$ D. BAXALY$ RXCH~D 3. BOyI~N T~O~tA$ P. Co.Nora+ Jt,+MES R, COO~ JOHN A. C~OWE Jom~ S. Do~ DIRFCTOg.S F~s'ro~ L, FowLm~ HfR^~.f R. HANME~, ~D~U~n A. H~x~vev GEO~,CE W. HILL. ~'t~. HA~,~" L. HILyA~ JAMES E. LrFsco~t~, JR. WILLIAM H. OOSnL~T F~O B. RE*dT~ J~x~ F. SX~ICKL~I~ OFFICP~R~ VIN~NT RIGGIO .............................................................................. Presldca¢ RICHARD J. BoXlmu ............................................................................. ¥1ee Pre~den~ J^~a~s R, Coo~ .................................................................................. Vice President pRESTON L, FOWLEX ......................................... Vice Presldcnt pAUL ~f. HA:IN ............................................................... Vice Pr*sldent G~o~GX ~r Hna,~ JR ............................................... Vice Pr*sidcnt EDM~D A. HARVEY ...................................................... Treasurer tff~P, xy L. tfflLy~,D ......................................................... A~slst~ac Treasurer F~ ~. R~vr~ ................................ Auditor; Assistanz Treasurer EDWARD ~). FLAHERTY ..................................... A~is~an~ Auditor ~. LERoy J~.~rsou ............................................. Asslscant ~udir.or FR~DEalCK ~. KENN¥ ................................................ As$~l~nt Secrct~ry EXECUTIVE OFFICE Ill Fi~tt~x Avenue, ~New York 3, N. Y. CORPORATE OFFICE I17 M~in Street. Elemlngton, N. J. TRA~NSFER AGENT Guaranty Tnas~ Company o/" New Yor~ New York 1L N. Y. REGISTRAR City Bank Farmers Tru~c Company New York 15, N. Y.

To the Stocktaolders o[ THE A/~a'~dcA~ TOBACCO COMPA~Vy: The Treasurer respectfully submir~ the consolidated statement o~ income and surplus for the year 1946, the consollda=¢d bahnce ~heer of your Company as of December 3I, 1946, and the report of Lybrand, Koss Bros. & Niontgomery, .......... E: A. Hagv~,, Tre~r~-e~ ...................... FI-emlngton, N. J., March I, 1947

THE AMERICAN TOBACCO COMPANY NOTIC~E OF MEETING Flemln~ou, N. J. March 1, 1947 Notice is hereby given that the Kunual Me~ting of the Preferred and Commo~ Stockholders of The Ameridau Tobacco Company will he held at No. 43 Park Avenue, Flemingion, N. J., at two o'clock in the afternoon, Eastern Standard Time, on W~lne~day, April 2, 1947, for tee following purpomm: (i) to elect directors; (2) to vote upon a proposal (de~ted Proposal A) that, on any o~ering of presently authorized shares of Common Stock B for subserlptinn to holders of Common Stock and Common Stock B, the Board of Directors of tee Company he autholized, to time extent not precluded by statute, in their discretion to determine, within ten days prior to the making of sush offering, the price at which such shares shall be offered to stockholder& provided that the price so determined shaU be ~ot less than 10~'o nor more than 30~ below the market price of then outstanding share~ of Common Stock B on the date of such determination; (g) in tim ewmt that, prior to the final adjourmaent of the mc~th,g, the Board of Directors shall have determined a ~riee at which shares of Common Stock B shall be off.red for subscrip- tion to hoIdem of Common Stock and Comttmon Stock ll~ then to vote upun a proposal (desig- nated Prope~al B) that the price a~ so determined be ratified and approved, without derogation of the authority conferred upon the Board of Directors (J| such authority shall have been con. letted in accordance with the proposal refea'red to in the preceding item) to determine such price; ~d (4) to b'mms~ct such other hualn~ ~ may properly come fiefoze the meeting. The Preferred and Common Stook transfer books will not dose, but hddem thereof tn be en- tltied to vote must he holders of record at the close of buslnesB on Marsh 3, 1947. JO~N W. H&~LON, Secr~ary PROXY STATEMENT The emdosed Proxy is solicited by and on behalf of the Management and is revocable. The outstanding number of eack das~ of voting securities of the Compmly is: Preferred 526,997 shares; Common 1,515,983 shares. The Prefix-red Stock is e~atllhd to four votes p~r shere. The Common Stack is entitled to one vote per share. ELECTION OF DIRECTORS The Board of Directors eonsisl~ of seventeen members who are elected to hold ofl~ee tmtil the ~ next Annual Meeting or until their suceessors are duly elected and qualified. It is the intention of • the Proxy Commlttee to vote at this Annual Meeting for the following nominee~, who together consti- "- . tat* the present Board, and who have served as dlrectozs of the Company ~iuce the yeax~ ~tated after their r~peetivo names:

2TM Nmmo Orpheus D. Bazaly* Richard J. Bay]~ T]~omas P. Comlors James R. Coon John A. Crowe John S. Dowd Preston L. Fowler Paul M. Hahn Hiram R. Hanmer Edmond A. Harvey George W. Hill. Jr. Harry L. Hilyard James E. Lipscomb, Jr. William H. Ogshnry Fred B. Renter Vincent Riggio James F. Stricldand year Fi~t Priacipal OV:ul~tioa Elected Di~ct~r Vice Preaidenb The American Tobacco Company 1940 of the Orient, Inc. Vice Pres~de~nh The American Tobacco Company 1929 Director of Tra~, The American Tobacco Company 1946 Vice President. T~ American Tobacco Company 1936 A~istant Chief of anufactuxe, The American Tobacco Comply I931 Vice Presid~at, American Suppllers, Incorporated 1946 VICe President, The ~a~risan Tobacco Company l~l Vice President, The American Tobacco Company1931 Director of Research, The American Tobacco Company 1938 Treasurer, The American Tobacco Company 1932 Vice President, The American Tobacco Company 1936 Assistant Tre.~sarer, The American Tobacco Company 1914 president, Am~xican Suppliers, Incorporatad1918 A~sistant Chief of Manufacture, The American Tobacco 1930 Company Auditor, The American Tchaczo Company 1931 President, The American Tobacco Company 1927 Vice President, American Suppliers, Ia¢orporatad t946 Three of the nominees n~Lmed above. Thomas P. Connors, John S. Dowd aad James F. Striek- laud, wer¢ elected dlre~tors during the year 1946 by the Board of Directors to fili the vacsncic* that occurred through the death of C. Huntley Gihson, Patrick H. Gorman and George W. Hill. Thomas P. Connors has been head of the Tra~ Department of the Company since February 10, 19~,4 and for a numb~ of years prior thereto was Assistant Director of that Department- John S. Dowd and Jamc~Y. St~icAlaad~far approximately the last fafte~a years have heett Vice Presidents of American $applicaz, Incorporated, a subsidiary of the Company, their activities in that capacity having relatad priaripany to the put,hose of leaf tobacco. Of the outstanding securities of the Company at the close of business on February 15, 1947, the Company is informed that these nominees were direeRy or indise~tly the benefidal owners of ~curlti~ as follows: Name Common O~eus D. Baxal~ 540 Richard J. Boylau 151 ~ Thomas P. Cotmors 100 James R. Coon 460 John A. Crawe John 5. Dowd 200 Prestou L. Fowler 300 Panl M. Hahn 1405 Hiram I~ Hanmer I00 Edmund A. Harvey George ~ Hill J~ 4 Harry L. Hilyard I00 Jar~m E. Lipseomb, Jr. 1200 Wi~am H. Ogsbur~ Fred B. Reute~ 21 Vincent Rig~o 3745 James F. Strickhnd Infomdiiot regarding the remuneration ~LRt~t tt!attratlon~*, Common B Pr~ fer~t 130 32 20 50 187 5 140 40 1700 203 300 I00 100 30 160 4O 220 of ~rectors is hereic~ter set forth under the cspfi~

PROPOSED ISSUANCE AND SAI~ OF COMMON STOCK B The ~on?ulldat~d net sales of $764~167,590 reported by the Company for tl~ year 1946 were the hrge~ in its hi.coy, ex~ee~ng by {206,610j085 the related figures of $557,557,505 for 1945, and contrasting with consolidated net sales of $363,558,664 for 1941. While tho larger part of the $206,fi10,085 increase repo~ted for 19~di over 1945 is due to greater unit volume of salos and Jome- ~ what higher average prices, approximately 28% ~of 1110 increase is due to the change of n portion of total sal~ from a tax-free hasls ~mesUy sells t~ the Armed Sea'~isez/ to dome~ti~ zalc* e~r~ylng she Internal Revenue tax. At December 31. 1946 the consolidated invenlories, of which l~af tchaoeo is the chief Item, amounted to ~A)7,013,548 and funded debt and bank loans aggregated $d68,074,250; this eompar~ with consolidated inventories of $202,222,316 and funded debt and bank loans of $10S.667,900 at December $1, 19~1, and represents an inexea.sn during the interval of $g04,791,232 in inventorie~ and of $16z~,40~,350 in funded debt and bank kings. In 1942 the Company issued ~ud sold $100.000,000 of im deben~res due in 1962, and in 1946 issued and ~old a ha~aex $100.000,030 o~ its dehantares due in 1969. Aher each isaac all then out. standing hank loans were r~ti~d. These issues are subject to cumulative sinking fund~ which reduced the aggregate amomat of both issues outstanding to ~182,243,000 at December 31. 1946. $inen the second deheiature isslz~ addltioua[ t~nds have 'even required in the bnshae~s, and at December S1, 1946 the Company had uu~slandlng blmk laanm aggregating $85.000,000. The amonnt of its hank loans increased to $13g,000.000 at February 15, I947 and some farther in0rease is ex- pected prior to the sez~onal decline in working capital req~firements wl~eb normally occurs during the spring of each year. The need for the funds represented by the b~k borrowings aris~ prinel- paIly through the higher average price of leaf tchacvo and the larger smotmt v~ tohaeeo inventory, both hi cost and quantity, carried by the Coznpany and its subsidiaries, the larger tobacco inven. tory bclng caJ/ed /or by increased s~des. There has also been an increase in the invanto~y ol manu- factured atoeki Additions are being made to plant and equipment, expenditures, for that purpose~ ehie~y for maellm~y~ for the year 1946 hav~g exceeded by ~,200,000 the depreniati09 agowdae~ ~or the y~ u~d ~a~r exptttclliur~m are evntemplate~L Having in mind the greater volume of ~he Company's business, the hierea~ in working capital requlremevls including the larger inventorie~ required for the proper handling of the busLuess, and the consequent need of additional permaneng eapgal~ the Board of Directors ¢o.slders it dealtahle that further equity eapltal be obtained. After consldexatich o[ the subject, sho vaneluaion ha~ bee. reached, subject to m~hat eondliioas, that additional shares of Common Stock B should be issued and sold, and (together with ebare~ of Common Stock B referred to below that have bee~a reaequired and are held in ths Ize~ary) should be offered tor subserlptio, pro rata to the holders of the Chin. mug Stock and Common Stock B. The capital stock (authorized} of the Company presently eonslsts of 540,106 shar~ of the par v~e of $100 ~ash of Prd~rted 5t~eb. t>f ",shleh 526,997 shart~ are ~s~aed mad outstandm_g in the hands of the ptthlio; 2.000,0~0 share~ of the par value of $2~ each of Common Stock, of which 1,609,696 shares have boca issuod, including 93.713 shares reaeqalred and held in the treasury, leavinS 1.515~9gS shares outstanding in the hands of the pu~blie; mad 6.000.000 shares of the par value of $25 eash of Common Slosh B, of whlsh 3,134,217 shares have been ismed, including 168,180 shares r~aequired and held in the treasury, leavlag 2.966,0~7 share| outstanding in the hands of the public. A d~crlption of provilions applicable to the Comanon Sto~k B and to the other classes o~ stock o~ the Company, u stated in the Charter (being the Agee~meat of Merger a~d Con- ~olidation as amended) of the Company, is ~et forth below. PgEFERRgD STO(~ Dividend Right. The holdexs of the Preferred Stock ar0 entitled to receive out of the surplus -~ or out of the net proliL% as and when dscinred by the Beard of Directors, a etu~alative dividend at ~ the rate o~ but never exceeding, six per centum per annum, payable yearly, hal~ yearly or quarterly. b0for~ any dividend shall be set apar~ or paid on the C~m0~ Stc~li or Common Stock D. Vo~.~g R~ts. The holders of the Prefer£ed Stock are e~tifled to four votes for each sham o£ such stock hdd bY them.

L/qzd.dat/on R/g/g*. In case of liquidation, or dissulutlan, or dislribution of assets of the Corn- posy, the holders of Preferred Stock shall be paid the par amount of their Preferred shares and the ~aotmt o~ dlvide~eds accumulated and unpaid before an)' amount shall be payable or paid to the holders of the Common Stock or Common Stock B. . M~seeffan~o~. The Charter doe* not cut oft such preempt ve rights as the holders of the Prc- ferred Stock may have under the law ~ the State of New Jersey. In the oplmon of entresol the holders of preferred Stock have no preemptive rights with respect to shares of Common Stock B. There are an limitations in any indenture or other a~eem~at on the psym~at of dividends. The Preferred Stock has no present subscription or conversion righth and there are no redemption pro- vislana applicable thereto. The outstanding Preferred Stock is fully paid mad non-assessable. COMMON STOCK The only distinction between the Common Stock and Common Stock B provided by the Charter is with r~pect to voting rights. Reference is made to the description of the Common Stock B follow- ing, including the pyrtlon under the sub.heading "Voting Rights". , COMMON STOCK B .] Dividend RiSkts. When all accrued dividends oa the Preferred Stock have been paid, the ,, D rectors (ff in ther jud~nent the surplus or net prosts, after deducting the amount of dividends to accrue on the Pre~ereed Stock during the current 5,ear, shall be SL~eient for ~ush purpose) have 'i power in their disci~don to declare and pay a dividend, or dividends, on the Common Stock and ]i Common Stock B, "me Common Stock and Common Stock B, with respect to cacb share of either , outstanding, have eqaml rights in the matter of dividends. Voting Rights. The holders of the Common Stock arc ¢ashlied to one vote for each share held by them, but the kuldsrs of Common Stock B are entitled by the Charter to no voting rights. L&/u/daaon R/g/d& .In o~se of Iiquldstlon, or dissolution, or distribution of assets of the Corn- ; i puny, after payment to the holders of the Preferred Stock ot the anmm~ts to which they arc entitled I (rulnrenee is made to the information under the sub.heeding "Liquidation Rights" in the foregoing ,! . [ desealplion of the Preferred Stock), the balance of the assets of the Company shall be divided ratably ~' among the holders of the Common Stock and the Common Stock li, share and share alike, without ~i distinction between shares of the Common Stock mid the Common Stock B~ : i Miscellaneous. The Chafer does not cut off such preemptive rights ~s the holders of the Com- mon Stock and Common Stock B may have under the ls~ of the State of New Jersey. In the opinion of counsel the holders of Common Stock and Common Stock B have preemptive rights with respect ~o authorized and unissued shares of Common Stock B. There are no limitations in any indontttre or other agreement on the payment of dividends. The Common Stock and Common Stock B have no pa~mt sublseription or conversion rights, and there are no rede~aptlon provisions applicable thereto. The outstanding Common Stock an,~tioinmon Stock B is fully paid ~ed non.assessabla. PROPOSED SALE OF COMMON STOCK B The Board ed Directors eontmaplate~, subject to the existence of market eondJtions acceptable to them at the llme, that fits Company wdl offer shares of Cunmma Stock B {hieinding shares reac- qthred and held in the ts'easnry) for subscription pro rata to holders of the Common Stock and Com- mma Stock B. Such offering, ff made, will not occttr tmtg after a registration statement under the Securities Act of 1933 shall have become effective, and the oliering would then be made on the basis of the prospectus included as a part of such registration stateanent, by the mailing of subscription war, ants or "rights" togeth0er with a copy of the prospectus to holders of Common Stock and Com- mon Stock B of record on a date ~ot later than the effective date 0i the registration statement. The preparation of the registration statement has already been undertaken, with the expeetullnn that it will beoome eHeetive aud the offering wilt be made shortly a~ter the Annual Me,ling. The psh~ at whisk such Common Stock B may so be offered will be subje~ to determination shortly prior to the effective date of the regislxation statement, mad wig be affected by market 4

conditions at the firm. Daring tim year 1946 the market prtee of the Common Stock B on the New york Stoch Exchange varied between |76.25 and $100.25 I:~ share, and the la*t reported sale on such Exchange on Fch~ary 15, 1947 was at ~79.d25 per share. It is presendy expected that the offering of the additional sharea wiII ho at a price ~Dt tours than twea~tydlv~ nor 1¢~ than twenty per- cent under the market price pre~alling at the time of determination of ttm offering price. The alYer- .~, ing prize, and the rdated proo~ to the Company, will he taken iron aeeouttt in the determination of tke n~alm of tharo~ to be o~ereth Withen~ limiting the dlscretloo of the 9oaed of ])Jreetux~ tthin~tely to determine Mher~se, with respect to the offe£mg of sharm of Common Stock ~ for subscription, it is presently contemplated that: (a) thu altering will he made on the koala of o~e share for each five shares of Common Stock and Common Stock B outstanding at the record da~ for determining stockholders entitled l~ sub- ac~, wbleh wiJ2 reqedr~ appmxlmatdy fi~,400 ~ to be iocinded in the offering; (h) the reoord date for determining hold¢~ of Common Stock and Common Stock B ~fided to subscribe will f~ be the dose of busha~..s o~ or the day prior to, the d~ective date of the registration statement covering the offering of such additional shar~s, which is expected to he April 3, 1947; (c) the mailing of ~ubscrlptlou warrant~ to ouch *toeAholders w/l/ be completed as soon a.s pracCicubIe after the effec- tive date of the reghtzation statement; (d) the sub.edption warrants will expire hy their te~ms at 3:00 o'clock P.M., New York City time, on April gl, 1947; and (e) the offering price, and the number of shares included in the offerln~g or the ratio of sash share~ to outstandiug shares of Common Stuck and Common Stock B, WIn he released for put~/cation at or prior to the time inforamtinn s~ntlng the offering price shall he filed by amendment to the reghtration statement. Stochho]d~s x, fith eddeesses outside of the United States or Canada, who will ~0e entitled ~o sab- sc~e for the additional shares, shoaid provide for the exercise or sale o~ subscription warrants apportalnin$ to shares held by them, hy maifiag arrangements therefor with Guaranty Tta*t Com- pany of New York, 1~ Broadway, New York 15~ N. Y., which is to he appothted suhsedption agent. Subseriptima wazrtmts are not to be mailed to .tt~kholder~ bevthg ragist~ed addresses out- side of the Untied States or Canada but are to be held for such stochhalders hy the subeeriptinn { ~ agent, subj~ to satisfactory arrangements being made with the suhseription agent for exercise, sale or other disposition thereof, ~mtll 10:00 o'clock AM., Iqew York City time, on the day the subecdp tion warzan~ by their terms will ex~'e. The subscription warrants so hdd, and as to which such other a~rangrma~ts sk~ not ba~e heen made, axe then to he sald~ ff possihin; and, :o the exten~ permitted by appiinchl¢ laws and regnlatinns, a pro rata share of the ~ate net preceed~ if any. therefrom is to be remitted to each stodtholder on whose hshalf such ~alo was made or. if such remittance ia not penalttad, held for the aceomat o~ such storkbelder subject to payment upon receipt of lawful instracti~=s. In order to assuxe the Company of the gale of the fun amount of thare~ so offered, it is proposed that the offering be underwzi~a, and dise~sions for that purpme have heretofore been instituted with Morgan Stanley & Co. The tc~m~ of any uaderwriLLag a~aP~ement~, including discounls or commis- sions payable to the tmderwrlters, have not yet be~a determined upon, and doubtless wfi[ be affected hy market oondiffoas and the price at which the additional shares will he offered. It wottI~t he expected that any such nnderwchlag arrangements would provide fez the purchase hy the lmderwriters at the offering price to shavchaiders of such of the shares offered to shareholders a~ should not he purchased through the exercise of aubscriptinn warranta, end that such ~aderwrilers might reshlee a profit or in~ from their sshe of such shares apart from gaderwritlng dlseozmts oz commLealons payshl¢ to the, It is intended that the net proceeds from the sale of the additional shares ~411 he added to the working cag~mi of the Company, and th~rex~er utilized in the bnshe~ or apptied to the extent deemed advltchle to the reduction of then nutstandhag bank loans. Of the net po~eede received fr~ta the sale of such of the shares as shall not thereto~oze havre hee~ learned, an emoanL e:luai to the par % value thereof will he credited to eapitai account and the excess over such par value will he credited to ,~ paid-in ~urpltts. The aet proeeofs frma the sale of sa]e.h of the shares as ~h~ll theretofore have heeat islned and reacq~ired hy the Company wfi] he credited to treas~ stock account, and the loss or profit from the sale of such shares as shown an that account wdl he sharged or credited to paid.in surplut~ 5

AUTHOBITY TO DETKRMINE pRICE ized ~hares of Common Stock B for ~ub~crlption to holders of Common Stock and Common Sto~k B, the Board of Dire~tor~/~e authorized to delennine the offering price, within certain limitations. The /~t~ Y~ is or~ the e~rat ~ the a~thoriz~iot~ ~,~ ~ ~t ~ ¢or~e~ ~t~ori~y pr~cl~ h~" ~zt~t¢. As th~ 8hares have a par value, tho statutory p~o~l~on tha~ share~ having a par value ~nay ~ot be ~ued at le~ than the par v~e, wou]~l limit ~cord~gly the authority ~o be con£erred; under pre~e~t market conditions tI~ limitation wott]d have no pr~vtlcaI appli~ation~ ~ thv thir~ limitation mentioned below would ]~e controlling. Th~ ~econd limitation is that th~ determination of the ot~er~ng pl~ mL~t be mad~ withi~ ten ~ay~ prior to the raaki~g of the offerin8 to ~tockhoId~. The third timlta~ tlon is that th~ pri~e ~o deterwined sh~l[ ~e no~ ]es~ than 10% ~or more th~ ~0% ~eIow the market price of then out~and~ ~hares of Common Stock B on the ~late of such determination. ~t m~y be noted that ~ would a]lo'~ more latitude ~ to price, ~n each direction, than the price rsnge pre~e~y vonterap]ated for the proposed off~r~n~, to permit alteratlo~ of preset plans should that appear necessary or de~irald~ in vlvw of later conditions. In tho ewnt tha~, prior to the final adjournment of the ~wtin~ tbo Bo~d of Director~ Bha~ have determined th8 ~rive at which ~hares of Common Stoc~ ~ ~haU be offered for ~b~cription to holders of C~mmon Stock sad Common S~ock B, then it i~ intended ~o repor~ to the meeting the price so de~ermlned l~y the Board oi Directors together "~th a propo~a| that the p~ice ~ ~o deterrnined l~e ratifie~i an~ approved, .~tho~t derogation of t~ authority of the Board of Directors to determine s~ch p~ce i~ such authority shall thereto~or~ ~av~ been ~ivvn ~y ~he me¢~g. :[t i~ t~e present e~p~tafiou thst the price ~ ~e dewrmlned prior to the final adjournment of the meetin~ and ~e submitted to the m~tin~ for ~pprovaL Howvver, ~hou]d the price not so ~e ~et~rm~ed prior to such time, or ~hou~d the price ~o bo ~e~e~ine~ an~ b~ approve~ ~y the meetin~ h~ ~e oiler and sale of the shares ~ contemp]atecl not ~e constm~mat~cI ~y reason of market conditions or otherwise, then it is dee~ed dc~ira]~l~ that IJae Board of Director~ ~ould haw au~o~t~ to tho extent set f~rt~ Whfl~ under Section 14:8-17 of the Ce~eral Corporation Law of ~ew Jersey authority i~ ~ven to th~ ~o~d of dir~vtor~ of a corporation to determine tho prlcc at which ~al~ shall be o~'~red to orgavizallon of the C~pany and it ~s therefore dee~ed deslr~l~ to ask f~r'a votv o~ the share- holders on Proposal B ~ wen as on p~opo~a] A. The ~I~orhy to be vonferre~ by ~uch proposals wo~id relate to pre~tl-f authorized ~hare~ of Cor~rnon Stock B that ~re not out~tandln~ ~ the ~a~ of th~ public, aggregating 1,0~,963 ~hare~, of which It.s them I~8,000 ~are~ would remain uni~ued o~ constL~nmat~on of present pls~s. FII~A~CLkL ST.kTEMENT ~ Thv annt~al roport of the Company for thv y~ar 1946, mailed ~.¢ith fl~i~ proxy statement to holders of Preferred and Common Stock, include~ con~olidate~ balance sheet~ at Decer~ber 31, I945 ~u¢I Devevd~r 31. 1945, and ~onBolidated sta~raent~ of incom~ and ~urph~ ~r th~ ~r~ e~de~t ~ tho~ dater, of the Company and its ~ub~idi~ri~ ~¢hv~e aceo~mts ar~ co~oIiJate~i therein. Such financial statements in the opi~io~ of the mav~e~rae~t ~re a~equat~ /or the exercise of prudent ~ud~ ment on t~e propo~,ds menfione~ n~ove, ~nd re~erenc¢ i~ made to ~uch finm~ial statements, v~hlch are i~¢orpvrate~ her~in by such reference. Fur~e~ financial ~tateme~ts o~ the Company are w f[~ in tho o~ce of the Securities and Exchange Commi~ion, Philadelph~, Pa. Bnd in the o~c~ of the New Yo~k Stock Exchange, Ne~ Yo~k, N, Y. REM~ERAT]ON R~nu~r~n o/ Directors ar'd Offers. The ~tggre~ate amount of rernt~eratlon received from th~ Company ~i ~ts ~ub~icI~ie~ di~ct[y or indirectly, on an accrt~I t~is~ ]~y each ~er~on who ha~ acted ~ a d~revtor of the Company durln~ the past iis~l )'ear, each per~o~ nominated ~or elec- tion ~ a director of the Company, and e~eh person who ha~ acted ~s an o~cer of the Company but not a~ a direvtor and who has received payments of remua~rafion totalin~ more than $29,0~K] du~ such i~Bca[ year, is set forth in the ~oI]owi~ t~bulatlon, which aL~o states th~ excess, i~ any, 6 -- y