Tobacco Documents Online

t c~ remune~allon 0ver the total rcmun~callon ~c~vM fQr the fiscal each p~evious hy ~ec~ur, year ~ir~ cr nomin~ ~r~g to~ r~a~ra~on o~ more than ~26100 ~cr scrdc~s ~dcrcd ~ 194& I ~-4 Remanerafion g.~oses cf Remuneration Name t~ Accrued (Or 1946 A~crucd tor 1946 O*~¢r 19~5 0rphr~s D. Baza]ys $ 30,333.32 $ 9,~00.06 -~ Rinh~xd J. Boyhn4 56,2~7.82 23,247.82 Thomas P. Conners 17,416.68 739.98 James p~ Coou~ 230,500.92 I83,990.12 John A. Cruwe 65,~O0.00 none John $. Dowd g5,000.00 none PreSton L Fowler~ 260,500.92 175,556.76 C. Huatby G~t 15~43&46 none Patrick H. Germant 29,934.78 none i Paul M. Hahn 230,500.02 151,515.40 % Hiram R. Hallmcr 25,000.00 Done E&nu~d A. Harvey 40,000.00 none George W. Hill* 295,611.88 127,302.68 George W. Hill, Jr.S 230~500.92 223,872.47 F~nT L /Dlyard 30,~O~DO none James El Lip~eomb, Jr. 12~00O,0O none Willh9~ H. 0~shnry 45,~00,00 Done F~d B. Reuter 35,000.00 4,166.66 Vincent Riggio2 285,669.4,5 206,683.93 Jam~ F, fi~rinklaud 33,(~8.CO none 1 Dcccas~l during the year 19~. ~ Elected President September 17, 1946. Elected a Vice President November I, 194& 4 Elected a Vice President Nuvemhnr 19, 1945. 5 Rcceivccl no remunexafion from Company or subs/dlarles during the fiist eIev~a moulh$ of 1945, ~0eing in 1fifillary servi~ during that time. A group life insurance policy was I~iaced in e~ect as o~ October 1, 1946, covering all regaL~ fuththne empiny~ of the Company or of lls ecusalidatexl subsidiaries and certain employees of othe~ subsidiari~, the maximum amount of insurance thereunder t~ any o~e employee being Iimited to $1fi,(~0. The cost of the insurance /s payable ~atably by the C~mp~my and such subsldla~ies. Each o| th~ abov~uamed indivldual~ living at the dale of such policy was insured for the maulmttm ~ounl z~l~r ~lloh ~Oll~. The gross premiums paid thereunder in reapect 0£ each such indlvidua~ w~ ~O.BO for the app~e~Ie par~on o~ the y~r 1~. NO such dlrcctor, o~ccr or nominee was indebted to the Company and its subsidlarie~ during such fiscal year, oth~r than (rent trsmsactlons in the ordinary coltrsc o~ buslne~. The aggregat~ amount of rcmanera~oa ~or such fiscal year, received ~rcm the Company and Rs stthridiali~, d~ectly o~" in~r~.ly, on an accrual b~.i$, by all the dlr~ctors and o~ccr$ o~ the Cure. pany ~ a group, wa~ |2,073,8~2.76, which was $1,168,392.51 mor~ than the aggregate received ~or th~ pr~o~ ~ year, and w~h W~ less th,~t 3/10 o'~ I ~ o[ the Company's consolidated n¢~ s~c~L Rem~ralinn o~ EmpDyees. The number of employees of the Company and it~ aubsidiari~ (other than officers aud directors ot the liomp~ny) who, during the last fiscal }.ear, ~cived /tom the Company and its s~idiari~, remuneration in e~¢~ o~ $20,C~0 hat not more than ~50,000, ~nd the aggregate amount of remLm¢Ia~ola paid to the persons in this Kroup, was: Number Agitate Amotmt for Gmp 14 $$¢zg,952.01 The numhnr o{ employees o~ the Company and its subsidiari~ (other than ufllo~rs a~d direc~ora o£ the Company) who, during the last fiscal year, received from the Company and ils suhsldiafiea, ll~un~rat~on in ~s of ~50,000 ~ut not ~ore than ~160~000, and the ag~egatc amount o~ r~u- neration paid to the persons in this group, was: N~m13~ Aggregate Amount tar Grou9 0 0 .! L~ )

T The number of ~pIoyees of Iho Company and its subeldlaris~ (other than o~eers aad dlreetora of the Company) who, during the last gseal~year, received from the Company amd its sul~iaries, r~mun~rafion in e0cce~ of $1CO,000, and ~aggregate amox~nt of remuneratloa pald to the persons in this group, was: N1~m~ Ag~u'e~ ~motmt tar Groop 0 0 Ramur, erat~n o/ O~r Persona. The following-rimed persons (other them director~, o~cer~ ~T emp~ye4~ of th~ Cox~pany) ~i~ aggreSs~e ~emune~uti~ ~om the Cx>r~po~xy dux~g the |~t fisoM yBar in exce~s of $~0,000. for services in tho eapaciL~e~ d~h

OT~C~ ~P Tai PR|S IDE ~T THE A~RICAN TOBACCO COMP~HY 121 FZTTX A~U~, NEW YORK 3, ~ March i, 1947 TO THE STOCKHOLDERS: During the past year, to our deep and nbiding regret, George W. Hill, o~r President for twenty-one years, came to the end of his life and of his long term of outstanding service to our Company. Your Directors honored me by electing ms his successor° It is my earnest hope that, i~ carrying on in Mr. Hill's place, I will have granted to me the same confidence and support that the stockholders of our Company Have him these many years. The enclosed Annual Report deseribes the results of the Company's operations in 1946. The release of tobacco products from price ceilings during 1946 enabled the Com- pany, during the latter part of the year, to keep pace with increased costs and to operate on a reasonable margin of profit. Consolidated Net Income for 1946 was $29,886,557, as compared with $19,697,066 for 1945. The Company's sales vol11~e in 1946, both in dollars and in unit cigarette sales, was the largest in our histo~. Consolidated Net Sales amounted to $764,167,590, -- more than double the Consolidated Net gales of five years ago, which amou~sted to $365,648,864 for the year 1941. In the opinion of your Directors, this greatly expanded sales volume makes advisable 8/i increase in the Company's capital, and they therefore submit to you proposals contemplating the issuance and sale of additional shares of Common Stock S, and the offering of suuh shares for subscription pro rata to the holders of CoEJnon Stock a~d CocK, on Stock g. It is presently contemplated that the offering will be made at the basis of one share for each five shares of Common Stock and Common Stock B outstanding at the record date. With the AIl~Ual Report and with this letter you will re- ceive the Reties, Proxy Statement and Proxy for the Annual Meeting, which will be held on April 2, 1947.

-2- In the Notice of Meeting. the proposals referred to earlier in this letter ate d~signated as "Proposal A" and "Proposal B". They &re explained fully in the Proxy Statement. Your Directors urge tha~ you vote "Yes" on both "Proposal A" a~d "Proposal B". Your attention is invited partioularly %o the portio~ of the Proxy Statement beginning on page ~, oaptioned "Proposed Sale of Common Stoc~ B", in which ~eferenee is made to the d~termination of ~he offering prioe, the contemplated basim of the offering, record date. mailing of ~ubsoription wa~ts and expiration thereof, a~d under~rlting of the offering. In view of the neoessi~y that a quorum be present or rep- resented at the meeting, and tha~ a majority of the stock present or represented vo%e favorably on ~he proposals, your cooperation in execu%inE and rQturning your P~oxy promptly will be especially apprecia%ed. Enclosures

1946 OPERATIONS AT A GLANCE THE COMPANY RECEIVE[: .dmmee AlU~r AAA • . . . . . . . ~7oo,a.~s,uuu RECEIVED FOR THE GOODS iT SOLD (illustrated are only a few of our 200 or more differ- ent trade-marked brands) $764,168,000 RECEIVED FROM DIVIDENDS, INTEREST AND MISCELLANEOUS $2,689,000 .... THIS IS HOW IT VT'A~ USED OR SET ASIDE: o / /

FOR REVENUE STAMPS AND TAXES FOR TOBACCO (including applicable expenses) FOR GOODS AND SERVICES INCLUDING WAGES $437,936,000 $199,779,000 $89,299,000 FOR DEPRECIATION ON MACHINERY, BUILDINGS, ETC. $1,598,000

OOO" lS;g'99L$ " • • . • . • • • riO:I SJLN N O:)~V H:)IHM 000'1~0L'~|$ SQ||N IRIN.ILNt JJ|W OZ SNldUNS OL NOIJLIOCIV IIOd O00'6CL'LL$ SIIIOIOH)I3OLS OJ. SON|OIAI(] tiOJ O00'~L8'95 I SH~LLNI )INVII QNV aNOg IO:1

The Preaident, The Board o£ Directors and StockhoIders o{ TEe Ar~er~c~ T~b~co Company, 111 FifEh Avenue. New York 3, N. Y. We have examined the eo~solldate£ balance sheet of The American Tobacco C~mpany as of December 31, 1946~ and the relaged consolidated sta~ment o{ income ~nd ~urp~u~ {~r the year ¢hen e~decl. The fin~a~ia~ statem~ of American Cigarette and Cigar Company, a consolidated subsidiary. Were examined by other kadepetLdent public accountants. With the exception of that sub~idlary, we reviewed the systems of ~nrernel control and the accounting procedures of the companies and, without making a detaiIed audio of the transac~ons, exam{n~d or teosted ~ccount[ng records ~n¢[ o~gr ~u~po~dll~ ev{dence by methods and to the <xrent we deerne~ appraprhte. Our ~xam{n~ ~on was m~de in agcordance with generally ~¢¢epted a*zd~ting standards appIieable in the circumstances a~d i.¢~uded alI procedures which we considered n~easary. We ~a6e ~ ~1~ exam~aa~on {or th~ year ~945. Lack of esse~tla~ data attributable to disturbed ~oreig~ conditions preolud~s our ~orz~ing an opiofon with respect ~o the ~nvestme~ts o~ The American Tobacco Company in The America~ Tch~cco Compa~" of the Orient, Inc. (~ ~n~ol~ ~w~ed 4~r~esti~ ~uh~{dia~y wla{¢h ~pe~ates a T~k~1~ lea~ bufing otganlzafion i. the Near East) and in the wholly owned French subsidiary. Otherwise,ln out" open,on, the ~e¢ompanylng balance sheets and related stater.en~s of {ncome and ~rp]u~ present fair]y the consolidated po~it~n o~ The American Tobacco Company and the sub£diaries inol~ded therein at December ~1, 1946 and I94~ and ~:he con~olldatcd resu~t~ of ~heir operations for the years then ended i~ conformity with generaIly ~ccepted accounting prlne{ples appI~d O1% a Co~$i$~eni: ]~.8~8. LYB~.A~CD~ ]~O$$ BROS. & ]VIONTGO2*~B.y New York, February 3, 1947

CONSOLIDATED STATEMENT lneludhag American Cigar¢~I~ and Cigar Company and zll wholly owned do~ for ~h¢ :~ rs Sales, lets trade add cath diseou~t~ retnrns and a]lowa~l¢¢s ........................................ Cos¢ of sales, selling, geaeral and adn~nlserativ¢ ~pcnses ................................ OPERATYNG PROFIT ........................................................... Add: Dividends and ~aterest from subsidiaries not consolidated hetd~ (Note 1 ) ..................... Other divider*& and in,ernst ............................................... Oehez income ........................................................................ Dedlw?: Interest~ amo~tlzatioa of dilcount and, ia 1945, eedemption premium on 3% debentures O~hcr L~terest ~d dlsc~u~t ............................. Other expense~ and 10~s~ ................................... INCO~,{E, before state and federal iacome taxes ..................... Dec'vet: ~r.at¢ ~11¢om¢ t~l~es ............................................................... Jg V Federal ~nconle taxes ..................................................................... ~ederal excess profits tax¢l ........................................................ Deducfi Port/on of ne~ L~eorae of Amer/can Cigarette and Cigar C©mpany appllcabie Io min~rlty inte Add, Adjustment of prior year~' federal and s~ate tax~ including interest, less related cxpe~lses ....... NET INCOME ............................................................................. Deduct, Four quarterly cash dividends of $L$0 each oa six per cent oumulatlve preferred stock BALANCE added to surplus ac¢oun~ .................................................... SURPLUS, beg~nnlng o~ year ............................................................................................. Add, Proceeds from iatur~nc~ policies on llfe of Mr. Georg~ W. Hill, deceased, less cash surrender v~. Deduct, Four quarterly cash dividends on common stock and common stock B at $1 for first quarter SURPLUS, end of year (Note 5} ................................................. Depreciation pzovlded and charged to costs and ex~ -~s. Th~ no¢~ refereed ~o ~b~e ace 8

TATEMENTS OF INCOME AND SURPLUS *holly owned dome*tic subsidiaHes except The An~efican Tobacco Company of the Or~erlt. Inc. for t~e~rs ~9~ud ~945 1~46 .......... i ....................... $764.167.~90 ................. i ............................... 70~,40L297 ................................. ~4,764.29) 1945 $557.5¢7,50~ 514.594,148 42#63.357 .......................................... 703,651 ........................... l~O,fin2 .......................... 2~g,719 $ 5~,9~7,~6~ ~,183,$97 207,931 $44,7~g.758 m~ur~ ................................ 5,567,714 6,4fl.4~7 1.243.989 410,8f8 7~1.028 7.542.731 65g,040 7.529.39~ 37.26~,36t 1.463,000 I~466,~19 lg,074,000 • 12.353.313 m 19,537,0~0 4.125,000 I7,~44,8~2 ............ O : Q ..... ZZTIIII iii IZZII IZIIIII CZZTZTTT' iiii ZZIIISIZ ~ ,=~,~ ~ to rmnorlty interest ............ 68,017 28,7S9,517 expeases ............................ 1.127.040 .................................................. 29.gg6~5~7 ~erred stock ..................... 3,1 al,98Z ........................................................... 26,724,J7I ....................................... 73,098.729 :ash s~rrcaadcr vaIu* thereof ................ 1,546,057 74.644*786 I01.369.36I fez flt~t qua~er lind $,75 lot s~bsequent quarters I4,566.540 ................................................. $ g6.g02,821 sr~ and exrlb.~ mnIJl~red tO $1 S98 012 in Z946 a~d $1.613,493 in 1945. ~erred to above ~re in-integral parl off t~z~ stattm¢~t. 19,32;,5~I 6109~ 19,262,4)9 434627 19.697,~66 16,~3L054 71,130,129 m 71,130,I29 87,66;,213 14.~66R4 $75,098,729