Tobacco Documents Online

1951

annuaE epor FOR THE YEAR ENDED DECEMBER 31, 1951 WITH CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Executive Office 111 FIFTH AVENUE • NEWYORK 3, N. Y.

1951 1950 Net incolne per common share ............. $5.57 Dividends paid per common share ...... 4.00 $7.17 4.00 Net saIes ..... $942,552,034 $873,621,130 Income. before taxes on income 80,410,505 76,724,339 Net income ......... 33,109,669 41,732,716 Dividends paid (preferred and common) 24,675,682 24,675,682 Pcmlon of net income invested in assets used in the buslaess and to provide for debenture sinking fund lequirements ............ 8,433,987 17,057,034 Current assets, December 31 .... 668,233,871 593,026,307 Current liabilities, December 31 212,177,930 133.373,663 Net working capltal, December 31 .... 456,055,941 459,652,644 Number of stockholders at December 31: Common ....... 66,693 Preferred ...................... 8,324 64,565 8,555

NOTICE OF MEETING Flemington, N. J., March I, 1952 NOTICE I5 HEREBY GIVEN that the Atnma] Meeting of the Preferred and Common Stockholder~ of TaE A~rEmC~N TOBACCO COMPANY will hc held at No. 34 Court Street, Plemlnglon, New Jersey, at one-dfirty o'clock in the aflernoon (Eastern Standard Time) oll Wednesday, April 2. 1952, for the following purposes: (1) to elect Directors; (2) to consider aad vote upon a propr, sal (designated Proposal A and set forth in the following proxy statement) made by three stockholders; and (3) to transact such other business as may properly come before the meeting. The Preferred and Common Stock transfer hooks will not be closed, but holders of Preferred Slock and Common Stock to be entitled to vote must be holders of record at tile close of business on March 3, 1952. JoRt~ W. HA~LO~, Secretary SPECIAL NOTICE Holders of what was formerly Common Stock B who still hold their Common Stock B cerfificate~ are reminded thah by amendment of the Charter of the Company ~n Aprg 8, 1948. each share of Common Stock B outstanding was changed into one share of Common Stock, with the voting rights of Common Sto~, namely: One vote per share.

PROXY STATEMENT "fhe enclosed proxy is sdicited by and ~n behalf of the Management and is re,~ocable in writing. Proxies in the form enclosed, properly executed b~ stockholders and duly tetra'ned to t~e Management and not revoked, wiB be voted and, if a choice be specified with respect to matters to he acted upon, wiB he voted in accordance with such specifications. Tile outstanding number of each class of ~oting securities cf the Company is: Preferred 526,997 shares; Common 5,378,425 shares, The Preferred Stock is entitled to four ~mes per share. Tile Common Stock is endtled to one vote per share. ELECTION OF DIRECTORS The Board of Directors consists of seventeen members who are elected to hold dIice unti! the next Annual Meeting or until their successors are duly elected and qualified. Jt is fire intention of the Proxy Committee to vote at this Ammal Meeting for the nomlnee~ named below. These nominees constitute the present Board and have served as directors of tile Company for the periods comnmncing with the dates set alter their respective names. The Company is informed that these nomfilees were dh'ectly or indirectly the beneficial owners ef rmtstandlng securities of the Cmnpany at the close of business on February 1, 1952, as set froth a±ter their respective names. Year First Natae Principal Occupation I~lected Director Orpheus D. Baxalvs Vice-President, The American Tobacco 1940 Company o1 the Orienb Inc. Altred F. Boa,'den Richard J. Boylan Douglas W. Brashaar Tl~omas P. Connors James R. Coon John A. Crou~ John S. Dewd Preston L Fowler Paul M. Hahn Hiram Pt. Haxllner Edmund A. Harwy Harry L. Hilyard John R. HnLchings, Jr. A. LeRoy Janson William H Ogsbury l~xe~ P. Stticklaad C~unnon prefeI~ed 884 62 Assistant to tim President, The American 1951 ?.1~5 Tobaceo Company Vice-President, The American Tobaoce 1929 1,745 315 Company Vice President. American Suppliers, 1948 100 Incorporated Director of Trnl~e, The American 1946 145 Tobacsu Company glce,Pre~ident, The Ameriean Tobacco 1936 652 50 Company Vice.President The American Tobacco 1931 1,00 105 Company Executive Vice President, American 1946 300 Suppliers, Incorporated Vice.President, Tbe American Tobacco 1941 600 100 Company President, The American Tobacco 1931 2,086 Company Director of Researeh~ The American 1933 120 Tobacco Csmpany Vice-President, The American Tobacco 1932 500 43 Company Treasurer, The American Tobacco 1944 120 Company Vice-Presldent, American Supplierz, 1951 102 Incorporated Auditor, Tixe American Tobacco I948 265 Company Assistant Chle~ of ManulEacture, The 19313 120 50 American Tobacco Company President, American Suppliers, 1946 320 Incorporated 2

John R. Hutchings, Jr. ~vas elected a director of the Company on May 29, 1951, to fib tbe vacancy created by the death of James E. Lipseomb, Jr. Mr. Hutehings is a Vice-President and director of American Suppliers, Incorporated, the Company's leaf buying subsidiary, and was tor approximately 25 years prior to his election a supervisor ~f kobacco leaf' buyers of that subsidiary. Ahhough the Management does not conteraplate the possibility, in the event any nominee is not a candidate ~r is unable to serve as a director at the time nf the elecgon, it is intended that the proxies will he voted for any nominee who shall he desigmlred by the present Board of Directors to fill such vacancy. Ie.formation regarding the remunexation of directors is hereinafter set forth under the caption "Remuneration". Proposal A The Company is inf~rmed that Lewis D. Gilbert, whose address is 1165 Park Avenue, New York 28, New York, John J. Gilbert, whose address is 1165 Park Avenue, New York 28, New York, and John Campbell Henry, whose address is 1088 Park Avenue, New York, New York, stockholders, intend to introduce at the forthcoming Annual Meeting the following resolution (designated herein as Proposal A) : "RzSOLWD: Tbat the stocltholders hereby request the Board of Directors to take appropriate steps to submit to stockholders an amendmel~t to the Certificate of Incorporation providing for cumu- lative voting, that is to say that at all elections of directors, the stockholders shall have the right of cumulaBve voting, which means each shareholder shaff be entided to as many w~tes as shall equal the mnuber of votes which he would be eutitled to cast for the election of directors with respect to his shares of stock multiplied by the nunther of directors to be elected and he may cast all of such voles for a single director or may distribute them among the nunther t~ be voted for, or any two or more of them as he may see fit." The proposers of this resolutinn, Messrs. Gilbert, Gilbert and Henry, have furnished the following statement setting forth the reasons advanced by them in support of their proposal: "At present all directors of Amerlean Tobacco are employees the public stockholders are completely unrepresented, a eonditinn we drink should be corrected. Cumulative voting, if adopted, would enable public shareholders to get Board representation with greater ease. Some 246,407 votes were cast in its favor last yea~mif you agree with us, please mark your ballot FOR. Shareholders desiring further information as to the hnportance oi the right to vote cumulatively at annual meetings should censLth 'Cumulative Voting for Directors' by Prcff. Charles M. Williams, published in 195t by Harvard Business School, Boston, Mass." The same proposers introduced substantially identical proposals at the 1949, 1950 and 1951 Annual 3Ieetings. Each ef these proposals was overwhelmingly rejected by the stockholders. At the 1951 Annual Meeting, stockholders east 5,218,021 votes opposed to this proposal The long-continued record of successful ¢peratlon of the Company's business by directors giving their entire time and effort to tile service of the Company and its subsidiaries indicates, in the opinion of the Management, that the directors have managed the business in the interest of all the stockholders and that it would not be in the interest of the Company to initiate this amendment. The Management recommends that you vote AGAINST Proposal d. The Management is not aware at the date hereof of any o!her matter which is a proper subject for action that is intended to bc presented at this meeting. 3

REMUNERATION Remuneration o[ Directors and O~cers. There is set forth in the follmvlng tabuhfion the aggregate remuncration, on an accrual basis, directly or thdirectly paid cr set aside by the Company and its sub- sidiaries to, or for the benefit of, the following persons for services in all capacities while acting as directors or oflleers of the Compally during its last fiscal year: each person who was a director of the Company at any time during such fiscal year am] whose aggregate remuneration, exclusive of pension, retirement and similar payments, exceeded $25,000; each person who was one cf the three hlghest-paid officers of the Company during such fiscal year and whose aggreggte remuneration, exclusive of pension, retlremcnt and similar pa)nmems, exceeded $25,000; and all per~o~xs, a~ a group, who were directors or officers of file CompanF at any time duzing such fiscal year. WhBre the total remuneration shown in Columns (3) and (4) exceeds by more than ten per cent. the corresponding total remuneration for the preceding fisca~ year, the excess is stated in Column (6). E~timaLed annual retirement bene6ts to the same inclivlduals at normal retirement date under the Retircmcal Plan for emp]oyees adopted by the stochho]ders at the 1949 Annual Meeting are stated ill Colmnn (7). (D I~ ~me of indiv~dval or identity of group Orpt~cns D. Baxalys Alfrcd F, Bowden Richard J. Boylan Dougtas W. Brashcar Thomas P. Cotmor~ James R. Coon(e) John A. Crowe(e) John S. Dowd Preston L, Fowler(e) (2) Capae~ie~ in which (3) remulleratlon ~a~ ~ec~ived ~a[~r ic~ Vi~e-Pre~nt and Man- $50,(~00 aging Director, The AmemieanToba¢¢oCom- pany of the Orient, Inc. (a) Assistant to the Pr~ident, 25,972.21 (b) The .gm~'iean Tobacco Company ¥i~u-President a~d Dircc. 50,000 tot of Purehase~, The Am~ricanTobacco Com- pany Vice~re~klent, American 40,000 Suppliers, ineo~orated (a) ; General Manager of St emmerics Directvr of Tra~c, The 33,000 ArnerlcanToSacco Com- pany Vice~res~nt aad Comp- 50,000 tre]Jer, The Amebean Tobacco Company Viee-Pr~sldent mad As. 5g,000 sis~t Chief of Manu- facture, The American Tobacco Company Vi~-P~e~ide~ ana Execn- 55,833.35 tire Vice.President, Am. erican gu~i~rs, Incn¢- potato] (a) Vice.President and Chief 50,000 of Manufacture, The Americ~Tobaeco Corn- pany (a) A£filiated company engaged in purchase and handling o[ lea[ tubazcv, b) P, gpresenls salary earned ~nly after election as a director April 4, 1951; total salary was $32,000 for 1950 and $35,~0 or ~951. ~¢) ~so o~eer o[ affaliated company or companies. 4 (7) Estimated (5) annual Applicable (6) retir~n~ent porfienof Excess benefit (4) group over ataormal pardeipafion insnraneo pre~lous re:~ement in profits premium year date $59.16 $16,293 43,18 12,500 $92,495.47 59.16 17,000 59.[6 Id~614 59.16 11,605 92,405,47 59.16 92,495,47 59.16 59.16 $5~833.35 92,495.47 59.16 17.0~0 17,000 18,013 14,846

If) (2) ~4) Nam~ o[ i~d]vidua[ Capacitie~ ~n which (3) Participation or id~tlIit7 oJ g~up lemuuerati0n was ~cei~ed S~i~ ~n pTo~t~ Paul M. Hahnlc) Presi~m, The American $120,000 $115,619.34 Tobacco Company; Presi~l, American CigareF¢ and Cigar Company Hiram R. IIanmer Director of Research, The 37,~0 Amerlca~iTobacco Com- pany Edmund A. Harveyld) Vice-Pr~idcnt in Charge 50,000 92,49o.47 ol Sales, The American Tobacco Company Barry L. Hilyard(c) Treasurer, The /unerlcan 50,000 Tobacco Company A. LeRoy JansonAuditor, The American 45,000 Tobacco Company ~amesE.Lipscomb, Jr.(e) President, American Sup- 45~000 pl~5, laco~orated(al Wfil~am H O~bury Assistant Chief of Manu- 50,000 lactate, The American Tobacco Company James P. Strickla1~d ~ce-Presidcnt and Presi- 64,~3.35 ~ Am~rlc~ Sup. pller~. Inco~orated (a) Dircctols and O~cers Directors and Officers as 911,301.66 578,096.69 1,049.40 as a group a group 17) Estimated {5) annual AppXicaMe (6) retirement p0r ti011 of ~xc~s~ ~ene~t group over at n~rmal ~ns~rance pre~ious retirement prcmlum yea~ d~t~ $ 59.16 $23,(]00 59.16 13,968 59.16 $14.15947 17,000 59.16 12,323 59.I6 5,00G 15,699 23.12 59.16 17,00C) 59.16 14,583.35 16,506 AffiliaLed company engaged in purchase aod handling o~ leaf ~obacco. Also of~cer of affiliated ¢ontparty or ¢ompRn~es, /d} Fleeted a Vice.president April 7, I9~0 The amovllt reporLed ~n (]~]~mn !6) ~s accounted for by participation as ~ Y~ce pre~idellt for o~ei 8 ~0ntl]~ o~ 1950 as agtlinsi pardcipatlrm for the ¢ntlre yeal ]9~. (e) Deceased :~lay 15, I951. The amounts stated in Column (4) above were accruet] as incentive compensation (based on amount of Compan'~" profits), under Article XII of the By-Laws, as amended by votc of the stockholders at the 1951 Alaaual Meeting. No fees or commissions were paid to or for the benefit of any of the indffilduals listed above. There were no pension, *efirement or similar" paymen s o or for the benefit of directors artd officers nf the Company during its last fiscal year. Tim Retirement Plan for employees adopted by vote of the stockbolders at the 1949 Annual Meeting covers approxlmamIy 19,100 regular full-time emph~yees of the Company and its subsidiaries. The Company has nmintained slncc October 1, 1946 a group life insurance plan which covers all regu- lar fuil-time employees of the Company and of i s consol da ed American subsidiaries and certain employees of uther subsidiaries, the maximum amount of insurance fimreunder for any employee being limited to $I0,000. The amount of group l~fe insurance provided for each employee is determined by h s basic annual pay. Each of the officers and directors was insured for $10,000 under such policy. The cos/of the insurance is payable ratably by the Company and such subsidiaries. The total number of employees insured under the plan on January I, 1952 was approximately 19,000. The aggregate amount of remuneration for the fiscal year 1951, received from the Company and its subsidiaries directly or indirectly, on an accrual ba~is, by all he directors and officers of the Company as a group, was approximately sixteen one-hundredths of 1% of the Company's consolidated net sales. 6

MISCELLANEOUS Any stockbolder making written request therefor to the Secretary of the Company will be furnished a summary of the Annual Meeting that will he prepared after the meeting has been held. Messrs. Lybrand, Ross Bros. & Montgomery ha~e for many years been the independent auditors for thr Company, and are appointed by resolution of the Board of Directors. In accordance with the Company's customary practice, a member of tbe firm of auditors will attend the Annual Meeting and respond to questions which may he asked by stockholders. Comments or suggestlcns by stoclsholders with regard to the audit are welcomed, as they are with regard to all other matters affecting the Company's interests. Flemington, N. J., is reached by the Lehigh Valley Railroad. The present train schedule, which is subject to change and should be confirmed, is as follows: Leave Pennsylvania Station (33ed Street and Seventh Avenue, New York, N. Y.) 10:55 A. M. Arrive Flemington Junction 12:03 P. M. Leave Flernington Junction 5:16 P. M. Arrive Pennsylvania Station 6:35 P. M. The Company will procure transportation from New York tc Flemington by railr~ad and leturn by railroad or, i[ expressly requested, retur~* b2 bus, at Company expense for any stockholder of record desirous of attending the meeling, on his notifying the Secretary in writing prior to Marsh 31, 1952, that he wishes stJeh transportation obtained. If you do not plan to attend, you are urgently requested to execute the enclosed proxy and mall it to the Company promptly. Expense of Solicitation. The expense of the solicitation of proxies for finis meeting, including the cost of mailing, will be borne by the Company. In addition to mail ffig copies of this material to stoclsholders, the Company will request persotls edlo hold stock in their name or custody or in the name of nominees for others, to forward copies of such material to tho~ person~ for whom they hold stock of the Company and to request authority for the execution of the p~oxies. The Company may reimburse such persons for their out-of-pocket expenses and clerical charges in connection therewith, which expenses urn estimated to he about 82,500. To the extent necessary in order to assure sufficient representation at the meeting, officers a/13 some regular employees of file Company and approximately 6 employees of Philip G. Cameron Coral- party will request the retnrn of proxies by telephone, telegram or in person, at an estimated cost of about S14,000. The amount of the expense to be borne by the Company will depend upon the volume of shares represented by the proxies received promptly in response to the Notice of Meeting. If proxies are not received promptly, it may be neceasary for the Company to send teIcgrapfiie solicitation to those stockholders who have not responded. The expense of such telegraphic solieitalion would be about $2,500. Stockholders who do not intend to he present at the Meeting arc urged to send in their Proxies without delay'. Prompt response is helpful, and your cooperat;cn will be appreciated. February 15, 1952.

Fehruary 8, 1952 To our STOCKHOLDERS: In the following pages your Management reports on the operation and resu]ts of file business of your Company, includlng its consolidated subsldmries, during the year 1951. Economic developments during the past year have affected your Company, as well as American industry generally. The impact of higher costs, higher taxes and frozen manufacturers' prices is directly reflected in the results of operations. Some significant developments with respect to your Company durlng 1951 were: 1. Dollar and unit sales of your Company were the largest in hs history aed tile largest in the tobacco induslry. 2. Income ]Jeforc taxes increased $3,686,] 56 to $80,410,505. a new h~gfi level for the Company. 3. Net income decreased $8,623,047 to $33,109,669 due to higher costs, higher taxes and ~rozen manufacturers' prices. 4. The Federal excise tax on cigarettes was increased on November 1, 19fil, from $3.50 per thousand to $4.00 per thousand (eight cents per package) and our se?ling prices were increased correspondingly. No other changes in tho prices of our cigarettes were made dmlng the year. 5. Your Management is making every effort to obtain permission f~om the Office of Price Stabilization It) increase the prices of cigarettes ~n order to improve the low margin of profit on sales which exists ~n the cigarette industry. 6. Becausv of larger sales volmne, hmreased invmm)ries necessary for the maintenance of this larger volume, the continued rise in the cosl of leaf tohacco and the gt~aler investment required for revenue slumps, your Management has taken steps to raise additional wo*king capital.