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1975 sales, increasing its market share from 5% to 10%. Niemeyer's roll-your-own tobacco and pipe tobacco account for 26% and 38%, respectiveJy, of the market inThe Netherlands, Export sales of these products make up 39% of NJemeyer's total. Combined sales of Gallaher's nontobac¢o operations were £2.69,005,000, compared with £230,076,000 in 1975, while combined operating income was £9,593,000, against £f 1,816,000 in 1975. Engineering operations, comprising Saunders Valve, Mono Pumps and F.I.P. in Italy, declined. New product developments are expected to lead to improvement in 1977 profits. ]n the optical goods and services sector Dollond & Aitchison reported operating income of £4,816,000, against £4,165,000 in 1975, with sales of £27,611,0O0, up 16%, Doliond International has expanded its continental operations to 63 branches, 9 Dutch and 59 Italian. GaHaher's wholesaling business declined 36% in operating income to £510,000. This reflected down-trading by customers as a result of inflationary pressures. While profits were hard hit in the first half, an improving trend was noted in the last half of 1976, Retailing operations, principally Forbuoys, reported operating income of £1,356,000, compared with £1,223,000 in 1975. Sales increased 19%. Forbuoys J n 1976 added 12 additional shops, bringing the total to 387. On January 4, 1977, Gallaher instituted pdce increases on most tobacco products to help absorb the impact of excise tax increases. In 1976 the British pound stetting declined in dollar value from $2.02 to St .70, or t6%. Under current accounting rules this gave rise to charges of $49,922,000 as Gallaher's results were translated into dollars. Thus what would have been a $35,439,000 contribution to American Brands' net income became, in consolidation, a net loss of $6,483,000. (GaJlaher's ! 975 contribution to net was $37,556,000.) Stuart G. Cart'~ fOl~ Managing Director, Tobacco

Master Lock Company Hyland J. Barnes Presldentsnd Chref E×ecutrve Officer 10 Master Lock's operating income of $20,023,000, up 13% from $17,748,000 Jn 1975, set a record for the eleventh consecutive year. Record sales were $53,452,090, compared with $49,307,000 in 1975. Strong sales momentum continued in the company's line of high- security pin tumbler padlocks, which contributed significantly to 1976's results. Armorlock (above, thfrd from left), made "tamper- proof" by a shrouded shack]e and revolving shackle guard, was introduced in 1975 and had excellent consumer acceptance in 1976. This product quickly became one of the better-selling products in Master's padlock line. Recognizing the demand for better protection, a new ultra-high-security padlock was introduced in June. This lock offers 6-gin-tumbler security, has a 3-inch-wide laminated case and weighs 2~/2 pounds; sales doubled anticipated volume. Combination and built-in locker locks showed improvement despite restricted school budgets and a low level of new school construction. This category was aided by a new dead-bolt built-in combination locker look. Steady growth is anticipated for this new product. Safes of Master Lock's burglar and smoke alarms continued to increase in 1976, with combined sales more than double 1975. The Ultrason-X burglar alarm plugs into a standard electrical outlet, providing an instant security device for homes and offices. Master's newly designed smoke alarms did well despite a proliferation of new brands and severe price competition. Export sales posted increases and sales in Canada, aided by a second warehouse, were strong. With warehouses now in Vancouver and Montreal, service to customers was improved. Master Lock maintains an aggressive markeSng and advertlslng program and in 1977 network TV coverage will be expanded, with commercials appearing on nine sports spectaculars. These include the Super Bowl, the Indianapolis 500, the Aft-Star baseball game and the British Open Golf Tournament,

James B. Beam Distilling Co. Beam's operating income was $18,681,000 In 1976, up 4% from the prior year's $17,939,000. Sales were $165,031 ,o00, up 4% over 1975. Although overall consumptTon of Bourbon declined 2% last year according to independent analysts, Beam Bourbon increased its unit sates and thereby further enlarged its share of the market. Jim Beam continues as the largest-selling straight whiskey in domestic and world markets. Beam's Chofce, 6-year-old premium Bourbon, also contributed to the company's volume increase, as did Beam's Bicen- tennial bottles introduced in January 1976. Beam made a further move to compete in the higher-priced category by introducing Beam's Choice black label, a 9g-proof whiskey aged for 100 months. Bourbon accounts for 82% of Beam's profits. Industry sales of scotch whisky held even with 1975 and the same was true 1or Bell's and Spey Royal, Beam's line o1 vodkas and cordials had higher case sales, with Dark Eyes vodka posting ~ 12% gain. Sales of Beameister imported German wines, packaged in colorful ceramic crocks, continued to increase. During the latter months o1 1976, Beam introduced a line of Italian wines under the Trave label. Combined sales of non-Bourbon beverages were $27,620,000, an increase of 5% over 1975. To meet demand for Mr, and Mrs. "T'" Bloody Mary Mix and other Taylor Food mixes, additional bottling facilities were brought on stream in Clermont, Kentucky, to supplement West Coast production. Taylor sales again increased, to $9,076,000. Regal China, which manu- factures Beam trophy bottles and other ceramic products, increased its sales to outsiders by 38%, to $4,633,000. Demand for used cooperage continued slow, and the market price continued to be low for dried grain, a by-product of the distiging process. Profits from these secondary sources were minimal Jn 1976. Martin Lewln President and Chief Opera~ing Officer 11

Sunshine Biscuits, Inc. Suns z I Edward J, dennlrlgs, Jr, President and Chief Executive Of freer Sunshine's operating income for 1976 reached an all-time high of $18,402,000, up 22% from the previous year. All three divisions-- Biscuits, U.S. Snacks and Canadian Snacks--showed profit increases. Cheez-lt and Krispy Crackers paced the increase in the cracker segment, with Hydrox, Sugar Wafers and Vienna Fingers leading the cookies. Sales for the Biscuit Division were $207,880,060, up $1,762,000 over 1975. Operating income was up 16% to $13,397,000. U.S. Snacks posted sales of $60,924,000, down 17% from the pre- vious year. The sales decline reflected the disposal of five regional snack operations (Baltimore, Raleigh, Louisville, Washington and St. Louis). The two U.S. operations being retained, Bell Brands in Los Angeles and Blue Bell in Portland, Oregon, had combined 1975 sales of $39,823,000 versus $38,890,000 in 1975. Their combined operating income was up more than 400%, enabling the U.S. Snack Division as a whole to show operating income of $1,567,009 as against $433,000 the year before. Apart from the discontinuance of the smaller marginal operations, the divislon benefited from reduced cooking oil costs. A new natural-style potato chip and corn chip, first introduced by Be9 Brands in Southern Californ]a= scored an immediate success with consumers. The Canadian Snack Division showed sales of $51,407,000, up 18%, with operating income reaching a new high of $9,439,000, up 13%. Distribution was extended for both Canadian labels, Humpty Dumpty and Maple Leaf. Combined sales for all three divisions, including partial-year sales for discontinued operations, were $390,211 ,O00, down 1% from 1975. Excluding the discontinued snack operations, sales were $299,110,000, up $10,571 ,O00 or 4% over the comparable 1975 fig ure. While advertis- ing and selling expenditures increased in a keenly competitive market, gross profit margins increased in each of the three divisions. 12

Wilson Jones Company Wilson Jones' operating income in 1976 was $11,481 ,go0, highest in its history. The 1976 profit figure was 58% above 1975 (a depressed year) and 19% above the previous high in 1974. SaTes were $60,718,000, compared w~th $50,728,000 in 1975 and $51,881,00g in 1974. A new merchandising program, the Modular Merchandlsing System, helped to achieve the strong results. MMS includes fixtures, pre- selected and prearranged merchandise, signs, product identification and inventory confrol--a complete system to help retail dealers move Wilson Jones products. MMS has given sales upward momentum that is carrying over into t 977. It has created additional outlets for Wilson Jones products among retailers who have not previously carried office supplies. The Wilson Jones Division, accounting for hag the company's sales, makes a broad line of loose-teat and other binders with related fillers and accessories, This basic line of office supplies showed a 17% sales increase and a 61% operating income increase in 1976, The DataSystems Division, specializing in products to retain and retrieve data processing printouts, showed a sales increase of 21% and operating income up 39%. DataSystems accounts for about a quarter of the company's sales. Substantia[ profit increases were also posted by the GrayLine Division, which prints standard business forms; the Perma Products Division, which makes corrugated storage boxes; and the Standard Diary Divlsion, which makes desk journals, appointment books and other dated goods. The Cooke & Cobb DNis[on, which manufactures expanding files and wallets, showed a satisfactory sales increase but encountered problems in high manufactu ring costs and availability of raw materials, which bnpaired profitability until late in the year. John P. Clark PresTdeNtand Chief Executive Officer 13

Swing]ine Inc, Edward W. Whittemore President and Chief Operating Officer Swingline's sales fo r 1976 were a record $136,060,000, up 11% over 1975. However, operating income declined to $16,483,000, from the record $17,033,009 posted in 1976. The drop in overall operating income resulted primarily from the cost of restafflng and reorganizing Marvel Lighting Corporation, manu- facturers of long-life incandescent lamps, acquired in December 1974. MarvePs operating income for 1976 was $2,060,000, down from 1975's $6,374,000. Sales declined 7% to $37,148,000 in a year of intense competition. To strengthen its position and offset competition, Marve[ introduced a new line of office lighting products in late 1976 to be sold through office product distributors and dealers. The impact of this move will be felt in 1977. The Swingline Division, responding to a recovery in demand for office and consumer products, attained record results in 1976. Operating income was $7,664,000 on sales of $36,159,000, represent- ing gains of 20% and 14%, respectively. New paperwork processing products added to 1976's results. These included new fastening devices, restyled manual and electric staplers, a pneumatic stap6ng work station for high-production use, new do-it-yourself products, and a line of glue guns. Case Cutlery, manufacturer of quality knives, shears and scissors, achieved record saJes of $17,622,000, up from $12,687,000 in 1975. Record operating income of $2,927,000 was up 68%. Furl operation of the new plant in Bradford, Pennsylvania, allowed Case to step up production for its aggressive market e×pans[on program. This resulted in the addition of a substantial number of new retail accounts and greater sales, tn four years as a Swingline profit center, Case has increased sales by 127% and operating income by 263%. 14

The Marson Gorporation reported record sales of $13,638,000, up 18% over 1975 and record operating inoome of $1,832,000, up 16%. Both fastener and automotive products have contributed to Marson's steady and uninterrupted growth. Several new professional products were introduced in 1976, including Mar-Gfass for auto-body repair and Contour, a material for repairing rusted vehicle areas. Spotnails, manufacturer of industrial fasteners, continued to benefit from new marketing emphasis. Operating income was a record $1,773,000, compared with $631,000 in 1975 and $118,000 in 1974, when the company was heavily dependent on new home construction. A new line of air tools for packaging and home remode]ing spear- headed the sales improvement. Ace Fastener, manufacturer of stapling machines and staples, reported sales of $8,050,000, up 3% over 1975. Increased costs for tabor and raw materials, however, continued to exert pressure on operating profits, which declined from $835,000 to $532,000. Two new products introduced successfully in 1976 were Air Bind Center, used to bind thick reports into book term and Prong Fastener System, for binding varlous-sized documents. Swingllne of Canada posted sales of $7,987,000, up 12% over 1975. Products contributing to the increase were Marson's auto-body fillers, rivets and tools, Swingline staplers and staples and office supplies~ Price controls in Canada, however, kept pressure on profits, which decreased 10%, 15

Acushnet Company Richard B. Young Ptesidentand Chief Execvtive Officer American Brands' consolidated figures for 1976 include the resuIts of Acushnet Company from April 4, 1976. Aeushnet contributed $7,729,000 to 1976 operating income and $68,550,006 to sales. For the full year, operating income was a record $10,403,009, on a new high in sales of $90,203,600, up 8% and 15%, respectively, over 1975. in addition to the famous Titleist golf bali, the Golf Division markets a line of quality golf products through pro shops. This includes golf clubs, bags, putters, cads, gloves and headeovers. Golf bags are also sold under the Finalist and Club Special brand names. For calendar 1976, the Golf Division posted operating income of $5,770,000 on sales of $55,117,0OO, compared with $6,936,000 and $50,717,000, respectively, in the prior year. Although gains in sales were recorded for golf bails and bags, excessive industry wide inventories eradicated the division's golf club profits, Acushnet's Rubber Division had record results in calendar 1976, with operating income of $4,663,000 and sales of $35,066,090, gains of 73% and 25%, respectively, over the previous record results of 1975. The division specializes in the manufacture of molded natura] and synthetic rubber products for a wide variety of industries, with approximately 40% of sales to the automotive industry. Acushnet Limited, a wholly owned subsidiary, attained greater distribution of the company's golf products in the United Kingdom and Europe. 16

American Cigar ® American Cigar's 1976 operating income was $6,352,000, compared with $6,226,000 in 1975. Thls gain was achieved despite a sales dip to $49,901 ,gog from $51,219,000 in 1975. Profit margins in 1976 benefited from the addition o1 highly automated cigar-making equipment which reduced costs and increased productlv[ly. The domestic cigar industry in 1976 experienced its sixth consecutive year of decline in unit sales Overall divisional unit sales declined, but at a lesser rate than the industry, resulting in an increased market share for American Cigar. Antonio y Cleopatra sales continued to run counter to the industry trend for large cigars and recorded the brand's fifteenth consecutive year of increased unit volume. In 1976 Antonio y Cleopatra was the divislon's leading sales and profit producer, accounting for more than half the division's dollar sales. Major marketing emphasis continues to be placed on this brand, with advertising featuring Grenadiers, Panetelas, Sabers and Saber Tips. La Corona Imported Cigars, handmade in Nicaragua, were introduced in the New York area at the start of 1976. This high-prlced product, comparable in quality to fine Havanas of the pre-Castro era, was well received and distribution was achieved by year-end in all major markets. To meet consumer preference two new shapes are being added to the line. Unit sales of Roi-Tan, Beck y C~. and Cabafias all declined in 1976. Little cigars also declined in line with the industry trend; American Cigar's brands in this segment include A&C, Roi-Tan and Deringer High-grade smoking tobaccos marketed by the division include Blue Boar, a domestic mixture, and Skallorna, an imported premium price Danish mixture. Starting in March 1977 the division will also handle the importation and sale in the U.S, of the Dutch pipe tobacco brands, Sail, Flying Dutchman and Clan. Alvin Bemstein President 17

The Andrew Jergens Company Kenneth C. Schuster Ptesidentand Chief Executive Officer Jergens' operating income for 1979 was $5,896,000, an increase of 47% over 1975. AII divisions of the company--domestic cosmetics, domestic soap, subsidiaries and international--contributed to the gain, Sales were $74,073,000, an increase of $6,594,000 over the previous year. Domestic cosmetics, including hand-care products, accounted for about half of Jergens' dollar sales and showed a 23% increase. Jergens' Canadian subsidiary increased sales 6% to $5,334,090. Sugar Beet Products Co. and its Canadian subsidiary, Chemical By- Products, Ltd., showed sales of $5,889,900, up 18%; these companies make and seJl industrial skin cleansers. Albert Verley & Company and its French subsidiary, Arornesee'nce, creators of fragrance and flavor compounds, posted sales of $3,311,990, a gain of 38%. As a group, Jergens' subsidiaries and international division showed a 37% gain in operating income on sales of $16,993,000, up 17%. New products introduced in the last three years, including Gee, Your Hair Srnefls Terrifio Shampoo and Conditioner, Nature Scents Soaps and Bath Beads, Barbie Toiletries and Jergens Pre-Heat Hair Conditioner, accounted for 27% of 1976 domestic sales, or $15,571 ,O0O. The most successful of these new products is Gee, Your Hair Smells Terrific, which achieved sales of nearly $5,000,000 in its second fuFI year on the market. The research and development program is continuing with a variety of new products being market tested. Hand care products, Jergens' original specialty, registered a sales increase of 9% ; these include Jergens Lotion, Jergens Extra Dry Skin Formula and Jergens Direct Aid. Soap sales were down, reacting to competdive new brand introductions. Gross profit as a percentage of sales increased as a result of productivity improvements, and distrib~tion of Jergens products in the marketplace was improved through the addition of brokers and the reorganization of the Sales and Sales Promotion Departments. 18