Tobacco Documents Online

DECEMBER 31, 1978

NOTI~.~ OF M~ETI~G (ENCLOSED WITd A~UAL REPOP~T DE~R 31, 1978)

pROkY (E~CLOSED WITH Ak~AL ~PO~T DECE~ER 31t 1978) ,3

i00-000 I CASH IN BANKS DECEMBER 31~ 1978 This account records amount of cash on ~el~Oslt with banks. ~ttexican Brands, Inc. ~slt with: Banco Popular de Puerto Rico BaRkers Trust Company Chemical Bank . General Account Chemical Bank - Vendi~q Arranqement Chemical Ba~k , Sal~smen Connecticut Bank ~nd Trust Company Crooke~-citiz~s National BAnk - San Francisco~ California First ~ational Ba~k of Atlanta - Atlanta~ Georgia First National Ba~k of Boston First Matior~l Bank of Chizaqo - Chicago, Illinois Citiba~k General Account Fzeedo~ National Ba~k of New York Irving Tr~st Company - G. ACCOUnt Irving Tr~st Company - M. ACcount Manufacturers Hanover Trust Company - General ACcount Morgan Guaranty Trust Company of New York - General Account Morgan Guaranty Trust Company of New York - Dividend Account Morga~ G~aranty Tr~st Company - L~ndo~ Oneida Valley National Bank Republic National Bank of Dallas - Dallas, Texa~ Shaw~ Bank Of ~ost0n Texas National Bank of Comme~oe ~ Houston, Texas The BaDk of New york The Chase Manhattan Ban~ - General AcCount The Northern Trust Company , Chicago, Illinois . GeneraI Kccount United States Trust company of New York United virginia Bank Westde~tsche Landesbank Girozentrale , General Account The American TobacCo Co,any New York - Leaf Purchase Accounts The Chase Manhattan Ba~k Citibank Manufacturers Hanover Tr~st Company M~rgan Guaranty Trust Company of New york Balance ~t Decembe~ 31, 1978 3,328.61 91~201.~2 10~,564.81 2,782.23 50,000.00 24~649.39 78,057.82 I02,582.~4 25~000.00 2,346.37 752,3~0,56 15,213,71 34,729.83 5,776.91 173,788.87 1,236,03~.22 26,~H2.27 1~,565.46 83,475.87 200,000.00 906.90) 24.613.07 44,972.72 472,212.1S 24,902.83 45,372.15) 5,000.00 5,000.00 5,003.20 5.018.3~ 3~889.89 3,575,19~.79

102-001 - C~H I~ BA~ - p~R~O RICAN SPECI~ ACCO~ DE~R 31, 1978 Thi~ account r0corde cash receipts ~l~m c~StC~S, ds~It~d by route ~A~les~e:l a~d Pu~Tto Ric~ Branch i~ F~rst Nablonal City B~nk, P~e~to Rico, for t~ansfer to New york, wb/oh hav~ not been ~ecor~ed in New York as of month end~ pl~s flied ~/nlmum balance o~ $i,000. Balance at December 31, 1978 Deposits re~orded in following month by bank Cash balance par ?ue~ Ri~an Bank s%at~ment 2~,610.38 31 513.49 5

31, 1978 sw~mar~ ~mal~Is of transac~nB: Balanae J~nuazy i~ ~978 Monthly relmbuzsement pa~m~m~ made to tm~ Less; Pa~t~ ma4e by ~ee to ~t~xees o£ ~11owL-4 ~e~= A~a~an ~wanas, Inc. c~iden Bel~ Me~fac~urLn~ Co~m~ Balance ~ 31, 1978 221.984o06 6,695.36 -0- 228t679.4~ 228.679+42 - 0 - G

I03-001 - CASH IN INTER~ST-BEAR/NG CALL DEPOSIT BANK ACCOUNTS D~CEMBER 31, 1978 Balanc~ of this accounn represents amount dsposlted In interesK-bearlng call deposlE bank aCCOUnUS. Thero werQ no transaculons during 1978. 7

104-000 - CASH ON }~D DECEMBER 31t 1978 This account records an i~prest Cash fund in Now York Office, in possession of Treasurer's Depar~ent, a~d may include cash on hand and/or vouchers for disbursements made s~bseq~ent to last reimbursement of fund. At year end debit balDllce represents actual cash On hand only. Balance at December 31, 1978 10,730.66 8

i05.000 - CASH IN TRANSIT DECEMBER 31, 1978 This account records amount )f cer~amn funds in ~ranslt and funds which were reclassified at end of year in orde~ to preserv~ regularity and consistency oF financial statements. A~ounts chaxg~d or credited to ~nlS aecoun~ each ~onth a~e re~la~sifled in following month. Balance December 31 1978 James B. Bsam Distilling Co. Sunshine Biscuits ~nc Gallaher Li.lit ~d MetroPOlitan '15~b. CO. Calvin S~pply~. Gr~.t A. & P. CO. Y, roqer CC Se~Im~t ~n Corp. 3,320.04 2~,903.23 30,662.77 137,214.54 lO 900.O0 774.06 20,339.93 14~84.08 Deblt Balance at Decer~ber 31. L978 246 298.65

107-000 - UNITED STATES SAVINGS BONDS SERIES E. CASH DECEMBER 31 1978 Th±s acoounn records ~ployees funds on depos±t in a speczal hank account for purc]mse of U~ited States Savlngs Bonds Series E. Th~ balance is fully offset by credit b~la~co >f A~co~nt Nc 108 000 - United States Savings BondsJ S~ries E, cash Offset ~CCO~n~. Details ~re maintained in Pay Roll Dep~r~en~, Suxmnary analysis ot transactlon~ Amerlcan Br~ds In¢ Le~ Balance Deposited Returned ~alance January ] in Special Bonds to Decer~ber 31~ 1978 ACCOUnt Purchasud ~ 1978 2 805.65 436,462.50 436,561.25 1,342.50 I 364.40 IO

108-000 - UNITED STATES SAVINGS BONDS~ SER~ES E, CASH - OFFSET ACCOUNT DECEMBER 31, 1978 Credit balanc~ of this account records Company's liability for ~np]oyees' funds which are On deposit in a special bank acdoun% for purchase Of United States Savings Bonds, series E. The liability for pay roll deductions not yet deposited An special bank account is recorded in Account No. "725-085 - U.S, Savings Bonds deductions to be deposited." Balance O~ unas =ccoun~ f~lly ofzsets deblt balance ot Account No. 107 000 Unleed S%~tes Savlngs BoDd~ serles E c~n. Det~il~ are maintained in Pay Roll Department. Summary analysis of transactions: Ame~iran Brands. Inc. 5~S~ Balance Deposlt~d Returned Balanc~ ~anuary l, z~ Special Bond~ December 31 1978 ACcount Purchased ~ 197E 2 805.b5 43E ~62.50 436.561.25 1 342.50 1,3~4.40 11

ll0-O01 - SH©RT-TE~I INVESTMENTS DECEMBER 31, 197B Balance of this account rep[-ese~ts face value of mo~ercial paper, negotiable certificates ~, of deposit and bankegs acceptances acquired. There were no transactions during 1978. I I IZ

121-000 - Cq~D~ ~B~O/.l~_l~St SECURITY ~R 31~ ~978 Letters of Credit Issued BX IS*U~ TO Amount Cen~al ~aBk & Tzust CO. Of Kauf~n C~garet~ Serviue Inu. 5,000.00 Miam£, F1orld~ 1770 N.W. COUXt ~iEst Pe~nE~l~la B~ Philadelphia, Pe~ylvanla U~On ~nnking & ~Tu~ DuBo~s. pennsy~var~a virginia N~t~Onal s~nk Nor fo~k, v~nla C£ty ~tlonal sank LOS Angeles, ~llfo~n£a Yirs~ ~hant~ ~at3Onal Red Bank. New Jerny F~r~ J~Sey Nat~l B~k Jersey City, New Jersey ~alf DOII~ Saving & Trust Bm~k yahn ~ ~nu~l D~vis~n o~ Pe~ Co. F~ ~ Wei~0~e~and ~hll~e lphia, Pennsylvania B~qi Toba~o Co. ~o~k4~u~, ~ennsylvania H. BQIkov TOba~eo NO~ folk, Vlzginia D/S/A La~ren~ Wh~lesalQ C~y & TObau~ Co. Los An~l~s, Califo~n~ G~den S~ Tobacco Bank, ~ew J~sey N~Y. Wholeea~Q C~dy Ho~ Corp. NeW~Tk, Ne~ J~ey cha~le~ Sle~d Co~ FirsE Citizen~ Ra~k ~ T~t CO* ~Orth W~k~e~oro, ~th ~lIna ~atlonal Bank & T~ust NoEwlch, ~ew Yo~k I~ustr~ Valley Bank & T~us~ CO. P~/ladel~hia, P~n~¥1van~ J. V~1 ~no ~r~s B~own Bzooklyn, New York Dermo~, X~c. Taylozsville, ~o~th ~arolina N~zwleh candy ~ ~obaceo Co. ~or~i~h, New Yo~k Reliable D~ ~txibu~ox~ We~ Ch~ster~ ~ennsyl~n~ i~,0~.00 i0,000.00 I0,~0.00 85,000.00 20,000.00 15,000.00 20,000.00 I0,0~.00 5,000.00 5,000.00 ~000.~ (C~ntinu~)

121-000 - C~IT CUST0~ER3~ S~I~RI~IT DEC~ER 31, 1978 Issued BZ Par~m ~xchar~e S~ak ~n, Virginia Peop1~ NaEional ~Ik WaLTrenton, V~inia ~chants Natlonal Bank G Trust CO. of India~lls In~lanapOlil, Indiana F~St NatlOPal Bank Will.son, West V1~£nla Total s~anuh Banking & TrU~ Co. of ~oldsboro Col~aro, North ~,a ~anch Banking & Trust co. of ~oldsboro Gold~x~, ~ Carolina Tot~1 ~a1~ce at Deo~er 31, 1978 Det~r~ of Credlt Issued To Payl~a SUCker T/A ~igore C~n, vizg~Lnia Wazx~n WhOle eal es WezrmY~n, V1~in£a WOO~ Wholls~le Co., I~. Z~anon, I~ L~na Tu~ Valley G~ooe~y co. will~a~o., West v~gi~,a Cex~LfL~J.,'i:es of ~posit SOU~C~ WhOlesale co. ~ldsboro, North ~aro11~ Southern ~leMl@ co. Gol~e~, NOah Carolina Page 2 Aex),xnt 8,000.00 15,000. O0 IS,O00.O0 15,000.00 50,000.00 SO,O~.O0 XO0,O00.O0 442~000.00 14

1978 ~it ~r~s of this ac~t ~ a full offset, to AC~t No. "121-000 - C:R~t B~Decembex31, 1978 (De~ilslnA~ant~o. 121-000) IS

~,25-000 - I~EE'VE FOR C.~SH DZS~ a~unt~ r~iY~le s~Je~ ~ ~dLSOO~mt. ~" Ju~aiysLs of I~ans~:~ons: c~m~s ~e Deep.be: 31, 19?8 983.963.33 34~06~,831.79 34 969 29~S0 35,953,261.8~ 34,879 650*30 1 073~11.$3

126-000 ~ RESERVE FOR DOUBTF~5 ACCOUNTS RECEXVABL~ - CUS~ 197B Th~s ~unt zecords r@S~TV@ for estimated losBes on customers' acoounts receivable. S~I~ry analysis Of tra~sa~tlons: Bal~c8 JanUary i, 1978 ~d~ COllections Current ~oviston Less: Amours wrltt~ off for ~tomars' acc~/nts receivable which became dot~otfv/ of ~olle~tion Balance Decemhe~ 31, 1978 299,996.54 BI,191.68 179,329.81 560,518.03 260,518.03 300,000.00 17

128-000 - DOUBT~DL ACCOUNTS RECEI%~ABLE CUSTO)~RS - WR~TTE~ OFF ~CE~ER 31, 1978 This accot~nt recuzds accounts receivable olass~fled as doub~f~l of collection ~ansferred by Credit Depaz~nt. A full offset is pr~ided i~ Ace0~nt h~. "129-000 . Offset to doubtful a~01%nts receivable ~ustu~ - %~citten of~.- S%mm~y analysis of t~ansactlons: Description of Items 1963 ~ol~ts: Continental Vending Maul~nes Nestbury, New Yo=k 73,075°54 491794.53 1964 Ac~oun~: Continental Ven~Ing Machlnes Westbury, N~w york 2,509.23 1969 ACaovnts: F° W. Koe~ecke ~d SoDIr Ina. Blue Island, llllnoLl 803!674.84 1971 Accounts: Gels Brother~ ar~ Zuckerman, Ino. stamford, connecticut I~ ,II1.85 1972 A~counts ~ Hudso~ HObBy, IDa. M£1waukie, oregon 44,567.22 8,115.50 1973 ~cc~unts ~ ~ England Tobacco and candy Co. Brldgep~z~, C~nne~ti~ut 19,695.~3 414.50 1974 A~uounts: Lawrence Wholesal~ Can~y & Tobacco Co. LOS Ar~ele~, Callfoznla 61,873.43 B~ha Ck Corp. Brooklyn, ~w Yo~k 20,307~57 T~g Valley Tobacco C~any Belfry, Kentucky 3,541.28 King T~ac~o Com~an~ ~an~te, Mi~b/gan 6,339.86 Balance Reductionb~ January i, 1978, Eliminations Balanoe and 1978 and December 31, Additions C011~ti~ns (Restorations) 1978 23!280.81 2,509.23 803f674.84 12,111.85 36!451.72 19,281.23 1,547.00 3,541.28 61,873.43 20,307.57 4,792.86 Total 1974 92,06~.14 ~!547.00 3,541.28 86,973.86 (Continued)

128-000 . DOUBTIr0L ACCOUNTS P~SCEIVABLE CUSTO~R~ . WRITTEN OFF ~ER 31, 1978 Description of ~tems 1975 Accounts : C~nexal American Cr~Rits COlumbus, Ohio F. W. Koeneake & Sonw Inc. Washington, D.C. Law~e~ae Who. Cdy. ~ Tob. CO. L°A.j Callfornia T~tal 1975 1976 ACOOUntS: Bohaok Corp. B~yn, New York LaWrence Wholesale candy TQba~co Co. LOS Angs~es, California covington Bru~. Mayfleld, Kento~ky A.T. ~me~ton Co. Inao So. san Eranc£8~, Calif. Total 1976 1977 Accounts: ~. Blo~len & S~ In~* B~klyn, New ¥~k C~r~lee G~y Inu. swainsboro, G~zqla G. V. Singletazy ~ SOn Whlt~ville, ~orth Carolina La~enal Wareho%~se ca~dy & Los A~eles, California F • W. Koene~ke & Sons Clar~m~nt Madison Tob. Oozp• ~ron~ ~ York ~herry TObacco Cozy. Bronx~ ~w york providence, Rhode Island ~ag~ 2 B~lanc~ ~du~tlon b~ January i, 1978, Eliminat~on~ Balance and 1978 and December 31, Addi~/ons COlLections (Restozation~) 1978 471.00 471.00 5,580°00 5,580.00 i!961.81 ir961.81 8!012.81 471.00 7,541.81 1,150.50 240.47 240.47 3,320.69 834.82 2,485.87 3,127.99 3!127.99 7,839.65 834.82 5f613.86 1!390.97 40,594.92 40,594.92 588.00 17.07 570.93 1,741.87 1,741.87 1,044.22 1.044.22 1,350.00 1,350.00 20,930.33 20,930.33 12,049.09 12.049.09 12,440.61 12144G.61 (Continued] 19

128-000 - DOUBTFUL ACCOUNTS RECEIVABLE CUS~g - W~I~T~,N OFF ~F~C~E~ 31, 1975 Description of Items 1977 ACcounts : (Continued) Kinsey Wholesalg CQ. Inc. ~ce, TeXaS 3,893.70 J. R. Bow~ D/B/A ~ari~tta TObacco Marietta, Geo~ia 2,0~?~27 TOtal 1977 96,720.01 17.07 197~ ~cco~u~ts : La~ence Warehouse Candy & Tobacco Co. Los Angala~, Callfo~nla 1,833.00 Covington Bros. Mayflower, K~tUQky 173.63 Harex ~nc. Providence, Rhode Island 450.00 H. P~ B~er CO. ~o~hester, New york 10,570.99 74.31 Western candy & Tobacco CO. Ina. G~a~ Falls, Montaua 2,178.91 Old Chicago Smoka Shops, In~. D~n~olnwood, illinois 1,299.49 Park C~est~r Toba~u0 & Candy Co. Mr. Vernon, ~ew York 7,6~3.47 4,598.50 Kinsey WholeSale CO. In~. c~er~, T~XaS 470.00 Symma~ Distributo~s~ In~. Vernon, California 2,3~9.55 Wor~lerg Salest In~. CoviD~ton, ~ntuck.v 57~475.96 3,722.67 Fer~andaz Distributors ~nc. ~or ton, Massachusett~ 9,583.~3 9,683.23 J. A. ~chrager Br~n~, New Y0~k 6~,136~19 pas~ Tobacco Co. Nor~ Hills, P~insyl~nia 30,7~i.03 FoOd Fai~ In~. Phila~e l~hia, p~nnsylvania 20~256.24 ~umpty Du~ty S~s~markets Oklahoma City, Okla~ 6,722.40 Allied S~perm~kets, In~. LiVOi~a, Michigan 37,607.64 John ~ikos ~ Co. Pirae~, G~e~ce 5,235.85 Page 3 ~alance F~c tloll by J~nuary i, 1978, Bl~inatiQns -~i ~ce ai~ 1978 and Dece~r 31, Additions Colle~ tions (Restorations) 1~78 3,~93.70 . 2,087.27 570.93 96,132.01 1,833.00 173.63 450.00 I0,49~.68 2,178~91 1,299.49 3,044.97 47~.00 (~,389.55) 53,753.29 68,136.19 30,781.03 20,256.24 5,722.40 37,607.64 ~[235°85 Total 1978 250,518.03 20,468.26 4!852.93 2351196.B4 Grand TOtal 1,420,786o85 81,191.68 27~161.85 1,312,433.32 ZU

129-000 - OFFSET TO DOt'BTI~UL ACCO~,~S RRCEXV~LE CUS%~ME~ - WR ~C TT'~'N OFF DECEMBER 31, 1978 C~e~t bal~ae of this aa~ount re~o~s a full offer to A~o~t ~o. "128-000 - Doubtful a~cou~ts reaQiva~le CUStO~rS - written off, " Sumlmaz-/ analysis of transactions= Balance January I, 1978 Add: Credits during year for customers Ac~nts receivable which became d~ubtful of COllection Ded~t i D~bits during year for: Collections Elimlnati~ns and Res~ratlons Net Credlt BalanQe De~e~blr 31, 1978 OfEset ~ ~t~btful A~S Receiwabl8 Customers - WZltten Off SUhuequQnt 1/i/57 1,160,268.82 260,518.03 1,420 786.85 81,191.68 27,161.85 i08,,353.53 1 312 433.32 ZI

140~001 - FI~TISH~D GCODS - CIC~P~TS,ES, ~IOKIN~ ?~TC, DEC~IBE~ 31, 197~ The debit balance o~ this account represents the inventory value on New York 0flies books of doDlestlc and export finlshod goods on hand at~ a~d i~ transit to, branches, w~rehous~s and the ~w York Office store, and The Andrew Jergens COmpany and Swinq- line Inc. products on hand in N.Y.O. stock. A detailed analysis o~ t~ansactions is maintained On NYO 2 by th~ PrOduct Cost Division Of the Accounti~ D~paxt~ent. For ~obacco products an average COst per thousand or per potlnd is calculated each month fo~ e~ch b~and, siz~ and group by adding ~I~ inventory v~iua at ~he beqinninq cf the month to the cost of manufacture billed £o t/~s of~i~ by ~he branches during the ~on~l less the cost of gratis goods on Factory Forms 31~2B ~d branch credits (Factory Fozms 31-2B are calculated at ~rlor ~nth's closing inventory Cost - branch c~edits are i~sued b? branche,~ on NYO FOImS lO) and divid~ the n~t result by the net applicable quantity. Those average costs are used ~o ~t~ine amounts appli- cabl~ to shipped and i~ventory q~a~titios at the end o~ the ~O~th. The d~0it balance a£ DecenCmer 31~ 1978t is comD~sed of the following~ Inventory Type ~a~t~t~ Value Cigarcttes ~l*ss~ic 5,215,103,700 27,32Y,711.54 EXport 77,179,280 ~22,086.95 P~erto ~Ican Branch 194,400 1,050.53 Smoking Domestic 572,729 - 5 3/4 1,233,945.46 EXpOXt 4,569 - 12 10,970.02 swinqli~ Inc. (Mars~n) 64.50 The Andrew Jerqens C~pany Products 1,123.16 Debit Balance December 31, 1978 28,996,952.16 ~Z

140-002 - FIIIISHED GOODS - CIGARETTES, SMOKING, ETC. ON CONS IGNI4E~ DEC@MeER31, 1978 The debit balance o~ this account represQnts the on-han~ a~d in-transit inventory value on New York OfficQ books of cigarettes m~qufactured by Theodorus Ni~eyer Ltd., Groni~qen, Holland, and shipped to S.E.I.T.A. in Mar~eilles~ France, for eventual sale in Co/slca, at which til~ the consiqD/~e~Lt is c~plQte~. The cost o£ the cigarettes in this account is reCOrded ~n the miscellaneous voucher register when Ni~yer invoices are processed ~ pa~nt. Prices paid to Niemeyer a~e determined by contract negotiated by ~Fort Sales Department. The debit balance i~ this account at December 31r 1978r is as follows: pALL MALL Filter pALL MALL Menthol LUCI<Y STRI~ LUCKY STRIKE Filter 85 ~. Debit bal~nce December 31, 1978 In~n~ry Value 410,000 4,029.59 240,000 2,217.47 640,0D0 5,024.45 750,000 6,739.15 2,040,000 18,DI0.66 ~3

140-005 - F~NISKED COODS - CIC~RET~E BOO~ DECEI~EK 31, i~75 The llsbit balance of tiais accQ~nt represents the avarage cost aIl~ the ~u~ufact~i~q rights at $2.00 per M of i~ CROIX I~eat straw Ciqaz0tte Books ~factured by the Ecus~a 9apez Division of Olln and also the average cost of BUI~ DURUM G~meed papers ~an~£actured ~y Zcust~ ?~pez Di~i~iD~ O~ 0~.4.~'~ O~ h~n6 ~t, ~ in t~nsit ~t bz~nch~ ~%d w~z~n~%s~s. A detailed analysis Of transactions is maintalnsd on N.~O _7 by the p~oduc£ Cost Division of the Accounting Dspart~ent+ An average cost ;~er tho~sa~I i~ oalculated each month Ly adding th~ invei~tory value at the beginning of the ~n%~h to th@ corot of books r~ce~ed during the m~nth le~s the cost of gratis qoods on Factory ~or~s ~I~2B (wlllch are calculated a% p~io~ mon~'s clos~n~ inven- tory ¢o~b) and 6i~idlng %h~ n~ ~sult by the net ~lic~i~ q~n~ity. ~%~s~ 5vezage costs are osed to detera%ine a~o~h%ts applicable ~o shipped qu~tities and to inventory q~astl~ies at the ~nd of the month. The debit balance at DeCember 31, 197~ is co~posed Of the followlnc~: BULL DURHAM 10O Leaves IA CROIX Wheat Straw i00 Leaves Debit bala~e DeC~aber 31, 1978 i~1,653 336,093 ~67,746 X~ve~toryvalue 5,916.60 6,110.22 12,026.S~ Z4

31, 1978 ~he debit balance of this account red.serifs the £nve~-y value on Eew ~ Off~e books of Domesti~ a~ E~ pini~hed C~ds, SI~LLC~m~ ~ S~ok~g T~ a~d ~h-G~ade ~ Toba~ on hand and in trane£t to ~n~aesw ~ and the N~ ¥czk Of£~. A de~ailed analysla of transactions Ag ~alutalned an N@O 2 ~ the Px~h~t cost Di~ of ~e &c~nt/ng ~w~mnt. An average cost par thousand ~ per pound is calculatea ~ ~onth fc~ each bzand# fr~tma~k an~ Pa~ ~ ad~u~ ~he L~Ve~ value a~ ~be ~ o~ th. ~ to ~ ~ of ~u~c~ ~ to ~ off~ b~ the l~an~ dur~n~ the ~o~th a~d ~ the cost of ~atls ~oods ~ F~ 11-~8 a~d ~ credlte 0~F 31-~I~g aze calculated at p~ ~nn~h,s closlng ~ co~t - ~anch ~ts are issued i~ bra~es on N~O 10) and d~v£d£n~ the net rUult ~ the appllca~e ne~ quantity. ZheR awn~e ~ ~--~ umd ~o ~ aS~i~able ~ S~R~d a~ In~ quau~£es a~ ~he end o~ ~e ~. The debit l~lance at ~ 31, 1978~ is ~sed of the foll~n~: 29~28~535 1,773 ~0gS, 03 36~465~lGl 2t70~,SG7°3S ~ r94J-s62S 307r9~4.07 8~393,~50 T~.,SO0°3? 4~313~580 39~404.44 2~073~900 16~5?8.74 920~800 ¢~03.25 493r475 36~391°89 ~,424 6 11,893.~ ~.l~213 6 4G4~ 640o80 2~223 7 6~13g ~95 373,950 ~-S ,120°28 88~3134 9r 768~32 40#800 442.64 77,000 ¢;90.07 3S~OOO 246.$2 ~5

CZ~P~G 3CC0~I~ 31, 1978 ~6

141-001 - ~ EXC~ ~X . C~C~RETZES 31s 1978 The debit balance of this acoo~ut ~presents the ped~Xal ~c£se Tax appllcable to taxable olg~tes ~ ~ art or in transit tot hranohes~ ~ah~uses a~d New Y~Ck ~lue. A detailed am~is is malntained ~ ~/o 2 by tho Product coat Divlslon of the AcCOUntlng De~t. D~t ~e Dece~ber 31, 1978 Rate of Tax 5,212.997,380 4.00 ~Or851#989.52

141-005 - ~ EXCL~ ~%X - CIC~RET~ 31, 1978 The debit ~lar~e of this ac~m~t represents the fmdezal excise tax appl~ble ~ all cig~zetto book~ ~ hand at and in translt to IEanches and war~1ouses. The federal ~Ise tax on all ~ £~ bl/lad to New ~k O£flce by Ecusta ~ D£v~/on of OLin, the ~anufa=~rer of the books. The debit b~lanee at December 31, 1978, ks =~m~sed of the followlng: ~JLL ~ i00 Leaves LA C~O~ Wheat straw I00 Leaves Debit ~a~%~cc Dea~$~Im_z 31, 1978 ~mte of TaX 131,653 i0.00 1,31G.53 336,093 i0.00 3,360.93

r~CE~ER 31a 1978 The debit balanc~ af this account =epzes~ts %ha federal e~clss tax appllcable to t~xable ~igars on hand at, and in transit to, branches, waze~s a~d New yoz~ Office. ~he f~d~al ~i~ tax ~ a£~ars ~e/~i~g ove~ three pmmas per thousand is ~ated on an ad v~lorem bas£s. Tax is c~/~.lla~e~ at 8 1/2% of the suggested ~m~lasale llst ~rlce With a ~ tax of $20.00 per thousand algazs. %~e tax zat~ ~ all Little Cigars £s $.75 per M. A ~etailed analysls of tr~ssactlons is malnta~d ~n NYO 2 by the C~et D£vlsi~ of the Auc~mt/ng D~t. ~e aeblt balance at December 31, 1978, is c~sed of the follOWi~g: ~and Tax Paid ~/~ ;u~mt A~C ~ne 36,465,181 459,759.71 ~t~t ~o~a~ P~=~S 2.941,6~$ 38,587.10 ~r~T 493,475 S.7~.52 ~tt~ C~a~S ~O~-~ 8,393,960 6,~95.49 A~ 4,313,580 3,235.17 2.073,900 1,555.42 F~YS 920,800 690.60 D~b~t ~ at D~e~ 31, 1978 Z9

149-001 . SALESM~'S REyJR~D G00DS ~EC~I~ER 31, 1978 4t716.68 54,239.22 52.724.75 -0- 30

149-002 - Sp~CZAL JOBBERS* ~/DR~D GOC~ DEC~ER 31t 1978 147,091.30 6 ~07 870.59 7a054,961.89 6 843 361.4.4 211,600.45 31

169-055 - ~APpING MA~R~AL AT SUPPLIEP~ DECF~BER 31, 1978 This acco~u%t records inventory value of~rappingmatezlalowned a~dheld at ~ppl~ezs. Raw Material Inventory held at Reynolds Metala Co~2any= Fmil Paper #28 lb. w~ight Dominican Hepublic - Imported LACORgNAclgar~ Balan~Q at December 31, 1978 38,733.17 112,452.57 24,339.02 175,524.76 3~

170-001 - GENER~ F~R~( SUppLIES DECKER 31, 1978 The balanoe of this a~o~m% repzesents the value of su~plles store~ at C~iden Belt Manufacturing C~any~ Durham, North carolin~ and carried on New York Offlce bOOks. Thece supplie~ are withdrawn for ~e by the Sales organization. Balance includes supplies at Cw~nsboro Fa~tozy, O~ensboro, Kentucky. ~he debit bal~e at De~emb~ 31, 1978, is c~pOsed of the following: ( 12) 3,774 2,698 27 110 3,754 13,964 118,071 27,717 1,684 40,000 11,251 8 8 15r961 924 64,962 Description Amount C~a~i~n All-~zpose Bags ( 590.07] C~mpliments of Mfg. - Up T~pe - yel1~w 3,728°39 Compliments of Mf~. - UC Tape - White 3,102.70 C~liments of Mfg. - UC Tape - Blue 108.00 Extra BOnus Carryin~ Caues 1,659.78 Free with 1 Pack Tape - Up Tape - ~d 3,322~29 Free with CaZton Purchase - pC Tape - BlUe 17~826°54 ~ee with 1 Pa~k Tape - UP Tape - Yellow 120,473.63 Free with 2 Pa~k Ta~e 1/2" Wide - UC Tape - White 26,432°75 F~ee with 3 Pack Tape - Up Tape - white 1,751.36 FUQI 011 - 0wensboro~ Kentumky 13,600.00 Masking Tape GOld 15,689°67 Merchandlslng Rep. Bag~ 357.72 Sample Cases 326.79 Scotch Tape 5,~60.21 Staples - Large 2~302.85 ~ew y~k O~£~ F~rms _ 17 845.24 233 297.85 Debit Balance December 31, 1978 33

170-002 - ~EN~RAL FACTORY SUPPLIES AT SUPPLXER~ DECE~fSER 31. 1978 This accounK records val~Q of Company-owned supplies held at various suppliezs. Balance at D~cembex 31. 1978 Name and Address of Suppliers Amsrzcan BS/*k Note Company Garrison ~nd Tiffa~ Streets Bromx. New York DeSCrl~tlor. It~_ ~ Amount Stock Certificates ~ommon Numbered 1. 000 232. ~ ] c~mmon Unnumb~ed 50*000 IC 750.00 i0.982.20 34

170-006 - pO~TA~E ~S 31, 1978 This a~n~ re~cds valua Qf ~a1~e~1 posta~R m~%~r ~a~ loadLngs at 245 Pa~k Avenue, ~ew ¥~Ck, ~ew YoEk, 3,5

I~,~]SP.R 31, 1978 The 4ahit ha~ of t~is a~aom~t represents the net ~t of attached and ~t-~.he~ c~mbinatlon New y~ck Cl~ and s~.a~ Tax S~, on band in the Sta'cl~aez7 I~: of: the New ~onk 0ff~.ce, 245 pazk Avenue, ~ use ¢4~ c~gszotto8 to t~ so~ OZ used as Samples at: Na~ yo~c]c Office. The de~it halanca a£ De~ember 31, 1978, is c~m~sed ~ ~e ~ollm~ing: Comblnation - New yonk cit~ and sta~e Ta~ sta~ ~ value Attached - Ne~ yark Office 17e500 3f963o82 Unattached - New Y~k Office 3,940 892.43 V~ading Machine . New y~k Office 1~012 229.22 Debit ~alan~e De~mbo~ 31, 1978 3~

170-00~ . NEW YORK STATE T~NSF~R TAX S~AMpS 1978 The balance in this accoun~ represents th~ value of New York State Transfer Tax Stamps to be affixed no canceled stock certificates. Balance at De~ember 31. 1978 Denomlna~lons 1 Cent 24 .24 2 cents 18 36 4 Cents 15 .60 5 Cents 21 1.05 8 C~nt~ IC .80 10 Cent~ 33 3.30 20 cents 2~ 5.80 40 Cents 1~ 4.80 50 2ents l~ 6+00 $1.00 IE 18,00 $2.00 I 12.00 83.00 ~ 9.00 S4.00 4 16.00 Sl0+O0 1 10,00 S20.O0 4 80.00 S40.O0 3 120.00 213 287.95 Balance at De~@mber 31, 1978 287.95 ~T

170-011 - RESERVE FOR C~SOLETE ~INE AND EQUZP~I~ ~I~T p.~'S DEC~ER 31, 1978 Thi~ account ~s amount p=ovi~ed £o~ po~ent~l obsolescence, due to ulumgts in style, i~!~o~a~ants* e~.* of msohine ~nd g~t zeplac~mmlt parts ca~r~d on bran¢h books ~; Au~nt No. "170-001 - Genm:al ~acl~ry suppl£Qs." Czsdit Ba~0o Ja~uar~ i, 1978 PEc~i~on fo~ 1978 Disposltlc~s C~t ~la~o~ Dec~bez 3~, 1978 211,649.69 201~ 250.68 185 73127 227,169.10 3~

EeC~M~J~ 311 1978 WEeping ~ter~al, • credit Balan©e Januazy I, lgTB p~VISlU~ DiS~osit~zu~ Cr~it E~l~n~ De~r 31, ~978 ~78,758.89 68,080.29 ~78 758.89 39

180-003 . SZNKING FUND CASH T~ HANDS OF TRUSTEE . 25 YEAR 4 5/8% SUBORDINATED DEBENTURES MATURING JULY I 1990 DECEMBER 31, 1978 ThlS account records oash transferred to ~rus~ee to fulfill slnklng f~d requlr~enKs az Januaxy i and July • according ~o agxeemen~ wl~n ~nd~rwritexs. There were no transactions during 1978 4O

180-004 - SINKING FUND CASH IN HANDS OF TRUSTEE - 25 YEAR 5 7/8% DEBENTURES MATURING JULY 1. 1992 DECEMBER 31 197E This acco~u re~ords cash transferred uo ~ruscee to fulfill slnklng fund requlrem~n~s a, Januar~ i ~d July l. according to aqreemen~ wlth underwriters There wer~ no transactions durln~ 1978. 41

~85.001 - NOTES RECEIVABLE DECEMBER 31, 1978 The balamce in tnls account repxesents notes recelvable resultlng from Compan! ~ransactlons, There were no ~ans&~tlons d~rlnq 1978. 4Z

185-002 - P~CEIVAB~S - ~DRWARD CONTP~ACT$ - FOREIGN CUP~Cy 1978 This account records the hedging galn on forward salQ of foreiqn currency in accordance with F.A.S.B. NO. 8. Paragraph 2~ Net Balance Dece~aber 31. 1978 - 0--

185-005 - SDI~K¥ ACC0~SRKCEI~rABDE DECEMBER 31, 1978 This account rscords amounts due from sundry debtors. The balance at December 31, 1978 Is oomposed o~ the following: Date Debtor Republica Dominicana - ~TASA August 29, 1978 September ll, 1978 November i, 1978 DQce~ber I, 1978 December 12, 1978 December I, 1978 Mercury Motor Express Fre~ S. Jamea Reedy For~rdlng Co. Lamcaster Leaf Department spa~ ~seas Shtl~t~g Corp. Fred S. J~s Cash Sales - Ci@arettes and Ci~azs to C~tsldQrs July 26, 1978 R.E. Frohllng Sept~b~r 28, 1978 R. Chester ~ovember 30, 1978 R. Chester December 14, 1978 ~. Lssselyong Decker 14, 1978 D. Jones December 26, 1978 R.G. Wilson Leaf Costs May 31, 1978 Norther 30, 1978 December 15, 1978 December 27, 1978 Deue~ber 29, 1978 D~cemberls, 1978 December 23, 1978 December 23, 197~ Decemb~ 23, 1978 December 31, 1973 Dec~ber 31, 1978 November 2, 1978 December 12, 1978 Jamuary 3, 1979 Do.ember 31, 1978 World Tabac Ltd. G. F. vaugh~m Tobacco Standard Bag ~ Burlap Standard Bag & Burlap G. F. Vauql,~n TOI~c~ SE~TA Th~rus Ni~" 5~l. Tl~odorus Ni~ey~- L~I. TheCdozus ~iemeyer L*~,c~. Ilni~g~l States 'l'oba~ Co. Ge~-,~-al cigar & ~l~ Co. - itol~t ~5~l~aao Co. Th~IS Nl~l~y~ Ltd. Th~:~rus Nl~,~ Ltd. Th~s Niem~ Ltd. 8,509.15 24.56 147.47 11,587.67 319.53 44.61 28.10 36.34 18.63 23.89 23.89 26.66 72.60 28,276.40 371.46 374.43 46,734.00 150,768.00 1,732.50 3,291.75 16,740.00 21,300.40 37,692.30 30.13 85,003.70 2,430.~0 38,394.~6 (C~ntinued) 44

185-005 - SDNDRY ACC0~ITS ~ECEI~ABLE DECEMBER 31, 1978 Date De~or Advertising Aqem~ ~efu~ds July ii, 1978 Daniel ~ C~Ies Associates November 13, 1978 S.S.C. ~ B. october 31, 1978 Daniel G C~l~s As~c£ates D~Q~r 31, 1978 Daniel ~ Charles Associates Dscemher 31~ 1978 F. willia~ Free & Co., In~. December 31, 1978 S.S.C~ & B. Deaemher 31, 1978 S.S.C. & B. December 31, 1978 S.S.C. ~ B. Ma~azine Adver tisin~ April 28, 1978 SEITA April 28, 1978 SEI~A June 30, 1978 S.S.C~ & B. JUne 30, 1978 ~.S.C. ~ B. June 30, 1978 S.S.C. & B. June 30~ 1978 S.S.C. & B. June 30, 1978 S.S.C. ~ B. J~ne 15, 197B S.S.C. & B. A~gUst i0, 1978 S.S.C. ~ B. August 17, 1978 SEZTA Septet 15, 1978 S.S.C. & B. s~tmmber 15, 1978 S.S.C. ~ B. Sept~a~ber 15, 1978 S.S.C. & B. Sept~ 15, 197~ S.S.C. & B. Septemb~ 30, 1978 S.S.C. & B. Oatoher 13, 1978 S.S~C. & B. C~tObe~ 131 1978 S.S.C. i B. ~vsmher 15, 1978 S.S.C. & B. ~ov~r 15, 1978 S.S.C~ ~ B. November 17, 1978 S.S.C° & B. December 15, 1978 S.S.Co & B. December 15, 1978 S.S.C. & B. Oth~ August 23, 1976 Consolidated Lith~aphers Nove~er 5, 1976 ~eri~an printing Conve~er~ December 21, 1976 Overseas se~ce Corp. Se~tembe~ 15, 1977 Contln~ntal Insurance Co. February 28, 1978 Overseas Service Corp. ~ovsmber 13, 197~ The Film Confozmer~ ~ov~mb~r 29, 1978 Olympia & York Properties Page 2 of 3 Amount $( 4,104.00) 7,772.00) 2,043.00) 277,125.00 336,775.00 132,877.00 4,379.24 12,682.31 474.18 1,500.59 352.66 182.81 347.68 1,928.20 763.49 1,237.73 2,~66.9S 483.74 327.95 281o12 524.98 258.98 277.64 295.00 597.64 632.38 612.18 195.82 1,277.78 6.93 2,210.85 298.12 i0,000.00 60.00 5,000.00 66.76 3,153.35 (continued) 45

185-005 - S~JV~DRY ACCO~S RECEIVAIILE DECEMBER 31, 1978 Dat~ Other (Contlnu~) December 7, 1978 Nov~ 28, 1978 De~ember31, 1978 D~mber 28, 1978 DeCember 31, 1~78 D~mmber 31, 1978 Dea~er 28, 1978 De~ember 8, 1978 Debtor Silv~Sc~e~ Chemical Bank 2~tho~se/Viv£ internati3nal Ltd. COstello BrOthers Ou~O~Life sEortsIllustzated SNITA W£111ampagma~, Ur., a/oHagmans Ina* cha~b~e p~rke,~hit~id~ ~W~ifg lqarehc~/se Net ~eragms ~%d (Shor~qes) Alabama Transfer & StOrag~ Co. Bek£ns Van & StOrage CO. Colonial Warehous8 c~ial Warehouse Co. W£11is Day Storage CO. D1mt~Ibution center~ o~ cincinnati, inc. Distr1~t~n East Fade~al warehouse, Into. G~braltaz wa~houses, ply. Ca~ente~ off~tt G~if Atlantic D~strlbution SerVlces~ PlY. of A~de~on~ clayton Co.~ New Orl~ La. G~if Atlanti~ D1strlb~i~n services Denver, Co. Hat ~is war~hou~ ~aslet~ Co. ~dqe~ Wa~house corp. Land war ehou ~e Laney & Duke Terminal warehouse Co., In~. Midwest Terminal warehouse Co. M~lwaukee Northslde Warehouse National DistZlhution Sy~t~ Taylor-Edwards W~reho~se united warehouse Company ~ni~zmal T~mlna~ Waz~h~e ~die Wilhelm Warehouse V~lley Distrlbuting ~ StO~age Co. Balar~e a% Decem~ 31, 1978 Page 3 of 3 Amount $ 216.00 717.14 1,075.00 49~00 i00.00 320.00 781.71] 69,41 33.44 476.69 177.65 749.22 370.80 331.16 9.86 40,675.20 770.87 382.26 94,2~ 753.60 47.17 751.59 42.08 43=20 162.54 16.42 200.40 16.42 6.00 14.~g 182.40 382.80 $ 1,288,990.16 46

~R 31, 1978 Balaz~e Dece~be~ 31, 1978 4T

DE~E~9~R 31, ].9'78 ~:Lla~ ~ber 31~ lS78 (S~ ~JE~mt h'o, 185-006 for ~talls.) - 0 -

185-010 - MIS~LL~0US ACCC~NTS ~CEIV~LE DEreK 31, 1978 •his accost ~rds a~ot~%ts dn~ f~om st~%dry debtors which are not recorded in other r ec~ivabl@ a~counts. BalaDce at Dece~lbe~c 31, 1978 ~altlss Columbia Tobacco CO., Inc., "LUCKY STBIKE- 5,160.40 COl~mbia TObacco CO., Inc., ,,pALL MALL" 289,962.33 Col~bla Tobacco CO., Inc., "SILVA THINS" 1,588.74 Et° All~etteS (SEITA) France "p~/~L MALL,, 26,190.00 322,901.47 P~ntal Income Tax Escalation Je~les B. Be~ Distilling CO. 1,706.00 1,706.00 Halfway Wheel & p~vts, Xnc., Check ~propsrly ~ndorsed by Haxvey Super M~cket 20.15 United Airlines Tickets ~d ~f%inds 593.00 RQpzeseIItS Amounts ~t P~a~d at December 31, 1978, on ErrOneO~ly Issued Dividend Chocks 58.47 ~i~b%tTse/~ent ~ Caution Notices frown Other Manufact~ers 65,337.00 Pr~c@ ~ncz~as@ ~ef~pd . Sa~8~Qn,s AUEG~obiles 5,414.18 Co~ie lqilklns . ~ag~ t~ ~/~y Car 777.14 Short Wsights - High-Grade S~klng Tobacco: Glasez Bros. - Credit fox Unsalable Merchandise ~t ~rned ll. 12 L~ B. Ball & Co. - Credit fox Unsal~le Y~rcha~ ~ se Petted 136.59 147.71 ~96,955.12 Balance at December 31, 1978 4~

ThiB ae~unt r~s a~r~t d~e f~ ¢d~ficers a~d e~ployees and a~van~e payments for travel ~e~atioD s. Bal~e a~ Dea~sher31, 1978 ~t~s and Telegrams Nov~nubeE 22, 1978 E.G. DaVis, JE. $ .20 Novewb~ 22, 1978 J.P. Qelanay Ii.91 Novel~he~ 22, 1978 G.R. ~ 1.02 I~ 22. 1978 J. J, G~J~f£n .28 Oeca~b~c 20, 1978 E* R. CeZ~ 11.53 DeO~J~oe~ 20, 1978 J. Po E~al~y 3.99 I~e~20, 1978 G. ~. G~ 1.23 D~e~g~ 20, 1978 S, G. Fa~8~ 3.28 Deo~r 20e 1978 5. MO~t:f~a~ .28 D~e1~0, 1978 T. M~ .28 D@O~20+ 1978 V.D. P~l~ino 1.28 D~20, 1978 C. ~ttalla 4~44 Peach,her 20, 1978 J* J* S~tl~ll 4.83 I~O~l]oe~20, 1978 F, H. S~tn~ 7.09 D~e~r 201 1978 J* A* 1~alsh 22.23 Deoe~er 20, 1978 J.J. Griffin 2.45 Per~=Qal Porchases O~t~r 18, 1978 J.J. ~ellett 182.90 Nov~13. 1978 O. G* Alli~ 290.91 Qove~herl3, 1978 O. G* ~lls~ 41.I~ 14, 1978 G. K* Co~ley 69.92 ~vel~l~27, 1978 K. C* P~I 2:600,00 ~'.w~Ser30, 1978 J. D, Ea~ 145.03 30, 1978 P.M. GU~e i01.07 De~ 8, 1978 R. W£1son, ~. 93.72 Deos~he~8t 1978 K. V&B;~:~Ja(~@S 13.20 Da~em~4, 1978 C. &. DeSouza 1,890.00 De~e~ 18, 197B M. w~al~ 67.04 De~eEkerlS, 1978 J. D~naghu~ 156.02 ]~e~oe~ 21F 1978 R.J. bailey 1,7~.~ D~c(mb~rlg, 1978 N. Sl~e ( 800.00) De~g~14, 1978 K. G~ 25.28 D~egcer 31a 1978 F. Silva 4.80 D~c~e~e~19, 1978 R. W* Willlams 12.00 (ConfOund} 5O

185-015 - ACCOTJHTS RECRIVABLE - OF~ZCE~~ ~ ~I~3YE~S DEC~ER 31, 1978 Ju~e 20, 1978 AU~Un~ 15, 1978 AUgtlSt 30, 1978 0~heE31, 1978 ~ 14, 1978 I~v~mlx~ 15, 1978 ~o~n~l~r 15 1978 ~13 1978 ~13 1978 1978 1978 Apr~l 27, 1978 ~rll 27, 197E Apr£1 27, 1978 Al~st 10, 1978 Decembe~ 19, 1¸978 Deceabex 1, 1976 J~13, 1970 ~toheE 1978 Per BDnal T~a~l C. E, Henderson P. Ree~ J. ~USS A. ~linar A. golinar D* Patla~ D. PaUaf C. A* Jackson, Jr. A. JP~IkO0~, Jr. V. Te=zam~ M. H. Z~,k R. H. S~Lqaet~ A, Be~ng~eln AUtanoblle I~m~.~anQe Ao F. ~o~de~ R. P, ga~k~r, ZIZ F, X. ~nel~n E. D. Sch:tT~ch~. ~. J. G~iffin ~ ~.a2. R~el¥obles T° Fi~ka Damage to ~ Cars C. C. Se~L~m Lo J. Y~ugo]; ~anufau~o~ed ato~k SOld to ~ol'eeB Bakanao at ~;~e~ 31, 1978 152.00 70,41 374.06 139,39 100.29 96.54 62.59 2~1,00 112o63 392.00 ~.~) 126. O0 84. O0 134,00 73~00 98°00 475.00 613.00 452.00 394.00) 2,004°~ 49.80 100.00 51

l 185.020 . AD%~ICES TO S~%~S~N ~ND SI~ERVISOR~ DECKER 31, 1978 Th~ halanGe of this aaosunt represents aash advances to members of our Sales Crgan~sa£1on. These fun~s a~e ~ed by th~ %o p%%rchasQ o~arettes and t0ba~o dizeGt f~om O~L~ 9oDbe~s ~u%d to ~ake O~2a~ @x~endltures au~h~ized by the Sa~Qs DepaEtmGnt. The ~UDds are countea aria ve=~ie~ periodically in the ~lel~ ~d are recalled by t~e ~w Yo~k Off~GQ o~ly on tezmlnation of the sal~S~la~. Cart~ngent f%h3d recai~a a~e on f~le ~n the Salem's ~rpanse Divislen of ~he ~oounting Dep~sent ~d. semiannually, a~l out- sta~n~ bal~ are ~fiz1~e~ with th~ res~ti~ Sales ~epa~t~. The ba/an~e at ~ec~ber 31, 1978, is compomed of the followin~ NO. Of SaI8s~ A~O~L~t cigaEett~ Sales Representatives 721 1,996~669.06 Overseas Sal~s RepEesentatives 3 Ii1926.95 American Clgar RepEesentativem 92 201 95000 Debit balance at December 31, 1978 • I SZ

185-039 - INTEP~EST ~CEIVABLE FROM RAN~S ON INVESTMENT ~N SUBSIDIARy SECURitIES DECEMBER 31, 1978 The balance in this account represents i~terest receivable fro~ banks on Reacq~ired An%erican Brands Overseas ~% G~aranteed Debentures due 1981. Balance at December 31, 1978 $87,440.00 53

185-040 - INTE~ST ~CE~VABLE DECEMBER 31, 1978 This mccomnt records accrued inter~su receivable on bonds owned by Company, on bllls and no~es r~eivable* mox~gaqes and loans. Balance at December J~ L978 Corporaue Stock City of New York - Due 1980 $i.000.00 . OctOber 1-December 31. 1978. at 4% i0,00 Mobil Oil Company on Lease ANreemon~ for 150 East 42nd Street 4~220.99 PacNaglgg S~rvlce Corpora~lo~ of Kentucky - 8 1/2% mor~gaNe 764.81 D, ~ W, Realty Co., Inc. - 8% mor~gaNe 157.99 R. F. Gemme and W. A. Mulvaney - S120.000.00 10% ~ortgaq~ Sale Of H~rtford Leaf Pr~per~y 3.911.32 Highway Construction - U.S. ~reausry Bills - Due 1980 S40.000 - OctOber l-December 31 1978, at 7 1/2% 750.00 Balance at Dec~ttber 3~ 1978 9,815.11 $4

DECE~L~ 31, 1978 This account records dividends receivable f=om inves~@nts in stocks of other co--hies. Stl~y analysis of ~xa~sact~Qns: Balance J~nuar~ i, 1978 Dividends decl&~ed by~ Master Lock Company The Andrew Jergens company Acme visible Records, Inc. Golden Belt ~nufa~turing Company A~ri~an B~ands Overseas, ~.V. Sw£ngline Ina. ~J~e~ioan Brands Export, Ir~. Sunshine Biscuits, Inc. American Tcbacca I~ternational COX~or~tio~ Wilson Jones Company Ac~Shnet company Puffy-Mort company, Inc. Ja~e~ Bi Beam Dis~illing CO. Fxanklin Life Znsuran~e company Less: Dividends ReCeived Balance at December 31, 197@ 0 - 9,063,000.00 3,200,000.00 655t00~.00 5,051,57~.5~ 150,000.00 3,735,000.00 950,000.00 6,800,000.00 31,700,000.00 6,428,000.00 4,565,000.00 25~,000.00 7,576,000.00 6~294,340.16 8~,444,018.70 86,444,018.70 - 0 - 55

185-070 - TRANSPORTATION C%A:CHS - le]*r~D D~CE.*~ER 31, 1978 Th/s aocount records amounts due from common carz_lers for claims actually filed by Traffic D~p~ctment add branches for excess tra~sportatlon ~haLTges paid, ind~ity for damages and pilferage and value of merchar~ise lost while shlpments were in tr~sit or in possession of carrier. (Details by c~rriQr mai~talned ~ General Acco~%ti~g Division) Balan00 at December 31, 1978 310,585.45 56

185-072 ~ ~p~%NSPORT~TIO~ CLAIMS ~ W~IIOUSE ~f'C~TED CO~TS D~ER 31, 1978 The balance of this account includes value of mereba~dlse iQst ~ damaged in shIpr~ent to war@boules wh~iQ at tattlerS8 risk, plum recoverable ozp~ses for which claim will be file~ when all costs a~d expenses ham bean a~um~lated. (Details Paintalne~ by Warehouse Department Richmond, V~J~%la) Ba!a~ae at D~cember 31, 1978 78,061.53 57

18B-074 - T~4SPO~ATION C~MS - SEE~7~(~ . 7~C~T~D COSTS DECKER 31, 1978 The balance of this Account includes value of mez~handlse lost or damaqed in shipment from will he ~led when a~l costs and e~penses have been accumulated. (Details ~,alntained by service ~ep~rt~ent - Riahmond, Virgin/a) C~edit Balance at D~emb~r 31, 1978 3,961.99 5~

185-0S0 - INSURE COMPANY CLAIHS DEC~ 31r 1978 ThL~ a~u~ r~rd~ a~it~ ~ue fr~ in~a~e c~a~i~ ~ ~Ealm~ ~r~perly ~ib~ta~tlat~ an~ filed representing lesser of eitheZ book value of assets Io$t plus recoverable expenses incurred, az a~unt du~ from insvzance c~mpany for asset lost u~der te~ms of p~I£Cy. Da~.e of Amount of Imss bocatlon ~ Loss 12/78 N.Y.O. S. piascik - Exce6s Wor~en's beqal Pees Compensatio~ 10/1/78-12/31/78 Ellzabeth V~SS - Workmen,s Om~en~t £on 35 Palem of Eouadorlan W~apper TO,aUto Damage £n Shipment from MaXta, Ecuador, to 0~ Ware~uIe in Columbiar ~ennsylvania 12/78 u.Y.o. 12/78 N.¥.o. Balance at December 31, 1978 10O.00 462,96 562.~ 6~O*QO i0,069.07 ~9

185LOSI -- ~NSURA~CE CLAIMS - ACCUMULATED CC%~TS D~EK 31, 1978 Thi~ ac~o%~t Eeaor~s net ~o0k v~lue of asBets 10st, plus re.retable exp~nsQs which are ~overed by insur~e a~d ~or wh/~h a clai~ will be filed with ins~a~cs company when all costs and e~enses have been acc~lated. Amount ~*JS TO~i G~I~LD . Tobacco Lost 62.24 in Transit E~eSS ~rkmen~s c~mponsatlon 487.50 c~aim . Emily Lo~go Date o~ Accident - 12/4/59 Insurance Claim No. I 268.40 paruel ~OQ~ Balance at DeCember 31, 1978 81a.14 6O

18~-~20 - FFDER~L EXCI~E TAX CIA.S DECKER 31. 1978 Tb~s ac~t ~ecords a~o~t Of clai~s filed agains£ 8~dry customers. There was no balamce at De~em~r 31, 1978 61

185-130 - DUTY DRAWBACK CLALMS DECEF~ER 31, 1978 The debit balance of this a~co~nt represents ~hm gr@ss amount of uncollected claims fil~d with the United States Gover~3~nt by Comstock & Theakst0n, ~nc., our customs brokers, covexlng drawback of duty on iml~rted to~ac=o contalned in r~qular export shipments. The port.on of these claims payabla ~90n collection to Comstock & TheakstQn, Znc., for brQkers' ~o~slssion is offset by Aocount ~o. "185-132 . Duty drawback and com- misBio~ thereon ~ayable ~o otherB.I' The debit balance at Deee~be~ 31, 1978, is co,seal of the followinq: Date 197~ June c~toher Amount of Commission Net Amount Due Gro~S A~o~t Payable to Co~sto~k The A~e~ican Cla~ ~. of ClaL~S ~ TnsakstQ~, In~. S~lal No. 1 29.16 2.92 26.24 serial No. i0 16.16 1.62 14.54 Serial No. 87 35.40 3.54 31.86 Serlal NO. 95 139.35 13.93 125.42 Serlal N~. 43/45 27.46 2.76 24.70 Ser£alNo. ? 23.20 2.3~ 20.88 Serial NO. 30 20.74 2.07 18.67 Serial ~Io. 53 20.83 2.10 18.73 Sezlal No. 103 18.@6 1.@9 16.97 Serlal N~. 109 34.96 3.50 31.46 Serial NQ. ii0 35.64 ~.56 32.08 To~al claims for The A~erican TObacco company 401.76 D~b~ Balance December 31, 1978 401.76 40,21 361.55 6~

185~131 - DUTY DRAWBACK TO BE ~D DL~R 31, 1978 The debit balance of this account represents the estimated net amount after deduction for anticipated Com~isslon of COW, stock & Theakston, I~c., our customs brokers, of duty drawback oI~ imported ~:oba~co contained ~ r~ttlar ex~ort olgarat~e sh~mment~ for which claims h~ve not yet b~en filed by Co~stQck & Theakst¢~%~ ~DC. ~mount of i~po~-~ed to~oacco subject to duty drawback is reported by D~Thams Re~dSVille and Vlrg/nia Sxa~chQs on ~tate~ts attached t~ "RepOrt8 of COSt of Domestic ~d Exert Manufactt~re." D~ty drawback on cigarette shipments to Army and Air Force Exchange SexviGe and U.S. NaV~ Shlps Store 0fflc~ ia handled directly with the CUStomer by Our CUStoms broker. The debit balance of this accost at Dece~ 31, 1978, is co~osed of the following: 1 - Charges based on statements attached to "Peports of COSt of Domestic and Export ManufacttLTO," frc~ Duzh~, Rei~zille and Virginia Bribes fox duty dzawba~k cla~ms which have not yet bee~% filed by COmStock & Theakston, Inc., for the accost ~f The ~erican Tobacco Co.any f~r r~g~laz ~xpoz~ shipment Of cigarettes : A. D~rh~ Brar,~h 295.~5 B, B~id~ville Branuh 165.51 C. virginia ~ra~ch 299.18 D~blt ~alan~e Dece~ ~l, 197~ 760.14 6~

185-132 - DUT~ DRAWBAC~ AND CC~IISSIOI~ ~Ep~ON PAYABLE TO OTHERS D~EE 31, 197~ The credit balance Of this account represents the customs broktragQ ~ms~sslon l~yabls to Coms~ock & T]~akston, InC.~ upon collection Of claims filed by them with the United states Government foz the account of The American Tobacco Company, These items are fully offset and are detailed in Account No. "185-130 ~ D~ty drawback claims.'~ Credit balance December 31, 1978 40.21 64

185.140 - HI~OUS CLA~4S ~ECE~ER 31, 1978 State T~X Clai~J ~ber of Clai~ Alaba~a 22 13t982.28 A¢ Lcona 6 14t359.80 C~l~£ornla 35 34~555°00 Colaca~o 7 2,170.50 Conner/cut 9 4,326°00 Georgia 1 781.84 I~ho 5 1,222.95 zllinoi~ 1 990.36 K~tucky ? 573.76 Masmauhuae~ 23 ~0j481.50 Rtnnesota ~ 2,~12°12 New J~sey 5 5~327°60 ~ew ~ork 78 47,184o22 O~go~ 2 773o10 pen~sylv~la ~ 12,~12.64 Rho~ Z slan6 ~ 2~871.00 ~ou~h Cacollna 1 96.88 Tennessee 2 ~#939.00 1 460°00 Hash£~gton 9 6,577°60 ~8~ Vi~g~nCa 1 622°20 ~onsln ~ 4,754*2% L~ssa ~v~n~ tax ~ ~acer£~ sa~.va~e ~e app1~e~ againm¢ cIa¢~ Balance at Deas~bar 31u ).97~ 190,374.6~ 996.97 189,377.64 65

185-150 -- DQU~L C~ QR THOSE ~AY~%B~ TO ~RS UpQN CQLLEC~IO~I DECKMBER 31, ~978 ThiS aCGOW%t xecords am0~nt Of ¢lalms filed a~ai~st t.Tans~ortation companims, ir~sura~oe cr~s and Q~h~l:s, including fe~:al el~cise tax ~nd state st,~lp clatJ~, which aroz i° ~cel;~;~.~ of collecl:&Qn 2. Not elqp~te(l to be ~ollec~d within O~Q ~ar of 0.~ ~t Up Bal~ce is f~lly offset by A~,~t No. "185-151 - Dff~t to ~ttbtf~ claims or l:hose payable tO othezs t~n collec~ion." Balance at December 31, 197~ Da~e o2 August 1975 ~ovembex 1975 May 1972 A~g%%st 1972 November 1972 Decem~er1973 Ja~uary1974 Febru~ 1974 ~ruh 1974 J~ 1974 AugUst 1974 October 1974 N~emb~ 1974 JW~'.~y 1975 1.~h 1976 T=ans~rtatlon clai~ Western Pacific Ra1~ad Co. 3,454.62 St. Louis - San Fran=is~o Railway or Tra~s~rtat~n Co. 292.55 A~c~e~ & Pie~ Ir~c* 7,326.18 D~ma~e to T~/klsn Tobacco SS. pzud@ntial - Sea Jet - ~zudentlal, Inc. 1,222.68 SS. M/V Zeta - G~if Coast Shipping Cor~. 411.76 ~. Ti~ ~X. Tra~si~diaDa - Fetas COoperative Inc. 290.01 SS. Ho~enfels - Fo W. Hat,mann & company, Inc. 150.00 SSo Santa Ele~a pru~tial Grace i,i~es 47.59 M~ ~COrma=k L~I~S 151.22 SS. Hell~ic L~eS 67.97 BOise Griffin Stea~shlp Co, 74°62 SS. Copian~ 299.91 B~ise Griffi~ Stea~shlp CO. 95.10 SS= Lash ~tali~ - Prudential Grace Lines 4,256°23 SS. LaSh ~;kive - pxlx~tial Grace Lines 4,851.04 U.~. ~avig~tion CO. i06.29 ~eric~d% EX~=t Lines 1,228.~5 Concordla Line Inc. 169.82 Amount s~ (Contln~d) 6~

~CE~e~R 31, 1978 Date of Origin ~'am~k-y 1977 ~J::L1 1975 July 1975 April 3,976 Aug,.mt %976 G~tobe~: 1976 ~eb~ 1978 July 1978 Aoguo~: 1978 ~acje to T~k/Sh ~co (Contl, uad) ~s. pEilippine Co~r B/L No. 35 ~tS~ 7/]~/~5 7,923.43 SS. T~Rnas L~noh B/L NO. 15 108.91 Wat~k~an St~Dship Co. ~ 3632 227.94 S$o Azamls . ~0£se GEiff%n stea~mh~p CO. 76.06 SSo Th~uu LinCh - Wate]~an steamship Co. 337.52 SS. Conooz~a Tad~ - Bo~sa Grlffln Steamship CO* 283.73 I~V Keban - ~eab~ COaSE Ra~ CO. 544.4~ Fil~ for ~ Shlpme~s of clgexe~ ~or Ao~o~t of Cu~t~ and C0~pany LOSS Of 1 Paokage C~n~inlng 3 M of P.M. Exits 22.00 ~s~ of Assoz~ad C,~g~x~ m~ ~o~¢~ TOha¢o~ 299.91 7,459 Ibs. Damaged ~ob° p~ La~ Paelf£co - p~Lal Gzaoa ~ i~,599.14 87? 1be* LO~ '~c*b. *~1~* EV° Ltne~ 1~794.48 Ir~i~g Tr~s~ - ~se,s Tobaksfab=~k .qo, 0974 559.68 SS. I~ pan,leo# ~tlal GEaoe L~ 5~.4.54 J. A. G~i~ ~n~ wheeling ~o~o~ E~o~eu 141.60 17 ba~ of T¢%~O LOSt in Transit - SS, Rio Magdelana 1,758.59 Claim foe 2 bales Lost in T~ansi~ - Me~ic~n ~ 249.74 D~ ~o 35 bal~S Df E~i~ To~a~oo - Columbla, Peansyl~la I S~a~0azd Coast LLae Railxoad CO. 8,826.11 ~iva~uLa TE~ L~ 8,826.11 9 bales of ~c~agua~ c£g~" I~m'aged - by t~te~ - ~ Mo~z Ea~]:e~s 367.56 page 2 Amount 33,9~.03 46,~85.67 {con~) 6~

i~5-i~0 - DOUBtfUL CLALM$ OR ~0SE FAMA~LE TO OT~E~ UP~ COLLECTXON DZLT~ER 31, 1978 Date of December 1975 De~e~be~1977 ~lanation Other Claims overpayment Of Retirement Benefi~ to ¥oz~ Employee~ at Various Loc~tions - Details Maintained by Employee Benefits U.S. Custams Claims Page 3 Amount 9,522.47 74,384.18 164~90.35

185-151 . OFFSET TO DOUBTFUL CLAIMS OR TI~O~E pA~ABI~ TO OTBERS ~ COLLEC~ZC~ 31, 3,978 Credit b~Em~ Of T~is mQommt reooE(~ a f~t~l offset to A0cw~t EO. "185.150 - DoubtfuI olai~ or those p~yab2m to others ~ ~11e©~Lon." ~alanue ~ 31, 1976 (~eta~18 in Au~ount No. 185-150) 164,6g0.35 69

D£CTJ~ 3?., Z978 =: S~a~ ~na£y~is of tr~aut~on~t ~ at Z~ce~or 3Z, 1977 C~SS~.~ Payable Pa~tu C~i~ ~ at* ~ 3?., 1978 1,074,774.00 375 059.00 Z,002,466.00 1,366~576.00 1 449 833.00 7O

200-020 - C~OLDLN BELT MANUF~CTURIHG COMPA3~ DECEMBER 31, 1978 The balance Of this aaco~%t E~ordS net a~o~n,t due from or payable to Golden ~elt Manufact~xinq Coi~any Qn current account. Su~mazy analysis of transactions: Golden Belt Manufacturing COmpany invoiaes ~nd credit memoran~uml Date December 31 50,990.25 DeCember 31 52 ;779.6~ Less~ The Ameriaan Tobacco Company invoioes and c~edit memorandum: ~ew York office November 30 2.77 December 1 3,150.00 De¢~Fmlher 1 2,332.00 De,~ 4o9]b e r 1 1,434. O0 Dec amber 12 511.00 DeCember 20 ( 1,71B.71} December 20 (14,897,00) De~m~ber 31 33,6B6.00 December 31 1,524.33 Deaember 31 555.67 December 31 11,400,00 Deaember 31 41.91 I>IT ham Branch ~c~er 13 811.[16 DeciPher 31 680.20 Rei~ville Branch Detecter 21 420.00 Dece~aber 30 ( 185.28) Deae~bsr 31 2, I08.00 December 31 559.02 DECember 31 121.70 DeCember 31 54.37 Dec~er 31 5,849.55 Decembax 31 2~ 248.54 December 12 Credit Balance December 31, 1978 vir inla Br~nch 170.00 103,769.90 37,560.97 1,491.26 ii,175.90 170.00 53,371.77 71

200-021 - GOLDEN BELT ~NUFACTURING COMPAN~ - LOAN ACC0t~ DECEMBER 31, 1978 This account records amounts on open lean to Golde~ Belt Manufacturing Company. Enterest payable q~arte~ly on last business day of ~rch, J~, September and December. There were no transactions during 1978. 7Z

200-022 - LOAN pAYABLE TO GOT~DEN BELT MALqIFACTURIS~G CO~AI~Z DECE~ER 31, 1978 This account records ~ount borrowed on open loan a~count from Golden Belt ~nufacturing Company ~nterest paid quarterly on last business day of March, June, September and DeCember. BalanCe at January i, 1978 197H TXa~zactloDs! Balance at Decembsr 31, 1978 Amount Amount BOrrowed 18,075,000.00 18,075,000.00 - 0 - - 0 - 7~

200-025 . ~I~SH~ ~Z.~CUITS, I~. D~CP2~R 31, 1978 This account =ecords net amount due from or payable tQ Sunshine B£s~uits, Inc., on cucrma~ S~mm~lry analysis of t~ansactinn~: Due to sunshine Biscultsp Ina. Payables: Oc~ber I0 Workera' Ccmpensat~on Divldend - 1977 W.C. 2153441 52,684.38 December 20 sayr~lllQ Bakery - Cookles 152-10 52,836.48 Reaelvahlesl DeCember 18 Dellvery ~ge 5.81 De~ember 28 p~cessing of 9a~ious prints 23.48 December 28 poBtaqe Due B£11s 2.72 DeQember 2g Federal E~re~ Ck~Z~os 89.60 DenemheE 29 Food , Off COst for the ~nth of Oa~bez 30.32 Da~ember 29 shipment of Aztwo~k 17-25 D~emher 31 AudlC~Isual Sezvlcos f~r Marketing M~etlng 20.74 De~ember 31 Computex Sezvlce CbJZge 10,282.00 December 31 Airline Tickets - M~. J. Fe~ber, ME. Karr£~an 454*00 Decembe~ 31 ~ostage E~p~le 1,845.71 December 31 Stationezy Cha~e~ 2~2.98 13~064.61 C/edlt Bal~ce De~e~be= 31, 1978 3~,771.$7 74

200-026 - SUNSHINE BISCUITS, ~NC. - LOAN ACCO~ JECEMBER 31 197B ~hls acco~ record~ ~Lount~ r~celvabl~ on open loan accoun~ with S~n~ine B~Scult~ Inc. Interest payable ~rtexly on last business day of 14arch, ~une 3eptember a~d Dece~e~ The~e were no ~ransactlons during 1978. 7~

200-027 -LQA~ pAYABLE TO SL~qSHIBE BISCUITS, INC. DECF~IBER 31~ 1978 This account records amount borrowed on open loan account from Sunshine Biscuit~r Inc. Interest paid quarterly on last business day o~rch, June, ~ephel~her and December. 12,1D0,000.00 Balance at January l, 1978 1978 Transactions: Balance at December 31 197~ Amount ~epald 40.100 000.00 43.400,000.00 3.300 000.00 8,800 000.00

31, 197@ Tt~a acco~¢t ~eaocd8 net mm~ d~te ~ o= l~y~l@ to J~C~S 3. Beam DLs~II~ Co. on ~U~Z:~TI~ aG~t~lt. Debit ~Lla~Ce at ~¢mJ=e¢ &],, 197@ -0-

200.031 - J~S B. BEAM DISTILLING CO. - LOAN ACCOUNT DECemBER 31, 1978 This account records amo~I%ts ~eceivable on open loaI~ ~coount with James B. B0am Distilling Co. Interest payable quarterly on last business day of March, June, September and December. StU~mary analysis Of transactions: Balance January i, 1978 Amount loaned P~payments Balance at December 31, 1978 3,000,000.00 61,750.000.00 56,750,000.00 8,000,000.00 78

200~032 - LOAN pAYABLE TO JAMES B. BEA~DISTILL~NG CO. DECEMBER 31, 1978 ~his account records ~ount borrowed on open loan account fro~ James B, Ream DistilliDg CO, Intereet paid quarterly on last business day of March, June, September and December. Balance at January lr 197~ 1978 Transactions: - 0 - Amount A[sount Borrowed RepE±d 18,48~ )00.0£ ~8,486 300.0( Balance at Dece~er 3] 1978 0 - 79

20C-035 - DUlrgY-HOTT C(~'~P~e INC. ]Q~::~.~ER 31, 2978 This acaount ~co~ ~t ~unt d~e f~ O~ ~¥~le to DUf~F~MO~ ~, Zna+w on O~L~ ~ aCCOl:J~t o D~e £~ Ouff~Hot~ Cum~an~i zno*: ~e~e~bez 19 AitIL~e Tioket - o. L. ¥1emlng 214.00 29 P~ioy~4nt Physical Ea*~inat/ons 40.00 De'it Balance at December 31, 1978 254°00 8O

200-036 - DUFFY-MOTT COMpANy, INC. LOAN ACCOUNT DECEMBER 31, 1978 This account records amounts receivable on open loan account with Dully-Moth Company, InCl Interest payable quarterly on last huslness day of March, JUne, September and December. S~ary analysis of transactions: Balance January i, 1978 Amount loaned Balance at December ~1, 1978 9,600,000.00 18,000,000.00 15,600,000.00 12,000,000.00

~00w037 - LO~JgpAY~LB TO DUF~Y-MOTT COMPAM~ INC. DECE~ER 31, 1978 This AccOUnt record~ a~oun~s borrowed on open loan accoul~ from Dully Mot~ company, Inc interest paid quarterly on last h~siness day of M~rch, J~ne, Sept~opl and Dece~Pr. There w~r~ no ~zansac~ions during the y~ay 1971 ~Z

200.040 - ~ V.~SZPJ~ p, ECOP.DS, Z~C, 33., 1978 This account ~eco~s met ammant due ~z~m ar ~yable to ~ Vi~le ~e¢~ast Inc., on c~E]:ent aC~Dt11~.. ~J

200.041 - ACME VIS~BL~ RSCOKDS~ INC. LOAN ACCOUNT DECE~ER 31, 1978 = This acco~ht recoxds ~mo~nts receivable On open loall account with Ac~e Visible Records, IDc. Interest ~ayable quarterly on last business day of ~arch, JUne. September ~nd December. S~mDary analysis of transactions: Balance January i. 1978 ~ount loaned Repayments Balance at December 31, 1978 3~300,000.00 6,200,000.00 6*600,000.00 2,900,000.00 84

20Q-042 - LOAN pAYABLE TO ACME VISIBL~ RECORDS, INC. DECE}IBER 31 197B ~hzS ~Ccoun~ ~cozds amount borrowed on open loa~ ~ccoun~ from Acme visible Becords. Inc Interest pale quarterly on the last buszness day of March J~ne September and December. There wez~ no transactions d~rln9 the yeal 1978 ~5

20G-045 - A~ZC~N ~CO Z~TZ~ CO~. Sex~oas ~ by C~mac~oo~z~e, pa~k~, DT~J.~aI~ ~t ~.~oe at ~ 31~ 1978 8~

200-046 - A~ERICAN TOBACC~ INTERNATI0~AL CORPORATION ~ LOAN ACCOUNT DECZMBER 31 1978 Th~s a~co~t ,ecords amounts re~eivabl~ OR open lo~account w~th~r~can Tobacco International Corporal±on, lntexest p~y~ble quarterly on last busxness day of ~rch JUne, September and De¢~mb~z. There were no 5z~s~ct~ons during the year 1978 $7

200-047 LOAN pAyAbLE TO AMERICAN TOBACCO INTERNAtiOnAL COp~. DECEMBER 31n 1978 This account records amount borrowed on open loan account from American Tobacco International Corp. Interest paid q~arterly on the last business day of March* June, September and December. Balance st January i, 1978 197B Transactions: Balance at December 31, 1978 ~m~ount Borrowed 39,700,000.80 32,200,000.00 1,500,000.80 7,500,000.00 9,000.000.00

20Q-050 - C~R LIMIT~Q DECEMBER 31, 1978 This account records net amount due from or payable to Gallaher Limited On c~rrent aQco~%t. Due from Gallaher Limited for: December 27 charge for (1) 12" FulI Port Ball Value Ii,321,36 Debit BalanCe at December 31, 1978 11,321.36 ~9

200-052 - LOANS pAyAbLE TO GALLAIIER LIMITED DECF~4BER 31, 1978 This account records amounts borrowod under forms of mound sterling loan from Gallaher Limitedand co,vetted i~to U.S. dollars. Interest paid quarterly On the 3rd day of January, April, Suly and October. Original value Balance January l, 1978 Transactions during 1978: Revaluation during 1978 Repayment !.lay 1978 Balance D~cember 31, 1978 ~mount of Lo~n Currency Pound Sterlin~ U.S. Dollars 18,000,000 31,175,100.00 18,000,000 34,560.000.00 ( 1,853,600.00} 18,O00,000 32,706,400.00 9O

200-055 -~P~CA=N B~GVER~AS, ~.V. DEC~ER 31, 1978 Thls ac~t records net a~ount ~k~ f~om o~ ~yable to A~erican Brands Overse~, N.V., on ~mt ac~t. -0-

200-057 LOAN PAYABLE TO AMERICAN BRANDS OVERSEAS, N.V. DECE~ER 31, 1978 The balance in this account represents amounts due to American Brands Overseas, N.V., financing subsidiary, Borrowings are recorde~ on subsidiary books. Ful£il]ment of Sinking Fund Pa~ent Requirement Balance as of November 15 of 8% Balance Januar~ 1978 Debentures Due 1981 December 31~ 1978 Direct Loan 17,000,000-00 (2,000,000.001 15,000,000.00 SMautomo Bank Loan - J~pan 25,000,000.00 (i) 25,000,000-00 TOtal 42,000,000.Q0 (2,000,000.00) 40,000,000.00 (i) Agree~er~t dated November 6, 1972, between the sumitomo Bank Limited of Japan and A~erican Brands Overseas, N.V.~ on loan maturing November 6, 1980 9Z

200-065 - ~Z~ INC. ~C~ER 31, %978 ~bls aaco~t z~oz~ net ~ due f~ or pa~able to swlngllne Inc. on cu~zent acoount, payable to swin~llne Inc. A~m~ acox~e~ f~ 2w082 mhax~s o~ "old" ou~s~%ndAng Sw~%inQ Zn~. stock Credit Balanao at becem~A~ 31t 1978 ~2,870.o0 ~3

200-066 - SWINGLINE INC. - LOAN ACCOUNT DEC~MBEK 31, 1978 This account records alnounts receivable on open loan accour~t with Swingline Inc. Interest pay~fele q~arterly on last business day of ~gazch, June, September add Dece~er, Summary analysis of transactions: Balance Jan~zry l, 1978 Am~un£ Loaned Repayments Balance at December 31, 1978 - 0 12,850,000.00 7,150,000.00 5,700,000.00 ~4

200--067 - LOAN pAyAbLE TO SgI~NGLINE INC. DECEMBER 31, 1978 This account records ~ount borrowed o~ open loan account f~om Swingline Inc. Interest paid quarterly on one last buslness day of ~arcn Balance at January l~ 1978 1978 Transactlons: Balance at Deceu~er 31 L978 June September and De~embe~. 400, I0.00 ~ount ~lou~t BorrowPc Repaid 900 000.00 1,30( 000.0[ 400.0~0.06 95

200-070 - MASTER LOCK CO~ANY DECEMBER 31, 1978 This account records net amount due from or payable to Maste= LOck Company on current account. PayablQ to Master LOck Co. for~ De~ember 28 - Overpayment on Airline Ticket: Mr. J. L. Flem~g Credit Balar~o at Decem~r 31, 1978 .40 .40

200~071 MAS'I,ER L©~J( ~OMPANy - LOAM ACCOL~T I~:~ CIE~.IBE R 31 ig7R Thls accou~ r~co~ds a~ounn~ ~oe~,a~le on open loan a~cou~t w~bh Mdster Lock Company. ~nter~st i~ p~yable quarterly o~ last business day of March, Jun~ September ahd December. Ther~ were no ~ran~actlon~ dur±~g the year 197~. 9T

200-072 - LOAN FAyAHLE TO MASTER LOCK CO~IPANY DECE~IBER 31 1978 ThlS accolmt records ~mounu borrowed o~ open lo~n account from Master ~ook Co~any. Inter~s~ pald quarterly on las~ business d~y of March, JunP S~pt~mbez ~nd December. Balance at January ]. 197~ 9.200 000.00 1975 ~ransactlons Balance at December 31, 1978 ~ount ~mloun~ Borrowed ~ep~Id 25,800. i0.00 25,S00~000.00 3( 000.00 9,5( 000.00

X3ECP+.~R 33+, 3.978 This accQunt ~ ne~ a~mt dua f=c~ c~ ~ayable to The, ~ ~e~s ~ GLl~feItt &OoO~2tt + l~ceSv~J~s m 12,378.00 ~-,585.50 792.50

200-076 - THE ANDP~W JERGENS COMPANY LOAN ACCOUNT DECEMBER 32, 1978 Fhis account records 8mounts receivable on open loan ~ccoun~ with The Andrew Jerger~Company. [nt~et is payable ~artexly on last business day Of March. June. ~ept~bel and D~ce/~D~r. Fhere were no transactions aurlng 1978. 1OO

200-077 - LOAN pAYABLE TO THE ANDREW JERGENS CO.ANY DECEMBER 31, 1978 This account records amount borrowed on open loan account from The Andrew Je~gens COmpany. Interest paid quarterly on last business day Of March, June, Septembe~ and December. Balance at January i, 1978 12,200,000.00 1978 TransactiOns~ Balance at December 31, 1978 ~Qunt ~0unt Borrowed 13,600,00~.00 19,000,000.00 (5,400,000.00) 6,800,000.00 101

31, 1978 This a~t ~e~ozds net ~t d~ ~om or ~a~xble to Wllm~n ~c~eu ~ on c~t~eng accost. 3alance at. Deco~r 31f 197a -0- IOZ

200 079 - WILSON JONES COMPANY - TJOAN ACCOD~T DECEMBER 31 1978 Tn~ ae~ounu record~ amounts receivable on open loan apcoun~ with Wll~on Jones company. Interest IS payable quarterly on last buslne~s day o{ March June Spptembel and December There were no transactions during 1978. 103

200-080 - LOAN pAYABLE TO I';~LSON JONES COMPANY DECEMBER 31~ 1978 This account records amount br~rrowed on ~pen loan account from Wilson JOnes COmpany. Interest paid q~tezly 0~ last business day of March. Jun~, September and Dec~lber. Balance at January 1~ 1978 5t200,000.00 1978 Transactions: Balanc~ at Decea~er 31, L978 AmoUnt Amount Borrowed Repald 34,500,000.00 36,000,000.00 (1,500,000.001 3.700 000.00 10,I

200-083. - AC~S~ET CC~PA%'Y DECE~R 31. 1978 This au~ount ~ooz~s net ~t ~ fr0~ or ]~ayable to Acm~hnst C~¥ on ~e~t a¢co~t. Smmazy a.,~xlysls of ~t~nJ ~alan¢@ at De=ember 31, 1978 -0- 105

200-082 ACUSHNET COOl'AblY . LOAN ACCOUNT DEC~ER 31, 1978 This account records amounts ~eceivable on open loan account with Acushnet CompaNy. Int~resg Ls payable quarterly on last busane~s day of Maxeh June september and D~c~mber. There weie no transactions d~rinq h978. 10(;

200 083 - ~AN PAYABLE TO ACDS~ET COMPAN~ DECEMBER 31 197~ ~h~s account records amount borrowed on open loan account from Acusnn~t COmpany. Zntere~t paid quarterly On last business day or March. June. September an~ December Balance ~ J~uarv 1 197E Transactions: A~ount ~mo~nt Borrowed RePaid 23,700 000.00 26,200tOUO.O0 10.500 000.00 Balance at D~ce~bez 3 1978 107

200-098 - INTERST RECEIVABLE FROM SUBSIDIARIES DECEMBER 31, 1978 -- ==- The balance in this account represents interest receiv~le on loans ta subsidiaries. January i, 1978 Accrued Swingline Inc. ]61,580.54 Duffy-Mott Company, Inc. 258.33 623,436.07 Acme visible Recordst Inc. 210,655.57 James B. Beam DistillinG Co. 209~235.41 American Brands Overseasr N.V. 139~047.7~ 258.33 1,343,955.37 Balance at Interest Dece~er 31, Received 1978 161,384.71 195.83 625,694.40 210,655.57 210,214.58 139,047.7~ 1,344,997.04 (783.34} lOS

200-099 - INTE~EST PAYABLE TO SUBSIDIARIES DECEMBER 31, 1978 The balance in this account xepresents interest payable to s~bsidiaries on open loan account. James B. Be~/~Distilling Co. Wilson Jones Company Golden Belt Manufact~rlnq Company Sunshine Biscuits, Inc. ~erican TObacco International corporation A~erican Brands Overseas, N.V. Acushnet CompaDy Master Lock Company ~le Andrew Jergens Company Swingline Inc. Gallaher Limited Balance December 31, 1978 Balance Balance Jallua~y i, Interest December 31, 1978 Accrued Paid 1978 - 113,225.45 113,225.46 129.16) 446,724.27 446,986.78 ( 391.67) 365.97) 200,703.17 201,977.31 ( 1,640.11) 602.78) 1,039,765.97 1,038,771.52 391.67 - 604,459.01 604,459.01 493,818.46 3,444,999.99 3,467,500.00 471,318.45 172.23) 703,998.60 703,826.37 @6.11 946,306.20 946,196.48 195.83 43.06) 727,770.13 728,020.82 (293.75) 86.11) 5,305.55 5,219.44 519,460.55 843,459.55 1,362,920.10 1,011*965.81 469,580.42 469,580.42 109

270 000 - INVESTMENTS WHOLLy OWNED DOME~TTC SUBSIDIARIES DECEMBER 31, 1978 This account records Company's investment in capital stock of wholly owne~ domestic subsidiary companies. Balance at December 31, 1978 Name of Subsidiary Company Am, erican Cigar Corporation C~ban Land & Leaf TObacCO Company ~nco~porated Golden Belt Manufact~rinq Company The American Tobacco Corlp~ny of the Orient, Inc. $~nshine Biscuits, Inc. ~ames B. Beam Distilling Co. The American Tobacco l~ternational Corporation D~ffy~Mott COmpany, Inc. The ~0~±c~n Tobacco company Acme visible Records, Inc* Swingline Inc. The Andrew Je~gens Company Master Lock Company American B~and~ Export Inc. Wilson Jone~ Colnpany Acushnet Company Amer±ca~ Franklin Company Kind of Par Shares Stock Value owned Amount Capital i0.00 100 1,000.00 Capital I00.00 21,450 1.00 Capital No Par 20,000 2,483,145.33 Capital No Par 56 560~00U.00 Capital NO Par 15,000 83,~38,626.96 Capital NO Par 1,500 60,399,009.71 Capital i00.00 50 269,608,332.67 Capital 1.00 i 34,382,599.72 C~pital No Far 1,000 1,0D0,00 Capital 1.00 1 52~9R6,024.46 Capital 1.00 1 124,773,321.~5 Capital 1.0O 1 I09,657,972.23 Capital 1.00 l,OO0 75,079,414.45 Capital 2.50 1,0OO 2r500.~0 Capit~l 1.0O 1 76,799,088.24 Capital ]*00 1,000 37,809,489.64 Capital i. O0 1,000 87,428.00 92a,068,952.26 Total Par or Stated Value of Capital Stock 3ssued 1,000.00 1.00 2,000,000.00 560,000.00 15,000,000.00 60,008,000.00 i0,000,000,00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 2,500.00 1,000.00 1,000.00 l,O00.O0 110

271 OOD - I~JESTME~TS I~ WHOLLY O?TMED FOREIGN SUBSIDIARIES DECENI~ER 31, 1978 This account records Company's il%ves~nt in capit~l stock of wholly owned foreiqn s~bsid- b:~.ie s, Balance at December 3], 197~ Tabaca!era Cuhana, S~A. InCorporated in Cuba June 14, 1932 Capital Stock Shares 158,000 Par Value 20.00 Gross Book Value 2,760,000.00 Provision for loss due to seizure by Cuban Government in 1960 2,?59,999*00 Net BOOk V~lue 1.00 1.00 ~neric~n Br~ds Overseas, N.V. Shar~s 200 Par Value [Cost) 1,000.0~ Gross BOOk Value 2Q0,000.00 Paid-in Capital 7,855,000.00 N~t Book Value 8,055,000.00 S,055,000.O0 Balance a~ December 31, 1978 8,055,001.00 111

272-000 - ~NVESTMENTS PART~ALLY OWNED D01,1ES~IC SUBSIDIARIES DECEMBER 31. 1978 This account records Company s znves~me~ in capital stock of Parti~lly Owned DOmeStic s~bsldlazxes. Name of Subsidlazy Company Total Pal or Stated Value K£nd of Par Sha~es ~£ Capital Btock Value Ownec ~o~t Stock Issued The Frank21n Life Insurance company ~apital 2.00 ~ 774,624 177,96! 605.38 2.00 11Z

273-000 - INVESTMENT IN SUBSIDIARY SECURITIES DECEMBER 31, 1978 Fhis account recordm ~ne par value Of listed securities of ~u~sidia,y companies purchased on open ~ar~eu. Analysis of transactlons~ Name of S~b~zdlary American Brands Overseas. N.V. 1,37I $1,00O.O0 pal valu~ 8% debentures due 1981 Balance DecemLer ~i. 1978 Amount 1,376,000.00 1,376,000.00 113

295-001 - IN~/ESTS~NTS - OTHER DECEMBER 31. 1978 this account records book value of sundry inveBzments after deductions for depreclarlcn and ~r tization • Gross BOOk Value Less: Provision for deprecla~lon Prmv~s~on for ~ortlzatlon Balance Dec~ber 31. 1978 Par Value on Prlnclpal prlnclpal AmOunt corporate Bond~ City cf New York U.S. Treasury 1,O35.10 4£ 000.OC l~000.O0 35.10 - 0 - 4( ,000.00 • 000.00 4 300.[ 1,000~00 40 ~00.00 114

295-200 - BILLS AND MORTGAGES RECEIVABLE DECEMBER 31, L978 This account records receivables secured by notes and mortgaqes from indivlduals and corpoxations exclusive of affiliated companles) ~o cover ~ounts iozned to th~ on propsrzy sold to them. S~ary analysis of cransac~lons: DUrham a~d South Carollna Railroad and Norfolk Southern Railway Company Date of Note - October 31 1956 Oriqinal Amount 250,000.04 Debit Balance J~nuary 1 1978 129,07~.00 Collections 1978 1,083.00 Balance December 31 1978 ~27~987. O0 D. & W. Realty Companyj Inc. Date of Mortgage - AUGUSt 26, 1970 orlqinal Amount i00,000~0C (2) Deblt Balance January l, 197E 35~830.48 Coll~tions 1978 12 131.60 Balanue Deuamber 31. 1978 23,698.88 packa~l~g Se~ICQ Corpora~lon Date Qf Mortgage ~ August 2E 1970 Original Amoun~ 140,000.00 (3} Debit Balance January i, 1978 ~13.240.73 Collections 197E 5,154.69 Balance Decsmber 31 1978 ~08,086.04 Robert F. G~me end W. A. Mulvan~y Date of Mortgage - J~ly 10, 1974 Oriqinal A~un% l~0,000. D< 4 Debit Balance January I, 197E [20~000.00 Colle0tions ig7~ 2,958.33 Balance December 31 1978 Balance at December 3~ 1978 (i) Nonlnt~rest bearlng ~nstrdment~ loaded car uslng sp~r track at Durha~ North Carolina, and yieldinq road-ha~l reven~e co N~r~olk Southern Railway Company. 2) Ten-year ~crtgag~ ~t rate of 8% interest, payable in monthly inst~llments of $1,213.30, for ~ne Dale of Company property at 8th and Breoken~id~e, Louisvill~, K~n~uoky Ten year mortgage at the rate of 8 1/2% in~eres~ for 20 years~ payable in monthl~ L~stal~2ae~ts of SI.215.20 ~or the sale of warehouses C. & D. ~t 17th a~d B~oadway, Louisville, K~ntucky (4) Sevenyear mor~gaqe for £he Dale of properny a~ 818-830 Wl~dsor Sur~e~, Hartford. ~o~eCelC~t. Interes~ at the ra~e Of 10%. ~ayable ~n the flrst day Of each ~onth, ln ~nstallm~nts ~f $1,585.81 commencln~ May I, 1978, throuqh March is 1985J p~r Modlfi- ca~10n Agre~m~nu dated April 6, 1978. .i17, )41.67 376,813.59 Pay~t in ~Onthly installments based upon $3.00 per 115

3]., 1978 The ~uIGe i.~ this account ~opros~t8 ~f~ ~celv~].e f~ ~8~tions+ ~ ~e no ~¢tlQ~$ d~ing ~ ye~ 1978. 116

300-000 - 3U5-000 - ,T~.~ROVJ~TS TO 310-000 - ~UZI, DZI~ ~ B'JZLD~ FI~ES ~R 31, 1978 These accounts reco~ gross booE value of real estate and bu~Idlngs and b~il~n~ fixtures On ~ of N,~'~ ¥o¢k OZ~:kce* .A~cotmt 300-000 - l~j1d ~alanuQ Jan~acy I, 1978 305-000 - I~'ovemenl:a to Lm~ Ba3.an~et J~n~ I, 1978 Additions 66,689.07 319-000 - ~e/~LtngS and Building Cestcem~ Sexvlce ~, V~glnia ~alLnue ~anuary I, 1978 1,324,242~45 Add~t/ons 31,717.00 Deletions 2 50000 i~353t 459.45 Loea~ H~TEfoCfltCofit~cti¢ut OWe~b~TO*Kent~c~ty 100,829.08 I05,014.84 85 494*68 15t334.40 i05e014.~ 120t349.24 C~n~r Ri~, Vir~La OW~ Kentt~Jk~ 57e972~2 57,972°32 124,661.39 C~Ud~ZO, ~tueky 2,~67,296.75 7*379-78 2,559,916.97 ~and Total 31, 1978 ~ala~ee 3 913,376.42 117

350.000 . S.%IIES~T,S AND S~E~VZSOI(Sq AU~C~I03II~S ~CE.I~]~ 31, 1978 ~ales ~ti~ Aes~ts cig~ ~s~ts Ba~oe ~ec~ 3Z, 1978 Nu~P~r of G~Oms BoOk Ca~s Val~ 654 4F026r036,37 86 503,193.3~ 740 4.529.229o68

352.000 . p~R p.b~C~ZI~S ~tCB~ 31, 1978 This acuo~u~t ~¢o~$ ~oss b0ok ~B o~ l~s~g~: autJx~0~lles ca~l~ on LOOks of Naw Xork Off:Lee only. 1973 C¢¢~11aa I.iJ~o~JJ~, ~o~or NO. ~33R39203410 13a799*60 1978 Chevro~e~ ~ Statiop Wagon, ~0toz NO. Z¢-35~503268 ~a~d at ~¢~aI~ S~¢m Ce~t4~ 5~096.37 Bal~¢e Dec~ 3Is 1978 119

m ~o s9"40 GUITC4~ BgRyICt I~¢~'ER ~AT~ C~ M~ x4~l~4s 1;?o

380.001 - IMp~V~S TO LEASEHOLDS DECEbS~ER 31, 1978 Th~8 aoco~nt records cost of improvements £o leaseholds at 245 Park Avenue. Amortization acnr~ed on these costs is recorded in AcCOunt No. "480-000 - Reserve for a~0~tizatlon of improvements to leasehol~. ,, summary analysis of tr~sa0tionsl Bala~oe January i, 1978 10,500,333.46 A~ditlons: E. Stasky Co~str~otio~ CO. Derqen Exdo Systems N~'~ ~s~uction CO. Skylir~ Sy~t~xls 3,568.75 4,157.40 8,049.00 z 3o~8.96 i?,084.11 D~sposltlons: Sale of 9th and 10th floors at 245 Park Avenue to Olymp£a and York Balance December 31, 1978 1,493,171.00 9,024,246.57 IZl

390-001 - CC~ST~JCTION DECEMBER 31, 1978 This aoco~%nt records aa~l~ulated uosts of constr~ctlon jobs in process at N~W York Office. A£ year-en~ COSts appllcabl~ to ~ranch jobs not recorded locally are re~Qxded in this a~co~nt. Debit Balance January i, 1978 Additions: ~l~r & nm~:~:lal l.n~ll~q 40 w~l~w ~sho~ - Cus~er S el:'~,1[c~ Cemt e~ ~n~.~,~ti~ of offices New York Office Deletions: Cost of construation of offices - NeW York Office . Transferred to Account No. "380-001 - Improvements to leasebOlds" Cost of inStall/m9 window sashes . Customer sorvi~e Center Debit Ralance DecemlbeE 31, 1978 27,750.00 3,967.00 11,416.40 43,133.40 11,416.40 31,717. O0 b 0 - 13Z

3~5-000 - RESER9E FOR ~PAIR CO~ISTRUCTION DECEIVER 31~ 1978 This account records that PQrtlon of constructlon jobG In proces~ on New York Office books which will not bQ capitaliZed upon completion. B~lanceDecember 31, 1978 -o-

I~nN'INO~I

or "~-Ico. OE~RRED OE~rATI~ ON ~S~C~IT~LIZF~ FO~ ~E~CCE~TI¢~4 ~¢~ ~p~v IS~+~6.~ P~E a ~c~T No, ~.1~. Dc~m~ D~P~t~I~T,~N I11,~.11 ~.~?. ~7 7*~1~*~ 1/1~ ~.~,47 ~r~,~ , ?+~11.~ ~r~l~.~

or ~-I~ ~EFE~ O~CI~TIO~ ON AS~ET~ ~pITALIZ~ ~R OCPR=CI~Tr~

TOT*L I~T~N~,~L~. T~E AM~aI~N TOBACCO Drs~LLO~*~ l~?h 1975 1~76 I~T8 10"(.809.08 ~9,6;~8 ~1 ~,~ZI.OO 30,!~?,~1 . 1,~7~.17 1,275,1T 38.19~,8~ IT, ImO,~O m,63~.co 1~,g86. o

405~000 - R~SERVE FO~ DEPRECIATION OF ISIPRO~NT$ TO LAND DECEMBER 31, 1978 This account zeco=ds amount of accrued depreciation on ~mprovements to land at C~stomeE Service Center, R/c]~ond, Virginle, a~d Owensboro Branch, OweDsboro~ K~t~oky, 9~oss book val~ of whlCh is i~cluded im A~eO~t NO. 4'305~000 - ~prove~e~ts to land." $~nary ~lysis of tr~actions: Balance January i, 1978 Transfezred in from Owensh~ro BranCh 37,446.20 50 7~0z.86 88~148.06 Additions; Depreciation a~crued during year and charged to: A~nt NO. "10-050 - ~nelcal and admt2~strati'~t" 2,290.44 i~a-.h Ne, "30-024 - Vaaant property and :h~tive equi~nt 552.09 2,842.53 Balance December 31, 1978

410,000 - RE~ERV~ FOK DEP~CIATION OF BUILDINGS AND BUILDING FIXTUS~S DECEMBER 31, 1978 This account re~ords a~o~nt o~ ac~ed d~p;eclation o~ buildings and building flxtures at C~mtomer sez~ice Center, Rie/%mcnd, vi~gini~ and Owensboro Branch, Owenshoro, Kentucky, gross bQok walue of which is ±ncluded in Account No. "310-000 - Buildlnqs and building fi~tllTes • ~, Su~aaay analysis of transactions: Bala/~e January i, 1978 Transferred in from Owensboro Addltic~8: Depzeclaticn accrued and charged to ACosunt NO. "i0-050 - Gene~aI and admini~tzat £ve" Depreciation ~acrued and charged to AccOunt NC. "30-024 - Vacant property and inaatlve equipment" LeSB: Dispositions Balance a~ De~embar 31, 197~ CuStomer Se~ic_ e Center Owensbozo 920,356.10 - 0 - 2~012,920.96 29,809.86 920,356.10 2,012,920.76 29,107.61 58,917.47 2,500.00 7,379.78 9 879.78 2,982,314.55

450-000 - ~R~E FOR DEP~IATION C~ ~LES~N'$ ~D SUPERVISORS, AS~OMC~ILES I~C~BER 31, 1978 The credit balan~Q of this a~count ;6prssen%s accumulaEed depreciation of salesmen's and merahant ~arine repre~entatlves, aut~bilms, gross book value of which is recorded in Account No. "550-000 _ Salew~nIs a~d 8uperviBorsi automobiles,,, on New York Office books. Depreciation is calGulated monthly at 2 I/2% of firat~of-month depreaiable gross book value. S~marya~alysis of transactions~ Balanue da~%%a~y i, 1978 1,586,727.44 Add: D~preu~tio~ foe yeaz char~ed to ac~unt: ~. "20-041 - Salesman,s salary and expense" 1,137,481.98 NO. "~0-041 - SaleSmen,~ salary and expense" 150,565.52 1,288_,047.50 Deduct= A~o~L~lated depreciation On automobiles Sold o~ otherwise dls~osed of d~//Ig year. Balance Eece~b~r 31, 1978 2,874,774.94 859 203.06 For details of reserve foz depreciation balances at De~ember 31, 1978, by statos, see com~ute~ ~rintout main~alned in GenEral AcCOunting Division.

452-000 ~ RESERVE FOR D~CIATIO:~ O~ pASSENGER A~OB~S D~R 31., 19)'8 Thi~ acco%~%t Zecords aGorued d~preclatlon on passe~ger auto~ObilQs recorded in Aooo~1~ ~. ,,352.000 - passenger a~tomobilel." S~azy analysis of tr£nsaotlonJ: Ealanco Ja~azy i, 1978 Depreciation aocrued during year and charged to ~oc~/nt .~o. "10-050 ~ General and admlnlstrat~ve" Less~ Disposal ~f ful~ ~epzeci~te6 F~r~ 500 ranch ~agon motor ~o. IN72HI32488 at Customer Se~Vlce Canter B~lanoe De~ember 31, 1978 17,61S.36 I,D19.28 3,818.76 14,818.88

460-000 - RESE~gE FOR ~EPREC~ATION OF 0FF~CE FUrniTURE ~D EQU~ME~T DECOR 31, 1978 Th~s acoo~t re~or~s ~mo~t of depEec~ation acc~/ed on cffice furniture and equipment on New York Office ~ks. Summary analysis of tTanea~tions: Balance January I, 1978 4,239,048.70 ~eprecia~ion ac~zued durlng year and 0h~ed to A~oun~ Nos. : ,,10.050 - General and ad~inlstratlve" "i0-@51 - Em~leyo~ benefits ~inlst~atlon" -20-¢42 . Field sales offlce exp~se" ,,30~050 _ G~eral an~ ad~istrative" "160.350 - General exgenses" "250-@15 - V~Eqinla Branch" LQSS: A~crued deprec~atlon o~ sales add other dlspositi~ns d~rlng year per anal~sls of profit and los~ on dlsposltlon of capital a~sots Balance December 31, 197@ 189,413.01 2,590.52 2,376.61 690.80 851.12 29.01 195,951.07 4,434,999.77 178 742.87 4,256,256.90

480-000 . p~SERVE FOR AMORTIZATION OF L~I~N~S TO LEASEHOLDS DECEMBER 31, 1978 ~his aa~ount re~ords a~oz%ization a~z~ed ¢~ value of imp;ovesent reoorde4 in Account No. ~380-001 - Im~E~ementm to lea~eholdm." Summary analysis of trams~ction$: Credit bala~Qe January 1s 1978 4,489,657~57 Addltions : ~t Provided 392,361.39 Less~ Dispositions: Sale Of 9th a~d 10th flc~=s at 245 Pa~k AVQmUe to Olympia and York 735,794.87 Balance D~aember 31, 1978 4,146,224.09 133

490-Q00 - RESERVE FOR VALUATION OF CAPITAL ASSETS DECEMBRR 31, 1978 This accott~t records amount rss~rvad to provide for estimated losses (excess of g~oss hook value over acoum~lated d~preciaticn) due to disposition of capital assets. S~m~Ixy analysis of transaotlo~s: Balanoe Jar~ary I, 1978 Additions: R~sorve for valuation of ~api~al assets Proceeds from sale of equipmantT D%tr ham Branch Durlmm Lea~ Lex~ngt on Leaf R~idsville Branch Vir gi~ia Branch RI ch~nd Leaf Mount aintop Bvench Owensboro Branch Hot folk Leaf Dispo sltioDs: Equi~e~t disposed of: Duzh~m Branch Durham Leaf LeXlng~n Leaf Pu~id svill e Branch Vir~inla Branch P~ch~omd Leaf Mountaintop Braeoh Ow~nsboro ~T~h NOrfolk Leaf Lancaster Leaf Bal~ee December 31, 1978 5,587,111.38 172,600.00 20.094.85 28,451.13 4,350.72 419,305°63 296,981.52 5,106.56 34,845.37 24,772.21 326.20 1,006,834.19 22,781.81 26,194.35 16,086.11 354,997.06 639,264.08 3,629.14 149,8S0.05 70,808.39 3,517.19 40.12 ~28.30 5,306 817.27 Details of t~ansactions duri~q year per analysis on "Profit and LOSS on Disposition of Capital ABsets" maintained in General Aa~untlmg Division. 131

600-000 - pp~PAID INr~R~ST, pREMIUM AND DISCOONT DECEMBER 31 ~.978 This accoun~ r~cord~ unamortlzed ~iscounu on bank loans, Commercial paper and debentures. unamor~izeddlsco~n~ on: 25 year 5 7/8% debentures maturlnq July l, 1992 LOan payable to Amerlcan Bra~ds OVerseas, N.~. (i) Commercial paper 5 year 9 5 8% notes maturing September ~ i979 i0 year 8 1/8% notos maturing March l, 1985 Balance at DeCembe~ 31, 1978 404,686.13 16~,876.94 883500.99 180,000.00 1,225,625.00 2,857,689.06 II Proceeds of American Brands Overseas* N.V., 8% debentuxas due 1981 1~+5

100-001 p~pA~D COMMISSION DECE~nER 31 lg78 rhls account records conmzs~lon ~n ~n~er~st Dea~ln~ co~erclal paper. ~lanc~ at Dec~er 31, 1978 8~6.48

600-010 - ~RPIRED INSURA~ DEC~B~ER 31, 1978 This ac~o~nt rauozds unexp/zea portion of spec~lc L~u~mce polic~ p~/~ zeoo~ ~n boo;;~ of New York O~f~. 1,000,000 Bo~/Zy in~uzy o= death 50,000,~ 50,000 (A.T.C0*) 25,oo0 (&*C. an~ Golaen~si¢) ~al~o Dccembe¢ 31, 197B Amount. of E~pir atloa Une~tced ~ of ~aIp and Rt~ CO~ D~ ~eJ.~c~e Automobile B PUbl/u L~ab£1~ty and Pcop~ Damage on CO~pCny~T~d ~o¢~bileS Januacy i, 1979 28,979.90 P~ior Yaazls ~ - ~eld for January i, 1975- ze~o~ect£ve miJus~tm 1978 ( 9,745.40) D~49e to C~any Pyoper~y and p~o~e~y of OP3tmca almeed by ac~Cs to bol~s, ~torsw eta., ~e~ng ~e and o~nuy JCnUacy I, 1979 - 0 - ~uctAbl~ a~y one ~£~nt - PhysicaX da~e 3,000,000, U.S.A., Comp¢~ ~on~ - B~ank~t Canada, P.R., v.I° y$~el~ty and Fc~gezy - "All Risk~' 500,000 o£ ~y natuz~ In~lu~4~ '.round ~l~ewheze in ~eselons ~n ~ostage meter ~ay I, 1979 6~632.12 2,000,000 ~iCy On~ertaklng BOnd S~pt. 1, 1979 ~.000.00 Aggcegate of 25,000~000 50~000 A~IPA~kS: '*AlI Ri~ks." Policy ~lU~tn~ ceEca~n de~u~l~!e 9¢ope~ties an~ ~LIs o~ise tnsu~e~ Ontll~ A~gu~tl6, 1979 16,847.25 Janu~ry~, 1979 - 0 - 137

~t of PoIic~_ various 117,675,000.00 VaX~ous wz~ Vaxlo~ 500,000) ZS,000) 5,000) ) 130,000) V~iou~ 200,000 T'~pe o£ C~a,ja ~ PJ.sk ox~ensa~ a~d ~lo~r'm ~11£~ Wor~en's ~Qnna~lc~ ~ud E~loye~*s Liability - VarJ~us states pr£a~ ¥~Im I~al~s - Hold for ~rA~en's Cc~r4n~lo~ - state t~md of Ohio ~'m ~mlt~o~ - 5~e fund of ~ch Dalmta (salem,~) Wo~'l~en's Cc~eneat~oa - State ~md of West v~zgL~ta fsalem~ pa~e E:pirat 1on b~iz~d Date Ba~-e Ja~t*~- I, 1979 (I09:853.49) Ja~%~aryl. 1979 8,500.56 Deposit P~tmi~ 1,356.00 DepositPr~um 85.0~ DeposltPz~mlum 50.00 JanuaEy i, 1979 - 0 - Jan~zy i, 1979 - 0 - JtLqe 1, 1979 96,570.72 3t~ly I, 1979 9.462.70 Ju~e I, 1979 ~.10 De~ 31, 1979 - 0 - ~am~ Ma~,e and TEa~z~atimn: Xnlan~ Mazin~ an~ /Tan~ Insurance A~ 13, 1979 Saxlne= Atlan~lu and P~i£1~ coaBtwiao, A.I.aska and Ha%rail Shi~ts Assessment o~ ~¢I~ tax on ma~e s 1".i~m.a~s 14~693.91 O~t~14, 1979 ( 590.30) FeJ~mlszyg~ %979 41.66 (Contlnued) 1~

600-010 - ~{PI~D Z~;r2P~C~ ~R 31~ 1978 ~a ~uat of Z, 000. O~ily 75,000,000 100wOO0 5,000,000 35,000,000 --- ............. ~e3 ¢3"9e of Co~exje aaa¢~ gLsk COVece¢; P=opex~ ~ ~1~tng tea~, n~ ",~ U.S*A~ ¢err£toc'les, ]~cess pablic Ltabilll~" an(~ ~n~xp~ed BaJlance O~m~zT 1, 1978 - 0 - ~mwcc~ i, 1979 3,171.67 O~mgacy 1, 1979 - 0 - lU.soallaneo~: P~d~ t ~J~bLt£t~ by 1. 1979 39,093.34 Ncc~'~ca~d/u~zcxafl: D~zeotm=sJ al~dof£~s' I~D~0L~LCy Tza'e~.~t 0¢¢obe¢ i* 197S 78,542.73 JL~WL¢~I* 1979 - 0 -

600-020 - P~AID ~ZS~ DECI~B, EP, 31, 1978 The debit bala~Ge of th~s a~count represen%s the ~st of ad%~LTtislng ~%iterial i~rred i~ the auTzent yea~ hu~ appllaable %~ ~seq~ent yeazs~ aatlvitles. The debit balance at D~ember 31, 1978, is compased of the following~ Brand and s~la CARLTON Filter ~ BSX Magazine - G~ezal - space - P~u~tlon ~wapape~ - Reqular - produ~ion CARLTON Filtez - CU~ 0~%~0or and Transit Posters - p~cductlon Ta~i Highs - SpaUe - ~port CARLTO~ Men~l - CU~ Magazine - Genera/ - Spaae - p~duGtion NQwspape~ - ~egula~ - produ0t~n OuTdoor and Transit POsters - px~duation CAP//20~ Filter ~00~ Ma~azlne - ~eneral - Spa~e - production O~t~r and T~aRS~t Po~t~ - pEod~cti~ Po~n~-o f-Sale Material CARLTON 100's Menthol Magazine ~ General - $~a~e - Product~n Out~z an~ Tzan~it P~gters . production Polnt-o f-Sal~ Material Maga~ine - General - Space Outdoor ~nd Tr~S~ P~Bters - pr~tion point-of-Sale Material TAKEYT0~ l~n~ 1~h~s Magaz~ne - G~e~al - Spa~e Poln~.o ~-Sale Matezlal TAREYTON u~za lOW taz menthol point-of-Sale M~texia~ Amount 55,823.02 895.48 56,718.50 79,496.24 6 950.00 86,446.24 26,090.69 158.04 720.78 26,969.51 20,078.00 2,838.33 2 609.50 25t526.03 5,019.51 709.63 2,609.50 8,338.64 18,799.88 32,337.80 391543.22 9~,680.90 18*799.87 39,543.23 58,343.10 848.84 (continued) 140

600--020 - p~pAID ADVERTISING DEC~BER 31, 1978 Page 2 pALL MALL LIGHT lO0's Magazine - GenoaI - production S~LVA THINS Fi1£e~ Magazine - Genezal ~ pzoduction payment to France SEITA C~werlng Distclbution Expenses foe £uux C~garette Bra~s in 1979 Varlous Combinations of our ciqarette BrLnds Modern America. Planners Gratis ~t~s Mili~zy - Domestic Con?entions Sportlng Events Monthly Minder Calenders - Export Pmlnt -o f-Sale Material • icke~s for the 1979 N,y~ Yar~ee Baseball Games Total C~atettes, Smoking, etc. ROI-TAN L~e Maqazine - Txade Papers - Production Produ~tlon of Motion picture . HOW to BUy cigars Point-of-Sale Material wrapping Material Magazi~e - Trade papers - production ~rograms - Miscellaneous - p~uotion product£0n of M~t~On Piature - ~ow to BQy Cigars RedeB~n of 3-Pack Cigar Package D£stribut£on In~ent£ve pz~gzam (19~0) pa~k Redesign (EXcludlng G~enadlems and ~inos) Wrapping Ma~er lal C1a$~i~s - Consumer ~ro~otion Gr~nadi~r~ - c~ns~er/Tra~e Pr~ion Grenadiers - promotion Developm~%t G~enadiers - Zntrodu~zy Display Cartons i0 Pa~k Grenadiers - polnt-af.Sale Mat~rlal 416.66 6,881.05 2,13G,23 6,410.00 1,094.00 6,040.72 106,908.30 1,960,00 32.43 5,925.00 8,929.7§ 669.69 108.05 1,411,04 ii,850.00 2,395.90 3t800.00 16,500.00 8,232.53 1,950.00 3,271.58 3,709.80 1,900,73 18,686.50 2,279.81 4,766.72 5,406.62 131 846.96 498,171.87 15,556.87 73,816.13 (Continued) 141

600-020 - p~PAiD ADVERTISING DECEMBER 31, 1978 Page 3 COrOnA Zm~zt~ Magazine - ~e Pa~s - ~@du~t~n CO~0UA - I~o S~Qs Pr~cti~ of ~t~n P~o - How ~ ~y Cigars R~esign of 3-Pack C~g~ Pac~es P~g~g Change Dev~@nt of New Pr~U~ Po~t~f-S~e ~at~lal ~appinq Material ~ c£gar S Magaz~e - Trade Pa~s - p~uutlon ~gaz~e - Tz~e Pa~rs - px~t~n Po~t-of-Salo ~te~ial SAIL ~c~ ~co Magaz~ - Tr~e Papas ~ p~UC~ Total Cigars a~ H~h-Grado S~9 ~ Gra~ Total ~ 31, 1978 1,975.00 499.50 6,464.92 20,000.00 2,858.46 664.49 38.04 2,864.30 71.93 32 462.37 121.907.~0 19.20 2,902.34 19.20 2 940.74 124 848.04 6~3 019~91 14Z

600-030 - pR~PAID EXPENSES DECEMBER 31, 1978 This account re~c~ds charges appllcable to future operations. American TelephoDe & Telegraph C~any - Adv~e chazges ap91~able to teletype service CO=merce Cleari~g Hous~ - Subs~riptlons B~nk services on 1990 debentures Transfer of balance due Cha~ ~hatta~ Ba~k on ~lerto Ri~@ s~pl~ment al allowaDces Fred P. GaSkell - Duty on I0 containers Dutch S~ok/~g TObau~ tQbe i~x~ted Bank services on 1992 debentureB Tobacco Merchants Assouiat~Qn Contributions Tobacco TaM Oounoil I/%C. - Con£rlbutions American District Telegraph - Advance cha~es Atlantic Container Li~es - Freight Treasuz~r, State of New Jersey - TaXes paid to State T~x Administrate, providence, Rhode Island , T~xes paid to State National A~soc. Tobacco - Contributions Gate City rental Pay roll prepaid e~ense Balance Decemb0r 31, 1978 Amount 1,700.00 2~133.00 2,242.72 10,881.67 2,606.56 677.53 8,666.66 5,174.00 980.00 2,706.30 1,157.20 201.25 25.00 192.42 1,333.33 49,G~TG4

500-070 - p~IpAID F~NT DECKER 31, 1978 This acp~o~t r~oor~8 rent~ pald in advance, ~rlmises 250 E. PO~@ de Le@~ Avenger DeQRtuZ, Georgia 47-49 Buffalo Street, Hamburq, New York i0 St~yvesant Avenue, Lyndhuxst~ ~ew J~Sey 07071 1159 Bancock Stzee~, Quincya Massachusetts 541 Jeffers~ Aven~e, Redv~o~ city, CallfOrni~ 94063 1109 N. T~pso~ S~xeet, Richmond 30, Virginia 321 W. 6~h Street, Royal Oak, M~ohi~an 4000 Aurora Avenuet Seattle, washington 21010 C~ter Ridge Road, Rocky Rive~, 0h~o 4~I16 5925 rorr~st La~e, S~It8 ~08, Dallas~ TOXaS 75230 U.S. 130 & Levitt 9arkway, Willlngborol New Jersey 511~ P~k Ag~nu~, Me~phiB, ~e~e~s~ 6901 West 63rd S~reet, Sh~oe Mission~ Kansas 236 Washington Sq~re Plaza, Royal Oak, Mich~ga~ Balance D~cember 31, 1978 133.60 95.00 137,50 150.00 104,00 250.00 120.00 97.00 142,00 ~16,00 160.00 120,00 ~7.50 141.00 97.00 144

D~BER 31, 1978 The debit halamce of this account rspresents the portion of taxes paid in advance and the portion of taxes for wh/ch ~labillty exists but which portion is appli0ab1~ to operations of the followln~ period. The ~ebit balance at DeC~m~sr 31, 1978, is c~sed of the following: calif0znla 0klah~ma OI z~on TeXas Wash~nqton Debit Ba~anco Kind of Tax Tax year Total Taz Fr~n~hiee 1979 802r 246.00 802,246.00 Los Angelea -Clty and County 7/1/78-6/30/79 29,064.87 12,080.~7 National city - City an~ C~unty 7/I/7B-6/30/79 7B6.57 390.~0 Oakland ~ C~ty an~ County 7/1/78-6/30/79 16,925.09 ~,346.92 Sacramento - City and C~unty 7/1/7~-6/30/79 3,~43.8~ 1,266.76 Union ~y ~ ~ty an~ ~nty 7/I/7~-~/~p9 7,~2.~6 ~,916.87 Tuls~ - state, City and County 7/1/78-6/30/79 3,470.16 1,735.08 Fran~h£~e 7/i/78-6/30/79 4,188.00 ~,094.0~ Mi1~ki~ - City an~ ~y ~/i/7~-~/56/~9 %,~15.7~ 51~.00 Fran~h~sa 6/1/78-4/30/79 6~,674.00 24,300.00 LiCense 7/1/78-6/30/79 1,679. ~2 840.00

600-090 - ~ZD ~q~IG[IT AND S[]I~]14G ]~(p~E . CZ~I SMOK,~, ~I~. ~.~R 31e 1978 ~e d~it ~alaHce o£ this accc~%t eadh month-end re~resenks: I) The amo~ of ~a~pai~ freight and shipping e~;ense app1i~able to p~odu~ ~ har~ at ana in transit to warehousesr 2) The a~unt of warehouse expense appl~able to pm~d~ct~ c~ hand at wa~ouse~ 3) ~e dlffezen=e, or v~iance, helen ~n~hly £zeight e~ ~ppi.~ ~pense provlded, based on standar~ ~ates ~evclopod for each packlnq, and that a~tually ~ed d~rin~ the m~th. ~he vaz/an~e is ke~ within reasonablo llmlt~ by per~o~i~ally adjustin~ th~ stan~ard~ and i~ w~i~%~n o~ in it~ en%ir~ to expense by yea~-end. 6641899.51 6791929,57 146

~E~- 31t 1978 Tho debit bO~C¢ a£ De~a~z 31, ~978, is c~4 ~ the foll~okr~: AmOOmt 37e707.43 147

600-095 . p~pA~D F~IG~T ~RD SHIPP3~G ~X~ . pt~R¢O 31, 1978 The debit balance o£ this account ze~cesents frei~t and ~i~i~g mcpen~e applicable to shi~ts of finished goods in transit to Puerto Rican B~anc~, Dablt ba~'~ce DeC~ 31, 1978 2,157.19 14S

,d 0~ "4OOOOOOOOOOOOOOOOOOO b~ o o o o o a o o o ~ b~ b~ o o o o b~o o 0~ oo o oo oo o o o oo oo ooo o o 8 0 o ? o o H

B00-112 ~, ~TER AI~D(~R DEPOSITS DEC~£BER 31, 1978 This accost r~crds de~slts wlhh v~us 0om~es~ goverrJaen~ der~me~ts or others which are re~le to us on ret~r~ of probity, discontinuance Of ~ervioes or c~let~on Of hra~sactlo~s. United Air llnss Deposit with Pos~as~er ~ur ~stage-due ~ail D~l~sits at 13ales administrative offices; Woc<ll,m~d Itllls, ~li~rl~ia . DepOsit Qn ~les Of£1ae Denver, Colorado - DePOsit on Sales office LOS Angeles, California - DepOsit on Sales Ol~ficQ ~l~ver, Massachuset~;s - El~tricity lted,~o~t, Cali~ornia - ~lN~s±t on Sales Office . The ~ nt e~:%r Un~n, New Jersey - Det~sit on Sales Office llinsd,~le, Illi*,~is - Deposit on Sal~s office ~t~- I~o. 24697 Balance DecE~er 31, 1978 Amount 425.00 1,596.90 359.04 218.00 27.20 25.00 282.00 245.00 385.20 350.46 580.27 4,494.07

600-120 - ~ICE LEASEHOLD EXPEI'iSE 31, 1978 ~lan~ at J~uacy l, 1978 E~enB~B L~ u~mct~om with mov~ ~o 245 p~rk Ave~e: L~g~ £m 96,843.~3 Litiga~Con se~tlant 120,000.00 P~L~tAn~ of ~¢se 5,970.64 222,813.87 Less; AllocaCsd W wc£tt~m off b~se~ on sq~ax~ Eootage in sale of 9th and 10th ~ioo¢~ ~o 0~ym~i~ and ~ozk ~lan¢e a~ D~ue~er 31, 1978 *Ezpenms in ~o~¢~¢~ w~Ch ~ove to ~45 p~Ck AVenue: Legal fees 85,174.88 ~¢ig&t ~on ~ttlmt 105,541.56 195,967.70 222,813.87 w195~967.70

600=121 - ~SE~~ ~OR ~EHOLD EXp~sB I~CE~ER 31, 1978 This acc0~t r0o0~Is aQc~ulated a~ortizatlon 0£ ~al~: Of leasehold expense at 245 Park Aven~e recorded in Accost No* "600-120 - OffiG~ leasehold expense." Balance at January I, 1978 Acditlons: Amount provlded DsletiOna: A~ount written off du~ to salo of 9~h and 10th floors to Olympia add york Balance December 31, 1978 94,531.65 8,207.15 11,748.2__4 90~990.55 1,~

600--900 ~ IT~S Ii~ SUSP~SE DECEY~R 31. 1978 This acoount is a clearing account which rQcords debits and credits for items for which peoper a~ounting distribution ~annot be determined at tlme of 0riginal ~cozdlng. There was no balance in this account at Deuembe~ 31, 1978. . 153

611-O00 - EXPENSES ON DEBENTURES SET UP FOR TAM PURPOSEZ DECEMBER 311 1978 This account is a memorandum account set up for tax pul~oses only. Debit balance represents total expense other than discount and cost of certain federal issue tax stamps, incurred in connection with sale Of 4 5/8% debentures. This e~ense is to be amortized for tax purposes over life of debenture. For income purposes in 1966f expenses on 25 year 4 5/8% subordinated debentures maturing July 11 1990, were charged to ACCOUnt NO. "799 - Expense of retiring preferred stock." Debit balance of this account is fully offset by credit balances i~ Account NOS. "612-000 - De~erred amortization of expenses on debentures set up for tax purposes" and "613-000 - Amortization of expenses on debentures allowed for tax purposcs.'! 25 year 4 5/8% Subordinated Debentures ~turing July i, 1990 Issuance Expenses in connection with debt: Registration fee Printing registration statement, prospectus, indenture ~nd related documents MOrgan Stanley services Trustee's fee incl~ding authentication fee and expenses Accountants' fee Legal fee Stock Exchang~ listing f~e Miscellaneous expenses Federal issue tax 700.00 17,959.28 75,000.00 5,956.89 500.00 26,000.00 1,080.00 53.67 9,450.21 Balance December 31, 1978 136,700.05 136,700.05

612 000 ~ DEFEP~D AMORTIZATION OF EXPENSFS ON DEBENTURFS SET UP FOR TAX pURPOSES DECEF~ER 31, 1978 This is a m~morand~m acrount s~ up for ~ax purposes only. Credit ba]anr~ repr~sent~ un~or~xzed expense, for tax puxpose~ only, on 4 5/8% subordinated d~bentures. Summary analysis o~ nransact~ons; Credit Balance January h 1978 5esE MOnthly amol~±zatlon of ~xpenses allowed for n~x purposes based on Lun~ outstand±n~ at the be~xnn±ng of th~ mon~n Un~mortized exuenses on bond~ ~archased Or called for red~mp~lon Total deductions ~red~t Bal~nce De~em~el 31 197~ 25 Year 4 5/8% Subordinated Debentures Maturing July 1, 1993 35~214.45 2,742~38 4,177.32 6,919.70 28,294.75 15.5

613-000 - AMORTIZATION OF SXPENSES ON DEBENTURES ALDDWED FOR TAX p~POSES DECEMBER 31, 1978 This accost is a memorandum account set up for tax purposes only. The credit balance of this accou[it represents expenses amoxtized for tax purposes on 4 5/8% subordinated debentures. Sugary analysis of transactions: Credit Balance January i, 1978 Add: Monthly amortization of expenses on d~bentures allOWed fo~ tax purposes based on bonds outstanding at beqlnning of~nth Unamortized expenses applicable to debentures purchas~ Or called for redemption Credit Balance December 31, 1978 25 Year 4 5/8% Subordinated Debentures Maturing July l, 1990 101,485.60 2,742.38 4,177.32 i0~,405.30 IS6

61~-002 - pp~PAID EXPENSES ON LONG-TERM DEBT ~ECI~Ep~ 31p 1976 qhis ~cco~t records prepaid port~on o~= expense on lo~9 ter~ debt. ~ount ~T~:m Loan p~ (i) 9 5/8% Notes Ma~uring ~eptember i, 1979 3~9~696.73 (2) 8 1/8% Notes Maturing March l, 1985 254,960.08 (3) 25 Year 5 7/8% Debentures Due (4) z~rlch I~surance CO. LDaI1s 101,470.00 (5) The Sumit0mo Bank - J&~anese Loan 2S0,692.$3 Balance December 31~ 1978 1,1~3,437.$3 E~pe~se Amortized Unamortized 303,070.49 46,626.24 97,735.24 157,224.84 101,470.00 0 - 216,367.47 64,325.36 841,458.08 301,979.75 301,979.75 (i) AgreemPnt dated September i, 1974, b~tween Morga~ Guaranty TK~st Company ~f N~W yolk a~ American Brands, I~c., maturing September i, 1979 (2) Agzeeme~£ dated March I, 1975, between Citibank and A~ezican Brands, InC.r maturlng March l, 1985 13} ~greeme~it dated J~y i, ~96~, between M~nu~ctulers llanovez ~/st Con~y and A~ericaD Bran~s. I~C., maturing July I 1992 4 ib yeal 6 3 4% ~wlss F~an~ Loans ~url~q F~Dr~az~ 2. 1984 A~re~n~ dated November 6 ]972. b~tWee~ The g~itom~ BaI~ L~mited and ~ll~l~an B~Ids Overseas. N.V., maturing November 6 19~ 157

615-001 - RECEIVABLE FROM MOBIL OIL CORPORATION FOR ASSIGNMENT OF LEASE O~ 150 EAST 42ND STP4SET DECEMBER 31 ~1978 This account x~cords the prlnclpal recQivable from ~0bil O11 Corporatlon for asszgnment of Leas~ On 150 East 42~d Street. payments are received oR tho twenty~fir~t oR J~n~ary, April, ~uly a~dOctober. Balance January l. 1978 bess payments received 1978 Balance Decl~mber 31, 1978 736.291.92 185,727.74 550.564.18

620-005 . D~OSITS ~COV~R~B~ FROM INSUIL~CE COMPANIES ~EI~KR 31, 1978 This account r~rds ~ortlon of specific insurance premiss that will be refunded by insurance companies ~S estimated by Corporate Insurancs. S~ amalysiB of transactions: Balance January i, 1978 Increase in premium de~slts paid Balance December 31, 1978 Use and Occupancy Coverages Mut~%l Floater 7/1/74 t~ 7/1/79 128,263,33 24,200.14 152,463.47 1S~)

620-010 . GR0~p LIFE II~m~Ol~J~.i,T~ ~ CC~PR~ENSIVE ~DIC~L EXpEnSE INSURANCE RESERVES DECF~@IER 31, 1978 ~8 me~raDd~ aCCC~t Ee~OEdS @/a~ant of preai~ r~tained by Metropolitan Life l~suran~@ Company as reserves to provide for ~cessIve llfe or ~edical @x~a~se clai~. This aught is redu=@d by am@~nts applied against excessive claims. Bala~ue Is offset in ~ii by czedit balance in Account NO. "620-011 - Offset to gEoup life Insurance and cc~pre- henslve ~d~cal @x~enBe insur~e ~es~es." For EeCOrd p~rpose an allo~&tion of bal~ce along v&T~ous c~pa~les is maintained in account ~alysls, Summ~y analysis of transaotlons: Special Contin~sn~ Rese~es A. Basia ~"Ip Life Insurance B. Su~plmtal G~OU~ L~f~ Insuranoe C. Co~9~ehenslv~ Medical Expense ~nsu~anc~ Pezs~r~l Coverage De~den~s ' ~e~age T~tal ~i~al Grand Total P~la~0~ December 31, 1978, allooa~ed as follows~ Bala~c~ December 31, 1978 88,500.00 - 0 - 83,781.00 - O - 83,781.00 I~.'0

620-011 - C~FSET TO G~0UP I~FE IN~UPANCE ~ CO~NSI~FE ~DICAL E~NS~ ~/~SURANCE RESERVES DECEMBER 31, 1978 This ~GOL%~t re~oTdS a full OffBet tO ~t retained by MetrOpolita~ Life Insurance Company from premi~ am reserves against excessive claims in ACcount NO. "620-010 - Group life insuxance and G~prehensive medical expense ins~can~ ~eserves°" Czedlt balance De~ember 31, 1978 (FOr details, see A~count NO. 620-010.)

640-001 - ASSETS C3tPITALIZI~D FOR I~CORD DECKER 31, 1978 Thi~ account records nominal v~ue at which certain assets are carrle~ f~r purposes of recozd. Balance at De~ember 31, 1978 1 - Wei~er Stem~aing MaQhine Pat~t: ~e~dltuzes made d~inq 1931 and 1932 in patenting Wei~er St~miDg Machine. Total cost of $6,827,00 was uharged 0££ December 31, 1933~ except for nominal sum~ 2 - Lucky strike Lighterz Expenditures Of $2,922.~3 made during 1927 a~d 1928 in connection with purchase of Lucky Strike Liqht~r, goodwill, property brands, etc., and to pmocure dis~ontlnuance of the L~cky Strike L~ghtGr Corpo~atlon, cr ch~ge of its name 3- ~ids, dies, etc., at various sUppllers for details ISchedule i): Equil~nt purohased for usQ Qf various suppliers in manufacture of products for US 4 - Fine ~rts (Schedule 2) 5 - Miscellaneous equlpmen~ at various locations per details {Schsdule 3) Balance December 31~ 1978 i. O0 i.(}0 1.00 I. 00 5.00 Schedule i: De~ails of MOldsI Dies, etc., at variot%s ~h1~liers: Packaging Systems Corp., 400 Rou~e .~o. 303, 0rangeburg, New York Plast~c mold to place state Tax Stamp on cigarette packages Small ~arton cushiOn insert Large ~arton ~shlon in~ert Miller~N0rth~rn Corporation, Roselle park, New Jersey Indian head for 8 1/2" x ii" letterhead~ R. ~. s~rafi~i, Inc.~ 44~ young Str~ To~awanda, N~W ~ork Cavity ~ld for A-24 Ci~ar Tips Cavity hol~ for A-36 Cigar ~lunts Cavity hold f~r AyC Saber Ti~ Morgan's Typographs, ~n~.~ Richmond, va. I set of ~-color dies for Half and Half Pre~i~ion Plastics Co. 4647-61 Ste~ton Avenue, Philadelphia, Pa~ Molds and tooling fer Sabers an~ ~abez Tip~ Cigars Injectlon molded ~nd deco~ate~ plastic ~qar ~ases (Continued)

640--001 - ASSETs CAPITALIZED FOR ~CORD DF~EMBER 31, 1978 Schedule ~n : Details o~ Fine A~t~: ~tt~, Barton, Durstin~ & Osborn, Mew York, New York Paintings 245 Park Avenue, New York, ~ew york i0017 98 p~intlngs 4 statues 2 wooden shOVels on mahogany plaques MOdel of Lucky Strike ex~l~it (~lew Yo~k ~rld's Fair) Schedule 3: Details of Miscella~eous Eq~ipmen~ at Various Locatlons: 2 bowling trophies 6 ~Qppe~ llne etchings 51 electrotype dies for e~velopes 1 set brass dlms for mailing machine 2 engraved cyllnd~rs for printing 60 ram. wide cigarette tipping for D~al Filter Tareyton IVEL Cor~ratlon, 53rd street and First Avenue, BrooklYn, New ~ork 1 1970 Exhibit Units i and 2 1 1970 American Brads, Xnc., EXhibit Booth ~c~ta Paper D~vlslon, Pisgah Forest, North Carolina Cylind~ for printing blue lines on whi~e tlppin~ paper Richmond Gra~nlre ~nc. , Richmond, virginia 2 PriRt~ng cyllnders [red ~d varnish) He~schel-Stelnan, ~nc. * 45 van Nostrand AVenuer Englew~od~ NOW Jersey Modular RaCk System Back Attachments and S%ip~o~ts Gr enabler s Counter Page 2 1~

670 001 CASH ~N DEPOSIT WITH MORGAN GUAPANTY TRUST COMPANY FOR DIVIDENDS PAYA~L~ UPON ~URRENDER OF STOCK QF CUBAN TOBACCO COMPANY I~C. DECEMBER 31, 1978 This account records cash on deposit with Morgan Guaranty Trust Company for divider.ds declared on American Brands, Ins. , stockswhich are to be paid to former stockholders of Cuban Tobacco Company Inc. upon surrender of stock in that company for American Bra~!ds, Inc., stock. This account is f~lly offset by Account NO. "670~002 - Offset to cash on deposit with Morgan Guaranty Trust Company for dividends payable upon surrender of stock oZ Cuban Tobacco Company Ins. " Su~i%ary analysis of transactions: Balance at January i, 1978 A~Lount deposited with Morgan Guaranty Tr~st Cor~pany during year for dividends payable upon surrender of C~ban Tobacco Company Inc. stock Less: Pa~crLent of d~vldends during year by Morgan Guaranty Tr~st CO~pany upon surrender of Cuban Tobacco Company Inc. stock Balance Decer~oer 31, 1978 Dividends on common Stock 31,200.27 3,171.25 34,371.52 3,519.57 30,851.95 Details of stockholders' names are maintained by the Secretary's Departrllent: No. of~m~erisan No. of Brands, I~c., StockhOlders Shares l0 870

B70 002 OFFSET TO CASH ON DEPOSIT WITH MORGAN GUARANTy TKUST COMPANY FOR DIVIDI~NDS pAy/~LE UPON BURI~NDER OF STOCK OF CUBAN TOBACCO CO/~IpAN¥ IMC. DECE~ER 31, 1978 credit balance of this account represents cash on deposit with Morgan Guaranty Trust Company for dividends declared on American Brands, Inc., stock payable to former stockholders of Cuban Tobacco Company Inc. upon Surrender of stock in that company for American Brands. Inc., stock. This acco~%t is fully offset by Account NO. "670-001 Cash on deposit with Morgan G~aranty Trust Company for dividends payable upon surrend0r of stock of Cuban Tobacco Company Ins." Balance December 31, 1978 30,B51.95 $~e Ac¢0~nt No. "670-Q01 - Cash o. deposit with Morgan Guazanty Trust company for dividends payable upon surrendex of stock of Cuban Tobacco Company Inc+"

679-C01 - SAIARM A~D ~%XES 1978 This a~G~nt is a cl~aring account whic~ is~ i - Charged w~th all ne~ sal~rles, ~m~es~ tultlon refunds and moving expenses paid to ea~1oyees by Nc~ york offi0e and with ~ay roll ~eductions app~laable to such p~%~ents. 2 ~ credite~ with transfers made by the Pay Roll Department to appro;~imte accents. A ~ a~alysls of transa~iorLs ~ 1978 f011oWB. De~%zer~. Total D~its TOtal Credit s ~ian~ December ~r i~7~ netail~ are on file in the B~y ~iI 50,851,779o12 50 851 779.12

679-005 - DIVIDEMD CORRECTION ADJUST~NT 1978 Thls accoun~ zecord~ ~ransac~lons arising ou~ ~f inccrrec~ preparation of dlviden6 check~ and subsequen~ cQrre~tlve a~tlon taken. Summary analysis of transactlons: payments of corrected divldend checks 521.82 Less: ~fth%ds of divldend ,vsrpay~en~ on ~necks r~deposlted ~ue b~ ch~ge l~ pa~,ee.s name or a~o~ 563.35 R~funds ~ ~t D~ceR~oer 31 reclassified tQ Account NO. "185-010 - Miscellaneous a~oun~s r~c~ivable" 5~.47 Balance at December 31. 1978 _ 0 . 1~7

679-.010 - TAXES TO BE DISTRIBUTED 197s Thi£ is a di~i~/tlon aooo~nt f~ taxes and interest on ~axes paid O~ ~ef~ed. 1~

679-015 . BUSINESS GIFTS DECKER 31, 1978 This ac0o~%t i~ a cleazin~ account in which total b~slness qlft expense incurred by e~ployees of New York Office and individuals operating unde~ direct supezv~6~n o£ New ~ork Office is accumulated and redistributed to appropriate accounts monthly. S~lry analysis of transactions: Total cost of business qifts Redistri~/ted as follows: i0-050 - G~neral and administrative 405 - BUSiness gifts 20.040 . ~.y.O. D0mestiu 405 - Business glfts 766 - Ticket donat~ns ~i-040 - ~.y.o. Expert 405 . Busiu~ss gifts 20-041 ~ Salem~en,s salary and expense 407 .SaleSmen. s expenso - 0ther 21~042 - Sal~sme~Ts s~lary and expense ov~se~s 407 - Sale~en,s expenss - Other 20-046 - Stere ~nd general - Domestia 766 - Ticket dDnat£0ns 30~040 - N.y.O. Domestia 405 - Business gifts 30-041 - Sales~en,s salary and expense - Domestic 407 - Salesmen's expense - 0thex Total distribution of e~p~nses 232.50 5,246.50 Balance December 31, 1978 81.12 5,479.00 386.96 11,501.03 864.88 8,513.80 90.00 6.20 26j924.99 26,924.99 -0-

---

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I~D'''~LAL X. W~CO~ r~ ×. WH~LAN TaTA~ NE~ Y~R~ ~r,~ T~E J~N~R,C~N TOB*CCO ~ L. ~H,~ N~ ¥,~ L. H~, ~. J~ T. ~E~k ~3'TI (~3.1B ~1,00 13~,92 [~L~tO~ or EXPENSE I~ ~1 k~ 101 ~G ~ 7~G~ G,~,98 415 ~ CO~¢~TI~m ~*D MEE~I~ 7~,38 ~G~4T

~, ~, ~L 599,16 ~. ~. ?~ I,~1 ~, P~ z~r~o ~,~1,1~ 313,11 8~1,61 69~. L~ 6~?,18 ?71,76

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679-025 - DI~CT MOVING Ey~0ENSE DEC~BER 3~* 19~8 This au=ount is a ~learln~ acoount ~ ~h total Dire~t Moving Expense incurred by employees is pald directly to them or moving companle~ and red£strlbut~ to approprlate ~o~t8 ~DtSly. Stmmlary analysis of transact~nl: T~tal aost of Direct Movlnq Ex~sm 90,0B0.78 ~XQO%mtB appl~cable to following empl~ees: N~ Amount O. P. Ae~hllman 102.22 T. A° Alb~t 4,655.84 W. J. Claybr~k 6,389.32 W. G. Davis 4,70~.47 E. Doerr, Jr. 8,621.77 L. T. Poleax, iII 1,513.40 F. Eyl, Jr. 7,825.41 M. Flan~gan I, 28~. 9~ T. E. Hall, Jr. 1,152~00 R. Haragan 4,714.97 R. L. Kessel 51146.54 T. B. Xizzlah 4,351.78 C. L. Lewis, Jr. 2,155.~5 B. C. Mc~list~r 4,3?6.05 D. M~ehnke 31041.25 R. H. Owen, III 6,397.55 B. G. S~h/~ell 6,212.07 L. A. steinweg 4,570.52 TL W. Stor~y 5,?73.44 R. K* Tllley 6,397.6~ R. D. TItUs 687.71 T~tal Paid 90,080.78 Balance at D~ember 31, 1978 - 0 -

679-030 . W.~E~SE~E -~VERTISI~G~S.~I~S 1978 T~IS a~cou~t is a ~leaXing account in whioh total ~st of freight amd s~age of advertising mlte~lals, salegmenls 8upplles and 8raillery at Golden Belt ~anufactuzing Cc~pany, Durham, N,rth Carolina, ~s actuated and re4/strlbuted to appropriate expense a~coumt~ monthly. S~ary analysis of t/~aatlons: Freight and aartage C/q~ttesp smoking, etc. Othsre~p~se9 ci~aret~elw ~ki~, eta. 33,190.36 673~950.56 707,140.92 ~ist~ib~tion to the f~llowln9 acc~%1~tsl 20-041 - Salesmen,s salary and expense 20-046 - Store ~.d general - Dmmestl¢ 21-046 - Store and 9eneral - Export B~ance at Decemb~ 31, 1978 91.235.42 609.699.46 6j206~04 707,140.92 - 0 - 1~0

679.045 - AUTOMOBILE SALES D~ER 3~, 1978 This aoc~nt is a cl~arlnq account in which proceeds fr~ t~ade-ln of autn~obiles @/%d rebates on sales of oe~tain autOmmbiles are recorded and redistributed to app~priate aocount~ monthly. S~mmmry analysis of transactions: TOtal proceeds fr~ sales of automobiles Less: ~ul~ts rlis~-il~t~t 'r~ follo~,rlng ao~otl.,lts - 10-077 - profl.~ and loss on disl~siti~ of ca~pil~l a~e~s 2~-ff77 - profit m~l los~ on dis~si.~ion of capital ~ssets 30-0"/7 _ profit ar~l los~ On disl~sltt.on of capital assets 250,i18.76 300.00 2221985.69 26 833.07 250,118,76 Balance at DQQember 31, 1978 - 0- 1S1

680-000 - COOD%9~LL, 9F~DS~ TRADEMA~, ETC. DEC~E~ 31, 1978 The debit balance of this account represents the net book value of GOodwill~ Brands, T~ademarks, etc. A c~Lpl~te S~y a~alysis Q~ Goodwillr B~/~ TradQ~%rks, ~tc.r fz~ 1904 to 1971 is Included in the 1971 ~ppl~m~ntary fiscal binder. A co~pl~te analysis f~om 1904 to date will be included in 1980 suppl~entary flsoal birder and at end o~ eaQh five-year period theZeafter. Ths d~it balance at Decem~ 31, 1978, is composed of the follOWing: Detail Debits C~edlts The ~J~ezIc~ Tobacco C~any 16,377,474.95 Conti~tal Tobacco Company 54,875,222.51 Consolidated Tobacco COmpany 56,425~469.98 127,678,167.44 We~ & Brothors Smoking Business 424,500.00 Bla~e T~hacco Company 24,282.26 B~ Leidesdorf company 308,760.50 John W. Carroll Tobacco Company 4% GOld Bonds p~hased and oancel~d Flat I~on Design 50.00 "~ney D~ Twist" ~rand 90,000.00 "sheet Met~l Packet BOOk" Patent 5,000.00 E. Seid~berg, Stlefel & Company - A11 Tobacco Cigarettes 4,484.50 L. Miller & S~nS 50,~00.00 P~gh~s to ~r~qh~ Box !~hlne 1.00 SUb ROSa Packet Develolm~ent i. 00 Box Machine Improvement l. 00 Vacu~,l can Experimental Account 1.O0 NeCk BOX Machine Development 1.00 ~ee~n Pat~s an~ M~tches 1.00 E~qlish Cork Tipping Machine D~Vice 1.O0 Fzench Cigarette Machine at Jersey City Wa~e~usQ 1.00 voiteck Mac hlne 1. O0 Maxfield All To~aceo Machine 1.00 Dunn All Tobacco Machine l~00 Allison cigarette Machine 1.00 ~ery cigarette Mauhlne i. 00 Moon~lis Cigarette ~chlne 1.00 Bruand~t Cigarette Case Makin~ Machine 1.O0 National M~al Edge BOX Company l. O0 H~rd Pa~king D~vice i. 00 Duplex Machine Cutter and Peed DeVelopment I. 00 ~King ~ward" TaZkish C~qar~tte Marathon ~gyp~ian Cigarette Company 8-7-0~ 200.00 Piedmont FOll Packing MauhAne 1.00 "Broadlea£" SmOking Brand ~0.00 "SmOkers Paradise. Cigarette ~and i00.00 "B~lly Good,, T~Ba¢cO Brand 10.00 C. V. Winfree TO~aCOO Company "Oxford ~ash~' SmOking To~a¢~o 500.00 Monarch Tohaooo ~Orks~ Inc., Goodwill, Brands, Trademarks 30,500.00 100. O0 27,335,000.00 144.63 (Contln~ed)

680-000 - GOODWILL, BP~NDS, ~RAD~I~RKS, DI~. D~Ct~IBER 31, 1978 Detail Fidell Wrapping and Stamping Machine ~9hts, etu. Pal~owsky Cork T~ing Machlne a~d Pat~ts ~ucher COrk /4achlne ~d patents F. F. Adams T0ba~c0 Company Blac~ll 'S D%Lr~ TObaOCO Company B~t le~-BUtlez, Inaorpezahed MOnogol Tobacco Works R. A. Patterson Tobacco Company Dural Paper Box "Way Q~ee~,,' "Bristol Club" and Other Tobacco B~ds "K~hess" Rights to Name Val~e of Bra~ds, Trademarks, Receipts, FOX--as ~d G~od- will transferred to the follo~g by con~yar~3e dated Dece~%be~ l, 1911, undeT terms of deoree of the United States Circuit ~c£ for the ~thezn District of New York, ~de and entered Norther 16, 1911z Liggett & My~s Tobacco COmpany p. Lorillard Company John W. CarrOll Tobacco C~pany Wzlte--o~f in J%~%e 1950 by Charge to Earned Surplus Excess Qf ~ket Val~e of The Am~ican Tobacco company stocks issued in co~eet~on with m~rqer ov~ minority interest in ~er~can Cigarette and Cigar C~any prior to ~erger A~orti~ation of a~nt chezged in c(~l~e~t~on wlth merqer of Am~ri~ cigarette ~d Cigar Coa~any, as al%th~rlzed by the Board of DireCtOrs on ~ebr~axy 16, 1954 Less: Credits Bal~c@ Dece/~ber 31, 1978 Debits 20,i00.00 17,765.00 8,000.00 1,624,354.06 6,296,147.67 364,249.67 18~,648.73 594,025.38 3,230.00 2,500.00 50.00 2. O0 2,198~146.15 139,933,81R.36 139,933,811.36 1.0_0 Pag8 2 Credits 36,840,237.04 19,460,752.14 2.00 54,099,429.40 2 198 146.15 139,933,@ii.36 I~3

700-000 - NOTES PAYABLE TO BANKS DECEMBER 31, 1978 This account records unpaid protion of loans from various banks. Interest Bank Bank LOans pa~able on Demand %~e Chas~ Manhattan Bank Citibank %lanuf~cturers Hanover Trust Company Moz~an Guamanty Trust Company Irvlng Trust Company J~te ll 3/4 ii 3/4 ii 3/4 ii 3/4 11.30 Special Loan Morgan Guaranty Trust COmpany 10.30 Balance December 31. 197~ Amount 13,000rooo.oo 15,000,000.00 [l,0OO,000.01 [5.500.Q~0.C lO,O00,O00.C 6,50/ 300.0I 7~,000,000.C 18,1

701-000 ~ NOTES PAYABL~ - COMMERCIAL pAPER DECEMBER 31~ 1978 This &ccount ~ecords unpaid promissory notes issued by company and drawr: to order of "bearer." Effective MatUrity Date Date Ra%~ ~o~nt 9/22 i/8 8 5/8 1,850,000.00 10/2 1/5 8.775 5,000,000.00 11/9 1/8 i0 1/8 1,000,000.00 Ii/9 i/9 i0 i/8 1,000,000.00 ll/10 1/17 10.225 5,000,000.00 ll/1O 1/9 10.225 2,000,000.00 11/15 1/15 10.275 2,000,000.00 11/15 1/16 10.275 1,000,00O.00 11/16 i/4 10.25 1,225,000.00 11/16 1/4 10.25 1,000,000.00 ll/16 1/18 10.325 3,000,000.00 11/17 1/19 10.325 10,000,000~00 11/20 , 1/18 10~225 1,000,000.00 11/20 1/18 10.225 l,O00,000.00 11/27 1/4 9 7/8 1,500,000.00 11/27 I/4 9 7/8 1,000,000~00 11/27 1/4 9 7/S 500,000.00 11/28 1/15 i0.00 2,000,000.00 11/28 1/3 9.975 1,000,000.00 ii/29 1/2 10.D0 1,000,000.0D li/30 I/I0 i0 I/S 2,000,000.00 12/i 1/12 1O i/8 5,000,000.00 12/4 i/8 i0 1/8 200,000.00 12/4 i/5 i0 1/8 500,000;00 12/4 1/8 i0 1/8 800,000.00 12/4 i/5 !0 I/8 500,000.00 12/5 1/9 i0 i/8 1,200,000.00 12/6 2/5 10.275 2,500,000.D0 12/6 2/8 10.275 1,000,000.O0 12/6 2/8 10.275 1,200,000.00 12/6 2/6 10.275 2,500,000.00 12/7 1/30 10.175 1,5O0,O00.O0 12/7 i/8 10.025 2,000.000.00 12/7 2/8 10.275 300,000.00 12/7 i/i0 l0 1/8 1,000,000.00 12/7 i/ii l0 i/8 1,000,000.00 12/8 1/25 i0.175 5,000,000.00 12/8 1/26 10.175 625,000.00 12/11 1/22 10.175 1,000,000.00 12/if 1/22 10.175 750,000.00 12/ll 1/22 10.175 500,000.00 12/12 1/23 i0.175 500,000.00 12/12 1/23 10.175 1,000,0O0.00 12/12 1/23 10.175 1,000,000.00 12/12 2/13 10.275 5,Q00,000.O0 12/12 2/13 10.275 500,000.00 12/14 2/~3 10.325 300,000.00 12/14 2/13 10.325 2,000,000.00 12/14 2/13 10.325 1,000,000+00 12/14 2/13 10.325 650,000.00 Forwarded 86,100,000.00 1~5

701-000 , NOTES pAyABLE - COMMEBCIAL pAPER DECE~ER 31. 1978 Effective Mat~/ity Date Dmte Rate ~ount Brought FoIwaxd 12/14 2/13 10.275 300.000.00 12/15 2/1 10.32~ 5,0OO.000.O0 12/18 1/24 i0.27~ 2.000.000.O0 12/18 2/i I0 3/8 1,150.000.00 12/18 2/1 10 3/8 495.000.00 12/19 2/22 10.42~ 1,000.000.00 12/19 2/22 10.425 1.000.O00.O0 12/i! 2/6 10.375 1,O00.O00.00 12/19 2/23 10.42~ 1,000.000.00 12/2( 2/5 i0.42~ 1,500.OQ0.00 12/2( 2/5 10.425 500.000.00 12/20 2/6 lO 3/8 1.000.OQ0.0O 12/21 2/9 10.475 2.000.O~0.00 12/22 2/28 l0 5/8 1.000.O00.00 12/27 2/26 l0 5/8 5.000.000.00 12/28 2/8 10.475 1,200,000.00 12/28 2/26 l0 5/8 2.000 000.00 12/29 4/4 lO 3/4 3.000,000.00 12/29 2/27 l0 5/8 1.000.000.00 TOtal Discounted Co~ er~lal Paper Effective Matur±t~ Commlsslon Date Date Rate A~ount i1 29/78 i/3/79 ).125 1.000.O00.Q0 [i/29 1/25 ).125 4,000.000.00 12/7 1/22 ]*125 4.000.O00.0O 12/14 2/2 0.125 2,000,000.00 Total Interest BeariDg CoiE~ercial 9apex Balance at December 31, 1978 117,245,000.00 ii,000,000.00 128,245.000.00 1S6

702-000 ~ NQTES pAyAbLE - OTHER DECEMBER 31. 197~ The balance in this account represenns the unpaid portion of [~romissory no~es other ~han none~ issued to b~%k~ or in form o~ eo~Leroial paper. There were no ~ransa¢~lons in this ~ecount dul~T~ 197E

710-101 - ~ ~ ~1~ T~$ pA~BLE The bala~e at Dec~!~r 31, 1978, £S ~posed of t~ £ollow~g: ~r~ls£~ ~ State of :[~u~.slana - 3% 4,~36.25 (~Ul aad£~Lona/ lo~ t~m) T~ess ~ Ove~vimlon £~ S~a~:e o~ ~aw York - 8% 526.60 (plus addll~lo~ im~l tax) ~ 609.~5

710-201 - PROVISION FOR FEDERAL INOO~ TAX PAYABLE DECEMBER 31 1978 This account lecords e~tlmated federal ~come z~x on net lncome Less lnves~raenv cred±t on qualified items as defined under 1971 Revenue Act far curre~ year les~ advance pa3Pmen~s made during year. S~y a~alysls of transactions: Balance Januazy 1, 1978 SUbaccount 1 ~ Curxent year's pzovlszon c~verzng estimated federal incoll~ '~ax 25,008.934.49 74,742,000.00 99,750,934.49 credit ~edlt LOst On Taken DlSJOSltlon Less~ Subaccot/xlt 3 Investlltent credit applicable to the following: gu~l~ing~ and b~ild%~g ~iNtures 28.291.73 13.31 28.278.42 Machlnery and equipment 353,193.21 4,8~I.03 348,332.18 Office f~rnit~re and equipment 12,972.92 733.69 12,239.23 Fassenqer automobiles 2,432.48 - 2,432.48 Autos, trucks~ tractors and trailers 26,413.93 159.50 26,254.43 Salesmen's and supervisors~ automobiles 53,315.58 36,347.60 16,967.98 Impzovements to land 262.80 R62.80 Leased equipment 5,321.28 1,796.76 3,524.52 482,203.93 43,911.89 438,292.04 LesS: Advanced payzLents of estimated 1977 tax 58,500,000~00 Aalount tzansferred to Account No. ,,710-301 - Provision for t0x contingencies xelative to pxior years and interest thereo~" 25,008,934.49 83,508~934.49 15,8G3,707.96 1S9

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A SUhl~r,~ ~LySlS or TRA~'~¢TI~S ~ 1978 rOf.~.O~'~: $~AT¢ F'~pF~ZA&. FK~[RAL $qt&TE 13~pt.O~'M~'4T ]~¢MpZ.O'F~'~ OLD A'~Z~ $ # ~*~Ne~ TAX TAX ~ ~'~L~t'~C£ J*'qu~Y 1. 19~ 167~61T.~ ~,~.97 9,8a~.18 115,O~6.T5 189.~ A.o: P~OV,S,ON .O. 1978 (SEE C~*tLSJ 7,251.9~0.5~ ~,O10.992.~; ~.;m.7~ 5.~.~.86 2.~7.50 ToT~ 7,~t9.55~.56 1.c53,~.~3 35~.m3.~ 6,0~9,~1~.61 ~,516.58 C~,¢~I~ ~*.c¢ De:¢r.~ece 31, 1978 21;1.~.~ 73.~6.56 18.79~.~2 1~,237,~ 171.6e (CONYle~D)

TO~AL T~_~ 6.~92.90 13o,~37,t3 1~,,376,8o 31,~o,3P .0. T5%~6.ce .0. 8,3~'/,2o .,0. 9,7~P.~O ;~0,~76.21 I~3,8~.3B ~7.6o3.93 ~ ,~3,~o,~o ~11,9o~.7~ ~9.3~.33 ~1,655.o5 C~,77~.~ ~,~TZ.87 1tg,07916T ~t .C~.~6 6.poo.c~ T,876.~ ST,T~7.o! 13,8~3.~ ,,,0. To.oo6,~ .0. t ~,ToT.3o 18,296.~3 .,0.. i

720-010 - ACCOL~TS pAyABLE - SALESM~tS A~D SIrPERVZSOF~I EXPENSE ACCOUNTS DEC~ER 31f 1978 The balance of this account represents ~mo~nts due to members of our Sales Organization for expense accounts sul~ted le~s any uncleaxed pa~ ~oli drafts issued to terminated salesmen in the States of Callf0zn~a and ~ew York. The balance also incl~deA accruals for ~xpens~s f~ the dates of the last e=Dense accounts su~tted eaah month to the end of the month whbuh are re~ezsed in the followinq month. A St~ary ~alysis of tr~nsaot~ons fOE the year 1978 follows z Credits for Sale~men's~nd Supervisors' E~penseAQ~h~ts Credit ~endezed, Plus Balance End Mon~ ~ A~aruals Debits of Month Balance January i, 1978 228,428.85 Janu~Ty 1,596,954.24 1,729,781.86 95,601.23 February 1,854,395.81 1,940,386.13 9,610.91 M~h 11996,278.80 2,231r791.72 (225t902.01) April 2,014,479.06 2,087,357.44 (298,780.39] May 2,529,829.61 2~175t724.54 55,324.68 Jun~ 1,871,411.61 2,294,555.05 (367,818.76} July 1,739,056.05 1,281,027.27 90t210.02 A~gUS~ 2,268,294.38 2,694,~17~13 (335,712.73} Septembez 2,251,226.33 2,29B,635.87 (383,122.27) C~tOber 2,631,890.30 2,~0,916.59 27,851.44 No~er 1~965p749.03 ~,i14,136.15 (120,535.68) December 1,839,473.61 1,682~085.60 36,852o3~ 24,55~,038.83 24 ~50 615.35 Credit Balamce Dec~er 31, 1978 36,852.33

720-020 - SD~DRY ACCOOl~ pAyABLE DI~I~L~ 31, I978 This accent re~r~s a~ts ~yablQ O~ which may become 9ayable to sun~z~ credito~u, whiGh ~m no~ recorded in other llabillty acco~s. SOCiete Anonyme d'EXploltatlon de8 Papeterles L. La Croix Fil~ - Manuf~c~ing ~Ights on bQoklets shippoa fo= ouz a~ount 93°96 Salary d~e Housing Ba~k of Puerto Rico ~mployee 233.65 Galb~eath Corp. - Resale of lease at 150 East 42rid Street, New york, ~ew yo=k 5,000.00 Cc~sslon payable to Mr. p. Al~urez 821.74 Fisher DEugs #4, 1813 ~owazd Road, Auburn, Washington 9800R - rQtailazl returned goods 1.81 C&P Telephone of virginia 6,139.62 S.S.C. & B. AdVertising Agency 167.23 State Tax on sample Cigarettes 3,807.60 Deposit on land to he sold in Lancaster, pa° lj000.00 Playboy Knt e~prls e 6 j260.00 West~ Union International ~23.65 ~.M.O. Insurance 126°00 Esoo Ex~e~mlnato~8 286.25 J. W. E~ards 292.11 ~°G.S. Sepia es 72.45 Garnishmen~ ~ C~stomer S~iae Center, ~ichmond, Va. 132.80 ~ber t s Restauran~ (2~83) Balanae De~ember 31, 1978 24,656.05

725-010 ACCOUNTS PAYABLE - INCOMG TAXES WITHHELD FROM NONRESIDENT ALIENS OR FO~IGN CORPORATIONS DECEMBER 31, 1978 This account records amounts payable to Director of InterNal Revenue for income tax withheld fro~i nonresident aliens, nonresident partnerships COnlposed in whole Or in part of nonresident individuals, and nonresident foreign corporations, as required by Internal Revenue Code. Income tax withheld from Dividends paid or payable to foreign stockholders. Details are Qn file in Treasurer's Department. 998.50 Balance at December 31, 1978 998.50

725 020 - ACCOUNTS PAYABLE TO ~OREIGN ~TOC~OLDERS - WITHHFLD /NDER U~ITED STATES T~ASURY DEPARTmeNT REG[II~TIONS DECEMBkR 31 197~ WhlS a~c0~nt records ameunt~ payable to foreign stockholders wn&~n have not bee] pald beacaus~ of Unite~ Stat~s Guv~r~mont Rezt~ictions. U~claimed amounus for dividends and p~oceeds 0f sale of ~to~k rightS, pzevlous~y blocked, which b~an:e fr~e of re~trlction but coul~ not b~ p~id oec~use p~yees could no~ De located, were t~ns~erred to Account No. "725~i04 Unclaimed ~redits payabl~ ~nApril 1954. Su~unary an~lys~s of ~rans~c~ons: Balance January i 1978 ~dd: Amounts credited i~ 197E Less: Amounts paid ~n 1978 Balance December 31 1978 Proceeds fro~ 195~ Sales o~ "o~on StoPk Dlv~d~nds Subs~rj~tzon Total Wzhhheld Warrants l ~63~i~ 1.350,~5 12.47 101.5[ I01,50 - 0 _ 0_ 1.4~4.62 [ 452.15 12.47 Details Dy s~ockholders and amounts w&thheld are kept by th~ Treasurer's D~par~men~. 2{J9

725-030 - ~.]OUNTS PAYABLE FOR PREFERRED STOCK p~TIP~D JUNE 30, 1955 DECEMBER 31, 1978 Credit balance of this account represents amounts payable to former preferred stockholders ~or i~terest to July 20~ 1965, and principal of $150.00 for each share of preferzed stock retired June 30, 1965, not s~rre~der~d for redemption. Balance Dec~ber 31, 1978 Sha~es Preferred ©utstandin~ Stock Interest Total 34 5,100.00 13.21 5,113.21 ZIO

725.040 - ACCODNTS PAYABLE - CITYF STATE A~ NATIO~L~L TAX WITH~ DECE~ER 31, 1978 The cEedlt ba1~oe of this ao~ount represents ~ts due ~ city, state and national ~v~r~m~nts for tax withheld for wage~ and salaries of Company employees, exclusive of amounts ~edite~ to Aac0unt NO. "725-060 - A~OU~ts payable - FederaI income a~d 01d age benefits taxe~ ~thheld from employees.- A su~ry analysis of transactions for 1978 folloWS. Details a~e on file in the Pay ROll Depar%ment. Details: Czed~t Balance Withheld fr~ Credit Balance Tiff__e ~ i, 1978 Salaries Tax~s Paid Deoer~ 31, 1978 state of_ Alabama 1,019.~I 3,940.13 3,988.50 970.84 Alaska 294.99 1,028.61 996.59 327.01 Azi~ona 488.90 1,968.37 1,993.87 463.40 Arkansas 363.92 1,815.60 1,690~36 489.16 Califoznia 2,624.64 34,593.54 33,639.63 3,578.55 COlorado 477.94 5,~$3.76 5,167.33 494.37 District of Col~mbia 281.70 1,097.70 1,092.63 286.77 Georgia 582.94 I0,54L92 10,136.28 988.58 ~il 220.88 2,622.02 2,583.41 259.49 Idaho 30.80 ?06.60 ~63.65 73.75 Illlnois 1,084.60 13.285.48 13,129.49 1,240.59 Indiana 429.86 4,501.17 4,589.77 341.26 IoWa 135.51 2,671.10 2,572.60 234.01 Kansas 976.85 4,253.75 4,093~04 1,137.56 K~ntucky 18,870.12 125,678.53 130,111.53 14,437.12 Louisiana 242.76 1,056.58 966.85 332.49 Maine 133.04 739.07 612.97 2~9.14 Maryland 768.27 9,828.38 9,628.87 967.78 Massachusett~ 1,552.71 19,986.40 19,687.20 1,851.91 Michigan 1,379.28 17,029.16 16,966.10 1,442.34 Minnesota 752.93 12,816.76 12,563.17 i,~6.52 Mi~sissipp~ 354.47 1,515.68 1,494.~4 376.11 Missouri 347.02 4,860.81 4,715.09 492~74 Montana 139.20 409.45 482.19 66.46 Nebraska 616.03 2,329.96 2,326.03 619.96 New Jersey 736.85 8,472~44 8,368.66 840.63 New Mexico ?4.35 836.66 854.40 56.61 New~o~k 110,621.78 808,586.00 825,803.79 93,403.99 No~thCar~lina 215,790.53 2,091,757.71 2f050,353.23 257,195.01 ohio 473.44 5,544.49 5,405.23 612.70 Oklahoma 380.47 2,009.22 1,828.90 560.79 Oregon 739.22 9,008.99 8,905.4~ ~42.73 Pennsyl~anla 8,910.6~ 173,770.30 189,996.73 12,~84.20 pue~t~Ri~o 1,986.17 18,728.33 18,625.76 2,08~.74 Rhode ISland 76.95 932.37 895.16 114.16 South CaZ~lina 1,469.65 11,636.03 11,850.73 1,254.95 ~tah 167.68 2,02~.29 2,007.13 188.84 vermont 266.66 is2~9.69 1,192.75 343.60 ViZ~in~a 18,595.19 918,360.64 910,914.88 26,040.95 ~e~t V~rgi~ia 182.78 2,379.00 ~,343.48 218.33 WiSconsin 773.35 9,922.58 9,882.72 S13.21 Puerto R/can ~ugtment - 0 ~ _ 0 - _ 0 . _ 0 - (C~ntlnued) 211

7251040 l A~S pAyABI~ - CI~, STATE A~D NATIONAL TAX WIT~ D~CF2~ER 31, 1978 Details I (Continued) Title Denver, Color ado Bowling G~een, ~entuaky Cynth~ana, Ken~uaky Danville, Kentucky G!asgow, Kentucky HOpklnsVille, ~entucky Lexington, Kentucky LouisVil~e, ~entuoky MaySVille, F~ntuuky Owsnshoro, Kentucky Paduuah. Kentucky Riohmond, Kentucky Russellville, Kent ucky Sprin~lle, Kentucky Winchester, ~ntuoky N~W ~o~kt New York ~pley, Ohio Pb/lade Ipl~la, Pennsylvania J.E. Ad Jus~ment Boyle County, Kentucky Zef £erson, Kentucky Maryland Countles, Maryland Crest~, pe~yl~inia L~ncaster i pe~r~ylv~nla Jobllson, XDdlana 8chef Dis~ict of Jefferson Co~w%ty, ~ntucky ~c~a~ion~l Privilege T~X Colu~ia (BOm~h) , Penn~Ivania ~caster, 9eD~sylv~/%ia W~ight, pennsylvania Total C~dit Balance E~c~%ber 31, 1978 Credit Balance Withheld from Credit Balance J~nuary i, 1978 Salarles Ta~es Pa~d December 31r 1978 62.00 210.00 222.00 50.00 254.80 465.15 484.07 255.88 129.41 321.06 215.82 234.65 109.67 216.26 193.51 132.42 140.90 373.29 337.80 176.39 108.28 109.42 143.00 74~70 5,275.23 37,861.37 37,014.86 6,121.74 90.60 257.18 291.93 55.85 184.87 638.98 396.63 427.22 7,694.56 14,880.35 22,452.16 122.75 60.07 44.50 78.25 26.32 59.60 193.51 127.81 125.30 14.64 60.08 59.06 15.66 - 0 - . 0 - . 0 - = 0 - 46,48 53.52 89.62 10.38 8,690.48 121,166.11 120,933.15 8j923.46 - 0 - - 0 - - 0 - - 0 - 253.39 3,499.51 3,324.61 428.29 - 0 - - 0 ~ ~ 0 - - 0 - 36.29 58.16 62.13 32.32 - 0 - - 0 - - 0 - - 0 - 290.44 3,266.58 3,271.10 285.92 15,059.00 71,~20.48 67,047.67 19,931.81 411.98 1,629.44 1,706.18 335.24 6.95 192.57 177.69 21.83 46.92 133.06 151.12 28.86 - 0 - 80.00 80.00 ~ 0 - - 0 - 120.00 120.00 - 0 - - 0 - _ 0 - - 0 - _ 0 - 120.00 i1,320.00 11,280.00 160.00 434,560.83 4,618 773.85 4a585,380.34 467,954.34

725-050 - ACC0~TS ~&~BLE - STATE ~I~HPLOlq~T£ Z~PA~CE ~ - Ep~LOyE~S, CO~IO~ E~C~ 31, 1978 ThQ credit balance of this accc~nt represents the u~ald portion of e~plOyees' cOntTib~tion £or State uneT~loyment insurance taxes payRbie to the stato~ l~sted below. A su~m~zy analysis o£ transactions for i~78 follows: Details are on ~ile in the Pay ~oll Depar ~ent. Alabama Alaska N~WJ~ Total Credit Balance ~anuary l, 1978 22.69 . 0 - 50.48 73.17 Cr~dlts for a~ounta wi~Id by: New york Off£~e 3S3.933 80,0__~O 1,055.~___~9 Total 406.62 80.00 1,105~77 1,592.39 Payments to var£o~s states in 1978 392.06 80.C___~0 ~ 1.536.47 credit Balance Decembex 31, 1978 14.56 - 0- 41.36 55.92 m ~ m

725.060 - ACCOUNTS PA~ABI~ - F~E~A~ ~ AND ~ AGE DEC:~g~R 31, 1978 £oz feSe:al ~ and o1~ a~e benef~.ts ~es payable to the Dlrec~)E O£ Znt~-~al Reve~ue. A smm~, ~l~s£s of ~zanssct/ons ~ 197~ £ollovs~ De~ll~ are on file ~n ~e Pay ~11 ~el~s~c~mt. ~ed£~; B~la~ce Jm~,~y 1, 1978 New York office ~m~hes ~ Dtvtsionl ~L p~lmenta C~ed~t ]~alan~e De~mber 31, 1978 498,820.66 10,137,087.68 12 084,113.24 ~l,720,~2L.StS 22 031 858.92

725-070 - ~00NTS pAYAbLE - STATE SIC]~SS COMPENSATION TA~ - E~LO~EES' C~TRIBb~ION ~R 31, 1978 The c~e~lt b0/anae of this a~oount ~epresents the unpaid port~n of eup1oyles' aonttibut~ for state s~]mes8 c~tion tax pa~a]~e to the etates list~ below. A su~marF analysls of ~ansa~/ons for 1978 follows; Details ~e on file in the Pay Roll ~azt~nt. ~ts Payment 8 C~edit withheld to cr~It Salar~s $~tes Dl~ea~E 31t 1978 Cal2fornLe, 567.02 10,524.16 9,967,99 486.03 New JeE~y 50,48 1,055.29 1,064.41 41.35 Puerto R/co 26.87 189,59 190.56 25.90 Puerto RIUO (Chauffe~LTS) 123.08 492.68 491.00 124o76 Rhode ISI~UI~ 40.50 352.55 283.40 I09.75 TOtal 80~ .05 12,514o27 ~ 7B7.80

725-080 - ACCOUNTS PAYABLE ~ E~LOyEE DEPOSITS UNDER ~PODFIT-$HAPING PLAN DECEMBER 31, 1978 This acc(~nt records amount due Profit-$hariDg Plan TZustee fo~ amounts withheld ~ro~ sala~i~s and wages of ~mployees at their request to Axticle X of Plan. s~mary a~alysis of trarLsections~ Balanc~ January i~ 1978 ~ounts witl~ld: Less: Payments made to Citiba~k~ N.A. B~lanu~ at D~C~ Zl. 197~ 32,559.g0 350rI17.00 382,676.00 350,5gi.00 ~,,16

725-085 - U.So SAVL~GS BOND DEDUCTIONS TO BE DE~0SlTED DECE~R 31, 1978 C~ed£t b~la~e of this a~ccunt records C~pany's llabil~ty to ~lOyees for p~y roll ded~ctlons to be ~eposited in a special hank aaaount for purchase of united States Savings Bonds, sezies E. The bal~nce of this account plus b~lance of ACCOunt No° -I08-000 . united states Savings Bondst Ser~es E~ cash - offset account" repr~e~ts total liability ~ employees, which is partlally o££~t by debit balance of A~OUnt No. "IDT-000 - Up.ted states s~vings BOndsr $erioB E~ oash." Details are maintained in Pay Roll Depar~onto S%U~aZy aDalysls of transactions: Balance January 1978 ~ductlons frQmpay roll D~posited i~ special h~r~ accent Balance Deceaher 31~ 1978 - 0 - 436,462.50 436 462.50 - 0 - m

725-090 - ACC~J~TS pA~A~LE TO E~LOy~ES DEC~ER 31, 1978 Thie au=ount records a liability t~ e~loyee~o Bala~c® at December 31, 1978

72S.I00 . UNCLAIMED WA~ pAyABLE DECE~EB 31, 1978 This a~count records ~claimed wages of former e~luyees whloh are subject £o ~la~ by %~em ~r by statGs ~d6r escheat laws. I~ Dece~be~ 1958, ~nclaimed wages f~ ymLTS 1941 to 1945, not es=heated by the State of New Jersey, were credited to ~t~t NO. "662 - S~%dry ~%clai~ payable a~ounts." S~ analysis of ~c~sactlonss Unclaimed Balari~e Januazy I, 1978 Credits d~ring 1978 Charges during 1978 Paid to indlvlduals or to state un~r escheat la~ Balance December 31, 1978 Ba1~e at Decamber 311 1978, is ucmposed of the follow~ng~ year 1978 308.29 1977 439.00 1976 774.67 1975 234.27 1974 18.16 1973 88.53 1972 145.49 1971 346.22 1970 924.41 1969 1,121.97 1968 880.22 1966 5.39 Balance December 31, 1978 Me~and%~ t payments of unclaimed wages to state of New Jersey under Escheat Laws followl ~Qrlod ~ve~ed 7/13/45 thr~gh 1/19/49 1/20/49 through 10/22/51 10/23/51 through 5/1/54 5/2/54 ~/~Cf~h 8/17/56 8/18/56 tbxOuqh 6/30/62 7/I/62through6/30/63 7/1/63 through 6/30/64 7/i/64~hrough 6/30/65 7/1/65 hhrough 6/30/66 7/1/66 through 6/30/67 7/1/67 through 6/30/69 7/1/69 through 6/30/70 7/I/70 through e130/71 7/1/71 ~zough 6/30/72 6,592.C~ 957.00 2,262.46 5,286.62 5,286.62 Date p~d A180~%t 2/13/57 16,53S.44 12/30/57 5,268.90 1/31/61 6,857.21 10/16/67 1,145.84 9/20/68 528.46 8/1/69 28.64 5/27/70 35.11 4/29/71 32.05 4/14/72 48.77 6/8/73 8.40 5/21/75 41.37 4/30/76 127.42 4/29/77 64.78 5/5/78 17.45 30,729*84 (Continued)

725-100 -UNCDAI~DWA~ES pAyABLE DE~ER 31, 1978 payments of un=laimed wages to v~Ti~A states ~der Escheat Laws follow: state Period Covered Date Paid Conneut£~t Through 12/31/70 3/28/78 ~lorldaprior 6/30/55 5/24/71 FloridaP~ior 6/30/59 5/8/75 Florida Prior 6/30/70 7/10/78 I111nols Prior 6/30/70 11/9/77 Kentucky Prior 6/30/64 2/4/72 Kentucky7/1/64 through 6/30/65 11/1/72 Kentucky Prior 12/30/65 12/26/73 Kentucky Prior 6/30/66 12/26/73 Kentucky Prior 6/30/67 4/2/75 ~en~ickyPrloE 6/30/68 2/26/76 ~n~cky p~ior 6/30/70 3/29/78 Ma~sac.hus ett s ~zlor 6/30/68 10/30/78 North Cazollna Prior 12/31/73 5/26/76 ~ozth ca~ollna Prior 12/31/74 5/10/77 ~nio prior 6/30/70 10/30/75 Psnnsylvanla 1954 T/LT~/gh 12/31/62 9/9/69 pennsy lydia Prior 7/30/63 12/26/73 Pennsylvania Pzlor 12/31/56 2/20/74 pennsylvania pri~c 12/31/69 11/23/77 South Catalina Prior 6/30/70 5/12/78 Virginia 7/1/60 through 12/31/60 4/11/69 V~rgiRia 1/1/61 t~gh 6/30/62 4/8/70 Virginiaprior 5/30/67 4/23/75 weBt Virginia 7/i/62 through 6/30/63 4/9/69 Tetal Paid Page 2 Amount 2,122.31 13.22 .98 13.15 227.25 355.09 11.27 12.05 1.59 6.49 5.29 22.05 84.51 1,021.71 2~.89 13,15 555.49 203,73 10.30 47.31 2.99 25.82 11.86 3.61 16.64 4,813.75 35,543,59

725~-I02 . OUTSTAI~OIq~G ~ PA¥~L~ DECt~BER 31, 1978 ~his accoumt zeoor~s dividend, Ra/aEy a~d waq@ ch~=ks, ~r~ other ch~ks ~tstaRdlng oyez one yO~T~ subject to ~laJxa hM payees o~ states ~ndex emmh~t lawa. Prior to 1948 balance Eapresen~sd aF~%~%£ of all outs#~nd~q oheoks dra~ within sIK years of end of pzecedi~g ye~, o~d~ a~ts bglng ~e~i~ed eamh year to ~co~it NO. '662 . S~zy I.u~clai~d paMable ac~o%int6." This pra~tloe was di~ontln~ ~ 1948. At Dec~c 31, 1950, a~o%ult O~ divide~ oheaks so ~Eodl%ed ~Eio~ ~0 1948, and st~ll o~t~ta~dlng, w~ =es~ored ~o th£s a~uoum~ by a ~t to AU~Vm~ NO. "66~ - Sundry u~laim~ payable a~cmunts~" ~nde~ j~9~m~ entered ~ovemher 23, 1954. in De~mh~r 195~ out~:Lnq ~heuk~ no~ subject ~o esmhea~, and ~azzled in this aoco~nt for 6 Or more yeaze, W~ze ~red£~ to A~ou~t NO. "662 - sun~zy u~ulaim~ payable a~ou,~s.'~ As a zes~l~ of ~hlz~ o~sT~d~aI e~he&~ a~a by S~ate of New d~se~, outstandi~ ch~s %ake~ into in~omm D~o~ue.T ~9S8, zes~esen~Imq ~(mm~msi~l o~li~a~n~ o~ The American Tobacco company for period Jul~ ~3, 1945, through Oo~r 22, 1951, and Amex~ca~ su~pli~s for pez~cd Ja~%k~ry ~ ~953, thKo%~h ~ I* 1954~ W~ Eestore~ to this ao~u~t ~ ~haz~ed ~o A~U~t ~. "662 - Sun~ unc/"almea pa~able auu~unts" in ~e 1959. Duzin~ 1967, Leaf Department tEan~z~d ~a~i~g ~he~ks to The ~ri~ T~ba~ C~ny ~OOkS, S~m~xy analys~s o£ tzausa~ions: Balance January I, 1978 100,423.78 Additiom: Amounz of ~he~ks ~a~ stilZ o~stm~lr~ at Dec~bez 31, 1978 D~vide~ Salary and 0~ c~=ks w~ Ch~ks 1978 12.86 1977 2~,692.91 459.56 12,876.21 197~ 265,32 ~974 337.92 1972 75.51 ~971 72.&0 2~,444.26 472.42 12~87~.2~ Balance De~=~her 31~ 1978 6,8~5.58 17,670.90 40,792.89 ~41,216.67 i16,71~. 19

D~EE 31. i~78 Detail~ schedule ~owi~g bal~n~e of outstandlng ch~oks by ye~s in Whloh draw~; Page 2 ¥~ Dividend Salacy~ Other ~a~ Cheoks ~__~che©ks cheoks To t~l 1954 12.75 7.00 19.75 1955 1.50 3.23 4.?3 1956 1.50 . - 1.50 1957 144.30 12.79 157~9 1958 3.~7 57.59 61.46 1959 4.4O 4.40 1960 - .72 .72 1961 9.80 .89 - 10.69 1962 37.50 .29 47.15 ~4.94 1963 18.00 3.31 5.34 26.65 1964 81.60 3.95 10.14 95.69 1965 176.01 8.O2 3.38 187.41 1966 185~40 1.07 37.69 224.16 1967 355.50 5.02 52.18 413.70 1~68 337.56 121.00 126.25 584.~I 1969 323.00 331.67 52.50 707.17 1970 1,105~23 829.97 425.57 2,360.77 1971 1,904~05 1,006.16 1,630.32 4,540.53 1972 3,729,83 599,97 I~833.18 6,162.98 1973 6,771.86 I~4G2.02 ~,623.47 I0,$57.35 1974 6,339.~ 1,069.46 3,264.38 10,673.72 1975 I~,387.32 1,09~.06 5~214.15 17,699.53 1976 ~4~212.27 ~SI.55 6,695.08 21,788~90 1977 26,~92.91 459.56 12,876.21 40,028.68 1978 12.86 12.86 Total 73,683.47 8~049.12 34,977.60 116,710.19 ~morand~ Pa~t~ of~=laimedah~ks to vario~sstat~Bunderos~heat law~: S.ta~__ Al=b~ma callfo~nla C~a~ti~t peri~ C~veEsd D~te pald AT~O~nt P~o~ to 6,/30/70 5/23/78 260.11 Z~lu¢ ~:~ 6/30/62 d/7/}'0 663.63 ]Pc:Lc¢ to 6/~0/63 4/27/71 179.45 7/1/63 thrOUgh 6/30/64 4/10/72 381.97 7/1/64 ~h 6/30/65 4/18/'/3 274.40 1>¢1¢~ ¢o 6/30/66 4/22/7d 21.25 Prto¢ to 6/30/67 4/S/7$ 72.06 ~¢ ~ 6/30/~ 6/18/76 82.75 PE:Lo¢ to 6/30/69 6/11/77 237.52 9x'~,o¢ to 6/30/70 4/'18/78 374.80 P~.OE to 12/31/70 3/28/'78 1,324.09 ~ior to 6/30/56 6/5/72 9.42 14.79 (Cont:Lu..~])

725-~.02 - OW~STANDXI~ C~ZCKS PAYK~LZ DECFM~ER 31, 1978 F1Orlda (Contln~) prior to 6/30/60 ~IOZ to 6/30/61 P~/~z ~ 6/30/70 Idaho ~ ~ 6/30/61 P=~ to 12/31/62 1111~Is pzlor ~ 6/30/54 Pr~ ~ 6/30/55 ?/1/55 z~ugh 6/30/56 7/1/86 through 6/3O/57 Pzi~ to 6/16/~8 Pz~ to 6/30/59 Prior ~ 6/30/70 ~z£o~ ~ 6/30/7O Iad~ana Pr~ to 6/30/60 7/1/63 ~bzough 6/30/64 Print ~ 1969 ~aqtucky PrIQz to 6/30/64 7/i/64 ~hrough 6/36/65 Pr~ ~ 6/30/66 Prloz ~ 6/36/67 ~io~ to 6/30/68 P~i~ ~ 0/30/69 Pr~r to 6/30/70 LouisKana ~ tu 6/30/72 Marylan~ Prlo~ ~ 6/36/63 7/1/63 ~ar~ugh 0/3O/64 7/1/64 thz~u~h 6/30/65 P~a~ to 6/30/66 ~ t~ 6/3O/67 P~ior ~ 6/3~/68 ~i~ to 6/3O/69 ~T~ tO 6/30/70 M~ssa~husetts pZ~Or to 6/36/~ M£ub/~am Pr~Z ~ 6/30/61 vn/~1 ~ 12/81/51 I/I/62 thz~a~h 12/31/62 1/1/63 t:lmough 12/31/63 1/1/64 t~mu~ 12/31/64 Pr~ to 12/31/66 Pr£or to 12/31/67 Prior eo 12/31/69 Pr~o~ 'co 12/31/70 Mim~escxa P~i~ to 6/30/70 ~b~aska ~rloz to 6/30/71 New J~smy 9~Isz Z~ 1/15/35 1/16/35 tazough 1/19/49 1/20/49 ~%z~*cjh 10/22/5~. 10/23/51 ~gh 5/1/54 2/11/45 ~h 5/1/54 Page 3 Da~e pa~ Kmotrnt 5/14/76 21.97 6/14/77 4O.6O 7/10/78 565.8~ 2/23/77 6.O3 3/15/78 1,55 5/17/70 ,~ 5/16/71 32.61 4/28/72 6.38 5/31/73 8.39 G/4~4 36,37 5/19/75 &9.15 7/25/68 63.32 4/20/78 438.62 11/9/77 859 • 92 9/13/71 165.07 S/17/72 7.S0 5/25/78 25.33 2/4/72 512.58 11/I/72 6.20 11/2/73 51.72 6/2/75 9.05 2/26/76 230.08 11/4/76 99.00 3/27/78 172.53 6/7/78 765.22 7/12/71 i19.10 6/30/72 67.6~ 8/10/73 4~.~ 9/9/?4 .43 7/18/75 4.95 12/5/75 .95 7/8/77 .98 7/13/~8 33.65 10/30/78 464.59 8/13/68 134.94 7/17/69 11.30 6/24/70 ~11.89 4/28/72 48.69 10/31/72 2.40 5/~8/74 33.29 S/80/75 195.70 6/7/76 470.84 6/20/77 151.00 6/20/78 112,89 3/20/78 86.55 11/13/7~ 170.66 12/30/54 47,059.25 12/13/57 17,C45.32 ~2/30/57 3,825.51 1/31/~I 5,641.25 2/3/61 1,009,92 (Contlnued)

725-102 -OUTSTANDINGC~CKSp&X~BLE DECE~ER 31, 1978 state NiW JsEsey {Cont~n~ed) New York ~Qz~h Carolina ohio Orlgon IJ~m.nsyl~la South C~lla~ Utah V~nt V~'g/.~/.i P~ju 4 Pezlod Cova¢~ Date pai~ Amount 5/2/45 through 8/17/56 12/16/67 639.98 8/18/56 ~m~h 6/30/62 5/20/68 4,166.33 7/5/62 through 6/30/63 8/I/69 1,251.08 7/I/63 thmm~h 0/3O/64 5/8/70 1,017.32 7/1/64 through 6/$0/65 4/29/71 1,257.55 7/1/65 through 6/30/66 5/14/72 1,1S6.68 7/1/66 tl=oagh 6/30/67 6/3/73 976,67 PEior to 6/30/68 5/8/74 614.93 ;rlor to 6/30/69 5/21/75 786,41 ~rior ~o 6/30/70 4/30/76 960.i0 Prior to 6/30/71 5/29/77 1,558.20 Prior to 6/30/72 5/5/78 940.26 PrioE to 12/31/56 11/6/67 260.60 5/i/57 thr°"gh 15/3~/64 5/8/70 1,180.08 prior to 12/31/70 8/2/76 2,647.77 Pri0~ to 12/31/73 3/27/77 3,256.23 1/1/74 ~ugh 12/31/74 3/10/78 1,159.57 Prior to 12/31/73 5/26/76 3,331.83 Prior to 12/31/74 5/10/77 1,720.08 Prior to 12/31/74 5/25/78 708.42 Prior To 6/30/66 10/31/72 26.30 7/2/67 through 6/30/68 10/30/73 417.87 PEI~ to 6/30/6~ 10/30/74 8.88 Pri~ to 6/30/70 10/30/75 114.77 prior to 6/30/71 9/21/76 88.23 Prior to 6/30/72 10/17/97 72.34 PFior To 6/30/73 11/6/78 854.17 Prior to 6/30/62 4/26/?7 18.65 Prior 6/30/63 4/20/78 23.93 Prior %0 6/30/~i 0/1/~9 117.36 PriOr tO 6/30/64 9/18/72 9.31 Prior To 0/30/70 7/14/78 52.63 Pri¢~c ~o 12/31/62 3/9/69 358.66 Prior to 15/31/65 ~6/26/73 109.59 Prior to 12/31/66 2/20/74 151.71 Prior to 12/32/67 3/26/75 31,27 Prier to 15/31/68 11/13/76 148.55 ~Tior tO 11/32/69 11/23/77 104.00 Pzlor tO 6/30/70 12/29/78 127,50 PEiOr to 6/30/70 5/12/78 198.62 PE~T to ~/1/61 9/26/68 66.18 5/~/61 through 12/31/62 11/6/70 89.14 1/1/63 t~x~gh 12/31/63 9/7/71 43.04 ~ci~T %0 12/31/70 12/8/78 757.79 PriOr to 6/30/65 4/2/73 .8~ Pz~Or to 6/30/59 7/28/67 8.50 ~r£o~ to 6/30/59 4/6/67 448.99 ~ior to 6/30/70 5/12/78 30.90 7/1/59 through 6/30/60 4/17/68 47.56 7/1/60 thEough 6/30/61 4/21/69 286.34 (Continued)

725-I02 . OUTST~IgGC~SCE~PAyABLE DECE~ER 31, 1978 Stata V~g&n~a (Contlnued) Washingtan Wsst vir gin~a Wl~onsin Pe210~ CoVered Date Paid 7/!/61 thigh 8/3o/s2 4/8/?0 7/1/62 through 6/30/63 4/27/71 7/1/63 thigh 6/30/64 4/19/72 7/1/64 th~uqh 6/3O/65 4/2/73 prioz to 6/30/66 4/16/74 Prloz to 6/30/67 4/23/75 ~ior to 6/30/68 3/8/76 P~i~r to 6/36/69 4/25/77 Prior to 6/30/60 4/6/~ 7/I/6e t~ 6/36/61 6/i~/69 7/1/61 through 6/30/62 5/4/70 7/i/62 though 6/30/63 5/14/71 7/1/63 ~gh 6/3O/64 5/4/?2 7/i/64 ~h~u~h 6/36/65 4/24/73 Prior to 6/30/66 $/17/74 Prlo~ ~ 12/31/68 4/20/?? Prior ~Q 6/30/70 5/12/78 Prior ~ 6/36/62 4/26/68 ?/1/62 ~u~h 6/3O/65 2/26/71 7/1/65 th~u~h 6/36/66 2/20/72 7/1/66 though 6/36/67 4/16/7~ Prlo~ ~o 6/30/70 4/9/76 P~ior ~o 1/1/67 11/30/78 page 5 A~oun~ 113.73 148.17 53.35 44.23 122.22 264. ii 71.07 101.05 61.73 • 82 24.35 18.30 33.58 .40 1.01 5.71 51.53 32.10 37,50 181.07 22.03 4.85 121,34%•96

725-104 - UNCLAIMED CRSDZTS pAYABLE DECE~ER 31, 1978 .... = This aQco~t rec~s ch~ks drawn by COmpany which were returned bsaa~se payse was un- known or ~uld ~t be located, subject to ~laims by s~ates under escheat laws or by payee. Prloz ~ 1948, Items in this ao~t were tra~sfez~ed to Aco~t NO. "662 - sundry un- alai~ed payable accosts" afteE six years. This pzaatlce was disaontln~md, and in 1950 a~o~%ts of ~ulaimed dividends so transfe1~red pEior to 1948 were remT~zod to this aaCO~h%t %t~ez J%~dg~Dt entered N~r 23, 1954~ %~%deE New Jersey ESCheat Laws. ~ D~e~ 1958 unolalmed aredits payable not subJeat to escheat, and ua~r~ed for six or mmra yesrs, were c~edlted to Accotu~t No. "662 . S~Ty ~=la~d payable aGaott~t$. ,, As a ~esult of third Custodlal oscheat autlon by State of New Jersey, outstanding commeraial obl~gatlons for period July 13, 1945, through 0Qtob~T 22, 1951, ~aken iRto i~ iR Dece~aber 195~, were restored to this account and Ghazged to AcCOst NO. "662 - S%1~dzy %reclaimed payable au- counts'~ in June 1959. Su1~az~'analysls of transact~onsl Balance January 1, 1978 Credits during 1978 ~n~laJmad and %mdel£ver~bl~ ~ivi~end che~ks Charges d~zing 1978 Paid to ~ivid~a~B OF ~ State under E~cheat Laws Balance DeCember 31, 1978 Balanae at December 31, 1978, i~ composed of the followi~g~ U~alalmed ~clalmed Divide~s 17,342.51 25,735.90 6~818.29 18,9~7.61 years DiVlde~dCheaks Others T~tal 1963 3.75 3.75 1964 16.00 16.00 1965 16.50 16.50 1966 40.50 40.50 1967 22.~0 22.50 1968 23.38 23.38 1969 20.00 20.00 1970 96.09 96.09 1971 570.35 57O.35 1972 1,098.72 1,098.72 197~ 1,424.21 1,424.21 1974 1,809.4~ i~809.40 1975 2,426.22 2,426.22 1976 2,809.94 2,809.94 1977 3,656.97 3,656.97 i~78 4,883.0~ 4,883.08 18,917.61 . 0 - 18,917.61 (Continued)

725-104 -t~CL~4EDCREDIT~ pAyaBLE DRCE~ER 31, 1978 Mimorand~ Payments of ~olalmed credits to the State of Peziod Cower ed Dividends 1/13/45 through 1/19/49 1/20/49 t/%Tough 10/22/51 12/23/51 through 5/I/54 512154 thzough 8117/86 8/18/56 through 6/30/62 7/1/62 thmsugh 6/30/63 7/i/63 through 6/80/64 7/1/64 through 6/30/55 711/65 t~'ough 6/:1o/66 711/66 ~ugh 7130167 8/1/67 through 8/30/68 9/1/68 hhro~gh 6/30/69 7/1/69 thzo~b 6/30/70 7/10/70 tltrough 6/30/71 7/1/71 thrOugh 6/30/72 Oth~ ~Clal Obllqat/ons 7/13/45 ~gh 3/1/54 7/13/45 t~Tough 5/1/54 5/2/54 t~=ough 8/17/56 8/18/56 through 6/30/62 7/1/62 through 6/30/65 7/I/69 thr~gh 6/30/70 Page 2 New Jersey umaer e~cheat laws follow: Pat8 paid Amoumt 2/13/57 2,730.69 12/30/57 1,252.82 1/31/61 4,048.66 i0/16/67 845.?5 9/20/68 2,639.25 8/1/¸69 511~50 5/8/7O 1.55 4/29/71 71.36 4/14/72 155.40 6/3/73 73.44 5/8/?4 74.46 5/21/75 84.81 4/35/76 83.64 4/29/77 114.78 5/5/78 91.56 12,779.67 1/31/61 35.13 2/3/61 280.59 10/16/67 476.11 9/20/68 119.00 4/29/71 3.00 4/30/76 56,89 972.72 payments of unclaimed cT~dltl to yules states under esuheat law~ follow: stat ee period CoVered Date Pald Amount Callfo~nia Prior to 6/30/70 4/18/78 15.75 Ill~iB Prior to 6/30/70 4/20/78 20.50 Kentucky prior ~o 6/30/64 2/4/72 60.00 Kentucky 7/1/64 thzough 6/30/65 11/1/72 6.00 Kentucky 7/i/65 through 6/30/65 I//2/73 i 50 M~la~ prior to 6/30/65 8/2/73 4,80 MaEy1~d pr~r to 6/30/66 9/9/?4 21.00 Mazyland P~I~ to 6/30/67 7/lS/75 21.60 Mazyland P~ior to 6/30/68 12/5/75 21.90 Mazyland Prior to 6/30/69 7/8/77 23.40 M~rylaDd prior to 6/30/70 7/13/78 24.60 ~3S~hUIQ~S ~i~ tO 6/30/68 10/30/78 27.00 Mi~higaq pEior to 12/31/66 6/18/74 2.25 ~ew York 1954 through 12/31/56 11/6/67 100.80 New York 1/1/57 ~hrou~h 12/~I/64 5/8/70 327.70 ~ew York Prior to 12/31/70 8/2/76 857.60 New york prio~ tO 12/31/73 3/7/77 ~63,13 New York 1/1/74 to 12/31/74 3/10/78 482.56 13,752.39 (Continued)

725-104 - U~LAI~D CK%~ITS pAyABLE DEC~F~R 31~ 197~ Sta~- North C~'Oli~ Nor t:h Ca~lin~ North Carolina 01~ Ohio Rhode Island Texa~ virqinia Vizginia Virginia VSrgrl~£a Virginia V~-ginia Vi~l~rcLa Vil~Jlnia Virginia Virg£nia PerlodCove~ed pzioz ~o 12/31/72 P;io= to 12/31/74 Prier to 12/31/74 Prior to 6/30/70 7/1/70 thzough 6/30/71 p~ioz to 6/30/73 prio~ to 6/30/70 Prior to 12/31/70 7/1/59through 6/30/60 7/1/60 through 6/30/61 7/i/61 thz~ugh 6130/62 7/1/62 throuqh 6/30/63 7/1/63 thrOUgh 6/30/64 7/i/64 through 6/30/65 7/I/65 through 6/30/66 7/1/66 t~gh 6/30/67 7/1/67 through 6/30/68 7/1/68 hhrough 6/30/69 Date 9aid 5/2617~ 5/i0/77 3125/7~ 10/30/75 9/21/76 11/i/78 11/29/78 12/3/78 4/21/69 4/18/70 4/27/71 4/19/72 4/2/73 4/19/74 4/23/75 3/0176 4/25/77 ~1.96 16.68 17.92 4.20 17,20 23,93 50,60 261.60 6.Q0 6.00 21.00 37.00 33.00 36,50 36,00 36.50 39.00_ Page 3 3,578.19 17,3~0.57

725-105 - L,T~BZ~LI~Z ~l:~R L~'~I~ OF C~DIT 31e 197~ This ~0~unt records the value o~ lett~s of e~edit i~od by banks as b~dezs on ~y ~ansactlons. This au~unt is fully offse~ by Account No, ',725-~06 _ Letter of credlt.~ There was no balance in this acc~un~ at yeaz-end.

725-i06 - LETT~K OF CREDIT DECE~ER 31~ 1978 Credit balance of this a~t re~ords full offset to AQaO~nt NO, ~725-I05 - LiabilitY unde~ lettez of ~redit," There was no balamce in this account at year-end.

7~0-010 - IN~ERE~ PA~A~LE ON FUNDCD DE~T SV~MARY ANALYSIS O? T~A~SA~IO~: TOTA~ 1.857.o0 (461.0oi -o- 2,565.0o 390.00 I~9,143.87 ~,203.1~5.00 ZhS,355*SG 4.Z59.375.00 1,~7.OO I~61.0oJ_ -O- ~,SG~.0O ~?C.OO 119,211.69 ZOS~.Z~O.CO 979,3o3175 ~,9o2,5~9.37 86~.IGO.6~

730 015 - INTEREST pAyABLE ON LONG-TEFM DEBT DECEMBER 31~ 1978 This account r~coxds interest payable on long-te~a debt. $~rlmary analysis of transactions: Balance Balance Loan 1/1/78 Accrued Payment~ December 31, 1978 Eurodollar Loan 866.67 19,804.17 20,420.S~ 250.00 Zurich Insurance C0. Loans 253,612.80 130,813.20 384,426.00 - 0 Eurodollar Revolving Credit Notes 677,2~7.71 5,619,683.23 5,592,876.89 704,074.05 9 5/8% Notes due 1979 4,812,500.00 14,437,500.00 14,437,500.00 4,812,500.00 S 1/8% Noted due 1985 4.082,495.90 12,1~7,512.80 12,187,508.70 4,062,500.00 Balance December 31, 1978 9,579,324.05

750 020 - XNTEREST pAYABLE ON ~HO~T-TE~4 DE~T ~is acco~iI~ records i~tel-¢st [)ay~ble ho barLk~ on 4emend ~otes a11d co~aerci~l ~aper. Balance ~t December 51, 1978 ~]e Chas~ Manhattan Ba~k i21,329.84 citibank 116~111.12 Morgan Guaranty Trust Company of N~w York 201~395.8~ ~nufact~rers Hanover Tr~st CO. 106,930.55 I~inq q'W~3t Company 66,007~62 M~rg~/L G~aranty Trust Company of New York [Special Loan] 9,2~8.61 C~ocker National Bank 5,133.39 First National Bank of Chicago i~,724.37 Total Bamks 639,931.Z7 Imterest Bearing commercial p~p~r 83,873.10 Balance Dec~be~ 31, 1978 723,804.37 Z33

730L030 - CA$II O~ DEPOSIT FOR pAYMENT O~ INTEREST ON ~©NDS DECEMBER 31, 1978 This account records cash on deposit with Morgan Guaranty Trust Company of New York for mayn*ent Of interest o~ 3% debentures which matured April 15r 1962~ and October 15, 1969; 25 year 3 i/4% debentures maturing February i, 1977; Chemical Bank New YOrk Trust Company as s~0cess0r trustee to the Morqan Guaranty Trust Co~any on mature~ 4% and 6% bonds~ in- terest on 25 year 4 5/8% subordinated debentures maturing July it 1990, and with Manu- facturers Manover Trust Compahy as trustee of 25 year 5 7/8% debentures maturing July I, 1992. This account i~ an offset to unclaimed interest payaSle portions of ACcount NO. Sugary anslysis of transactions: Balance Balance January i, Payments during December 31, 1978 ~ 1978 197S Chemical Bank New Mew Trust Company 6~ Bond~ 857~00 857.00 25 Year 4 5/8% - 0 - 258,287.74 258,287.74 0 - Subordinated Debentures ~aturin~ July l, 1990 Morgan G~aranty T~st ~of New York 20 Year 3~ 0 - ~ 0 - ~ 0 - _ 0 Debentures Matured April 15, 1962 25 Year 3% 2,565.00 - 0 . - 0 ~ 2,565.00 D~be~tufes Matured Oetoberl5, 1969 25 Year 3 i/4% 390.00 - 0 - 0 ~ 3~0.00 Debentures Matured Februar~ l. 1977 Manufacturers Hanover Trust company 25 Year 5 7/8% - O - 4,406,250.00 4,406,250.00 - 0 ~ebent~s ~6~turi~g July i, 1992 Total 4,351.00 4,664,537.74 4,664:537.74 - ~d,35~00 Z:94

730.050 - INTEP~ST PAYABLE ~O GALBP~ATH CORPORATION ON REASSIGn'lENT O~ LEASE DECF~BER 31, 1978 ~lls ~ccount ~e¢Ords ~rlterest p~yabl~ (5% per ann~[L) zo Galbreath Corporation On rea~siglm*oIlt of le~se at 150 E~st ~2nd Street, New Yark, ~ew York. The balance as of Decer~ber 31, 1978, ~pre~ts interest ~¢~r~d a~ cha~d mo~th~ t~ ~c~t No, "i~ ~5 - Oth~~ inter~t ~xp~n~e.- payments ar~ made q~arterly a~d charqed ag&~nst thi~ ~cco~n~. Su~y a~ai~is Qf t~ns~ctions~ Bala~ January if 1978 ~nte~est ACC~ Period Amount I/l-i/~l L.9~5.14 1/22 4/21 4,366.77 • 4/22-7/21 4,079.42 7/22-i~/21 3,788.47 I~terest Disbursed Amount ]/21¸ 4,65~.58 4/21 4,366.77 10/21 3,788.47 Balance at December 31, 1978 3,565.44 15,99Z.45 19,5~3.~9 16,885.24 2,678.65 ~35

COBR~CTED COPY 740-010 - ACCOUNTS pAyABLE - ACCRUED pay ~OLL DECFI4B~R 31~ 1978 /he crew/it ~lance of tI~is acco~/it represents a llability for salaries a~i wages earnee hut not yet paid. Credit Bal~nce at January I, 1979 C~edlts from Branch Locations Credits from New York Ogfiee Total Cr~dlhs Debits from New York Office Credit Balance at Dee~ez 31, 1978 12,788.Q0 78~600.00 91,38S.00 91,388.00 - 0 -

740-O'j0 . I~'CENT~V~ COMPENSATION pAyABLE DECEMBER 31, 1978 T~ E~I. ANC~ AT DECE~R 31 IS CO~O~I~ OF TH~ rOLI.r~WlN~I 50~ PAYABLE 50% 0E~ERR~D BY F~RUAmy I TO DECE~E~ I~7~ P~RC~NT A~OU~T p~C~ AMOUN~ OWRP~oVlaI~N D~RREO TOTAL ANO ALL PKRCE~T AMOUNT U~ALLOC TKq pARTICrP~NT5 M~, ROBmRT K. HEIMANN CHAIRMAN AND PR[SID{NT 9 23~i8~I150 ~ ~33~891~0 18 b6?.TBR.o~ D~SCRET~ ONA~Y ~9 753.65o.oo z9 753,650.00 58 1,5o7,3co.oo (zo7. 398.~) 8~k~C D~CE~ 31. 1978

~AL~NCE JAnUAry I~ 1978 OV¢~pROvlSlON A~pLI,ASLC ~O 1977 pAyHCN~ OV~pRowSlO~ AD~US~E~ IN 19T9 BALA~¢~ OZC~S~R 31. 1978 ~,63~.~9T.66 2.1~2,OOO.CO ~29,323.92 2,391.395.OO 2,391.39~'~ ~ 6o6~o oo P~ovlo~o YzA~ 1978 71~o=o50 . INCENTIVE CfI4PENSATIC~ pAyABLE DEC~8~R 31. 1978 I~78 I[~CKNTIV~- COM~'~NSATIOh ~ P~v~e~ SY Ft~U~mY 1979 NON~ISC~E- ~ O1~rR~o~mY A~L 382.319.OO 5~9~759.OO I,~20,309,OO 7,562.OO lC,~.OO 11,60~.OO ~9~,19T.66 38~, 319.O0 509.759.0° 1,2~O, 309.OO ~67,7~3,~o 6~3,71o,co ~,299,9~2.oo ~9~,197.66 ~9,323.9~ b67,783.00 6~3,TiO.oo ],~99,90~.oO 3,o27.0~ ~,160.Co ~O?.398.OO

750-010 - MISCELI~\T~US ~CCR~ pAy~ D~ER 31, 1978 ~*is auco~Lt r~uords ~scellan~us accruals wh,ch are not recorded in other l~ability accosts. ~alance at December 31, 1978 Trustee Selv~ce~: Irvlng Tzu6t - Profit.sharing ~lan 85,250.00 Special Projeats - C.T.R. 73,300.00 Contingenole~ relating to pending litigations 8,212,376.94 Legislatlve hearings 136,469.77 8,422,146.71 BUilding Operating E~en~e - 245 Park AVenue: Real Estat6 (Tax) EScalati~z ~Jne~ic~ BramdBt Ir~., & S~shin~ Bis~itsr Ir~. 285a695.00 J. ~. Beam Impert Cor~. 1,706.O--0 287,401.00 National Cl~anlng Contractors 43,000.0~ Eazle C. C~emants 50,763.01 New York Telephone CC~oany Telephon® 26,~0~00 TeletyPe 4,000.00 30,000.00 SOciet~ ADon~e d'~ploitatlon des Papeterie~ L. La Croix Fils~ Royalty at two dollars per M on ci~ar~t~ ~ooks 672.19 Loom~s ~ayles In~. 16,000.00 Western Union Tel~aph - Telegraph 1,000.00 Counci~ for Toba~o R~eaz~h 510,078.~0 T~le~hon~ servi~e - CUSter Se~vlce C~nter 9~000.00 ~ewis Bus£~e~s M~hlnes ~6.67 Pin~erton Guard Serviue 4,000.00 pG~nie & Edmonds . A~crual for legal fees 273,310.62 G.S. BUOk 5,392.00 xerox Corp. 5~0.23 ~dV~Ztising Department Kxpen~e - plates, pToofs, art WOrk - sample pa~ks 2,054.82 Tobacco ~stltute 23,748.00 C~ M~lha~t~n Bank - Retlz~n~ Plan - (Corrected in January) ( 67,500.00) vi~inla Electr~ and Power Company - Customer SerVice Center 3,500.00 Davis, Delan~y and AarOW, Inc. 44,33~.72 Balance Decemb~T 31, 1978 9,744,818.17

750-015 - COP~ORATE ACCRUALS PAY~LE DECEMBER 31, 1978 ~iS acco~it records estimated liability (accrued monthly) for p0yments to be made to certain banks and Coopers &Lybrand for indenture bank service, t~u~ee fees and auditors' expenses rel~tive to acq~isitions~ proflt sharing, proxy expenses* et~. Balance at December 31, 1978: Coopers & LZbrand Balance of estimated auditing fees for 1978 202,800.00 Trustee Sez~ic~s: Citibank Registrar~Commonstock Services on 8 i/8% notes due 1985 655.80 17,972.16 18,627.96 Morgan Guaranty Trust COmPany of New York Services on 8% debentures due 11/15/81 Services on 9 5/8% notes due 1979 Services as transfer agent - Co~on stock 493.30 35,379.45 15,000.00 Commitment Fees: EurOdollar agreement dated December 1972 Aus, ust 1974 3,749*99 16,736.11 20,4S6.10 ForWard Exchange Contract Hedginq loss on 15,O00,000 pound s~erling contract Balance December 31, 1978

750-020 - ACCOUNT3 PAYABLE TO BP~T~SH A~RICAN TOBACCO COMP~, LIMITED FOR EXPORT SHIpp~NG~S DECEMBER 31, 1978 The credit balamce of this ac~t ~epr~se~ts ~o%%nt d~e ~nd payable to British American Tobacco Comgany, Limited, for our liability u~der export shipping arrangements for LUCKY ~TP/~E and LUCKy FXLT~RS Ciqarette8 shlpped as sea stores, A su~mazy analysis of transactions for the y~ar 1978 follOWS= Credit balanue January i, 1978 Amount credited during 1978 ~otal .~l~u,ut of pa~'~tlltB d'0zilt9 1978 Cr~tit bal,~nce I~cea~l~r 31, 1978 72,629.69 264,905.76 337,535.45 228,234.03

750-030 - ACCRUED C:I~.l~ MACHINE ~O~I.Ty pArLE DECEMBER 31t 1978 This acoount zedo~da a llahillty fo~ zcyaltles payable to InCezma%ional Cigar Machinery, Divi~On O~ ~ ~neo~a~e~, foz ~eamed ~ig~¢ ~hln%s. ~ of Deoem~ 3~., ).~S, ~.2n~z~ weze Olgo~ machines at followlnq 1ocatlons: p~yalty SasQd Upon P~u~tlon Lobar±on NO. of Machlnes 2-70 Maohines . $i.00 per thou~d ciqars o¢ $25.00 ~ ~r machlne per month Mountaintop n Per~sylva~la ~9~nt @f Rese~h an~ ~1~nt, ~ich~nd, Ui~Inla 2-70 Ma~hlnes with 2-90 attac~nts - $.85 and $.60 per thOulamd Ci~azs or $50.00 min~ 2e~ mauhlne F~r month Mo~taintop, Pennsylvania @ .60 53 2 SS 2-81 Maahines - $3.0D per thousand cigars or $25.00 ~ini~mm paz machine ~er month Mountaln~op t pennsylvan£a 2-66 Machines - $i.00 per tho~sand Cigars $25.00 minimum per machine per month M~unt alntop r ~ennsylva~la 18 Royalty Based ~on Plat ~%nual Rental M~n~aintop, Pa. ~-70 With 2-~ ~ttac~r~ ~¥alTJ ~r Annm~ $i,000.00 Muir of Macblnes 28 $7,412,30 S~ a~alys~ of tra~sa0~i~s: Bal~oe ~t~zy i, 1978

750-030 - ACCRUED CIG~ MACI{I~ ROYALTY PAYABLE DECEMBER 31, 1978 Accrnal for Yeaz Royalty Based upon production: 2.7o ~i.es ROyAL~ ~N~AINrOP 10.~2+712 ~10~ 3~&?..~ ~.s~o 2,11B%9=,9 2.0~.11, ~2.1~ TOTAl. 13.1~+671 ~12, ~72,.83 ~'A2.~ Page 2 Z.70 MA~ IS~ WI~4 ~0 ATT'CHM~T$ ~ L,6o er~ M T~.38 $T1,27 2-66 Machines 2-81 Machines ROyalty Royalty Lo~ation ~ $i-00 Per M Quantit~ $3.00 Por M Mountalnto~ 5,14S,~72 $5,148.69 265,219 $795.66 Total 5,148,672 $5,148.69 265,219 $795.66 Royalt~ Based on 21at Annual Rental Machlnes Monthly No. ~f Rate Months Moult a/n~p 2-70 62.50 9 M~unt aintop 2-70 83,33 12 Owensbozo 2-70 83 • 33 2 N.¥.O. pin,vision (owensb~zo)2-70 9 Total E~/alty COSt of Clgaz ~a~hine8 d~rinq 1978 A~uruals no~ hilled L~ss: payments to Zntarnational cigar Mach/nezy Division du~ing 1978 Balance De~ember 31, 1978 1,0C0.O0 26,833.32 5,333.34 18,000.00 84,394.54 3,305.04 87,699.58 79 489.09 8,210.49

750-060 - ACCQU~TS PAYABLE TO pROFIT-SHARING pLkN TRUSTEE DECEMBER 31, 1978 This account records liability for amomnts payable to profit-sharing plan trustee Hnder plan as approved by stockholders at ann~al meeting held April 6, 1960, and as amended. S~ary of analysis of transactions: Balance January i, 1978 Less: Adjustment of prior year's overprovision PrQvision Less: Payments to trustee: February March April May AUgust Balance December 31, 1978 868,236.82 868,236.82 780,465.86 868,236.82 i0,155.28 3,439,000.00 43,738.40 3,395,261.60 3,496.000.00 6,891,261.60 3,395,331.60 3,495,930,00 Z4

750-080 - G~OL~ LIFE I%~SU~AI~CE ~P~I~I[~i~ pA~ABI~ DECE~V~ER 31, 1978 •his accoth%t r£cords basic gro~p llfe ~/%s~r~%oe i, re;li%~a payable to I, etrol~litan Life In~tucanc~ C~y ~or basic group llfe in,raise uBd~r ~i~ ~opted by Com~' o~ October i~ 1946. Pla~ Cov~r~ all regulaZ EUll-tL~e employPes of Th~ Ameri0~n Tobacco Company, Golde~ Belt Manufacturing COmpany and e~loy~es retlred from actlvs service after Cctober l, 1946. 1978 monthly premium rate was $i.04 per $1,000 of ~verage. S~cy analysis Of tl~ansa~tiQns: Debit Balamce Janvary i, 197~ Absorbed in cost for year 1978 *Les~: ~o~t cr~lit~d fr~ dividend ~et co~t for year Amount p~id to Metropolitan Life Insuran~ Com_~any Les~ dividend r@~iv~d from M~tro~olltan Debit ~la~c~ December 31, 197~ 13.72 3,113,266.28 42,963.0~0 3,070,303.2~ 3,114,657.72 42,963+00 . 1,405.16 Calenda~ yea~ POlicy Ye~ 1978 911/77 to 7/31/78 2~757,757.74 2,~45,~53.15 254,731~27 262,721.16 6,913-~6 _ 7 149.25 3~019,402.87 3,115,725.56 93,863.41 __~4 3,113,266.28 3,220,065.40 Details of pr~mi%~ by c~anles: AbsQrbed in C~st by The ~merican T~kacce Company Leaf Departments ~ne~ic~n T~bacoO COmply o~ the orient, I~ To~al Golde~ Belt Manufacturing C~mpany T~tal Absorbed in Cost *Includes redistribution of dividend covering following policy &~rlod: The American T~bacco company Golden Belt Ma~ufactuxlng Company American Tobacco C~mpany of ~ Orient, Ina. ~eriod 8/1/77 t~ 7/31/7B 41,126.$3 1,718.71 117.76 42,963.00

750~I . SUPP~L GIIOUp L~E ~SUI~.~ ~ I~kBLI~ 31t 1978 S~ ~alysls of ~r~nsa~ti~n~ Ba~e J~ I# 1978 Amount pala to Me~pol£tan Li~e ~S~Ce Company A~o~n~ ah~he~ by CC~pany ~ yea~ 1978 87.57 273,251o93 273~164o36 T~AC ~MoUN7 AeS~EO P~M IU~ PAI~ PREMIUW C~m A~UNTS WIT~ELD T~ ~l~Ht~ ~ISTR ~UTI OM PR£MlUM W~7~H£LD rm~l 79,I.5o.93 ~79,~36,o9

750-082 - C~ MZ~IC~ EXPENSE ~ P~0MS ~ DEC~5~. 31, 1978 ac~In~ r~cc~s ec~ensive mJdical expense /m~J~ance ~remltu~ ~ayable to the Metropolitan Life I~surance Cc~any f~ the medical e~ense ~s~r~nce plan which provides c~verage fo~ c~rtain employ~s~ certlln ~etire~s and certain ~epondents of bo~h ~mployBos a~d reti~. A~ of Decembe~ 31, 1973, ~o~a~e ~r these plan~ was ~vid~d to th~ ~leld sales C~gan~ation ~ff~ctive O~tobar I, 1962 ~w york 0££1ue Employe~ E~fectlv~ Octoba~ i~ 1963 0v~s~as ~loy~s (c~ient) Effective April i, 1964 Leaf ~yi~g ~rgar~zat~on Durham and Le~n Lea~ ~p~r~nts Ef£e~tlv~ ~ay i, 1964 ~Ttf~Td and I~n~ast~ Leaf D~art~en~s Effe~ti~ Mny ii 1964 The ~the~ay-steane corporation E£fect~Ve May I~ 1964 Retirees ~f above AB Indicated RQ~i~Qa~ undez m~rly ~ Di~ab~li~y Provi~ion~ 0£ CC~pany P~tire~_nt ~lan* H~ly ~pl~yees Eff~tlv~ Januamy i, 1971 Salaried ~ployees ~ffective JanUary i, 19~2 *Applies to ~lo~eeB onl~ at sp~ui~ lo~atlon~ COVerage ~a~ extended to th~ ~ ~ivi~ion on Mar~h i, 1864, This coverage was c~n~led on ~ov~e~ 3~, 1964. DUe to the ~s~t~on of op~ratlons~ coverage ~r a~tlve ~ploye~s at Th~ ~athe~ay-Steane corporation ~as elim/na~d on D~c~r 31, 1972. This cov~rag~ may be ex~nd~d to oth~ comgany ~loye~s as autho~i~d by resolution of ~h~ ~ ~i~t~ ~n ~te~l~x 14, 1963. pnemlums applicable to active and r~tired ~loyees and de~ndents of employees retired after Outobe~ is 18~3, are borne by the COmrany. ~u~s appli~ble to dependent cov~rag~ for a~t~ve e~ploye~ and employ~os ~tlr~d pri~r t~ october i~ 1963, and ~ubs~qu~nt to ~anuary 31~ 1974, a~e ho~ne pertlal~ by the employs. Exces~ of a~tual depend~nt premium pala over am~mts withhel~ ~ ~Q1~ct~d f~ employee~ is a~rbed by th~ C~any. Z47

750-082 - C~ ~DXCAL EXP~I~SE ~ ~ ~%~r~LE 31, 1978 A st~e~xy analysis of transactions £or 1978 follows: Credit Balanae January i, 1978 160-350 - G~eral expense 2e760.03 200-005 . The ~ican Tobacco C~l~%ny of the Orient. Inc. 2,942.16 25D-002 - Durham Leaf Department 78,944.98 250-006 . L~i~/tom Leaf Department 20,694.72 250-015 * virginia ~ranch 65°32 250-046 - I~c~ster L~f D~l~r~nt 5,596.94 250-050 - p~et~to Rica~ Branch 9,525.53 750-095 - ~rovislon for retirem~t ~nefits - N.y.O., Sales, Leaf, Qtc* 203,765.0? ~io~ Mem~r s 365 ~985.00 Er~nch Salaried Total 598,328.07 10.050 - General ~nd admLuistrati~e 239,392.85 10-051 - Emp~2ee i~neflts administcation 6,051.21 20-025 - Unahe~rbed and und/str~b~ted expense 7,095.00 20.026 - Branch &~ipistraticn 4,486.22 20-030 . ~azket~%g Department 9p898.21 20.040 - N.y.0. Domestic 29,296.61 21-040 - N.¥.O. EXpOrt 6,441.11 20-041 - Salesm~nts salary and ex~enBe 309t698.13 20-042 - Field sales off~ce e~ge~ 5t066.54 21-042 - Sale~men.B saL~Ey and E~K~er~e - C~exs~s R@~ceseRtatlves 1,183.08 30-025 - unahGorbed and Pmdistrlhuted expense 419.25 30-026 - BT~Ch a4;~stration 3,562.~0 30-030 . ~arketi~g Depar~msnt 3,034.92 30-040 - N.y.O. DO~SstIc 4,241.18 30-041 - Sale~ts ~iary ~d eA~eD~ 41~583.39 30-050 - General and adm~istratlve 1,600.08 Total Company Provision Total CO~any E~eP~e Em~loyee contribution Total Contribution an~ ProvL'~on Pz~mi~ L~id to Me~Topolitan Lifo I~cance 1,690e157.5~ LeSS D~V~de~d R~eived 0o00 C~edlt Balanc~ De~ber 31, ~978 ~aga 2 40,043.39 1,392,008.03 I~432,051.42 340,414.48 1,772,469o50 1,377 325.79 82,308.40 245

750-090 - ~SE3N'~ FOR ~'g~3Y~J~'S LZ.~I,ZT'~ INBU'~C~ D]~R~ 31, 1978 5alsace at De~es~e~ 31t 1978 2,115.00

750-093 - ]~S~ I~OR ~ ~SX~G COSTS D]~ 31, 1978

750.095 - pROVISION FOR P.~TIP,~KSI~ B~C~FITS DE(~MB~R 31, 197~ TILts ~o~t is set %~ ~ ~ovi~ ~Qr: 1 - ~a~nts to P~tir~ent PI~ T~ustee, The Chase ~dlhattan Bank A. ~ establish a fund for pa~ent of benefits to employees of The Amaric~ ~bac~o company, The Katheway-Steane cor£o~tion, Golden Belt ~hln~act~ing C~pany, C~ban Tabacco C~pan¥ In~. and Amez~c~ cigar corporatlon, who reti~ afte~ January I, 1949, in accore~a~ w~th amended reticent plan approved by ~t~ckh~iders April 6, 1960 ~. ~o~ ~ayme~t ~f supple~hal benefit all~ances (outs~e th~ plan) to emp~yees ~I ~for~oned Companie~ w~o r~tire~ after Jan-~ary I, 1960 2 - Di~e~ pa~D~ ~f b~mefits to empl~Mee~ ~Z ~he Amerlc~ ~bacao Company wh~ ze~ir~d hef~r~ J~n~ i, 1949, ~d~r ~ inf~al pl~ 3 - Gro~2 Lif~ ~suranc~ pr~ium On ~ertai~ retired ~mploF~s of The Amerlc~ TObacco C~y 4 - payments of instants ~remi~ ~ ~tro~llt~a Life Xnsuranc~ c~m~ny for compr~hensi~ m~d~cal insurance ~overa~e fo~ retired e~ployees (Continued) zz1

750-095 - pROV~SIC%N F0K ~TXREY~T BEnEFiTS D~C~KER 31, 1978 Analysis o~ Transactions: contribution Paid to R~tirement plan TrUStee The A~ezi~a~ ~bac~o Company ~iden Belt Manufacturing COmpany Paid to i~ployees Retired p~i~ to January I, 1949 Group Life Xns~ramce p~i~ Supplemental Allowanco paid by Trustee Group Medical Insurance premium Amount Accrued and Payable in 1979 Less: Contribution Pilled to Sub~u~panies Su~plemen~l A/Iowances Billed to: G~iden Belt ~nufacturing Company Less Payments Applicable to PriQr Year ~et C~st - The American T~bacu~ Company for Year Page 2 U~der the C.itside Plau the plan Total 26,429,393.00 452,510.00 26,881.903.00 867,522.96 ~2,508.82 622,678.62 217,797.75 5~8,486.7~ 1,491,471.95 26~429,393.00 452,510.00 26,881,903.00 52,50S.82 622,678.62 217,797.75 598,486.76 28,373,374.95 867,522.96 27,749,425.96 1,491,471.95 29,240,897.91 452,510.00 452,510.00 6,695.36 6,695.36 4~2,510.00 6,695.36 459,205.36 27,296,915.96 1,484,776.59 28,781,692.55 5,440743.~0 ~440,743.00 21,~56,172.96 1,484,776.59 23,340,949.55 (Continued)

DECL~R )i, 1978 provision D£s~ibution of Net Cost Plan ~ranehes Cigars 1,877,91B .87 Cigarottes 12,294,156.97 Leaf De~ar ~nt s cisars 131,582.43 Cigarette~ 2,487,169 .H0 160-350 - G~eral expenses: Cigar ~tte Leaf 6~,0~3 .~ Cig~ Leaf 42,002.29 200-005 - The Amexican TObacCO Company OE the orientr i~c. 46,375.10 ~5~,05~ -- pu~r~ Bic~ 51,076.~9 i0.050 - G~e/al a~d admini~trativs 2,141,071.99 IO.QSI - Employee benefits a~ni~is t~at ion 155 . pzofit ~ha~iag a~m£ni~a%i~ 35,1~5.93 159 - Keti~t administration 18,946.~8 20-026 - Br~noh adm~nistrat~o~ 341,339.52 20-030 - M~rketln~ Departm~ 142,487.57 21.040 - ~.~.0. Export 51,~92.~8 20-G41 - SaleS~en,s salary ~d expense 2~53,136.~3 20-~42 . Field sales office expenss 33,218.04 20.04~ - Stor~ and general - ~ic 576.13 30-~26 - Branch administra~o~ 79,~26.~0 30-030 - Marketing ~aEtme~t 35,~6~.91 30-041 - S~e~e~'s salary ~nd expense 504,478.~7 30-046 - store and g~nera/ . Domestic 224.05 30-050 . G~eEal and ao~i~strative 2~431.93 750-~93 - Re~eEVe ~or ;la~t closing ~osts 16,366.53 22~ ~33,335. ~5 LeSS~ paymsn~ to ~r~s~a ~nde~ plan Outside plan Payments applicable t~ prior ~eax Total paymen~ 1979 Add~ Char~ed to subcompani~s Under ~la~ Outside plan CrQdit balance at Decem~e~ 31, 19~8 Page 3 p~o~i4~d Overpr owi~i~ ~et Year at 12~i/78 Provision 2r000,033.75 526,133.72 1,4~3,90~.03 13,0@3,605.50 80,~66.34 ~3,013,239~16 140,138.80 5,631.13 134,507.67 2,643,902.26 106,439.50 2,542r462.76 6~,I00.28 Z,496.26 64,404.02 44,733.56 i~797.51 42,936.05 49,390.72 I,@84.64 47,406.08 55,46E.~ 2,~8.64 5~,234~43 2,2~0,29~.85 91,628.10 2,188,670.75 57,~75.96 1,505.~0 ~5,968.1~ 20,178.29 810.81 i9,3~7.48 363,535.70 14,~07.77 3&~,927.93 151,753.07 6,097.~2 145,655.25 55,266.~5 2,~20.74 53,045.91 2,506,153.2~ 100,703.49 2,405,4~9.76 $5,37B.i0 1,421.58 33,956.52 613.59 24.66 5B8.93 ~4,~04.75 3,407.67 81,387.ii ~8,30~.9~ 1,539.35 36,7~9.57 324,27~.i~ 13,030.30 311,247.83 23~.6~ 8.59 229.O3 ~0,2~0.76 1,~16.76 29,064.00 ~4,318~i11.94 ~77,162.3H ~3,3~0,949.55 26,881,903.00 1,491,~71.95 28,373,374.95 (5,440 ~ 743 .O0) ~2,932,6~i.95 ~52,510.00 6~95.36 459,205.36 867,5~2"96

751 001 PAYABLE TO GALBRhATII CORPORATION F0N ASSIGNMENT OF LEASE ON 150 EAST 42ND STREET DECEMBER 31, 1978 This account records the princi[~al payable to Galbreath Corporation for assignment of lease on 150 East 42~d Street, New York, New York. charged against this account. s~mary analysis of transactions: Deferred payable to Galbreath C~rrent portion payable Balance payable December 31, 1978 Pa~nent is made quarterly and 182r260.90 97,250.ii 279,511.01 ZS,~

755-110 - pRO'~B~(A~ FOR AD~RTI~ ~T$ DECKER 31, 1978 The ored£t balance of this a~ount zepreaents estimated llabilities ~Q= display, etc. • agreements with various r0ta~le~, etc. Pa~mant~ thereof are dafez~ed peDdlng either roQeipt of Involc~ or in aeoordance with t2~ t~ms of t~he agreements. The oredit ba~a~e at DeCember 31, 1978, ~s compesed o£ th~ followi~q: Brand and T~e of Arrangement AmOunt Cigarettes, Smokin@i etc. CaZl~n Fil~r, carlton Menthol, Carlton Filter 100'S, Carlton 100's Mentho1~ Pall Mall Extra Light, pall Mall Filter King, Pall Mall Filter 100's, TaZeyton 100'S, TaZeyton llght~, ~gzeyto~ lonq light#, Tar~yton ultra low ~ar me~t~Ql~ ~ar~yt~n 85's, p~ll Mall Lights 100~B, Ve~dlng Ma~hlne s 348,423.55 Carlton Filtar, Carlton Menthol, CarltOn Filter I00~, Carlton 100's M~nthol, Pall Mall Light 100's, Tar@yton li~ht~, TaZa~on l~ng l~ght~ Dis~la~ Offer 125,586.90 All Ma~or B~a~ds, Shelf Arrangement ~410.00 1,469,4~0.45

755-12~] . pROVISION ]~OR pROMOTION OF DISTRI3UT~0N D~CEMBER 31, 1978 The are~It balanoe of this account zepre~nts an estlmat~ 1/ability foz payments on allOWances to ~ mmde fo~ VamlouJ plans ~v~rln9 ix~om0tion of dlstrib~tlon of C~a~y pr~uct~. The ~zedit balance at December 31, 1978, is ~mposed of the following: Cigarettes, Smoklng, etc. Military ~ice allo~e 4,000.00 256

755.130 - p~VZSZON FOR F~GAZr~A/)~t~ISING DEC~Z~ER 31, 1978 The credit balance of th~s a~ount represents am~u~*ts ~ue for magazine, et~., advertising ~pace an~ production ~ts for which czedltor$' b~ll$ have ~t been received. The aredit balance at December 31, 1978, is e~mpos~d of the following: Brand and Media cigarettesI Smokln~t etc. Maqazine . General Tar eyt on lights Tarey~on long lights ~all Mall Light lO0's Pall Mall Exit& Light To%al cigarettes, SmOking, etc. Programs and Trade Publiaati~ns Various combinacionB Qf oux cigaretto bra~ds M~qazi~e - General -°.~tonio y Cleopatra Financial ~cjazine ~ G~and Total An~t 6,757.84 6,757.90 343.42 19,304.52 2,106.40 21,410.92 57.05 696.75 22,164.7~

755-14¢ - PI~NZSION FOR ~F;p~Z]R ADVJ~TZS]:~G The ux~d~t ha1&n~e of tb/s a0co~t Z@pFesentB ~o~nt~ due for r~m~paper ~dver~Islng ~pace and production co,tin for wh~ah ~e~Itors' bills have not be~ receive~. Credlt balwe at Deesmber 31, 1978, is c~posed of t~e followlng~ Bra,d and Kedka C£~srettes~ ~kln~, eta. Carlton F~te~ C~I~ Menthol Ct~ T~el~n ~g lights ~8,830.54 12t146.56 71s794.76 68,65~.23 5,912.20 57,338.43 2~5.4B 284,943.20 1 078.8?

755-150 - p~3~ZSIO~ FOR SUND~ ~RTISING E~C~ER 31~ 1978 The credit balan~ of this account represents a~cunts due foe mis~ellaneous advertising for which supglle~s~ inv0~cQ8 have not been received. The credit balance at December 31, 1978, is c~spo~ed o~ the followlng~ Cigarettes, Smokin~i etc. pALL MALL LIGHT 100~i TA~Y TON lights TAF~/ON long llghTJ TEKEyTC~ low tax menthol SILVA ~NS Filter SILVA T~INS Menthol CA~LTC~ Filter 83 ~. O/p CAKST0~ Filter 83 ram. Box CARLTON Fil~ 100gs CARLTC~ lO0*s Menthol ~k~i~g Depart~en~ Comb~natiom Cigarette Brand8 To~al Cigarettes, Smoking, Gtc. ROI -TAN ~ol~ers Tips Large Sises TrUmps Charger Suout All Sizes ~NTC~IO y CLEOpATPA G~enadiex~ All Oth~s All S~Zes ~0 y CLEOPATRA Little Cigars Filter ARISTOCPAT LA~ Large Sizes Imported Whiffs DC~ SEGOVL~ Total Cigars SKALLORNA Sm~klng Toba~ SAIL Smokln~ Tobacco FL~IN~ D~ ~ki~g Toba~ T~tal IIi~h-G~ade ~kls~ Tobaueo T~tal Cigars a~d High~ra~ Smokln~ Tobacco 8.37 70.12 651.27 26.05 50.68 9.44 664.~0 16,415.30 15,534.65 18,513~63 45.31 786.98 26.39 134,309.97 130,575.16 1,433.98 341.36 223.97 80.54 323*67 61,510.20 55,743.60 22~970.82 11,I12.00 36 226.44 5,490.03 5014~3.58 204.93 858.58 2,000.0~ 8.03 12,545.14 5 152.26 ~xand Total Amount 454,851.71 59,050.84 17,705.43 76,756.27

755~150 - p~OVISION FOR EXPORT ADVERTISING DECEMBER 31, 1978 Page i of 2 The aredit balance of this aaco~nt represents a~ounts due for magazlne, newspaper, radio, etc., export a~ver~islng for which c~aditors, bills have not been received. Credit bala~ae at Dec~b~E 31, 1978, i8 c~sed of the followlng~ cigarettam, Sm0kln~! etc. pALL M~LL pALL MALL Filter 100'S - Cup pALL ~I~LL M~th~l 100'S . CUp pALL MALL Extza ~ight - Cup PALL MALL LIGHT 100's PALL MALL Filter King - CUp LUCKY STRLKE LUCKY 100'S LUCKY Filters 851S TARE~TON 851s and 100'S TA~EYTON lights TAREYTON long lights SILVA ~IN$ Filt~ SILVA THINS Msnthol CARLTON 100's MeNthOl CARLTON Filter - Cup CARLTON M~%thol - CUp CAPLTO~ Filter 100'S HALF and RALF Filter LONG JO~S Fi~ter LONG JO~S Menthol TALL pi~ t ~r EALF AND ~%LF Smok/ng Tobacco - RegUlar HALF ~ hALF Smoking Toba~ - Cherzy BULL DUP/~M Smoking Tohaaao p~IADIN BLACKC~RRY ~moking Toba~o BOURBON BLEND SmOklng Tobaoco Genexal Combination Cigarette Brands Total cigarettes, Smoking, etc. Amount 7,469.50 14,970.29 778.16 49.48 21.73 10.45 1,042.90 15.58 632.~4 4,717.27 239.11 716.99 46,788.56 i~397.03 44.25 i1,97D.92 771.11 400.05 32,355.83 1,838.07 26.37 2,952.09 3,975.43 21.63 3.95 6.33 2.72 12,000.00 150,262.16

755.160 - pIK~gISION FOR EX~0~T ADVERTISING DECEMBER 31, 1978 ~unt ROI-TAN Tips 576.61 L~rge S~eS 564 • 56 Little Ciq~Ts i00 ' ~ 21.37 Golfers 55.32 Trumps 41.79 Tips - Cherry 312.76 1,572.41 ANTONIO y CLE0PATR~ All Others 532.99 Little cigarsFilter and Menthol 3,090.77 Ninos 110.69 3,734.45 LA COPONA Large Sizeu 1,601.64 Whiffs 24.95 1,626.59 ~P~DAyS Little cigars 652.50 Total Cigars 7,585.95 SK~LLO~A Smoking Tobacco 4,30 Total Cigars a~d High-Grade S~oking Tobacco 71590.25 Total cigarettes, S~ok/ng, Qt~,, Cigazs a~d High-C~ade S~Mi~g Tobacco 157,852.41 Transfer of Liability to P~er~ Ric~i~ Brealch 2,363.77 155,488.~ Grand TOtal

755-170 - p~SIC~FORRAD~OADVER~I$ING E~CE~ER 31, 1978 The =red£~ balanue of this a~unt represents a~o~nts d~le for ~adio adve~sln~ for whloh billin~has~tbeenrocelve~. ThQre weze no transactions in thls account during 1978.

755-180 - pRDVISION FOb TELEVISI~ ADVERTZSING ~EC~b~ER 31, 1978 The credit balance of this aCCOUn~ represen~ amountJ due for televls~on advertising for which billing hu not be~ recQive~. There were ~ transactions in thiJ accost d~ring 1978,

755-190 - p~VISIONFOR DISpI~y~IsI~3 D~ER 311 1978 The credit balance of this aocount represents am~ints due to display matezlal suppliers, edvertisL~g ag~les, and transportation displ~y companies for the cost of display advertisLRg for whlah Invoi~es have not been zeceived. The credit balance at DeCember 31, 1978t is ~o~posed of the followi~g: Clgazettes, Smoking, etc. Point-of-Sa/e Material pA~L b~LL LIGHT 100'~ CARLTON Filter 100~s CARLTON 100'S Kenthol long light S T~N 1£ght s TAR~/TO~ ultra 10w ta~ mentho~ Total Amount 711.01 21.46 21.47 1,774.70 1,774.70 497.00 4,800.34

760-Q00 - CO~%ION STOCK DIVIDENDS PAYABLE DECEMBEK 31, 1978 This acco~I%t reoords dividends payable on co--on stock, excluding treasury stock. S~ary amalysis of transactions: Dividends Declared in: N~ber Of Shares Dividend Dividend Date TO Stockholders Outstanding Rate per NUn~er Declared of Record (1) Share ~ ~/:iount 290 January 31 February 8 26,066,027 .875 March i 22,807,856.23 291 April 25 May i0 26,241,556 .875 June 1 22,g61,444.~i 292 July 25 AUgust l0 26,~28,296 .~75 September 1 22,949,S41.32 293 October 31 November i0 26,495,224 1.00 December i 26,495,224.00 g5,21~,365.76 Dividends Pai~ in: Withheld under U.S. Treasury Dividend Date Department Met Pa~ent Total Amo~nt NUmber paid Regulations tostockholders of Dividend 290 March I 15,071.10 22,792,785.13 22,~07,~56.23 291 June 1 15,002.16 22,946,442.05 22,961,444.21 292 September 1 13,777.84 22,936,063.48 22,949~841.32 293 December i 14,221.20 26,4~i,002.B0 26,495,224.00 Balance Decembe~ 31, 1978 58,072.3~ 95,156,293.¢6 95,214,365.76 0 Note: (I) Net shares o~tstanding after deducting treasury stock

765 000 - $6 CO~RTIBLE PF~EFERRED STOCK DIVIDEND PAYABLE DECF~IBER 31, 1978 This account record~ dividends payable on $6 convertible preferred stock. S~r~r~ry analysis of transactions: Dividends Declared in 1978: To Numbex Dividend Dividend Date Stockholders of Shares Rate Pe9 N~iber Declaxed of ~ecord Outstanding Share ~ Amount 29 January 31 February 8 320~935 1.50 March 1 481,402.50 30 April 25 May i0 240,265 1.50 June I 360,397.50 31 July 25 AugUst i0 212,765 1.50 Septer~er i 319,147.50 32 October 31 NOVember i0 205,950 1.50 December 1 308,925.00 1,469,872.50 Dividends Paid in 1978: Withheld under U.S. Treasury Net Amount ~tal Dividend Date Department Paid to Amount of Nu~er Paid R~ulations StOckholders Dividend 29 March i - 0 - 481,402.50 4Si,402.50 30 June i 0 360,397.50 360,397.50 31 Septem~oer 1 - 0 - 319,147.50 319,147.50 32 December i 0 308,925.00 308,925.00 0 - 1,469,872.50 1,469,872.50 Balance Dec~ber 31, 1978 0 Z~6

765-i00 - $i170 CONVERTIBLE P~FER~D STOCK DIVIDEND PAYABLE DECEMBER 31, 1978 This account represents dividends payable ok authorized but ~ot issued $1.70 convertible preferred stock. Balance DeCember 31, 1978 12,534.36 q.

810-001 - FOUR PERCF~TBO~DS MATURED AUGUST i~ 1951 DECEMBER 31, 1978 credit balance of thi~ account afte~ A~g~st i, 1951, represents amount of four percent bonds of The ~erican Tobacco Company due AUgust ]~ 1951, which have not been presented to Chemical Bank ~ew York Trust Coml~ahy* SUCCessor Trustee, for pan.lent a~d cancell~tion. This account is fully offset by balance o~ Account No. "810-002 - Cash on deoosit with trustee for red~ption of four percent bonds which matured A~gust i, 1951." ~her~ were no ~ransac~lonS in rne account d~ri~o 1978. Balance D~ce~Joe1" 31. 1978 150.00

810-002 - CASH ON DEPOSIT WITH TRUSTEE FOR P~EDE~TION OF FOUR pERCENT BONDS ~{ICH MATURED AUGUST i, 1951 DECEMBZR 31, 1978 Debit balance of this account represents amount of cash on de.sit wit C emical Barak New York Tl-~st Company~ T~stee, for red~Elption of four percent bonds which matured August i, 1951. The debit balance of this account f~lly offsets credit balance of Account NO. "810-001 - }'our perceIlt bonds matured August i, 1951." There were no transactions in this account duzing 1978. Balance December 31, 1978 150.00

810-003 ~ 25 YEAR 3% DEBENTURES I.~Tt"R~D OCTOBER 15, 1969 DECE~fl~:SR 31, 1978 Balance of this account represents 25 year 3% debentures matured October ~5, 1969, whicb have not been presented to Morgan Guaranty Trust CoopaDy of New York, Trustee, for payment and cancellation. This account is fully offset by AcCount No. "810 004 - Cash On deposit with trustee for red~nption of 25 year 3% debentures matured October 15, 1969." The~e were no transactions in this account during 1978. Balance December 31, 1978 4,000,00

810-004 - CASH ON DEPOSIT WITH TRUSTEE FOR REDEMPTION OF 25 Y~AR 3% DEBENTURES M~%~Jp~D OCTOBER 15, 1969 DECEMBER 31, 1978 This account records cash in hands of trustee fo~ retirelnent of matured debentures at par val~e a~d is a full offset to Account No. "810-003 - 25 year 3% dcbentuzes matured OctObe~ 15, 1969." There were no transactions in this account during 197@. Balance Decembel 31 1978 4,000.00 27~

810-010 ~ 20 YEAR 3% DEBENTURES MATURING APRIL 15, 1962 DEC~!MBER 31, 1978 = = Balance of this account xepresents debentures matured April 15~ 1962, not surrendered to ~nd retired by trustee. This liability is fully offset by deposit with trustee recorded in Account Mo. "810-011 - Cash OD deposit with trustee for redemption of 20 year 3% deben- tures which matured April 15, 1962." The2e were no transactions i~ this account during 1978. Balance December 31, 1978 3,000.00 Z7~3

810-011 - CASH ON DEPOSIT WITH TRUSTEE FOR REDEV~TION OF 20 yEAR 3% D~BENTURES W~I~CII MATURED APRIL 15, 1962 DECEMBER 31, 1978 This account xecords cash i~ bands of trustee for retirement of matured debentures at par value and is a full offset to Account No, "810-010 - 20 year 3% debentures maturing April 15, 1962." There were no transactions in this account durin~ 1978. Balance at De~aber 31~ 1978 3,000.00

810~012 - 25 YEAR 3 1/4% FEBRUARY i, 19771 DEBENTURES - MATU}{ED DECF~ER 31, 1978 Balance of this account represents debentures maturing February l, 1977, (called August i, 1974, at 100 1/4%) not surrendered to or retired by trustee. Thls liability Js fully offset by deposit with trustee recorded in Account No~ "810~013 - Cash On deposit with trustee for redemption ~f 25 year 3 i/4% debentures matured February i, 1977." There were no transactions in this account during 1978. Balance at December 31, 1978 5,012.50 Z74

810-013 CASH ON DEFOSIT WITH TRUSTEE FOR REDEMPTION OF ~5 YEAR ~ i 4% DF~ENTURES MATUreD FEBRUARy [. 1977 DECEMBER 31 1978 ThIS account r~cords c~sn in hands of tzus~ee to cover retlre~Lent of called dobentuzes at I00 1 4% and &s a full )ffset to ACCOUn£ No. "810-012 25 year 3 1 4% February i, 1977, debentures -matured~ •here were no ~r~nsact±on~ in ~nls account during 197~. Balance at DeC~aD~r 31. [978 ~ I12.5f

820-040 r 25 YEAR 4 5/8% SUBORDINATED DEBENTURES MATURING J~Ly l, 1990 DECEMBER 31, 1978 Four a1%d five-eighths percent subordinated debentures of ~ericen Brands, In¢., issued J~ly l, 1965, and Inat~ring July 9, 1990~ subject to indenture dated J~ly i, 1965, between A~Lerican Brands, Inc., ~nd Chemical Bank New York Trust Company~ TrUstee. Interest is paid semiannually on January i and July i at rate of fo~r and flve-eighths percent per annum, indenture provides for optional SinkiIlg F~d payment after June 30, 1970, toqether with accrued interest to date fixed for redemption~ Sur~i%ary analysis of transactions Or±ginal Issue Calle~ o~ ret±red tnroug~ Sink&~g Fund pr.or to January • 1978 ~alled for ~d~mptlon b~t Not Deposited R~tl~ed w~tb S1nkln0 throu~ Fund Trustee Sinkilj Fund Totsl 8.591,i00.00 3,O~b,5D0.00 Balance January i 1978 5,5S4,~O0.00 P~rchased by Company ~nd del&vered to Trustee in lle~ of cash for Slnkin~ Fund Payment due July l, 1978 42~ J00.0C Purchased by Sinking Fund Trustee 0 - ~29 530.00 Balance December 31. 1978 5.15S io0.o0 ~76

820-045 . 25 YEAR 4 5/8% SLrBO~I~ATED DEBENTURES ~hATtrRING JULy i, 1990, REACQUIRED DECEMBER 31, 1978 Par value of 25 year 4 518% subordinated debentures, ma~urlng July I, 1990, p~xchased by Company for cancellation or for paymen~ co S±nklnq F~d Trustee in lieu of cash as provided for in Section 3.03 Of indenture dated July 1. 1965. summary analysis of ~ransaetlons: Balan¢~ JanUary i, 1978 [.158s400~00 Debentures purchased by COmpany par Value J~nuary - 0 - February . 3 - March - 0 - April 2,000.00 May 12,000.00 June 59,000.00 July 25,000.00 Auqust [2.000.00 september 24,000.00 0ctobez 383,000.00 Novemb~ ~4.000.00 December 29~500~00 Less: Par value of debentures delivered to Sinking F~d TZUstee as pay~ to slnkinq fund in lieu of cash as provlded in SQction 3.03 Of indenture R~tlrement Date July l, 1978 Balance December 31, 1978 Par Value 429.500.0( 56(~500.00 1,718,900.00 42~,500.0( [.289.400.0(

820.050 . 25 YEAR 5 ?/8% DEBENTUI~S MATURING JULy i, 1992 DECEMBEK 31, 1978 5 7/8% sinking f~nd debenture~ of ~erican Brads, Inc. r ~turing July l~ 1992~ sub]eFt to ~de~ture dated July l, 1967, betwee~ America~ Bra~ds, Inc., a~d Manufacturers Hanover Trust Company~ Trustee. Interest is paid semiannually cn January 1 and July 1 at the rate Of 5 7/8% per ann~, I~dentt~e provides for ~i~king fund retiregent On July i of each year, beginninq with 197~ ~f not less than S5.000.O00 prlneipal a~ount and n~t more than $10.000,000 principal ~moun~ of deblntures. summary analysis of transactions: original Issue Called for Redemp~zon l~/t ~ot Deposited Retired with Slnklng unrougn FUnd TrUStee SinkinF~ Total i00,00( }00.00 C~lled or retired through Sinking Fund pr&or ~o ~an~ry l. 1978 Bal~ce January ] 1978 25,000,000.00 75.000,000.00 ~/rchasedby COmpany and dQlivered to Trustee zn lieu of cash for Sinklnc PurcI'~s~d by Si~kin~ ~und Trustee Bala~c~ December 31 1978 L978 5,000,000.00 - 0 - 5.000.000.00 70.000.000~00

82Q 055 25 YEAR 5 7/8% DEBENTURES MATURING 0ULY 1, 1992, ~C~IRED DECEMBER 31, 197@ Par value of 25 year 5 7/8% debentures maturing July i, 1992, purchased by Com!~any for cancellation or for payment to Sinking Fund Trustee in li~ of c~sh as provided for in indenture dated July i, 1967. summary analysis of transactions: Balance January i, 1978 Par value of debentures purchased by Company Month Par Value January . 0 - February _ 0 - ~rch _ 0 - April 0 - May . - O June 1,400,000.00 July - 0 August 39,000~00 September 63,000.00 October 46,000.00 November 112,000.00 Decen~r 33,000.00 Less par value of debentures delivered to SlrLkinq Fl/nd Trustee as payment to Sinking Fund in lleu of cash as provided in Section 3.03 of indenture Retirement Date Par Value July i, 1978 5,000,000.00 Balance December 31, 1978 33,338~000.00 1,693,000.00 35,031,000.00 5,000,000.00 30,031,000.00

830-025 - 15 yEAR 6 3/4% SWISS FRANC LOAN MATURING FEBRUARy 28 1984 D~C~NBER 31, 1978 The balance in this accounu xeooxds indabtedness u~der loan agreements dated Nov~i%bor 22. 1961 with Zurich. Alpina and Vit~ Li£~ Insurance CQmpanles. A2~ount of Loan CUrre~¢[ SWlSS Francs ~.S. ~ll&zs Original value 40,000.00( 9,263.750.Q0 Revaluatlon 12/31/74 and przcr ±n accord with F.A.S.B. No. 8 5.696.250.00 Restated Balance i/i/7~ 40,000,00( 14.960 000.00 Add: Revaluation duxlng 1975 308.000.00 Less: S~nk~ng Fund p~yment - 2/1/76 4,400 00C 1,697,740.0~ optional paymen~ - 2/i/76 4.g00.00( 1.707.810.00 Add: Revaluation dUring [976 899.230.00 Balance January i, 1977 31,200,000 12,761,680.~0 Transactions durimg 1977 Less: Sinking Fund payment 4,400,000 1,80~,480.00 Optional payment 4,400,000 1,752,960.00 Add: Revaluation during 1977 - 2,063,440.00 Balance D~cember 31, 1977 22,400,000 11,271,680.00 Add: Revaluation during 1978 (49,229.60) Less: Repayment of loan February 1978 22,400,000 ii,222,450.40 Balance Decsmbex 31, 1978 0 - _ 0 - ZS0

830-030 - EURODOLLAR LO~G-TERM LOANS DECEMBER 31, 1978 ~%e bal~ice in this account records indebtedness tr~isferred to American Brands Overseas, NV. , as a contribution of capital and redeposited by them in loaner bank and outatandi~ 5~rodollax long-te~m revolving credit loans. Contribution of Capital to American Bra~ds Overseas, N.V.: Maturity Bank Date Murgan Guaranty Trust CO. - Nassau 9/17/79 Eurodolla~ long-term revolvinq credit bank loans: Loan Net Ynterest Rate Amount 3/8 of i% 4,800,000.00 4,800,000.00 EfEective Maturity Interest Bank Date Date Rate Sank Of A~erica - Nassau 12/8 1/8/79 10.9375 i0,000,000.00 Bank or America - Nassau 12/15 1/15/79 10.5625 3,00B,O00.O0 Manufacturers Hanover 12/7 1/8/79 11.375 10,000rO00.O0 Trust Co. - Nassau 12/13 1/15/79 ii.1875 10,000r000.O0 Morgan Guaranty 12/12 1/12/79 11.9375 5,000,000.00 Trust Co. - Nassau 12/J5 1/15/79 10.5625 15,~00,0~0.00 12/18 1/18/79 ii.3125 lO.00OrO00.O0 citibank - Nassau 11/30 1/2/79 ij.937 10,0C0rOO0.00 12/12 1/12/79 11.875 5,000,000.00 Chemical Bank . NaSSaU 12/1 1/2/79 i1.1875 8,000,000.00 chase Manhattan Bank - Nassau 12/1 1/2/79 11.125 7,000,000.00 irving Tr~st Co. - London 12/12 1/12/79 ]3.875 5~000,000.00 12/15 1/15/79 10.56 2,000,000.00 100~0O0r000.0,~ Balance December 31, 1978 i04,800,000.00

830--CJ35 -- D~STIC P~VOLVING C[~]DIT LOANS DECEMBER 3Z 1978 This =ccoun~ xecords Domestic ReVOlVlng Credit Loans with various Dan~s. The~e wer~ no ~ransactlons during the year 1978.

830 045 - 9 5/8% NOTES DUE SEPteMBER ] [979 DECE~ER 31. 197~ Thls account recolds ~ 5/8~ no~es o~ Amc~can Bravado. Inc. ~s~ued ~s of bept~nDer ±, Iq74~ and maturing Septer~ber i, 1979. subject to indenture dated Septe~}~er i, 1974. m~rwe~n [nE Company and Morgan G,*aranty Trust company ~r~ree. Int~r~t is p~vable semlannually on Mar~h i and Septer~ber i at 9 5/8% per annum Balance at December 31. 1978 150.000.000.00

830-05Q - 8 i/8% NOTES DUE MARCH l, 1985 DECEMBER 31, 1978 qhis ~ccount records 8 1/8% notes of Amprican Brands, Inc., issued as 09 March i, 1975. s~D3ec~ to ii%deIlture dated 14arch l* 1975. betwee~ the Company arid CltibankI trustee. Intelest is paymfsle semiannnaliy on Mazch 1 and SPpt~mb~l 1 at 8 1/8% per annum. Balance at December 31 1978 150,000,000.00

850 001 - RgSERVE FOR DEFEP4~ED FEDERAL INCOME TAX DECEMBER 31, 1978 This account records a reserve for possible future federal income taxes applicable to: L - Depreciation deducted for tax purposes in excess of amounts provided on books 2 - Certain other allowable expenses deducted for tax purposes ;~hich will be recorded on books in subsequent periods. SUI~ary of transactions: Balance Reserve applicable to; Januar i, 1978 Subsidiary Dividend 193,000.00 EXcess Depreciation - 0 - Depreciation and related - Deferred 11,748,000.00 Other - deferred 12,637,773.60 Disc. - other 448,000.00 Retained Earning Adj. (23,797,747.85) Provision Balance for Year December 31, 1978 - 0 - 193,000.00 (i,133,000~00) (1,133,000.00) 427,900.00 12,175r900.00 2,636.559.57 15,274,333.17 ( 61,000.00} 387,000.00 - 0 , (23,797,747.85) 1,229,025.75 1,870,459.57 3,099,485.32

850-011 - FEDERAL INC©ME TAX OFFSET TO DEFE~RZD INCENTIVF: COMPENSATIO~ pAYABLE DECEMBER 31, 197~ This ac¢0unt records estimated reduction in future £~deral income taxes to be realized on payments of deferred Incentive Compensati@n, which payments will be deductible for tax p~p0~e~ in yea~ in which paid. Bal~nce at December 31, 1978: Mr. Robert K. Heimann, Chairman a~d Pregident Incentive Compensation Available for Allotment Total 1978 1979 After 1979 467,783.00 467,783.00 ~Group No,discretionary Discretio~&ry Prio~ Vear's def@rred all participants Overprovision and unallocated 623,710.Q0 62~,710.00 1,299,902.00 1,299,902.0G 429,323.92 429,323.92 214,605.00 214,605.00 3,035,323.92 1,091,493.00 1,514;507.00 429,323.92 Federal I~come Tam Offset to: Deferred (After 1979) Discretionary Adjustment to Bu Made in 1979 Overprovision and unallocated Balance December 31, 1978 @ 50% 214,634.81 @ 52% 675,949.04 ii0,020.56 1,000,604.41

850-020 - DEFER~EDI~ DE~L~31, 1978 ~hls aCCO&L~E zepresents the re~tal income on fa~la~dt real estate ~/~d i~s~n~e. There were no tran~a~ti~%s in this aGcount du~ing 1978.

850-021 - DEFERRED INTEREST INCOME DECEMBZR 31, 1978 The balance i~ thin account represents interest income applicable to future ye~r~ on deferred monies receivable on Company transactions. Balance December Jl, 1978 Amerlc~n Brands ©v~rseas 8% Debemtures 30,142~50 ~88

850-031 - ~SERVEFOR DE~ERRED FOREIGN EXCHANGE ADJUSTMENTS DECEMBER 31 1978 ~e credlt balance of thls account ~cpresen~s add.tlonal lona-term liabili~les on loans d~e to uF~;ard revaluanlons of foreign curzenc¥ T~er~ wer~ no tz~nsac~ons du~ing 1978.

900-001 C~ITAL STOCK - CO~ION - AUTHORIZED 900~002 - CAPITAL STOCK COMMON UNISSUED DECEMBER 31, 1~78 Credit balance of Account No. "900-001 - Capital stock con~on a~tho~ized" records par value of authorized col~non stock. The debit balance of Aec0~t NO. "900-0~2 r capital stock common unissued" records par value of unissued co[~on stock. Net of these accounts equals par value of imsued common stock. Stock certificates are for $6.25 and $50. ~ar value per shale. Each share of $50. par val~e is convertible into eight shares of $6.25 par value common stock. Followi~q sets forth details o~ a~thorized, unissued and issued con~on stock at December 31, 1978: ACcount NO. "900-001 - Capital stock - ceil~i, on authorized" Account NO. "900-002 - Capital stock common unissued" Issued capital stock - Common December 31, 1978 Shares Par Value 60,000,000 375,000,000~00 31,303,747 195,648,418.75 28,696,253 179,351,581.25 Issued and Outstanding at December 31, 1978 Number of Shares P~ Value Total 12 50.00 600.00 28,~96,157 6.25 179,350,981.25 NUmber of Shares Par Value Total 96 6,25 600.00 28,696,157 6.25 179,350,981.25 28,969,253 179,351,581.25 5"90

910-001 pP~FEP3~D STOCK DECEMBER 31, 1978 The balance of this account records stated value of issued preferred stock. Balance January i, 1978 Less: Conversion of 132,911 preferred shares to common stock Balance Decembez 31~ 1978 33,326,100.00 13,291,ICU~00 20,035,000.C0 Note: 15,000~000 shares of convertible pseferred stock without stated value were authorized at the stockholders meeting Of May 7. J969. On December 14, 1970~ 750,C00 shares were issued with a stated value of ~100.O0 iJer share for the acquisition of Master Lock Company.

910 002 $1.70 CONVERTIBLE P~FERRED STOCK DKCBMBER 31, 197~ The balance of this &cco~nt records stated value of issued $1+70 preferred stock. Shares Amount Contribution to capital of American Acushnet Company the value of 1,865,499 shares of $1.70 convertible preferred stock at a stated Value of $20 per share 639,865 12~797~300.00 Balance December 31, 1978 639.~65 12,797,300.00

929-000 - PAID-IN CAPITAL DECEMBZK 31, 1978 Prior to merger of ~e~ican Cigarette and cigar Company into Company as of Dec~,ber 31, 1953, this account was titled "Excess of Net Proceeds from Sale of Common Stock over Par Value" and rspresented net proceeds received from sale of CO,On stock less p~r value of shares sold. At December 31, 1953, this account was credited with excess of ~larket vmlue over par value of Preferred and Con~1orl stocks issued in connection with merger and name ohailged to "Excess of Net Proceeds from Capital Stock Issued over Par Value." Current n~e was assigned in 1966. Balance January 1 ~xercise of Stock Option Plan: N~rnber of Shares Average ~ost of Shares (Incl. Transfer Tax) Average Cost of Shares at Option Price Reductio~ in Paid-ln Capital 1977 197~ 47,431,426.30 48p346,508.58 22,025 70,175 891,174.30 2,905,799.65 880,321.90 2,649,403.13 ( 10.852.40) ( 256,396.52) Conversion of American Tobacco International 5 1/4% Convertible Guaranteed Debentures for American Brands, Inc., common Sh~res: N~ber of Shares Tnvestment in A.T.I.C. Average C0st of Shares Converted Contribution to Paid-iN Capital 81,837 48~439 2,945,~72.79 1.743,470.67 2,555,564.92 1,512~628.88 390,i07.87 230,841.79 Conversion of $6.00 Convertible ~referred stock for ~merican Brands, ~nc.~ Common Shares: NUmber of Shares Investment in Master Lock Company Av~rag~ COSt of Sh&res Converted Contribution to Paid-in Capital 295,344 5,434,605.43 13,290,441.18 4,898,341.12 ii,979,031.55 536.264.31 1,311,409.63 Conversion of $1.70 Convertible Preferred Stock for American Brands. Inc., Common Shares: Ntnnber of Shares InVestment in Acushnet Company Average Cost of Shares Converted Contribution to Paid-in Capital Val~e of Fractional Share in Transfer of Cuba~ TObacCO Co, Stock to ~erlcan Brands, Inc. New York State Transfer Tax O~ 13,304 Shares of $1.70 Preferred Stock Keacquired Credit Balance at December 31, 1978 - 0 - 387,246 - O - 16~144,540,00 0 16,289r585.G8 / 145,045.68) - 0- - 0- (437.50) - 0 - 48,346,508.58 49,497,317.80

930-001 - ~TAI~D EARNINGS DECE~BI~ 31, 1978 ~lls ~ccount records a~ount of ea~nlngs accv2m/lated on pmrent company books. A Complete SU~Xy analysis o£ retained ~arnings 1890 to 1975 is included in the 1975 suppl~mentary fiscal blndor° A complete analysis from 1890 to dat~ will be included in 1980 supplemen- tary fiscal binder and a~ end of each five-year ~eriod thereafter. Summazy an~lysls of transactions: credit Balance at Jnnuary I, 1978 Add: ilet Income 732,946,469.81 169,455~516.51 Less: Cash Dividends: Co~mon StOCk ATM 3/1/78 22tS07,85G.23 6/1/78 22,961,444.21 9/I/78 22,949,841.32 12/1/78 26,495~224.00 95,214,365.76 $6 COnvertible Prefexred StOCk Amount 3/1/78 481,402.50 6/1/78 360,397.50 9/1/78 319,147.50 12/I/78 308,925.00 1,46g,872.50 $1.70 Conveztible preferred Stock ~uount 3/i/78 624,319.90 6/i/78 619,662.33 9/1/78 610,082.40 12/1/78 351,291o40 2,205r356.03 98,889,59~°29 Exces~ of $20.00 stated value for $1.70 Convertible preferred Shock ~qu/xed 75,792°50 Credit Balar~e at Decentbe~ 31r 1978 803,436,599°53 2.94

930-300 - DI%,IDENDS PAZD ON CO,%~ON STOCK DECEMBER 31, 1978 Debit balance of this account records dividends declared durii%g year oR o~tsta~ding common stock, exclusive of treasury stock. A~alysis of transactions: Dividend Date Stockholders Dividend Net Shares on Each Declared of Recor~ Date Paid Number Outstandi~ Sha~e ~ount Paid January 31 February 8 March 1 290 26,066,027 .875 22,807,856.23 April 25 May i0 June 1 291 26,241,556 .875 22,961,444.21 July 25 August i0 Se!gt~nber 1 292 26,228,296 .875 22,949,841.32 October 31 November i0 December 1 2~3 26,~95~224 1.O0 26,495,224.00 Balanc~ traDsf~rred to ACcount NO. "930-001 ~ Retai~d eazni~gs" at December 31, 1978 95,214,365.76

930 301 - DIVIDENDS PAID ©~ $6 CONVERTIBLE PREFERRED STOCK DECEMBER 31, 1978 Debit balance of this account records dividends declared during year on outstanding $6 convertible preferred stock. Analysis of transactioDs: Dividend Date Stockholders Dividend Net Shares on Each Declared of Record Date Paid Numb0r . 0utstandiIl~ Share A~ount paid January 31 February 8 March 1 29 320,935 1.50 481,402.50 April 25 May 10 Jllne i 3Q 240,265 I.SQ 360,397.50 July 25 August l0 $~pt~mber i 31 212,765 ].50 319,147.50 October 31 November 10 Dec~iber 1 32 205,950 1.50 308,925.00 BalaDce £ransferred to AcCount No. "930-001 Retained ear~ings" at December 31, 1978 1,469,872.50

930-302 - DIVIDENDS PAID ON ~1.70 CONVERTIBLE pp~F%P~D STOCK DECeMBeR 31~ 1978 = Debit balance of this account records dividends declared during year on outstanding ~1.70 convertible preferred stock. Analysis of transactions: Dividend Date Stockholders Dividend Net Shares on ~ach Declared of Ke¢ord Date Paid N~ber Outstandi~q Sha~e A~lount paid January 31 February 8 March 1 7 1,468~9~8 April 25 May i0 June 1 8 1,458,029 July 25 August i0 September 1 9 1,435,465 October 31 Nov~nber 1O December 1 l0 826,568 Balance transferred to Account NO. "930-301 - Retained earnings'* at December 31, 1978 .425 624,519.90 .425 619,662.33 .425 610,082.40 .425 351,291.40 2,205,356.03

940-000 . TKEASUR¥ STOCK DECEMBER 31, 1978 ....... = This a~count reco:ds net val~ of this Company's Capital Stock reacquired and held by it. sum~ar~ analysis of transactions; Balanca January i, 1978 (i) i~7~ Tr~nsactio~s~ Trsasury stock ~urchased Treasury stock reissued: Stock Option Plan St~ck issued upo~ ~onver~ion Of American Tol:~cco International Corporation 5 1/4% debentures due 1988 $6.00 ConVertible p~eferr~t stock Sl.70 Convertible preferred stock Balans~ DeCe~er ~i, 1978 CommoD ~tock Shares 2,669r934 294,050 70,175) $6.25 Net par Value BOok value ~6,687,087.50 I07,0B2,611.88 1,837,812.S0 14,765,903.75 438,593.75) ( 2,901,71B.38) 48,439) 295,344} 387,426) $02,743.75) 1,845,900.00) 2,421~412.50) ( 1,512,628.88) (11,979,031.54) (16,289,585.68) 2,162,60Q ~3,516,250.0~ 8%~65,551.15 (~) 89,165,551.15 (1) A - includes 146~092 sharesat Cos£ of $4,562r087.93 reserved fer convers±o~ of 5 1/4% debentures due A~gust l, 1988, issiled by American Tobacco ~nternatiu~al Corporation B - Includes 445,272 sha~es at cost of $18,060,049.76 res6~ved for co~version of 200,350 shares Of $6.00 convertible preferred stock

10.050 - G~NERAL AND ADMIniSTRaTIVE 1978 This ac~/~t reuo~ds co1~ozate a~ali~istrative costs and New York Office Operating Gosts excluding sales, Marketing, Adveztislng, E~po~ Sales, Manufacture, Cigar ~eau~ive a~d Employee B~efit~ De,argents. S~y analysis of transactionsl Salaries General 9,553 ,I14o6S OveZt/me 36 877.99 9,589,992.64 P~ Roll Costs Pay ~oll Taxes 567,939.54 I~o~k~en~s Compen~atlon Insurance 6G,369.75 Retirement Plan Contribution 2,197,095°75 GrOUp Life Insurance ~r~£ume 224s224,58 GrO~ Life ~nsurance premi~ . Supplemental 9,977.25 Comprehensive Medical Expense Insurance p~emlums , personal 208,556.68 Comprehensive Me~/Cal Ex@ense Ins~ra~ce Premiums - Dependent 31,366.10 Msdlcal Expense ~nsurance Pr~m/ums,d~pendent {40.00} 3,289,4~9.65 C~.er ~pl~ee ~osts Travel Expense 138,908.56 Carfare, Taxi ~n~ Meals 18,948.65 Seventh Floor D$~ing RC~mS 16~,811.34 ~%~talnment Expense 7,608.14 conventions and Meetings 14,591.51 Semi~s an~ C~any-~o~r~ E~ti~n~l courses 25,956.30 T~ti~n Refund plan 14,575.40 Business Gifts 23~.22 ~mployees' ~esta~rant Subsidy i02,9~1.78 Eaployee ~lCcation Expense _ 3,751.00 490,305.90 General D~eS 52r848~17 SUbS c~ipt ions 4~, 687.83 Rations and Gratis G~ods 66,589.89 Publications 22,866.45 Corporate Anno~cmuent s 1B,~99.60 203,7~I. 94 Indirect Materials and S~pplieg Auto,bile Operating Exp~nse 5,521.77 Medicine and Medical Supglie~ 12,416.33 Sto~k c~f£eates used 13,638.33 S~a~£0~ery, Pzin%in~ and Office Su~pl~es 353,6~7.16 Aud~ovi~ua/ ~e~se ~547.21 ~8,790.~0 399,560.00 (continued)

I0-050 - GENERAL ~ND ADMINISTRATIVE 1978 Legal Legal Reta~ers, SpeCial Fees and ~psnses Chadbo~e, Parks, Whlteside and wolff Pmtent an~ Trademark Search Fees ~nd E~enses PeRnle, ]~onds, Morton, Tayl~T an~ Adages ~ers. ~oqe a~d Hills Ladas, parzy, V0n Gehr, C~id~i~ And Descha~ps COnsult~n~t Fees and Expenses Coz~ra%e ~ees a~d Expenses Joseph V. Baker Earle C. Cle~ents Co~porat~ T~st ~p~%y Boone G~s John Behr Earl Nawsum and Cmmpany David ScOtt United states Corporate CO. George H. Woe~ard Othez ~ses Legal Fees - LOCal Co%n%gel AdamS, ~leQmerer. Hogar, ~nah m~ Fours An~ers0~ and RUSSell Pillsbury Madisc~1 amd Sut~ Day, Be.T~y add Howard Bethe~ Bob~son ~d Moore Bryant. Bzya~t, CEill, M~ll & ~e~ B~is£, M~ore. S~y~%e a~d McGee M2~er, C~ntf~eldt PaddOCk and StUne Rhodes, simon an~ ~ader Wolf Blo~k Shore, ~Olls & Cohe~ Lawler, Felix and i~ll M~C~thy add McCarThy, To~nto, C~da Maye. Valentine, Davenpor~ ~d~l MOO~ O'Hama, Rubemg, CetZulo and Osborne Wa~ner a~ smith Stites, MmElwain and F~wler ~ley a~ Lard~er ~gan~rf .~d ~ioe Car t~r cum~oy E~kext ~ 8e~ns Kaykastro and Ch~ne~ Ca~lln and Drys/~l~ Slauqhlm~, May, I~d~ SSCB Edw~ds ~gell ShOOk, H~Tdy, Bea~on 420,000.00 162~712.41 ~6603.12 16,458.~I 61000.0O 19t999.92 265.00 28~734,24 16~458.33 3~f068.61 7*370.00 8tB98.98 50,332.18 I14~89S.70 872.48 8,180.33 4~400.00 13r666.03 ~75.00 42~200.00 6.37 2~326.04 98B.57 6~w314.66 3r384.20 3F933.72 108o16 91o32 372.53 7r529.33 1,567.15 361222o92 3,1~7.21 218.gi 5,729~22 158.26 Pag~ 2,094,436.00 589,315.~3 2~586.04 193,706,55 363,974.2~ (Continued)

1978 (continued) Legal P~ovisions . Distri~tlon to G. & A. Legal Fees - Special Projects Legal Fees RegUlatory proceedings Misoella~eous Fee~ and ~pens~s Legal Fees, Industry computer Legal prov~siQns - Distrlbutlons - Other Total Legal office S_paN and E q~i~n~ o~fice Cleanlnq Service Building Ma/nten~nc8 SerVlce window Cleanlng Sezv~e Exterminating $ e~vice M~sak Steam Lands~a9~ Service Buildlng Security Service Refuse Pemc~Yal Landlord's Ch~rqes for Services Office Furniture a~d Equlpsent Maintenance Gas and Eleatrlcity Water P0sta~e Tele~c~m~inlcati0n s Insurance Taxe~ Taxes - Real Estate T~es - pers0~a~ property Taxe~ - Sales and Use TaXes ~ Occupancy Licenses - Other De~eclation a~d A~ortIza~i~ Depreciation - Land Xmprovements Deprec~atlon - B~lld~ngs ~nd B~il~ing Fixtures Depreciation - AutomObile Equipment Depreciation ~ Offi~~ Furtive and Equipment A~ortlzation - Leasshold ~p~en~s Amortization ~ LeasehOld E~Se Realty Co~nissions . Amortization ~ent and Related Expense Rsnt ~ B~/idlngs Bent and Related Expense . Oth~r Rent - 0ffi0e Equipment ~e~t . Data Pzocessing ~q~ipm~nt ~tockholder and Dividend Expense EXpenses in Connection with Dividends Stockholde~ Meetin~ an~ Reports New StoCkholders ~y EXpenses C~on Stock Expenses 163,600.00) 132,880.42 73,992.00 18,717.50) 306,565.14 23,200.00) 733,279.08 85,113.07 16,162.87 3,858.46 500.00 34B.39 12,4~.59 78,179.61 1,036.00 73,806.01 66,427.79 344,883.57 2,784.45 195,909.87 11,249.00 673.17 76,469,94 172,181.31 32,189.00 2,099.57 30,038.34 1,019.28 177,394.79 392,361.39 8,207.15 2,853.~0 3,175,590.48 35,484.06 49,15q.B9 ~909.80 245,271.95 493,991.65 15,933°68 224,317.05 2,490.48 Page 3 3t575,938.38 1,614,887.76 561,214.44 407,499.20 292,76~.42 613,973.92 4,093,142.23 9S2,004.81 (C~ntlnued)

10-050 - GEnERaL AND ADMIniSTRATiVE 1978 COntEibution ~J1d ReseaCCch Fo~dation ~a~ ~ns~Itute ~ ~i&%~6 koti~Itie~ Council fur Tobacco In~ti~ut~ Other I~dustrial Associations Conl:i'Lbutl~s Nis~ell~eous M~dlcal Laboratory Fees Collection Fees and E~pen~es Crodit S ezvice B~nk Se~i~e Ch~es M~.~senqmE Se~,t~e Emgl~y~ A~en~] ~n~ Becru~t~ F~e~ Temporary I~elp ¥~cellaneous T~tal Charges Distribution to Subsidiaries and O~her A~OUnts ~olden Belt ~fact~i~g Cc~y 511Dsh~e Biscuits, In~. d~ss B. B~ Distilii~ Co. D~fy-Mo~t Company, In~. American T~ba~o International Corp. Swlngline ~. vlsibl~ Re~ords, Inc. Master LOCk C~any ~he A~rew Jer~ens Compsny Wil~n Jones Company ~ushn~ C~y Puerto ~Ic~n Bzanch 0ffioe S~&em Medical Serv~e ~0d Sezviae Office Spa~e - ~hmond Rent~l ~ncome Seventh ~I~ Dining P~ms 0~Tt ~a~h~ ~lJrlC~ Buildin~ Se~i~es printing 00mput ez services Net ~ransfe~red ~o A~unt No. "10-099 - ~et income" at Dec~er 31, 1978 Page 4 819,676.30 23,833.34 201,772.05 1"851,281.74 3,943.29 16,589.54 15,689.33 956.77 19,937.21 10,738.43 117,809.49 246,404.94 28 i01.04S.77 17,940.53 715,580.12 12,204,06 37,983.99 27,000.00 13,404.00 9,600.00 6"860.~0 9,204.00 8,496.00 7,248.00 7,498.07 132,1~9.00 4,454.00 12,941.00 65,~50.20 578,88~.77 220,994.42 89,661.00 53,575.9~ 37,300.00 140,182.00 i_35,765.00 2,344,184.02 25,756,856.75

I{]--051 -- E~LOyEE BENEFITS ~I~I~TRATIO~ 1978 This accost records cos~ of af~inistering profit-ShaZing ~nd ~tirement Beneflt Plans. S~a~ Anal~sls Of Transa=tions: Sal~les : C~neral ~er time Pay ROll Taxes Retirement Plan - Contributions Premium to the tension Gua~an~ Coz~2~ration Group Lif~ Insurance premlums Group Life Insumance premi~s , Supplemental Comgrehensive Medical E~pense I~sUranoe premiums - persona1 ~ehensiv~ Medi~1 ~xpens~ l~s~anQe P~e~%i~s . Dependent Travel Expens~ Carfare, Taxi and Meals Ent ertalnment Exp~nse DUes SUbscript ions seminars and COmpany-Sponsored Educational Courses Publi=at ions CO r~r at e Anno~ement s Sta%~onery_ ~ Printing ~n~ Office Sup~lle~ Auditing T~st~e ' S Fees Cons~l~ants~ Fees a~d ~enses A~tu~r ~ al F~es Messen~e~ Service Office F~znituz~ and Equipmen~ Ma~tenan~ Miscell~eous ~ees and Expenses Te leco~m~ni~ at ~ns Posta~ Stockholders Me~ting ~/~ Reports Mis~ ellan~ous Insurance Depreciation - office Furniture and Equipment ~ent - Office ~ui~t Tem~or azy Help ~ stribu~ion of: Office Spa~e Medical S~zVice Food S eavlce Legal Total Charges Deduct: D~strlbu~ion to subsldi~lesl ~ide~ Belt ~factur~/~g C~a~y James B. Beam Distilling CO. Total Credits Bal~ce Trar~sferred to Ac~o~t No. "i0-099 - Net inc~e" at December 31, 1978 239,194.96 3,327.7~ 242,522.73 15,189.82 55,335.64 32,706.40 5,866.39 62,36 5t685,00 366.21 263.35 490.58 19.69 730.00 5,714.53 540.00 4.95 55.10 39,351.19 35,800.00 282,810.89 127,073.57 26,040.00 443.9S 742.83 37,320.77 7,999.56 6,134.46 4,889.84 142.40 167.02 2,590.52 1,051.31 1,141.42 67,052.00 2,882.00 8,124.00 74,900.00 ~210.48 28,300.00 16,000,00 44,300.00 1,047,910.48

10-052 INCENTIVE COMPENSATION AVAILABLE FOR ALLO%MENT - CUp~/:NT YEAR Computatio~ of ~/~ounts of Incen+iv~ Compensation for the Year 1978 under A~tici~ Xll og the By L~ og the Co~pan~] (In Thousands) Income, b~ore taxes on income, sho,,~ by the consol~dated statelflent of income for the year 1978 itlcluded in the Annual l~pO~t to stockholders Add~ ~ount provided ffor incentive ¢Ompensahion under A~icle XII, ~educted in detezTmination of income, ~efore taxes on inc~ Dividends: G~Iden Belt Manufacturing C0m~any Deduct: Overprovisions ~ prior year's incentive compensation Golden Belt Manilfacturing Company Inc0m~, before Taxes on income applicable t~ minority interest in Gallaher Limit~: Subsidiaries $ 422,470 $2,606 250 2,856 425,32~ $ 29 370 5 ,597 419,72@ Deduct: Reversal Of applicable consoli4ation entries~ Decrease durinq 1977 in profit Of Golden Belt MaNufacturi~q Company in inventories of The Americ~n Tobacco Company, Sumshine siscuits, etc. $ 34 Gains in excess of loss from ~ales or other dispositions of land, buildings, goodwill~ trademarks a~d investments in subsidiaries or o~he~ companies ~8 3,922 Net income before taxee, as ~eflned in section 6 {a) {Base for c~pntlng incentive compensation) $ ~15,~ Computatio~ Of incentive compensation: ~[ount (In Dollars) Aggregate a~nt ~aii~bl~ [or ~llot~ent~ Basis {$415,806,880} @ 5/8% $2,598,793 Unallo~ated to be reversed in 1979 207,398 Allocation (In Dollars) $2~391,3D5 Corporate $i,329~783 A~lerica~ Tobacco 1,204~010 America~ Cigar ~5,000 $2,598793 304

10-052 - INCENTIVE COMpENSATIO~ 1978 This account records aggregate amount available for allotment as incentive cQmpensation to ch~ixman and president and Management Group p~r~uant to Article XII of By Law~ as amended. Adjus~Dnts ~f p~ior year's in~entive compensation are included in current year's account. Details foll~w: 50~ P~y~ble by 50% Deferred to Febr~ar~ December 1979 Total per- per met- cent Amount cent ~mount cent ~ount Allocatio~ of incentive compensatlon for 1978 NX. P~bert K. Heimann, Chairman and President 9 233,891.50 9 233,891.50 18 467,783.00 467,783.00 Management Group Nondi~cretionary 12 311,855.00 12 311,855.00 24 623,710,00 Discretionary = available for allotmsnt 29 753,650,00 29 753,65Q~00 58 1.507~2~I].00 Unallocated ( 207,398.00) 1,29~,902.00 Aggregate aright available for allo~en~ Total ~nalloca~d Total allocated <}verprovision ~nalloca~d to b~ reversed in 1979 5O 1,299,396.50 50 1,299,396.5~ I00 2,598;793.00 103,699.00 i03,699.0Q ( 207,398.00~ 1,195,697.50 1,195,697.50 2,391,395.00 ZI4~605~Q 2,606,000.00 29,613.00 2,576,387.O0 available foz allohment Less: Adjustment o£ prior year's ovsrprovision Ad~us~e~t of prior ~r's ~nallocate~ Balanc~ transferred to Account No. "10-099 . ~et i~a,e" at D~cen~sr 31, 1978 18,006.00 11,607.00

10-053 - PROFIT-$IIARING pLAN EMPLOYER'S CONTRIBUTION 1¸978 Thi~ account records Company's contribution to ProFit Sharino ~lan, approved by stockholders at ann~al meetingr April 6, 1960t an~ Certified annually by i~d~pend~nt c~rtified public accountants* Pzofih-Sharing Contribution - ~ctual Cigarette Cigar Corporate Adjustment: (To be made in ]9~9) Provide~ 1978 A~tual 1978 Provided 1978 Prior years' Ovezprovision Balance Transferred to ACCount NO. "10 099 - N~t incomer' at Decembe~ 31, 1978 2,956,863.48 3~6,529.93 ~43,094.76 3,446,488.!¸7 3,496.000.00 3,446.488.Z7 49,511.83 3,496,000.00 ( 43,738.40) 3,452,261.60

10,053 - pROFIT-SH~R~NG pLAN - EMPLOYER'S CO~T~TBUTIO~ 1978 ]onouz~nlon of 1978 company COnt, lbutlon to F£oelt-$h~rln5 pl~n CIn Tha~sands Inc~m~ ~f~re taxe~ on l~com~ and m±~orlty inte~s~ ~hown by the con~olidated ~tatement of l~come ~0r ~he vear 1978 included in th~ Annual Repor~ ~O stockholders Ado Amounts provlded re. Profit Sharing Plan d~ducted ~r dOtermlna~on of inc~e before ~xPs on in~ome D~Vldends A¢~Sh~Pt 4,5~5 ~olden Belt 5,062 Acm~ V~slble 655 Zallaher Limited 40,148 ~ster Lo~k 9,063 Andrew Jeroen~ 3,200 Zwln~i~e 3,~5 B~an 7.576 D~f[y Mort !~ Uranklln Llf~ 6.294 D~duct ~bs~d~aly income, bsfore taMe~ on income and ~inorlty i~terest: Gallaher Limited {net) i01,550 C~id~n Bali ManufartUrlng Company 5,19~ Snnshi~e BiSrUltS, TIIC. 16,387 James B. Beam Di~tilling CO. 25,471 The ~'r~nkli~ Lifs Insurance Company 21,234 Acushnet Company 13,508 D~ffy-Mo~t Co~pany, Inc. 2,5~7 Arme Vls~ble Records, In~. 4,974 swingline Inc. 14,054 Master Lock Company 23,b~4 ~h~ Andrew Jerg~s Company 7,530 W~l~on JOnes Company 18,2{6 ovnrprovlS±On: Pro~It-Sharlng ~lan ~rioF yeaF co~t Reversal o£ applicable consolidatlon ent~es: (i~c~ease) Decreasm during 1978 in pzotit of: ~olden Bslt Man~facturlng Company in inv~ntezles OF The A~elican TObarco COmpany, Su~sh±n~ ~isc~tts~ etc. Gai~, in ~XCe~S of %os~, [rom ~al~s or other dispo~ tions o[ land, bul]dings, ~oodwi]l~ brands, ?r~dem~zks and invest@ents in s~bs~di~rie~ or otheF companies Net income be[ore ta~s, as defined in Article • (Ill of the Pl~n, for Pla~ ~ear i~78 (Continued) Page 422.470 3.496 93*792 97,288 252,3]¸3 44 34 1,142 253,533 266,225 3(J7

10-U53 - pROFIT-SHARING PL%N E~I~LOYER'S CONTRIHUTION 197~ P~ofi~-Sharing contrlb*itlOn for Plan Yeaz 197~ In Thousands Baszs i00.000 000.OO ~ 3 1/2% 50,000 000.00 I 5% I15,22S.Q00.00 ~ 6% Less: Forfeitures [ESt. Mat PlOfln Sharin= AmPrlc~n Brands Tnc Note: Prov±ded 3.49~ ~00.0~ Actual 3.446 488.17 49.511.83 In Dollars Paae 3 Amount 3,500, ]0.00 1.500. )0.00 ~.973 500.00 12.972 500.0~ 4~_2 198.~4 12.4~i 301.56 3~JS

10-055 ~ pROVISION ~R ~UL ACCOUNTS ~R~ - CUS~V~ DEC:r~IBER 31, 197B --, = ........ This accost records provision for estimated losses on customers' accounts receivable. SUmmary analysis of transactions: Provision for estimated losses Debit balance transferred to Account ~0, ,,10-099 ~ ~e~ income" at December 31, 1978 179 329.¸ 8~

10-057 - ~'~]~ENSES DE%'ELOPING NEW ~'R0~TS 19",'8 Su~ry a~alye~s of transa~tlons: TL~ - TA~TG~ low tar menthol TA~ long llgh~o P~T D~blt hal~e tEansf~re5 ~ ACaOUn~ NO. "10-099 - ~et in~me:' a~ December 31, 1978 238,18) 15.31) 43,053,50

10-058 - TRANSFER E~pI:~SE, STOCKS AND BONDS 1978 This account record~ costs in connecti0n with securities J.ss~ed or guaranteeo by this Company: Transfer agent services ~aying agent services Trustee services Registrar se~ic~s Recording stock transfers RedemptloN services Income ~rom exchang~ fees Brokerage commission Advertising expenses Miscell~neou~ S~ary of transactions: Co--on Stock 9 5/8% Notes due 1979 8 1/8% NOteS due 1985 25 year 4 5/8% s~b~rdinated debentures due 7/i/90 ~erican Tobacco International 5 i/4~ debentures due 1988 25 year 5 7/8% sinking fund debentures due 7/1/92 A.B.O, - 1981 debentures Balance trans~ezred to Account NO. "10-099 - Net income" at Dec~nb~r 31, 1978 62,177.50 291778.72 25,131.31 5,10!.87 i,i17.94 8,360.33 11,534,76 143,2¢2.43

L0.068 - GAIN OR LOSS ON FOPJ~IGN EXCHANGE DECEMBER 31, 197~ Thls account records nsK galn or loss on foreign zransactaons dup to exchange ra~e fluc~atiQn and effect of forward contrac~ p~rc~ases in accordance with F,A.S.B. No. 8. Galn ox (LOSSl 18 Million Pound Sterling Loan Fo~ard Exchange Contract~ 40 Millio~ Swiss Franc Loan: CUrrent Portlon ForWard Exchange Co~tract Long-TezmPortion Forward Exchange Contract 15 Million Pond Sterling LoaT Forward Exchange Contrac£~ Balance transferred to Account NO. "10-099 - Net incomQ" at December 31, 1978 1.782 000.00 71,600.00 (1,037,120.00) 1,086.349.60 - 0 - (1,073,00~0Q) 829,829~0

i0~069 - pREMIUM OK DISCOUNT ON LONG-TERM DEBT 1978 This account records differeDce between par value a~d actual cost of the followiilg debentures p~xchased or called for redemption and al~o ~ecords c}~,arge to this account for unamortized discount on debentures purchased or called for redemption: 25 year 4 5/8% Subordinated Debentures ~turing July i, 1990 25 Year 5 7/8% S&r~king Fur~ Debentures M~turing July i, 1992 A debit balance represents excess On p%emlumpaid over discount earned on debentures purchased or called and is a charge to income~ A credit balance represents excess of discount earned on debentures pur0based over premi~mpaid on debentures purchased or called ar~is a credit to income. S~mary analysis of transact&ons: Debentnres Purchased 25 Year 4 5/8% Debentures 25 Year 5 7/8% Debentures Due 7/1/90 Due 7/1/92 Total 14onth par Value Discount Par Val~e Disco~]t Discount January - Q - ~ 0 - _ 0 ~ ~ 0 February O ~ - 0 - - 0 ~ - 0 March - 0 - _ 0 - 0 - 0 April 2,000.00 500.00 - 0 - - 0 May 12,000.00 3,000.00 ~ 0 - - 0 - June 59;000.00 13,053.75 1,400,000.00 247,996.00 July 25,000,00 6,625.00 - 0 - O August 12,000.00 2,gl0.OO 39,000.00 7,312.50 Septembe~ 24,000.00 5,880.00 63,000.00 11,]82.50 October 383,000.00 77,589.49 46,000.00 8,358.75 NOvember 14,000. 00 3,613.00 ll2,000.O0 23.305.00 December 29,500. O0 7,621 • 25 33,000. O0 6,765.00 560,500.00 120,792.49 1,693,Q00.00 304,919.75 425.712.24 Debentures Called for Redemption 25 Year 4 5/8% Debentures 25 Year 5 7/8% Debentures Due 7/1/90 Due 7/1/92 Per Value Premiu~ Par Value Premium - 0- - 0 - - 0- 0 Unamortized Discount on Dobentures Purchased Or Called ~or Redemption 25 Year 4 5/8% Debentures 25 Year 5 7/8% Debentures Due 7/1/90 Due 7/1/92 Par Value Discount Par V~lue Discount - 0 - 0 L 1,693,000.O0 ( 17,692.74) Discount on open market purchase of 240 shares of Americe~ Brands O%'erseas,N~V.,1981 debentures Credit balance transferred to Account No. "10-099 ~ Net income" at December 31, 1978 (17,692.74) 600.00 408,619.50

1(]-070 - DIVIDENDS AND I~I'ERI~ST ~I4CO~[E FROM SUBSIDIARIES 1978 ~is account ~co.ds income from interest eaTn~d on notes mor~qaqes ~nd 1oan~ and dividend~ Irom subsidiaries. summary analysis of tr~sac~ons: DlVid~i~d Income: ACUShn~t Compa~-- American Tobacco Internati0n~l Corpora~lon S~nshine Biscuits. Inc. Anle±ican Br~ndsExpor~, Inc. Swlngl~n~ Inc. The Andrew J~rgen~ Company Golden Belt Man~facturinq Company Acme Vlsibl~ Records. Inc. Wilson Jones Comuany American Brands Ov~rsea~ N.V. M~t~r LoC~ Company J~mes 8. B~JE Distilling CO. Duffv-Mott Company, I~C. Interest on O~enI~an Accounts: American Brands Overseas N.V. ~cl&e Visibl~ Records, InC Dufty-Mott Company, Inc. Swl~gl±ne Inc. James ~. B~am Distilling Co. Balance tla~sfer~ed to A~count No. '110-099 - Net ±nccme" at D~cember 31, 1978 4.56~ ]00.00 31.70C 30.00 6,80C ]0.00 950, ]0.00 3,200, ]~.00 5.061 ~78.54 655 000.00 ~,428,000.00 ]50,000.00 9.063,000.00 7.576.000.0~ 2~sO00.00 36,592.44 210,655.57 623,436.07 161,580.~4 209~235.41 ]0.149378.5Z 1,241.500.03 81,391,178.57

[0 071 - DIVIDENDS A~D INTEREST INCOME FROM OTHER THAN SUBSIDIARIES 1978 Thl~ account records income from dividends received on stocks owned by Company and interest earned ~ hoops bonds, mor~qages a~d loans of other than ~bsidiaries. summary analysis ot urans~e~&ons: ~nterest Income: Face Value or Amount Maturlt~ ~ Period Rate [ntera~[ BO,d_S : U.S. ~reasury Bills March 31. 1971 40.000,00 1978 6 3/4% 675.00 U.S. Treasury Bills March 31 1980 40 000.00 1978 I/2% 2 292.%G ~e Stock: City Of New Yor} Oct. i [980 [ 000.00 197E 4% 40.00 D. & W. Realty CO.. Inc, Sept. 1980 100.000,00 [978 8% 2.347.12 Paokaglng Servzce Corp. Of Kentucky Sept. 3, [980 140 000.00 [97S 8 i/2% 9,391.20 R. F. ~emme and W. A. M~ivaney March ] L985 120,000.00 L978 10% [i 556.21 Othem: [ntezesz o~ assag~ent Of IS0 East 42rid Street to Mobil Oil Company Interest on surplus allowance IS. Danz&g & Co.) Dlvid~nd - TAe Frankl±r Life ~nsuranc~ Company ]o~issi~n on export ColgmLian TObacco Co. Balan~o transferred to ACCQUnt No, 10-099 Net Income a~ Decemb~ 31 1978 !5.264.94 206.45 6,294.340.16 145.80 6,340,26G.48

10-072 - ISSUANCE AND DISTRIBUTION EX2ENSES ON DEBT 1978 This account records current year's expenses applicable to corporate morxowlngs. summary analysis of transactlensz commltment Fees Domestic Credit Facllity Domestlc Revolvlng Credit Facillty Domestlc Revolving credit Eurodollar Revolving Credit Co~nlsslon on Co~m~cial Pa~er Discount on ForWard Sale Amortization of Issuance and Distribution Expenses on Lonq-Term Debt Prepayment Penalty on Zurlch Loan 25 Year 5 7/8% Slnklng Fund Deb~tuxas du~ July I, 1992 ZurlCh Insurance CO. LOans 9 5/8% Notes due 1979 8 1/8% Notes due 1985 Balance transferred to ACCOUnt NO. 10-099 - Net income" at DeCember 31 1978 15.625.01 i54.337.71 404,965.77 [78.722.24 1,631.92 95,944.D7 174,896.00 4.041.85 LD,408.04 69,939.36 25,495.92 1,136,007.89 [3!6

10-073 - MISCELLANEOUS INCC~/~ 1978 This account records net income from corpcraE~ 5ransacclons not properly classifiable to any regular income acco~it. Sale of rlqa~s and titl~ 9th and 10th floors. 245 Park Avenue Olympia, YOZk Refund on volume b~si~ss - AVIS Settlement of Credit - D~ctapnone Corp Balance transferred to Accotlnt NO. 10-099 - Net inc,~me" a~ Deee~i0er 31. i978 1,553,278.82 176.98 80.27 1,553.536.07

10-C77 . pROFIT ~ LOSS ON DISPOSITION OF CAPITAL ASSETS D~q~F~mER 31, 1978 This account records net [gzofit) o~ loss ~sulting f~m ~ispositlcn of capital assets in,filled in New york Office aaoo~ts. S%%aa~ary analysls of tra~sactio~s~ Improvement to leaseholds ~ Sale of 9th and 10th fl~rs at 245 park AVenUe, to Olympia and York Office Furniture and Equipment Passenger Automobiles Balance transferred to Ac~ot1~t ~o. "10-099 - Net inoo~Q" at DeCember 31, 1978 757,376.13 34,271.83 ( 300.00] 791,347.96

10.079 .MISCELLANEOUS EXPENSE 1978 This account re~rd8 expGnses included under other expenses a~d losses" on income s~a~ement. Summary analysis of zransactlons: Cash in lleu of fraction shares of cuban Tobacco :o. - Stock convors&on Legal fees - Chadl~ne, Parke. ~itesid~ & WOlff ~ ix~sslhle acqll&sl~lons Balance translated to Account ~o. "10-099 - Ne~ income¸ at Dec~aber 31 1978 550.00 23,200.00 23,750.00 • (

i0-080 - INTEREHT AND DISCOUNT ON SHORT-TER~I DEBT 1978 This acco~it records amo~ of int~est and discount exp~nse on short-tez~Dorrowlng~ SUmmary analysis of transactions: DISCount on notes and interest on bank bor~owlngs Dlscount on co~ercial ~aper Interest on ~o~ezcial paper Balance transferred to Account No. 10-099 - ~et income at December 31. 1978 5.058.214.6Z 14,181,725.53 129.944.83 iE~,369.885.99

10.081 , INTEp~T ON LONG-TE~M DEBT 197_s This account ~ec~l-ds inueres~ expQnse~ payable samlannnally on debentures currently OUt- star~iDq and On LOng-Te~ Fo~e~q~ and Dc~estic bor~owlnqs. Su~m~ar~ analysis of ~ra~sactlons: Interest Expense on DebeDtures Interes~ Expense Int~res~ Expense 25 Year 4 5/8% 25 year 5 7/8% on 5 year 9 5/8% on i0 year 8 118% Month_ ~ ~ No£es Due 1979 Notes Due 1985 January L7,059.31 203,970.~i 1,203 125.00 1,015,629.10 F~brua~y [7~059.32 ~03,970.21 1,203.125,00 L,01r ~25.00 M~rch 17,059.31 203,970.21 ~ 203,125.00 1,015,625.00 April i7,058.54 203*970.20 1.203 125.00 1,015.629.22 Ma~ i7,~28.4~ 20~.97~.Zi I ~03~125.0q 1,015,625.~ June 17.005.35 ~03,056.33 1,203 125,00 [,015,625.0( July i6,754.57 197,116, D4 1.203 125.00 1,015,625.00 August 16,666.19 197,116.05 1,203,125,00 1,015.625.00 Septer~Jer 16,619.93 196,918.~5 i~03,1~5.00 ±,01~ 629.48 OcLobsr 15,575.97 L96,579.94 1,203,125.00 1,015,625.0¢ November i5,056.43 L96 358.82 1,203,125.00 1,01~ 625.0( Dec~ber i4.4~i.40 195,800.~6 1,203 125.00 1,0151625.0( i97.364.80 1!402,797.33 14t437,500.00 12,187,)12.8C Interest Exp~se on Loans: Eurodollar Loa~$ RevolviDg Credit Mo~th ~ I~an January 1¸579.17 660,730.56 February ],516.67 474,~38.90 Mar~h ] 679.17 550,818.80 April i¸525.00 404,598.20 May i ~79.17 289,710.15 June 1524.99 521.855.84 July 1579.17 427,341.81 Auqus~ 1,679.17 ~29,704.16 September 1 ~24.99 568,293.05 ~ctob~r 1,679.17 443,044.09 Dec~mhez 11712.51 789! 577.52 191804.17 5,619,683.23 Balance Transferred ~o Account N( 10-099 - Net income" at De0ember 31. 1978 Zurich Insurance Com ~n Loans - 6S,265.35 6B,432.50

~0-082 . DISCOUNT ON LONG~TE~ DEBT 1978 This a~co~t records ~%<crent year's ~mortization of discount on thin follo%'ing: DebentureS: 25 year 57/~% sinking fund debestures maturinq Ju,y i, 1992 95/8% n~tes due 1979 8 i/8% notes dye 1985 ~S~S of tzansactions: (l] Discount o~ 25 year 57/8% sinking fund debentures due Jull~!~i9~ Par Val~ o~ Am0~tization Debentures a~ .0625 E~d of Bond Month Previous Month Pe~ Month January 41,662,000.00 2,603.8a February 41,66~,000.00 2,~03.87 March 41,662,000.00 2,6D3.88 April 41,66~,000.00 2,603~87 May 41,662,000.00 2,603.87 June 41,662,000.00 2,~03.88 July 40,262,000.00 2,516~37 September 40,26~,000.00 2,516.38 October 40,160,000.00 2,510.00 NoVember 40,ii~,000.00 2,507.12 December 40,09~,000.00 2,505.8B 95/8% notes due 1979 81/8% notes due 1985 Foreign Zo~ro~in~: Penalty on pr~pa~n~e~t of z~rich ~s. Co. r~an 6 ~/4% 40 Mill±on Swls~ ~ranc zurich Ins. Co. Loan Bala~c~ transferred ~o Account NO. "~0~099 - Ne~ i~co~e" ~t DeCember 31, 1978 Total DiBCount 2,603.88 2,603.87 2,603.88 2~603.87 2,603.87 2,603.~8 21516.37 2,516.38 2,510.00 2,507.12 2,505.8B 30,69~.38 270,000.00 198,750.00 i02,196.71 601,642.09

I0w084 - INTEF~ST ON LOANS FROM SUBSIDIARIES AND A~FILIATED C©!.IPANIE$ 1978 ::=:. ..... ~]is account records interest expense on notes payable to s~bsidiaries and affiliated companies. S~/mnary analysis of transactions: Interest on loans from~ Sunshlne Biscuits, Iac. 1,039,765.97 James B. Beam Dl~tilling Co. ii~,225.46 Amelican Tobacco Int~rnd~lonai Cozpol~tion 604,459.01 ~erican ~-ands Overseas, N.V. 3n56~ 537.53 Sw±ngllne Inc. ~ 305.5! Golden Belt Man~facturlng Company 206 703.17 ~a~ter LOck Company 946 306.2f ~ Andrew J~rq~ns Company 727.770.13 Wilson Jones company 44E,724.27 Acushnot Company 703~ 98.G< ~llaher Limited 843,459.5~ 10-099 Net Income" 9,19~ 255.5~ Balance transferred to Accomnt NO. at Dece~er 31 1978

10-085 - OTHER INTEREST EXPENSE 1978 This account zecords i~tez~est expense exclusive Of short-te~, long-term and f~I%6ed debt. Summary analysis of transactions: Interest on Interest on Taxes Sale of Current Lease to Prior Year Year Galbreath Other MOnth Tax Continqencies provision ~ Intexest January 72,741.61 4.61 i~521.82 February61,986.52 1,455.59 March 68,240.83 1,455.59 April 75,106.35 I,~26.85 May 76,683.01 1,359.81 June 83,980.33 1,359.81 July 79,518.49 7.26 1,330.71 AUgust 76,539.5Q 1,152.23 1,262.82 September 76,539.50 6,778.43 1,262.82 october (688,084.96) 4,469.19 1,233.37 November72,078.39 353.64 1,164.63 Dec~ber 134,3~2.5~ 1,164~63 1,422.C6 189,672~15 12,765.36 15,998.45 1~422.06 Balance transferred to ACCount No. "10-099 - Net income" at Deo~i1ber 31, 1978 219,858.02

10-085 - OI~ER INTEREST EXPENSE 893 ~ pRIOR yEARSI CONTINGenCIES D~EMBER 31, 1978 The debit balance of this acaount ropresents the net debits to interest ~xpense for the ~urrent yeaz on tax contingencies relative to prior yea~p applicable ~ cigarettes, smoking m eta. A s~um~azy analysis of tr~nsactlons fo~ 1978 follows: Net Debits for Credits to AC~U%t TaZ to Whlah Interest ApplIQs Tax Year ~a. 710-301 Feae~al Inaome 1972 (200,616.59) 1973 (278w424.49) 1974 81,092o40 1975 146,642.00 1976 74,845.60 1977 70,252.50 Alabama Inuome 1973 348.00 1974 330.00 1975 294.00 1976 360.00 1977 190.00 Arizona In~e 1976 102.50 1977 42.50 Arkansas Income 1973 60.00 1974 60.00 1975 60.00 1976 60.00 1977 37.50 California Fra~mhise 1971 720.00 1972 720.00 1973 720.00 1974 720.00 1975 720.00 1976 714.38 1977 570.00 ColOrado InaCme 1972 60.00 1973 60.00 1974 60.00 1975 ( 145.00) 1976 60.00 1977 42.50 Conneatlcut Income 1972 120.00 1973 120.00 1974 120.00 1975 240.00 1976 2,473.21 1977 1,080.00 (C~ntinued)

DiSt. OE Colu~la FloridK Geo~la Idaho llli~ols ~dlana ~ntuuKy 10-085 . OT6ER L~TEREST E~q~SE 893 - pRIOR yEAB~' CO~I~GENCI~ DECE~KER 31a 1978 TaX£oWhich InteEest A~lies Fza~ohlse Incom~ Income ~aome Supplemamta I IR00~e Gross I~e Income Incame Tax Ye~ 1977 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1976 1977 1973 1974 1975 1975 1971 1972 1973 1974 1975 1976 1977 1971 1972 1973 1974 1975 1976 1977 Page 2 Net Debits for Credits to A~ount NO, 710-301 63.80 1,020.00) 780.00) 1,710.00 3,330.00 8,760.00 900,00 383.001 232.001 209.001 744.60 630.00 510.40 80.00 80.00 80.00 80.00 80.00 56.70 740.00 387.00 90.00 90.00 90,00 63.80 162.50 85,00 88.50 249.92 312.41 1,080.00 29,430.00 22,920.00 15,450.00 13,140.00 3,900.00 3f120.00 4,740.00 (46,757.33) (27,378.90) ( 9,406.16) (25,296.55) [ II,199.181 8,800.00 5,443.20 (Contlnued) ~26

Kentucky (Continued) ~ulslana Maine MaS S~ChL~S Qt t s Michigan Mirm~5ota Missovzi Montana IO-085 - 0~ I~TEREST EXPENSE 893 - PRIOR YEARS' CONTING~A~IES DECE~EE 31, 1978 TaX~oWhlch Interest A~lle6 Liters e IDC~8 ~xclse Inc~e single Business Franchise Inc0me Income ~ome Tax y~ar 1972 1973 1974 1975 1973 1974 1975 1976 1977 1974 1975 1976 1977 1973 1974 1975 1976 197"/ 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1975 1976 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1972 1973 Page 3 Net Deblts for CEedits to ACCount No. 710-301 34.88) 96.79) 46.99) 27.89 600.00 6~0.00 240.00 360.00 525.00 9,346.40 6,826.40 3t998.80 2,233.00 4t685*30 3,736.30 3,526.28 1,689.70 ~,48L50 303.30) 669.90) 286.60) 160.00 126.60 231.30 201.30 3,860.70 2,413.10 15.801 ~19.0C It023.96 446.02 80.00 80.00 80.00 80.00 I~226.40 759.60 58.00 60.00 60.00 60.00 60.00 42*50 90,00 90,00 (continued)

~n~cana (Con~nued) N~ Emmp~h~e NO'~ Jers~ ~ York t~ York C£1:g 10-085 . OTHER I~TEREST E~PENSE 893 - pRIOR YEARS I COh-I~NC~NC~ D~CEMBER31, 1978 TaX to ~rni~h Interest Al~lies Imc~m~ BUsiness-Proflt ODrporatlon Business Fra~chls~ FranChise (UB~) Cen~al Corp~r ation Genazal C~rpora~ion (~sI) Inuame Fran~hlse Tax yeaE 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1974 1975 1976 1977 1972 1973 1974 1975 1976 1977 1975 1976 1977 Page 4 Net Debits for C~e~ts to ~eount NO, 710-301 90.00 90.00 236.30 135.12 120.00 120.00 120.00 120.00 120.00 75.00 900.00 900.00 900.00 900.00 637.50 588.80 ( 707.20) 680.00 97.00) 7,820.00 16,445.60 85,00 85.00 847.00 539.20 156,50 393.50} 300,00 3,120.00 5,762.50 8,692,50 60.00 60°00 392.50 285°00 3~1.00 300°00 3~°00 11,820.00 ioj260.00 30t590.00 1,560.00 1,980.00 1,615.00 (Cont~ued)

I0-0S5 - Cq~ER INTEREST ~pENSE 893 - pRiOR yEAR~' COnTInGENCIES I~C~ER 31, 1978 T~X tO W%ich £nterest A~lles Tax Year North Dakota Income 1972 1973 1974 1975 1976 1977 Ohio Franchise 1973 1974 1975 197@ 1977 Oklahoma Income 1972 1973 1974 1975 1976 1977 Oregon Exoise 1972 1973 1974 1975 1976 1977 pQnnsylvanla Income 1974 1975 1976 1977 Fra~hiso 1974 1975 1976 1977 Franehis~ {Clgar) 1976 ~ode Island Bus~ess Corporation 1972 1973 1974 1975 1976 1977 South CaTol~a Income 1973 1973 1974 1975 1975 1977 Pagl 5 Net Debits for C~edlts to ~co~a*t NO. 710-301 120.00 120.02 120.01 120.00 120.ii 85.00 360.00 360.00 360.00 360.00 270°00 60.00 60.00 60.00 60*00 60o00 42.50 120.00 120o00 120.00 120.00 120.00 1,404.00 (30,507.47) 21,693.75 12,593.75 14,067o50 1.75 60~00 30.00 42~50 127.50) 311.30) 26@.30) 80.00 80.00 80*00 63.30 120.00 120.00 i20~00 S05.50) 577°50 665.00

10-085 - OTHER I~EEEST EXPENSE 893 - pRIOR YE~/~' CC~TINGENCIES DECEMBER 31, 1978 T~toWhich Interest Applies Tennessee Excise Franchise virginia Incom~ Utah Franahise West Vi~:~ia B~siness Ccaupat£c~ Inc~ Debit Balance transferred to Account NO. .I0-099 - Net inc~e" at December 31, 1978 Tax Year 1972 1973 1974 1975 1976 1977 1972 1974 1975 1976 1972 1973 1974 1975 1976 1977 1975 1976 1977 1971 1972 1973 1974 1975 1976 1977 1971 1972 1973 1974 1975 1976 1977 Paqe 6 Net Debits for credits to ACCOUnt NO. 710-301 1,057.49) 6,222.45) 5,003.18) 150.85) 110.26) 60.00 583.22 457.48 335.67 165.75 1,750.00 1,750.00 1,750.00 5,670.00 6,020.00 29,016.00 567.72 231.36 275*00 7,5D8.00 5,580.00 3,960.00 2,760.00 II98Q.0D 1,560.00 1,040.00 900.50 810.45 6,393.55 9,185.10 9,815.45 9,635.35 142.60 189,672.15

10-091 - FOI~EIGN INCO~ TAXE~ i078 This account records fol~iqn income ,axes paid or Da~abl~ by foreign ~oncern~. Summary a[~alysis of transactlons: Philipplne~ ±nrome nsx o~ 1978 royaltles pald or payable Dy !olumbia Tobacco Company for ~e of trad~rks: Pall Mall Total Phiilpp±ne Tax Phll~.uDzne Royal~ Tax 81.791.00 28.626.85 Balance tzansferred to Account No. .i0_099 _ Net income" at Dec~alber 31 1978

10-092 - ~EDERAL INCOME TAXES 1978 This acco~It records estimated federal income tax expense. Summary analysis of transactions: Estimated Federal I~come Tax Expense Prior yeKxs' Contingencies Less~ Investment Credit Applicable to Fixed Assets and Leased Eq~iIlment for Branches snd Leaf Departments: Cigarettes Cigars Balance Transferred he Account No. "10-099 - Net income at December 31, 1978 420,036.10 18,255.94 438,292.04 72,4£ _ E]3-0E 3~L'

10-092 - ~DER.~T~ ZN~ TAXES 893 . PRIOR YEARSI (~?I'~I~C~S 31, 1978 The ar@d~t balance of this aooount ~p~esent8 the net c~edlt to Federal Lnoome taxes relative to prloE ~mLrs, as de~ned by our Tax Depar~t~t, during the ~nt ~ar. A S~uLTy analyS~s of tran~tlone fo~ th0 yeLT 1978 foll~B: Net Debits fOE CEeditl tO AOOO~t F.~nd of Tax Tax Year NO. 710-301 Federal Income 1972 ( 705t122.00) 1973 (I, 097a627.00) 1974 55,000.00 1975 ( S0~000.00) 1976 ( 124,0C~.00] 1977 18 274.12 C~ed~t B~l~e Tr~Ee~ced to AOOOUnt NO. "10-099 - Nit ino~e~" at Deoember 31, 1978 (1,903 474.88)

i0-093 ~DERAL INCON~ ~AX . OFFSET TO TAX EXPENSE ON INCENTIVE COI.IPENSATION NOT DEDUCT?CBLE IN CUI~NNT ¥SAR 197(4 ~lis account records estimated federal income ~ax ok that portion of provision for incen- tive ~Dmpe~safion available fox allQ~/~ent undeg Article XII of By LaWS of Company, M~idh is [lot deductible for taxes in curl-e~t year but is deductible ix y~ars paid. Purpose of this ~ccount is he adjust current ye~'g income for book aild statement purposes to reflect amQun~ Of incentive comp~satiQn [~et of total estimated ~untg Of federal i~come ta~ applicable thereto, of total a~nt o~ in~rlt~ve compensation available fur allotmentt amounts allocated to Chair~n and President an~ Management Group, nondlscretio~ar¥, were deductible for taxes in current year. Estimated federal income tames credited to this account were calculated at a rate of 52%. Details Of the estimated federal i~come tax calculation follow: I~centive Compensation Available for Allotment Management Grou~ Discrstionary Estimated Tax Rate Estimated Tax Adjustment to be made ~ 1979 Estimated Fav~bl~in 1978 1,299,~02.00 52% 675,949.04 110,020.56 Credi~ balance transferred to ACCount No. "10-099 - Net $~co~e" at December 31, 1978 785,969.60

i0-094 - FEDERAL ZNCO~IE TAX ADJUSTMENTS OF PRIOR yEARS' INCENTIVE COMPENSATION pAyMENTS DEDUCTED FOR TAXES IN CURRENT ¥BAR 1978 This account records Federal imcome tax ~xpense in curren~ year on d~fe~xed incentive ~ompensa~lon paid d~ring year and adjustJnents of provislon for ~ncen~ive ~omp~nsanlO~ ~eferred in prlor years ~u~ary of transactions: A~ounts paid in 1978 M~nagemsnt Grou; 3iscretionary) Prior yeaz s de~erred Balance transferred to Account No. Net income" at December 31 1978 10-099 - 634 550.68 42,903.39 &77.464.07 677 464.07

10-095 - FEDERAL INCOME TAX APPLICABLE TO DEpReCIATION DEDUCTED FOR TAXES IN EXCESS OF AMOUNTS pROVIDED O~ BOOKS 1978 This account reCOrds deferred federal i~%¢ome taxes on depreciation, DISC and other items~ Balance at December 31, 1978 894 - Depreciation and related - deferred 896 - Othez - d~ferred 398 - DISC o~ner 705.100.00 2,636.559.57 61,000.00 Debit balance transferred %o Account No. '~i0-099 Net income at Decembex 31 1978 1.870 4S9.57

10-098 . pt~ ~C~ BPJ~ p~tYI~ZT ~ LOSS D~ 3~r 1998 Page 1 of 2 Thi~ account re~ords a~ou~ulate5 i~oflt and Iosl from Pue~ Rican ~anch opa~ations du~ing ~en~ ~r~ This a~mt £$ composed of fol~owlng aac~t~A, ~etailm of whioh ~e z~z~ed on Puo~to ~aan ~h ~ks. ~let Sales 20-001 - 5ales - Du~esblo 20-003 - CaRh ~Isco~nts 30-001 - Salos - D~mes~la ~etsales COSt o~ ~alen 20-011 - Cost o£ ~ale~ - D~estCe 20-014 - FEeight a~d ~hippin9 e~e~e - Do~estCa 30-0~1 - Cost of sales - Dom~gtic 30-014 - Freigh~ and ~h~ing e~mse . D0mestl0 3,824.459.49 ( 1,555.31) 116044.60 3,938,948.78 2,875,886.37 I13,775.59 74,9~8.4Z 4,802.99 TOtal Cost of Sal~ 3,069 373.36 Available PrOfit 8~69 575.42 Selli~r AdV~Tt~s~ an~ Adminlst~ati~e EI~sos 10-050 - ~eEal a~l a~Inls~Tatlve 10-896 - ~i~a~le expense 20-03~ - N~p~oe~s 20-041 - Salem's salary an~ expense 2~-045 - P~om~tlon of dlst~Ib~tlon 20-046 - Sto~6 and g~al - D~m~st£~ 20-048 ~ S~les - C~m~sti¢ 30~04~ - S~o an~ qene~al - Do~es~ 30-048 - s~m~e~ - D~e~i~ Total Selllng+ ~tls:blg, etu., ~enses ~t~ndproflt NO~ol 172,788o81 241t888.00 26,148.93 287,920.50 3,067.92 61,999.47 8,~22o94 131o~2 ~6~.97 ~837.95 66,737.46 The amounts and a~aounts listed above aEe ~cl~ded in 1978 FisCal Statement tt~der ~'~ha~i~ SalOS - COst of Sat@s, Selling a~d ~Is~ng m~u~ses before and aft~ ~ear-~ ~Jus~mmts." Aav~tlsl~ expen~ a~=nt$ wa~e zeola~si£1e~ to ~r~ ~ve~tlslr~ £oz tbls ~t~teme~t.

10.098 - I~RTO P~C~q BPJC~H pBO~XT ~qD LO~S DEC~A~R 31, 1978 Total Othe~ Expe~su and LOSSea ~el: j~ofit at Dee~,~ 31, ~978 Page 2 of 2 ~8.32 4,310.21 22,066.39 g¢638.2S 4*116.13 ( 4j300.00} 1~627.59 96~.97 255.6i 31,657.50 35:079.96 ~s4~.os 25 536*88

20-O02 - SALES . LEAF, ETC. - DC~S~IC DECE~mER 31, 1978 This account recoz~ a~O~t of domestic sales of leaf tobao~, et~. There were no txansactio~s in this acao~ut during the year 1978.

~0-012 . COST OF S,~S - ~ ETC. - ~STIC D~CF~MBER 31, 1978 Th~s acQ0unt reo0r~ cost O~ ~omQstlc l~af tobaooo, etc., sold. There were no transacEions in this account d~rlng the ye~ ~978.

20-020 - SALVAGE A~D EXPENSE - RE~ORNED GOODS DECEMBER 31, 1978 Page 1 ThiS a~oont xecords salvage real~zed on unsalable finished goods, other than cigars, returned fr~ trade and expenses on bPth ~lable and ~salable returned ~cods. Net balar~e e~ts as ~n adjust~T~nt of COsts incl~dod 21 Ao~ount NOS. "20-011 - Cost of Sal~s - Do~estlc" and "21-011 - Cost of salem . Export,, applicable to original sale to customers. For salvage a~d expense in cennectlom with flnish~d goods d~%Kqed at branches, warehouses, etc.~ or applicable to salable qood~ which have b~en =et~cned for Cel~ai~ ~ecial reasons a~d a~e th~n taken from steak for reha~dling ~r salvage, see ACC~/IIt NO. "20-021 L Salvage and expeilse - goods xe~rked, dQstroyedf e~." S%%m~ary analysis of transactions: Refundable value Of Federal Excise Tax ~ppliaable to un~lable goc~8 2,301,075.92 Actual ~a~vage va/ue raallzed from reworked u~salable goods ~etur~ed from ~ade, sale~n amd transpQrtation co~panles Tobacc~ a~d casing, less labor a~d ~ator~al Qost of rehandling -- 633 259.89 Total C~edlt s Loss~ Chazgos applicable to salem's returned ~OOds: TEansportat~on chaxges paid by sale~n 1,961.96 C~ty ~nd State ta~ stamps paid for by Salesmem 9,329.69 Pa~e~ts to jobbmrs for handling sals~aem'8 ret~rn~ 354,6~8.64 Refundable val~e of ~ede~al Excise Tax appli~able to goods taken from stock and r~wor~ed or salvaqed, u~salabla goods returned by ~ustomers and salvaged for ou~ a~count, ~nsalable goods returned by t~ans~rtation uc~panles and salvaged for their account, unsalable fl0c4 ios~ merchandise returned from trade and Salvaged for our account applicable to goods reworked or des~roy@d for which Fede~Cal Exci~e Tax claims wer~ filed and to goods ~Old to eunployees, etc., ~E oth~=wi~a dls~oSad of for which Federal Excise T~X claims were not filed 3,071,645.84 2,9~4,335.81 355,9~0.29 (Continued)

20-020 - SALVAGE ~NDEXPE~SE . RETURN~D GOODS DEC~ER 31, 1978 ..... Page 2 Less~ ~t%~t of Federal Exci~ Tax claims filed there~ 3,071,312.72 Federal excise tax appl~cable to ret~r~ed 9DQdS 333.12 E~penses of operatlr*g D~ham service Department 710,$45.78 Refund Of MOntana, Idaho, and Alabama Tax ~ ~salable clg~cet~s ( 2j860.12) Inb~ and outbound transportation charges on msrcbandlse returned or shipped to other locations 58.19 Adjus~t of differeDces on speulal jokkbers' retttrns 9~475.04 ValUe of Wrapping material shlpp4~d to customers for use in xeturning m~rchandise under the unsalable merchandise agreer~ent 3 108.04 Total ~its i, 086,940.34 Credit balance transferred to ~c~t!nt N0. ~10-099 . Net income" at December 31, 1978 ~I 847 395.47

20-021 - SALVAGE AND ~P~qSE - COGDS I~WOI~D, DESTROYED, ETC. 19?8 This a~aount records ne~ expense in,fred in rehandling, reworklnq or destroying manufactured goods other than ~iga~s: 1. Damaged at b=anchss, wareho~es, etc. 2. Bet~2ned as salable me~ehandlse for certain special reasons, and then taken from stook for rehan~mq, zewo=klng or salvage Net d~b~t balance of t~s aooount aGts as mn addition to costs iRcl~ded in AGCO~%t NOS. • 20--011 - COst of Sales - D~mestic- and "21-011 - Cost of sales - Export.. For net salvaqe appl±eable to unsalable merchandise retuZned f~m th6 t~adeS and expenses on both salabl~ and unsalable rett~%cd goods, see ACOOgnt NO. "20-020 - Salvage ar~ expense - ret~ned g~ds." S~ analysis of transactions~ Net e:~emse applicable to manufactured goods damaged at branches, warehouses, eta., while oarrled as finished goods, and taken fzom stock fox rehandling, ze~rk~g or ~alvage ~ Cost, including federal exaise tax, ~ity and state tax 1,022,054.59 TransporLatiQ~ ~haxues~ l~bor and materials 25,071.03 Othex salesmen expen~es 687.3~ 1~047,812.96 Less: Actual salvage realized f~om r~worked or salvaged gac~s : Lea~ and ~asing 15,333.51 ~edezal Ez~ise tax refundable 368,470.78 383,804.29 Debit balance transferred to ~c~o~nt No. "10-099 - ~et inhere" at De~m~er 31, 1978 664,008.67

20-022 - C~SOI~"I~E ~,~PING ~TER~ ~ EXPE~SBS DECEMBER 31, 1978 This ~ccount records ~lue ef ~igarett8, m~/nq, etc.. w~apping material charged off a8 obsol~te and aost o£ storage, ha~ling and other expenses incidental thezeto a~d credits for wrapplng ~atezial used ~ sold which was previously charged off as obs01~ta. Sunma~y ~alysls of tra~6a~onsz provision fol~ obsolet~ ~al~l~g ~t~£al at l~r~ches Mat~'~l ehl~'g~ off I~ss i Se&,~ re~liz~.d on saleJ .10-099 - Ne% il~ml~" at D~C~her 31, 1978 68~1~D,29 132~442.77 3,402.7~

20-023 - ~3~ MACR~ pARTS ~.978 This a~com~t re~ozds val~ of clgszettes, smDk:L~, etc., ~achi~ ~ ah~ off as obsolete ~md othe~ e.,-~s lnci~n~ thezeto ~td 0re~.ts for pro~ ~lized pz~vlslon for obsole~ ma~hlne paE~ at bzan~hea 201,250.6B ~0solete machlne partB ~hazge~ off: DurUm B~ch 2,338.33 IALr h~ l~af 13,472.45 Vl~glnla Branch 48__,127.82 63~ 938.60 ~lan~ tn~ansferEm~ to Acu~mt ~Io* "10-099 - Net L0~cmm" at December 31, 1978 2~

---

1978 This aucount recc~Is expenses inked hef~e start of producti~r e~essive overh~aa and manufacturing ¢o~ts duxlng eaxly nths o~ p~4uctlont o~unt~ applicable to other cost of ~les and a~nts which distort prior month's ~ yearls cost ~Ig~es at ~Igar~tte k~anches and lea£ departments and ~moking h~an~hes. ~llatlonw conversion ~.~ ~%od~Ic~tic~% of eq~l~t V/~Inia ~anch 527,284.94 Durham B~anch 381,539.37 Reldsville Branch 257r853°21 Lex~ton Leaf 57,980.~ Rind Branch 12,942.16 Durham Leaf 7,866.21 1,245r4~.07 Wri~e-off of shorts at Duzh~m and Relds~e ~xanches 769r749o32 ResidUal portion Qf pa~ent to ~k£n~ha~ countyF ~.C., ~ p~sonal ~operty taxes ~ &~ported tobacco 190,940.46 P~emium adjustment - WOrk~s C~mpen~a~ion~ ~en~al ~hil~t7 and automobile . ~riar years 183,498.39 EXCess cost a~pl~cabl~ t~ machi~ evaluation ex~imen~ at General PZOCesslng~ Lnc. 47,859.35 Nonzecoverahle /nsura~e costs and adjusts 24,?48.49 ObSOlet~ hogsheads ~unke~ 18t277.24 R~du~tion of d~i/ar value and p~und inventories Qf loll a~d paper st~d at Reyn~l~s Metals CO* to re£1~c~ ~ield adjustment for the ccntract 7/1/76 - 6/30/77 17,242.70 Synthet~u l~volumps m~nthol c~ystals d~stroyed 9,83~.59 E~p~nses in~r~ by Hendezson Enter~rls~ and ~u ~az~ wa~house 2 ~89D.00 E~SeS ir~rr~d re~ovln~ 1 1~sh~ad s~t-up devi~o and 1 slO~ ¢om~yor 2t757.46 Th~odozus ~i~2 er Cost ~£ salos of leaf 45,672.61 L~S: Proce~d~ ~ 21571.91 Retroactive pa~ - ~einstated em~loyee 2s324.74 Miscel L~neous 2,045.60 AI~£~ Ch~ - unharmed cash discounts 881.91" TOTal C~es 2 521f090.93 Credits : 0verprovision in A~t HOo "750-095 . ~r~v~sio~ for retlr ~ent ~en~flts,, 649,190.29 o~e~p~ov~n in A~t ~o. -20.0~6 - ~ administration,, 19r634.45 Vol~e incentlv~ pr~r~m with Island ConTa~mer (~y 1977- 19~) 3,567.00 M/~CelIa~Q°~S 898.66 Gas and l%~hrioatlng 0il tax refund 801.36 Total Cr~li~s 674 091.76 Net ¢l~mlit b~/ance tr~ferred t~ ACcount No. "10.099 - Net income" at December 31. 1978

20-026 - BRANCR AD~I~IS~TION DEC~SME~R 31, 1978 This a~t is a clearL~g a©count in wn~ah ~oste of operating Ciga~ette Nanufacturing Department, ~m~al Englneerln9 Department, in Ri~hg~nd, V~Inia, salexles an~ =elated ~ay ~II trams Qf ~actory su~e~vls~W pecse~nel and mainw o£ quality px~duet m~ense are ac~mllated and aba~l monthly to l~nchQs~ Wheee a~pllcable, eYpenses ~e app~£ed spec£~£cally; the r~in£n9 ere di6trilmtud baBed on net value of estlmated productlun of each branch° A~ year-end baiarme £s d~str~buted to A~un~ NO. "20-025 - UnaS~bed and u~di~c~Ib~ted expense" for ~Iffe~e b~tt,~n esti~at~ mrs billed to branehe~ and act~ ~/~a~as to ~his accost. 4,579,626.64 4,559,992.19 19,634.4__5 4~579,626.64 - 0 -

20.029 - I~A~,CI~ A~ I)L~YEIX)P~NT 1978 This account recQ~ds expenses in conmectlon with 8xperimantal machinery. Expeximental Equi~nt for Tobacco EXpanslon Bala~e Transferred ~o A~COunt NO. *'10-099 - Net ~ncome'~ at neGember 31, 1970 164,472.04 164,472.04

20-050 - GE~R~L AND ADMINISTRATI~;E EXP~ D~C~F~ER 31, 1978 -- = -- This acuou~t reCOrd~ general ~qd a~ist~Tatlve axp~n~ appliaable to cigarette executives. SUmmary analysis of transactions: DUeS Cont rlbutions Balance transferred to A~co~nt No, "10-099 _ Net in¢o~,~ at December 31, 1978 32,750.00 12,530.00 45,280.00 [;5{:I

~0-059 - F~C~ISE, ETC., T.~S NOT B~]~D ON ~NOOF~ 891 - CUF]~ pRDVIS~[O~ PF, C~ 31r 1978 The ~ebit balance of this account xepresents the amount of e~ensel fo~ the ~remt year for ~he following t~e$ mQ~ base~ on ~¢~, &pp~c~l~ to ~gazet~s, smokID~, etc. ~.at e ~l~lBe S~te f~an~h~le State li~A~se Other mlscell~neotm state and ic~al A s~mazy analysiB of tran~a~tions fo~ I978 follows: Debit8 fo~ Credits t~ ~c~un~ No. ,'600-089 - p~wlsi~n foz Debi~ Kind of Tax ~Ta~es" TaXes pa~able" Balance F~an~is~ & Co,polite ~lori~a CorpoZation ~e~o~t 10.00 10.00 Georgia Anm~al ~e~o~t $. DO 5 o O0 ~awali Gross In~ (Za¢ise) 11,195.60 11,196.60 ~nG~m~ Li~sQ Tax 2.50 2.50 Indi~a ~nnual ~po~t 15.00 15.~0 ~S~ Income ~ax 106,000.00 106,000.00 A~it~o~al Fee for Inorease of ~b~xe~ 186. C0 i~6.00 Ken~t~ky A~nual Bepozt 5.00 5.00 Bowli~ G~e~a - Oc0~an0~ ~i~eaN 30.00 ~0.00 Russ~ll~llle - O~a~cy Liee~ je T~ ~2,000. O0 72,000.00 iouisla~a Ana~l ~e~ozt 5.00 5.00 ~ran~hi~e Tax 18,830.~3 i~,~$0.43 Mass~chusatts Foxei~n Corporation F~lin9 Fee 35,00 35.00 MiChigan Filin~ Fee, ~an~hise ~ad AD~ B~l~zt 682.00 6~2.00 Sidle ~S~SB Tax I~5,000.00 165,000.00 Misso~xl Annual ~ep0~t 10.00 i0.00 ~an~hi~e Tax 1,255.00 1,2~5.00 ~ Jsrsey ~ ~9~=t I~.00 15.00 Coz~a~ion B~i~ess Tax I00~000.00 100,O00.O0 New ~ork Franchise T~ 65,000.00 65,000.00 ~ew ~zk ~ity Gen~al C~p~a~n ~u~ne~ Tax 45,00Q.00 45,000.00 ~orth Carol£n~ Franu~ise Tax ~65,596.00 120~500,00 386,0~6,00

20-059 . FI~C~ISE, ETC., TA~S NOT B~ED ON INCQ~ 891 - CU~ pROVISION D~-X~ER 31, 1978 Kind of TaX 0klahc~a Annual Affidavit Franchise T~X Oregon License Tax Pennsylvania Franch±se TBX Rhode Island A~ual I~rt Tennessee ~%nual Fee Davldson CO~ . Gross Receipts TaX DaVldson COUnty - Business License Tax Franchise Tax Nashville ~ B~sineBs License Tax Shelby ~ Busln~ss License Tax Shelby - G~oss ~ceipts Tax Texas ~r~Ichi~e Tax Utah A~ual Re~r~ Vir~£nla ~e~stratlon Washington ~nual Fee - Sta~e Buslnes s Tax License Tox West V~qinia License Tax Business Occu~atlon Tax Wisconsin 2~nnual Report Dsbi% Balanoe Transferred to ACCOUnt NO, *'10.099 . Net in~e" at Deaembez 31, 1978 Debits for Credits to Account NO. ACCOSt NO. "710-401 - "600-0~0 . PZUVlSlOn for ~TaXeS" Taxes pa~oble'~ Debit Balance 4,184.50 60,646.66 1,679o59 260.00 3.00 4,229.00 200.00 224,000.00 15.00 150.00 1,623.1S 6,000.00 1,619.65 1,000.00 21.00 12,149,34 5.00 50.00 2.00 44,446.97 26,000,00 35.00 3.00 8,413.50 200.00 224,000.00 15.00 150.00 1,623.15 6,000.00 1,619.65 1,000~00 72,796.00 5.00 50.00 2.00 44,446.97 1,673.59 260.00 26,000.00 35.00 332,360.75 1,033,062.64 1,365,423.39

20-059 - FR~NCHrSE, ETC., TAKES NOT BASED ON INCCME 893 - p~OR YEARS~ CC~TINGENCIES DECEMBER 31, 1978 The debit balance of th~s aoQo~t re~ressnts the net debit to cigarettes, ~k~g* etc., In~m~ e0ve~ing unde~p~ovislon or overp~0vislon ~or state an~ le~al taxes not ba~ed o~ 1nacre, relatlve to pric~ years, a6 ~Qterm/~ed by our Tax Department, ~zing the ~rre~t y~az. A ~ of tzansactions for 1978 follows: Net Debit for Credits to Kind of Tax Tax yea~ ACCOSt NO. 710-~01 Delaware Ann~al Report i~77 3~.~D Indlana Gross ~come 1973 { 1,753.62) 1974 (2,204.04) 1975 (2~275.00) 1977 1,737.00 Ke ntu~ky Liuease 1972 ~ ( 8.00) L97~ ~ 67 .C~ 1974 ( 37.00} 1975 I 74.O0] MassachusetCs Ex~l~e 1973 (1,000.00) 1974 (3,000.00) 1975 (2,000.00) 1977 7,443.00 Michigan FranchlSe 1975 4,200.00 1976 2,900.00 S1nqle B~slne~E 1976 (3,000.00) 1977 4,415.00 ~ew Yock pranchise 1976 5,000.00 1977 ( 9~14~. 00) New York City G~eZal corpo~atlon 1976 3,125.00 1977 ( 8,475.00} North Ca~ol~na Sale~ and Use 1975-1978 1,434.30 Fr~n~hiBe 1977 34,000.00 Pennlylva~la Franchise 1974 ( 46.60) 1975 1,000.00 1976 500.00 1977 16,157.00 SOuth Car ollna License 1977 i, 168.00 Tennessee Fra~¢hlBe 1972 1,527.15 1974 1,767.30 1975 1,798.20 ~9~ 1,5~.~5 1977 (10,701.15) N~ShVIIIe - Bu~in~s~ License 5/1/77-4/30/78 { 1,000.00) DavIdsO~ CO. - Business L~cens~ 5/1/77-4/30/78 (1,000.00) Shelb~ co. - ~uslneJs License 5/i/77-4/30/78 (i~000.00) Washi~9~on PacSonal Property T~X 1974-1976 2,694.50 Debit Balance Transferred to AOCo~t ~o. "10-099 - Net tno~me" at Deoelbe~ 3~, 1978 45~631.49

1978 This a0¢0unt records monthly expense incidental t~ the operation of Department of Research and ~eVelopment, located at Chsster, virginia. Summary analysis o5 transactiOnS: Ex~e~QS ~o~ ~es~aroh and develoi~nt in connectio~ with product improvement Balance Transferred to Account NO, "10-099 - ~et inao~" ~t December 31, 1978 48,499.92 48,499~2

20-061 - NEW ~DDUCTS DIVISION 1978 This acc~Ant record~ monthly expense incidental to ope-~atlon of Department Of Research and DeVelopment, located at Chester, Virginia. Su/%mary ana/ysis of t~ansactions: ~el%ses fo~ research a~d develol~ent in conne=ti~n with developin~ new products 1,970 131.48 Balance transported to Accost No. "10-099 - Net inc~I' at DecQmber 31, 1978 1,970,131,48

20-073 )E[SCELLAN~OUS INCO~ 1978 This account reo0rds set income on tral%sa0ti0ns a~pllcable to ~igar@tt@s, sm0ki~g, etc., not prQ~Qrly classifiable to any ~egular income accouter. st%m~aEy analysis of transactions: z~c_ome profit Received fz~m Prizing TObacco for verio~s Dealers 61,329.21 Profit on Sa~e of Scra~ 3,69~.16 Sto~age Of Tobacco for stabilization Corp. 2,558.99 Eef~d Ford Fleet GUarantee - Resale program 1,104.50 1976 CC~±ssion fr~L canteen Corporation 1,009.50 AdJus~ent Of Dlsc0~nt on Cigaxettes Sold in Retail Store - New York Office 445.52 Rent Reueived from Creative Displays from ll/TS - i1/79 175.00 Engraving Plat~s - W00dla~A MQtal CO. 40.19 credit Balance Transferred to Acc0~it No. "10-099 - Net income" at December 31, 1978 70,358.07 4 ~r

20-074 - ROYALTY INCC¢~ 1978 This aucoumt records ~Fa~t~eB reuelve~ fYom othez~ ~O~gh theIT u~e of pat~ntg and copyrights owned by C~p~ny. Summary an~lysl~ of ~ansactions: Colu~bla Tohao~ CO., Zn~. Use o£ tzademaZk "pA~L ~LL" in the pb/ILppines 81,791.00 Service d'E~p1o~tatlon Zmdu~tz~Io das Tabaos et deg All~me~tes - .~ITA- Use of ¢zadawark "pALL ~%LL,, i~ Fza~ce and Cm~s¢oa I09,412.94 Balance tEa~sfLcred to Ac~ovat NO. "~0-099 . ~ot inac~s" at De~ember 31, 1978 ,~r J

200075 . IK~C~ F~ TPANSACTZ~ WITH S0~SIDIARIES 31, 1978 8u~mazy analysis of tzansautlons: ~ldeal Belt Manufactuzln9 P~ntal Less depr ealatlon Gallaher ~tea Royal~y income f~ ~se of "SILVA TH~" tza~emazk at ~emhe~ 31, 1978 37,8~.00 8,556.48 29,243.52 2,104.00 31,347.52

20-076 - F'LOC~ :LOSS 1978 This acao~nt re~ords n~ loss ~es~Itlng f~o~ damage %o clgaze~tes and smoking ~oha~co by tornado an~ floo~ ~tars. Summary analyni8 of *~:~anp,~tt.ons: ~yBtono Sales CO. In~. 3o~mstown, pa. 1,717.63 New 0rleans, La. It387.61 Falr flewa N.J. 49t 896.00 New OZleans, La. 180.~ ~182.22

20.077 - pROFIT ~ LOSS ON DZ~SZTZO~ OF CAPITAL ~S~S D]~V~E]~ 31, 1978

20-078 - ~ EXPENSE ON PLANT E6~Ip~E~T 1978 This a~coUnt re~or~s expenses in ~ion with e~i~% York on plant ~qulp~mt app1iua~le to ~ than c~gaz equi~mt. ~ocatlonl Vi~inla ~an0h 3,762.?2 at Deoembe~ 31. 1978 3,762.7=~2

provision for legal contingenoies - pem~/n~ LiZ~atlons Ces~ion of s~emm~ o~zat~ons at Re~d~,vLlle ~ellan~us ~alan~ ~xansf~ed ko AeCOUn~ ~0. "i0-09~ - ~t ~" at oec~mbe¢ 31, 1978 la 200,000. O0 257,084.67 2 798.95

20-090 . TAXES ~ASE, D C~ INCOME - OT~R T~L~ FEDERAL 891 - ~NT ~SION DEC~ 31, 1978 Ale de~it balance of th/s account zepresants the amount of e~pense for the current year fox state and local inaom~ tax~s applluable to c£9~rettes, smoking, etc. A summary analysis Of transaotions fo~ 1978 follow~: Debits for(~edit6to Account No. ACCOUnt NO. "710-401 - .600-080 - pzovieion for Debit Kind of Tax Pre~idTax@s" ~able" Balance Alabama Income 38,000.00 Arizona In~ume 53,000.00 Arkansa~ Income 38,000.00 Callfornia FZanChise 80B,246.00 Coloraom I~come 55,000.00 CO~ec~icut /~ome 88~000.00 Dist~t of C~ikmlbiaFr~nchlse 9.000.00 Florida Incom8 156,000.00 Georgia Ir~C~me 92.000.00 Xdaho InCOme 19,000.00 illinois Inoo~e 138,000.O0 Indiana Supplemental In~ 66,000.00 ZQwa Income 123,000o00 Kansas InQo~e 65,000.00 K~u~ky InCOme 850,00~o00 Louisiana Inoo~e 56,000.00 Maine ~nuome 33a000°00 MassachuSetts Ewulse 367,000.00 Minnesota InCOme 134,000.00 Missouri InaOmm 48,000*00 M~nt~na IncOme 23,000.00 Nebraska Inu~ 28,000.00 ~ewl~ampshi~e Buslne~ P~flts 58,000.00 New J~r~ey CoZpo~at/on Business 176,000°00 New yozk F~anchiEe 1,550,000.00 New ¥ozk C£t~ Gen. Cozy. ~us£ne~s 980,000.00 North Carolina Income 3,234,000.00 NO~h Dakota In~ 16,000.00 Ohio Fzan~hise 270,828.00 Okl~oma In~ome 44,000.00 O=e~n E~ise 98,000.00 p~nnBylvania Income 512,000.0D Rhode Zslan~ B~Iness COZ~ratiom 35.000.00 So~thCarolina Income 54,000°00 Tennessee Exalse 94,000.00 U~ah F~an~his~ 11,644.00 Vi~g~nla ~ncome 2,719,000.00 WisConsin In~ome 182,000.00 (COntinued)

20-090 - T~S BASED OH INCO~ , OTBER THAN FEDE~%L 891 - CURRENT pp~ISX~ DEC~ER31, 1978 Pag~ 2 Kind of Tax K~ituck[ - Cities a~d Co~T~esz jeffer~onCo~nty - ScbOolBoard Net p~ofitLicense Fee Lexington Net Profit Lioense Fee LouIBville ~et profi~ License Fee ~ss Tran6it Owe~sboro Net Profit License Fee O~her JurisdictionXno0me Portion of above allo~able to Account ~0. -5C--090 - TaXes based on ino0~e - Other than feder~l - Ciqars~- "891 - CDrr~t ~rovisio~" Deblt balance transferIed to AOco~t NO. .,10-099 - Net income" at December 3Z, 1978 Debits for Credits to A~oUnt ~. Aooount NO. "710-401 - "600-080 - P~visiom for Deblt P~id Taxes" Taxes Pa~able" Balanue 4,000.00 27,000.00 6,000.00 1,000.00 4,000.00 428,000.00 808,246.00 ~2,987,472.00 13,795,718.00 34 000.00 16__5,000.00 200,000.00 774,246.00 13,153,472.00 13,595 718.00 ,~,,4

20-090 - TAKES BASED ON INC~ OT~ER T~%N FEDERAL 993 - pRIOR yEARS' CONTINGENCIES D~R 31, 1978 The credit balaDcQ of this account represents the net credit tQ Cigarettes, sm~)klng, @tc., inesme c~va~i~g t~derpm~vislon or overprovision for state and lo~al taxes Based on interne, Eelative to pr~r years, as deteralned by O~T Tax Department, dl~Ting the ~mrzant year. & stvamazy a~alys~s of ~ransactlons for 1978 follows: ~/.d of TaX TaX ysar Al~i~r~ Inc~Q I976 1977 .~r~sas ~ 19"/7 Colorado Inc~e 1972 197"/ ~l~ecti~t I~c~e 1975 1976 1977 Dis~J.Gt Qf ~lt~b:~a Fr~hl~e I93'7 Flor£ela ~e 1972 1973 1974 1975 1976 1977 ~:~r gia l~n~Q 1972 1973 1974 1975 197"/ Illinois l~n~e 1972 1973 1974 1977 ~ t.e~a SuSie. l~e 1976 1977 ir.~ In,~e 1971 197~ 1973 1974 1975 1977 ~et C~edlt6 for DebltstoAccou~t No. 710-301 6,048.00 1,000°00 9,55~°00) 5,362.00) ~,000,00) 1,654.00) 11,000.00 3,000.001 1,372.0~1 2,557.751 2,000.00) 2,000.00) 3,000.0~ 9,000.00 40,000.00 4,553.00 1,313.00) 1,187.00) 1,245.00) 1,860.60) 4,000.00) 3~876.00) 1,274.00 706.00 5~800.00) 5,299.00) 1~000.00 3,305.00) 3~,000.00 ~41000.00 25~000.00 24~000.00 ( 7,000.0~) (11,000.00) ( 2,I66.00) (C~ntinued]

20-090 - TAXES BASED ON INCOME OT~R TFI~ FEDERAL 893 - PRIOR YEARS~ CONTINGS~CXES DECF24BER 31, 1978 Kind of Tax Tax year Ka~sag ~ncome 1977 Kentucky Income 1971 1972 1973 1974 1975 1977 Lexington Net Pro f i~ 1977 Luui&vills Clty 1977 Mass Transit 1977 SC h~31 Boszd 1977 ow~nsho~ Net Profit 1977 Louisiana I~me 1977 ~:~ne InCOme 1969 1970 1971 1972 1973 1974 1975 1976 ~a ssach~set t s Xr~ome 1973 1974 1975 1976 1977 Michigan InCOme 1974 1975 Minnesota In.sine 1976 1977 Missourl In~0me 1977 Montana ~ncome 1976 1977 Nebraska IneOme 1977 New I~shire Business Profit 1977 ~lew Jersey Cor~ratlon B~si~oss 1977 New York Fr anuhi~ 1972 1973 1975 1977 New York City General Corpo~atlon 1972 1973 1976 1977 Net C~edits for Dehits to Account NO. 710-301 ( 33,500.00] (106,272.00) (79,180,00) (35,247.00) (120,843.00} (109,842.00} 473.00) 1t077.00) 1,069.00 311.00 542.00 1,269.00) 407.52 7,000.00) 7~000.00) 7,000.00) 7,000.00) 10,500.00) 14,000.00 14,000.00 13,000.00 11,181.~ 11,000.00 14~000.00 9,000.00 60,862~00 9,000.00 7,000.00 7,875.00) 9,162.00) 1,000.00 832*00) (13,500.00) ( 9,000.00) 6,294.00 989.00 ( 2,6~.00) (39,5t~.00) (71,296.00) 352.00) 2,391.00) 5~000.00) (54,033.00) {Cont l~ted )

20-090 - TAXES BASED ON INCO~ OTKER THAN FEDERAL ~93 - ~RIOR yEARS' CON~I~NCIES DECEMBER 31, 1978 Kind of Tax North Carolina Income I~rth Dakota Income Pr±vilage Oklahoma Income oregon Excise Pelmsylvan~ Inc.oll~ Rhode Island Bus:Lness ~r~i~n SouthCal~l:~a income Tennessee Excise Franchise Virginia Inc~e Wl~sin Income C~edit Balance Transferred to AQcount !Io. "10-099 - Net ±~o~e" at Dec~ 31, 1978 Tax Year 1977 1973 1974 1975 1976 1977 1977 1977 1977 1972 1973 1974 1975 1976 1977 1972 1973 1977 1975 1975 1977 1972 1973 1974 1975 1976 1977 1975 1976 1977 1977 1977 Net Credits fo~ Debits to ACcount NO. 710--301 (15,687.00) 9.36 .24 1.22 6.56 515.00 ( 794.0O) 7,188.00) 9,61S.00) 5,633.00 ( I,I03.00) (189,636.38) 97,500.00 77,500.00 (15,516.00) 792.00) 871.00) 2,316.00) 5,880.00) 657.00) 2,760.00) 2,998.41) (21,013.11) (23,783.06) ( 2,986.70) ( 6,166.81) (12,116.4D) 2,640.57 1,492.65 4,447.35 (13,518.00) (10,731.00) (a90,546.75)

21-002 - SALES - LEAp, ETC* - EATORT D~ER 31, 1978 This account records ~mount of export sales of leaf tobacco, etc. Summary analysis Of transactions: Cigarette t~ba¢co and wr~pinq material~ SOld to Direction Generale du S,E,I,T,A. Balance tran~fezred to ACcount No. "10-099 - Net inoome" at De~lber 31, 1978 691,023.69 691,023,6~

21.012 - COST 0r SALES - LEA~, ETC.. EX2ORT DECEMBER 31, 1978 Th/s ~CCO~L~t records cost of ex~ort leaf tobacco, etc., SOld. SL~c~ry analysis Of tra~sactlons: Cost of o~.garett~ ~1~¢~ and %'r~pp~cJ materials, ~o., sold to D~'ection G~ale du S.E.LT.A. Balemce trar,l~ferred to ;~cot~nt No. "1C-099 _ Net ino~.~e" at Dec~nl~r 31, 1978 659 220.64 659,220.64 ~ ,~

30-002 . SALES - LEAF - ~STIC D~ER 31, 1978 Th~S accost records a~o~t of domestic sales of clg~ leaf tobacco. There w~r~ no trans~ctlons in this account durlnq th~ year Of 1978.

30-012 , COST O~ SALES - LEAF, E~C. - ~TIC D~C~BE~ 31, 1978 This account records cost of ~Btio Ciga/ leaf tObacco sold. Ther~ we~ ;~ tr~usactions in ~/ii5 account dUZin~ the ~ear of 1978.

30-020 - SAL~Ca~ A~ EXPE~I~E - ~ GOODS 1978 This acco~t me~c~ salvage ~mliz~4 on t~salLble cigars returned from tra4e and e~0enses on both salable and unsalable returned cigars. Net cr~dlt balance of this account auts as a red%~-tlon of ~oats included in ACCOUnt N~S. "30-011 . COSt of sa~es . Domastic,, a~ ,,31-011 - COSt of ~ - EX~o~.,t F~E ~ivaqQ and ex@~@ /~ correction with fi~ goo~s ~ at b~ar~heB, wsrehouses, etc., Or appllcable %~ salabl~ goods ~Ich ham beQn returned Zor certain speelal zeaz~s add ~ then ~%ke~ fE~ st~Ik for ~ ~ s~Iv~ge, ~ A~co~t No. ,,3C--021 . salvage and eXF~nSe - gOOds z~WOrk~d, destroyed, etc.- su~mazy ~r~lysle of transac%lons: ValUs of fe~l e~ise tax applicable to unsalable ci~rs, othe~ than floo~ loss me~=handlse =eturaed ~=~m %zade Vai~e o£ loose ¢£~ars and seconds salvaged fro~ unsalable ~oods returned from tra~e, other th~n floo~ loss ~se, or returned without identification, lass labor an~ ma~exlal c~ o~ rehandling ~RIDAyS Cigax~ Ret~/rr~d Total czedlts 137,494.91 141,566,26 5.¢0 279,066,17 LeSS : FedeZal excise tax a~91ic~ble to goc4s taken £~ stock and rahanalsd e~ salvaged, ~aLable goods ~ed by customers and salvaged fu~ ~ ~wn a~nt, un~lable ~oods retl~med by transportation c~%0an~e~ and s~lvaged foz their aem~nt and u~sala~le ~loOd loss ~e re~ from the trade a~ sa1~a~ed for our c~n account, applicable to goers r~hand1~ or salvaged f~ fsd~al exclse tax claims were filed and to ~uds Sold to employees, etc., oz otherwls~ disposed o£ ~r which fe4eral e~i~e tax claims were ~t filed Amount of fe~alex~IsetaxclaLmsfiled 137,805o35 {136,679o00} (Contlnu~d)

30.020 . SIJ~'v-AGB ~ E,~{I°EI~a~B - ~ GOOD~ 1978 Net salvage valuQ of ~le meruhan~e returned L*l def~tlve condition I]ra;alJgble ze~:~c,'ned gcx:x~ ~an~ortation char~B, etc., paid by C~t ba~e ~erred to A~ NO. "i0-099 . ~et income" at Decembex 31, 1978 I,i18.83 192.56 48,278.50 50,?16.24 228,349°93

30-021 - ~ ~ ~P~NSE - C4DODS R~WOR~, D~ST~OY~D, ~TC. 1978 This account records the n~t SXDense incurred in rehandling or salvaging cigars: i. D~ged at b~an~hes, w~rehQ%%s~r e~a. 2. R~turned as salable merchandls~ for sgeclal reason~ ~nd then taken frQm stork for rekindling or salvaqe The net debit balance of th/s ac~unt acts as ~ additAon to cost included in Account Nos. "30,011 - Co~t of sales - Domestic~ and "31-011 - cost of sales - Export." For ~et salvag~ appllcabl~ to unsalable cigars returned from the trade, ar~ exp~naes on both salable and ~nsalable returned cigars, see Account ~o. "30A020 _ Salv~ge and e~pense returned goods. - summary analysis ef transactians: Cost~ Including Federal E~Ise, C~ty a~d State Taxes Tzansportation Char~es, Labor and ~aterlal Less~ Leaf and CasAng Salvaged ~ederal Excise Tax Ee~un~abl~ fr~ Re~ked or Salvaged GOOds Debit Balanc~ Transferred to Account l~o. 'Ii0~099 _ Net In~e" at December ~i, 1978 30,721.56 5,262.94 35,984.50 1,040.13 1,069.14 34,915~36

30-022 - OBSOLETE WRAPPI[~G MATE~AL AND EMPE~SES 1978 This accost records value of cigar wrapping material charged off as obsolete add cost of storage, Iknndllng and other expenses inaldental thereto and credAts for w~appAng mater/al ~ed or sold which was ~eviously charged off as 0bs01et~. s~E~ary analysis of ~ransactions: 51aterlal charged off LESS: Material previously ch~Zged off ~d subsoquently used Balance t~ansfezred to AccOunt NO* :'i0~099 ~ N~t income', at December 31~ 1978 28,577.65 76.35 28,501.30

30-023 . ~SOI//~TE N~C~11~ pA,~5 This ac~t reao~ value of clgaz machine parts ~ha~ged off as obsolete, ~nd othez ~penses L~cld~nt~tl the1~, and ~itm for p~o¢eeds ~alized for sale of c~solete machine par~s. ~bs01ete ~chine pa~ts (~£ed Off: Y~untaintop B~h ~lanue Tc~fegged to Acuomlt ~o, "10-099 - ~t ~" at De©~ 31, 1978 6,917.4~ 6,917.45

---

30-025 - t3~C%BSORRED Ai~ U~DZSTRIB~ EXPS~SE 1978 This a¢~t ~eco~ds ~epEo~Iw~on oig6~ e~ense an~ exuesslve overhead d~ing eazly moDths of pz~ and m~dm~ibutad a~ount~ a~plJ~ab1~ to othe= cost of sales ac~mmts o~ ~un~s which dlst~zt ~ moBth'8 ~ yeasts cost E£~eS at Clq~ B=anchej and Leaf

TOtal B~a~h .~m:L~£et~tJ.on ~em Credit Di~e~ti~n t~ ~an~hes Adjustment a~ ~ 31, ~8 Deh~t to A~ ~0. "30-025 - l~na~so~hed ~n~ ~alan~e a~ ~ 31, 1978 632,039*05 632,039.05 . 0 -

1978 This aCCO~.~t rec.o~ ~ral and ~lstrativ~ e~nBe appliaahle to ~ ¥ol-k Of~£~ Cigaz EXeCutives, 26~150.00 658*00 78~.52 127,397.56 4,304.78 29,064.00 3,~20.~g 287.28 1,281.00 ~19,08 1,041.85 49.2~ 14,00 391.24 2,163.73 10,12 153,36 15.36 25.0~ 4,~05.72 80.1g 19.19 ~gO.80 48.72 57.00 6.42 28 ,~64.00

891 - ~ p~VISZON DECE~ER 31, 1978 The debit balance of this account ze~rasent$ the awount of expenses for thin ~--Eent ye~ f~ the following taxes not based on ~, appliuabll to Q~ga~s: P~Bylv~ia ~i~ tax PennSylvania fran~hi~ tax A ~ a~alysls OE tTaneactlon$ fo~ 1978 follows: K/rid of T~x ~nnsylvanla Franchlee Debit balance transf~zod to Acootmt No. "10-099 - Net h~o~e" at DeceDber 31, 197B Deb£t s fo~ c~ea~B to A~COunt ~. "710-401 - pz~vis ~n f~ TmJ P~ 3,000.00

30.059 - FI~ICi/2~SE~ E~., TF~ES ~ BASED ON ~CC~ 893 - pRIOR ~RS' CONTZNGEI~Z~S D~CEM~ 31, 1978 The cr~it balance of this ac~t repze~mts the net c~it to ciga~ Depaztment 12~ome aovg~ng unci~rpx0vision or ove~i~coviaion for state taxes no£ based on income zelatlve to prior years, as determined by our TaX Department, during the ourrent year. A s~aly a.,*aly~,B O~ tZL~l~O'i:lO~S for 1978 follow~: of Tax TaX year Net CZadlts for Debits To AOOOUnt ~o. 710-301 PeanSylva~la Fr~hi~a 1974 (24,250.26} 1976 Credit balance tzansfcaTed to Aooou~% NO. "10-099 - NeE ~me" at Dec~hez 3?** 1978

30.060 - L~'~I~D~T OF P]~DUCTS 1978 This acco~ut rmcords monthly e~n~s Luclden~al to op~zation of Depaztment of P~seareh and Development, ioca~d at Chester, virginia. There wez~ no ~ansactionu d~ing 1978.

1978 This acco~u~t records mont]~y e~genSes applicable t6 cigars incldental to operation of Department of ~e~earch and l~8velo~ent locatQd at Chester, Virg~lla. S~t~mary a~alysis Of t~an~ct~oDs: Expen~e~ for Regearah and D~lopment in connection wlth developing new ~roduet s 93,~65.32 ~alance tTansfe~red to Account NO~ "10-099 . N~t inQo~e" at December 31, 1978 93~485+32

30.073 - MlSCELI~2~S L~C~ 1978 This account r~ords net inaome from various transactions not classifiable to any other Ciqar In~e accost. S~mQary a~alysls of tr~nsa0tions: Ga~ ~ef~d puroh~ses from South Carolina Gas ~ EIQctric CO. Refunds from Ford ~tor ReSale program Prafit on sa/~ of ~rap Balance transferred ~ A~count ~o. ~z10-09~ _ Net income,, at December 31, 1978 709.86 45.00 1,063.86

30-074 ~ ROyALTy INC0~ 1978 Th/s accc~t records royalties received from others throuqh their use of patois amd ~opyrJght~ o~ned by Company. There were no tran~c~i~ns during 1978.

30-076 - FLOOD LOSS 1978 This acco~.t recoils n~t loss rQ6ult~ from damage to ciqars by tornade and flood wgters. Metrogolitan C£gaxette Corp., New O~leans, Louisiana 6~.40 ~la~ Transfe~ed to Account ~o. "i0-099 - ~et ~co~" 65.40

3G-077 - pF~FIT AND LOSS ON DISPOSXT%0N OF CAPIT~ ~$ETS DEEE~ER 31, 1978 Th~s aoco%ult Eecords net (profit) or loss Eesulting from disposition of capital assets at cigar locations. S~a~ry a~alysis of transactio~s~ Profit: On sale of salesmen's and s~pexv~sla~to~biles O~ sale of land at Lancaster Less: provision on I088 a% 0wsnsboro Cre41t balanGe transfQrrsd to AU~Qunt ~o. "10-099 ~ Net inuomea~De~ember 31, 1978 17,201.13 381~617.19 172,600.00 209,017.19

X978 Thi~ acco~n~ r~o~s ex~enBe$ in ¢o~tlon with ezpezla~al w~rk on p~ar~ equipment fo: cigar lo~a~ons. There ~mze no traneautlons d~ir~ 1978.

30-079 - MZSC~LLAI,~O~S E~,~EHSE,~ 1978 Details of eu~ incur~e~ in closL~g of ~ufact~ing op~rat~i at C~on~xo BE~ah (~qensboEo B~emch: Va0a~ion pay 135,000.00 Separ atlcm pay 880,000.00 E~IO~# rQlocation expenses 15,000.00 D£e~llng and sh~ppi~g ~o~s of o~p~t ~nd su~plles to ~0un~Lnt~p B~a~ch 260,000.00 ~loyees' t~a~ling ~nses ~e se~-~ eq~ ~nsfez~e~ fzom Owens~ to ~ountalntop Branch 3,000.00 ~£butlun - U~i~ed Wa~ of Owans~ - Davless CounZy 1977-1978 Ca~ign 2,000.00 Con~inulng ove~he~ 150,000.00 1,445. 000.00 ~1 ~nsb~o B~anch ~a~gn~n~ of ~ut~m~nt a% ~ouu~int~p ~ar~h and ~v~n~ of l~a~ne~'s ~oJc ~w t~ans~tat~n cha~ £c~ lm~ shaped Total ~ounta1~top ~ch ~8,000.00 150,000.00 1,000.00 309 000.00 1~ew ~:ork Off~aeI l~l~e ~lmlif~:l to ~% No. "111-,099 - Nel~ ~al:~" 33,000.00 188,000.00 21,000.00 50 000.00 292 000.00 2 046 000.00

891 - ~ p~OVI~ZC~ DECemBER 31, 1978 The d~i~ bz~ of ~s ~o~t ~ntl the ~n~t of e~otm~a fo~ t~m o~rant ~ for ~a~ and ~ ~m ~a ~lieable to cig~s. A S~ ar~lysls of transaetlonu for 197B follOWS: K£Dd of Tax Portion of to~al other InaomJ taxeB for tho year 1978 appl£uable to ¢Iga~B, cred~ to Account ~. "30-090 - T&~s based on ina~ - 0T~eE ~ federal," ,,891 _ OJ~re~t pzovla~on" Debit balance t~ansfe~ed ~ &u~ount No. .10-099 - ~ in~" a~ December 31, 1978 Deb£ts for C~edfts ~o Ac~o=nt No. "710-401 - "600-080 - Provision for Deblt Taxis pa~able" Balance l~ 000.00 200 CO000

30-090 - ~$ BASED ON ~O/~ - O~1~R ~ I~DEIU~ . CZ~RS 893 - PRIOR ~40~NT~G~C~S DllC~v~F~q 31~ 1978 •here wa~e no t.~a~sa~tJ.ona ~m~o~d :~n ~his &coo,,mk ~ 1978.

31-002 . SALES - LEAF . EXPORT DECEMBER 311 1978 This acQount recordB a~o~nt of export sales of c£q~r leaf tobacco, ~y analysis of transactions: Ci~ar ~apper tobamco sold to Cebr. van Schuppen'5 Ritmee~ter, Ve@ndaal, ~lland Balance tran~farred to Ac~oun~ ~o. "10-099 Net income" at ~ecember 31, 1978 23,875.36 23,875.36

~is aocoun¢ r~rds COSt of e~port ~igar leaf tobacco sold. 8ux~ary analysis of trapsaoClons: Co8~ of cigar ~appQ¢ tobacco sold ¢o GebX. Va~ Sch~ppen's Ri~eester, Veendaal, HoXlan~ Bal~n~e tcansferred to Auoount ~0. "10-O99 - ~et incoae" a~ December 31r 1978 23,900.36 23,900,36

A~ERICAN B~ND3, XNC. RECLASSIFICATIO~ ENTRIES - BALANCE S~ET DECEMBER 31, 1978 AC~O~Dts payable reade 720-001 . AOcounts payable Ancrued salaries, wages and other ac~p~nsatlon 740-010 - Aacounzs payable - accrued pay roll AQ~Z~ed taxes ~ts payable - soaial se0~rlty a~d othe/ taxes bra~oh books - 1- 229,313.94 229 313.94 211 658.49 17,655.45 211,658.49 17,655.45 To reclassify location items of accrued pay ~Oli as "Accrued salaries, ~ges and other compensation" and of soclal sec~Ti~y and other taxes as "Accrued ~ax~s." A~rued Pay ~II other Looation ~0~ ~ Tac~es D~rham 41,728.78 39,852.09 1,876.69 Mountaintop 17,290.53 15~676.41 L614.12 ~idsv£11e 41,719.78 38,767.12 2~952.66 Virginia 31,410.07 29,106.46 2,303.61 DUrham Leaf 6,514.99 5~817.70 477.29 Lanoas~ezLeaf826.19 746.00 80.19 ~folk Leaf 1,122.64 1,056.32 86.32 Le~/ngZanLeaf58,799.0~ 52,957.83 5r841.25 RichmOnd Leaf?~254.26 6,676.98 577.2~ Ha~merD~vision 22,847.62 21,001.58 1,846.04 Total 229 313.94 211,658.49 17~655.45 - 2 . 429,0~0.00 ~cc~ue~ salarle~, ~ages and othoz uompensation 740-050 - in~entive compensation )~vertlsinq and other accrued expenses 750-070 - incentive ~o~nsat~on 429,000.00 To r@ulasslfy deleted portion of incen~ve compensation as "Advertising and othez ~ccrued expa~ses" (Continued)

AME~CAN BRA~, INC. RECLASS~YIC~TIC~ ENTRIES - ~ SHEET DEC~ER 31, 1978 - 3 - Long-t 8z~ debt 200-057 - Loans paymble to ~ican Brands Overseas, N.V. 830-045 - 9 5/8% Note due 9/1/79 Advert/sing and other auczued expenses £1~rent portion of lon~-tarm debt Page 2 624,000.00 150,000,000.00 150,624,000.00 150,624,000.00 150,624,000.00 TO Eeclaselfy, as a c~Eent liability, the estimated pzinaipal a~51L~ of debent~Tes and notes to be r~deemed in 1979 -4- InVenT~Eies 35~327.00 0ther raw materlals and supplies 170-001 - General factory s~pplies 35,327.00 Property, pl~t and equlpme~t, at cost 35,327.00 ConsT~ti~ 390-002 - Const~/ct~n 35,327.00 TO reclassify amounts ear~ied in Aoco~t: No. "390-001 - Construatlon- at yeaz-end for machine- part jobs to A~oun~ No. "170-001 - General ~a~tory ~pplias": Location AmOunt DuZham 19,429.00 Mountaintop Reldsville 10,520.00 ReSe~TCh and De~elo~e~t Ric~nd 1,122.00 virginia _~4256.00 Total 35,327.00 (continued)

AI~P, ICAN B~;, ZlqC. ~J~'~R 31, 1978 r..m~ 3 -5- Intercoc~anv Co, fro2 Aauo~nts 60.00 ~¢an~hel a~cl Leaf Depart~lntl 720-020 - sun~cy ~tl payable 60.00 TO record ~heaks issuld by loaationR in paywent of federal excise tax and leaf puEchale0 l~efore cash was adTanoed by New York Off~e Location Amoun_..~t Durham Leaf 60.00 Leaf StOCk Labor in ~oeess 0the~ raw ~tsr:L~3. and s~ppl£ee LabOr in procsss -6 - 96a g54.78 35 782.14 znventc~lem Flnlshed products 140-700 ~ LaboE in pro~eBs Rm~lassifioa~ion of lahoz in pz~ess from f~nlshed goods 132,736.92 LocaClo~ Lea~ Raw Material s R~£dsvllle 29,507.61 - Mountaintop 2~148o54 6,278,17 V2~ginia 35~217.77 Durha~ ~ 29,503.9__7 132,736.92 (Cont£nuod)

AMERICAN BRANDS, ~NC. RECLASSIFICATION ENTRIES . ~E SHEET DECKER 31, 1978 Page 4 ConstTuctlon in process Shipments in transit Inventories Other raw materials and supplies 170-800 - shipments in tr~sit Realassification of shipment~ in transit LOeatlon I~arl~m RBid~ille TOtal - 7 - 28,144.40 28,144.40 Amount 4r552.04 2,885.87 20,706.49 28,144.40 - 8 - 28,144.40 28,144.40 250-010 - ~eid~ille Branch 720-020 - S%1~dry accounts payable T record Reidsville's final FF 14 for 1978 9 - 751-001 . Payable to Galbreath CO~poratlon for a~si~ment of lease on 150 East 42nd ~treet 185.005 . Sundry a~counts ~¢ceivablo 720.020 - Sundry acoounts payable 615-001 - Receivable frc~ aBslgnment of lease on 150 Rast 42rid street to Mobil oil Corp. 2,885.87 2,885.87 97,000.00 193t000.00 97,000.00 193,000.00 TO reclassify c~zrent portion of re~eiv~le fr~ Mobil and payable to Galbreath on reasslgr~ent of 1~se at 150 East 42nd Street J. ~5

~2~EP/CA~ B~%/~DS, INC., A~D SUBS~IAP~S ~JUSTINGt P~Ci~SIF~CAT~ON AND ~L~INAT~NG E~BI~S - C~N~I~DA~ED ~ ~}{EET Cash payable to affiliated cc~anies Current portion of lonq-t~rm debt Long-term debt DECE~31, 1978 (In Thousands) Di£ferent ysar-er~ interc~any accounts - Gallaher Other current as~ts • o eli~te interc~mpany rsce£vakles and payables 76 81,005 2,000 38,000 356 121,437 121,437 Co~n st~ck Paid-ln capital Retained earr~gs , BaI~u~Ce DecembeJc 31, 1978 Other raw materlals, sUi~lies and wark in pmmcess In~anglhles reBultlng from ~usineas acquisitions Cash Invostments in subsidiaries A~e visible Reaords, ~nc. Aaushrmt Cc~pany American Bzands Export, in~ ~erlcan Brands Overs6as, N.V. American F~anklln C0~any American C~gar • he American Tobacco Cc~any The ~erican Tob~¢~ C~any of th~ ~iemt, In~. A~erlcan Tobacco ~ntsxnat~onal Corporation The Andrew J~g~ns C~mpamy Duffy-I~0tt Company, ~nc. C~Iden B~it Manufa~t~rin~ C~any Jam~s B. Beam Distillin~ Co. Ma~ter Lo~k CoW,any Sw~ngline Inc. Sunshln~ Bi~cult~, In~. wilson Jones Cc~any 87,767 581,552 120~196 1,689 144,830 9O 52,986 37,809 3 8,055 88 1 1 560 269,608 109,658 34,383 2,483 60,399 75,079 124~773 83,439 ~799 936,124 936,124 To eliminate investments in whOlly o~ed subsidiaries (Continued)

AMERICAN BRANDSr INC., ~ SUBSIDIARIES ADJUSTINGt RECLASS~FICAT~C~ AND ELIMII~ATING ENTRIES - CONSOLXDATBD ~ALANCE S~T Retaira~d earnings Balan~o D~ember 31, 1977 Net income fur 1978 DECE~ER31, 1978 (In Thousands) - 3 - Leaf stock Finished products 0thez raw materials, suppliGs and WOrk in p=o~ess 225 23S (13) 225 52 37 136 TO s~ti~s V~CIOUS Journal ent~es as indicated below: ~etalned Net E~try Earnings InoomQ Number 12/31/77 1978 3~A 190 (17) 3-B 4a 238 Loaf S~oc~ Pre~iuct_~ (37) Other ~aw Materials, supplies and Work i~ process (136) 4 (52) {13) (52) [37) (136) Retai~edeaznings Balanoe Dec~sCser 31, 1977 A%st income for 1978 - 3A- Finished gco~s Other raw materlals, sUpplless~d~rklnproces8 190 (17) 173 173 37 136 (Continued)

BMER~CA~I BRANDS, XNC., /~ND SURSIDL~2~ES ADJUST~ p~CI~SS~XCATION AND EI~HINAT~ ENTR~ES - CONSOLIDATED ~ S~£ET DECE~ER 31, 1978 (Zn ~%ousands) Page 3 - 3A . (Conkinu~d) TO ellm~nate f~ Iswentorles ar~ retained aarnlugs, profit, net of faderal income ta~es, on salea by Colden Belt Ma~ufact~g Cc~any ~o The American Tobacco COmpany and SUnshine Biscuits, L~. D~tails follow: Finished goads Tax @ 48% Other raw materials, supplies and WOrk in 9~oceBs TaX @ 48% Total Daceaher 31, 1977 70 ?? 33 37 40 262 289 126 139 175 190 = = 3B RefaCed ear~ngs Bal~/~eDeaembex31, 1977 Net incmme fQr 1978 Leaf stock 48 52 52 52 TO ml~ulnate from inventories and retained marninqs, profit, net of federal in~ taxes, on sal~s by The Amerlc~ Tobacco COmpany o~ the Orient, Inc., to The American Tobacco Company. Details follow~ L~af ~tock Tax @ 4S% December31, 197~ I01 93 4~ 4~ 52 48 {Cont L1ued)

~2,~RICAN ~%NDS~ INC.~ AND SUBSIDIARIES ADJUSTING, P~CLASSIFICA~IO~N ~ ELIMI~TING E~RIES - CONSOLIDATED BALanCE S~ET D~CEMBER 31, 1978 (In Thousands) Page 4 - 4 - Aecrue~ taxes Defexred income taxes 9,955 9,955 TO reclaseify as a curEent liability thnt portion of deferre~ income t~xes t~hlch is attributable to ~urrent assets and eurren~ liabilities as requlred by A~P.~. o~inlon ~¢o. ii. . 5 - Retained ~arni~gs - net inc~e for 1978 Retained ear~i~gs - divldends pa~d 80,150 80,150 To Qliminate dividends paid to A~erican Brands, Inc., by: ~m~rlcan Brands Overseas, N.V. 150 American Tobacco Intornational Corporation 31,700 The Andrew Jerqens company 3,200 GOlden Belt Manufacturing COmpany 5,062 ~ster Lock company 9,063 sunshine Biscuits, Inc. 6,800 ~win~llne In~. 3,735 American Brands ExpOrt, Inc. 950 Acm~ V~sible ~aords, In~. 655 Dully-Mort COmpany, In~. 266 J. ~. Beam Di~tilllng CO. 7,576 Acu~hnet Company 4,565 W~ISOn Jon~ Company 6,~28 80,150 - 6 - Long-term debt Other assets 4,800 4,800 TO net iRvest~ent o~ bOOks of A~ezlcan Bra~ds Overseas, N.V., against Eel~tsd lO~g-term debt on books of Am~ioanBzands, ~c. (Continued) A ,, ,!0,~

~2~CAN BRANDSt TNC., A~D S~IDIAP~S ADJUSTING, RECLASS~ICATION ~ ELIM~NAT~G ENTRIES - CONSOLIDATED BAI~CE S~EET DECE~ 31, 1978 (In ThouSands ) . 7 - Investment in The Franklin Life Inssrance company Balance 1/i/78 Net income for year 1978 Dividends received during 1978 Net ~nrmaliZed de~reciatlon on investments in maxketable equity le~nl~itles of The Franklln Life Ins~ran~ Cow,any for year 1978 Net ~reallsQd depze~i~tion on invests%is in marketable equity securities of The Franklin Life Insurance Company Balance I/i/78 For year 1978 Rsta~led earnings Balance 1/i/78 Net i~come fez year 1978 DiVldends received d~Clng 1978 Paga 5 6,214 1,617 13,872 (6.294) (2,981) 6,214 3,452 471 2,981 3,452 9,566 2,088 13,872 (6,294) 9,666 TO Ze~ord equity in undistributed net incom~ and ~Dz~aliz~ depreciation on investments in marketable equity ~auritles from ~ove~ber i, 1977,through December 31, 1978,related to 27 1/2% ownership in ~he Frankli~ Life ~nsuranue COmpany.

AMERICAN BRANDS, INC., ~ND SUBSIDL~2/ES ADJUSTZNG, RECLASSIFICATION AND ELiMInATInG ENTP~ES . C0~SOLIDATED STATEMENT OF INCOME N~t Sale~ ~roviRi~ ~or taxes on in~e Federal - ovrrently payable Retained ea~ings Met ina~me for 1978 COSt Of sales FOR TK~ YSA~ ENDED DECKER 3L, 1978 (In Thousands) - I - 13 13,934 13 13 13,960 To summarize varl.~uj journal ~,~cies as ~ndicated belowl P/ovision fo~ Net Rsti~%ed COSt of Taxem Sales E~_~ Sales on Znaome 1-A { 4) 8 ( 4} I-B 13t 934 (13,934) 13,934 13 ~I~, 95D) 15 Om~% of ~es Pe~aln~ ~rnln~ s Net inc~e 1978 peae~al . ~ly payabl~ 4 4 4 TO adjust cost of sales and F~dezal Inc~m~ Tax ourrently payable for the increase in the profits in inventory o~ The American T~a~c~ Company applicable to leaf salos by The American T~bacc~ ~any of th~ ~mt. D~tails ~li~w: profit in inventory Tax @ 48% De~ember 31 197_! i01 93 4~ 4~ 52 48 (COntOur)

~P~CAN BR~DSt ~C.. aND SUBSIDIZES ~JUSTI~IG, RECIASSIFICATZON AND ELIMINAT~3 Et~ES . COtISOLIDAT~ STATEMENT OF INC0~ ~C~ T~ YEAR E~D DECE~ 31a 1978 (In Thousands) Page 2 - IB - ~et SII~s 13.934 COSt of sales 13,934 TO eliminate sales by Golden Belt Manufacturing Co.any, Gallahe= Li~ted an~ wiZson Jones Company to affiliated c~panies. - IC- Retained eaznlngu 17 N~t i~me for 1978 17 Provision for ~xett on l,n~ 17 Federal - aurrently INlyable 17 Cost of Sales 34 TO adjust u0st of sales ~nd Federal ~n~Qme Ta~es uurr~%tly payable ~or t/~ dacrease in the profits in inventories of affiliatsd companles applicable to salas by GOlden Belt Manufaoturing COmpany. Deta~Is follow: December 31 1978 1977 Prof~ in inventories ~32 366 Taz @ 48% 159 176 173 190 - 2 - Cost of sales 411 other income 48 Selling expenses 102 Admlnl st r a~ive @xpQnses 225 P~0fit S ha~inq 102 Inueutives 30 To reclassify selllng and adminlstratlve exgenses of Golden Belt Manufactuzlng Company applicable to intercompany sales and salesmen di~Ibu~ion function ~e~formed for The American Tobacco company. (Continued)

2~LER~CA~ B~, INC., ~ SUBSIDIARIES ADJUSTING, RECLASSIFICATION ~ND EL~M~NAT~G E~TR~ES - CONSOLIDATED STATE~f~T OF I~C~ FOR T~ YEAR ENDED DEC~MBE~ 31r 1978 (In ThOUSands) Page 3 - 3 - Other income 97,191 Zntercumpan~ interest, dividends, etc. 97,143 Miscellaneous 48 97,191 Cost of sales 31 interest and related ~harqes I0,716 Other interest (5) Xnt ~company interest 10,721 i0,716 Retained ea~ning~ 86,444 Net income 1978 86,444 To eli~te Interc~p~y InteresE i~mo, interest ~QBSe, divld~ds and ~e~t hilled by The American Tobaouo 0o~pany to GOlden Be~t Manufaut~ing C~m~y 161s depreulation on rented proper ty. Retained emzninqs Net income for 1978 provision for taxes on income CUrrently payable - Federal Deferred - Federal in~m.e taxes Equity in pret~ me=hinge of The Fra~n Life Insl~r~c8 Company 13,872 13,872 7.362 6,364 998 7,362 TO record equity in earnings of The Franklin Life Ins~L~a~ce Company. 21,~34

? 7

( IN T~SA~ .~RaC l~i~r" 14~87~ (~Tl~cc

~£RI~N R~A~ INC. AND SL~GIDL~IES ~NSOLIPAT~n RAI~N~'~H~PY ~TH~.A...] ~LO~ BELT TO~CCe C~A~ ~'~E~ e. e~ C~Fr ,~1~ ~.,~ .~ V~I e.^Ne= 37.~3t 1 .~ ~,~1 ~,T~ ~7~ I ~,;~ ~a3 I 5~ 13~3 ~.~39 15.1~o 13,~~ ~1,6~ i 13o 71~ ~I ;,~ ~ TI~,~ 251.178 TI~!

4~J~

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AmerlcanCi~a~ a DivisionofAme~'J~anBra~ds, Inc. S+~ent of I~zome year Ended Dece~bez 31, I978 Sales to CUStX~ers Deduct: Cash Discount AIIo%~nces on Returned Net Sales Cost of Sales, Adwertislng, Sell~ng and General and Kdmlnlstxatlwe Expenses Cost of Sales Freight and Sh~pplng E~ense ~ew York Offiae Selling EXpense General and Admlnistrat~v~ EXpense Stat~ Taxes Not Based on Inoome Sale~en'8 Salary and Expense samples Magazine Advertising Newspaper Advertising General Advertising St~e a~d General Selling Expense MaZkotlng Depaxtment P%tblicatlonm, Trade, et=. Promotic~ and Distribution Total Brand Profit Do~uct i salvage and Expense - Returaed GOOds Salvage ~u~d Expense - G0~ ReWOrked~ DesTroyed, etc. Obsolete Wrapping Material and ~e~es Obsolete Machine Parts unabsorbed and Undlstzibuted F~Kp~e Finished GOOds Inventozy Adjustment New products DIvislon Vaoant Pro~y ~ Inactive ~qui~ment ~o~ 47,818,361.23 903,4~6.71 1 719 332.74 45,195,56L78 Puerto General Rican Branch 47,702,316.53 116,044.60 903,466.71 I, 719j332.74 45~079,517.18 116,044.60 32,572,798.14 32,497,889.73 74,908.41 1,386,039.31 1,381,236.32 4,802.99 384,579.15 384,579.15 9~,797.~6 935,797.06 ( 21,954.26) ( 21,954.26) 2,723,20~.75 2,695,195.75 28,007.00 96,281.25 96,011.28 269.97 396,395.91 396,395.91 ( I04.04] { i04.04) i02,~59.49 102,459.49 - 795,309.54 795,178.1~ 131.42 233~895.69 233,895.69 16,996.08 16,99~o08 59,672.34 59,672.34 39,~81 368.41 39 573~248o62 I08,119.79 ~193.37 5 506,268.56 7,924.81 ( 228,349.93) ( 228,349.93) 36,54~.95 34,915.36 1,627.59 28,501.30 ~8,501.30 6,917.45 6,917.45 142,544.52 141.577°55 966.97 233.61 233.61 93,485.32 93,485.32 150,743.08 150,743.08

American Cigar a Divlsim of American Brands, Imc. Sta~£ of Income Year ~ded December 31, 1978 Deduct: (Con tinued ) Miscellaneou S In~c~Q Flood LOSS LOSS on Disposition of Capltal Assets Adminis~ve Cost - ~t~m~t and Profit-Sl~l~lg Plans l~x~eivab~.e - ~s~z6 I~ en'~.ve Compensation Profit Sl~.z~l~g Total Net In~e ;~el=cre T,~eB Page 2 P~er£o General p, ican ~tal ~ Broth ( 1,063.86) ( 1,063.86) 65.40 65.40 ( 209,017.19) ( 209,017.19) 2,046,000.00 2,046,000.00 137,276.00 137,276.00 7,532.00 7,532.00 39,568.00 39,568.00 347,635.80 347,635.00 2 598613.65 2,SgSz~785.48 2,915,579,72 2,910,483.08 2,828.Z7 5 096.64

OO'S O~*OT ~o'0£ ~nom~ o0+o0~ O0+~S o~'~ oo'o~ 00"~ Oo,ooo~ oo-ooo+~ O0"OOO+6 00"~o0'6 oo-~ oo'ooo'~ oo-co~ Za~o0 ue~ ~o ~ ~o ~o~no~ ~ ~so~ ~ •

CC~Tp~B[~XC~S m.zr~Tc2~ D~%~S~ T~C*r D~v~SX0NS ZgV8 C~ARGED TO Pa~ 2 ~%o~n t Genezal ~d ~anch~s Cont zlb~t~d A~nlstra~ve Branch ~uat 1,000.00 1,000*00 50,0O 1,000.00 1,000*00 500.00 ( 48,271.301 (48,271.30) 50.OO 5.OO virgi~a 2~4.00 Durh~ 9,000.0O 9,000.OO ~i,000.o0 11,000.00 lOO,00 D~rnam 50.0O I00~00 M~ntainto~ 150~00 75.00 ~m~ta~nte~ ~20.80 5~0.~0 io~.00 I0.00 virginia 4~.03 Mo~n~alnt o~ 100 00 I0.00 v1191nla IC~.00 I00~00 ~nt ~dntop ~00.00 ~t~Int~p 100.00 50~.00 500.00 ~5.00 Rei~sville S0~.00 500.00 ~rglnla 5~000.00 5,000,00 I00.00 I0.00 Vlz3i~a i00.00 45.0O 23&.00 100.00 100.00 90.00 75.00 90.O0 9O.OO 4S.00 90.OO 2O.00 10D.00 200.00 ;5.03 2~0.00 9~.00 Z~a£~VL~tS SO,GO ~n 15O.OO Z.~nc~st ~*~ 30.00 5O.OO 20-050 - Ge.ueze~ zw,4 aclmJ.n~a~.lve 30-U50 - C~u~ r ~% an~ a ~:Lni~ % r a~.ive 20.O50 . ~ ~ a~Ir~v.c;~ve 20.050. G~al ~ a~s~zati~ 30.050. c~:al aa~ a &minis t zL,C.llV~ 400.00 103.00 3,OO0.OO 100 .~0 I2D.O0

CO~RZB~r~ZO~8 cnARGED TO • e~e 3 Amom~t ~er~l ~ ~heG ~f D~a~,%s tone,buSed A~nlstratl~ ~a~h ~%m~ ~ Amount ~00.00 5O0.OO 1,000.00 1,000.00 1,100.00 1,100.00 500.~0 ~00.00 1,000.00 1,000.00 ~50.00 445.OO D~X~ ~65,00 D~zha~ 140.00 D~rha~ ~0.00 I00.00 ~00.00 5OO.OO I00.~0 Durham 1,300.00 1,300.O0 100.00 10.00 ~izg/r~a ~0.00 I,~00.00 i~000.00 I00.00 150.00 150.00 ACCOunt m~gber ~ Titl~ ~5.00 ~5.00 ~0.00 35.OO 100.00 100,00 25.0O 20.0~1 - ~,~ ~ ~nd e~ L~ loo.c~

unJ=~d Ca~e~l ~;isv ~f N~ Y~rk Cit~ t~a~ Clvlc Asso~:£atlc~ un±te~ Je,~i~h Ap~al - Fed~ti~ ~ Jewish ~hi1~u~es weo= ~C v~1"~~ ~escua S~ad we~t ~r ~e~Dftm~a~ Church CO~=BUWI~S ~ A~CA~ TC~=CO C~A~y AW~ ~z~ CrGAR C~ARO~D TO Page 4 ~it Genezal m¢.~ Bzanmhe~ ~ Dew'amirs Ccntribatad A~r~isteat ire BraU~h A~uat ~ ~t~t ~,000.00 55,@~6.00 40,4S0.00 40,450+0O ~50.00 1~,70o.o0 13,700.00 5OO.OO 5OO.O0 ~00.00 i~n~as~e~ 100.00 ~00.00 ~i~ 500.OO ~50.00 V~,£~ i~5.00 ~c~d 55.OO @,5OO.OO 8,500,00 ~o0.00 V~r~inla 440.OO ~h~ ~0.OO 100.Q0 I@,00 Virgi~a 9O,0O 500.00 2,5O0.OO ~,500.00 5~.00 ~mt alntoD 5OO.0O I~.C0 ~u=talz~p i~0.00 6OO-O3O . ~ai~ ~e~s 5,Z94.0~ ~@~50 - General and a~stra¢iu~ 60.c~ 2~D2@ - ~ar~ a~m~L~i~t~a~i~ 10.00

~hr~ IN T}~ FVA~IN LI-~ INB~E COMPA~Z DEC~ 31, l~7s CQSt Of ~7 i/2% i~te2est it% Eral~ acquire/ i~ ~ove~ 1977 Ex~enr~s incurred ~n 1977 ~elated to above Expenses £nm~red in 1978 r~lated to abovo Investmant /n Frankl~nt at COSt, per American ~ran~s, Isc4, msc~ at Doc~ber 31, i~8 Investment in ~ank/in, at equity, at JanUary l, 1978 Expenses ~ in 1978 Equity i~ net earning~ of Franklin DiVi~end~ ~eiv~4 Zqulty in net change in unrealized d~pteciation on investments in ~erket~blm eqo/ty s~urities of The ~ranklin Life Insur~r~e Company at December 31, 1978 ~nv~st~ent in F~anklin, at ~ity, nt De~embez 31, 1978 Iin ~ousands) 176,126 733 I~I07 177 ,~55 178t476 i,I07 13,872 ( 6,294) 184,180

<.r ~G'~0'9~'~ ~.~5~g 09"£IL,~,s 8~'IIL'9~'~ 6~-9~Z,~6~ 6~.~5,~S~,~ ~*T~C,~T~,~ ~*0~9,~ ~'L~'8~'~¢ 0~.~6.96T,~ ~.906,ygL,~¢

197S

see copy of Annual Report. Inta~glble8 resulting from b~islness aoq~[sitlons NOTES ACC~ANyI~G FINANCIAL STATE~R are o~mprlsed as foll~s~ Deuember 31, 1978 1977 1976 1975 1974 1973 Cost in E~cess of Net (In Thousands] Assets ~fBusIDesses A~ulred ~ Gallaher 117t022 115r787 113w135 114f465 123~527 85,369 65~438 Beam 10r696 ~D4696 10w696 10~696 10~696 10~9~ 1~ Ma~t~ ~ 82~8~ ~8~ ~07 ~ ~2~7 ~2~ ~2~ Wi~ ~ 4~8~ 4~98~ ~ ~us~ ~7~ ~17 ~72 -- ~ 443,10~ 446,02~ 454,48~ Brands and Trademarks Be~m 26,990 26~990 26,990 26,990 26,990 26,99~ 3%]l%shi~e 32 32 32 32 17 15 Swlnglln8 JeEgens 27,022 27,022 27,022 ~ _~ 465'925 ~ ~ 473,049 481,492 449,370 1971 1970 1969 1968 37,661 36,798 8,iii 8,104 1,588 1,154 9,786 7,926 62,78~ 53,751 10,788 8,121 1,621 1,648 147,649 154,805 43,744 44,748 62t807 62r783 73,229 73,045 9,786 9,786 408,1s~ ~ 40~ ~7 s7,146 s3,98~ 26,991 26r991 271000 27,000 27,000 15 15 15 66 57 - 50 ~9 29 - 27,006 27,03% 27,094 ~66

Kh~ITULATION OF PROFIT AND LOSS ON ACTUAL DISPOSITZC~ OF CAPITA~ ASSETS DEC~ER 31r 1978 Reca~itulat/on of net pro£it or loss resulting from actual dispositions of capital assets, in~i~ing P~rt~ Bic~ Br~nch* S~mary tr~nsaatlons for the year 1978~ Per Recapit~l~tlon Of Inventories January I and December 31t 197S, A~quis£t£ons, Disposit£ons and Accrued ~pre~lati~n Therec~, Eealiz~tlon and ~rcfit and LOS~: Real estat0 and bu/idlngs ImDrove~e~ts ~o leasehold ~chinery and equipment, including Qn st~age Office furniture and equilm~nt, in~l~d~n~ on storage Salesmen I s ar~ Supervisors B automobiles Pas sender aut~m~bile~ AutOmobile tru~ks, tractors Net A~Ount Realized on Dis- GROSS ~oOk Reserve for ~Dsitio~s and Value o~ Depreciation ~et Book Valu~ (Profit) D i~ ~ of ~a~sfers or Loss 199,553.56 74,298,82 471,192.25 1345,937.51) 1,493,171.00 735,794.87 757,376.13 5,941,~0.52 4,5@S,777.11 8~,132.76 4~3,420.~5 353,952.81 297,364.21 9,612.89 4~,975.71 1,1%9,523.44 ~59,203.06 38@,322.32 (58,001.94) 68,126.84 58,333.83 21,178.56 (i~;385.55) _~9S~.22 ii7,274.57 12,4~4.~4 ( i~.616,19] 9!364!751.39 61741f046~47 1,801,873.62 821,831.30