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NOTICE DF MEETING Flemlngten, N. J:, Marek i, 19S(} Nozm~ m K~<~Y a~v~m that the Axmual Meeting ~ the Preferred av.4 C~mmuu S~o~kh~l<lors e{ TI~E A'z~c~ TogAcco COVZp~Ny ~I1 be held at No. 43 Park Avenue, FIemhlgton, ~New Jersey, at two o'olock in tlm ahernoon (Eastern Standard Time) on Wednesday, April 5, 1950, for the followhng pltcposes: (1) to ~leet Directors; (2) to consider and "¢ot~ upon two proposals (desi~aated Proposals A and B and set forth i~ the attaohed Proxy Statement) m~de by thre~ s~kholdcr~; ar~ (3) t~ transit ~eh ¢theY htl~r~e~s ~s m~1~ p~operly ~m¢ befc*r~ ~ald racking. The PreCerred and Common Stock transfer books will not be closed~ bu~ holders of Pxeferred Stock and Colnmon Stock to be en~igled to vote must be hok[ers of ~ecord at the close of busln~s on March 6, 1950. ]O~N ~. ~'~ANL~)~, SeCretary SPECIAL NOTICE I'Iolder~ af what was formerly Common Stock B who grill hold their Common Stock t; certiKeates ace r#mh~ded that, by amendment of the CA~arter of the Company on April 8, 1948, each shar~ ~ Common Stock B outahmding wa~ ~hsnged into one share ot Coln~non St~ck" wldl the voting ri~hts of Common Stock. namely: One wte per share. PROXY STATEMENT The enclosed Promy is so'Jolted ky and on hchaI£ of the IYianagement and is revocable tn wring. P:oxies in the ~rm eno~¢], proper1) cxccutet by ~toeldaoldecs and duly r~t~rned to the Managemen~ an¢~ not r~vok~d~ will be vo~od a,~d, ~ a eJloice be s~ecifie~ with resp~t to mat~¢r~ to be acted upon~ wi~ be voted ~n accorcla~ee wRh such spe~ea~io~s. The eut~an~ng nu~nber ~f e~c.h ~ass of votln~ sect~illes of the Company is: Preferred 52~997 share~; Common 5,378,4-95 shares. The Preferred Stock is enthIed to ~m~ vote~ per share. The Conmaon S~ck ie entkled to one "¢ote E~ .~bare, ELECTION 0]? D~RECTORS The Eoard o*] Dire~Lor~ consists of t~eventeen member~ who are ~leoI~d Lo hold o~ee nnlfl th~ next Ann~al b~ee~ing or uatiI their ~ueccs~ors are duiy elected an~ qualified, h ~ the ~ntent~on o~ the ~roxy Committee ~o w~ at thJs

.4nrmal 2,leetlng for the fullowillg nomhleeS. ~hc> together conshmt¢ the present Board~ add ~tho hax~ ~er~ed as dJre0Io~ Of the Conlpmly for the periol]~ eell!menelug with the elates sfatedL otter ~e[r re~peat~ names: ~fear l~:st Name IPrlnrlpml O~¢r~patlon Elect ed Direatar Ozpheus D. naxalys Vi~e-Prcsidonh The Ameri~.~n Tobacco Colla~any o~ the Orient, Inc. 1940 1~charg J. Boylan Vice-President, The ±knaerleaa Tobncco Company 1929 ]3ougIa~ W. B~a~hear Vi~ePr¢~ig~t, Amer~ar~ Suppliers, IncQ~pQrated h948 Thomas P. Col~n~r.~ Director of 'Italic, The d~n~eri~an Tobacco Company 1946 James R. Coon Vi~e Presidoat, Th~ American Tobacco Company I936 Joh~a _&. Grruve ¥~¢e-Pzezldent, The .am~eulL~an T~haec~ Corap~n? 1981¸ John S. Dowd Vice-Provident, American Suppliers, Inco~rated 1946 P~eston L. FoMer Vi~e-P~idcnt, The Amerlean Tobacco Company J941 Paul N. ~ahn ~ioe-Pre~dent, The ~Lraerlema ~2ubaee~ CompaW lg~ Hiram I/. Ha~ner Di~elor of Re~eaxch, l°be Americaa Tohae0o Company I938 F.dmu~d A. H~r~9, Treasurer~ The American Toba~) Company I992 H~rry L. }lilyard As~istat~t Treasurer, The thmexlcan T~aceo Co~npany lgOa~ A, LoRoy Jan~rm Auditor, ]'he American Tohac,~ Company ]¸948 JaJnes E. Lipseomb, J~ President, Amertha~ Snppllcrs, isworporated 191~ '~V~llism tL Og~ury Assistant C)fief o~ hlaan~a~ture, The Am~rlcan Tohacco Compai~y 19~0 Viucex~ Pdgg~o Pre~idant, The Ameulean Tobacco Compang 1927 James F. Strlchlang Vice-Pr~idemt, American Sa~pliera, Incorporated 1946 Ahhough the ~anageraent does not eentemplate the pe~athillt~ in the everat any ~omis~ee is not ~ ca~dldate or is mlabl~ to serve as a director ~t the ti~e of the electro,a, the p~oxles will he vo~ed ~or nny no~ai~e~ who sbul~ he tl~*gg~xat~4 ~ thB p~ent B~ltr4 ~f D~rector~ to ~ ~uck vae~ey Of the ,~u~taud&ag z~Uult~r,~ ~i the Cr~mp~uy ~t the eg~e ~ hu~i~e~a on February 1~ ~950, ~he Comgany is in[errand that the~e nora nee ~¢re d re~tlv or indlreetly tile bencfi¢~I owr~exs of seetlr~fies as follow~: ~arae I%m~ott Prefelrecl Orpheus D. BaxMys 819 ~8 Fdehard J. Boy]an 1,~140 200 Doag~an W. Rr~hear lO(I Thomas P. Condors 145 James it. Co~n 652 50 John &. Cro~e 2~0 5 John S. Dowd 240 Preston L. Fowisr 6D0 100 ~aul M, ~lahu 1.6~b Hiram iq. Ilanmer I~0 Edmund A~ Harvey 300 g0 Harry L. Hilya~d l_'2f~ A. LeRoy Jsn~ 165 James E. Llpscorah, Jr. 1,800 I00 William H. Og~bury 1~),0 fill ~isteent Pd ggio 5~g&2 ~ame~ IV. StrlokIand 320 Information re~ardlng the remuneration o~ direetor~ is herBtha~ter ~et forth under the eruption s~Remuneratioa". ~rvposM A. The Compaay ls intormed that Lewls D. C4~ert, ~oso addte~ 4~ l155 Paxk Avenue, New Yo~h 28, Nuw York. Joh~ d. Gilborh who~e adth'e~s is 1165 Park Avenue. New York 28, Now York, and John Campbell Henry, who~e address is 65 East 7(ith Street, New 'irork 21, New York, stookholders, intet~d to ~utroduee at the forthcoming Amaual Meet}ng the ~ullov~ng resolution (de~ignate4 ~xer~m as Pi'opo~a A) : "ResoI~.~ thal the ~lis,wlng elau~ ~hag he add~cl to th~ preaent provisions of Ar tiule XIl--That no~ivithsta~ging the above provisions for ineentlve compensation, the amoun~ to he paid to ~e Pr~aldent of the Corporagon shall in no event e~zeeed an aggregate total amount of $200,000 mad that ~i the ¥tce Presl~ent~ shall not be in excess o~ $150,000 each.~' 2

The proposei~ of lids resclatiou have fosnlshed the ioUol/ing ~¢~tenlc~l~ ~ettinS iorlh the rcag0n3 advanced b1 there in ~npp~rt of their prefect: "Now that ~eynolds Tobacco managcmen~ has adopted a plan <:ailing for ~adt~al eii~inatfon--over a ten year period--of their profit sharing plan mid Liffgett and ~yers o[gchhs eonklnae to waive a ~od percentage of theirs oaly Amealo~n Tch~eco continues to pay su~ amounts as $447,731.42 to its President (Total Compensation figures given in last Proxy Statement). Vlec Prc~dents reeclved address ~tals of ~246~688,84 cash. "~rc believe the managc~laIlt sponsored reductions of la~ year inedetiuato and that many agree i~ shown by the fact that 336,253 votes wcre ~ast for our similar proposal thai." Mr. Leed~ D. Gilbexls co-sponsor ~ Proposal A, has on five scpazate oce~slont~ at the Annual Me~h~ of 1946, 19~, 19~2, 19d8 and 1949, introduced proposal.* to change Artlde XII of the Coropany=s By-Laws h¥ lllnltlng the inoentlve eompen~all~n payable thelsundcr. The 194~ and 1949 proposals, wlti~ were identical with Proposal A, were introdueed by hlm and the same co-sponsors, MessIs. Ci113erL and Henry. ~ach of these proposaI~ lia~ hcen rejected by the stocld~alders by overwhelming vote. At ~e 1949 Ammal Me,~fillg, stochhalde~ cast d,g55~g47 votes opposed to this identical proposal Arli~le X~f o~ the By-Laws of the Co~npany wa~ adopted by the ~tochholders on March lg, 1912, by ~ vote of 62~,g~7 td~ares of stock ~n it~ foyer t~ 35 shares opposed. On the recerilmendatlon o~ the Management, it was amer~ded at the 1949 Annual Meeting of srochh~ldsss~ the effect of the ame~dment I~elng a suhstamial reduction ls~ the rate~ o~ i~eentive compensation payable under the ~Law. Th~ amended A~tiale X~I was adopted by the st~chhclders on April 6, 1949, by 5,I74~¢g9 votes in its favor to 110,290 votes oppose. It pro~de~ as follo~s: Section L As soon as practic~bl~ ~f~er the cud of the ~,ear 1949 and of each year of the Com~anv'~ ope~afloa~ thereafter, the Treasurer of the Company shall aseetm~n the net profits, as hereinafter d~mcd, earned by the Company during sash ~ar, and ~f such net profits exceed the ~mn of $15,g00,00G the Treasurer shaJl pay an am0nnt equal in the aggregate to li~e per cent. of such excess to the ]Precld~c~t and live Vine- presidents of the Company in lli= fallowing proportions, to wit: One-fourth thcceef, or 1~/~ per cent. of such mnom~t, to the P~csidenls onedilth of the r~nainder thereot~ or ~. per cent. o~ such amouah to each oi the live Vice-presidents a~ saIary for the yea~, in addlifon to the PuKed salary of each of said o~cers. Section 2, If any such office he vacant for a time amounting in the aggregate to one month in any year, so mush of the amoanS provided by this re~alutfon to be ~ald to the itacuxabent of sash ol~ce as is propor~onate to the time o~ such vacancy shall lie rett~rned in~ the general prolit accot~nt of ~e Company. If there sliall he a change daring the year in the inemmbent of any cl~ee, the amount hsrcinbefore provided to be paid shall lie dls.lded among the d~fferent ineuathents of such ofgc¢ in the proportion of their respcctlve periods of ~ncumheaey during the year~ slthjec~ ~ the above pr~v~sfon in ~-ehtinn to vacancies. S~ti~n g. ~or the purpose o~ this ~?-La~. the ~t profih, carried by th~ Cnn~p~y in g~ty y~a~ ~lall eonclst of the net sundogs made by the Company in i~s business a~ a manufaetozer e~ld sellzr of tobacco and its produe~ after deducting all expenses and losses, and such provlclons ms chalI he dpterm!~ed by the Board of Directors of the Company for depreciation and for all outstanding trade obligations, to which profil~ shall hc added, or from which profits thalI be dsdncted, as the case may be, the Company's prepowion (based o~ its stock liold~ng~) o$ the net profits or losses for tile year of its subsidiary eompan~c~ engaged ill the manufacture (dlrsetly or through the Company or any other a~llated company) and sate of smoking tobacco, cheedng toh~eco~ clgareltas~ or llttlc cigars. Section g. ~he deelarallon of the Treasure~ a~ to the anmu~t of net profits fo~ ~e year and the sum due anyone hereumlcr shall be binding and uonclu~ive on all parties, and no one chiming hereunder shall have a right to qgtestion the said declaration, or to a~y examination of the books or accounts of the Company, and ~otl~mg heroin confabbed shall give asy incumbent of any o/gas any righ~ to claim to continue therein, or any other right except as herein specifically expressed. Section 5. This Bytha~ may lie modified or repealed only liy the action of the stoclthalders of the Company sad not by the directors. The amendineut of Article XI~ adopted by the s~ochholders last year, while reducing the rates of ince~tls,e com. p~nsat~on ",'e:ty hgth,~t~nthliy~ pres~zv~s the edm~hnt of an ineen~'~e to ther,~d ¢~o~t and aeeomplishraem for stockholders. The e~tablithment of an athitra~y ceiling beyond which there is no such h~eenllge ~s incon~btent with the pfmolph of ineen~vo compensation and would not, ~n tlle h~,anagement's opi~on~ be advantageous to the Company and its stoclthalders. The ~fanagcmertt recommends ~hat 7on vote OPPOSED TO Proposal A. S

Propoaa~ ~. The C0mpan) is thformed Ibat the sar!le pr0pos~rs, M~rs. Gi]ber', Gilbert ~nd Henry, also intet~d to ~a~zo~u~e ~t the ioiL~e~g ham+a~I Me~ng ~e ~ollo~v~g ~e~olu~thn (tIe+~n~tetl hereth as Pr~pe~a] B) : "R~ol~'~, that the stockh~lc[ers ]~ereby reqtte~t thv B~(I ~ DJr~eto~ to f~]~e appropri~e step~ to suh~it t~ stoa~oIders ~t~ amea~roea~ to th~ CertlJ~cate oi ][n~orpa~a~i~n prov~dthg thr e~zrn~at~ve votlng+ that i~ t~ say tilat at a~ e~eetJon~ ~ thre~to~, the ~oekhold~r~ ~a~ be~'e thv right ol e~m~/ati~e vo~oag, whlch J~ to sa~ tha~ each ~to~belder ~ha]/ be entltIed ~o ~s ~ay vote~ a~ sbai1 ~quaI the ~umher of vot~ whic]~ he wauid he entitle~ to e.~t lo~ ttht e]e~6on o~ d~re0~ors ~vith respect to ]~is sh~res o~ +rock m~ltlplied by the na~ber o~ director." to /~e e]ee~d and he may Cast ~1i of ~th votes ~or a s/~e 85xeeto~ or may di~rthute them ~ou~ the ntmaber to be voted ~r~ Or a~ay two or more of them ~ be ma~" ~e~ ~?' The proposers of this reao]ufien h~tve ft~rni~bed the following st~teoaent +etLth~ th~th tho rea~ur~ ~dwnced ]~y them in ~upport of their ~opo~al: "Ctmmlativc voting ~ particularly imporl~nt at +4meriean T~ba~ because at present tl~ere ~e or~ aza" cmploye~ or~ t~e Board of Dir~e~ors~ Ther~ ara n~ aat~zJ~, d~eetor~ ~ ~ ~t~., e~m~.~y "a~ mos~ ~orporati0ns ~x+da~ Ma~y ~tockboklers ~ the r~ht to elect dlre~tors a~ A~erlea~l Tohaeeo ]~y ~umtdaflve ~. T~aS~ tm~ be~ ~t~wn by the th~ ~aat ~5 ~otc+ ~e~e ~ ~or th~ ;p~opos~l of ~ ~t ~r. |~ you agree with thos~ of yoar ~llow owner~ ~o vot~n~ please mark ~o~r b~ot for t[~i~ propo~L" The same prop0~er~, 2de~rs. Cilbert, Gilbert ~c[ Henry, thtro~uced th~ iden~ieal proposaI ~t the Aanual Me~tJ~g The Ion~.eont~ued reeont ol s~eeessthl operalthn of the ~omp~ny'~ I~usthe~ b~ dlreetors giving their enttre time and effor~ to the +ervlce tff th~ C~mpany an~ ~ts ~ubsi~iarles ~ndicate~, in t~e ~p~n~on o~ the ]~Ianage~eut, tha~ ~:au~8+ ~t be ~ the ~atere~ ~ the Cam~y t~ ~th~ate ~h~ at~th~eat t~ ~e C.~ztlf~ a~ ~e~t?~i~. The Mar~tem~ reeomrr~nds tha~ ~t~ ~ote OPPOSED TO Pr~p~l/L q~le Mana~mne~t ~ not now a~are of any other matter inte~de~ to be presented ~or aelth~ at the meeting. KEMIJ]NEI~.TION R~r~merat~ a] D~rector~ and O~er+. There is ~t thrth in the ~ollowing ~bedati~n the ~ggregate remun~a~[on ~ire~tly ~r indhreetly pa~ or ~er ~m~e, o~ an accrual h~s~+~ ~y the Con~p~ny a~ ~t8 ~s~arlcs to, er io~ the benefit of, th~ ~o]lo~ng persons ~or servers in all c~pacil~e~ while ~ctln~ ~ d~rectors or ~eers of tile Comp~x~y during ~s last ~i~cal year: ea0h person ~o wa+ ~t dir~3t,~r o~ lhe Cempany at any thn~ during such f~scal year and whose ~regate xemunerafion~ ~:clu~ve o~ p eal~ion, retirement and ifim~Jar tl~yme~f~, exce~d ~25,000~ eac~ pcr~o~l who was one ~ the three hlghe~f,paid o~e~r~ o~ the Cem~any thtrln~ st, e~t /~cal yea~ and whe~ ~greg~te remluilvrati~n~ exclusive ef penslen, redr~men~ aa~l ~hnthtr pa']men~m, e~ceed6~[ $25,0(}0~ and all pcrson~ ~m ~t ~roup, ~ho ~.er~ dlreclor~ or ~eers of the Comparty at any tlmc dur~n~ Bueh fiscal year. Wher~ tbe total remuneration e~ce~cls by mole tben tea par eer~t, the t~t~ re~ttmer~tt~ ~ tile p~ee~[~ ~a~ y~tr, t~ ~'~ ~ ~a~cl ~ C~I~-~a (6/. F~5~ta~ a~t~aal r~ti~'~ment henefi~ ~ the same indivfJuals at nol~aal r~[~remr, nt d~te ur~der the Rel/rement l°lan :~or arapIoyees ~dopted by the stoc~beldex~ n~ ~e 1969 ~a~t~al Mee~thg are ztme~ 5n Cobe~ (7)+ (I) (2) (4) or lde~tiIy o~ ~coup temune~t~o~ ~s ~ec~v~ ~a~f~| ~u i~'o/~t ~ Director, The AJ~cr~ '['ab~eo C~p~ny of the P6ch~rd J, Boyl~a Vieo-Pre+i~ ~nc[ D~re~or o~ ~0,000 ~204,44~.0~ p~e~a~, T~e A~¢vi~an 'To, b~eco C~mpany (7) Applicable R~ir~men~ Groa~ ~ce~ o~em at Norm~l ~Ir~n~e prev~ns i~llr ~m~nt pr~ ye~ ]D~te $16,??B 69.64 17,000 (,~] A~ialed ec~tpa~y ~ngBged t~ par e]lase ~lnd ~ ~trt dlin~ nf leaf t~baec~+ ¢

17) Estimated (5) Annual Apolicable ILedregtent porqon o~ (6) Benefit /I) (2) 14) Group igxee~s over at Normal Name o~ indivi&lal CaImciffes in whteh (3) Participation Insistence previous ~el]rement or identity o~ group remmaerafioa was xecvilrea Sal agie~ ~n pzll~s premlum your Date Douglas W, Brashear Vi~ePres~de~t, American Sup- $40,000 $69.64 $4,99611 $!4,000 pli0rs~ In~orpora~tt (a) ; (~n- era/ Manager of Sters~aeries Thoxaa~ P. Cormo~ Director of 'l'raf6~, The Am~r- ?f3,~06 69.M, 2,906.11 1L0~g icaa Tobacco Company Jamez R. Co~n(b) Vice Frcsldea~ ~d C~mptrgl. g0,0aO $236,sdt8.6¢ 60.64 17,t200 ~er, The ,~erican Tobacco Company Join~ A. Crowe(b)(e) ¥ice.Frcs~d~nfi The American 50,000 159,657.97 69.64 159,634.08 17,000 Tobaooo Company John S. Dowd V~e-Freside~t, American Sup- 50,000 69.64 9,9~6.11 17,000 pliers, Incorporated(a) Preston L Fowled(b) Vice.President and Cll[ef of 50,000 204~$f8~66 69.64, 15,033 Maauthettlr% "~he Alaerican "12obaeea Comp~ay Paul M. Hahn(b) Viee-Pr~sldonfi The American 50,000 204,443.6¢ 69.64 I7,000 Tobaooo Compsny; Presb denL A:~lericaa Cigarette and Cigar Company Hiram R. ISanmer Director of Re~earcli, The 32,500 69.64 IL900 Ameri¢an Tobacco Company Ed~n~nd A, Harvey Treasurer, The American To- 50,000 69.66 17,000 ba~o Co,albany Harry L. Hilyard(b) Assistant freazurer, The Amer. 4,0,000 69.64 4,996,11 11,I$2 ieaa Tobacco Company A. LeRoy 316nson Aud~tor~The AmerlcanTobacco 36,000 69.64 6,585.37 13,625 Company ~ame~ E. Lip~eomb, Jr. Pzesi~ent, ~raeficau Supplies, 32fi,9~3 69,64 ~5,0~3 Inoorporafed (a) William H. O ~b~tx7 Assistant Ch~oA ~ M~uf~c.t~r e, 5fi,(300 69,6& 17,000 The American T~baceo Com- pany Yineeal Riggin(b) PresidenL The Amerlcan To- 120.600 340,76%72 6966 25,000 bazeo Company James P. Strlokla~il Vie~-Fresldent, Amerleaa Sup. 50,000 69.64 9~996,I1 15,5~4, pliers, Incorporated ( a ) Direo~orB or Omccrs D~reetors or Ogicers as 936,500 1,31~,I8025 1,253.52 as a gro~tp grotl~ (&) ~bIiat~d oo~pnny ~nga~*d i~ ~ttrdx~o sxzd lmndlln g o£ acai to]~c~. (b) Also o~¢er o~ */52dated company oz ~ora0ani~s. (e) Electecl a Vico-Presldent on }.larch ~,2, 1949. The ara~ur~t re~orled ~a Calurrm (6) is ~eo~nted 5or by 2arti~ipati~ as ~ ~e~ P~r.~d~,t uttd~c Axti~ k~ ~r ~ 9 m~h~ o~ 1949, ~ ~g~it~t ~ ~c~t~t~z~, ~ 1040. The araomats stated in Column (if) above were a~crued as incentive compemsation (ba~d on participation in Company profits), trader Article XII of the By-Law*, as amended by vote of ~he slockholder~ at tlzo 19~9 2~nn~ Meeting. No lees or c0mmisaions were paid to or for the benefit of auy of tb~ individual6 ll6te~l tthove. Ther~ were no penslo~ r~firemem or similar paymc~N to or ~or the benefit of directors and officers of the Company. 3

The i~etlrement Plan For employees adopted by vote ot the stock'raiders at the 1949 Annual ~eefing covers approximately 18,850 reguinr folbfme employees of the Company and its subsldia~ies. The Compa~ hss mah*talned slnc¢ October 1, 1~16 a group llfe ia~uran0e plan whloh cowrs aB red,thor fuBdime employees of the Company and of it~ eo~solidzted American sub~diazles and certain employees of other subsidiaries, the maximum amonm of i~urancc there/ruder inr any employee being llmlted ~ $1~,0~0. Th~ amount of group Bfe fosu2ance provided for each employee is determ/ned by kb~ ~asid mmanl pay. Each of the editors a~d directors was instated for $I0,000 under such polloy. The cost of the Bmurance is payable ratably by the Ccqnpany and such suhaidiaale~. Th* total number of ~mployees insured un~r the pla~ on January 1, ]950 was approxim~tely 18,500. Th~ agitate anaount of remnnera%i~ for the fiscal ~cax 19~, ~eeb~ ~om the C~upany a~d ha s~bel~a~es, directly or indlre~tly, on an accrual basis, hy all the directors and o~cers of the Company as a group~ was approximately tw~nty-slx one.bundzedths of 1% of the Corapany% consolidated net ~ales. M2BCELLA~NEOU$ Any stocldielder making wnV.en request therefor to the Secretary of the Company wiR bc furniBIed a smmmary of the Annual Meeting that '~tiI be prepared after the raeeting ha~ been held. Messrs. L)haand. Ross Bros. & Moatgomery have for re,any years been the independent auditors for the Company, a~d are appointed by resolution of the Board of Dloe~tors. In accordance with the Company's custon~ary practice, a mouther of the firm of auditors ~ill attend the Annual Meeting and respond to questions which may be a~ked by stookhelder~. Comments or suggestin~ by stockholders w~th regard to file audit are w~leomed, as they are with regard to all other roarers affeetlnff the Company's ~nterests. Plomington, N. J., is ~cached by the Lehigh Valley RabIrosd. q]le present traht schedule, wkink ~ subject to chai~go and should be eonfimned, is as follow~: Leave Pennsylvania Station (5drd Street and Seventh Avenue, Nece York, N. Y.) 10:55 A.M. Arelve Flemlngton 1~I;10 P.M. Leave FTemlngton 5;07 P,M. Arrive Pennsylvania Station 6:35 pIVI. "[he Company wilt procure railroad transpofta~o~l, h'om New York to Flem~rrgton and ret~n, at Company exp~r~e for any stoekhoI~er of ~e~ord desiron~ of attending the meeting, on Ids nofi~ylng the Sccretar~ in writing, prior to March 31, 1950, that he w~shes such transporta~ioa obtained. If yea do not pIan to attend, you are urgently requested to execute the enclosed Prow and mall it to the Company promptly. Expense el Solfcetatiom The expens~ of the selinltsfion of Proxies for this meeting, i.chal~ng the oost of mailing, will he borne by the Company. In ad~hinn to melfoag eovles o~ thls material to stockholders, th* Company wM request persons who hold stock in their arena or e~tedy or in the name of nomluee.~ i~r other% to forward copies of suck material to those persons lbr whom they hold stock of the Company a~d to request anthorky for the execution of ~he Proxies. The Company may relmin~se snob pemon~ {or their out-oLpocket eXpelmeS and clerical charges in eonneotinn therewith, wlfich expenses are em~,ated to be about $I#00. To the extent necessary in order to assure su~oinnt representation at the meeting, o~cmrs and some xegular employe¢~ of the Cotl~pany and approxhnately 6 emaployee~ of Philip G. Cameron Compmay will reqtte~t the ret~n of Proxie2 by telephone, telegram or in person. at an estimated cost at about $12,500. The amount of the exp~nse to be harn~ by the Company wUl depend upon the volume of shares r~prese~ated by the Pro:des received promptly in ~c.~ponse to this Notice of Meeting. if Proxbs are not ree~ved promptly, it may be necessary for~o ~end teleg~'aphin solicitation to those s~oel2aolders who haw sot responded. The expense of such telegraphin selkdlation would be about $2,500, Stoekhelde~s who do not intend to be present at the Meetqng are urged to send in their ProxioA wBheut delay. Prompt response is helpful, and porte cooperation will be appreciated. F~ruary 9: 1950.

THE-A-MERICAN TOBACCO COMPANY FOR THE YEAR ENDED DECEMBER 31t |949 WITH CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF INCOME AND EARNED SURPLUS Executive i Office i 111 FIFTH AVENUE • NEW YORK 3, N.Y. j,

HIGHLIGHT5 OF 1949 1949 Net income pe~ common share ........... $7.80 Dividends paid per common share ....... 4.06 Net sales . $858,896,08~ Net income ..........................,...i ........ 45,676,154 Dividends paid (preferred and common) 24.675,682 Portion of net income invested in assets used in the business and to provide for debenture sinking fund requirements . 20,999,472 Current assets December 31 383,761,695 Current ]iabilitie~, December 31 i[32,93t,653 Net working capital, December 31. 460,830,042 Number of stockholders at December 31: Common ................................................. 64,104 Preferred ................................... ::.....: ......... 8,813 i 1948 " $7.58 3.75 $873,466,917 43,912,204 23.381,074 20,681,130 567,883,212 126.387,405 441.493.807 63,425 8,848

THE PRESIDENT'S LETTER Mooch 1, 1950 To the Stockholders: The accomp~ymg kncmcial statements submitted by the Treasuzer, including the report of Lyhrand, Ross Bros. & MonLgomery, Ce:~tified Public Accountants, present the result~ of the Company'e con~olldated operadorm in 1949. This Annual Report also con~in~ a summary of :~nanclal highlights, which appe~s on page 2, and a digest "1949 Operations at a Glance," Which appears on pages 12 and 13. SALES and EARNINGS Consolidated net income ~or 194-9 was higher by SI,762,950 than for 19411. This increase was primarily due to the fact tha~ the ctlrrent wholesale prices of LUCKY STRIKE Cigar eILes arid oIher major ciga~eLte bmndI~ of the Company plevcdled throughout the year 1949, whereas in 1948 lower levels al prices were eKective up to July 29 of that Tear. Sales volu~e in dall~ an~ units in 1949 was sliqhth/ lower than i~ 19~8. Over the years the inlense competition whlch exists between clgctrette ~analacturers has re.~altec~ in ~fts fr(~ t~me to fi~e in the ~ela~v~ volu~ al th~ ~iou~ hrc~s. Durlng I949 such a shi~t (p~cukaIT favorable to the br~nds with smcdler volume~ again took place. Th~s, while tl~ ~[t ~ales of LUCKY S~IKE C~g~re~es show a decline, rids was largely offseL by an increase in o~" sale~ of PALL MALL and HERBERT TAREYTON Ciq~eLtes. DIVIDENDS The dlvklend on the Common ~ock, payable March l. I~50, consis~ng of the ~egul¢~ tizst quarter dividend of 75 can~s per sbure and an extra dividend of $1.00 per ~hare is the 178th consecutive dividend on the Cernn~on St~ck of your Company.