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PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER MNAT00415041

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER More than 800 stockholders arrive at the Hunterdon Central High School near Flemington, N. d., to attend the Company's annual meeting. Buses zoere used lot those coming [rom New Yorl: City. MNAT00415042

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER ~1!1. ROBERT B. WALKER, President, acted as Chairman of the meeting and Mr. John W. Hanlon, Secretary, acted as Secretary of the meeting. The following directors who were present were intro- duced by the Chairman: Virgil D. Hager, Executive Vice President; A. LeRoy Jan- son, Executive Vice President; Alfred F. Bowden, Vice President, and President, Cigar Division; Robert K. Heimann, Vice President; Joseph R. Waterhouse, Vice President and Treasurer; William B. Young, Vice President; James J. Cun- ningham, Director of Purchases; A. Gor- don Findlay, Vice President, Cigar Divi- sion; John G. Hager, Jr., Vice President, Cigarette and Tobacco Manufacture; Eugene F. Mooney, Director of Sales; John B. Sparrow, Vice President, Ameri- can Suppliers Division; Silas E. Strlck- land, Vice President, American Suppliers Division; George L. Turner, Pre~ident, American Suppliers Division; and George A. Wilkinson, Director, Tax Department. The Chairman also introduced Cyril F. Hetsko, Chief Counsel; and R. Kirk Batzer and Walter R. Staub of the firm of Lybrand, Ross Bros. & Montgom- ery, the C~mpany's independent public auditors. Approximately 85% of the total eligible vote.u were represented at the meeting. The Chairman reported to the meeting on the Company's recent prog- ress and its plans for the future: Pre~ident'~ Rvpor! Last year in my first report to you as President, I began with three statements. President Robert B. Walker reports on future plans and 12 major twtions taken by management during his first year in office. ! said that competition in our busine~ is constant and demanding; that our market is always changing; and that we cannot afford to stand still even for a moment. As to my first statement-the introduc- tion of new cigarette brands by our com- petitors in the last year, with more to come, makes it clear that competition in our industry is as demanding as ever. MNAT00415043

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER As to my second point-the fact of change in the cigarette market is self-evident to all of us. Your management views this change not as a handicap but as an op- portunity to win new sales. And with reference to my third statement of last year, I can assure you that since my first report to you we have not been standing still nor have we any intention o! do- ing so. Since last April your management has done these things among others: I We have achieved national distribu- tion for MOSVCL~IR Modern Cigarettes and made this new brand a factor to be reckoned with in the menthol market. Last month I informed you, via the An- nual Report, that MONTCLaIR's unit sales have been well in excess of expectations for a new brand, 2 We have brought to market a com- pletely new and different ty[~ of filter cigarette, CaRLV0S, with "tar" and nico- tine content so low that we print test results on all packs and cartons. CaRL~ON is another historical "first" for The American Tobacco Company not only in respect to its low tar and nicotine deliv- ery, but also in its use of the unique fla- vor-filter to enrich the taste. 3 We have spurred TAREYTON sales to another substantial increase, an increase gmator in percentage terms than the in- crease for filter cigarettes as a group. TAREYTON now has a new advertising agency, a humorous and effective cam- paign-which I think is a real "eye- catcher"-and a new look altogether. 4 I Last year I pledged to you our best efforts to strengthen the Company's competitlvc position in the filter and menthol filter markets While I do not have final figures Ior March, we estimate that filter cigarette sales represented approximately 167; of our total last month. In March 1963 the percentage was 11%, So we are moving toward a better product mix. 5 While broadening our filter cigarette line we are keeping our strong position in the nonfilter field. PaLL MaLL is ranked by independent analysts as the largest- selling cigarette in the country. LUCKY STRIKE aCCOUntS for about a third of all standard size cigarette sale.~. P^I.L MALL and LUCKY STRIKE, together with the nonfilter HERBZR'f TaREYTON, give us more than half of all nonfilter cigarette sales in the United States. 6 Meanwhile we have not neglected our other tobacco products. Last August we appointed a new advertising agency for all our cigar brands, a move taken to coordinate and strengthen our cigar pro- motion activity. More recently we have created a new Cigar Division, bringing the manufacture, sales and administra- tion of our cigar business under a single head. You will find in your sampler box today our new Ro~-TaN Little Cigar which we announced only a week ago. This is the first little cigar to be o~lered by a major cigar manufacturer using an established brand name, and I am glad this is an American Tobacco first. The objective of | MNAT00415044

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Be[ore commencing the meeting's business, stockholders rise and bow their heads in a silent moment o[ tribute to the late Paul zM. Hahn, President el the Company, 1950 to 1963. this management is to be first in every tobacco department, and I can announce to you today that we will very shortly offer a series of other product firsts, to be announced in the next few weeks, It is not generally realized that we are one of the nation's largest cigar manu- lacturers, with a sales volume of more lhan $50 million a year in this field. In a sense, our cigar business is a kind of built-in diversification, and I might add that we are the only large cigarette maker with a substantial stake in cigars. 7 In HaLF A~a HALF we have one of the nation's most important smoking to. bacco brands. H^Lv ^Na HALF has shown healthy increases for the last three con- secutive years and is continuing to climb in volume, Our efforts in the pipe tobacco field include not only sales promotion but also the introduction of new and bet- ter packaging, and in some cases the re- designing of labels for greater consumer appeal. We have recently offered new and redesigned packages for BLUE BOAR and Tux~-~, and we are studying other ways to increase our share of the smok- ing tobacco market. This too is a form of MNAT00415045

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER built-in diversification which we are not neglecting, even though it represents a small percentage of our total dollar volume. 8 Sala~ success does not just happen. It is the end result of many things, be- ginning with dedicated research and product development, continuing through precision manufacture and qual- ity control, and culminating in effective marketing. In the last twelve months we have strengthened our organization in all three of these important departments. Our research activities have increased so much that we will shortly break ground for a new laboratory building at Rich- mond, although, as many of you will recall, we doubled the working area of research only nine years ago. Our manu- facturing and leaf department, is phasing in a new six-million-dollar stemmery at Reidsville, and a new eight-million-dollar leaf processing plant at Richmond. Each of our three filter brands offers a multiple or compound filter with activated char- coal; our manufacturing department pio- neered this difficult departure in cigarette design and we have a greater production capacity for this most advanced typo of cigarette than any other company. Our marketing operations have been strengthened by the infusion of new blood, not only within the Company but among our advertising agencies. Some of this activity will not bear full fruit for some time, but we are sowing the seeds of progress. 9 I have mentioned the built.in diversi- fication represented by our various to- bacco lines, and in view of our strong financial position I know many of you are wondering about another kind of diversification-acquisition of new enter- prg~s compatible with but supplemen- tary to our tobacco business. Last year we engaged in a rigorous study of diversi. fication po~ibilities. This was conducted with great care and great intensity. Participating in this study were the President and Vice President.s of the Company, assisted by management com- mittees, a firm of outside consultant.~, and our investment banking advisers from the financial community. We are not going to rush headlong into the area of acquisitions merely for the sake of re- porting that we have diversified. We want our diversification, when it comes, to represent financial progress and not a drag on earnings, and we think that is what most of our stockholders want. ] emphasize this becau~ profitable acqui- sition requires proper timing as well as careful preparation and careful negotia- tion. The industrial scene in recent years provides many examples of ill-timed and ill-considered acquisitions which have re- sulted in troublesome divestment rather than profitable investment. On the other hand, I am sure that you realize Proposal Two, on which we will vote today, is tan- gible evidence of the further steps being taken by your management in this direc- tion. One of the imporiant purposes of Proposal "rwo, as pointed out in the proxy statement, is to enable the Com- pany to buy into its treasury its own MNAT00415046

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Belore meeting, stockholders view Company displays of advertising and products. Shown here, Shareholders Grace Weinberg of Kew Gardens and lrvine Friedman o! the Bronx. common stock and thereby facilitate pos- sible diversification moves. Here, as in the field of management, some of the actions we are taking may not bear im- mediate fruit. But the absence of dra. matic announcements does not mean we are standing still. 10 A good example of profitable invest. ment is our important stake in the Brit- ish cigarette market, where your Com- pany owns 13~. ot the ordinary stock of Gallaher Limited, a large tobacco manu- facturer which has an estimated 40% of that market. Gallahcr last year contrib- uted $1,357,000 to our earnings. This represents a handsome return on investment since our Gallaher holdings are carried on our books at less than $5,500,000. This was the amount o! our original investment in our formcr British subsidiary, J. Wix, which we built up over a period of years and which was exchanged two years ago for Gallaher stock. We are now engaged in negotiations looking toward a foreign acquisition in MNAT00415047

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER one of the European Common Market countrie~ Hopefully we may be in a po- sition to announce such an acquisition in Europe before next year's stockhold- ers' meeting-perhaps even before the year is out. When and if the European Common Market opens up for interna- tional commerce in tobacco products, we hope to be ready with a base of operations on the Continent. Meanwhile we will be acquiring manufacturing and marketing know.how in Europe. I I I have been attending stockhold- ers' meetings of The American Tobacco Company for many years and I realize that no such meeting can be considered complete without some mention of out- side directors. It has long been our con- viction that a tobacco busine~s is best run by men who know tobacco best. We still hold that conviction and our stock- holders have demonstrated on many oc- casions that they hold it too. At the same time, may I recall to you my promise of last year that we would certainly propose for election to our Board outside people qualified to make a real contribution to its deliberations, provided we could find such people. Of course we have the benefit of outside per- spective supplied by our consultanLq and agencies in many areas-finance, ac- counting, legal, marketing, public rela- tions, and so forth. Nevertheless your present management is alert to the pos- sible value of broad outside perspective at the Board level, and we have made a diligent search for qualified outsiders to sit on our Board. I am pleased to an- nounce to you today that we have made progress in this direction, and ] believe our search has been fruitful. We have two likely candidates under considera. tion at this time. Two of the pre~nt members of the Board will retire a few months hence, and it is our intention to replace these retirees with outside direc- tors whom I will nominate at the proper time. Accordingly, barring any unforeseen events or difficulties, I can tell you at this time that the composition of our ]7-man Board before our next stock- holders' meeting will include two outside directors. Let me make it clear that we do not have in mind figurehead directors who will serve as window dressing but working directors with demonstrated capability of contributing to our business decisions. This accords with our view that the func- tion of the Board of Directors is to ad- minister corporate affairs for the benefit of all the stockholders. We do not believe that any director, whether an operating executive or a qualified ouL~ider, should be elected by a minority through cumu- lative voting. A director so elected might feel bound to act in what he considers the interests of a minority, even though such action might not be in the best in- terests of the corporation and the stock- holders as a whole. We believe factionalism, on the Board or anywhere else, is not good for the Company or the stockholders. We be- | MNAT00415048

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER lieve the present method of election, by the majority, is the best way to avoid this and therefore we do not agree with the proponents of cumulative voting. 12 ] will complete this list of major ac- tions taken by noting that we increased the dividend. Last year, in the course of my report to you, I pointed out that tobacco has a long and honorable history as a creature comfort, stretching back many centuries before Columbus discovered it in this hemisphere. In fact, the growth of the tobacco custom has closely paralleled the rise of civilization itself. If tobacco's history is long and honor- able, it has also been marked by periodic storms, and we are living through such a storm at present. I believe that the cm'- rent anti-tobacco storm, like most waves of hysteria, is motivated in large part by frustrations of one kind or another. There is first of all the frustration of those who are unable to explain certain With the Company's cigar volume exceeding $50 million per year, Mr. and Mrs. F. T. Foy o[ Hatboro, Pa., ~'hou' interest in Roi-Tan, La Corona, Antonio y Cleopatra ond Bocl¢ y Ca. MNAT00415049

PRO'rECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Sherman M. Ancier Philip Appelbaum Thomas V. Brosnahan ailments which have accompanied our lengthening span of life on earth, and who see in tobacco a Convenient scape- goat. Now, as in generations past, there are those who see in the anti-cigarette crusade a chance to gain public atten- tion, or political advantage, or quick sci- entific notoriety. I cannot tell you that anti-tobacco propaganda will cease. In our 1963 Annual Report, which was sent to you last month, I quoted the re- cent statements of the Board of Trustees of the American Medical Association on the subject of smoking and health. That body proposed, and the A.M.A. accepted, a long-term research project because- and I quote-"Large gaps in knowledge will remain after the Public Health Serv- ice Committee reports on the appraisal of the literature and makes its recom- mendations." Despite dogmatic charges about tobacco from some quarters, the A.M.A. recognized the need to "probe beyond statistical evidence." Early this year The American Tobacco Company and other large tobacco corn- panics pledged a total of ten million dol- lars, with no strings attached, to help finance the A.M.A. study. We have also pledged to the A.M.A. the full coopera- tion of our research department, which is the industry's oldest, dating back to 1911, and which has boon continuously studying the composition of tobacco and tobacco smoke for more than 43 years. As businessmen we might be acctl.e, od of partiality if we challenged those who cloak their attacks in the guise of do- goodism. So let me quote to you a few statements and excerpts from neutral sources which will, I hope, put the exaggerated charges of the anti-tobacco crusaders in ~me kind of perspective: 10 MNAT00415050

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER From the Nebraska State Medical Journal: "... Lot us not tell then they are going to get lung cancer on the basis of ciga. retie smoking. Such a course might save us very red faces in the near future." From an article in Fortune Magazine on "The Science of Statistics": "Basic physiological investigations must now take over. The only way to prove that smoking causes lung cancer is to per- form scientific experiments that would prove the existence of a biological mechanism." From a Life Magazine article on the Sur- geon General's Report: "The report and its conclusions are al- ready being challenged by scientists as eminent as any on the Surgeon Gen- eral's Committee. These critics.., have pointed out that the incriminating sta- tistics have never been backed up by conclusive laboratory proof-lung cancer has never been induced in any experi- mental animal by the inhalation of ciga- ret smoke alone." Before we leave this subject, let us look briefly at the other side of the coin. There must be very good reason.~-reasons deep- rooted in human needs and wants-why 65,000,000 Americans, representing more than half our adult population, smoke cigarettes regularly. Let me illustrate this with a little news item which ap- peared in the press last December. This item was headlined "Navy's No-Smoking Test Turns to Ashes in 3 Days." It read as follows: "The nerves of 15 sailors ordered to stop smoking for eight days became so frayed that the test was halted after three days, Lewis D. Gilbert ,%muel Go/dbladt Albert Goldstein 11 MNAT00415051

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Navy psychologist Benjamin B. Wey- brew reported today. "The smokers in the test got irritable, ate too much, had trouble sleeping and per- sonal relationships began to deteriorate. "Dr. Weybrew said the 'psychological contagion' spread to nonsmoking sailors and 'there was a danger of impairing the efficiency of the crew.' The test was held aboard the Triton while the nation's largest nuclear sub was on a six-month global crui~ in 1960." Fortunately the great contribution made by tobacco to our daily lile-which has always been self-evident to me-is also self-evident to objective seientists and medical men. In the Annual Report we quoted a statement from the American Medical A.~sociation which is worthy of repetition here. Said the A.M.A.: "Since smoking may produce a tranqui- lizing otlect as well as other favorable psychic reactions not so well identified, these factors need further study in evalu- ating the whole matter..." I may turn out to be a poor prophet, but perhaps we may begin to hear more of the good effects of our product than some of our anti-tobacco campaigners would like. My report to you today would not be complete without reference to a series of positive steps the present management has taken to underline and reaffirm a policy and position we have always held. We believe smoking is a form of enjoy- ment for adults. We have no interest in promoting tobacco use among young- 12 stem. For many years we have taken special pains to see that our advertising copy and our advertising illustrations are consistent with this position. Early last June I instructed our sales organization to discontinue all advertising in college publications and all campus promotion so that there could be no possible mis- understanding of our position either by the general public or by critics of to- bacco. Later that month several other tobacco companies made similar an- nouncements through The Tobacco Institute. In August of last year we terminated the employment of our last remaining sports figure as a commercial announcer. We did this with regret because Frank Gif- ford, the great halfback oI the New York Giants Football Team, is a fine young man. However, we believe it to be in the best interests of the Company to lean over backwards, if need be, to demon- strate that we have no wish to appeal to youth in our promotion. In that same month we stated categorically in Lvcgv SvRIgv. advertising that "smok- ing is a pleasure meant for adults," and while our attempt to separate the men from the boys was criticized by some we received favorable comment.s from men of good will who appreciated what we were trying to do. Three months ago we announced that we would undertake no new commitments to sponsor sports pro. grams on radio and televlsion-again, to avoid even the appearance of directing our advertising to minors. I am not going to criticize an), of our competitors for MNAT004150>2

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER their advertising practices in this area, but I will say to you that the present management of The American Tobacco Company is determined to promote its brands with clean hands. As to the immediate state of our busi- ness, I bring you good news. While our January dollar sales were down, Febru- ary sales showed a distinct improvement. For the first 28 days of March unit ciga- rette sales, unit cigar sales and consoli- dated dollar sales were higher than for the comparable period in 1963. We do not have final March figures, but it is certain that dollar sales for the full month will be substantially higher than March 1963. Net income figures for the first quarter will not be available until later this month. The trend of our business is such, however, that I would hope and expect these figures will not be far below last year's for the same period, even though our advertising expen.~s in the first quar- ter of 1964 will be higher than for any other quarter in the Company's history. As you know, we are now promoting five major cigarette brands on a national basis, as compared with four last year. One reason for our good showing in this quarter is the fact that our new Cigarette is requiring less advertising expenditure than we had anticipated. CARLTON was so well received by the press that a demand for the brand ex- isted even before we had distribution or paid advertising. While it would be pre. mature for me to make any predictions, it does appear thus far that in CARLTON We have the right product at, the right time. It is a product which literally sells on sight, and in fact our ~lllng theme for C^RLTON Cigarettes is the simple Matilda Clickman Joseph d. Hack John Campbell Henry 13 MNAT00415053

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Edward J. Maguire I)r. Samuel Moskou,itz Evelyn Springlc phrase "See for Yourself." Ladies and gentlemen, I want to express on behalf of my associates and myself our thanks for the very real support and encouragement we have received from the stockholders. We have our share of challenges and problems in this compli- cated age, and we are doing our best to meet these problems so as to serve the best interests of the Company and the stockholders. We know today's problemg must be met with hard work. We know we cannot afford to stand still for a mo- ment. I assure you we are not going to stand still-we intend to move forward. Election of Direclors The following directors were elected: Orpheus D. Baxalys, Alfred F. Bowdcn, James J. Cunningham, A. Gordon Find- lay, John G. Hager, Jr., Virgil D. Hagcr, Hiram R. Hanmer, Robert K. Heimann, A. LeRoy Jan.~on, Eugene F. Mooney, John B. Sparrow, Silas E. Strickland, George L. Turner, Robert B. Walker, Joseph R. Waterhouse, George A. Wil- kin.qon and William B. Young. Action on Proposals Proposal One to elect Lybrand, Ross Bros. & Montgomery independent audi- tors for the Company for 1964, recom- mended by management, was adopted. 29,019,050 votes were east by the stock- holders "For" and 41,608 "Against" thc Proposal. Proposal Two to amend the Certificate of :Incorporation, recommended by man- agement, was adopted. 451,609 shares of preferred stock, being more than two- thirds in interest of the preferred stock out-standing, and 20,134,272 shares of 14 MNAT00415054

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Adele L. St~nton common stock, being more than two- thirds in interest of the common stock outstanding, were voted "For" Proposal Two. 1,696 shares of preferred stock and 90,076 shares of common stock were voted "Against" the Proposal. Proposal Three to provide for cumulative voting, introduced by Lewis D. Gilbert, John J. Gilbert and John Campbell Henry, was defeated. 25,943,543 votes were cast "Against" and 1,429,891 "For" the Proposal, or 5.22~. of the stock voted. Financial Reports Mr. Batzer of the firm of Lybrand, Ross Bros. & Montgomery read to the meet- ing the report of the independent audi- tors for the year 1963. The report stated that, as in prior years, the accountants had reviewed or tested accounting pro- cedures and evaluated the systems of internal control of the Company and its subsidiaries and that, in their opinion, the accounting procedures and systems of internal control are, in all material respects, adequate and appropriate to the needs of the business. The report described the procedures followed by the accountant~ in substantiating accounts receivable and inventories, indicating that (a) tesL~ and reviews were made as to cash collections recorded in cus- tomers' accounts which showed that the Company's customers are paying their accounts substantially in accordance with the credit terms granted by the Company; and (b) inventories were priced at costs determined by the aver- aging of the transactions reflected by the inventories in the accounts and the costs were computed by procedures consistent with those employed for man3' years, as MNAT00415055

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER approved by the United States Treasury for tax purposes. The Annual Report of the Company's operations for the year ended Deeember 31, 1963, a copy of which had been mailed to each stockholder of record, was pre- sented to the meeting by the Secretary. Discussion Sherman M. Ancier, Philip Appelbaum, John F. Astbury, Thomas V. Brosnahan, Lewis D. Gilbert, Matilda Glickman, Samuel Goldbladt, Albert Goldstein, Joseph J. Hack, John Campbell Henry, Edward J. Maguire, Dr. Samuel Mosko- witz, Stella Phillips, Evelyn Springle, Adele L. Stanton, Eleanor M. Summers, Joseph W. Szczech, Arthur L. Valen- tine, Dr. Frederic C, Willson and Paul D. Wolfe participated in the di~ussion with questions, comments and sugges- tions. In response to questions about the Com- pany's auditing procedures, Mr. Walkcr gave the following information to share- holders. The Company's accounting rec- ords permit management to make in- formed decisions. Regarding recommen- dations made by the independent public auditors, Mr. Jansen, Executive Vice President, recalled only one instance, in over a period of almost thirty years, in which independent public accountants recommended a change in our account- ing procedures. ]n that instance, the recommendation was examined by man- agement and the change was instituted promptly. 16 As to inventory control, Mr. Walker stated that the Company counts all of its hogsheads of tobacco at least twice a year and the independent auditors also count a substantial portion of the total inventory. In a discu~ion on cumulative voting, Mr. Gilbert stated why he favored it. Mi~ Stanton spoke against cumulative voting, while Miss Phillips favored it. The following is a summary of other subjects that were brought out in the general discussion period. As to directors, the Company's by-laws provide for regular meetings of the di- rectors on Tue,~iay of each week; the), also meet informally each day at lunch- con, and formal business is usually con- ducted on the last Tuesday of each month. Last year there were 16 meetings of the Board at which formal business was transacted and at least 9 members of the Board, usually more, attended each meeting. Two members of the Board -John G. Hager, Jr., and Virgil D. Hager -are brothers. The Company does not reveal its adver- tlsing expenditures because of competi- tive reasons; however, advertising ex- penses in 1963 were approximately 20% higher than in 1962. The various media used by the Company are carefully eval- uated on a continuing basis. It would not be useful for the Company to list its tele- vision shows in the Annual Report be. cause the television sea~n ends three months after the Annual Report is i~ued and new shows are purcha~d which be- gin in the fall. MNAT00415056

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Arthur L. Valentine Dr. Samuel Moskowitz stated that the Federal Trade Commission's attempt to force cigarette manufacturers to label their cigarettes as "harmful to health" is unwarranted. He emphasized that statistical correla- tion is not proof of causal relationship between cigarette smoking and lung cancer, and said he was astounded that the Surgeon General and his Advi~ry Committee were taken in by such studies. In the absence of laboratory or other positive evidence, there may be no relationship between smoking and lung cancer, he said. Havirig used statistical calculations in his own work, he realized that one can pretty much determine what one wants to prove in advance and then go ahead and prove it with statistics. Mr. Gilbert read to the meeting excerpts from editorials appearing in the Abing- don, Pennsylvania, Journal of January Dr. Frederic C. Willson Paul D. Wol[e 23 and 30, 1964, which discussed throat cancer and noted that man.u-heavy smokers pass the age of 90 while many nonsmokers contract throat cancer at an early age. The Corapany currently has eight lung cancer lawsuits pending. One of them is on appeal to the Supreme Court; lhe other ~ven are in a pre-trial stage. Brief di~ussions of Company products di~losed that the Company packages it.~ filter cigarettes with the filters at the top of the package becau~ consumer re- search surveys indicate that this packing is preferred by most filter smokers. ROI.TAN is the nation's largest-selling 10¢ cigar and the Company is working to improve the brand's distribution east of the Mississippi. First shipments of new ROI-TAN Little Cigars, with filters, were made eight to ten days before the meet- ing. Cigars are profitable to the Company. 17 MNAT00415057

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER After close of meeting, stockholders rush to stage to visit Mr. Walker and directors. 18 On leaf tobacco, the Company's inven- tory was le~s at the end of 1963 than the end of 1962 partly because the Burley auction markets closed earlier last year than usual. Currently, the Company's leaf tobacco inventory is about the ~mc or slightly below what it was this time last year. Other information given during the dis- cussion period included: Federal and other taxes on Company income, as stated in the Annual Report, amount to more than 52% because of the inclusion of state and local taxes; the action at the meeting on the charter amendment puts the Company in a position to purcha~ shares of its own common stock and, if it should decide to do so, purcha~s would probably be made on the open market; from the end of 1963 to the date of the Annual Meeting, the market price of the Company's common stock increa,~d by 16%, compared with an average gain of about 5% for other major tobacco com- panies, and about 7% in the Dew Jones Industrial averages; most of the income received by the Company trom Gallahcr Ltd. in 1963 was tax free bccau~ British lax had already been collected on Galls- her's income. One stockholder expres.scd objection to use of animals in scientific experimentation. During the course of the meeting, and at its close, several stockholders compli- mented the Company on its recent prog. ress and commended the Chairman for an informative and pleasant meeting. MNAT00415058

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PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER y OUR COMPANY'S PRINCIPAL PRODUCTS which make your dividends possible... Cigarettes PALL MALL LUCKY STRIKE TAREYTON (with activated charcoal filter) CARLTON MONTCLAIR HERBERT TAREYTON Cigars ROI-TAN ANTONIO v CLEOPATRA LA CORONA BOCK v CA. CABAlqAS Smoking tobaccos HALF AND HALF BLUE BOAR GENUINE "BULL" DURHAM 150 East 42nd Street, New York, N. ~'. 10017 PrJntcd |n U. S. A. MNAT00415060