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It's better when you do it together That's why Lucky has put charcoal and rolled tobacco together in a filter for the first time. You know about charcoal. It's the great mildness maker. Some cigarettes settle for charcoal alone. But Lucky rolled tobacco, a great natural filter. Together they give you -- real real mild. KING SIZE OR Charcoal and rolled tobacco in the tip. Only Lucky gives you both. Ti54210759

Eugene F, Mooney V=ce President-- Sales Philip H. Cohen Director of Advertising Boone Gross Relired (Formerly President. The Gdler.te Cempany) Marketing Five years ago the Company's entire Marketing Department was reorganized as a corporate function and all operations associated with creating and delivering a product were grouped under one Vice President. The operations include Sales. Advertising, Market Research, Corporate Media, New Pr'oduct Development and Public Relations. At that time the Company's most critical probtem stemmed from the fact that filter volume represented about 16% of our cigarette sales. The Company has substantially strengthened its position in the filter cigarette market since then and now has a total of twelve filter products nationally distributed compared with two five years ago. In terms of percentages, the Company's filter volume has increased by more than 150% since 1964, which, translated into dollars, represents $223,000,000 in added sales. Filter volume in J'anuary 1969 represented 36 % of total cigarette volume and the Company's marketing efforts are dedicated to further increasing this percentage. In late 1964 American Tobacco first introduced PALL MALL Gold in the new 100 millimeter size and the concept for the luxury length cigarette in the gold packing swept the market with a flood of imitators. In 1968 the 100 millimeter cigarette was the fastest growing segment of the overall filter business, representing approximately 21% of the total liltcr market according to a recognized independent report. American Tobacco has the largest number of products in the ! 00's market with six products distributed notionally. Though TAREYTON Filters have been inthe Company's product line since 1954, it was not until 1963, when a new advertising and marketing plan was developed for the product, that it began to show dramatic growth. Since that time, unit sales of TAR.EYTON have increased 56%. TAREYTON 100's were introduced [8 months ago and in 1968 the two products accounted for 64% of the activated charc_oaJ cigarette market. The intensive new product development program, begun with the introduction ot~ CARLTON in January 1964, had but one purpose and that was to create new filter cigarette products which would enable American -Tobacco to increase its filter volume. That objective has been pursued diligently and the Company's success in increasing its share of the filter market has been the direct result of our continuing program. American's newest filter introduction, SILVA THINS 100's, exemplifies the new cigarette with a new and meaningful product difference. In 1968 the Company invested most of its advertising dollars in network and spot television. In addition, leading mass magazines, news weeklies, newspapers and major men's" magazines were used t~or print advertising. Although the dollar amounts spent on cigarette advertising are large, they represent a small percentage of the total dollars spent for cigarettes in this country. Many other industries in the consumer goods field spend proportionately more for advertising than cigarette manufacturers. T!54210760

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I2 Advertising for our cigarette products is handled by six advertising agencies and all are compensated by an incentive fee method which was introduced in 1965. This system enables the Company to achieve greater mileage from every dollar spent. Over the last four years savings from this system have totaled $8,157,000. For many years it has been the Company's position that smoking is Our nationwide Sales Force works to get distribution and display for our major cigarette products. Theirs is a demanding and never-ending task since the number of retail outlets for cigarettes in the United States is estimated at 1,500,000. a form of enjoyment for adults. In George H. Woodard President, Welling & Woodard. Inc. 1963 the Company discontinued cigarette advertising in college publications and halted campus promotional activities to underscore lhis position. All cigarette advertising is carefully studied to avoid situations that might be misconstrued as appealing to the youthful market. Until now, Antonio y Cleopatra offered a great deal of pleasure. Now we offer ~~/ a L__ittle pleasure, too. New, mild AE.-C Little Cigars. They're flavorful and mild enough to satisfy the taste of any smoker. They're slim, extra long, and fil ter tipped. The elegant pack holds 20. Have a Little.You'll want a little more. T154210762

Cigarette Products Filter Cigarettes PALL MALL Gold 100's-lower in "tar" than the best-selling filter king! Longer. Milder. In the distinctive gold package. PALL MALL Menthol 100's--extra cool.., extra mild and forest fresh. Combines the outstanding taste of PALL MALL's fine tobaccos with menthol TAREYTON -- if you could: put "l'AKt~¥'rON'~h~lt-e-r-o~ your cigarette, you'd have a better cigarette. But not as good as a TAREYTON. 100's or king-size. LUCKY FILTERS -- put charcoal and real tobacco together in the LUCKY Filter and what have you got? Real tobacco taste made real mild. King-size or 100's. SILVA THINS 100's--lowest in "tar" of any 100's-- lower than most kings. Yet better taste. SILVA THINS has the Skyline Filter. SILVA THINS Menthol 100's- the same mild taste as SILVA THINS 100's but with a fresh menthol flavor. MONTCLAIR--where does a menthol smoker go to get a charcoal filter? MONTCLAIR-that's where... CARLTON--U.S. Government tests show two packs of CARLTON have less "tar" than one pack of any leading-brand-, BULL DURHAM ]Extra Size-- smokes slower for a better taste because it's thicker than other cigarettes. The slower the smoke the better the taste. HALF AND HALF Filter Cigarettes --pipe tobacco in a filter cigarette. The same fragrant HALF AND HALF blend pipe smokers have enjoyed for years. Cigar and Smoking Tobacco Products Cigars ROI-TAN--America's largest-selling cigar in the 10¢ price class, ROI-TAN offers more shapes than any other cigar at its price. Also ROI-TAlq Tips, Cigarillos and Trumps in the 5¢ class, and Golfers in the 4¢ class. ANTONIO y CLEOPATRA--the mildest top-quality cigar, available in 12 distinctive shapes. Selected shapes are available in both light and dark wrappers. BOCK-the original panetela, created in 1888. Also BOCK Pan-A-Tips, the panetela-shaped cigar with a plastic tip, and the new graceful, mild-tasting BOCK Chancellor. LA CORONA --"Supreme the World Over"-available in a wide variety of shapes in either light or dark wrappers. TIPTON --a slender cigar with the new "Lock-On" plastic tip and the extra light taste. Customarily sold at the popular price of 5 for 20¢. CABA~AS -"The Aristocrat of Fine Cigars-since 1795." Little Cigars ROI-TAN --the popular-priced little cigar in the traditionalsoft pack. ANTONIO y CLEOPATRA--the milder, longer little cigar of distinction, elegantly packaged in a crush-proof box. Nonfilter Cigarettes PALL MALL--King-Size--its famous length of fine tobaccos makes PALL MALL the long cigarette that's long on flavor. "Outstanding-- and they are mild!V LUCKY STRIKE--Regular Size. LUCKY STRIKE Means Fine Tobacco. A blend of the finest domestic and Turkish tobaccos. HERBERT TAREYTON--King Size With The Tailo~_d_Tip~J.avoy.j~¢ for more than fifty years because of its distinctive mild taste. Smoking Tobaccos HALF AND HALF--the Company's leading smoking tobacco, Burley and Bright, with a wonderful fragrance and aroma. BLUE BOAR-- American Tobacco's leader among high-grade pipe tobacco blends, now in pouch-in-box packing. GENUINE "BULL" DURHAM_ far and away the No. 1 "roll-your- own" tobacco. PALADIN BLACKCHERRY -- quality pipe tobacco, custom blended for a full-bodied flavor and rich aroma. 13 T!54210763

14 Smoking and Health The program of The Council for Tobacco Research--U.S.A., supported by the Company and others in the industry, is now in its sixteenth year. Since its inception more than $19,000,000 has been appropriated by the industry for a wide range of research studies through the Council. Research grants are recommended by eminent m en-of~eien ce~ompri " ~sing-the- Scientific Advisory Board of the Council, and grantees are given complete freedom to pursue their work and publish the results objectively and independently. Since 1963 your Company and five other cigarette manufacturers have pledged $18,000,000 to the American Medical Association for further independent research in the field of smoking and health. Research continues under grants made by the American Medical Association. The tobacco industry continues to endure unfair and unjustified harassment from government and private sources that has been unequalled since the Volstead Act. The use of antismoking commercials by TV and radio stations in response to the Federal Communications Commission requirement under its "Fairness Doctrine" that broad- casters devote "significant" time to antismoking messages typifies the pressures exerted against the tobacco industry. Despite the volume and virulence of anti-tobacco propaganda, the cold fact remains that no clinical or biological evidence has been produced which demonstrates how cigarettes relate to cancer or other disease in human beings. T154210764

Gallaher Limited 15 Gallaher reported increased sales for 1968. Converted to U.S. dollars, sales were $979,I40,000 compared with $940,457,000 in 1967. In view of these results the Directors of Gallaher will recommend at their General Meeting on April 23 a higher final dividend payment to Ordinary shareholders for 1968. Gallaher's principal cigarette brands in the United Kingdom are Senior ~rvJcc,.P~r~Drive_, Kensitas and Benson & Hedges. The company's quality cigarette products account for approximately 25 % of the United Kingdom's cigarette market. In 1968, following the successful introduction of Senior Service Extra - a cigarette in the lower price category-Gallaher placedthtee new cigarette products in test markets. One of the three, Albany cigarettes, offering the consumer a savings over popular priced coupon brands, became the third largest seller in Scotland and is now being introduced nationally. Gallaher's major cigar products are Manikin and Hamlet which are the two largest-selling brands in the country. Other important cigar brands are Senator, Harlequin and John Cotton cigarillos. Gallaher's cigar business represents more than 50 % of the cigar market in the United Kingdom. Gallaher's smoking tobacco products are Condor, Old Holborn, Holland House and John Cotton. Gallaher sales and income were higher than in 1967, partly as a result of a price increase that was instituted in July. However, this increase was needed to offset the devaluation of the British pound and the cost to United Kingdom manufacturers of replacing Rhodesian tobacco with more costly American tobacco. Results for 1969 will reflect the full effects of devaluation and exclusion of leaf purchases from the Rhodesian tobacco market. The company maintains its Head Office and service departments in . London; however, because of its Irish origin the Registered Office of the company is in Belfast. Of its 15,000 employees, 6,000 work in Northern Ireland. T-he-Gallaher_f.a~:torla~ :~r~. lncated in Belfast and Lisnafillan, Northern Ireland; at Hyde and Middleton near Manchester, and in Cardiff and Port Talbot, Wales. A new factory near Dublin to service the Irish Republic started production early irt 1968. The company's large Central Research Laboratory in Belfast is engaged in evaluation of leaf tobacco, smoking properties and projects relative to the manufacture of tobacco. It also conducts work for the Tobacco Research Council. On January 1, 1969, the following American Tobacco executives became Directors of the Galtaher Group of Companies: Robert B. Walker, President and Chairman of the Board of Directors; Robert K. Heimann, Executive Vice President; Cyril E Hetsko, Vice President and General Counsel and John H. Hager, Marketing Coordinator. Mark R. Norman, O.B.E. Chairman, Gallaher Limited A. W. H. Stewart-Moore Managing Director, Gallaher Limited Ti54210765

Food Products 16 James L, Bauchat President, Sunshine Biscuits, Inc. The sales of Food Products accounted for $289,089,000 in 1968 compared with $219,918,000 in 1967. The substantial sales increase reflects, in addition ~0$unshine growth, the operations of Duffy-Mott Company, Inc. Sunshine Biscuits, Inc. Sunshine's record sales in 1968 are attributable primarily to the rapid growth of the snack division. During the year a number of programs progressed from the planning stage to the stage of implementation. Specifically, they are (1) Manufacturing facilities now in the process of realignment and modernization, (2) A product line pruned of unprofitable items, (3) Sales territories restructured for more effective coverage of major outlets and (4) Advertising which has been give.n a new competitive punch. These programs have one single objective and that is to sharpen Sunshine's competitive thrust. Sunshine's most successful new products in national distribution are Mint Hydrox, tangy Cheez-Pleez and the new sugar dusted cookies-- Lemon Coolers. One of the most interesting new items being handled in the snack line is Nibb-lts, a puffed potato-base snack. The new Stay-Crisp plastic bag liner was introduced with a redesigned carton for Krispy Crackers in the last quarter of 1968. Early results indicate a substantial sales gain for these popular salted crackers. Primary Sunshine Products SUNSHINE KRISPY CRACKERS. Flaky-thin, flavorful saltine crackers which "out-taste 'era all." SUNSHINE HYDROX COOKIES. The original creme-filled chocolate sandwich cookie. Also available with a mint filling. SUNSHINE HI HO CRACKERS. The all-around, round cracker that About 40% of Sunshine's volume is in snacks-principally potato chips- as distinct from the biscuit and cracker business. The snack division also markets corn chips and, in California, refrigerated potato products are marketed for restaurants and institutions. This year a program to achieve package design uniformity and introduce the Sunshine logotype on all snack packages was phased in to achieve nationwide identification for Sunshine snack products. Sunshine now markets snack products, including potato chips, corn chips, corn snacks, nuts and popcorn, in 36 states and Canada. Sunshine snack products are marketed under the following regional names: Bell Brand, Blue Bell, Dickey, Drenk's, Gordon's, Ihrie, Klein's, Krun-Chee, Mann's, Old Vienna, Humpty Dumpty and Schuler's. The Executive team was reinforced with the election of Horst G. Denk to the position of Executive Vice President and Director. Cyril C. Nigg was elected to the Board of Directors and named Assistant to the President. At year end, W. Elliot Brownlee retired as Chairman after nearly 40 years of loyal and devoted service. Sunshine acknowledges the many contributions made by Mr. Brownlee during his varied career in the field of milling and production techniques, processing and quality control, product improvement and the establishment of raw material standards. goes with anything. SUNSHINE CHEEZ-IT CRACKERS. Delicious, inch square cheese crackers which are "Good Any Old Time!" SUNSHINE FIG BARS. Filled with a generous quantity of luscious figjam. SUNSHINE ORBIT CREME SANDWICH. Two crunchy toasted coconut cookies with a delicious, vanilla filling. SUNSHINE SHREDDED WHEAT. Ready-to-serve cereal made from the whole kernel of wheat. SIYNSHTNE CHEEZ-PIX. A new snack, finger shaped with a tangy cheese flavor. SUNSHINE GOLDEN FRUIT. The fruit sandwich biscuit filled with choice raisins. SUNSHINE GRAHAM CRACKERS. Nutritious graham crackers, good for.young and old alike. SUNSHINE VIENNA FINGERS. Pastry flavored sandwich cookies with creamy vanilla filling. SUNSHINE SUGAR WAFERS. Sugar-crisp waffled cookies failed with frosty icing. SUNSHINE CHEEZ-PLEEZ. Tangy, cheese snack crackers in four party shapes. Perfect for spreads and dips. TI54210766

17 Sunshine doesdt believe in fat saltines. 20 Sunshine Krispys 20 of the other leading saltine The best saltine is a thin, crisp saltine. As the picture shows, Su~shiue Krispy saltines are achmlly thimxer than the saltine which claims to be slim- style. Thim~er, crispier, better tasting. And because Sunshine bakes 'era this way, you get up to 8 ~xtra Krispys in every box. ~Vill the Sutmhine baker~ ever bring out fat salt~ ~ F~t chalice. ~n~e ~t~ ~tten And ~u ~n prove i~ T154210767

Food Products I8 Donald M, Klock President, Dully-Mot! Company, Inc. Duffy-Mott Company, Inc. Duffy-Mott is best-known for its Mott's Apple Sauce and other apple products, despite the diversity of its broad family of quality foods. In 1968 Duffy-Mott retained its leadership in the apple products field and by expanding distribution to previously uutouched markets in the South, Midwest and West Coast, achieved national distribution for this popular line. Another household word in the Mott's line is Sunsweet Prune Juice, a leading Duffy-Mott product since 1933 when the company became the first to process prune juice. Sunsweet has consistently outsold all other brands of prune juice combined. Other products marketed under the Sunsweet label are Apricot Nectar, Apricot-Apple-Prune Juice and Ready-to-Serve Prunes. A highlight of the company's year was its successful introduction to the New York market of a wide line of specialty vegetables packed in glass under the Lord Mort label. This packaging innovation in the vegetable field includes, for example, Cut Green Beans, Carrots, Beets, Peas and Tomatoes. The glass jar containing these premium products instantly identifies their color and quality, and on the basis of demonstrated consumer acceptance in the test region, Duffy-Mott plans to expand distribution into new markets. The company has.developed a promising new product called Clamato, a deliciously seasoned clam and tomato flavored cocktail. Following successful introductions --in-Omaha,, A-I b any-and-N ew-Yo rk, the company immediately sought distribution on a national basis. Clamato has proved popular not only as a breakfast drink, an appetizer and a drink mix, but as a base for soup and other dishes. Also new from the company's research laboratory are Lord Mott Rice Pudding and Lord Mott Tapioca Pudding, both packaged in glass. Market tests have been successful and broader distribution is planned. A totally new effort during the year was the company's entry into the institutional food field. In this area, Duffy-Mott has been successful with its frozen "Surf Cakes," prepared in the company's plant on Maryland's Tilghman Island. The company's nutritionists are developing additional frozen seafoods beamed at the institutional market. Additionally, Duffy-Mott has acquired the equipment and facilities of Cherry Growers, Inc., a quality fruit-growing cooperative head- quartered in Traverse City, Michigan and has arranged to market and produce its products. The major products include cherries, apples, plums, blueberries and rhubarb. This expansion not only adds other lines of fine foods to the growing Mott's family, but also provides the company with three midwestern plants to increase production of existing Duffy-Mott products. Duffy-Mott Products MO'I~r'S Apple Sauce--five kinds of apples make Mott's apple sauce never too sweet, never too tart, always just right. MOTT'S Apple Juice--fresh apple flavor so delicious and crisp it almost crackles. SUNSWEET Prune Juice-- the Relaxati~ze~-Only~Su ns~eet offers-the same laxative strength in every glass. SUNSWEET Ready-to-Serve Prunes --plump, luscious prunes packed in a sugar syrup. MOTT'S Puddings-ready-to-serve Creamy Rice Pudding and Tapioca Pudding. MOT'US Fruit Treats-chunky apples and other fruits made tastefully and especially for kids- and their parents. MOT'US Figure Control Meals- control your figure, not your appetite, with 3-course meals under 300 calories. MOTT'S A.M. and P.M.-fruit juices blended the Mott way for round-the- clock enjoyment. LORD Mo'vr's Clamato-- the light, bright anytime taste of clam broth and tomato. LORD MOT'E'S Vegetables-- more than 10 of the tastiest, tenderest vegetables ever. LORD MOTI"S Steamed Clams--a clambake in a can. Tender softshell clams, still in their shells. LORD MOT1"S Frozen Seafood Products- a brand new line of delectable seafood products from Chesapeake Bay--deviled crabs, fried dams, crab cakes and stuffed flounder. T!54210768