Tobacco Documents Online

PROXY IMPORTANT NOTICE-This proxy is forwarded by the Management, who request, if you will not be present at the meeting, that you fill out, sign, fold and return this proxy in the enclosed stamped addressed envelope. -1 -i The undersigned hereby appoints PAUL M. HAHN, JOHN A. CROWE and A. LEROY JANSON proxies, with power of substitution, to vote at the Annual Meeting (including adjournments) of Stockholders of The American Tobacco Company, to be held April 2, 1958, for the election of directors, on Proposals A and B referred to below which are described in the Proxy Statement, and on any other business that may come before the meeting, with all powers the undersigned would possess if personally present. IF A CHOICE IS NOT SPECIFIED BELOW, THIS PROXY IS TO BE VOTED FOR PROPOSAL A AND AGAINST PROPOSAL B. Management recommends a vote FOR Proposal A. ^ FOR PROPOSAL A ^ AGAINST Management recommends a vote AGAINST Proposal B. ^ FOR PROPOSAL B ^ AGAINST A majority (or, if only one, then that one) of the proxies or their substitutes acting at the meeting may exercise all powers hereby conferred. Dated : . . . . . . . . . . . . . . . . . 1958 0!4TV #,0tcryCi00/~T Company will fill in V V .......... Preferred ... .. ... Common .. . ... . (Stockholder should~sign here) ~ ~ * -- [L. S.] When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such.

NOTICE OF DIEETING Flemington, N. J., March 1, 1958 The Annual' 14'Ieeting of stockholders of THE AMERICAN Tot3ncco CoINzPnNY will be held at the Hunterdon Theatre, corner of Route 69 and Church Street, Fleminglon, New Jersey, at one-thirty o'clock in~ the afternoon (Eastern Standard Time) on Wednesday, April 2, 1958, for the following purposes: (ll) to: elect Directors; (2) to consider and' vote upon a proposal (designated Proposal A and set forth in the following proxy statement) to elecu independent auditors for the Company for the year 1958, whichproposal, has been recommended by the Management; (3), to consider and vote upon, ai proposal (designated Proposal B and set'forth in, the following proxy statement) made by three stock- holders; and (4) to transact such, other business as may properly come before the meeting. The stock transfer books will not beclosed, but holders of Preferre& St'bck and Common Stock, to be entitled tovote, must be holders of record at thealose of business on March 3, 1958. JOHN W. HANLON, Secretary

a PROXY STATEMENT The enclosed proxy is solicite& by the Management. The proxy may~, be: revoked by notice in writing given to the Secretary at any time before being voted. Proxies in the fo= enclosed, properly executed by stockholders and duly returned to the Management and~ not revoked, w.illl be voted and, where a specifi- cationis made on the ballot provided therein, will be voted in accordance with such specification. Attendance at the meeting does not serve to revoke the: proxy. The number of shares of each class of voting seeurities of the Company outstanding, is: Preferred, 527;831 shares; Common, 6,512,522 shares. The Preferred Stock is entitled to four votes per share. The Common~ Stock is entitlled to one vote per share. The record date for the determination of stockholders entitled to vote at the meeting is the close of business March 3, 1958. ELECTION OF DIRECTORS The Boardl of Directors consists of nineteen members who are elected to hold office until the next Annuall Meeting or until their successors are duly elected and qualified. It is intended that proxies in the accompanying form will' be voted for the nominees named beloav. These nominees, with~ the exception of George L. Turner who was elected a director on February 4, 11958, are members of the present Board and have served as directors of the Company for the periods commencing with the dates set after their respective names. The Company is informed that these nominees were directly or indirectly the beneficial owners of outstanding securities of the Company at the, clbse of business on February 4, 1958, as set forth after their respective names. Name Year First Positions and Offices with Company Elected and Principal Occupation (a) Director Common Preferred Orpheus D~ Baxalys Vice-President and I1^Ianaging Director, 11940 2;23062 Thomas P. Connors John A. Crowe A. Gordon Findlay Charles Ganshow Jolin, G. Haoer, Jr. Virgil D. Hager Paul N1. Hahn Hirarn R. Hanmer Harry L. Hilyard John R. Hutchings, Jr. A. LeRoy Janson The American TobaecoCompany of the Orient, Inc. (b )' Vice-President in charge of Public Re- 1951 700 lations Director of Traffic 1946 300 Senior Vice-President 1931 800 105 Vice-President, American Cigarette and 1953 2,005 Cibar Divisiony and Chief of Ciaar SalesVice-President, American Cigarette and 1951 11,000 Cigar Division, and Deputy Comp- troller Manager of Louisville, Ky., Ciaprette 1956 200 7 Factory Vice-Presidenty Manufacture1955190 President! 1931 4„784 Director of Research 1938 300 Vice-President and Treasurer 1944 750 President', American Suppliers, Incorpo-1951 500 rated (b) Vice-President and Comptroller 1948 418 2

Name Year First Positions andlOff'ices with~CompanyElected andlPrincipall 0ecupatfon(a)DirectorCommon Preferred Ferdinand Mall,raf Director of Purchases, 1957 100 Siltis E. Strir;klandl General Manager of Stemmeries, Corn- pany and American Suppliers, In- corporated(b)~ 1957 100 George L. Turner Vice•President, American Suppliers, In- corporated(b) 195ou 150 Robert B. Walker Vice-President and Director of S'ales 11955 410 George A. Wilkinson Director, Tax DepartrnenY 1957 275 William B. Young Assistant to the Senior Vice•President 11956 600 (a), The positions andl offices listed after the name of a nominee are withtheCompany;, unless otherwise noted, and are his principal occupation. (h)~ Affiliated company engaged in purchase and handling of 1Laf tobacco- The Company is also informed that none of the nominees was directly or indirectly the beneficial owner on February 4, 1958, iof outstandingsecurities of: subsidiaries of the Company, other than directors'qualifying, shares. George L. Turner was elected a director onFebruary 4, 1958. Mr. Turner has been a Vice-President of American: Suppliers, Incorporated, a principal leaf~-buying, subsidiary of theCornpany; since 1lIarch 1, 1957 and for more than four years prior t'heretowasAssistant to the Executive Vice-President of that subsidiary. He has been employed by the Company or American Suppliers, Incorporated for rnorethan, 42years. In the event any nominee is not a candidate or is unable to serve as a director at the time of the election, which is not now expected, it is intended that the proxies will be voted for any nominee tivhoshall be designated by the present Board of Directors to fill such vacancy. Proposal A ELECTION OF' INDEPE\DE\T AUDITORS The Management proposes and recomanends theelectiom by thestocl:holders at t'heAnnual Meeting of Messrs. Lybrand, Ross Bros. & Montgomery as independent auditors for the Company for the year 1958. In line with thisrecommendation the Management intendst& introduce at the forthcomingAnnualAleetingthefollowing resolution (designatedl herein as Proposall A) RESOLVED, that Messrs. Lybrand, Ross Bros. & Montgomery be and they hereby are elected'the independent auditors for the Company f©rthe year 1958. This firm of certified public accountants have been for over 25 years, the independent auditors for the Company. In accordance with the Compan~-'s customary practice a member of the firm will attend't'he~Unual .lleeting andl respond to qlucstions which may be asked by stockholders. TliellLanag,ement recomrnends that youvote, PORProposrzl A. Proposal B RESOLUTION PROPOSED BY TIIREE STOCIiHOLDERS The Company is informed that Le~cis D. Gilbert, a recordi holder of 80 shares, of Common Stock, whose add'ress is11G5 Park Avenue, New York 28, N. Y., and/or JoltnJ.Gil'bert,a record~ holder of 80 shares of Cornmon Stock, whose addr.ess is 1165 Park Avenue, New York 28, N. Y., and/or 3

John Campbell Henry, a record hold'er of 400 shares of Common Stock, whose address is 5 East 93rd Street, New York 28; Ni. Y., intend to introduce at the fortheoming Annual Meeting thefollozving, resolution (designated! herein as Proposal B) : "RESOLVED: That the stockhold'ers of The American Tobacco Company, assembled in annua1 meeting in person and by proxy, hereby request that the Board of Directors take such steps as are necessarv to assure that at alll eleetionsof directors the stockholders shall have tlheright of cumulative voting, that is to say each stockholder shalli be entitled to as many votes as shall equal the number of votes which he would be entitled toi cast'for the election of directors, wit'hrespeet to: his shares of st'ockmultiplied by thenurnber of directors to be elected, and he may cast all of such votes for a single candidate or maydistribute them among the number to be voted for, or any two or more of themi as hemay see fit." The proposers of this resolution, 11!I'essrs. Gilbert, Gilbert and Henry, have furnished the following statement setting forth the reasons advanced by them in support of their proposal: "When last introd4iced in 1953, this resolut'ioni received the support! of 3,314 owners with 223,920 votes. The need for cumulative voting at American Tobaccois apparent because of the continued insisteneeof the management on an all-management Board ofDirectors, in contrast to Lorildard and even R. J. Reynolds. Cumulative voting is now mandatory under the law of 21 states, Northi Carolina being the latest so: toact."Believingasit does in the principle that theCornpany is best managed, byd'irectors giving theirenti'retime and effort to its service, the M'anagement is of the opinion that Proposal B does not serve anyusefull purpose, and that it would not be in t'1ie, Company's interest to initiate steps to provide for cumullativevoting, Substantiallyidentical proposals were introduced byt'hesame proposers at five consecutive annual meetings from 11949to1953. That: the great majority of the stockholders share the A'IanagEment's opinion is evidenced by the fact that each of theseproposals was overwhelmingly rejected! by the stockholders. At the 1953rneeting, when the proposal was last submitted, the stocleholderscast! 6,355,552votes (96 c/n )against theproposal.TJte?tlanabem~entrecommends th,atyou a~oteAGAINST Proposml' B. The Mianagementis not' aware at the date: hereof of any matterthat, is intended! to be presented at this meeting other t'han the election of directors and Proposals A and B. If any matter not known at the date hereof is properly presented for action at themeeting, it is intended that the persons named in the proxies will vote thereonaecordingto tiheir best:, j;2idigment. REnIUNERATION Remuneration ofDirectors and017icers. There is set forth in the, following,tabulatiiony on an accrual basis, all direct remuneration paid by the Company and its subsidiaries to the fol7owingpersons, for services in all capacities whil'edirectors or ofHcersof the Company during its last fiscal year: each director, and each of the three highest paid o11'ucers; oftheCompanvwhosedirect aggregate renrtmeration exceeded $30,000;and alll directors and officers of the Company as a group. Estimated annual retirement benefits to: the same individuals at normal retirement date under theIletilrement Plan for employees adopted by the stockholders at the 11949Annuall 1L1ceting arestated! in Column (4). 4

(4D' Estimated annual (I) Name of individlral or identity of group (2) Capacities in which remuncration wasreoeived (a) (3) Aggregate remunerationl(b) retirement benefit arnormal retirement date Orpheus D. Baxalys Vice-President andl Managing Director, The American Tobacco Company of the Orient, Inc. $, 56,663 $17,9M Bowden Alfredl F and Vice-Presi- Assistant to the Ptesident(c) 54 735 16;250 . Thomas P. Connors John A. Cro%re(e) , dent inchar~e of Public Relations(d) Direatorof Traffic Vice-Piesid'ent andCliiefof Dlianufacture(c), , 38,498 133,( 70 11,625 18;125 John S. D'owd(,-)~ and Senior Viee-Ptesident(d)Executive Vice-President, American Suppliers, I t d 69,992 18;309 A. Gordon Findlay(e) ncorpora e Vice-Piesident, American Cigarette and Cigar Division, and Chief of Cigar Sales 45, 4'14 14, 7 50! Charles Ganshow(ie) Vice-President,, American Cigarette and Cigar Division, and Deputy Comptroller 50,327 11,299~ John G. Hager, Jr. Virgill D. Ha~er Manager of Louisville, Ky., Cigarette Faetory Assistant to the Vice-President in charge of Manufacture i c) and Vice-President, Alanu- facture(d) 34.665 54,077 11,1162 16,254 Paull Mi. Halini(e): President 201,149 25;00& Hiram R. IIanmer Director of Research 55,244 14,531 H'arry L. Hily.ardl(e), Tieasurer(e)and Vice-President! and Treas- urer(d)~ 67,4192 12,465~ John R. Hutchin'p_ Jr. Vice-Pl-esident(f)! and President, American Suppliers,, Incorporated 66,242 11,4411 A. LeRoyJlanson(c) Comptroller(c)i and Vice-President and troller (A) Com 67,492 16;891 Ferdinand Mallgraf Silas E. Strickland'i e)~ p Director of Purchases General \IanaRer of Stemmeries, Company and American Suppliers, Incorporated 41,328 33;4101(h) 9:589 12;652' Robert B. Walker Director of Saleshc)i andi Vice-President and 57,577 171000~ George A. Wilkinsoni Director of Sales (d )Director, Tax Department 43,328 9:813 William B. Young(e) Assistant to tlieVice-Pr~esident in chargeof D`lanufacture(c), and!Assistant to the Senior 43,078 83984 Directors and Officers as a group Vice-President (d) Directors and Officers as a group 1,291,959 (a)Capacitiesreferrod to werewit'h The American~TobarcoCompany; unless otlierwieeindioated. American Suppliers. Incorpo- rated and The .1'merioanTobacco Cuntpanyof theOrie-r% Inc. are affiliated companies enp-agedl in purchase and handling of leaf! tnliacco. (b) i'ncludcs undeferrrd noneontingenti portion of incentive eompensation for 1937 under Article XII of the By,Laws. (c)Priorto:1'pril 4, 1957. (1d) Commencin~April 4, 1957. (0Alsooflieer ofafliliate.d company or companies. (;f) Prior to clootioni asPresident on Ularali1, 1957. (~g) Retired Jianuaiy31, 19,~8. ('h)Remunerationshownisfor period sub:equent to election as a director ef[ectiie':1larch 1, 1997: The deferred'~ portion ofl incentiv-ecomPensation u2tder Art~iclle hIII of the By-Laws for 1957 (the first year for whichi it is provided) payable to~ each participant in tien eq;ual annuall contingent installments duiriina the ten~ years following the close of the year in which his employment by the Company terminates, was as follows for the directors and officers referred to in the above table: Orpheus D. Baxalys, $4,413; 5

Alfred F. Bowden, 87,910; Thomas P. Connors, $,2,998,; John~ A. Crowe, 564,920; John~ S. Dowd, $9,992;A. Gordon Findlay; $3,539; Charles Ganshow, S7,327; John, G. 111ager, Jr., 82;665;Virgil D. Hager, $8,327r ; Paul Al. Hahn, -81,149; Hiram R. Hanmer, $7,994; Harry L. Hilyard, 89,992; John R. Hutehings; Jr., $9,992; A. LeRoy Janson, $9,992;Ferdinand Mallgraf, 56,328; Silas, E. Strickland, $3,081; 1'iobert B. Walker, $8,327; George A. Wilkinson, k6,328;William B. Y'oung, $6,328; andDirectors and Officers as, a group, ~265;972. No amount w,as set aside or accrued during, the Company's last fiscal year for pension or retirement benefits proposed to be paid under any existing, plan by the Company or any of its subsidiaries to any officer or director of tlheCompany. The Retirement Plan for employees¢overs approximately 17,600~ regularfwll-timeemploy.ees ofthe: Company and its subsidiaries. The aggregate remuneration for the fiscal year 1957, fromtheCompanyand its subsidiaries, directly or indirectly, on an accrual baisis, of all the directors and officers of the Cornpanyas a group, was approsinlately fourteen one-hundredths of ll o of theCornpany's consolidated net sales. MISCELLANEOUS Any stockholder mal:ing written request therefor to theSecr.etary oflthe Company will be furnished a summarv of theAnnual \Ieeting which will be prepared after themeeting, has been held. Conaments orsuggestions by stockholders with regardl to the Annual Report are: welcomed, as they arewith regard toalll other mattersafE'ecting the Company's interests. Flemington, N. J., is reached by the Lehigh VallleyRailroad. The present train schedule, which is subject to change and should be confirmed~ is as folloNcs: Leave Pennsylvania Station (33rd Street! and! Seventh Avenue, New York, N. Y.), 10:55 A. M. ArriveFlemington Junction 12:03 P. M. Leave Flemington Junction 5:2-1P. M. Arrive: Pennsylvania Station 6:40 P. M. The Company will procure transportation from New York toFlemungton by railroadand return by railroad or, if expresslyreguestcd, return by bus, at Company, expense for any stocl.holderof record desirous of attending the meeting, on his notifying tiheSecretary in writing at! 150! East 42nd1 Street, New York 117, New York, not latert'han Miarch 26, 1958, that he ~6shes such transportation obtained. If you d'onot plan to attend, you, are urgently reqpested toesecutetiheenclosed proxy and mail ittothe Company promptly. Expense of Solicitation. Tlreespense of the solicitation ofprosiesforthismeeting, including the cost, of mailing, will be borne by the Company. In addition to mailing copies of this material tostock- holders, t'heCompany~cill request persons iti-hohold stock in their names or custody oriir the names of nominees for others, toforivaird copies of such material to tllosepersons for whom they hold stock of the Company and to request authority for the execution of the prosies.To the eYtent! necessary in order to assure sufficient representation at the meetliaig, oflicersarld some regular emplbyees of the Company and, at aniestimated' cost of abotat 51411.000, approximately 6 employees of P11i1lipG. Cameron Company will request the return, of proxies by telephone, telegram or in person. The amount of the espenseto be borne by the Company NN-il1 depend upon thevolumeof shares representcrd by the pr.osiesreaeived promptlvin response to, the Notice of llleetiiing. If proxies are not received promptly, it may beneaessary for the Company to sendl telegraphic solicitation totliose stockholders ichohave not responded. Stockholders who do notintendl, to be pne,ent at thelleetingareurged to send, ini their Proxies without delay. Prompt r(-pon,~~e islielpful. atld s-onrcooheration wiill be appreciated. February 6, 1958. 6

ANNUAL REPORT For the year ended December 31, 1957 HIGHLIGHTS . . . . . . . . . PRESIDE\ T'S LETTER . . . . . . . OPERATIONS AT AGLANICE . . . . . CONSOLIDATED STATEMENTS OF INCOlIE' . 2 . 3 . 12 AND RETAINED EARNINGS . . . . . . 13: CONSOLIDATED BALANCE SH'EETS . . . . . 14 NOTES TO STATEMENTS . . . . . . . . 16 AUDITORS' CERTIFIC ATE . . . . . . . . 17 TE\-TE:1R FINANCIAL REVIEW . . . . . . 18 DIRECTORS AND, OFFICERS . . . . . . . 20 EXECUTIVE OFFIICE, 150 EAST 42ND STREET. NEW YORK 17

HIGHLIGHTS V ~~Ji.fi d' ".E'ZLCCZ, L 4~,(Z,~2(J. 1957 PER COMMON SHARE Net income . . . . . . . . $8.28 Dividends paid . . . . . . . 5.00 Net sales . . . . . . . . . . . $1,098,092,746 lhcome, before taxes on ilncome . ... 118,604,650 Net income . . . . . . . . . . 57,094,650 Dividends paid (cornmon and preferred) 35,729,596 Portion of net income invested! in assets used' in the business and to provide for debenture sinking fund requirements . 21,365,054 Current asset's, December 31 . . . . 740,482,648 Current liabillitiies, December 31 171,137,745 Net working capital, December 31: ... 569,344,903 Number of stockholders at December 31: Common 86,998 Preferred 7,187 $1,091,206,358 111,351,800 51,688,800 35,729,596 15,959,2041, 724,423,039 1157,842,406 566,580,633 84,250, 7,140, 2

THE PRESIDENT'S LETTER February 4, 1958 To Our Stockholders T HIS report coti-ersolperatiions, of The American TobaccoComhanN .~, includinbconsolidated subsidiaries, for 1957. Financial statements for J. IN,it &- Sons Limited and The American Tobacco Company of the Orient, Inc., both wholly-owned subsidiaries, are consolidated with those ofthe harenro company for the years 1957 and 1956 throughout this report, the 1956~ statements having been revised for comparative purposes. Net income in 190-7 was the highest in the history of the Company, SK;094,G50as compared! with ,51,688;800 in 1956. Dollar sales were S1,O98y092„746as compared with $I,09:1,206y0358 in 1195G. Domestic unitcigarettesalesim 1957 «-.erelbNverthan in 1956;export i tati-freei unit sales of cigarettes of domestic manufacture were higher; and salles of cigarettes manufactured by J. Wix & SonsLimited were higher. Sales In PALL MALL and Lt'cta' STxir.~ your Company has two of the three laiirgest-se1ling, cigarette brands in the United States, according, to inele- henelent surveys. In 11957, for the fourth successive year, these brandb accountedforincr•eased percentages of the nonfilter hing-size and standard- size markets, respectively, although these markets continued to, decline. In 1957 your Company's nonfilter brands represented about 451,-~0 of all nonfilter cigarette! sales in this country, accord'hng to independent surveys which, estimate that nonfilter brands accounted for about 601/-,, of total cigarette sades in the U. S. The Company's nonfilter brands incliude PALL 1IAr t. fair and away the nation's leading Iting size cigarette;~ H1:ImI:RT 'hal.EY'1'0N, a1l-zo~ lt~in,~~ size:~ and LUCKY S`rR~1Kr:, perennially among the lead- in,,, standard-size brands. In June 195T, your Company increased the net whoie'sale prices of its nonfilter cigarette brarrcls by approtiimately 34~ per thousand. By virtue of the introduction of a second filtier brand, IJi'r P_aR:a~nl.; the combined sales of your Company's filterciourettes, FIM't'.x TiPT'AIZM-roN and Hi'11 PaRADE, showed a greater percentage of increase in 1957 than the 3