RAYBESTOS-MANHATTAN, INC.

Bridgeport, Connecticut
Office of the President                                                        March 15, 1935

To THE Stockholders of Raybestos-Manhattan, Inc. :

I am glad to present to you herewith the Company's Balance Sheet as of
December 31, 1934, and relative Statement of Income, Profit and Loss, and Sur¬
plus, for the year, together w^ith the Certificate of the Company's Auditors,
Messrs. J. Lee Nicholson & Company.

The improvement in the Company's operations which commenced in 1933,
continued in the year just closed. Net Income during 1934 was $750,891.59 on
Net Sales of $13,761,532.56, after providing $610,287.41 for Depreciation, and
$150,000.00 for Federal and State Income Taxes. In 1933, the Company's Net
Income was $685,198.61 on Net Sales of $10,759,901.05, after provisions of
$588,519.21 for Depreciation, and $100,000.00 for Federal and State Income
Taxes. The equivalent, per share, omitting those held in the treasury, was $1.17
in 1934, and $1.07 in the year prior. In accordance with the Company's regular
practice, inventories were valued at the lower of cost or market, and all known
costs and expenses were provided for in the accounts.

Quarterly dividends at the rate of 25c per share were continued during the
year. This rate was established with the first dividend paid in 1934, having
been 15c per share for some time prior. At the end of the year there was carried
to Surplus the excess of $108,434.84 of Net Income over dividends paid, and
$30,879.12 of other items which could not properly be treated as current income.

The Company's Surplus at the close of the year was $5,711,157.76, its
Capital Stock $9,721,800.00, and its Net Worth $15,432,957.76, of which
$6,951,285.01, or 45%, was represented by Net Working Capital, $6,405,721.72,
or 42%, by Fixed Assets (after deducting accumulated depreciation of
$9,259,019.39, or 59%) and the balance by other Assets.

The Current Assets were ten times the Current Liabilities, and there was
neither funded debt, nor banking obligation, outstanding. Each of the 641,300
shares of Capital Stock issued and in the hands of the public had a book value