Tobacco Documents Online

a~s ® llllllf~ ~ / C` ANNOAI. REPORT 19i0 a G m \ ~ k ;~- {~ - G(3o~ otd~ p~9°f+t OcaS,{P,,a8.~9.ir~JS 9w v;j a,t~d~ 3 3.ft a~ ~r .'.'6 :5 B p 0 0 0 .F a ~fl 2 LI ® ow e ® 0 a 0 © a eu 0 L3 tzQ 6 f m 0 C7 Y

BOARD OF DIRECTORS FRONT ROiF": (left to right) Irvin$. Peak, Frank Hopewell, Robert M. Ganger, Herbert A. Kent, William J'. Halley, Todd IP/ool BACK ROW: (left to right) Alden James,,?Vleluin E. Dawley, Donald A. Hen, derson, Lewis Grulier, Joseph J. Blacknall, F Gladden Searle, Harris B. Parmele

T47/LC ANNUAL REPORT-1950 OFFICERS Herbert A. Kent Robert M. Ganaer Todd Wool WilliamT Halley Frank Hopewell Irvin H. Peak . George 0. Davies Joseph J. Blacknall Melvin E. Dawley Robert M. Ganger Lewis Gruber William J. Halley Donald' A. Henderson . . President Executive Vice PresidentVice President and Secretary Vice President. Vice President Vice President . . . . . Treasurer DIRECTORS Frank Hopewell Alden James. IIerbert A. Kent Harris B. Parmele Irvin H. Peak E Gladden Scar]e. Todd Wool GENERAL COUNSEL - Perkins, Daniels & Perkins TRANSFER AGENT-Tlze New York Trust Co., New, York. N. Y. REGISTRAR - The National CitryBank; New I^ork; N. Y Executiue Office - 119 lT'est 40th Street. t1'ew York 1'8;A'. Y Corporate Office - 15 Exchange Place, Jersey 00% ,1': J. 1

® IMPORTANT NOTICE Our business having reached proportions whereby con- tinued acceleration requires additional capital, a refinanc- ing plan has been adopted and is presented to you with this report in the form of a supplemental letter. The recom- niended plan is the result of several months of diligent research conducted by our special committee appointed to make this study and headed by W. J. Halley, Vice Presi- dent, Director of Finance. A PROGRESS REPORT FOR THE MEN AND WOMEN WHO FINANCE' OUR ACTIVITIES WE tssuE herewit'hi a detailed statement of' your Company's operations for the year 1950 - a crystal-clear picture of how your Management has used' the funds you supplied to continue product growth and to enhance the value of your investment. It is our acknowledgment ofl your confidence as evidenced by your investment without wliieh we would not be able to furnish the tools that'y in turn, provide a livelihood for some six thousand fine Americans and their families. In writing this letter I like to feel I am personally interviewing each stock- holder in the interest of' readership and study of a report d'esigned' for clearer and easier absorptioni of', facts. It is made up of subsections, illustrations and text, giving y.ou, a good idea; of what we have done and plan to do as we turn the mid-century corner. You willl understand how, in a highly competitive business, we have been able to move forward in the cigarette field with a per- centage increase considerably greater than that of the industrv. Earnings before taxes: for 1950 amounted to S12;632;i68.18, a new high record in the Company's earning history, due in a large measure to the Com- pany's dollar sales of $167,936,931.43' in 1950; which was also a record in the Company's history. The net income available for the common stock anrounted to 96;03L T68.18, equal to $2.69 per share on the outstanding common stock as compared to $2. 73pershare in1'939 and'i $2.21, per share in 1948. This slight decrease inn net income available for the common stock w,asdueentireh- t'othe recently inrrPaserl_FP 1Pral Tax ratPS F.crPnt for thP,_P; nP\t' AnJ increa?ad ;, tayPC tha net.

The Company's 5% Gold Bonds in the face amount of $6,195,460 mature on August 1, 1!961. In addition., the Company had notes payable to the banks in the amount of $18; 00.000 on December 31, 1950; which amount had increased to$23.700.000 on Februarv 15, 19'a11. While it is anticipated that! these notes will have been~ substantially reduced by August 1, 1951, the Man- agement of your Company feels that additional financing is required to pro- vide for payment of the 5% Gold Bonds, the liquidation of bank loans, and to provide the working~capital necessary to finance your Company's expanding business. ~ Our industry, is nowfacedw as you know; with a new and substantial in~ crease in Federal excise taxes. imposed to aid in our present crisis. Plus this, many of the states are seeking more revenue from t'obacco products. For a better understanding of the Federall and State taxation as it applies to our industry, a veryinterestinn article appears on the inside back cover of! this report. You will be interested in knowing every possible protection is bein- given our valuable records. NIicroCilmingisbeingdone daily. Films are storeollman.miles,fromNew York; while prints are sent to another equally secure Iocahon. We are asking vou to approve the transfer of our Annual 3leetin= from JersevCityr to New York Citv.It is the feeling of many that such a move will result in almuch greaterattendancer Much like a good old-fashioned Thanks- giving, dinner, ai great deal ofl tinreis consumed in preparation and f'or that~ reason we would be delighted to have the Lorillard fasnilh- hozne t'~oobserve and comment on our efforts. The suggested move must be sanctioned by two, thirds of the outstanding voting stock. Therefore. it is important to indicate vourapproval by returnon=Nourprnx}-, so marked. You nrar be oneof' those persons who. %%lien receiving an annuali report and proxy statement, f'eelJ; your holdings too small to effeetivelv assist or protestL and thereb%- relegates your vote to the waste-basket. If so; consider 3

Federoll Slate. ondlocolTa.es 49.13 C Cosl of leof Imbne<o..napplnq. und. ah',er ~ maleriul9nndsemices;bouphllrumorhenl~ \~ Weges ond sal6riesvp lo $5000. (diredly concerned ..ilh prndudion) ' $aldrier af $5000nnd over (manegeridl lond oll eRicer.)', Amount sel nsvde For. mechines.and . planta.veoring oul (i. e. depneciatien)i Amou-pnid ta Iheownert of 1he business (di:idendd to stockhelders) . ~ 37,47C u ` u u) ~ ~ uJ Reseined'in lhe businese ~FOC \ 077U fulunaneedlandimprovemems. " 42~ 01.22E 01.13C that approximateUy i2~Jo of, Lorillard's stockholders own one hundEedl shares or less;, 10``Ic; own between one hundre& and five hundred shares; while only 1 jc holdl ini excess of five hundl-edl shares. The balance is in the hands of brokers and institutions. We feel this represents a very healthy corporate picture. It means men an& women in alll walks of life arc investing a; part ofi their savings with us; we are very conscious of the irnplication of this stewardship. Each year we attempt to point out to our stockholders the importance each share of stock can play in the generat corporate picture when properly rep- resented at our annual meeting. It, is interesting to note the numtier of' n-ien and' women who appear each year and are heard! by Management. In many cases they are owners of but a few shares. yet' they make their holdings, how- ever small, express their views. 1`our shares are important enough to speak for you even though you are present~ only by proxy. The active participants referred to: do their work sincerely and do it in many cases with the aid of fewer shares possibly than you own If this makes for a better understanding of Management and widens the scope of enli=htenment', we at Lorillard are delighted and invite you to j oin us in our desire to bring about stronger Stockholder-Management relationship than is now enjoyed. If you~ agree, maywe greet you either in person or by proxy on April 3r~d. In the light of disturbed world condStions, predicting business tr~ends is hazard'ous. We expect our brand progress to continue and Government ship- ment's to many parts of the world to increase. We are prepared to meet the situation and to cooperate tothe fullest in our country's endeavor to bring about world peace. In view ofi the many demandsplaced on business, fore- casting earnings,in 11951 cannot be done with any degree of accuracy. Respectfully submitted, President~

1950 SALES ACCOMPLISHNiENTS NIT sales of Old Gold Cigarettes for 1950 continued to show a substan- U tially greater increase than the average for the industry. Again this year, a new impressive high was recorded for your Company's leading, volume brand. We feel confident that this stpady growth of Old Gold shouldl continue in response to our consistent and accelerated promotion program. In the king-size cigarette fie1d; a classification of growing importance, your Company's relat'iveNy new Embassy brand is progxessing, soundly in high.spot national distribution. Though still small volume-wise, Embassy sales for the last quarter of 1950 increased 79% over the same perio& of 1949. Again„ in 1950, exports were hindered by lack of dollars in many foreign countries, andl virtually alll ofl your Company's cigarette: volume was confined to the domestic market. While industry sales of smoking t'obacco and loose-leaf chewing tobacco continued slightly downward, your Company's important brands held theii own, maintainang, about the same volUme recorded for 1949: Tax withdrawal figures indicate an industry decrease for cigars of our classification. However, our total cigar sales showed a slight increase during 1950: Our new centralized operation of the Cigar Division began~ to: show desiredl results the last half of 1950i MuriellCigars were markedly improved with modern packaging designs and, in the Longfellow, an& Perfecto sizes, with Havana fire-curedl wrappers. These improvements are showing promising results: Our economyy brand, Headline, was increased to60 late in the year, wit~L demand far ahead of production. 5

THE LEAF BUYING' SITUATION 0 ux Leaf Department is charged wit6 two vital responsibilities. First, to determine ac¢uratelythe Company~'s over-all requi'o•enientsoftobacco leaf of all necessaryty,pes.Second, t'vbuy, process andl store for proper aging alli leaf tobacco for at lt ast a two-year manufacturing requirement. This past year, dueprimarily tcthe continuing and substantial increase in Old Goldi sales, it has been necessary.forour Leaf Department to: purchase areater quantities than in previous years of both flue-cured and burley tobaccos. By so doing, our leaf tobacco inventory tod'ayis greater t'han a year ago, and, based oni anticipated increases in business, is considered' adequate for our next two years' requirement. The prices paid for flue-cured tobaccos purchased in 1950 were at an all- time high. This was due to two reasons. The Government decreased the acre- age: and raised the support prices to new record heiQhts. Also the strong demand for cigarette tobaccos, on the part of the industry, further stimulated prices for the 1950! cr.op. As to future prices, it! is conceded that the Gov- ernment will increase the acreage of flue-cured andl burley tobaccos to be plantedl for the D951 crop.. We arenottbo optimistic as to the possibility of this Governniental action resultin~ini lower prices. N1'e believethe most we can expect is that prices for the 1951 crop~ will ao nohigher than at present. TuLar-u n-tiun I I

DEVELOPMENTS IN iMANI1F:}iCTURIN'G F 'rlir last teivyears; the avcra`e iirduStrN cost wfl flue-cured bright tobacco (whichaccounts for 50`,,' of thc u~arcltcmanuflacturin - cosU) has in- creased 333;c.. CiaareUepricesinu this period have increased only2'0'/~. This fact dranratically denionstrates the vital ahallpngeto the manufacturing department of y ourCompany - thclt of maintaining and improving, qualit}. yet constantly finding new practical means of effectina further manufacturing efficiencies and economies. Your Management is happy to report further pro~ress in both quality and savings for 1950. Modernization of your Company's ei,arette factories is near- ing completion. And new machines, lialanced operation and increased efficiencry have made it possible adequatelyto absorb our increased production volume. Ini Louisville, Ky., a modern building now under construction should be completed during the summer of'! 1951. Your Companyhaspurchased 13' acress of property adjacent to the Louisville plant. Thisproperty; including t~+-o: needed warehouses, can be utilized for additional construction when advisable. At theeigar factoryinRichmond. Va~, our newcentralizedw operation and continuing plant irnprovement are efTccti~nl- substantial production economies. Complntemodernization plans are now being executed. Your Management anticipatesthat„ byfall of1951, practicallv all work, including installation of additional new machiires; airconditibned storage rooms and other modern improvements, should be completed. Plant improvements alreadyineff'ecu aree achievina tansible savings and! providing new higher standardsof quality,. 7

RESEARCH ACTIVITIES D URING the:recorded year, Harris B. Parmele,, Ph.D., was elected' a Director of our Company. Joining P Lorillard Company two decades ago, Dr. Parmele organized what turned out to be the first company-sponsored tobacco Research Laboratory in~this industry. Today, with latest scientific equipments graduate chemists and laboratory technicians analyze everything that' goes into and around Lorillard products. Quality, control, governing manufavturing, is directed by the Research Depart- ment. Pure research, dealing with the future, is a continuous project. Most of the laboratory work is concentrated on the cigarette, because this is the largest single tobacco item sold today. But cigars, smoking tobacco andl chewingt'obaccocome in for their share ofanaly=sis, all aimed at making them conform; to pre-est'ablishe& high quality standards. In the Research Laboratory, also, cellophane and alumin= foil; whose, uses in the tobacco field were pioneered by LorillardL are subject'ed to strin- gent sirength and puritytests. The package, even the eolorand inks ar~eanalyzedl In the factories, the Research specialists constantly test! the air and moisture content of the huge rooms. Even the paint usedl on factory walls, machines and floors is tested . . . the furnace coals analyzed lest they give off emanations which would alter the tobacco product characteristics. InAe maze:of microscopes, test tubes and special apparatus, the tobacco leaf' goes throughi a tortuous mill which yields its precise secrets, "secrets" whichi enable the experts to pair off' and blend tobaccos, in terms of their scientific elements, to make a constantly improved andl stable quality product. 8

HUMAN RELATIONS ouxCompanyhas lon- recoanizcd theimportanceof'~~ the human element yin dealing with its employ,ees; distributors and retailers, stockholders and the public. The excellent relations it enjoy°s with all four groups, we believe, are directly due to thisrecoanition. The bulk of' theCompany-'s employees - 61 "c - han-e been with the Com- pany, five years or more. 12.3`,,'c have worked for the Compan.-~y ten years or more and 11~.6`,. ~:,thcent'~y~ years or rnoFe. In 1950 your Company received excellent cooperation from its employees and leaders of the fourteen unions representing themL In line with current economies, w,age,and hourly-rate increases all alon~ the line were the rule. Realizing the importance of training and! promoting employ,ees t'~opositionsof greater responsibility, your Company has completed and put in operation~ new scientific plans and proErams for the development and training of execu- tive personnell Further plans for job evaluation and merit rating arebeing, formulatedi A111 employees todat benefit through Company--paidl group life insurance.. Beginning this year, a liberall sick-benefit plan is being inau` urated. Two new mod'erni cafeterias, similar in desi=ni and equipment. have been installed in the Company's Louisville and Jersey City factories. N\ all'-bal'anced hot meals, prepared under the supervision of Home Fconomists, are now served to employees oni a non-profit basis. A new house organ. HMt', issued bi-monthlly to Company employees, was (continued on p. 12). 9

lnbli.AN'b] P.` .rilSrdCumprn. t! ~ V z; 3 v R4 l P :d ., p Lo.~lJ'.rdC • A= nevv magasines fowcompany=employees;& A¢ recente innova4ion.=.forr ouv personnels ('corzteiaiaedjromp. 9) launched in 1950. Throu=h this magazine, employees are kept informed of Company activities and plans, receive personal recognition for contributions made to the Company's proaress, and are taught how, each in his own posi- tion, to do a better job. In the important field of trade relations., your Company has continually taken part in~ the activities of the various associations serving its 6.500 dis- tributors and one and one-quarter million retailers. These trade activities, we believe;, serve a highly desirable' function in furtheringmutual understanding, friendship and interestL A new informative book, LORILLARD AND TOBACCO: will be ready , for distri- bution the latter part ofl 191-31. Tracing the growth of your Company, the wrorld's oldest' tobaecofirmo from a sma111 family enterprise in 1760, to the preseirt; corporation with more than 26;000stockholders, LORILLARD AND TOBACCO will be more than~ the history of a' business. In a striking sense, it will be part of the annals of the development of the United States. Takenfiom the hook is this paragraph: "Bright threads of obligation, are woven into the fabric of Lorillard's his• tory-.'I1heybeaan and continue with the manufacture of tobacco~ products which would make and mainttainthe Companti's neputation. Throu~h the pattern~ run strands which represent fair dealings and relationships with the 3.200 suppliers of' the product and the skilled hands and minds that! turn it into finished wares - with all who plavtheirpart in an old andl lon_-suceessful enterprise. Still' other strands are tokens of duties fiulfille& toward! thestbck- holders who have displayed their confidence in the' firm and the worth of its products. Among the brightest in the Lorillard fabric are threads which sv.m- boliee good citizenship in support of''civic and charitable causes." 12

ADVERTISING AND SALES PROMOTION T xAslong, been~ a principle of the cigarette business that theeffectiveness I of advertising is, next~ to tobacco cost'y the single factor most closely gov- erning profits. Unproductive outlays can pulll down earnings while successful advertising lowers that~ cost per unit sale. It willl be interesting, to our st'ock- holders therefore to know that, while our advertising investment for Old Gold continues to increase, the advertising, cost per unit sale was slightly less in 1950' than for the preceding year. Now in its fifth consecutive year,, the highly, popular "Treat instead ofl a Treatment" theme continues to build public goo& will for the brand and pay off in constantly increased sales. Breaking precedent with the usual cigarette advertising, such statements as "Old Goldlcures just one thing-the wor~ld'sbest tobacco" have won public approval and further enhanced the prestige of the:product and Company. In~ addition, through one of our vehicles of advertising presentation; "The Original Amateur Hour," substantial sums of money have been raisedl for worthy charities and civic causes: Dur~ing the past twenby-four months, this popular program~ traveled to thirty-one different cities, where local audi'~ iu d t fill d t it t h / or ms were e o capac y ear an o ~ cheer amateur talent' onithe wayy to stardom. Sponsored by local groups, this public service activity has resulted in hundreds Ted Aiack reeelvea ovation at ToI~do. 13

of thousands of dollars being raised formanv worthy causes all over tlie country,. Philanthropies of all types- civic, charitable and medical,, f'or all religions, races and creeds - have benefited. Some recent beneficiaries have been the Heart Fund, Spastic Paralytic Fund, Chsldren's I'olio Fund; Arch- bishop CushingCharity; Junior Chamber ofCommerce_ National Je%ci'sh 1 iospital, Veterans' Welfare Acti'vitics; C:owlciUs Traflic SafetyActiivity; Cuur- munity Chests, Veterans of Foreign Wars, National Home fur Children, 13oy" Clltbs, Shrine Charities, Sisterhood! Activities, Socict'~y for Crippled Children, New York Foundling, H'ospital, Disabled American Veterans, National Corr- f'erenceofChristians and! Jews, Cerebral Palsy Childreni and many others. We sincerely believe the public service resulting from this activity.,, while benefiting the acceptance of our products, also: fulfills an obligation of ;ood corporate citizenship. Another public relations vehicle for your Company has been a sound film called' SEMINOLES OF THE EvERGLADES: During 19J0~ a total audience of' more 14 than nine millioni persons witnessed this fas- cinating, documentary of the Florida Indians. , Through its title alyd! sub-titles the film is closely identified with Lorillard! and Old Gold and has been eagerly accepted by church groups, indhst'rial plants, fraternal organsza• tions; school systems, etc:;, and its black and white version has been televised over many of the country's leading TV stations. Because of the widespread and! favorable publicit'yyour Company has received fromi the showings of this first film, we have now produced two more OLD~~ COLD,dan-iu;;. Par12 and little -tch hux.,

American Indian ducumentary filmswhicharein, priucess ofdistrihution. Durina~ the y.earthe "Ori~inal Arnateur Hour-" ' radiopro~ram contiinued'' tobe broadcast nationally over the American I3r~oadcastiiia net'naTork, evem Thursday evening. Also over this same network, 109stationscontinued to carry our Old Gold commercials via the most strategic, scgment of "S'top: the Music" each Sundayniaht. Thisf'~rancbiseis current'dy raterll asoneInfl the best "dollar" buys in radio. Probabl}°tlie biggest news and must important develupment in adlrertising durina the year was thet'~remendous growth and selling impact of television. Fortunately, our Company entered this mediumi earlh• and secured most r-alu- able time franchises on both strategic cable networks and Kinescope. Thus. our two TV network cable programs, "The Original Amateur Hour" on NBC-TV each Tuesday night, and "Stop the Music" on ABC-TV every Thursday evening, enjoy usually large audiences and our TV' commercials are rated amonathe mosti effecti'vein~ television. Coordinated' in theme and timino wit6 our Old Gold! radio andl TV' advertising, are full color pages in leadina maaazines - Lile, Sat- urdlrzyE~veningPosL and Look. In 1951 we ar~ee rounding out thiss¢hedul~ with the addition of Collier's and Quick, thus adding~ 4:250;000eirculation; monthly to our printed; messages., tUsoi beginning , the first! of this year, a proved, successful daytime radio program., "-naleen, for a Day;"' was addb& for necessary an& additional impact! on the ever-increasinglv D-a Ja -. OLD GOLD'..TV..... salesman. 15 L

important housewife, market.. Supplanting, past activities in, Sund'aynews- paper supplements, our 15-minut'e segment of! thi's powerfuli 5•d'ay-a-week broad'cast, over 45U stations of the Mutual Broadcasting, System, should prove most helpful in creating additional carton business from this highly important market'. EMBASSY KING-SIZE CIGARETTES. During the recorded year, we sponsored the "Dr. I. Q:" radio program to carry the Embassy "commercials." How- ever, in the summer we decided to add the force of television. With a rela- tively new and not too widely, known brand, this medium of television offered expanding opportunities of visually presenting the new package. Also an analysis at, that time clearly indicated that television coverage was reaching the point where it closely paralleled Embassy distribution, partic- ularly in metropolitan cities (where king,siee cigarettes enjoy greatest aecept- ance). Hence, at a strategic moment we were able to purchase an already developed TV half-hour program, "The Webj" andl a favorable time franchise over the CBS,TV cable network on Wednesday evening. Sales,results thus far indicate the wisdom of this strategy. MURIEL CIGARS. TV, too, is flurther establishing, this brand in key markets. Because the marketina, strategy of our Cigar Division has been~ to concentrate in profitable areas of best distribution, TV "spots" proved to: bet'he most effective and economical method! of'. promotion. Our animated 111urie1l cigar, who sings and'~ dances on tele- vision, screens, has achieved widespread accliaim~ among TV fans, and~ particular cigar smokers. Hcrc is~our~TV ~"Dfuriel."~

t- P. LORILLARD COMPANY and SUBSIDIARY CO1tiIPANY CONSOLIDATED STATEMENT OF: INCOME AND EARNED SURPLUS FOR THE YEAR ENDED DECEMBER 31, 1950 Mith Comparative Figures for 1949 1950 Sales, less Discounts. Returns and Allowances. $167,936,931'.43 Costi of Goods Sold, Selling, General and Administrative Expenses . . . . . . 154;552,502:91 Operating Income . . . _ $, 13;384,428:52' Other Ihcome 291~632.96 $ 13;676,061.48' Interest on Long•Term Debt . . . . . . $ 839,272.50: Amortization ofDebentnre Expense 12,611.27 Other Ihterest 191.409!53' Income before Taxes on, Income .. Provision for Federal Income Tax _ Provision for Federal Excess Ptofits Tax 1'rovision for State Income Taxes . Net Ihcome for year . . . Earned Surplus at be„inning ofl year 1949 $153,500;123.48 141,436,937.53 3 12,063;185.95 160;076.51i $', 12,223,262.46 $ 857,272.50 13;039.98 141,816.65 $, 1,043293.30S 1y012;129.13 $, 12;632,768,18' $ 11.211,133.33 $ 54087,000.00 $'4,142;000.00 564,000.00 - 244,000.00 2454000.00 5 5.895:000.00 $ 4,387,000;00. $ 6,737,768:18 S 6,824,133.33 25,476,604.10 23,27Q020.611 8 32;214;372.28' $ 30,094,153.94! Dividends on Preferred Stock (G7 per share). S 686,000.00, $' 686,000.00 Dividends on Cbmmon Stock (1950; $L85 per share; 1949;,$1'.75 per share) 4,156.212.25 3,931,549.84 $ 4,812.212.25 8 4,617,549:81 Earned!Surplus atiend of year $'27:3v2,160.03, $' 25.4't64604.10 Depreciationprovided--1950 S'(03!831.25 1949 635:475.32

P. LORILLARD COMPANY CONSOLIDATED BALANCE; With Co»ip.rrative ~ CURRENT ASSETS: Cash in banks and on handl IInnfA rPrnivahla_lr,u~n( ASSETS 1950 19.19 $ 9,933,736.34 $ 5,762.370.59

and SUBSIDIARY COMPANY SHEET - DECE'MBER 31, 1950 Figures f or 1949 LIABILITTE'S. CURRENT LIABILITIES: 1950 1949 Notes payable - banks . . . . . . . . . . . . . . . $ 18 700;000.00 $ 9,000,000;00. Accounts payable - trade . . . . . . . . . . . . . . 3;235,630.11 1,885,510:56, Twenty Year 3% Debentures (idue within one year) 600,000.00 600,000100 Accrued'taxes . . . . . . .. . . . . . . .. . . . . . 6,385,940.78 4,938,293.89 Accruedi payrolls . . . . . .. . . . . . . . . . . . . 599;333-03 536,919.27 Accrued interest . . . . . . . . . . . . .. . . . . . 258,0711.87 262,571.87 Other, accrued liabilities . . . . . . . . . .. . . . 210,256.35 198,414.02 DividEnds, etc.-fttndson deposit, contra 1,126."r85.3# 836.615.09. Total current liabilities q 31,116,0b7.48 $ 18,258;324.70 LONG'-TFR14f I1F.RT: 5% Gold' Bonds, maturing August 1, 1951 .... $$ 64195,450.00 $ 6,1954450.00 TwentyY''ear 3% Debentures, dueO0 otober 1. 1963' (the indenture requires the retirement of 8600.000,annuallil1951-1962) 16:600.000.0017.200.000:00 Total long-term debt S22;795.450.0W $' 23,.39.i;¢50:00 CAPIT.4I. STOCK AND Si?RPLI?S: Capital Stock: 7% CumuhitivePceferred Stock, par value $100 per share: Authorized 99;576shares: issued 98,000 shares S9;800.000.0W 59,800i000:00 Comaion Stoc.k, par value $10 per share: Authorized 5.000.000shares It;sued 2'.2-16.681.89'shares . 22:466.8L8.W 22:466:818:90 Paid-in Surplus 1.237.030:OIl 1,237,030:01 Earned Surplus: as per~ statement .. .. 2T.372.160.0325.4764604.10 ($12:541,469.88not available for cash~ divid'ends on common stock under provi~ions of debenture indenture): Tdtal capitall stock andsurplus... S60:8;6,008.9!1 S58,9801453:01 $111i787.-176:42' $100.634,227 ~ 1I +~ The 517c Gold Bonds maturing Augusti 1,, 1951 arenou included in current liabilities becau~e the Company,expectstodischargethem ouCof the proceeds from the sale of new securities. 19

Jersey City, N. JL, March 1. 19511 RX EM ® To the Stockholders of P.'Lorillard Company: Statements showing the results of the operations of your Company and its subsidiary for 1950; the financial position at December 31, 1950, and comparative figures for the pre• ceding year, are set forth on the preceding pages. Respectftrllysubmitted,. W:J. HALLEY, Vice President Director of Finance ACCOUNTANTS' REPORT To the Board of Directors and Stockholders of P Lorillard Company: We have examined'the consolidated balance sheet of~ P Lorillard Com- pany and it's subsidiary company as of December 31,, 1950;, and thee related consolidated statement of income and earned surplus for the year then ended. Our examination was made: in accordance with generally accepted auditina, standards and included such tests of the accountin~ n records and such other auditing procedures as we considered necessary in the circumstances: In our opinion, the accompanying consolidated balance sheet and consolid'ate&statement of income and earnedl surplus present fairly the financial position of' P Lorillar& Company and its subsidiary company at December 31, 1950, and the result'6 of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a~basis consistent with that of' the precedina, year. DELOITTE. PLENDER GRIFFITHS & CO. Certifir?dPulilic Accountants 111 Broadway, New York, N. Y. February 13, 1951. 20

FACTS WORTH CONSIDERING The Federal t'axes, collected! through the revenue stamp on OLD GOLD, alone, more than pay the entire cost of the complete Legis- lative and Judicial branches of the Uhited States Government an& its top adlninistrat'ive officers. This includes the salaries and expenses of the President of the United States, the Vice President, the Cabinet,, alll Senators, all Representatives, the Supreme Court, the Court of Appeals, even the Secretaries ofl the Army, Navy and Air Force. Considered from another viewpoint - a man and wife in Louisiana,, averaging, three packs of OLD GOLDS a day, pay an annual tax,, through cigarette revenue stamps, that is rnore than three times the amount the:average worker pays a year in Fed'eral income taxes. The tobacco industry is the secondl largest producer of Federal and state tax revenue in the Nation. And in time of'rearmament for Defense, we must and will contribute gladly to the fullest extent. But~ there is one area of tax activity that should be watchedl care- f'ully. State and municipal officers in many sections of the country, seeking addutional sources of revenue to cover excessive spending,, are casting their eyes over various products for additional taxation. Cigarettes, cigars and other tobacco products are coming ini for their share of attention. No stockholder in any tobacco company should delkide himself about what could happen. For still higher state and municipality levies mayy come on your tobacco products, unless the movement can, be checked in time. Andlexperience has showni that highi state and munici- palfityy taxes, coupled with present Federal tax, cani decrease sales sub- stantially, and not bring in the additional revenue that is anticipated. We believe all stockholders should know the facts: Cigarettes are no longer a luxury. They are a utility product that serves a needed and usefull purpose - recognized as vital to morale. Today theyy are the largest selling package product in the retail food business. As such, cigarettes contribute t'othe Nation's economyt'hrough serv ing more than two•thirds of all retail outlets in the United! States. They provide a steady flow of income to two million tobacco growers. They are instrumentall in nurturing and sustaining small business enterprises - providing the foundation of constant sales which, in their total cfFect, support the entire business and sale ofl other products. r,lll these vital forces ofl our economy can be disrupted by further discriminatory taxation by states and municipalities. But such disrup- tion can be checked by vigilance and coneerted' action by all of us. If you believe, as we do, that such excessive taxation on tobacco products is discriminatory and unfair, we hope you will let your wishes be knmcn to your owni state and municipall officers - as such move- ments get under way, locally.

C9 o Ifi a n $ ® n 187 ® . Pd n n k +:a n mn g NN , 9 0 n n ta.~ ® r G^. n n 01 ® ® M ,. 8 ..;.4- /41 A s1z1s8zA

---

---