Tobacco Documents Online

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