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GEORGE O:, DAVIES V ice~. Presideni ~ Treasurer, andlDireot'or~of~~Finanoe DR. HARRIS B., PARAAELE Vioe President and. Di reotor. of ResearoK GEORGE A. HOFFMANNI Vice. PresidenYa nd Director of Manufaoturinq MORGAN Jl CRAMER Director of' Export and Government Operations GEORGE W. DAVIDSON . Vice President: Federal Tin Company,,. L'orillardSu bsidiarx HAROLD F. TEMPLE Presldent, LEVAI'~S' GRUBER Chairmanof'the Board and Chief Executive Officer DONALD~~ A. HENDERSON T'reasurerand Secretary Twentieth~ Century-Fdx, FIImCorporal'ion MANUEL YELLEN VlcePresidentand Director oi'Sales MELVIN E. Dd,WLEY' V iee. President~and Direetior~~ Lord~ Q6. Taylor F. GLADDEN SEARLE' Indu.striatiaY~ HAROLD']C. SCHREDER Executive.Vioe Presldtrnk.t andiDirector Distributors Grou p;. Ilne.. GD Cz .~ Q0 sW

P'. LGRILLARD COMPANY Notice of Annual Meeting, of Stockholders TQ! BE HELD APRIL 7, 1959 To the Stockholders of P. Loritlard Company: NOTICE is hereby given that the Annuall Illeeting of the Stockholders of P.. LoRu.r.ARD ComPAxY, a New Jersey corporation, will be heldl at the Biltmore Iiotel, Madison Avenue and 43rd Street, New York, N. Y., at 2:30 o'clock in the afternoon, of April 7, 1959, for the following: (1) The election of thirteen ('13) directors to hold office until the next Annual Nleeting of Stockholders or until their successors are elected and qualifiedi; (2) To consider and vote upon a proposed amendment to the Certificate of Incor- poration of the Company under which the presently outstandi'ng..g shares of Common Stock would be split on a 2 for 1 basis and, in connection therewith,, the autfiorized Common Stock wouldl be modified; andi (3) The transaction of such other business as may properly come before said meeting and any adjournment or adjournments thereof. The stock transfer books will not be closed, but only stockholders of'recordf at the close of'business on February19',1959; will beentiitiled to, vote, notwit'hstand'ing~ any transfer of any stock on the books of the Company after such record date. Jersey City, N. J. February 261 1959 ANNA: F:~ WoESSNM, Secretary. 8 9ti9 785 3 If unable to be present at the meeting, please sign the enclosed Proxy and -return itt in the accompanying, envelope so that the meeting may be properly held.

Proxy Staternent RIGHT TO! REVOKE PROXY ANY STOCxxoLDER, giving the proxy enclosedi with this statement has the power to revoke the proxy at any tinne prior to the exercise thereof. Your attention is called': to the provisioni of' New Jersey law providing that the attendance at the meeting of a stockholder who may have theret'ofore given, a proxy shalt not have the effect of'revoking the proxy unless the stockliolder so attending shall in writing so notify the secretary of'the meeting at any time prior to the voting of the proxy. Unlesss the persons named iin the proxy are prevented by circumstances beyond their con+- trol from acting, the proxy will' be voted at the saidi meeting and at any adjourn- ment or adjournments thereof in, the manner specified therein. BY WHOM AND THE MANNER IN WHICH' THEI PROXY IS' BEING SQ'LICITED The proxy is solieitedi by and! on behalf of the management of P. LoRIULAw Com- FArry. The expense of'the sollicitation, of proxies for thi's meeting, ineluding the cost of mailing, will be borne by the Company. In addition to the use of the mails; the Company may request persons holding stock in their name or custody,, or ini the name of nominees;, to send~ proxy material to their principals an& request authority for the execution of the proxies and will reimburse such persons for their expense in so doing at a total estimated cost'' of about Five Thousand' Dol'lars ($5,000) . Tb the extent necessary in order to assure sufl'iciient representation at the meeting, officers and regul'ar, employees of the Company and others regul'arly retained by the Company, at no additional' compensation, wil'1i request the return of proxies personally, by telephone or telegram. The extent to which this will' be necessary depends entirely on how promptly proxies are received, and, stock- holders are urged to isend' in their proxies without delay. The management has no knowledge or informationi that any other person will specially engage any employees to soIicit proxies. 892'9;854 2

VOTING SECURITIES': OUTSTANDING The outstanding number of each class of voting securities of the Company and the number of votes to which eachi class is entitled are as follows: Common Stock: Preferred' Stock Total' Number of Shares------------------ _----- 3,282,024 98;000' 3y380,024, Number of Uotes------ _---- _-_---------- 3,282,024 98,000 3,380,024 Only stockholdlers of record at the close of' business on February 19, 19'59,, willi be entitled to vote. ELECTION OF DIRECTaRS'. At this Annual Meeting, thirteen (L3) directors are to be elected, who shall hold! office until the next followin;g, Annuali Meeting of Stockholders or until their succes- sors are duly elected and qualified: It is the intention of', the persons named in the enclosed form of proxy to vote such proxy for the election of the nominees named below. If any of the nominees named below is not a candidate for election as a director at the meeting-ani event which the management does not, anticipate-the proxies will be voted for a substitute nominee and the other nominees named below. Approximate amount af' eacb daas of ' Name of'. Year JeLLritieJ's of tjPecorparal~on when Company beneficially P#nci~al in mhicW Juck ~rat oumed dirertty ar N'ame of Occapal+an or oernpation u electEd' indirectly ar of' Nominee Einployment carned an Director January; 19, 1959 Lewis Gruber Chairman of' P: Lorillard'Company 1946 11,000 shares of' the Board and Common Stock Harold F. Temple Chief Executive Officer President P. Lorillardl Company 1948' 6,4'50 shares of George O. Davies Vice President, P. Lorillard'Company 1955' Common_Stock 5,500 shares of', Treasurer andi Common Stock Manuel Yellen, Director of' Finance: Vice President P. Lorillard Company 1956 8,500~shares of and Director Common Stock of'Sales 89~a~..978551 ' Idas served continuously since; except for periodI January 16, 1950, to Aprill 28, 1958! 3

ame of' lWominee riwcipa!' Occupation or Employment Name of corporation in which sucti occupation is carried ow. Year when first elected' Director Approximate amownt, of eachh class of secnrittes of'the Compa„y beneficially owned directly or indirectly as of lanuary.l9y 1959' Harri's B. Parmel'e Vice President P. Lorillard Company 1950 6,800 shares of and Director of Research. Common Stock George A. Hbfl4nann. Vice President P. Lorillard'Company 1957 5,000 shares of and Director of Manufacturing, Common Stock MorganJ. Cramer Director of Export P. Lorillard Company 1958 1,238'shares of! George W. Davidson Herbert A. Kent. and Government Operations Vice Presid'ent Consultant Federal' Tin Company P. Lorillard Company 1957 1939°"'' Common Stock 3,000 shares of Common Stock 3,375 shares of ' CommoniStock F. Gladden Searle Ind'ustrialist 1943 r 900 h f s es o a Common Stock DonaldA. Henderson Treasurer' Twentfieth~Century-Fox Film Corp. 1346 328'shares of Common Stock Melvin, E. Da!wley Vice President, Lord & Taylor- 1950. 568 shares of' Director and General' Merchandise Manager Department Store Common Stock . Schreder Harold' X Executive Distributors Grou 1956 112 shares of . Vice President Executive Vice Presid'ent p6 , Inc.-Investment Bankers Group Securities, Inc. -Mutual Fund! Common Stock * Has servedi continuously since, except for periodI September 1, 1956, to December 19, 1956': Each of the nominees named' above is now a director of the Co'mpany' and„ eol- lectively, they comprise the entire mernbership of the Board. Each of such, nom,. inees mas elected to his present office by a vote of'securityholdera at a, meeting for which proxies were solicited under Regulation X-14 of the Securities and Exchange' Commission except Morgan J. Cramer, who; for' more than five years prior to his election as a director effective December 1, 1958, had served' the Company as , Director of Export and Government Operations. 89 ,9; 8 jG 4

REMUNERATION AND OTHER TRANSACTIONS WITH DIRECTQRS, AND NOMINEES FOR THE F'ISCAL YEAR ENDED DECEMBER 31, 1958 The following table sets forth all direct remulleration paidl by the Company and its subsidiary for the fiscal year ended December 31, 1958, to (1) each person who, was a director of the; Company at any time during such year and whose aggxre - gate remuneration for such year exceeded $30;0001; (2) each person who was one of the three highest paid officers of' the Company d'wring' such year and whose aggregate remuneration for such year exceeded $30,000; and (3) all persons, a's' a group, who were directors or officers of the. Company at any time during, such year:. ame alary Amount of' Incentive Compensation Paid Currenttp Ctti?acities in Whial't Remuneration TtY?as Received' Lewis Gruber $70,000.00 $97,117:03 President - Irvin H. Peak 43,750.00 76,552.49 Executive Vice Presi- dent'(a). Harold F. Temple 36,000.00. 66,270:22' Vice President George O. Davies 36,000i00' 66,270.221 Vice President and' Treasurer Manuel Yellen 36,000:00 66,270.22 Vice President. Harris E. Parmele 36,000.00 66,270.22 Vice President George A. Hoffmann 32',600:00 52,132.10 Vice President and Director of Manufac- turing. Morgan J. Cramer 17,095'.83. 28,750.00 Director of Export and Government Opera- tions. George W. Davidson 24,000.00. 20,000.00 Vice President- Federal Tin Comr pany. Officers and! D2rectors as a group 4'95,2'4'5,75' 689,070A0 (a) Effective December 1, 1958, Irvin H. Peak, who reached retirement age on that' date, resigned as a Director and Executive Vice President. The Company has entered into ai contract' with Mr. Peak under whi!chi effective that date, he was engaged in an advisory capacity through December, 1959, for compensation atl the rate of $30,000 per annum:. 89029"7t35'7 5

! The following table sets forth, for each, person named above,, (a)! all pension or retirement benefits proposed to be paid to such personi und'er the F'mployees" Retire. ment! Pllan of the Company in the event, of retirement at normal retirement date, directly or indirectly, and (b) all benefits proposed' to be paid to such person or his beneficiaries. (subjeet to prescribed conditions) for a period of ten years fol'lowing retirement or other termination of' employment out of all incentive compensation to date i under the above-mentioned! Article XIiIi of the By-laws of the : Company., Suchi Article XII provides for incentiwe compensation for officers and key personnell of'aM amount equal to stated percentages of'consolidated net earnings before Fed- eral taxes on ineome, incentive : compensation awards and capital gains and losses. me Lewis Gruber Estimated Ahznual Benefits on Retirement under Emplobees' Retirement Plan(1) $10,590.00 Present Estimated' Annual Benefits on Retirement - under Article XII of By-liaws(2) $~ 314383',19: Irvin H. Pealt (3) 24,910645' Harold F., Temple 111,453',00 15,729.68 George 1 O. Davies 9,339.00 15,248.09 Manuel Yellen 111,769'.00 15,250.54. Harris B. Parmele 8,780.00 16,430.12 George A. Hoffmann 4,840.00 9,20L38' Morgan J. Cramer 6t354.00 1,375.00 George W. Davidson 7,625.00' 500.00. Officers and' Directors as a group 132,992.20 Article XII for future years but, subject to the conditYons referred to in clause (b), above, cannot, decrease. It includes the following annual benefits based on incentive compensation awards for 1958, constithxting, in, each case, one-tenth of' the contingently payable part of' the incentive compensation award for such year: Lewis Gruber, $21,135.10; Irvin H. Peak, $14;965:74;; Haroi'd! F. Templ'e, $11,881.06; George O'. Davies, $11,881.06; Manuell Yel1'en, , $11,881.06; Harris B. Parmele, $11,881L06; George A. Hoffmann, $7,639:62',. Morgan JL Cramer,,$1,375; George W. Davidson, $500;~and officers and'directors as a group, $95,733.48., Irvini H. Peak„who reti'red' effective December 1, 1958, elected pursuant to the Plan to receive the annual sum of $6,914.04 until, his death, at which time his wife, if she shall survive him, In each case, the estimate assumes continued employment at salary rate in effect December 31,,1958, until normal retirement date. (2) Such estimate assumes continued employment andl may increase under the operation of'such (1) will receive the annual sum, of $2,600.00 until her death6 6 890'21'97858

All of't'lie remuneration set forth was received' by the persons named' in their capacities as officers or employees of the Company an& its subsidiary.. During the fiscal' year ended December 31, 1958, the persons named above exercised certain options ta purchase shares of Common Stock of the Company (exercisable at' a purchase price in each case of $24 per share, which was in excess of. 95%0 of' the mean between the high and low prices on the New York Stock Exchange on October 22, 1957, the date of grant) pursuant t'o agreements entered into by the Company and such persons on October 22; 1957, under the Company's Restricted Stock Option Plan, which agreements and Plan were approved in, Aprily, 1958, at the Annual AIeeting °of Stockholdcrs. The name of each such person, the number of such shares purchased by him and' the market value per share (the mean between the high and low prices on the New York Stock Exchange) on each date of purchase are as follows : Morgan J. Cramer, 1,000, $57:44; George W'. Davidson, 2,500, $58.31; George O. Davies, 500, $57.69;Lew.is Gruber, 1'0,A00, $82.06; GoorgeA.HofEmann, 3,000, $57.69,, 800, $68.25, 2'0p; $72:94;~ HarrisB.Parmele„ 5,000, $57.69; Irvin H. Peak2,500; $'57.4'4',4,500, $69.3'1; Harold F. Temple, 5,000 $57:44; and Manuel Yellen, 5,000, $57.94. Officers and Directors as a group purchased 31,500, shares of' Cornmon Stock of the Company dtiring the second calendar quarter of 1958 when the price range per share of the Common Stock on the New York Stock Exchange was $,70L-$50.25;. 5,300' shares during the third calendar quarter when such price range was $72- $63.625; and 10;200 shares during the fourth calendar quarter when sucli price range was $89'-$69.25. A12ff options heretofore granted have been exercised. PROPOSAL TCa SPLIT PRESENTLY OUTSTAND- ING CQ~MMON STOCK AND TO MODIFY AUTHORIZED STOCK The Board of Directors recommends that the presently outstanding shares of Common Stock be split on a 2~ for 1 basils andy for that purpose, that the Certificate of Incorporation of'the Company be amended so as to change the presently author- ized 5,000',000sharesof Common Stockof'thepar valtze of $10 each into 10;000;0~W 7' 89 29:859 t

shares of Common Stock of' the par value of $5 each and' to provide that each of the presently outstanding shares of Common Stock be split into 2' newly author- ized shares of Common Stock of the par value of $5 each. IyTo~ change is proposed in the rights or privileges of the Common Stock. Each holder of shares of Commoni Stock of the Company is ent'itled' to purchase his pro rata proportionl according, to the number of shares held by him, of Common Stock issued for cash, except 3'5,500 presently authorizedi shares (which would become 71',000 newly authorized shares) of Common Stock which may be issued on the exercise of options that may be granted hereafter pursuant to the Restricted Stock Option Pls:n of the Company and as to which shares such preemptive rights have beeni waived, In the opinion, of'the Boardi of' Directors the proposed' stock split, if effeeted', would result ini greater marketability of the shares of Common Stock. The cost of selling and transferring the shares currently held by a, holder of Common Stock would be higher after the proposed stock: split than the corresponding_eost in respect of the stockhol'der"s presently outstanding shares. Assuming a market price of'$80 per share (approximate market price on February 19, 1959), the cost of selling 100' of the presently authorized shares in New York on that date would be $54.36. The cost of: so selling, 200 shares after the proposed stock split at an assumed price of $40' per share would be $89'.36. Since the above-mentioned proposal merely involves a stock split, no financiall statements are furnished herewith. Counsel advise that, in their opinion, under present Federal income tax laws, the proposed stock split would not be taxable to the holders of' Common Stock. The specific recommendation of the Board' of Directors as to the proposed d amendment to the Certificate of Incorporation to carry out such proposal is set forth below as "Proposed Amendment to Certificate of Incorporation." Under the applicable IrTew Jersey law the affirmative vote of the holders of two-thirds in interest of each of' the Common Stock and Preferred Stock out- standing at the close of'business on February 19, 1959 is necessary for the adoption of'the proposed amendment. 8,c~,,c~ ; SGa, 8

i1 PROPOSED' AMENDMENT TO CERTi IFICATE OF INCORPORATION The Board of Directors recommends that the applicable provision of t'he. Certificate of Incorporation which, now read's as follows : "FOURTH-The total authorizedl Capitall Stock of' this, Corporation is 5,,099,576' shares of which 99,576 shares are Preferred Stock of the par value of $100 per share of the aggregate par value of $9,957,600' and 5,000,000 shares are Common Stock of the par value of $10 per share of the aggregate par value of $50,000,000. Each share of Commom Stock without nominal or par value previously issued' is hereby changed into a share of Common Stock of the par value of $10. ***"' be amended to read as follows : "FOURTH-The total' authorized Capital Stock of this Corporation is. 10,,099,576'shares of which 99,576 shares are Preferred Stock of the pau value of $100 per, share of the aggregate par value of $9,957,600 andi 10,000,000, shares are Common Stock of the par valiQe of $5 per share of the aggregate par value of' $50;000,000: Eachi share of' Common Stock of'the par value of $10 per share previously issuedl is hereby changed iinto two shares of Common Stock of the par value of $5 per share. ***"' AUDITORS The Board of Directors has appointed Messrs. Haskins & Sells, Certified Public Accountants, to be the independent Auditors of your Company, andi a, representative of that firm will be present at the AnnuallWleeting of Stockholders. CONCLUSION The Annual' Meeting is called for the purposes set forth above and' for the t'rans- action of such other business as may properly come before the meeting. At the date of this Proxy Statement the management knows of no other matters whichh may come before the meeting. However, if' any other matters properly_ come before the meeting, it is the intention of'the persons named in the enclosed form of proxy to vote such proxy ini accordance with, their judgment. Dated February 26, 1959! 91 89297861 r

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For lfhe Year Emded D'ec.~ 31', 1'958', P. LoriJliard' Domipanx ANNUAL 14iAEETING AND PROXY The,Alnnual'Meeting of Lorillard shareholders irill be held on A',pril 7; 1959 a1'the Hotel B'iltmore in New York City. Meeting time will be 2:30 p.m. and'doors tirill be closed prompily at 2:15 to keep the session free of interruption: Notice of the M'eeting; along: tirith proxy and proxy statement; is being mailed to you under separate cover. Your proxy is your way to approve or disapprove of Management's steward- ship. Your vote is th'erefore important' personally to tLlanagement; whether it be for five shares or 5,000 shares: If, you are unable to attend' our Annual Meeting on Alpril' 7 in New York, please sign and return your proxy before you put it aside. lt' will'lt't us know of your continued interest.

I y To my fellow sharehold ~er•s: Compiling this comprehensive digest of your Company's 1958 operation has been a pleasantt undertaking; to have been an, integral part, in its making represents the most rewarding experience in my business life. It was an exciting year, particularly gratifying in its results: 1958 set sales„earnings and divid'end': records far beyond anything in the recorded historyy of P. Lorillard' Company. Furthermore, in 1958, our Kent cigarette, due to its dramatic increase in sales; became one of the largest selling, filter cigarettes in AmericaL In many communities it is reported as lead'ing, all' cigarettes, filter or non-filter. Your Company i's the pioneer in higlt filtration; having, perfectedl the: original, scientifically sound and proven full filter. All filter techniques today stem from Lorillard's minute research,, a fact, recognized by leading science writers and' repu- tablepubliaations: You may be sure your Com- pany willl do everything possible to maimtaini its leadership in this area andl willl continue to pioneer better ways to make smoking even more enjoyable. D!uring the year we introduced still another innovation in filters conceived and perfected inn our own research department. This is the new Oldl Gold "Spin Filter" and acceptance of it' has been grat'ifying. In~ addition, ai new king-sized soft package wasintroduced's for Newport and released for general distribution. This brand inn both sizes is doing exceptionally well and we expect great things from our "hint of mint" Newport cigarette. Ini the international arena, we are progressively planning to expandlpresent activities.. As of'now, our products are available in limited distribution in countries not hampered by the dollar exchange. In the Philippines, Venezuela and Panama, our princi- pal cigarettes are being manufactured' and distrib- utedlon a license or royalty basis. To extend foreign recognition and' prominence, we expect to approve further applications along these lines during 1959. In new financing, we offeredl common, stock- holders the right to subscribe to additional shares of common stock on the basis of one new share: for each eiight' shares held. Judged'. by the high per- centage subscribed for through the exercise of warrants,, the ofI'ering provedl attractive to share- hold'ers and eminently successful' from, the Com- pany's viewpoint. I am sure youiarefamili~arwithi the details„ the purpose being to provide: addi- tional capital with, which to expedite the growth plans designed by the P'lana Board. Net sales for 1958 amounted': to $4'79;120,409; compared with $293,4115,430 for 11957; while net earnings rose 135% to $27;037,083' or, on the basis of amounts applicable to common shares outstanding at 1958 year-end, $8,02 per share. This compares with 1i957's reported net earnings ofl $11,4'84',412' and $3:78 f'or each share of com- mon stock outstanding at 1957 yearend. Had results for the current year been calculated on the number of shares outstanding in 1957, earnings per common share for 1958' wouldl have: equalled $9.24. Dollar dividends reached thei'r highest levell in our history, with a total of $4 per commoni share being paid ouu Bank loans at year end stood at $49,850,000 and these will, as usual, be sub- stantially reduced' before the next buying, season. Consolidated' balance slteets andl statement of' consolidated earnings and retained' earnings are found on pages 16-18; the financial highlights on page 4; and I comparisons on page 19. During 11958, we moved the Company's hea& quarters into new modern offices located at' 200 East 42nd1 Street in New York City; the 29-story structure is known as the Lorillard Building. The time consumed in handling, the many de- t'ails relatedl to a rapidly growing enterprise kept us from doing as much as we would have liked in the interest of diversifieation. We did, however, take a step in that d'irectioni withoursubsidiiary,. Federal Tin Company. This company, by the way, caught the spirit ofl the parent corporation and produced': sales andi earnings substantially in: excess of' the preceding year. To Federal Tin's 89ti978s4

0 basic tin packing operation, paperboard printing is being,added~, which means a goodly share of our packaging, and wrapping material needs eventually will come from this unit. A modern, six-color rotogravure press is being installed for high speed cutting, creasing and printing of paperboard for carrtons, crush-proof boxes and many other products reqµiring the use ofl paperboard in their finalizing processes.. This operation willl come into being early in the second! qµarter of 1959. A major move toward greater efficiency and continuity in Managemea f'or the: future welfare ofl this Company was manifest ini the executive changes announced late last year which became effective with the new year,. Our Board' of' Directors felt keenly the importance of a wider range of executive direction, plus the strengthen* ing of ai corps of' thoroughly trained key execu~- tiwes capable of meeting all situations. In keeping, with this formula, the chief' executive officer became Chairman of the Board, with the newly- elected President as ai supporting, officiaL Other departments were strengthened by responsibility assignments designed to tie Sales and Marketing together and, because of the importance of Adver- tising, this latter phase of our business is now being handled by a committee headed by the Chairman. Thus, while I personally remain as active as ever as Chairman+-indeed, if anything, my supervisory activities have enlarged-our other top echelon executives now are able to share more deeply in top level activit'ies and planning. The work we do is like a wheel in its operation: Vice Presidents and Department Heads are the spokes which are welded into the hub; or chief' executive's station; all are locked together by thee band of steel determinatiom Within this wheel and radiating out from itt are the skills contributing to the growth factor of' our trade: Procurement experts keep us con- stantly andl amply supplied with everything f'romm paper clips to: costly pieces of modern, technical equipment. Manufacturing, utilizes a good share of these instruments in t'ranslating, formulas into~ better products. Researchers live their lives in the test tubes of'~ progress and' throughi intense: studies we have gained quality controls and advanced prodOcti concepts. The treasurer andl his aides arrange payrolls for several thousand' employees; and financing that permits heavy purchases of raw materials and other necessities: Traffic men keepa a constant flow of the finished products roll in- into distribution centers. Advertising sur- rounds the brands with communication lines dramatically providing ai public awareness and creating, a want. Sales f'ollows through with marketing andl merchandising techniques to place the fruits of our labor on counters and shelves wherever tobacco products are sold. Public Relations keeps the public andi financial circles apprised of' Management's activities, its stran& ards and' progressive: policies, its personnell and prodticts. To these segments of our wheel we apply a form ofl commercial therapy in marketing, giving, life and character to the superior productss borni in the 1'aboratories ofI Lorillard. It would be : gratifying if all' holders of' P. Lorillardl Company stock could attend our annual meeting to be held in New York next Aprill 7th. Knowing, this to be impossible, may I ask those of you who cannot be with us to: exercise your right to vote by proxy. This is important to you andl it is important to the proper conduct of' a meeting, Whether your holdings are smalll or large, whether you favor Management or not, we urge you to express your views through the instrument that is legally yours, the proxy. This report': was written, for you, to keep -youu informed of the activities of a Companywhosey securities you have placed in your investment portfolio. P trust you will' read it carefully. My associates jpin me in expressing sincere appreciation for your understanding support throughout, the past year: And you have our assurance that we shall be unremitting in our efforts for this current year; further, we have molded a pattern that, we firmly hope and', expect, shouldi carry us on to greater volume and an improvedl industry position. Cordlall y, Chairman of ' the Board.

a Sales • Net Earnings • lflesults ~, per ~ Common ~~ S'~lilare ~: Net' Earnings . . . . . Dividends . . . . . . Shareholders' Equity Current Assets Current Li'abilit'ies~ • . . . Working Capital • • • • Lr ong-Terrn Debt'. . . . . Shareholders' Equity . . . Number of Sharelio~lders. Numnber of Employees . . 1958' 1957 $479,120;409 , $293,415,430 27;037,083'. 11,484,412 . . 8.02 3'.78 . . 4:00 1.95 35.57 26.95 235,555,292 -192;202,969 . . . . 91,638,808 82;399,19'2 - • - . 143y9116,484 109,803,777 . . . . 50,750,006 54,041,670 . . . . 12'6,552,6T7 86,674,232 . • . • 23,517 26;976 . . . • 7;508 6,591 HOW OUR S'J#LES' DOLLAR WAS DISTRIBUTED ----------°----------- ~':1l,;I:~ .\ SA1..11{BI:', (r!98c ---_-------- --°-°----- 1{IF:1T.\11; '-'1'ASIIPti 13.61 c Ih'I•EICEST ------------ ~ ----°--- ~Ifi ------°---°- I\R:O)IE~11I} OTIII:IC TAXES -- °'TOItACCfD, OTIIIER I'URICiIASE`± & DEPRECIATION 35.74e 1'I{EFERRED & COMMON DIVIDENDS RE'I•AINEII _,-----_°--°--°-- 2.724 TsAS{i^V1:\4;S __-_-~~.-------_____---------- 2J9;3t

At the last annuali meeting, held in April; 1958. shareholder attendancee hit an a114t'ime record for your Company. M'anagement sincerely hopes that this year's meeting will see still another new record'turn-out of'shareholders..

i Sales of'your Company's products during 11958 advanced most~ satisfactorily. To keep pace withi the increased! demand and! to ensure: its continuing, growth„ the Sales D'ivision increased' its personnel and now empl'oys more men in the Field Selling,andl Marketing Organization than ever before. While Kent was unquestionably the Company's "standout" brand for the year, new outlets were opened for alll our brands, intensive merchandising and' sampling campaigns were conducted througHout' the yean and three product additions to our line were successfully launched and distributed: Old Gold Straights, Newport king-size cigarettes„ and a new Old Gold Spin ~ Filter cilgarette. The problems inherent in effecting the transition from, an old product or package to a new one are delicate and, if improperly handlled„ may result in a loss ofl business and a loss of goodl will. It is important that all oU stock on the market be completely disposedl of by the time the new label arrives and stocks of all outlets, wholesale and retail, should be exhausted_at as nearly the same time as possible. Thus confusion is avoided and the Company is not placed in the untenable position ofmarketing;, at oneandl thesa~metime,botha new andl a discontinued product. ln the case of both Old Gold Spin Filter and' Old Gold Straigkits, your Company is pleased to report that the transition from old! to new was accomplished smoothly, efficiently and to the satisf'action of all in the industry who handle our products. In the case of Newport king-size cigarettes; the situation was additionally complicated by the difficulties encountered in securing a worthwhile: distribu- tion on any new size or brand' of cigarette. The chief reason for this is that, the large number of' new brands and sizes marketed in the last few years have made the wholesalers, grocery chains, and independent retailers opposed to ~, stocking anything new in, the cigarette line, since any addition increases their tp inventory and investment considerably. aJ ~ ' Nonetheless,, both! sizes ofl Newport now enjoy a distribution comparable to 00 that of leading, brands which have been on, the market for considerably longer (n ' period§ of time. This distribution, coupled': with proper displays at points of (Z) sale and well planned consumer sampling, has been the prime factor in the steady growth of this brand. We are happy to report that sales of Newport! have shown

a consistent steady growth all during the year and the rate of this growth sharpllyy accelerated' during the last sixty days of the year, with~ all indications pointing, to~a continuance of this upward trend. When it is remembered' that supermarkets now sell more than half' of' the total cigarette volume, the importance ofl carton displays in these outlets becomes obvions. During the year the number of' cartons of our brands displayed in supermarkets on self-service merchandising fixtures showed substantiall improve- ment. A new plan intended' to strengthen still more the prominent display of our brands in large volume outlets was inaugurated in October and shows every indication of being, highly successful.. Another, important distribution area in which our, Company made considerable progress is vending machines, which now account for the sale ofl an estimated' 15% of all cigarettes. At the end of' 1958 placement of our brands in vending machines had more than doubled the number we had at 1957 year-end. In export, sales increased greatly: our brands were marketed successfully in many new foreign countries and' we regained rights to the Oldl Gold trad'e-mark, which hadlbeen in other hands for many years, for most of'the world. So far as our non-cigarette products are concerned, your Company also fared' quite well. Both our smoking tobaccos andl our Between The Acts Little Cigars showed' increases over last year;, with the latter's sales running in excess of' 1I2% ahead of 195'7. And, while our chewing tobaccos suffered minor decreases over last' year, we still came out well ahead of ind'ustry, averages for these products. 0 I 7

0 Progressing f'rom, plans started in, late 11957, the Company's advertising gathered momentum, in keeping with the increased sales picture, in order to carry our sales messages to more people and more markets than ever before in the history of the Company. All major media were used, with a large percentage of our effort devoted to television, which has proved to be a superior selling vehicle for our products. At this time we are full or partial sponsor ofl six different nighttime television properties on the three majpr networks. These run the fulll gamuti of the entertainment spectrum and include such diverse appeals as an interview show;, panel program, news, variety, "private eye"' andl quasi-western. Thus, regard- less of the consumer's tastes in television, one ofl our television shows is bound to have appeal for him. Other national media which we use to~ support our brands include Sunday supplements, network radio, and the top consumer magazines. fn addition, considerable advertising, pressure is placed on the consumer through such local media as newspapers, spot television and' radio, and outdoor spectaculars ini selected key markets where sales indexes indicate high potentiall opportunity for our: products. During this year the Advertising Department was strengthened to take advan- tage ofl the 1'atest scientific methods in both market research and' media, analysis. And, late in the year, an Advertising Committee, consisting of! the Chairmann of the Board, the President, the Sales Vice President and the Advertising P4fanager„ was set up. Working, closely with the Department andl the Committee on both plans and implementation is the advertising agency which handles your Company's brands. Through this close three-pronged cooperation, more effective advertising is 8902"9787Q

obtained a the least possibl'e' cost. As a matter of fact„ through careful' forward planning and increasedl buying, efficiencies, the Company materially improved its advertising iinvestments in 1958, with the cost of reaching consumers reduced, to levels below industry average. Campaigni themes, which remained' consistent for all brands throughout the year, were: KENT . . . Of alll leading fiiter cigarettes, Kent Filters Best . . . You get' less tars and nicotine. OLD GOLD, STRAIGHTS (without a filter) . . . An all4obaccoo cigarette, dramatically redhced in tar and nicotine.. OLD GOLD NEW SPIN FILTERS . . . The besti taste vet ini a filter cigarette. NEWPORT ... Light, menthol with a hint of mint ... Refreshes while you smoke. In order to get maximum milleage and effect from each campaign;, speciall effort was made to use sales promotion material for point-of-purchase displays that was coordinatedi in time and' content with our various advertising campaigns.. This year saw the beginning of a corporate campaign which was built around the Company's leadership' in researchc "You can depend on Lorillard to be'e first with the finest cigarettes ... through Lorillard research." To further buildd this corporate image and impress it on the public mind; all of' our regular product advertising also carried the phrase, "A Product' of P. Lorillard' Com~- pany-First with the finest cigarettes-through Lorillard' Research."

% 5im In our laboratories, where theory becomes reali;ty, studies of' great depth and importance move : with precision under highly trained supervision. The public recognizes that the name Lorillard is synonymous with cigarette filters of high filtering efticiency.. This has not come easily, and it is our aim to stay out in front. A continuous program is in effect to constantly improve today's filters and to develop new and better ones for tomorrow.. In additiony basic research studies are being, conducted with respect to new and startlingly different methods of handling,, processing and treating tobacco. And': cigarette smoke is being studied more carefully and' more thoroughly than ever before, since it is here that' we believe tomorrow's improvements will be: found. Thus, on all fronts, your Company continues its accelerated research inquiries into all aspects of tobacco. Since : many of'the precise specifications for production of' our various cigarette brands start right with the original leaf,, our Research Il7epartmentt and 1eaf' buying organization work hand inn hand' at all times: This is true, as well, for most of our other departments, particularly Manufacturimg, which is charged with~ the responsibility for mass producing the products so painstak- iingly fashioned': in our laboratories: At Louisville plant~ new control laboratories, designed to Researcll, an Green.sboroincludes weight check offi'lter ~ suppl'ementth'e, xaorkof Company's mainresearcli center "toae" on super-sensitive scales toensurethat itmeets. II in Greensboro, were put into operation during the year. prescribed standards before being formed into filter tip: 89 0'20'9 7 87 4

To maintain the dominant position in the cigarette industtyy which Lorillardl has achieved throughi production of' superior products, greater and greater emphasis has been placed on quality control. This means simply that every cigarette we manufacture must'~ meet very definite and increasingly precisee speciifications. This holds true for all our brands, filter and non+- filter alike. Quality standards must be met not once a: week, nor once ai day, but every hour that our factories run. . L To facilitate this program, 1958 ' saw the establishment of a Branch Control Laboratory at our Louisville factory., In keep- ing with, Lorillard practice, thislaboratory is, mod'enn, well equipped, and manned by thoroughly trainedI andlcompetent per- sonnel. While Greensboro remains the center of our research activities, the new Louisville installation, dedicated to the main- tenance of quality, already is contributing,much to the uniformity and precise caliber of our products: •r ts, In our industry, mechanical and engineering improvements and developments are interwovenc The scientist and engineer form a team, and one cannot reach the desired goals without the other. Thus; in 1958 aniEngineering;Research and Develop- ment department was formally established' as an integral part ofl the over-all Research Division. Pilot equipment and adequate shop facilities have beeni provided for this new department. And valuable contributions should be forthcoming in, the months andl years ahead from its highly trained specialists. Special Lorillard-designed laboratory equipment'is used to check rnenthol and mint, determine exactquality and quantity forttsein `7iint ofmintP' 1V'esvportcigarett'es. High'lyr trained cFtenrists, using Kjeldaliland'otJrer equip- ment; perfornr continuing studiesto, determine exact clia ra c teris tics found' in various types of leaf tobaccos. 13

Commencing, with January and continuing throughout the year, Lorillard"s production facilities operated in high gear. New equipment, both domestic andd foreign, rolled into bothi our Greensboro and Il.ouisvill'e factories. As fast as this equipment was installed' and set up to produce millions of cigarettes daily, the sal'es surge would necessitate still another upward revision of' our require- ments, and addiitipnal equipment had to be:ordered. From month to month, production quotas increased and at year end final delivery of equipment on order from abroad wasstill ilncomplete.. Production lines in Greensboro operated around the clock-six days a week- throughout 1958. Louisville production was stepped up also and it' operated two shiEtson a maximum basi's~ during most of'the year. While it is, natural to think ofl production in terms ofl machines, the mem and women behind them should not be forgotten; without their efforts!we could not have successfully met the challenge that faced us this year. When it was decided during the year to introduce a king-size, soft-pack version of our "hint of mint" Newport cigarette, a major production problem was faced and' resolved: development of a soft! pack so tightly sealed and air tight that the cigarette's quality is preserved and the mildl menthol' andl mint flavor lockedl in. This package met, with immediate acceptance and is now helping to further establish, our position in; this growing, segment of' our industry.

iI During the year 11958 our requirements of! leaf tobacco were purchasedl at prices higher than 1957. This increase was due, in part,, to higher support prices established by the Ul S. IDepartment of Agriculture: As a result of the continued increase in sales of our products, our activities in~ the tobacco markets reached! an unprecedentedl peak in, 195&'. In order to maintain, the well balanced leaf' inventory necessary for production ofILorillard''shigh, quai'ityciga- rettes, it became necessary for us to, supple« ment existing inventories through purchase of substantial quantities of' properly aged, high qUality tobaccos suitable : for immediate use in our manufacturing operations. Naturally, with leaf purchases exceeding any previous period in the Company's his- tory; the tempo of our processing, facilities had to be accelerated and our stemmeries were operated on an around-the-clock schedule. Further, additional storage facil'i- ties to accommodate. the: larger leaf invent tories became necessary. We; therefore, purchased five storage warehouses and built two others, all strategically located in Lexing- ton, Kentucky. As in, the past, our leaf purchases were coordinated with scientific studies conducted in our Research Division. This program involves the testing of leaf tobacco samples from various growing sections, which helps our leafbuying organizationini the selection of tobaccos ofthehighest quality for our products.

P. LORI'LLARD COMP'ANY AND SUBSIMARY' COMPANY ASSETS CURRENT ASSETS: Cash, . . . December 31 1958 1957 . . $ 13,964,035 Accounts receivable-customers (less $945,080 in 1958 and $716;727 in 1957 for doubtful accounts and cash discounts) . Other accounts receivable . . . . . . . . . . . . Inventories (at average cost) : Leaf tobacco . . .. . . . . . . . . . . . . . Manufactured stock and revenue stamps . . . . . . . . Materials and supplies . . . . . . . . . . . . . Total current assets . 23;612;776' 909.272' $ 12,163,400 17,898,774 691,435 168,290,593 23,579,916 5,198,700 . 235,555,292' PI2OPERTYy, PLANT, AND EQUIPMENT: Land . . . . . . . . . . . . . . . . . . . . 620,758 Buildings and building eqµipment . . . . . . . . . . . 14,822,401 Machinery and equipment . . . . . . . . . . . . . 25;594',399 Total! . . . . . . . . .. . . . . . . 41,037,558 Less accumulated depreciation . . . . . . . . . . . Total property, plant, and eqpipment-net .. OTHER ASSETS: ~ 1'0;1110,425~ 30,927,133 138,470,252' 17,218,082 5,761,026 192,202,969 880,154 14,987;4'11 21,628,068 37,495,633 8,98'1,78!1 28,513,852. Mortgage note receivable . . . . . . . . . . . . . 279,391 286;536 Prepaid expenses andl deferred charges . . . . . . . . . 2;605,557 2,236,345 Unamortized debenture discountl and expense ....... 660,933 715,248 Brandiy, trade marks, and goodwill . . . . . . . . . . I ~ 1. 3',545,882 I 3,238,130' ToTA[ : . . . . . . . . . . . . . $270,028,307 , $2'23,954,95'1 Total other assets . . . . . . . . . . . 89 ~g : 8'78

i LIABILITIES December 31' 1958 1957 CURRENT LIA'BILlT1ESt Notes payable (banks) . . $ 49.850,000 $ 58',550,000' Accounts payable . . . . . . . . . . . . . 6.337,250 5,476,824 Long-term debt~ due within one year (:less held by Company) . 2,266,664 11,849~,~998~~ Accrued taxes . . . . . . . . . . . . . . . . 26.060;199 13,049,515 Accruedl payrolls . . . . . . . . . .. . . . . . 5',501,73'1. 2,437,622 Accrued' interest. . . . . . . . . . . . . . . . 470,639 - 421,990~ Other accruedl liabilities . . . . . . . .. . . . . . 1.152',325 6113,243 Total current liabilities . . . . . . . . . 911.638;808 82,399,192. i LONG-TERIvI: DEBT (exclusive of amount due within one year): Notes (i3% and 3'i'4%) due serially toJuly 11, 1963 ..... 6,250;006 7;916,670 Twenty Year 3% Debentures, due:October 1, 1963 ($600,000 to be retired annually to 1962)' ....... 11,800;000 12;400,000 Twenty, five Year 3% Debentures, due March 1, 1976 ($350,000 to be retired annually to 1975)' ....... 12.900,000' 13;250,000 Twenty, five Year 3a % Debentures, due April 1;, 1978 i ( $675 ,000 to be retired an~nuaily to 1977) .. . . . . . . 19.800,000' 20;475',000' Total long-term i debt . . . . . . . . . . 50.750,006 54i,0411,670, RESERVES FOR'PENSCONS AND CONTINGENT INCENTIVE COMPENSATION 1.086,876 839,857 SHAREHOLDERS' EQUITY:, 7% Cumulative Preferred Stock (par value $1001per share), authorized 99,576 shares; issued 98,000' shares ..... 9.800,000 9,800,000 Common 3tock(par value$1'& per share)- authorized 51000,000 shares; issued 11958-3;282',024 shares; 1957 2,852,854 shares . . . . . . . . . . . 3 2.8 20; 240 28,528,540' I I Additional paid-ini capital (premiums less expenses on common. ~ stock issued ) . . . . . . . . . . . Earnings retained' for use in the business . 29:643',735 288 54 642' 8,085,578 40 260 114 . , , , co « Total shareholders' equity . . 126.552,617~ 86,674,232 N co TOTAL . . . . . . . $270.028,307 $223,954,951 .:J ~, See Notes on Page 18

Vj . I ~ a~`~.406,~ a,~t',~,e~ P. LORILLARD OOMPANY' AND' SUBSIDIARY COMPANY Year~ Endezl'De 1958' ~ certzber 31 1957 REVENUES: Net Sales . . $479,120,409 $29 3,415,43& Other . . . . . . . . . 358,192 51,433' Total . . . . . . . . 479,478,601 293,466,863 COSTS AND' ExPENSES: Cost of Goods; Sald, Selling, Advertising, and! Administrative Expenses . . . . . . . . . . . . . . . . . 417',838,982' 265,152',128'. Interest . . . . . . .. . . . . . . . . . . . . 4,009,536 3,432, 323' Federall and State Income Taxes. . . . . . . . . . . 30,593y000 13;398,000 Total l . . . . . . . . . .. . . . . . 4!52,441,518 281,982;451 NET EARNINGS . . . . . . . .. . . . . . . . . . 27,037,083 11i,484,4'12 DIVIDENDS ON' PREFERRED STOCK ($7 per'share' in each year) . . . 686,000. 686,000 EARNINGSIAPPLICABLE TO COMMON STOCK ($8.02 perBhare' in 1958y $3.78 per share in 1957;, based on number of shares outstanding at end of each year) . . . . . . . . . . . . . . . 26,351,083 110,798,412 RETAINED EARNINGS, beginning of year'., . ., . ., . . . . . 40;260,114 35~~,024,767~ 66,611,197 45,823,179 DIVIDENDS ON COMMON STOCK ($4.001 per share in 1958; $11.95 per share in 1957) . . . . . . . . . . . . . . . . . 12,322,555 5,563,065, RETAINED EARN,INGS,, end of year . . . . . . . . . . . . $ 54,288,642 $ 40,260, '114 NOTES: (I) Provision for depreciation amounted' to $2,087.631 in 1958I and to $1',793;5'35 in 1957. (2) The, options granted: twenty-eight officers and key employees in October 1957 to purchase an aggregate of 64,500 shares of common stock at $24 per share (this price being more than 95% of the market price at date of grant) were exercised subsequent~ to April 8, 1958, the date the granting of such options was approved by the stockholders:. At December 31, 1958, 35,500 shares of unissued common stock, were reserved for purposes of the Restricted Stock Option Plan for Employees, but no options were outstanding:. (3) Additional paid-in capital increased in 1958 by $20,655,157; being the premium received,, less issue expenses, orr. 364,670 shares of'common, stock issuedd pursuant to the subscription offer to stockholders in November, 1958, and by $903,000, being the premium received on 64,500 ~ shares of common stock issued upon, exercise of stock, options. (4!)! Property, plant, and equipment is stated at cost with the exception of certain properties acquired prior to December 31, 1932,which, are stated at values, lower than cost, determined as of that date. Ll/

I RELATING TO OPERATIONS. E Yrar. Earnings~ I'ncome~andi Earnings Dividendl~. Ended' Nert heJore~Tares~ Excess~ Net Comon~. Comon. m m Der.~.31~. Sales onlncome~~ Profi'ts~.Taxeie~ Earnings~ Share* Share~ 11958 ' $479,120,409 $57,630;083' $30;593;000 $27,037,083 $8'.02' $4.00 1957' 293,41'5,430' 2'4,882,4112 13,398,000 3;398,000 ~' 111,4'84,4I12 3178' 1.95 11956, 203,280,41'7' 8,618,758' 4,099,000 I 4,519,758 1.34 1.20 1955 228,268,392 13,098,500 6,502,500 I 6,596,000 2.07 1.35' 11954 231,046,695 12,629,1143: 3 6,287,000 6,342;143' 1.98' 1.60. 11953' 253,933,462 18,787,571 11,594,000 7,19'3',571i 2.28 1.60 19~52~, 2~~1'~~4,50'8,482 11',640;9~42' 5,9~40~,000i I 5,700;942' 2.01 1'.50~. 1951 188,4'A7,430, 10',943',472' 5,817,000 5,126,472 1i.78 1.50. 11950' 167,936,931 12,632,7681 5,895;000' 6,737,768 2169 1.85 11949 153,500,123 111,2'111,1I33 4,387,000' 6,824,133 2'.73 1.75 RIELATIING~~ TO~~ BALANOE~ SHEET' Property, Plknt Shareh'olders" and'Equi pmeutt Equity At~ Total~ Working~ Grass~~ Net~aJter Per.Cam-~~ 6~ Dec~.31. Inventories~ Capital A~mount~ Depreciation, . Amount~ manShare!r~ 11958 $'1'97,069,209 $143,916,484 $41,037,558 $30,927,133 $126,552',617 $35.57 11957 ' 16'1,449,360' 109,803,777 3'7;495,633' 28;513,852 86;674'',232 26:95' 1956 136,652',28'1 110,245,323 3'5,079,590' 26,399,561 81,438;885 25.111 1955~ 140,988,335 112,451,576 34,292,757 25,488,791' 81,028,497 24.97 1954 144',189,440' 108,876,,796 27,518,065 18,675,223 78,969,754 24.25 1953 135s727,170 1' 11I,269,498 2'4',392,884 1 16,218,639 77,878;061I 23.86 119~52 1I2'5,008,096 811,369,651! 22,605,22'2 ~ 15,085,844 67,820f512 23.24 1'95'1 101,995,679 811,658,130 ' 21,342,441 14;200;835 66,549,877 22.73' 119,50, 84,4'611,181' 69,907,552 19,433,534 12.734,785 60,876,008 22.73 1949, 74,992',955' 70,474,585 17,707,279 111,094,0'41 58,980,453 21.89 ' Based on number of shares outstanding at end of' each year.

tHl AS' K II N I S & S E L lL S CERTIFIED PU6!LIC'~. ACCOUN~TAN~TS~ 67 BROAD 5TR',EET. NEW YORK 4 February, 6, 11959. To the Board of' Directors and Shareholders of P. Lorillard Company: We have examined the consolidated balance sheet of' P. Lorilllard Company and its subsidiary company as of' December 31,,11958 and thee related statement of consolidated earnings and retained earnings for the, year then ended. Our examinatian, was made iin accordance witlhi generall'yaccepted auditingstandards, and' according~lyincl'uded' su~ch, test's of the accounting,reeords and such other auditing procedhres as we considered necessary in the circumstances. In our opiniony the accompanying, consolidated balance sheet and statement ofl consolidated earnings and retained earnings present fairlY the financial position of the companies at December 31, 1988' andl the results oftlheir operationsfbr the yearthen, ended, inconformity with generalNy accepted accounting, principles applied on a basis consistent wiith, thatt of the preceding,year.. ox ,9,&4 e1w

, G f ., © - CIGARETTES Fihiters I Non-Filters Turkish LITTLE CIGARS , LEADING PRODUCTS OF' P. LORILLARD COMPANY SMOKING TOBACCOS CHEWING TOBACCOS /3,~16~ i 0 a ® UM

-- -- - _ - -- --- a I ~. -- .. ~' ~'~ ~~I~ •~ ~' o Od ~^¶ , ."~~xQM s ~VM~VV~V ~~I I I I ( I ' f I I

Item 1. Securitie&Registered on F.xchanges. (1) Title of Class Twenty Year 3% Debentures, due October 1, 1963 Twenty-five Year 3% Debentures, due March 1, 1976 Twenty-five Year 3t 3/4% Debentures, due Aprll' 1, 1978 7% Cumulative Preferred Stock $!100 par value Common Stock $Y0~ par value Itemi2'. Number of Stockholders.. (2). Name of Each Exchange on Wh:LchRegistered New York Stock EScchange. New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange Title of' Class Number of' Holders 7;$' Cumulative Preferred Stock 1„88D $100 par value CommonStock 21,637 $10 par value Item 3. Parents andlSubsidiaries of Registrant. No change Items 4 to 9, inclusive, not required to be answered. 1

Item 10. Financial Statements and Exhibits. (,a) Financial Statements. Page Opinion of Independent Public Accountants. ConsoTidb.ted'Balance Sheet, Decem- ber 31, 1958. Statement of Consolide•.ted~ Fkrnings and Retained Earnings for the Year Ended December 31, 1958. Statement of Additional Paid-in Capital for the Year Ended December 31, 1958. Notes to Financial Statements. Schedule V - Property, Plant, and Equip- 4 51 6 6 7-10, ment for the Year Ended December 31, 1958. 11 Schedule VI - Reservesifor Depreciation, of Property, Plant, and Equipment for the Year Ended December 31, 1958. 12 Schedule IX - Long-Term Debt, Decem- ber 31, 1958, 13 Schedule XII - Reserves for the Year Ended December 31, 1958. 1!4 Schedule XIII - Capital Stock, Decem- ber 31, 1958. 15 Schedule XuI'- Supplementary Informationn to the Statement of'Consolidated Earn- ings for the Year Ended December 31, 1958'_ 6 1. Schedules I, II, III, IV, VIII, X, XI, XIV, XV, and XVII are omitted because present. because the required matter is not Schedule VII is omitted intangible assets have been carried at a nominal value of $1.00 since 1933.. 2. The individual financial statements of P. Lorillard Company are omitted as permitted by bothiItems l(b)1(i)1 and 1(b) (ii) of'the Instructions as to Financial Statements for Form 10-K. Exhibits. None. I t~0 1110 ~ ~ ~ co - 2 -

SIGNATURE In pursuance to the requirements of the Securities Exchange Act of 1934, the registrant, P. Lorillard Company, a corporation organiizediand existing,under the laws of New JerseY, has duly caused this annual report to be signed onlits behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of New York and State of' New York on the /.~~ day of April 1959. Neither the execution and filing of this annua]l report, nor any statement marle herein, nor any action taken or omittedi pursuant to provisions of'the Securities Exchange Act of 1934 as amended or the general rules and regulations of the Securities and Exchange Cbmmission, shall constitute a waiver by the registrant, or by any of its directors, officers, employees or auditors, of any constitutional right. P. Lorillard Co ® y Registrant ~- Y:./V-c,. _ . Name -affd"Tit1 e ~~. Assistant Comptroller CD ~ ca ~ m ~ - 3 -

CERTIPIED,PUBL7C.ACCOUNTANTS 6:7. B~R-0AD~. STREET NEW YORK 4 P. Lorillard Cbmpatyyr: We have examined the financial statements and schedule&of P. Lorilliard Company andl its subsidiary company,, listed in the accompanying index, which you are filing as part of' your Annual Report (Form 10-K)lto the Securities and Exch:ange Commission for the year ended December 31,, 1958. Our examination was made in accordance with generally acceptediauditing standards, andi accordingly included such tests of the accounting recordsland such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statements of'consolidated earni:ngs andlretained earnings and of additional paid-in capitaIl present fairly the financial position of the companies at December 31, 1958'and the results of' their operations for the year then ended, in conformity with generally accepted!accounting principlies applied on a basis consistent with that of the prec, -a yeara and the schedules present fairly the required information,. February 6, 1959,

A S 3 E T S CURRENT ASSETS : Cash.............................. .... ............ $ 13,964,035 Accounts receivybie - customers (less $457,669 for cash discounts and $487,411 for doubtful accounts) (Schedule XII) ..................... Other accounts receivable ...................... Inventories (at average cost) (Note 2): 23,612,776 909,272 Leaf tobacco ................:...............' . 168,290,593 Manufactured stock and revenue stamps........ .. 23,579,916 Materials and supplies ....................... 5,198,700 To-cal current assets .............................. , PROPE;TY, PLANT, AND EQUIPM0 T (Note 3) (Schedule V): - Lsnd ........................................... 620,758 - ~ Buildings and building equipment ............... 14,822,401 Machinery and equipment........................ 25,594,399 Total .................................. 41,037z5S8-- Less accum~lated depreciation (Note 4) (schedule VI)................................ _.:. 10,110,425 Total property, plant, and equipment - net ...... 0T~_i ASSE•PS : Mortgage note receivable ....................... ~ 279,391 r Prepaid expenses.and deferred charges.......... 2,605,557 Unamortized debenture discount and expense (in - -- process of amortization over the lives of the - - - respective issues)..........., ,,.,...,,. 660,933 Brands, trade-marks, snd goodrrill 1 - Total other assets .............................. TOTAL ................................. L I A B I L I T I E S CURRENT LIABILITIPS: Notes payable (banks)............................ ... . $49,850,000 Accounts payable (trade) ......................... 6 337,250 Lorag-term debt due within one year (less 41,025,000 debentures held for sinking funds) (Schedule IX).................................. , - -- - 2,266,664 Accrued taxes (Note 5) ............ ........................... 26,060,199 Accrued payrolls................................. 5,501,731 Accrued interest ................................. 470,639 Other accrued liabilities .... .. ... 1,152,325 #235,555,292 Total current liabiiities... .. .. . .. S 91,638,808 IANG-TERM DEBT (exclusive of amount due within one year) (Note 6) (Schedule IX): Notes (3% and 3 1/4`,6 ) due serially to July 1, 1963........................................... 6,250,006 Twenty year 3% debentures, due October 1, 1963 - - - - - ($600,000 to be retired annuallg 1960 to 1962). 11,800,000 Twenty-five year 3% debentures, due March 1, 1976 ($350,000 to be retired annually 1960 to 1975). 12,900,000 30 927 133 Twenty-five year 3-3/4% debentures, due April 1, , , 1978 ($675,000 to be retired annually 1960 to 1977) .......................................... - --- 19,800,000 Total long-term debt ..................... .... 50,750,006 RRSERVFS FOR PENSIONS AND CONTIMEtQT INCENTIVE COMPENSATION (Notes 10 and 11) (Schedule XII) .. .............................. 1,086,876 SIiAREHOLLERS' EQUITY: 7% cumulative preferred stock (par value $100 - -- -- - 3,545,882 per sh.are) - authorized, 99,576 shares; issued, 98,000 shares Sc_hedule.XIII).......... - - $ 9,800,000 Common stock (par value $10 per share - authorized, 5,000,000 shares; issued, 3,282,024 shares (Note 12) (Schedule XIII) ..... 32,820,240 :• Additional paid-in capital preaiums less expenses on coamon stock issued) (per accom- panying statement).............................. 29,643,735 Earnings retained for use in the business (Note 7) (per accompanying statement) .......... 54,288,642 Total shareholders, equity ....................... 126,552,617 COMMITMENTS AND CONTINGENT LIABILITIFS (Note 8). TOTAL .................................. ~27 0,028,307 See the accompsiqing Notes, which are an integral part of the financial statements. 89297889

P STATIIyIEN'T OF' CON60LIDATID EARNINGS AND RETAINED EAIRNINGB' FOR THE S[EAR ENDED DECEMBER 31, 1958' REV'EN[IESh Net sales (Note 9), ..................... $479;120,409 Other ...............,.................... 358,192 Total revenues,............................. $479,478,601 COSTS AND EXPEN3EZ: Cost of goods solidiQNotes 2, 9, and 10), $358,697,005 Selling, advertising, andiadministrsr tive expenses (Notes 10 and 1'1)...... 59„141,977 Interest on long-term debt (including amortization of debenture discount and expense, $54,315), ................. 1,827,430 Other interest (principally on bank loans)................................... 2,182,106' Federal income taxes ................... 28„766,000 State income taxes................... 1,827,000 Total costs and expenses ............. ... 452 441 518. NET EARNING3......................................... , ,... 27„037,,083 RETAINED EARNINGS, DECFIMBER' 31, 1957 .................... 40 260 114 Total................................ 67,297 197' DEDUCT' DIVIDENDS DECLARED (Cash): Preferred stock -$7.00 per share.................... 686,000 Common stock - $4.00 per share .......................... 12 322,555 Total dividends declared .................. 13,008 555 RETAINED EARNINGS, DECEMBER 31, 1958 (Note'7)........... $I54.,2~88,642 LORILLARD COMPANY AND, SUBSIDIARY COMPANY STATEMENT OF ADDITIONAL PAID-IN CAPITAL FOR' THEYEAR ENDED ' DECPlMBER, 31. 1958' BALANCE, DECEMBER 31, 1957................,.,....,.......... $ 8„085,578 ALID: Excess of'proceeds reeeived fromisal'e of 64,500 shares of common stockk upon exercise of stock options over par value of stock issued:........... ~ 903,000 ~ Excess of'proceeds reeeived„ less issue~ ~ expenses, from sale of 364,670 shares ~; of common stock, issued pursuant to m the subscription offer to stock- p holders in November 1958, over par value of'stoek issued ................. 20,655,157 21,558,157 BALANCE, DECEMBER 31, 1958....,...,.......,..........,...... 29'.643',735 See the accompanying Notes, which are an integral part of the financial statements.

. P. I:;ORILI;rAFD ~ COPKPANY AND SLTBSIDIARY' COMPANY N©TFZ TO FINANCIAL 3TATRa9ft FOR TSE YEAR' EbIIIDEC~ DECFMBF~2 31, 195,8 The financial statements includelthe accounts of the. Company and its wholly-ow;aed subsidiary company. At December 31,, 1958 the net assets of the subsidiary exceeded the invest- ment of' the Company in such subsidiary by $666, 097,, which amount represents wndistributed earnings since date of acquisition and has been iinclu$ed in sarrings,.retained for use in the:business'. (2 ): The entire inventory of leaf tobacco~ has been classified as a current asset in accordance with.a generally recognized tradelpractice although, due to the.duration of'agSng processes, the tobacco on hand include&requirements beyond thelperiod of one year. It is not practicable too determine thwamount not realizable within one year.. Inventories at th&beg{nni;nw, and end of the year, priced at averege' eost'„ were: December31„ 1957, $161,449,,360;, December 31, 1958,, $197', 0'69, 209 . (3): Property, pl,ant,, andi equipment is stated at,cost with the exceptionof certain propexties,acquired.prior to Decem- ber 31„ 1932 which are stated at valuesy lower thsn cost4, detexvninedas of that date., (4) It is the policy of the:companiies to provide for deprecia.- tion on the stra3,ght- !imetiod at the fol.low3'.ng annual rates, based upon the estihnated useful lives.of the I properties, applied to.the gross carrying valuest Buildir7g s and building, equignent - principal items, 2% ' Buildings and building equipment - other itfts.... 5% Machinery and equ,ipnent - principal items............. 5% Machinery and equipnent - other items, ........... . . . . . 10;6: and 20% Office machinery ............ . 10% to-33-1/3% f. Automobiles.., ................ 25% I Also, it is the policy of' the~ companies to malte additional provisions for depreciation to off-set the reductions in Federal income taxes resu.ltiog,:f:t-om the use for tax pur- poses of the declining balance method of' computing depre- ci:ation on certain' pro~?erty. The additional amount so~ provided for 1958,was $285,170., Upon the retirement or other disposition of' properl6y, ~ depreciation reserve is charged with the acclmnylated V amount of depreciation applicable to such property, and ~ profit or loss is taken up in earnin$s., ~ Maintenance, repairs, and renewals aracharged to eamningsMy a&incurred. Betterments are capitalized. - 7 - (;Conti'nued)~ - 1.

The Federal income tax liabilities of the compesil.es have been settlediup to and including 1955. While the liabilities for subsequent years are subjeet to final determination, the amount provided in the consoliidated' balance sheet is believed to be adequate to cover any additional assessments whichimay be made by the Treasury Department. (6) The aggregate amounts of' me.turiti'es and sinking fund requirements of long-term debt during each of'the next five years, less debentures held by the Compan for sinking fund purposes, are as follows: 1959, 123266,664; ; 1960 to 1962, inclusive, $3,291,664 in eachiyear;, 1963, $12,275',014. (7). (8) (9) Covenants limiting the payment of dividends on common stock and the purchase, redemption, or retirement of'such stock are contained i'nithe debenture indentures and in the note agreement. Under the most restrictive of these couensats the amount whichicould have been expended for the fore- going,purposes at December 31, 1958 was limited'to approx- imately $52,000,000. At December 31, 1958 outstanding commtitments for the purchase of property, plant, and equipnent amounted to approximately $11,200, 000 . The Company and two other tobaccolcompanffes are defendants in a civil action brought by Lawler D. Sharp in the United States District Court for the Eastern District of. Louisiana. The plaintiff's complaint, which1was filed' on March 28, 1958, alleges that the pliaintiff;, alresident of the State of Mississippi, developed cancer of'the larynx by reason of his use of cigarettes manufactured and sold by the defendants. The complaint demands judg- ment against the defendants, jointly and severally, in the amount of $155,000 in actual dsmeges and $1,000,000 in punitive damages under the laws of NLississippi, together with interest and costs. Thelanswer of the Company denies any liability on its part to the plaintiff. Pre-triaii examinations in such action have not been completed. Federal revenue stamps affixed to products solidiin 1958 amountedl to $~08,551,967'. ___.,...-...~, (10'), Under the non-contributory Ehiployees Retirement Plan of the compani'es, retirement allowances (normally at age 65) are being provided for salaried employees who have completed GD three years of service with the companies. The assets rp of the Plan are held'by City Bank Farmers Trust Compsny, ,j as Trustee. The present annual coat of the Plan to the m companies is approximately $270,000, i'ncluding $15,000 ~ for past service. An i'ndependent actuary has estimated ~ that the unfunded past service cost of the Plan at_ Decem_" „ ber 311, 195B approximated $90,000. The Boardiof Directors has followed a practice of authorizing annually the making of supplementary payments to retired employees whose allowances under the above Plan fall below (Continued) - 2.

certainminim,mm amounts. At present such supplementary payments aggregate approximately $15,000 per annum. As of November 1, 1952 the Company adoptedia non-contributory RetiYrement:Allowance Plan (amended in 11955 and 1958) pro- viding retirement allowances for full time hourly rated and fits and other public pensions. With certain limitations, or piece work emplioyees. To be eligible for a retirement allowance an employee must be in the service of the Com- pany to his sixty-fifth birthday (certain female employeess to sixty-second birthday) and must have completed at the time of retirement not less than twenty years of credited service as defined inithe Plan. Retirement allbwances vary withithe length of credited service or by reason of other factors, the maximum allowance being $135 per month after thirty years of'service. Inialli cases the allow- ances are to be reduced by primary social security bene- the Board of Directors of the Company has the right to modify or terminate the Plan at any time, provided that no retirement allowance being paid at the time of any modification or termination shall be discontinuedior reduced. The retirement allowances presently being paid under this Plan approximate $!+6,Q00'per annum. As of October 1, 1954 the Company's subsidiary adopted a non-contributory Retirement Plan for non-salaried~ employees. The retirement allowances presently being paid under this Plan approximate $2,800 per annum. With respect to the P3ans referred to~in the two preceding paragraphs, it is the poliey of the companies to main- tain reserves equal to the estimated present worth, actuarially calculated, of the future retirement allow- ances payable to the employ.ees who have attained retire- ment age. A't December 31, 1958 such reserves aggregated $578,231. Provision is not made in respect of thei employees who have not attained retirement age; an, independent actuary has estimatedithat the amount that would be necessary to provide for the past service cost in respect of such empLoyees as of September 30, 1958 approximatedi$2,070,000. (,11) Incentive compensation for officers and key personnel pay- able under Article XII of the By-Laws, based on consoli- dated net income after making adjustments specified in such Article XII, amountedito $3„08t+,681 for 1958. amount is included inicurrent Iiabilities.. This (12) Ten-year options to purchase an aggregate of'64,500 shares of authorized but unissuediconffion stock, being,part of a total of 100,000 shares reserved for the purposes of a Restricted Stock Option Plan, were granted in October 1957 to twenty-eight officers andikey personnel at $24.00 per share or a total of'$1,548,000,, subject to approvali of stockholders. These options became exercisable upon approval of the Plan by the stockholders on April 8, 1958 andiat that date the fair value (approximate market value) of the 64,500 shares under option was $51.50 per share or a total of $3,321,750. All the options were exercised prior to December 31, 1958. At the dates of exercise the 89!2'9'7891 - 9 - ('Continued) - 3. 7

4 fair value (appr.oximate market value) was $63.18 (anrerege) per share or a total of $+,074,888. The amount bg which the option price of $24 per share exceededithe par value of the stock issuediwas credifted to additional paid-in capi'tal. At December 31, 1958, 35,500 shares of authorizedibut unissued common stock were reserved for purposes of the RestrictediStock Option Plan, but no options were outstanding. . - 10 - ( Conclhided ) - 4.

SCHEDULE V P. LORILLARD COAPANY ANfl -SUBSIDIARY CoMPANY PROPERTY, PLANT, AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31 1958 --- - - - - - - COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F OTRER CHANGES - BALANCE AT RF'PTRFMFNTS DEBIT AND/OR BALANCE AT BEGINNING ADDITIONS OR SALES CREDIT - CLOSE OF CLASSIFICATION OF PERIE}D AT COST (1) DESCRIBE PERIOD Land ...... . . ..... . .. .. .. -. .. -. -. -. -. -. -. -. -. -. _. . . .• $ 880,154 $ 37,714 ~ Buildings and building equipment....- 14,987,411 537,779 N Nlachinery and equipment .............. 21,628,068 4,788,137 ~ (1) $ 297,110 702,789 809,722 (2) Cr. $12,084 $ 620,758 14,822,401 (3) 25,594,399 TQTAL ............... $37,495,633 $5,363,630 $1,809,621 Cr. $12,084 $41,037,558 Property, plant, and equipment retired or sold is stated in Column D at gross book value as carried in the property accounts, i.e., as written down as of December 31, 1932 or at cost. Provision for depreciation of dies (see Schedule VI). After deducting reserve for depreciation of dies (see Schedule VI). S6BG6~68

SCHEDZTI,E VI P. LORILLARD COMPANY AND SUBSIDIARY COMPANY - - RESERVES FOR DEPRECIATION OF PROPERTY, PLANT, AND F)QUIPMENT FOR THE YEAR ENDED_DECENBER 31, 1958 _ CtTLUMN A COLUMN B COLUMN C ADDITIONS COLUMN D COLUMN E --- .:r CHARGID CHARGEQ DEDUCTIONS FROM RESERVES DESCRIPTION BALAN~E AT BEGINNING OF PERIOD ; TO PROFIT TO OTHER AND LOSS ACCOUNTS - _ OR INCOME DESCRIBE RETIREMENTS, - RENEFALS AND OTHER - REPLACENIENTS DESCRIBE BALA.NCE AT CLOSE OF PERIOD Buildings and building ~ equipment ................. $2,504,972 $ 476,423 $418,327 $ 2,563,068 N Machinery and equipment..... 6,476,809 1,599,124 528,576 7,547,357 TQTAL..,........ ...,981,781 $2,075,547 - $946,903 - $10,110,425 Dies........ ................. $ 109,259 $ 12,084 - -. - (1) ~ 121,343 ) The reserve for depreciation of-dies does not appear in the consolidated balance sheet, having been deducted from the corresponding asset (see Schedule -V). 96R4,6Z68

P. IARIIllARD COMPANY AND 3DB3IDIARY COMPANY IANG-TERM _DEBT. _ DECEMBER 31, 1958 COLUMN A COLUMN B COLUMN C COLUMN D ANAUNT INCLUDED IN - - C-OiLJMN C WHICH Is AMOUNT AMOUNT ISSUED AUTHORIZED AND NOT NOT HELD HSLU BY OR BY.OR FOR FOR ACCOUNT ACCOUi4T OF - - NAME OF ISSUER AND TITLE BY RE'.fIRE[) OR OF FACH ISSUE INDENTQRT CANCEIM_(1) - OF ISSUER ISSUER TAEEiFIDF THERDDF P. IARILLAIH) COMPANY: Notes (3% and 3-1/4%) due serially to July 1, 1963 $10,000,000 ~ 7,916,670 None ~ 7,916,670 Twenty year 3% debentures, due October 1, 1963 ($600,000 to be retired annually to 1962)-...... 20,000,000 12,400,000 None 12,400,000 Twenty-five year 3% debentures, due March 1, 1976 ($350,000 to be retired annually to 1975) ....... 15,000,000 13,250,000 $350,000 12,900,000 Twenty-five year 3-3/4;6 debentures, due April 1, 1978 ($675,000 to be retired annually to 1977).. 22,500,000 20,475,000 675,000 19,800,000 Less long-term debt due within one year, included in current iiabi3ities: ...... Notes (3%) due 1959 ............................. ... Twenty year 3% 1963 debentur-es.................. Twenty-five year 3% 1976 debentures, $350,000 less $350,000 held by Company................. .. Twenty-five year 3-3/4% 1978 debentures, $675,000, less $675,000 held by Compsny.....-. Rmount shown under caption "f,ong-Term Debt"....... FEDERAL TIN COMPANY, Inc.: - -- - -- - - None COLZJMLY E ANIOUNT INCLUDED IN SUM ERTffiQDEQ UNDER CAFrION "IANG-TERM DEBT" IN RELATED - BALANCE SBEi! ~ 7,916,670 12,400,000 12,900,000 19,800,000 $53,016,670 $1,666,664 600,000 - 2,266,664 L0,750,006 (1) The indentures contain no provisions as to the issuance of additional notes or debentures. (2) Columns F, G and H are omitted as the answers thereto would be "None".

P. LDRILLARD COMPANY AND SUBSIDIARY CQMPANY FtESERVE3 FOR THE..YFAR ENDED DECIl+RBER 31, -1958 COLUMN A COLUMN B COLUMN C --- ADDITIONS -CHARG . - - CHARGED BMIFINCE AT TO PROFIT TO OTRER BEGINNINC AND LQSS ACCOUNTS.- DFSCRIPTION OF PERIOD OR INCOME DESCRIBE Cash diac_ounts......................... $347,109 $9,344,346 Doubtful accounts...................... _ .__ 369,618 158,963 (2)$ 4,829 ' T©TAL.._ . $716,727 $9,503,309 N - - _ ~ .Pensions ..........................-.... .. $579,414 $ 46,966 - ~ 4~829 Contingent incentive coutpensation...... 260,443 (5)$265,773 - - - - --- -- -- - - TOTAL ................... $839,857 ~ 46,966 ~265,773 j1) Discounts allowed. 2, Recoveries on accounts previously written off. 3) Accounts written off and collection fees incurred. 4) Pensions paid to retired hourly employees. (5) Deferred portion of incentive compensation for 1957 transferred from current liabilities. (6) Deferred incentive conpensation paid dilring 1958. COLUMN D DEDUCTIONS FROM RESERVE3 - DESCRIBE (1)99,233,786 (3 45 999 $9,279,785 T 4 1 48,149 6 17,571 65,720 SCIRD= XII ...~....~...__ COLUMN E BAiANCE AT CIASE OF PERIOD $ 457,669 487s41L-. _- $ 945,080 ~ 578,231 508,645 ~ $1 086~876 eseM6Zse

P. LORILLARD COMPANY AND SUBSIDIARY COMPANY CAPITAL_STOCK,_DECENIBER 31, 1958 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN H --- - NUMBER OF SHARES SHARES OUT3TANDIIG AS SHOWN NUMBER OF INCLUDED IN COLUMN C ON OR INCLUDED IN RELATID NUMBER OF SHARES WHICH ARE BALANCE SFCEEP UPIDE_R CAPTION SHARES RESERVED NUMBER OF ISSUED AND 3iELD BY QR N0'F-fflnD BY "CAPITAL STOCK!' FOR OPTIONS, SHARES NOT FOR ACCOUNT OR FOR ACCOUNT AMOUNfi AT WARRANTS -- _ - , NAME OF ISSUER AND TITLE AUTHORIZED REfiIRED OR OF ISSUER OF ISSUER WHICH CONVERSIONS, AND OF ISSUE BY CHARTER CANCELED THEREOF THEREOF NUMBER CARRIED OTHER RIGHTS P. Loriliard Company: 7% cumulative preferred stock, par value $100 per share......... 99,576 98,000 None 98,000 98,000 ~ 9,800,000 Common stock, par value $10 per share ............................ 5,000,000 „ 3,282,024 None 3,282,024 3,282,024 32,820,240 (1) Information is not furnished as to Federal Tin Company Inc. because all the outstanding shares of that - company are held by P. Lorillard Company and the answers to Columns G and H would be "None." (2) These 35,500 shares are reserved for purposes of a Restricted Stock Option Plan for officers and key personnel. (3) Column F has been omitted as the answer thereto would be "None." Column G has been omitted as the - answer is given above. None (2) 35,500

P. IARILLARD. COMPANY AND STJB.`3IDIARY COMPANY SLTPP'LFMENTARY INF'ORMATION TO THR STATIIMENT OF CONSOLIDATED EARNINGS FOR T.HF :YF,AR. ENDPD DEGBMIDER 31, 1958 COLUMN A CQhtJMN B CHARGED- DIRECTIY TO PROFIT: AAID . LOS3 TO COST OF ITIIM (300DS. SOLD OTHER 1. Maintenance and repairs ................ $ 2,746,260 $148,994 . 2. Depreciation ... . . ...................... 1,551,247 536,384 3. Taxes, other than income and excess i profits taxes: Federal Revenue.Stamps ........... . .208,551,967 398,655 ~ .. . rn Itnport duties ........................ .. . .. . .. .. 1,730,690 117,362 i Pagrol-l taxea.-------- ............. 962,851 154,877 Property taxes....................... .• 560,416 153,774 Total taxes, other than income and excess profits taxes..,... $211,805,924 ~824,668 4. Management and service contract fees - 5. None Rents and royalties: Rents ...... ~ 195,626 - $298,667 . . Raya,ities............................ 58,189 Total rents and rayaities....... ~ 253,815 $298,667 (1) Charged- to machinery 00646,<JV6$ and equipment. SG1iECRJLE XVI COLUMN C CHARGED TO OTFIER ACCOtJNT3 COLUMLY D TOTAL $ 2,895,254 2,087,631 208,950,622 (1)$139,343 1,987,395 1,117,728 714,190 $139,343 $212,769,935 ~ 494,293 58,189 S 552,482

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