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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