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875-P. Lordlard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 Borrowings The cash requirements of the Company are usually at a maximum between September and March, because of heavy leaf buying during this period, and at a minimum in the summer, prior to such buying season. It is customary in the industry to borrow short term funds in order to finance these seasonal purchases of leaf tobacco. During 1966 short-term borrowings ranged between a minimum and maximum of $10,900,000 and $49,900,000, respectively. Such short-term borrowings on March 31, 1967 were $ 31,400,000. Prices Sales The list price of the Company's filter and non-filter king-size and 100 mm. filter cigarettes is $9.20 per thousand and of non-filter regular size is $9.00 per thousand. Such figures reflect a price increase of $.20 per thousand effective March, 1966. The prices include Federal excise tax at the rate of $4 per thousand and are subject to the usual 2% cash discount if paid within ten days. State and Local Taxes At April 30, 1967, excise taxes on cigarettes, which are levied upon and paid by the distributors, were in effect in forty-nine States, the District of Columbia and a number of municipalities. Such taxes, many of which have been increased in recent years, range from two cents to fifteen cents per package of twenty cigarettes. Employees On April 30, 1967, the Company had approximately employees, of whom approximately .. were hourly rated production and service employees covered by collective bargaining agreements with affiliates of the AFL-CIO and some independent craft unions. The remaining .... employees are other hourly rated personnel or are salaried employees serving in executive, administrative, engineer- ing, supervisory, production and clerical capacities. On January 1, 1965, a three-year contract relating to cigarette operations was entered into with the Tobacco Workers' International Union AFL-CIO. [Refer to employee benefits with possible reference to notes in financial statements regarding pension plans.] PROPERTY The properties of the Company are employed generally in the processing and storing of tobacco and in the manufacture of the Company's tobacco products and storage of such manufactured products. Its principal properties are owned in fee and are located as set forth below. With minor exceptions, all machinery used by the Company is owned by it. All properties are in good condition, and the cigarette-making machinery and the cigarette-wrapping and packing machinery are of modern design and of high-speed type. The Company has plants for manufacture of its tobacco products at Greensboro, North Carolina, and Louisville, Kentucky. The Greensboro plant is devoted exclusively to the manufacture of cigarettes and is a modern, one-story air-conditioned building covering thirteen acres of a plot of approximately eighty acres. The Louisville plant, which is a multi-storied building occupying approximately twelve acres of a plot of about twenty-four acres, is utilized for the manufacture of cigarettes, as well as little cigars, chewing tobacco and smoking tobacco. 9 .__ ./np-.___.. IV

875-P. Lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 The Company also has facilities for receiving, processing and storing leaf tobacco at Lexington, Kentucky; Danville, Virginia; and Lancaster, Pennsylvania. The plant and facilities of Federal Tin and Paper Products, Inc., are located in Baltimore, Mary- land. Usen Products Company has its plant and facilities on a twenty-acre plot it owns in Woburn, Massachusetts and has recently begun operations in a 45,000 square foot processing and canning plant on a five-acre plot in Golden Meadow, Louisiana. Reed Candy Company has its plants and facilities in Chicago, Illinois. Reed Candy Company recently acquired a tract of land of approximately 50 acres in Campbellsville, Kentucky and is proceeding to construct a facility occupying square feet. Golden Nugget Candy Company leases a plant in San Francisco, California. The Company leases executive offices at 200 East 42nd Street, New York, New York 10017. MANAGEMENT Directors and Officers The directors and executive officers of the Company and the positions and offices held by them are: Name Positions and Offices Manuel Yellen*.. Director, Chairman of the Board and chief executive officer J. Edgar Bennett*...... .... Director and President George O. Davies* .. ...... _.... ... Director and Executive Vice President William A. Jordan* .,..... .. Director and Executive Vice President Henry E. Erickson* .. ... .. ...... Director and Vice President William D. Okerson• .................... Director and Vice President Peter G. Levathes* . ....... ........... Director and Vice President Anna F. Woessner* ...................... Director and Secretary Robert Z. Post*. .. .. __ . Director and General Sales Manager Lewis Gruber* ................... ..... Director Donald A. Henderson ............... . Director Melvin E. Dawley ..................... .. Director Harold X. Schreder ...................... Director Harold E. Stassen . ................ . .... Director Robert Meyer. .... ... ............... .... Director B. Lowell Jacobsen ...................... Vice President Walter M. Aikman ........................ Vice President Philip R. Grant.... .__ .... Vice President and General Counsel John J. Darby ............. _ Comptroller Edward G. Kontos ........................ Treasurer * Member of Executive Committee. All of the executive officers of the Company have been actively engaged in the business of the Company for more than five years except the following: (a) Mr. Jacobsen was a Vice President of Pepsi Cola Co. from 1961 until he joined the Company in 1963; (b) Mr. Levathes, before joining the Company in 196..., served Twentieth Century-Fox Film Corporation in various capacities, including Vice President, and was Executive Vice President of the advertising firm of Clyne-Maxon Inc.; 10 ,

875-P. Lor0lard Company-P. E Amend. No. 3 -Pandick Press, Inc.-May 9, 1967 (c) Mr. Aikman, who joined the Company in 1964, was for more than the preceding two years a Senior Associate with Arthur D. Little, Inc.; (d) Mr. Grant was a partner in the law firm of Perkins, Daniels & McCormack or its predecessor firm for more than the preceding five years before joining the Company in 1966. As of May 8, 1967, the directors and officers of the Company did not own beneficially, directly or indirectly, any shares of Preferred Stock of the Company. As of such date, these persons as a group may, under interpretations of the Securities and Exchange Commission, be deemed to have owned beneficially shares (... .%) of the outstanding shares of the Common Stock of the Company, including ___ _ shares (_ _.%) as to which such persons have disclaimed beneficial ownership. Included in such total are shares transferred by the Company to certain directors and officers in payment of contingent awards of incentive compensation and placed in escrow to be released over a ten-year period (in the case of contingent awards for years prior to 1960) and a fifteen-year period (in the case of contingent awards for 1960 and subsequent years), subject to compliance with the applicable earning-out, non-competition and other continuing conditions to the receipt of contingent awards set forth in the Company's incentive compensation plan. (See "Remuneration" herein.) The number of shares to be released annually to such directors and officers as a result of such transfers during the ten-year period and, where applicable, during the fifteen-year period following termination of employ- ment are, respectively, as follows: Mr. Bennett. 32 and 174; Mr. Darby, 43; Mr. Davies, 437 and 246; Mr. Gruber, 699; Mr. Jordan, 29; and Mr. Yellen, 437 and 246. The information as to beneficial ownership of the persons indicated above was received from, and rests peculiarly within the knowledge of, such persons, and the Company disclaims responsibility for the accuracy and completeness of such information. Remuneration The following table sets forth all direct remuneration paid by the Company and its subsidiaries for the fiscal year ended December 31, 1966 to (1) each person who was a director of the Company at any time during such year and whose aggregate direct remuneration for such year exceeded $30,000; (2) each person who was one of the three highest paid officers of the Company during such year and whose aggregate direct remuneration for such year exceeded $30,000; and (3) all persons as a group who were directors or officers of the Company at any time during such year. \eme of tndi.ldn.l C.p.e/ty in wF1eF rationwa.reeelved S.I.ry C,.rreni ineentlve ompen.aion(1) J. Edgar Bennett . . _ _ _ . President $ 65,000 $ 57,632 John J. Darby.. .. .. .... _ Comptroller 28,320 13,978 George O. Davies. ._ Executive Vice President, Finance 50,000 29,817 Henry E. Erickson _. .... Vice President, Leaf 40,000 40,000 William A. Jordan ...... _... . Executive Vice President and Vice President, Sales 40,301 39,568 Peter G. Levathes_ __ Vice President, Advertising 50,000 41,232 William D. Okerson Vice President, Manufacturing 36,250 36,250 Anna F. Woessner.. .. Secretary 20,000 15,000 Manuel Yellen ... Chairman of the Board and chief executive officer 75,000 54,815 Directors and officers as a group (2)_ ............. .......... ..._ _... 685,734 428,044 (1) Incentive compensation is paid under Article XII of the By-Laws of the Company which providea for such payment to officers and key personnel in an amount equal to stated percentages of net operating Income (ranging from 11 m CD W O O W ~ Fr

875-P. lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 3% of the first $50 million thereof to 6% of net operating income in excess of $58 million), defined, in general, as consolidated earnings before Federal taxes on income, incentive compensation awards and capital gains and losses. Such Article provides for the allotment of such incentive compensation, as current and contingent awards, ranging from 10% to the Chairman of the Board, Chief Executive Officer, 8% to the President, 6% to not more than four Vice Presidents and not in excess of 4% each to other officers and key personnel. (2) The Company has an agreement which, as renewed, terminates on November 30, 1967, with Mr. Gruber, who retired November 30, 1964, and whose retirement payments started as of that date. Under such agreement, payments at the rate of $25,000 per year are being made to Mr. Gruber for consulting services. On retirement, Mr. Gruber commenced to receive contingent compensation awarded over a period of prior years consisting of the annual release of escrowed shares referred to on page and the payment of $2,512 a month. The foregoing table reflects all current awards for 1966 to directors and officers under the Company's incentive compensation plan. Contingent awards of incentive compensation for 1964 and subsequent years under an amendment to the plan approved by the stockholders in 1966 are contingently payable in three equal annual instalments, commencing with the second year following the year for which the awards are made, if earned out by continued services and, in the event of retirement or other approved termination of employment, if requirements as to non-competition and conduct not prejudicial to the Company are complied with. Contingent awards for 1966 to the directors and officers referred to in the foregoing table, payable in annual instalments in each of the years 1968, 1969 and 1970. if earned out, were as follows: Mr. Bennett, $29,976; Mr. Darby, $3,394; Mr. Davies, $22,065; Mr. Erickson, $25,398; Mr. Jordan, $25,298; Mr. Levathes, $12,077; Mr. Okerson, $26,648; Miss Woessner, $3,333; Mr. Yellen, $39,553; and directors and officers as a group, $194,406. Contingent awards for years prior to 1964 were contingently payable following termination of employment over a period of fifteen years (ten years in the case of contingent awards for years prior to 1960). The amounts so contingently payable to the directors and officers referred to in the foregoing table during each of the fifteen years following termination (and, in parentheses, where applicable, any additional amount payable during each of the ten years following termination of employment) are as follows: Mr. Bennett, $4,682; Mr. Darby, $1,571 ($500); Mr. Davies, $4,682; Mr. Erickson, $5,015; Mr. Jordan, $1,835 ($388); Mr. Okerson, $250; Mr. Yellen, $4,682; and directors and officers as a group, $45,747 ($9,176). All the remuneration set forth was received by, or is contingently payable to, the persons named in their capacities as officers or employees of the Company. The Company has applied for an insurance policy, to be paid for by it, indemnifying it in respect of its liabilities and expenses arising under by-law or statutory provisions pursuant to which directors and officers are indemnified against liabilities and expenses, and for an additional insurance policy, to be paid for by the directors and officers, indemnifying them against certain other liabilities and expenses. The following table illustrates the estimated normal annual retirement allowances payable under the Employees' Retirement Plan of the Company upon retirement at age sixty-five to employees in the earnings classifications and with the years of service shown: Em"lo.ea•. A...... Annnd E.r„ina Dvrln. tl,. Ai.h.a S oI1R. 1 tt Y..re Tet.l Annn.l aennBt. Yrnrr w1 (:eed/lwd 9ee.1e- iLw. Pr.cedln. Aetiremanl 20 Y..r. 25 Y.... tn Y..r. 35 .r.r. $ 25.000.. _ $ 6,980 $ 8,680 $10,370 $12,070 50,000__ _ 14,480 18.050 21,620 25,190 75,000 21,980 27,430 32,870 38.320 100,000 _........ 29,480 36,800 44,120 50.000 125,000 ....... ... 36,980 46.180 50,000 50,000 150,000 . _ .... 44,480 50,000 50,000 50,000 [Describe briefly the Company's profit sharing plan] 12 I f

875-P. Lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 Transactions with Directors and Officers Mr. Meyer, a director of the Company, is President of Heintz van Landewyck, s.a.r.1., a Luxem- bourg tobacco manufacturer, all of the share capital of which is owned by Mr. Meyer and members of his family. P. Lorillard International S.A., a wholly-owned subsidiary of the Company, and Heintz van Landewyck s.a.r.l. each own a one-half interest in P. Lorillard s.a.r.l., a Luxembourg corporation, which, since April, 1964, has manufactured and sold under license certain of the Company's brands for several of the Common Market countries. On August 21, 1964, the Company purchased 4,600 shares from Mr. Gruber, a director of the Company, at a purchase price of $46.125 per share, which were used as a part of the consideration given in connection with the acquisition of the business of Usen Canning Co. (See "Business" herein.) On such date, the mean between the highest and lowest selling prices on the New York Stock Exchange was $46.75 per share. The law firm of Stassen, Kephart, Sarkis & Kostos, or predecessor firms (of which Mr. Stassen, a director of the Company, was a partner) were paid $35,975, $39,300 and $33,825 for legal services in international matters in 1964, 1965 and 1966, respectively. OPTIONS Restricted Stock Option Plan In October, 1957, the Company adopted a Restricted Stock Option Plan (the 1957 Plan), which provides for the granting to key employees of the Company, including officers, of restricted stock options (as defined in Section 421 of the Internal Revenue Code of 1954) to acquire shares of Common Stock of the Company. The 1957 Plan specifies a maximum term for options granted thereunder of ten years from the date of grant and all outstanding options are for a term of ten years. Each outstanding option agreement contains a provision under which the employee agrees to remain in the employ of the Company for at least two years. Except under specified circumstances, an employee is not permitted, within two years after the date upon which an option shall have been exercised with respect to any share, to make a sale or other disposition of such share within the meaning of Section 425(c) of the Internal Revenue Code of 1954, as amended by the Revenue Act of 1964. The Company believes that, under such Revenue Act, certain changes will be required in any option hereafter granted under the 1957 Plan if such options are to be treated as "qualified stock options". As of April 25, 1967, 31 key employees, including 13 officers, held options to purchase an aggregate of 33,100 shares of Common Stock of the Company. Of these, options for 2,100 shares were granted on September 18, 1959, at the price of $39.50 per share and options for 31,000 shares were granted on June 20, 1962, at $43.50 per share. In each case the option price was not less than 95% of the fair market value of the Common Stock at the time the option was granted. Included in the options granted in 1959 were options for a total of 2,100 shares to persons who were officers or directors, including an option for 900 shares held by Mr. Jordan and an option for 1,000 shares held by Miss Woessner. Included in the options granted in 1962 were options for a total of 17,500 shares to persons who were officers or directors, including options held by the following: Mr. Bennett, 3,000 shares; Mr. Darby, 1,000 shares; Mr. Erickson, 3,000 shares; Mr. Jordan, 1,000 shares; Mr. Okerson, 2,000 shares; and Miss Woessner, 500 shares. 13 W Cd W O O W ~ W

875-P. Lorillard Company-P. E. Amend. No. 3-Pandick Press, Inc.-May 8, 1967 Stock Purchase, Option and Incentive Plan In April, 1963, the Company adopted a Stock Purchase, Option and Incentive Plan (the 1963 Plan) under which the Company's Common Stock may be sold through stock purchase or subscription arrangements or through stock options to key employees, including officers, of the Company. The stock option provisions under the 1963 Plan are generally similar to those in the 1957 Plan except that, among other things, the option price must be equal to 100% of the fair market value of the Common Stock on the date of grant. As of April 25, 1967, 47 key employees, including 16 officers, held options under the 1963 Plan to purchase an aggregate of 83,400 shares of Common Stock of the Company. Of these, options for 30.200 shares were granted on July 31, 1963 for a period of ten years at the price of $44.75 per share and options for 53,200 shares were eranted on December 1, 1965 for a period of five years at the price of $45 per share. In each case the option price was not less than 100% of the fair market value of the Common Stock at the time the option was granted. Included in options eranted in 1963 were options for a total of 15,400 shares to persons who were officers or directors, including options held by the followine: Mr. Bennett, 3.000 shares; Mr. Darby, 1,000 shares; Mr. Erickson, 3,000 shares; Mr. Jordan, 2,000 shares; and Mr. Okerson, 1,000 shares. Included in the options granted in 1965 were options for a total of 46,600 shares to persons who were officers and directors includin, options held by the following: Mr. Bennett, 7.500 shares; Mr. Darby, 1,000 shares; Mr. Davies, 6,000 shares; Mr. Erickson, 3,000 shares; Mr. Jordan, 5,000 shares; Mr. Levathes, 5.000 shares; Mr. Okerson, 5,000 shares; and Mr. Yellen, 10,000 shares. Under the 1963 grants, the stock purchase arrangement provides for the immediate sale and transfer of shares, with ten per cent of the purchase price (but not less than $5 per share) to be paid forthwith, annual instalments of approximately two and one-half per cent to be paid thereafter, the unpaid balance to be paid in July, 1968 (with right of prepayment) and simple interest payable to the Company on the unpaid balance of the purchase price. The employee is entitled to all dividends on the stock. The stock is held as collateral, subiect to being returned to the Company if the purchase price is not paid before the end of the period in July, 1968, without refund of any payments made or release of shares equivalent to such payments, but with no further liability on the part of the employee. If employment is terminated under certain circumstances within two years after the purchase agreement is made, the Company is entitled to repurchase all shares for the amounts paid by the employee exclusive of interest. Thirty-two employees agreed to purchase a total of 17,950 shares at $44.75 per share under this arrangement during 1964 and such shares were all sold and transferred upon receipt by the Company of the required down payment of $5 a share. Included among the employees agreeing to purchase shares under the stock purchase arrangement were the following directors and officers: Mr. Bennett, 500 shares; Mr. Davies, 3,500 shares; Mr. Erickson, 500 shares; Mr. Okerson, 500 shares; Mr. Yellen, 3,500 shares; directors and officers as a group, 9,900 shares. Miss Woessner was granted and exercised a stock purchase right on December 1. 1965 for 500 shares at $45 per share under an arrangement similar to those granted in 1963, except that principal payments of approximately four per cent per annum must be paid, with the unpaid balance due in November, 1970. The approximate amounts of the purchase price remainine unpaid as of February 1, 1967 were as follows: Mr. Bennett, $18,500; Mr. Davies, $130,000; Mr. Erickson, $18,500; Mr. Okerson, $18,500; Miss Woessner, $19,000; and Mr. Yellen, $130,000. The market price of the Company's Common Stock as of a recent date is shown under the caption "Price Range of Common Stock". 14 GD CO W O O W ~ »'b

875-P. Lorillard Company-P. E. Amend. No. 3-Pandick Press, Inc.-May 8, 1967 LEGAL PROCEEDINGS By decree dated November 16, 1911, of the Circuit Court of the United States for the Southern District of New York, in a suit entitled United States of America vs. The American Tobacco Company and others, under the Sherman Act, each of fourteen corporations, including the Company, was prohibited from taking specified action, including (1) making transfers of its property to any other of those cor- porations, (2) making any agreements of specified types with any other of those corporations, including agreements relative to the control or management thereof, relative to the price or terms of purchase or sale of tobacco or tobacco products and relative to the apportionment among those corporations of trade or business either as to customers or localities, (3) holding stock in a corporation whose stock is also held by another of those corporations and (4), with stated exceptions, requiring a jobber to buy another brand or brands from such corporation in order to be able to buy a p9rticular brand. The Company is a defendant, along with one or more other tobacco manufacturers, in four cases which involve claims that the respective plaintiff or plaintiffs' decedents contracted cancer or other involvement of the lung or throat as a result of the use of tobacco products. Damages which range from $9,999 to $1,820,000 in three of such cases and $6,000,000 in the fourth are alleged, none of which has yet been tried. DESCRIPTION OF COMMON STOCK The following statements are brief summaries of certain provisions contained in the Certificate of Incorporation and By-Laws, as amended, and certain provisions contained in indentures of the Com- pany. Such statements do not purport to be complete, are subject in all respects to the full provisions of the documents mentioned, and, except as otherwise stated, do not relate to or give effect to provisions of statutory or common law. Dividend Rights. Dividends may be declared and paid on the Common Stock after all accrued dividends on the Preferred Stock have been paid, if in the judgment of the Board of Directors the surplus or net profits are sufficient for such purpose after deducting such sum, if any, as shall have been reserved as working capital and the amount of dividends to accrue on the Preferred Stock during the current year. The holders of the Preferred Stock, in preference to the holders of the Common Stock, are entitled to receive cumulative dividends at the rate of 7% per annum of the par value thereof. Restrictions on Payment of Dividends. Certain restrictions on the payment of dividends on the Common Stock are contained in the Indenture dated March 1, 1951, the Indenture dated April 1, 1953 and the Indenture dated June 1, 1961, under which Debentures were issued. Such restrictions prevent the Company from making certain payments, including cash dividends upon its Common Stock, if the aggregate of such payments made after a date specified in the applicable document would exceed by more than an amount specified in such document the aggregate of (a) the consolidated net income of the Company and its subsidiaries during the period from such date to the making of such payment and (b) the proceeds of the sale of capital stock (other than, in the case of each Indenture except the last- mentioned, Common Stock which was being sold at the time such Indenture was being entered into). At December 31, 1966, retained earnings available for dividends on Common Stock, under the most stringent of those restrictions, was approximately $74,000,000. 15

875-P. Lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc -May 9, 1967 Voting Rights. Each holder of Common Stock is entitled to one vote for each share of Common Stock held. Each holder of Preferred Stock is entitled to one vote for each share of Preferred Stock held. Liquidation Rights. In the event of any liquidation or dissolution or distribution of the assets of the Company (whether voluntary or involuntary), after payment to the holders of the Preferred Stock of par of $100 per share plus unpaid accumulated dividends, the holders of the Common Stock are entitled to receive pro rata al] the remaining assets of the Company. Other Rights and Provisions. Neither the Certificate of Incorporation, as amended, nor the By-Laws contain any provisions with respect to preemptive rights. In the opinion of New Jersey counsel, the holders of Common Stock have preemptive rights with respect to the authorized and unissued shares of Common Stock issued and sold for cash; provided, however, that preemptive rights may be denied with respect to shares issued pursuant to a duly approved plan for the sale or issuance of Common Stock to employees and those actively engaged in the conduct of the Company's business if such plan is in accordance with the laws of the State of New Jersey. The shares of Common Stock issued under the 1957 Plan and the 1963 Plan (see "Options" herein) may be issued exempt from existing preemptive ri-hts. The Common Stock has no conversion rights or redemption or sinking fund provisions. There is no restriction on the repurchase of shares by the Company while there is an arrearage in the payment of dividends. The Common Stock, when issued for full consideration, is fully paid and nonassessable. SELLING STOCKHOLDER The shares to which this Prospectus relates were acquired by Irving Usen in connection with the acquisition by a subsidiary of the Company of the business of Usen Canning Co., a Massachusetts corporation. (See "Business" herein.) Since October 1, 1965, Mr. Usen sold 2,000 shares and made gifts of 1,360 shares to private persons. He also donated 3,800 shares to the Irving Usen Charitable Trust, a charitable foundation, which may sell all or part of such shares from time to time on the New York Stock Exchange at prices current at the time of sale. After giving effect to the sale of the shares hereby offered by Mr. Usen, his ownership of the outstanding Common Stock of the Company will be reduced from 126,868 shares to 95,028 shares. EXPERTS The financial statements included in this Prospectus have been examined by Haskins & Sells, independent certified public accountants, as stated in their opinions appearing herein and in the Regis- tration Statement. and have been so included in reliance upon such opinions given upon the authority of that Firm as experts in accounting and auditing. LEGAL OPINION Legal matters in connection with the Common Stock of the Company offered by this Prospectus are being passed upon by Perkins, Daniels & McCotmack, 30 Rockefeller Plaza, New York, New York, outside general counsel to the Company. ADDITIONAL INFORMATION This Prospectus omits certain information in the Registration Statement (Form S-1) on file with the Securities and Exchange Commission. The information omitted may be obtained from the Commis- sion's principal office at Washington, D. C., upon payment of the fee prescribed by the Rules and Regulations of the Commission. 16 GD CD W O O W ~ ~

875-P. Lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS P. LORILLARD COMPANY: We have examined the consolidated balance sheet of P. Lorillard Company and subsidiary companies as of December 31, 1966 and the related statements of consolidated earnings and consolidated surplus for the five years then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statements of consolidated earnings and consolidated surplus present fairly the financial position of the companies at December 31, 1966 and the results of their operations for the five years then ended, in conformity with generally accepted accounting principles applied on a basis consistent in all material respects. New York, N. Y. February 1. 1967 HASKINS & SELLS 17 00 CZ W O O W ~ ~

875-P. Lorillard Company-P. E. Amend. No. 3 -Pandick Press, Inc.-May 8, 1967 P. LORILLARD COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET, DECEMBER 31, 1966 ASSETS CURRENT ASSETS: Cash S 14,304,301 Accounts receivable-customers (less $994,026 for cash discounts and doubtful accounts) 29,348,710 Other accounts receivable 1,615,723 Inventories (at average cost) (Note 2): Leaf tobacco . .._ ._..... ... 209,281,952 Manufactured stock ..._ ............ .... ........ ........ 24,867,483 Materials and supplies...... ...._ 7,241,177 Total current assets..... ._.,.__._ ._ ........... . .._ . . .._.. ..... _.. . . ............................... ...._...... $286,659,346 INVESTMENTS IN ASSOCIATED COMPANIES (at cost plus equity in undistributed earnings) ............................ 3,845,870 PROPERTY, PLANT, AND EQUIPMENT (at cost): Land ............... ........ ...... .... ......... $ 948,836 Buildings and building equipment... ....___ _ ................ . .. ........ ..... .... .. 23,349,698 Machinery and equipment. ......... .......... ...... . ...... ............. ... ........ ... ......... .. 51,843,739 . Total _ _ _ _ .. ...... . ....................... ...... . ...... $ 76,142,273 Less accumulated depreciation (Note 3) . ... .......... 29,609,070 Property, plant, and equipment-net..___ 46,533,203 OTHER ASSETS: Prepaid expenses and deferred charges... .._ S 2,617,853 Unamortized debenture discount and expense (being amortized over the lives of the respective issues) . ............. ..... .... .. . ........ ... ........ ......... _ ... .. ... 976,167 Trade-marks and goodwill (Note 1). 2,157,422 Total other assets._. ... ... . . ..... 5,751,442 TOTAL ........ ............ $342,789,861 See the accompanying Notes, which are an integral part of the financial statements. 18 ~ ~ W 0 0 G,7 cp~ GD