Tobacco Documents Online

United States, this year, produced the largest flue-cured crop on record. On our Burley purchases, the government support price rose an aver- age of $4.01 per hundred pounds by grades. Turkish tobaccos averaged about the same as last year, but we were favored in the last quarter by a 50 reduction in duty. Over-all, our leaf costs, though now somewhat higher than in 1950, are considered an excellent investment. So long as the government continues to control acreage and parity, your Company sees no prospect of reduc- tion in the prices that we will have to pay for leaf tobaccos. Out of modern °`mira- cle" machines come wrapped, stamped, sealed Old Gold Ciga- rettes, electronically checked against pack- aging imperfections. ... and further manufacturing efficiencies were achieved 4 TO COMPENSATE in some measure for constantly increased leaf costs, your Mari ufacturing Division continues to do everything pos- sible to even further improve quality standards, increase production, lower costs, effect savings. Certain long-range plant and equipment moderniza- tion projects, completed in 1951, already are showing desired results. In Louisville, Ky., a new modern air-conditioned building was com- pleted in 1951, and a warehouse was converted from storage to manufac- turing. In Jersey City, N. J., new high-speed cigarette machinery was installed. And in Richmond, Va., major improvements begun at our cigar factory in 1950 were completed. Production formerly handled at Middletown, Ohio, was transferred to the new facility at Louisville where it has been absorbed in about one- third the floor space. Consolidation was completed in October, 1951, and the outdated Middletown factory was sold in January, 1952. These moves already are effecting important economies, stepped-up production, even higher standards of quality for products. In 1951, also, the Company sold its plug chewing tobacco brands. Plug tobacco, for the last decade, has steadily lost ground, due to constantly in- creasing costs, decreasing consumer demand. Your Company has retained its more profitable loose-leaf chewing tobaccos. In this field it is a leader. 9 Modern tractor-trailer units carry raw materials into Louisrille's new Q build- ing, finished products out. Functional layout, lat- est equiprnent, com- plete mechanization 'ect manufacturing ccononties in neto plant for smoking tobacco. 89300843

CIGARETTES '' ( 'on 1/>If/j y VVROOes8 Old Gold Embassy Murad Helmar CIGARS Muriel Headline Van Bibber LITTLE CIGARS Between the Acts CHEWING TOBACCOS Beech-Nut Bagpipe Havana Blossom SMOKING TOBACCOS India House Briggs Friends Union Leader -~_- y~'~

lg) : ® i I )( ).i ,, I .i (11I )l', )' I 0'I/~~~'/ 89300844 ~'r" N;ICIb'A "1 N c~i ~ h

Research Director lJr. ll. R. Pnrnrclc srl upLorillard tobuccorescurch laboratory, has directed its crctiritics since 1929. Science helps Lorillard select the finest raw materials, produce top quality products esearch is an important phase Every item that goes into or around Company products is subjected to most rigorous tests. 12 Chemical analysis of leaf is vital, for type, grade, crop affiect final quality of Lorillard products. Paper must be of exact porosity or cigarette dies out between puffs. SVS00ESg of your Company's operations Y O U R C O M PA N Y'S well-equipped Research Department, staffed by com- petent scientists, continues a full program of quality control and scientific inquiry. Constantly, experiments of two distinct types are conducted: First, there is testing for the present, in a never-ending effort to make our brands competitively superior. Every item used in the manufacture of Company products is analyzed upon purchase, to insure opti- mum quality. In addition, all Lorillard manufactures are tested continually to make certain they meet unvarying, rigid requirements at each stage of production. Cigars, smoking and chewing tobaccos are under constant laboratory scrutiny, but a greater proportion of time is given over to cigarettes, the largest single tobacco item sold today. Second, there is research for the future. On this very important phase of your Com- pany's operation, Management wishes it were possible to be explicit. However, this part of the Research Department's work is labeled "top secret." It is here that all ex- perimental work aimed at new products, acquisition of greater tobacco knowledge and development of new techniques is conducted. Such information must be clas- sified if your Company is to retain its com- petitive edge. The laboratory serves the Company and the consumer by its never-ceasing search for new methods and new ideas, by its dedication to an always-better product.

During worst of Kansas City flood, Lorillard took Lorillard, recipient of fust NATD plaque years Old Golds to flood- and fire-fighters by police boat, ago, receives another for 1951 convention booth. ...and ever- increasing attention is paid to Human relations Y OUR MANAGEMENT believes in conducting Company affairs with the human element in mind. With employees, shareholders, suppliers, distributors, retailers, the public, we try to act always on the principle that sound human relations make for sound business relations. We are proud to hear, more and more each year, that P Lorillard Company is a good place to work. Company-paid group life insurance, liberal sick-benefit plans, coordinated sports programs, sparkling new cafeterias and a pictorial bi-monthly house organ help foster this feeling. The excellent cooperation received during 1951 from Lorillard em- ployees and the fourteen unions representing them has been gratifying evidence of the fine relationship between Management and workers. Of major importance in this connection is your Company's long-time policy of promoting, wherever possible, from within the ranks. The new sc.ientific Sales Training and Personnel Development plan, now in opera- 9Ve00E68 In true civic spirit, giant Old Gold pack foat parades in Richmond festival. tion a full year, has implemented this policy and made its operation more exact. Aimed at recognizing and rewarding merit, the plan has achieved most satisfactory results. Twenty-seven key promotions have been made within the Sales Department during 1951, on the basis of modern job evaluation and merit ratings. Understandably, a preeminent consideration on the part of workers is that of wages. Like everyone else, our thousands of employees, in 1951, were faced with rising living costs. Hence, your Company insti- tuted wage and hourly rate increases all along the line. Merger of the Middletown, Ohio, plant with the Louisville factory offered a challenge in good human relations. Lorillard had been a part of the Middletown community for 39 years. The economic necessity to move endangered employee welfare, community economy and Middle- town's friendly acceptance of P Lorillard Company and its products. 13

Lorillard and Tobacco, history of the Company, has been reqnested by libraries all orcr the rrorld. Employee sports program hclped formation of Lorillard softball. hoacling and basketball teanrs. l)aring 19.51 eleven million Irer,plr enjoycd Lorillard's docnmentary colorfilmson the Amcrican Indian. Hence, some six months before operations were to be terminated, your Company detailed the move and its economic necessity to em- ployees, unions, civic leaders, the entire community. Meetings, employee communications and full-page newspaper ads told the Company's plans: sale of the plant; liberal employee termination allowances; employment cqnsultation service to help workers obtain jobs elsewhere. Public reaction and results proved Management's treatment of this delicate matter sound. Most employees secured other work; the plant was sold; letters, newspaper and radio comment were laudatory; and civic leaders praised our handling and frankness in telling the story. In its relations with the trade, your Company is considered equally successful. We participate wholeheartedly in trade functions and activi- ties. That this attitude pays off in good will is seen by the fact that, in 1951, your Company's exhibit at the convention of the National Asso- ciation of Tobacco Distributors was voted "most popular," drew the greatest attendance, and was awarded a handsome plaque to prove it. The l,ori.llaril Heri.tage, Lorillard and Tobacco, a readable dramatic history of your Company and its nearly 200 years in the tobacco industry, was published and distributed in 1951. All stockholders, many employees, members of the trade, public and school libraries have received this book. To a tremen- dous reading public, Lorillard and Tobacco is bringing the Lorillard story to life. Another undertaking in which your Company takes pride is its series of documentary color films on Indian life. This program, started in 1950, met with success, was expanded in 1951, will continue into 1952. The series is particularly appropriate for Lorillard sponsorship because of your Company's long use of the Indian as its trademark. The films have been seen by millions of viewers in schools, unions, churches, industrial plants, fraternal organizations and over the coun- try's leading TV stations. In 1951, Miracle on the Mesa, one of these films, won the coveted "Oscar" of the Cleveland Film Council as "the finest sales promotion and public relations film produced in the United States in the past year," top tribute that can be paid a sponsored film. Your Management will continue to place emphasis upon the human relations aspect of its work. It considers this a sound approach and one 14 fitting the traditions of P Lorillard Company.

IEIIere's the advertising and sales promotion story Distinction, sincerity, believability make your Company's advertising message convincing and effective T 0 B A C C 0 economists agree that the sales growth of an established ciga- rette brand depends upon the effective- ness of its advertising. Your Management wholly subscribes to this philosophy. Hence, advertising long has been a major Management function in P Lorillard Company. The best index of advertising effective- ness normally is to be found in sales re- sults. In these times of inflated prices, with advertising costs substantially in- creased, a more realistic index must be called upon. Sales gains can be canceled out by the very advertising that helped create them if that advertising is too costly. A more accurate gauge of adver- tising effectiveness, then, is the profitable balance between monies expended for ad- vertising and sales gains effected thereby. The new index must be the advertising cost of attaining sales results. We are therefore glad to report that the substantial increases registered in 1951 on all of our major advertised brands were achieved with a rise in ad- vertising cost of only one-half of one per cent per dollar of sales. How this was accomplished we believe will be of interest to our shareholders. 7elevision h (r Good Ex(tneplo Today, television is our most potent advertising medium. It is also our most expensive. In 1951, network time rates in- creased over 70%, due to greater number of sets in use and the extension of the coaxial cable. Through constant research and analysis, this challenge of increased cost was met and balanced by strategic integration of programs and increased impact of our commercials. The highly popular Miss Muriel -who invites listeners to "pick me up an' smoke 15 8Vg00C6g At nrilitrtry camps hcre and abroarl, Original ~ o Amateur 1[our entcr- " tains troops, is honored. ta Queen for a 1)ay, rec- ord cromd-paller, stops traffic when 200,000 fans /ill Chicago Loop. l[or.se show to Iracl,•cr. Old Gold sponsors 117 Madison Square Garden sports events locrrllr. Radio press calls Uown You Go on Daniont "sn- perior half-haur of firn."

Dennis James, Old Gold TV "salesman," Danc- ing Pack "ad lib" a television commercial. 6Vg00E68 Stop t'1C Music's Bert Parks, "king" of biggest jackpot show of all, se- lects mystery melody. me sometime"-now "rides" on every Lorillard TV network program. By this integration, separate Muriel "spot" pro- grams were eliminated, substantial econ- omies were achieved and the TV audi- ence for Muriel was increased five-fold. Through development of visual trade- marks, such as The Old Gold Dancing Pack and her little Matchbook compan- ion, who dance out a rhythmic animated ad on Old Gold TV programs, high spon- sor identification has been achieved. According to reputable independent analysis, your Company currently is re- ceiving, out of television, the most de- sired commercial impact at lowest cost in the industry. Each of our TV programs differs in nature, format and network, to attract and reach the largest audience possible each week. The Old Gold Original Amateur Hour, with Ted Mack, is carried over 57 NBC television stations every Tuesday night and currently enjoys a higher viewer au- dience than ever before. From all over the country, amateur contestants travel to New York to demonstrate their talents on TV screens, coast-to-coast. Stop the Music, with Bert Parks, ap- pearing over 48 ABC-TV stations every Thursday night for Old Gold, consistently has been one of the most popular audi- ence-participation shows on the air. The Web, with Jonathan Blake, is channeled through 34 CBS-TV stations on Wednesday nights for Embassy ciga- rettes. An unusually realistic show, out- 16 standing in its field, it is today one of television's high-rated mystery shows. During 1951, also, the Company added new TV programs for additional impact in strategic areas for its Old Gold ciga- rettes. From Madison Square Garden in New York City, 117 top sports events are televised to the large sport-fan audience in that area. Queen for a Day, exclu- sively a radio show up to now, is being televised in Los Angeles. Professional baseball was offered in the Seattle area. An intriguing new panel quiz, Down You Go, which has met with considerable critical acclaim, goes out over eight key stations, from WGN-TV (Channel 9), Chicago. Radio Corttinrces Important During the past year, television has materially affected night-time radio lis- tening in key markets. Yet, more than one-half of the population still is un- touched by this new medium. In consideration of these develop- ments, your Company has revised its total investment in radio and considers its present programing in proper bal- ance with the current shift. Special radio emphasis is placed on those areas where television is not yet available, and all areas are properly covered. Five mornings a week, when there is less television competition, Queen for a Day plays over 515 Mutual Broadcasting Company stations. Tl;e original "Cinder- ella" show, Queen is beamed at house- wives and the growing purchases-by- the-carton market which they represent. Additional stations, in non-TV areas, are

being added on this program for 1952. Stop the Music, on 195 American Broadcasting Company stations every Sunday night, continues one of the best "cost per thousand" shows on the air. The Old Gold Original Amateur Hour on 283 ABC stations on Thursday nights salutes a different municipality each week, and once a month has emanated from a city other than New York. Lt the Printed Page Your Company has found high fre- quency advertising in mass consumer magazines with family appeal to be most productive. In Life, Look, Collier's, Sat- urday Evening Post, and Quick, Old Gold magazine advertising appears in color, coordinated in theme and timing with our TV and radio promotions. The Lorillard Message That message continues to impress by its believability and honest sincerity. The intent of Old Gold advertising, unlike competitive cure-all claims, is to place quiet but effective emphasis on the fact that a cigarette is made to give pleasure, and pleasure alone. In its sixth year is the theme "Treat instead of a Treatment." Prestige of the product and Company has been enhanced by the attention-getting statement that "Old Gold cures just one thing - the world's best tobacco." The ever-increasing public approval of these dignified and credible claims is manifested by ever-increasing Old Gold sales to the thinking public. 0Sg00E6e lTle Believe in Public Service It is traditional with P. Lorillard Com- pany that, wherever feasible, it will further philanthropic, civic and worthy causes of all types. Such projects build good will for the firm, benefit acceptance of its products, perform a public service and present Lorillard to the public in its role of corporate good citizen. During the year, the Old Gold Orig- inal Amateur Hour raised substantial sums of money for accredited community projects representing all religions, creeds and races. The show traveled to a dif- ferent city each month, where local audi- toriums were filled to capacity by resi- dents who came to root for home-town amateur talent. Thousands of dollars paid in admission fees in 1951 went entirely into the coffers of beneficiaries such as: the reactivated USO in Wash- ington, D. C.; Cancer Research, Ohio State University; Boys Club, New Haven, Conn.; New York Foundling Hospital, New York; Goodfellows, Memphis; Bap- tist Memorial Hospital, Kansas City; and others. The show went overseas to play Army camps in Europe, as well. Also in 1951 Queen for a Day pro- grams were sponsored in Army, Navy and Marine Corps installations. In each, format and general presentation followed Queen's, but details differed to fit the oc- casion. Genial master of ceremonies Jack Bailey conducted "Admiral for a Day" shows for Navy groups, "King for a Day" programs at a Marine base. 17 Weaving Embassy's Web, Jonathan Blake plays "Your Host in Ad- a•eruure" on television. At New York's Madison Square Garden Amateur Hour and Queen both drew capacity houses. Queen for a Day selects "king," supplies break in military camp rou- tine, builds good will.

P Lorillard Company I7 At Lorillard's Jersey City, N. J., plant, all the Company's cig- arette brands are produced. In addition to Old Gold and Embassy, ull Turkish cigarettes and export brands are manufactured here. In Louisvilic, Ky., Lorillard's newly expanded plant is one of the most modern in the industry. Here the Company manufactures all of its smoking and chewing tobaccos, as well as Old Golds. The factory of Rirhmond. Va., where all Lorillard cigars cire rnanufocturvrl, houses rr.ost modern equipment, refrigerated storagu units, curinq roonis with autornntic hrat and humidity controls. CONSOLIDATED STATEMENT OF INCOME AND EARNED SURPLUS FOR THE YEAR ENDED DECEMBER 31, 1951 With Contparative Figures for 1950 1951 1950 Sales, less Discounts, Returns and Allowances ........ $188,447,430.83 $167,936,931.43 Cost of Goods Sold, Selling, General and Administrative Expenses ...................... 176,034.189.06 154,552,502.91 Operating Income . . . . . . . . . . . . . . . . . . . S 12,413,241.77 $ 13,384,428.52 Olher Income and Expense (net) 92,233.22 291,632.96 $ 12,321,008.55 $ 13,676,061.48 Interest on Long-Tcrm Debt . . . . . . . . . . . . . . . $ 1,034,700.63 $ 839,272.50 Amortization of Debenture Discount and Expense . 30,058.56 12,611.27 Other Interest . . . . . . . . . . . . . . . . . . . . . 312,777.08 191,409.53 $ 1,377,536.27 S 1,043,293.30 Income before Taxes on Income . . . . . . . . . . . . . . $ 10,943,472.28 $ 12,632,768.18 Provision for Federal Income Tax . . . . . . . . . . . . . $ 5,302,000.00 $ 5,087,000.00 Provision for Federal Excess Profits Tax . . . . . . . . . . 286,000.00 564,000.00 Provision for State Income Taxes . . . . . . . . . . . . . 229,000.00 244,000.00 $ 5,817,000.00 $ 5,895,000.00 Net Income for year . . . . . . . . . . . . . . . . . . . . $ 5,126,472.28 $ 6,737,768.18 Earned Surplus at beginning of year . . . . . . . . . . . 27,372,160.03 25,476,604.10 $ 32,498,632.31 S 32,214,372.28 Dividends on Preferred Stock ($7 per share) . . . . . . . . $ 686,000.00 $ 686,000.00 I)ividends on Comnion Stock (1951, $1.50 per share; 1950, $1.85 per share) . . . . . . . . . • 3,669,426.91 4.156,212.25 $ 4,355,426.91 $ 4,842,212.25 Earned Surplus at end of year . . . . . . . . . . . . . . . $ 28,143,205.40 $ 27,372,160.03 Depreciation provided - 1951 $815,827.07 1950 $703,831.25 18 . .......a.......- 1