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Ten+Year Financial Review-119'60~49691 (Dollar amounts in Thousands'exzaeptYor'penshare data). Results for Year 1969 1968 1967 1966' 1965 1964 1963 1 962 1961 1960 Salesand'OperatingiRevenues,,. $ 554,030, 166,726 136,765 114,260 95,360 81,976' 66,567 41 ,732 41,225 44,199 Earnings Before Taxes ........ $' 46;173 31,983' 25,245 9,508 10,759 6,606 11993 3 ,645 5,413 5,4811 Earnings Before Extraordinary, Item ...................... $ 26;339' 20,023 15,755 5,818 6,589 3,167 933' 2,045 2,728' 2,771 ExtYaordlnary Item ........... $ 5,283 15,165 (3,247) 1,5811 7,648' Per Share Earnings Before Extraordinary Item ...................... $ 1 L83 1.40'~ 1'.09 , .39 .40 .17 .05 .10 .14 .14 Extraardinary'Item ........... $ .37 1.06 (.18), .08 .38 Dividends .....,.,..,.,.,.......,.,., $' .131h .13Ph Averaga' Shares Outstanding i... 14,399,077 14,304,687 14,422,185 14,866,590 1'6;81'4,339', 18i486;21'9 1 19,570;823 20J11' 7;918 20;027;918 20;012;918 Year.End Position Current Assets ................ ,,$ 476~335 93,509 44,413 38,780 28,526 32,690 1'8;872I 2 2;1'25I 23,120 1'4,786'. Current Lietlilities ............ $' 1'50;813 30,390 23,992 19,726 24,765 18,576' 14',508 2 6,3341 11,721' 9,345 Working Capital .............. $' 325522 63,119 20,421 19,054 3',761! 14,114 4,364 ( 4,209) 11,399 5,441 Net' Property; Piant' and Equip. .. $' 21'7;240' 160,207 146,489 141,305 135,207 130;316' 129,055 10 7,889 72,887' 64,471 Total Assets ................. $1,011,424 272,578 209,726 195,035 182,388 179,493 158,879 13 6,423 102,782 86',209. Shareholders' Equity, ......... $' 259;726 124,185 90,855 76,795 71(136 72,744 73,5811 7 4,681 64,829 62,074 Nbtes:', (1) 1 Dataa for 1969 include Lorillard Corporation from November 30„1968: (2)'. Per' share i statistics were computed an average number of sharess outstandingforg the year, adfustedtog ive.effect,ta~a'.2Yvfbr~lstock split ini January of 1,968'.and a 3-for-1 stock, spiitin November,,1~968: Sales and Operating Revenues Working Capitai Total Assets (In i miilions) (in i'millions)i (Ini= mitlions)' am ~ roo. 424 300 o0 wo 20D aw 150 100 300 iiiIiiiItflJL o a' . ~ 1960 'EA '!6 •67. •M. •ar' 19ro'~ 'el Y2 '6! i YM1 ~ Y6 'M •N. 1

To Oiur'Shareholdeirs and Employrees:. On behalf' of! the Directors of' Loew's Theatres, Inc., I am pleasedl to submib this Report for the fiscal year, ended August 31, 1969. It was a year of vigor- ous growth in sales, earnings, and capi- tal assets. Of' primary significance too the future of' your Company was the acquisition of'the Lorillard!Corporation, which, became effectiire at the close of' the first quarter.. Consolidated sales and revenues for fiscal 1969 reached $554,029,595, and earnings before extraordinary item rose to $26,339,279: Earnings per share, after givingi effect to the November, 1968, three-for-one stock split, were equal to $1.83, as comparedlwith $1.40 in fiscal 1968, Ibefore extraordinary items.. In addition, a totall net gain, of' $5;282,955 amounting to $.37 per share ofextraordinaryincomewas realized oni the sale of the remainder of~our holdings in Control Data Corporation, which shares were acquired in connection with our Exchange Offer to stockholders of' CommerciallCredit Company. Revenue and income from our hotel and theatre operations continued to grow, while substantial increments to our sales and earnings totals derived from the combination with Lorillard. By this action; Loew's acquired a company with a history of successful operation dating back to 1760. Lorillard' manufactures and markets more than a score of' profit- able tobacco products and - through its Reed Candy Company subsidiary - a number of candy products. As the decade of'the 60's ends; we have come to the end of, the first ten years of operation of Loew's Theatres, Inc:, un- der present management. From the ten- year financial review on the preceding page, it can be seen that your Company has experienced a period of, significant. growth, For the first nine years, Loew's growth was primarily the result of our activities in building, acquiring, and operating 2

theatres and hotels: Theatre andl hotell operations are both consumer service industries that have undergone many changes during this period - reflecting new patterns in the travel, entertainment'd and leisure-time activities of the Amer- ican public. Loew's consistently has beenin the forefront of both industries, In the past year, your Company entered two new fields which greatly broaden the fronts on,which we will continue to move ahead: consumer products and' home buildingi Through the Lorillard merger, we now have a distribution apparatus chan- neling our products to nearly everyy supermarket and drugstore in the coun- try, as well as a substantiallsales capac- ity abroad. We are firmly launched into the consumer goods market. Following an agreement with J. H. Snyder Company of Los Angeles, we became active in home building; and community development. Construction is already under way on three projects - in West Los Angeles, South San Fran- cisco, and Yorba Lindai California - and advanced planningiis progressingg for the development of severaC more, includingi beachfront, high-rise condo- miniums atCoronado and Santa Monica, and an apartm^nt and shopping i center at San Carlos on the San Francisco, Peninsula. Now in a strong position to produce andl market a wide variety of' goods and services - entertainment;, lodg,ing, food and beverage service, consumer prod- ucts and permanent living space - your Company is fully prepaned for expan- sion in these and other areas. To give recognition in name to what has already happened infacti we shall ask the share- holders at our next annual meeting to approve a procedure which will change the name of'your Company from Loew's Theatres, Inc., to Loew's Corporation. It should be noted that our capacity for growth is greatiyenhanced by our highly liquid position - as evidenced by our favorable 3:1' ratio of current assets to current liabilities. The ready availabilityy of' these funds gives Loew's manage- ment increased flexibility to capitalize on advantageous opportunities for ex- pansion. One such opportunity has Ued to an agreement'- announced as this Report was being prepared -to construct a, second Loew's hotel in London. De- signed to meet the demands generated by the projected air travel boom of'the 1970's, it will be the largest hotel in Western Europe with approximately. 1800 guest rooms; large ballrooms,. meeting rooms, shops and many other services and facilities. I should like to add some thoughts about the continuing public controversy over cigarette smoking, and about the prob- able discontinuance of cigarette adver, tising on radio and television. Lorillard has been in the forefront of, the tobacco industry in the research and development of' cigarette filters. You will recall that the Kent Micronite filter, came to the market fully twelve years prior to the issuance of the Surgeon- General's Report, and filter cigarettes now account for 95% of Lorillard'ss sales. We are confident that~ the new $3 million research center at Greens- boroa North Carolina, willl maintain Lorillard's leadership in the develbp- ment of products to meet the changing needs and tastes ofi the times. Opinions within the industry vary greatlyy about the impact on tobacco sales and earnings if' cigarette advertising is no longer placed in the broadcast media. The British, experience with a similar ban would suggest that there need be no effect on sales. What is clear, how- ever, is that uncertainty and' changingi market conditions are hardly new phe- nomenalinithe business world; nor need' they threaten the forward+looking en- terprise. As a case in point, when the manage- ment of your Company entered the theatre business ten years ago, the mo- tion picture industry was in the midst of' a periodl of painfull transition resulting from a number of, factors including thee explosive growth of a competing enter, tainment medium aimed at' the mass market. The ten-year review on page 1 reports the aggressive record of' Loew's Theat'res„ Inc., since that~ time. With a wide range of products, services and marketing capacity to supply the rising demands of' a burgeoning con« sumer economy both at home and abroad, we are committed to the con- tinuation and prudent expansion of our profit-orientedlgrowth, program into the decade ahead'. Again, I express my gratitude for the contributions to our achievements by our employees and' for the continuing support of ou r shareholders. 04 Laurence Alan Tisch Chairman of the Board! November 12,1969. 3

Review of Operatilons. The year ended August 31', 1969, pro- vided a background for the operation ofi Loew's enterprises that include& « alcontinuing upward trend in the use of' hotel space by business and industry; « a further rise in consumer expendi- tures for travel; leisure and entertain- ment; « an acceleration in the need for neww housing; « increasing: impact on the overalll economy of'sizeabla new markets repre- sented by youth and hitherto econom- ically submerged minorities.. Functioning within ai sociall and eco~ nomic environment containingi both positive and uncertain elements, Loew's management in 1969 continued to inr crease sales andl earnings throughi ag- gressive new market development, institution: of innovative operating effi- ciencies, and expansion into two totally new fields: consumer products and home building. 5 ii

IHotel, services and properties A cornerstone of Loew's hotell opera- tions has always beeniemphasis on the individuality of, each property in com- bination with the efficiencies and econo- mies that can be realized through co- ordinatedlcentral management'. Among the fourteen Loew's properties in seven, cities of' the Western Hemisphere are hotel names significant in their environ- ments and recognized around the worldt The Drake, The Warwick, The Ambassa- dors, The Regency, The Mark Hopkins, Americana. This tradition will be ex- tended when Loew's opens its first European hotel in London, on May 1, 1970: The Churchill, a contemporary 50Q+room hotel bearing a name honored on both sides of the Atlantic. The emphasis on individuality reflects the realities of the vast variety of mar- kets for hotel services. Whether the hotel client is a family on vacation, a salesman on a business trip; or an asso- ciation planning a, convention, Loew's hotels cover the total range, from cos- mopolitan luxury hotels to motor inns, from convention hotels to resort villas. For each ofi these distinct markets;, Loew's has developed a distinctmarket- ingiplan. The results can be measured in average occupancy rates substanr tially higher than those of the industry. A prime sales target continues to be meeting; and convention business, whichi nationally totals some 300,000 meetings; involving 40 million, people spending upwards of $7 billion on food, lodging, entertainment, and travel! Loew's na- tional sales force actively solicits trade shows and' business and professional meetings, both individually and in con- cert with Chambers of' Commerce and local Convention,Bureaus~ Beyond the values inherent' in a, hotel's individuality, or the aggressiveness with which a, particular market is pursued, hotels continue to be measured by very fundamentallcriteria: According to aire- cent GallupiPoll, the four most important The Regency - New York City factors in choosing a hotel, are overall cleanliness, reasonable prices, courtesy of' staff„ and convenience of location. Close behind are quality of food service and ease of'getting; reservations. On all these counts, Loew's hotels score high. To the master hotelier's ancient traditions of' hospitality and service, Loew's has added the contemporary in- The Pbmp Room; Hotels Ambassador - Chicago formation processing capabilities of the computer - to handle reservations, to coordinate purchasing and billing, andl to maintain quality control throughout the system. The results translate into increased efficiency, Iower costs„ and greater patron satisfaction: Another factor that contributes to inr creased efficiency, is relevant also to some of'the social andieconomic prob- lems facing the larger U1 S, society: Loew's is the only major hotel operation that, has incorporated into its personnel practices carefully d'esignedl training programs to upgrade unskilled em- ployees. For the employee„ these pro- grams lead to increased earnings and greater job security: For Loew's Hotels and its guests; the results can be meas- ured inimprovedlservice. The prospects for the future of the hotel industry are highly favorable, in part due to the anticipated inauguration, in 1970 of'the age of' the jumbo jet. Travel in- dustry proJections indieatie that thee number of' business trips by air during the next decade will continue to in- crease atl a fairly, constant annuall rate of' approximately 12.3%. But the new jetliners will increase airplane seating capacity at almuchihigher rate. Asair- 7

Loew'S State l'and State 2- New York City lines are confronted with the need too fill seats, they can be expected to search for new markets among the 84% ofi the adult population who have not yet trav- eled by air. Situated as they are at prime commer- cial and recreational centers; Loew's hotel properties are in key positions to attract a substantial part of the pro- 1ectedl increase ini the number of' air travelers (33,900,000 in 1980 as opposed to 20,800,000 in 1I968)', Loew's formula of quality service combined with thee latest marketing and management tech- niques is geared to the opportunities of the new age. lPillrnexhi bitlion Revenues and earnings from theatre operations advanced to record highs as additional phases of the growth pro- gram initiated in 1965 were put into effect. Through construction, acquisi+ tion, and creation of new exhibition space by''piggybacking; "withinexisting properties, eleven new theatres joined the Loew's circuit: Loew's San Francisco Loew's Tampa Loew's Natick (Massachusetts) Loew's State 2(New York City). Grove Theatre (Lakeland, Florida). Valley Circle (Woodland Hills, California)' South Bay 2 (Redondo Beach, California) Loew's Dallas Eastwood Mall (Niles, Ohio) Loew's 167th Street'Twins (North 141iami' Beach). Loew's: Richmond MaN - Cleveland House boxoffice records set at many Loew's theatres continued to prove very attractive to distributors and producers eager for high-quality showcasing of important films. The experienced manr agement group responsible for day-to- day theatre operations has built the Loew's reputation for excellence throughi constant emphasis on three basic elements in cinema exhibition: plant, personnel, and promotion. Every effort is made to assure superi- ority in the purely physical aspects of all Loew's theatres: site locationj building, designiand construction, interior decor and amenities, quality ofiprojectioniand sound equipment. As the cinema has become today's most widely appre- ciated art! formi Loew's has sought to provide comparable exhibition values.. Through recruitment and training pro- grams, Loew's theatre managers con- tinuously seek to upgrade the quality of service offered to the public, while offering theatre personnel the opportun- ity to advance to supervisory positions. Although a glance at theatre waitingl lines today would suggest that the con- temporary motioni picture has becomee the primary art and entertainment form for modern youth, Loew's boxoffice records indicate that there is still con- siderable appeal inithe family film, as well as iniother popular films appealing to the youth market. Loew's theatres have created an appropriate environ- ment in which to show the modernipic* ture - of whatever genre - in a modern frame. By a careful program of, planned ex- pansion through new construction and acquisition, and by payingicareful atten- tion torthe details of theatre locationiand patron satisfaction, Loew's theatre man- agers look forward to continued sub- stantial growlhiinrthe decade ahead. Consumer products The major factor, in the substantial in- creases inisales andloperating revenues 8

reportedl for the year just ended was Loew's entry into the consumer prod- ucts field with the acquisition in Nbvem- ber, 1968, of Lorillard Corporatiom Established in 1760 by French immi- grant Pierre Lorillard as a"manufac- tory" of such items as snuff' andi pipee and chewing tobacco, the Lorillard or- ganization in 1968~-69' was responsible for the production and marketing of eleven styles of'cigarettes, five different kinds of cigars„ five brands of pipe tobacco, and three brands eaehi of' chewing and long-cut tobacco. Through its Reed' Candy Company subsidiary, three candy bars and tlwo hardl candy products in eight different~ flavors were also on the market: To achieve greater efficiency in ciga- rette manufacturing severali new pro- cedures were introduced, resulting, ini higher yields and improvedl tobaceoo particle size. Major installations of' automated eigareite making machines were initiated at the Lorillardl plants in Greensboro, N. C., and Louisville, Ky., along with upgrading and automation ofi packing machines. The additionof' new Reed and'Goldon Nugget'products 10 bulk storage tanks for materials used ini the manufacturing process resulted in lower unit costs, andl the coordination of' purchasing functions through the. New York corporate office has intro- dUced further economies. Over a period of several years, strong consumer interest has developed in 100mm filter and high-taste menthol cigarettes. Sales of, Kent 1001s conr tinued to increase throughout the year, and Kent maintained its place among the country's top ten brands. Old Gold Filter 100's were introdUced into an in- creasingi number of' markets, and na- tionwide distribution is expectedibefore the end of 1969. With national distribu- tion, a major advertising! campaign iss scheduledi Early in 1969; national distribution was achieved for the new Newport ciga- rettes. In a major marketing move de- signed to make it more directly com- petitive with, other highrtaste menthol brands, Newport was reformulated and repackaged with a cork tip. Lorillard brands have long controlled the major share of the cigarette-sized cigar business, and sales of Omega Filter~, Madison Cork Tip, and' Between the Acts increased substantially during the year. Two new 100mm brands will be test-marketed in the near future. Erik Filter, a small cigar of' an entirely new size, was introduced in 1964, and now dominates the market~ in its product category. Erik Menthol was introduced during the past year and, in keeping with recent' consumer interest in flavored cigars, Erik Burgundy is being test- marketed now. Several other new products are in vani1 4 ous stages of'development. The first'of Lorillard's tipped cigars will be in testt markets before the end of 1969. Lorillardls Beech-Nut brand has Ibngi been the national favorite in the small but profitable chewing tobacco, market. Two other, brands, Bagpipe and Havana Blbssom, are marketedl regionally. Major, packaging innovations are being introduced to give these products a new and modern look. International operations account for a significant~ share of Lorill'ard sales; and net~ sales overseas increased over the previous year. Lorillard exports finished products directly to more thani 130 foreign markets and has licensing ar- rangements for overseas manufacturing in countries ranging! from Finland' to Australia. Lorillard acquired the San Franciscoo based Golden Nugget Candy Company in 1965'aspart of'its diversification pro- gram, and Reed Candy Company of. Chicago joined the Lorillard family the following year. Since 1967, Golden Nugget has operated' as a division of Reed. In February, 1969, a new, distribution warehouse was opened~ in Atlanta to serve the growing marketfor Reed prod- ucts in the Southeastern states. And aa new, 1'50 Reed roll was introduced in May for sale in the continually expand- ing vending machine trade. As in the past,, Lorillardl research and development activities were carried out in areas ofi both basic and appliedl re- search~ Basic studies were continued in composition of tobacco and tobacco smoke, in flavors,, f'iltration, and the burning process. The process control and quality control departments devel- oped new proceduresto achieve greater cigarette uniformity andl introducedl cost-reducingi techniques in tobacco sheet and by-product~ production. In response to the growing need for re- search at both the basic and applied levels, a new $3' million Research and Development Center at Greensboro will be openedl late in the fall of' 1969. The new facilities - includingladditional gas chromatograph instruments„ smoking machines, and a fluorescent spectro- photometer - will help keep Lonillard in the vanguard in developing new and

Deluxe lengtt+ 100mm brands Other Lorillard consumer products improved: products. And the!applied re-searchi capability will enhance work onn improved productioni rates; mechanical refinements, more effective utilization of' computers and computer information„ automation, and other innovations de- signedlto increase efficiency: Home building and community development Follbwing a periodlof long and intensivee research,, Loew's management became convincedl of' the transferability of its experience inithe construction and op- eration of theatres andl hotels to the housing field, long ignored by major U. S. corporaRions. Loew's residential construction and management activities include two prop- erties in New York. Tower 53;,a 39-story structure located directly across 53rd Street fromithe Americana, contains 213 apartments and 128,000 square feet of commercial space. Tower, 58, on 58th Street west of Fifth Avenue, is a 33-story buildingiwith 169 apartments and 44',000 cornmercial feet. In March of' 1969, Loew's acquired the assets and properties of' four California corporations engaged' in residential construction. At the same time; a joint home building and community develop- ment programi was launched with the J. H. Snyder Company of Los Angeles. By August 31, work had begun on three projects: . Beverly Glen Park,lhlest Los Angeles:. A residentiall community„ which when completed will contain 833' individual' homes zoned on a "bluster" plan and a 4?Lz-acre shopping center in a1307-aere natural park environment, tlAbre than 200 acres are permanently reserved for fully landscaped greenbelts, open space, and recreational areas, including facilities for tennis and clubhouses for teenagers and adults. Purchasers may choose frorn 25 distinctive architectural exteriors on six different split-level' andl two-story floor plans, at prices rangingi from $55,000 to $75,000. The first section 111

of 205 houses is now under construc- tion, with completion at the rate of' two a day. (U, S. Plywood-Champion Papers, Inc., is a co-partibipaft with Loew's- Snyder enterprises in this development.) The two other projects already in con- struction will consist of' homes more modestly priced - in the mid-20,000 to mid-30,000 dollar range. . South San Francisco. A development of' 1,300 single-familyy homes consisting of'both semi-detached dwellings and towni houses. M'odels of the first section of, 150 semi-detached units were completed and furnishedland shown to the public on September 28. Completion of'homes at the rate ofifourr daily is anticipated for late November. Models of the town houses are under construction iand schedu led for comple- tion by the end of~ 1969. « Park Norbalinda (Orange County): This willlbe a development of 600 three-, f'our,, and five-bedroom single family homes in a parklike setting to which all homes will have direct, physical access. Twenty different exteriors are available on four plans. The first section of 129 houses is under construction, with com- pletions at a rate of four each day. Beverly Glen - partial interior of IMakefield model Three additional sites are in earlier stages of development. « On the beach at Coronado, just southh of' San Diego,, a 1,408-unit condomin- ium project will rise on a 30-acre plot that runs along one-half mile of' ocean beach~ Ten 16-story cylindrically-shaped buildings willi be constructed; containing one-, two-, ; and three-bedroom apart~ ments. alllrooms will be placedlon the. outer perimeter of' each building, and every room iwill Ihave a view of'the oceani Glorietta Bay; or San Diego across the Bay. Recreational facilities will!be eon- structed on the site. The Coronado project, of bold design in a magnificent setting on one~ of the few remaining beach sites on the West Coast, has excited high interest even before the completion of' architectural plans. « At' San Carlos, on the San Francisco Peninsula; pl'ans are being drawni for construction of' 592 rental! apartments, 150 single-family homes in the $40,000- $50,000 range; and a 6% -acre shopping center. The development willi occupy, 1100 acres. « On Ocean Avenue in Santa M'onica; 320 two-, and' three-bedroom condo- minium apartments will be constructedd in two 20-story towers overlooking the Pacific coastline, The U. S. Department of Housing and Urban Development has recently calledl attention to the need for26'miHion hous- ing units in the nextdecade. To achieve this goal will require production at the rate of nearly 3 million units annuaRy: Despite the current critical shortage„the rate of building starts dropped in 1968' from 1.9 million in Januaryto 1.3mi!Ilion in July. It is expeeted!that bythe end of the year the rate willl have declined to 1i million or lower. All signs point toi a, continuing need for new housing at all' levels of the eco- nomic ladder. Having joined!forces with the J. Hl Snyder Company, which has been responsible forthe construction of more than 15,000 homes in California, Loew's sights are aimed towardl sub- stantial!growth in its new home building enterprises from coast to coast. Yorba Linda-partiaf interiorof SherwoodmodeF' 12

Consolidated Balance Sheet Auyust,SY, 1'969 and 1'988' ~ LOEWS' THEATIRES, INC. and Consolidated Substdiary Companies 14 Assets Current Assets: Cash .................................,........ Time deposits ................................ Marketable securities (Note 2) .................. Accounts receiwable, less allowance for doubtful lac- counts and cash discounts, 1'969; $3,640,121; 1968;. $1,318,980 .................................. Inventories, at average' cost:' Leaftobacco ................................. Manufactured stock ......................... Materials, supplies, and other .................. Totali current assets. ....................... Investments and Advances: Investments in and advances to unconsolidated sub- sidiary and associated companies, at cost less allowance for losses of' $6;088~000 ............. Land, mortgages and other investments, at cost' .... Total investments and advances ............. Property,,Plant andlEquipment, atcosi (IUote 3): Land ........................................ Buildings andlbuilding equipment ............... Machinery and equipment~ ...................... Leaseholds and leasehold improvements ......... Total .................................... Less accumulated depreciation and amortization, .. Property, piant and'eqpipment- net ......... Other Assets: Cost~ in excess of net assets of company acquired (hlote 1)' .................................... Unamortized debenture discount and expense being amortized'overt'he lives of the respective issues. . Prepaidexpenses, deferred charges, et'c.......... Total other assets ......................... See the accompanying Notesto.Financial IStatements:, 1969 1968, $ 1'7,753,862I $' 8,128,585 2,143',000, 27,888,475' 177,054;451i 39,148,782 52;495;874 17,655,767 196,771,877 21,148,599 8,967,742 687,296 476;335;405 93;508,905 7,467,278 13,147,838 12;859,040 20,615,116 12;859,040 58,855,579 45,422',003'. 1'59,947;891 1'37,337',995'. 85,096,686 32,866',350 13,677;146' 12,71'8',9941 317,577,302' 228,345,342 1'00,337;370 68,137,962 21'7,239,932' 1'60,207;380 247,668;192 41,192;377' 8;372;666 5,999,447 297,233;235 5,999,447 $1 ~011',423;688 $272;574;772I

M Liabilities and Shareholtlers" Equity 1969 '1968 Current Liabilities: Notes payable ................................ $ 61,981',000 Accounts payable andlaccruedlliabilities ......... 46,882,700 $ 12,398;763 Accruedtaxes:. United States and foreign income taxes ......... 10,968,387 8,899,994 Excise and other taxes ........................ 22,492,858 2,388;422 Current maturities of long-term debt (Note 4) ...... 8,4'88',020, 6,702,871' Total current liabilities ..................... 150;812;965 3%390;050 Long-Term Debt, less current maturities (Note 4): Senior debt, less current maturities .............. Subordinated debt ............................ Totalllong-term debt ....................... 174,095,846' 108,597,964 415,683,534 480,900 589,779,380 109,078,864 Deferred Credi'ts„Reserve and'Qther Liabilities: Deferred Federal income taxes (Note 9) .......... 210,984 4,680,000 Reserve for employee benefits ................... 6,233,656 Deferred credits and non-current liabilities ........ 4,661,124 4,240;726' Totalldeferred credits,,reserve and other liabilities.............................. 111,105,764 8,920,726' Shareholders' Equity,: Common stock, par value ofi$i1 per share, outstanding shares stated at par value (frlote 5) .. 14,438,263 4',768,745' Additional paid-in capitall (filote 6) ............... 1'05,586,717' 6,632,284! Earnings retained in the business ................ 139,700,599 112,784,103 Total shareholders' equity .................. 259,725,579 124,185,132 $1,011,423,688 $272574,772' 15'

State nent~ of Sales and Operating Revenues: 1969 1968 Consolidated Sales of' manufactured products and revenues of Earnings theatres and hotel operations (Note 7) ........ $533,529,659 $145,904;1184 and~ Earnings Security'transactions, rent and other revenues ... 20;499;936 20,821',987 IRetained! iin, th B i Total ................................... 554,029,595 166,726;171 e us ness For the Years Ended Costs and' Expenses: Alugust 1969 and'1966 31 , , Cost of goods sold and operating costs (Note 7) .. 375~055,288 107,777;631 Selling„advertising, andladministrative .......... 87,529,4'93' 11,708,017 Depreciation and amortization(hlote 3) .......... 10,888,945 7,797,914 Interest and amortization iof bond discount'....... 34,382',84'1 7,459',557 United States and foreign income'taxes (Note 9) .. 19,833,749 11,960,000 Total ................................... 527,690,316' 146,703,119 Earnings Before Extraordinary Item ............... Gain on sale of'Commerciai Credit Company and Control Data Corporation common stock net of' expenses, less income taxes ofi $1,990,000 in 26',339,2791 20',023,052' 1969, and $5,33%000 in 1968 .................. 5;282;955 15,164,922 Net Earnings .................................. 31,622,234 35,187,974 Earnings Retained in, the Business, beginning of year medu¢t:. Dividends paid, $.1'31/3 per share in 1969, and 1'12;784,103 89;423,245 $.13173 ' per share in 1968 ..................... Transfer to common stock in connection vNit'h (1,913,246) (1,907,278) 3-for-1 stock split (Note 5) ................... Charges in connection with retirement of'shares of (2,792,492). treasury stock ............................. (9,919,838) Earnings Retained in the Business, end af' year (Note 4) .......................... $139,700,599 $11'2,784,103' Earnings Per Share (Note 8): Earnings before extraordinary item ............. $1.83. $1 L4'0' Extraordinary item ........................... .37 1.06" Net Earnings ................................ $2.20 $2:46" Earnings Per Share Assuming Full lDiilution (Note 8): Earnings before extraordinary item ............. $1.711 Extraordinary,item ........................... .30 Net Earnings ................................ $2:01 LLOE1M'S' THEATRES, INC. and Consolidated Subsidiary Companies "Restated to give effecVto November; 1968, 3'-tor-llstock split. See ..thee accompanying.Notesto. Financial Statements:.. 1&

I Nlotles' to Financial Statements 1l Acquisitions: Effective November 30, 1968, the Company acquired the outstanding common stock of Lorillard Corporation ini exchange for $401,676,734 principallamount of, 6~/eP/o subordinated debentunes due 1993, and 6;478;657 t2-yearwarrants to pur- chase one share each ofithe Company's common stock at an initial price of $35'5 aishare. The operations of' Lorillard have been included in the accompanying consolidated financiall statements since date of acquisition. The excess ofi $247,668,192'of'the fair valUe of the debentures ($361,509,061) and of the war- rant's ($'103,658,512) over the net assets of Lorillard at date of acquisition has been attributed to intangibles, which in the opinion of Loew's management, have continuing value. IYis the Company's policy not to amortize suchiexcess as longl as there is no diminution in value of the investmenti 2. Marketable Securities: The carrying value (cost) of' marketablJ3 securities as ofi August 31, 1969 ap- proximated quoted' market value. At August 31, 1968, the quoted market valuee of' marketable securities was iniexcess of'cost: 3. Property;,Plant and Equipment: It is the policy of the Company to provide depreciation, computed principally' on the straight-line method„oven the estimated useful lives of the various classes of pnoperties. Leaseholds and improvements are amortized over the retatedl leases (including optional renewal periods where appropriate) or the lives of improvements, ifiless than the lease4erm. 4! Long-Term Debtl: The long-term debt at August 31'4 1969 and 1968 consisted of the foliowingt. 1969 1968 Senior debti less current maturities:. Twenty-five yean3% debentures, due 1976, . $ 9,127,000 Twenty-five yean33/4%d debentures, due 1978 12;316;000 4~/e%a sinking,fund debentures, due 1986 ... 33;150;000 Other senior debt, principally mortgages (interest rates ranging from 5% to 9%) .. 127;990;866 $115,300,835 Less current maturities .................. (8;488;020) (6;702;871) Total senior debt, less current maturities. . 174,095,846 108,597,964 Subordinated debt: 51/i % convertible subordinated debentures, due 1993 ............................ 287,900 480,900 6% % subordinated debentures, due 1993 .. 13;720;000 '6~/e%a subordinated debentures, due 1993 .. 401,675,634 Total subordinated deb................ 415;683;534 480;900 Total long-termidebt .............. $589,779,380 $109;078;864 'Redeemable by the Company in whole or in parti commencing in 1'976'at 105% and de- creasing percents thereafter, andlrequiring annual sinking fund payments of $4,000;0001 in the years 1976 to 1980, andl$17,500,000 from,1'981' to 1992. The aggregate of long-term debt maturing during the five years endingiAugust 31„1974 is approximately as follows: 1970, $8,488,000 (included' in current lia- bilities and after deductingi bonds held in treasury); 1971, $11',140,000; 1972, $,9;886,000; 1973, $15,215,000; 1974, $1'5,055;000: The indentures relating to long-term debt provide, among other, things, for certain restrictions oni the payment ofi cash dividends on the common stock. Under the most restrictive indenture, the amount of earnings retained in the business available for cash dividends was approximately $32,000;000 as of' August:31, 1969. 5. Common Stock: In fVovember,,1968, the authorizedl common shares were increasedl from 15,000,000 shares to 30',000,0001 shares and two additional shares were issued for eachi share then outstanding to effect a 3-for-1 stock split. The par value of the shares issued'as a result of the stock split was charged to additional paid-in capital and earnings retained in the business: 17

Notes to Financial Statements (concluded). LOEIW'S THEATRES, INC. and Consolidated Subsidiary Companies Changes in common shares wereas follows: Shares outstanding, August 31, 1968' ......................... 4,768;745 Shares issued during the year: Exercise of'stock options ................................ 61,340 Issued for acquisitions ................................... 64,000 Conversion of' SVsi %o convertibie subordinated debentures.... 4,375 Exercise of warrants .................................... 256 3'-for-11 stock split~ ....................................... 9,539,547 Shares outstanding, August 37, 1969' ......................... 14,438,263 At August 31, 1969„6',4'78,401' shares of common stock were reserved for exer- cise of the warrants issued in connection with the acquisition of Lorillard. The warrants entitle the bearer to purchase for cash (or through application of'the 67/e%a subordinatedldebentures at principal amount)' a share of common stock afaniinitial price of $35 increasing to $40 a share until IVovember 29; 1980 when the warrants willl expire. 1,050;088 shares were also reserved for exercise of stock options and conversion,of'the 5Ya% convertible subordinated debentures. At August 31„1969, options were outstanding to purchase 302,764 shares of' the Company's common stock at~prices ranging from $27.25 to $45.13 per share, including options substituted for options to purchase shares of the common stock of Lorillard outstanding at date of acquisition. Options to purchase 231,264 shares are currently exercisable andlthe remaining options become exercisable in, annuall installments through 1974'. There are 737,405 shares available for future option grants: During 1969; employees purchasedl 61,340 shares for $1,907,007. CAdditional Paid'-In Capital: Changes in additional paid-inicapital were as follows: Balance, August 31, 1968' ................................ $ 6;632,284 Fair value ofiwarrants issued iniacquisition ................ 103;658,512 Exercise of warrants ................................... 8~704 Exercise ofstoek options ............................... 1',84'5;667 Conversion of,51/2 %convertible subordinated debentures ... 188,605 Transfer to common stock in connection with 3-for-1 stock split (6,747,055) Balance, August 31, 1969 ................................. $105,586;717 7. Excise Taxes: Excise taxes of $145;723,302 paid on sales of, manufactured products in 1969 are included in "sales of manufactured products and revenues ofi theatres and hotel operations" and "bost of goodssoid and operating costs" in the accom, panying statement of'consolidated earnings and earnings retained! in the busit ness. 8. Earnings Per Share: Earnings per share are based uponithe weighted average number, of'shares (1969', 14,399,077 shares; 1968, 14,304,687 shares after giving effect to the 3'-for-1 stock split) outstanding during each year. Earnings per share assuming full diiua tion is based upon an assumed exercise of~warrants (throughiappiication of the 6~/e %a subordinated l debentures at par as payment of the exercise price of $35 per share, with related adjustments to interest expense and debt discount, net of tax effects) and anassumed exercise ofistock options. 9~ Federal Income Taxes: Deferred Federal income taxes have beeni providedlfor the tax effects attribut- able to timing,differences between financial reporting andl reporting for Income tax purposes resulting principally f!rom alternative methods for computing tax depreciation and from providing i reserves for employee benefits and reserves for losses and expenses. 10. Commitments: Minimum rentals under longtterm leases expiring through, 2066 aggregate. $7,234,000 per annum. Under certain,of the leases the Company is required too pay taxes and other charges and additionall rentals based upon gross receipts or net income from the related property. 111. Litigation: Pending litigation includes antitrust and'other civil suits for damages incidentt to the companies' businesses. The outcome of such actions will not, in the opinion of' management, materially affect~ the business or assets of Loew's Theatres; Inc. and subsidiary companies. 18'

Opinion of Independent Certified Publlic rAccount'ant's Haskins & Sells Certified Public Accountants To The Board of'Directors And Shareholders of. Loew's Theatres, Ihc.:. Two Broadbvay, New Yor~k 10004 We havesxamined the consolidated balance sheet of Loew's Theatres, Inc; and Consolidated Subsidiary Companies as of'August31,1969', and the related statementof'consolidated.earningsand earnings retained in the business fonthe year then ended. Our examination was made in accordancee with generally accepted auditing standards, and accordingly included such tests of the accounting recordsand such other auditing procedures as we considered necessary in thecircumstances. In our opinion{ the accompanying statements present fairly the consolidated financial position of'theCompanies atAugusf31',1969 and the results ofitheir operations fior the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with thatt ofithe preceding year. ~Ya.a;Ouec/k~GGr1L./ Nbvember 11, 1969, 19'

f Directors Offioers'. 20 Charles B: Benenson Benenson Realty Company James Bruce Director„Revlon, Inc., U. S: Industries, Inc. and other corporations Sidney Fread Financial'Vice President Lewis Gruber Honorary Chairman, Lorillard Division Herbert A. Hofmann Senior Vice President John F. Murphy Consultant Manuel Yellen Vice-Chairman of the Board' HerbertA: Hofmann SeniorVice President Bernard Myerson Executive Vice President. Simon Hl Rifkind Member, Law Firm ot Paul, Weiss; Goldberg; Ritkind, Wharton & Garrison Laurence A. Tisch Chairman of the Board and Chief Executive Officer Preston R. Tisch President and Chairman of the Executive Committee Manuel Yellen Vice-Chairman of the Board and Chief Executive Officer of Lorillard Division Laurence A. Tisch Chairman of the Board and Chief Executive Officer Preston R; Tisch President'and Chairman of the Executive Committee Bernard Myerson, Sidney Fread Executive Vice President Financial Vice President ErnesfEmerling Arthur J. Raporte Lester Pollack Jacob Stillman Vice President Vice President Vice President Treasurer and Secretary John C. Podester, Assistant Secretary Seymour H. Smith Leonard Pollack AssistantSecretary Assistant Treasurer _Q;~- - ANeUtdfn'U,S:.!'.

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