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Qw. ® CORPORATE MATTERS Loews-LDrillard Merger 7/11/b9 Foro 5-1 ® 0

As filed with the Securities and Exchange Commission on November 21, 1968. Registration No. 2-30386 SECURITIES AND EXCHANGE COMMISSION WASAINGTON, D. C. 20549 AMENDMENT NO. I TO FORM S-1 REGISTRATION STATEMIIVT UNDEB THE SECUffiTIES ACT OF 1933 LOEW'S THEATRES, INC. (Exact name of registrant as specified in charter) 1540 Broadway New York, New York 10036 (Address of principal executive offices) CALCULATION OF REGISTRATION FEES Proposed Proposed Maximum Maximum Amount Offering Aggregate Amount of Title of Each Class of Being Price Offering Registration Securities Being Registered Registered Per Unit Price Fee Common Stock, par value $1 per share ....... ......... ....... 2,159,119 shs. $120 $259.094,280 $51,819 Common Stock, par value $1 per share ................ ... .... 15,279 shs. 79 1,207,041 241 Common Stock, par value $1 per share ...... .......... ... .... 14,784 shs. 81 1,197,504 240 Common Stock, par value $1 per share ...... .......... ... .... -tsl4,;hs. 82 2,307,480 461 Common Stock, par value $1 per share ...... .......... ... .... 9,563 shs. 90 860,670 172 Common Stock, par value $1 per share ...... .......... ... .... 41,495 shs. 90 3,734,550 747 Common Stock, par value $1 per share ...... .......... ... .... 200,000 shs. 115 23,000,000 4,600 Total ......... 2.468.380 shs. - $291,401,525 $58,280

PRELIMINARY PROSPECTUS DATED NON'E3IBER 21, 1968 Loew's Theatres, Inc. 7,405,140 Shares of Common Stock ($1 Par Value ) This Prospectus relates to 6,477,357 shares of Common Stock, $1 par value, of Loew's Theatres, Inc. ("Loew's"), issuable upon exercises of warrants to pur- chase shares of Common Stock of Loew's (the "Warrants") and to 927,783 shares of Common Stock, $1 par value, of Loew's issuable to employees of Loew's and its subsidiaries upon exercises of stock options. All outstanding options are held by employees of Lorillard Corporation ("Lorillard"). The Warrants entitle the holders thereof to purchase one share of Common Stock at $35 per share for the first four years, one share at $37.50 for the next four years and at $40 for the final four years. The principal amount of any of the 6$o-/o Subordinated Debentures due 1993 held by a holder of Warrants may be applied in amounts 3. . -, = of 100 or integra1 multiples thereof in payment of the $ purchase nrice upon w ti-2 ~ exercise of any Warrant. This Prospectus also relates to the re-offering of 01- '0 2 shares of Common Stock from time ~„ «,ne in the market at prevailing prices by any exercising holders of such Warrants and options who may be deemed N C V ° N d ... C underwriters. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is November 29, 1968. I

No person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, in connection with the offering contained herein, and, if given or made, such information or representations must not be relied upon as having been authorized by Loew's or any other person. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities covered by this Prospectus by Loew's or any other person in any state or other jurisdiction to any person to whom it is unlawful for Loevr's or any other person to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the facts herein set forth since the date hereof. TABLE OF PAGE Loew's ............................... 3 Use of Proceeds ....................... 3 Capitalization ......................... 4 Summary of Earnings of Loew's ......... 5 Statement of Consolidated Earnings of Lorillard ........................... 6 Condensed Pro Forma Combined Summary of Earnings ........................ 7 Condensed Pro Forma Combined Balance Sheet .............................. 8 Market Prices ........................ 9 Business of Loew's .................... 9 CONTENTS PAGE Business of Loew's Conducted Through Lorillard ........................... 16 Pending Legal Proceedings ............. 21 Management .......................... 23 Options to Purchase Common Stock ...... 26 Federal Income Tax Information ........ 29 Description of Common Stock ........... 30 Experts .............................. 31 Legal Opinions ........................ 31 Additional Information ................. 31 Financial Statements .................. F-1 2 Loe Its exec• directly subsidial statutorN Lorillarc corporat "Loew's Theatre: Loc exhibitir picture t States a construc of markc Thi tobacco the proc. Loe the stoc

ions, other id, if given horized by ition of an >on in any )n to make nder shall, icts herein PAGE ough r LOEW'S Loew's Theatres, Inc. ("Loew's") was organized in 1954 under the laws of the State of New York. Its executive offices are located in New York City. Loew's is principally a holding company, owning directly or indirectly the capital stock of a number of operating subsidiaries. The principal Loew's subsidiary, Lorillard Corporation ("Lorillard"), was acquired by Loew's on November 29, 1968, by a statutory merger of Loew's P. L. Co., Inc. ("LPL"), a wholly-owned subsidiary of Loew's, into Lorillard; upon consummation of that merger, the existence of LPL ceased and Lorillard, the surviving corporation, became a wholly-owned subsidiary of Loew's. This merger is referred to herein as the "Loew's-Lorillard Merger." As used herein, the terms "Loew's" and "Company" refer to Loew's Theatres, Inc. and its subsidiaries, including Lorillard, unless the context otherwise requires. Loew's operates 14 hotels in the United States and the Caribbean and is engaged in the business of exhibiting motion pictures in the United States and Canada through owning or operating 110 motion picture theatres and the related real estate and other facilities connected with such theatres in the United States and Canada, owns a combination office-luxury apartment building in New York City and is constructing another such building in New York City. Loew's has also derived income from its portfolio of marketable securities. Through Lorillard, Loew's is also engaged in the manufacture and sale of cigarettes and other tobacco products. The business of Loew's conducted through Lorillard and its subsidiaries also includes the production and sale of pet food and candy. USE OF PROCEEDS Loew's will add to its general corporate funds the proceeds of any exercises of the Warrants and of the stock options to be received from time to time. 3

CAPITALIZATION The capitalization of Loew's and subsidiaries as of August 31, 1968 (giving effect to the subsequent three-for-one split of Loew's Common Stock) and as adjusted to give effect to the Loew's-Lorillard merger, was as follows : Loew's and Outstanding Title Subsidiaries As Adjusted Short-term borrowings : Notes payable-banks-6/ % ......................... $ 14,300,000 Notes payable-others-6y8 ofo to 6Y8 % ................. 5,000,000 Long-term debt (including current maturities) : Loew's Theatres, Inc. (1) : 5/% Convertible Subordinated Debentures due 1993(2) $ 480,900 480,900 6% % Subordinated Debentures due 1993 ............ - 401,305,000 Subsidiaries (1,3) : Mortgage notes, 5%% to 6Y4o-/0, due 1975-1998 ....... 81,913,300 81,913,300 Mortgage notes, 5% to 6/ofo, due 1970-15,:4 ........ 12,999,574 12,999,574 Sundry mortgage and other indebtedness, 0% to 7/ %, due 1968-1994 ................................. 20,387,960 20,387,960 Twenty-five year 3 fo Debentures due March 1, 1976 9,688,000 Twenty-five year 3%% Debentures due April 1, 1978 13,184,000 4% oJo Sinking Fund Debentures, due June 1, 1986 .... - 34,382,000 6% 'o Subordinated Debentures due April 1, 1993 ..... - 13,720,000 Common Stock, $1 par value, authorized 30,000,000 shares, issued and outstanding (4) ..................................... 14,306,235 shs. 14,306,235 shs. Warrants: 12 Year Warrants expiring 1980, each foi the purchase of one share of Common Stock (5) ................ - 6,477,357 wts. (1) For information concerning obligations under leases on Loew's real property and guarantees by Loew's of debt of the subsidiaries and obligations under long-term leases, see Note 7 of Notes to Financial Statements of Loew's. (2) See "Business of Loew's-Other Interests" for data concerning $480,900 principal amount of 5%% Convertible Subordinated Debentures due 1993 issued by Loew's and 16,350 shares of Common Stock reserved for issuance on conver- sion of such Debentures. (3) For additional information as to outstanding indebtedness of Loew's subsidiaries, see Note 4 of 'Notes to Financial Statements of Loew's and Note S of Notes to Financial Statements of Lorillard. (4) Excludes 808,905 shares reserved upon exercise of options under the Key Employees' Qualified Stock Option Plan, 118,878 shares reserved for issuance upon exercise of other options substituted for Lorillard options and 16,350 shares reserved for issuance upon conversion of 5i/2% convertible subordinated debentures. (5) For exercise prices, see "Options to Purchase Common Stock-Warrants". 4 The f< Montgome: should be r Income : Theatre, Food an( Rent and Expenses : Operatinf General o Depreciat Interest C Other .. U.S. and Income t items . Securities tran Realized , Related fi Provision Net g Incon: Extraordinary Net loss o Gain on s trol Dat Net incom Per share data ( Income bc items . Net gains Extraordin Net incomc Dividends Average numbe income per NOTES (amoun (a) Appro taxes in the yea (b) Exclu, (c) Becau for unrealized i year ended Aug (d) After (e) Net oi (f) After (g) As a i of various hote change in lives ended August 3

:subsequent r's-Lorillard iding isted ),000 ),000 ,900 ,000 300 574 360 )00 )00 )00 100 35 shs. 57 wts. bt 1e r- al -k id SUMMARY OF EARNINGS OF LOEW'S The following Summary of Earnings of Loew's and Subsidiaries has been examined by Lybrand, Ross Bros. & Montgomery, independent certified public accountants, whose opinion appears elsewhere herein. These statements should be read in conjunction with the financial statements and related notes of Loew's appearing elsewhere herein. Years Ended August 31 Income : Theatre, hotel services, etc . .....................•...... $ Food and beverage sales ................................ Rent and other income .................................. Total income .................................. Expenses: Operating ............................................. 60,726 General and administrative .............................. 3,576 Depreciation and amortization ........................... 6,191 Interest on debt ........................................ 4,549 Other ................................................. 327 U.S. and foreign income taxes(a) ...................... 3,440 Total expenses ................................. 78,809 Income before securities transactions and extraordinary items ............................................... 3,167 Securities transactions: Realized gains ........................................ Related federal income taxes .......................... Provision for unrealized losses, net of taxes(c) .......... 1964 1965 1966 1967 ~ In Thousands of Dollars^ 1968 59,326 $ 67,241 $ 79,128 $ 87,922 $ 108,135 16,614 22,732 28,915 32,399 37,769 6,036 5,581 6,217 6,700 10,788 81,976 95,554 114,260 -127,021 156,692 69,331 85,427 90,476 110,334 4,123 4,635 6,286 8,693 7,077 8,094 7,367(g) 7,798 4,934 5,601 6,049 7,460 674 994 1,342 458 3,815 3,690 6,860 9,290 89,954 108,441 118,380„ 144,033 5,600 5,819 8,641 1,344 1,990 7,882(b) 355 440 2,190 989 1,550 5,692 (1,550) 1,422 12,659 10,034 2,670 7,364 Net gains on securities transactions .................. 989 - 7,114 7,364 Income before extraordinary items .................. 3,167 6,589 5,819 15,755 20,023 Extraordinary items : Net loss on disposition of fixed assets (d) ................ (3,247) Gain on sale of Commercial Credit Company and Con- trol Data Corporation common stock(e) ............... 15,165 Net income (loss) ..................................... $ (80) $ 6,589 $ 5,819 $ 15,755 35,188 $ Per share data(f) : Income before securities transactions and extraordinary items ............................................... $ .17 .34 $ .39 $ .60 $ .89 Net gains on securities transactions ....................• .06 .49 .51 Extraordinary items ................................... (.18) 1.06 ....,. .., Net income ............................................ $(.01) $ . $ .39 $1.09 40 Dividends ............................................. None \one ''one None Average number of shares outstanding, used in computing net i $2.46 $,~.13, income per share (f) .................................. 18,486,219 16,614,339 14,866,590 14,422,185 14,304,687 NoTEs (amounts in thousands of dollars) : (a) Approximately $1,340, $1,280, $1,930, and $2,150 of income from Puerto Rican operations was not subject to U. S. income taxes in the years ended August 31, 1965, 1966, 1967, and 1968, respectively. (b) Exclusive of $128 losses charged against reserve for unrealized losses. (c) Because of the decline in market prices of securities during the latter part of the fiscal year ended August 31, 1966, a reserve for unrealized losses of $1,990 (less taxes of $440) was established. The unused portion of the reserve was restored to income in the year ended August 31, 1967. (d) After credit for income taxes of $3,040. (e) Net of expenses and less income taxes of $5,330. (f) After giving effect to 2% for I stock split in January 1968 and a 3 for 1 stock split in November 1968. (g) As a result of an examination by the Internal Revenue Service of the Company's tax returns for certain prior years, the lives of various hotel building fixtures and equipment were lengthened to conform to lives established by the Service for tax purposes. This change in lives resulted in reducing depreciation expense by $1,048 and increasing net income by $528 ($.04 per share) for the year ended August 31, 1967. 5

indicative of the results for the full year. 1963 ~ REVENUES: Net sales (a) ................................ $525,850 Other (b) .................................. 1,209 Total revenues ...................... 527,059 COSTS AND EXPENSEs: Cost of goods sold (a) ........................ 382,227 Selling, advertising, and administrative expenses .. 78,366 Interest on long-term debt .................... 3,208 Other interest (principally on bank loans) ...... 1,945 Total costs and expenses .............. 465,746 ~ EARNINGS BEFORE INCOME TAXES ................ : . 61,313 PROVISION FOR INCOME TAXES: Federal : 'Current ................................ 29,784 Deferred ............................... 833 State and foreign ............................ 2,255 Total income taxes ................... 32,872 NET EARNINGS ................................. 28,441 DIVIDENDS ON PREFERRED STOCK (C) ............... 686 ~ EARNINGS APPLICABLE TO COMMON STOCK .......... $ 27,755 PER SHARE OF COMMON STOCK: h d d Si M E Year Ended December 31 ont n e x s June 30 (Unaudited) 1964 1965 1966 1967 1967 1968 ^ ^ In Thousands of Dollars, except per share amounts $478,810 $483,855 $510,434 $564,966 $277,486 $286,919 1,531 2,671 1,670 1,940 860 1,061 341 480 486 526 512 104 906 566 346 278 287 980 , , ^ ~ , ^ , , , ^ 343,932 346,899 360,925 395,686 195,605 201,052 79,150 81,825 87,649 104,307 51,639 54,503 2,914 2,797 2,574 2,374 1,155 1,366 1,791 2,008 1,746 1,589 714 1,481 427,787 433,529 452,894 503,956 249,113 258,402 52 554 52 M 59 210 62 950 29 233 578 29 , , ^ , , , , 24,168 22,901 27,062 28,458 13,079 14,406 348 550 500 355 352 96 1,885 2,700 2,333 3,103 1,390 984 26,401 26,151 29,895 31,916 14,821 15,486 26,153 26,846 29,315 31,034 14,412 14,092 686 686 686 686 343 172 _.~ _ $ 25,467 $ 26,160 $ 28,629 30,348 14,069 $ 13,920 $3.74 $3.89 $4.35 $4.67 $2.16 $2.15 $2.50 $2.50 $2.50 -$2.50 $1.25 $1.30 $217,113; 1964, $191,661; 1965, $192,056; 1966, $198,290; 1967, $215,469; six months ended (b) Includes undistributed earnings of associated companies: year ended December 31, 1963, none; 1964, $317; 1965, $281; 1966, $66; 1967, $296; six months ended' June 30, 1967, $109 and 1968, $129. (c) On April 9, 1968, the 7% preferred stock was converted into 6%% subordinated debentures (see Note 1 to the Lorillard financial statements). The added interest cost (net of Federal income taxes at present rates) on such debentures on an annual basis is less than the dividends eliminated on the preferred stock by $245 per annum. (d) Based on the average number of shares of common stock outstanding during each year adjusted, for periods prior to the poolings of interests described in Note I to the financial statements, for shares issued in such poolings of interests. (e) Reference is made to "Business of Lorillard-Employees" regarding the Profit Sharing Plan which became effective on January 1, 1968 and pay rate increases granted employees in 1968. See the third paragraph tinder "Business of Loew's Conducted through Lorillard-Advertising and Sales Promotion" herein with reference to tlle decline in 7..orillarcl sales dt.rir,sx 1964. STATEMENT OF CONSOLIDATED EARNINGS OF LORILLARD The following statement of consolidated earnings of Lorillard Corporation and its subsidiaries (which includes amounts applicable to Usen Canning Co. and Reed Candy Company prior to their combination with Lorillard in 1965 and 1966, respectively, in poolings of interest-see Note I to linancial statements) for the •five full years ended December 31, 1967 has been examined by Haskins & Sells, independent certified public account- ants, whose opinion with respect thereto appears elsewhere herein. The statement for the six-month periods ended June 30, 1967 and 1968 is unaudited; however, in the opinion of the Company, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the operating results have been included in the statement for such periods. This statement should be read in conjunction with the other consolidated financial statements of Lorillard and the related notes included elsewhere herein. The results for the six months ended June 30, 1968, are not necessarily Earnings (d) ............................... $4.08 Cash dividends .............................. $2.47/ (a) Includes excise taxes on products sold: year ended December 31, 1963, June 30, 1967, $106,899 and 1968, $106,649. Q .~ J T r. fD >-G,~ CD ~, rD (7 ~' ,-« ~ 0

~ y N ~ d 0 ~ va.~y v~ ~a ~,a o x a u E , ~ a 69' .u Q ~ CONDENSED PRO FORMA COMBINED SUMMARY OF EARNINGS (Unaudited) The following condensed pro forma combined summary of earnings has been prepared by combining U d~A iu ~ the consolidated results of operations of Loew's for the fiscal year ended August 31, 1968 with those of Lorillard for the twelve month period ended June 30, 1968, giving effect to the pro forma adjust- ment described below, and should be read in conjunction with the separate financial statements of the ~ companies and the related notes included elsewhere herein : .c 3 Loew's Pro Forma Lorillard Adjustments Pro Forma Combined ~ Revenues : In Thousands of Dollars 3. Net sales and services ...................... $145 904 $574 399 $720 303 a Other ................................... , 10,788 , 2,141 , 12,929 ~ Total ........................ 156,692 576,540 733,232 Q '+.' Deductions : , O S Cost of goods sold and operating expenses .... 127,283 508,305 635,588 i o ~ ~ ~ Interest: 6%°fo Subordinated Debentures due 1993 Other ............................... 460 7 4 941 $ 27,590 (1) 27,590 12 401 ~ ~ Provision for income taxes ................. , 9,290 , 32,580 , (13,795)(1) 28,075 ~ Total .................... 144,033 545,826. 13,795 703,654 Income before gains on securities transactions and extraordinary item .................. 12,659 '0,714 (13,795) 29,578 .~ Net gains on securities transactions 7 364 7 364 s.. p .............. Income before extraordinary item ........... , 20.023 30,714 , (13,795) 36,942 ~ Gain on sale of Commercial Credit Company and Control Data Corporation common stock ........ 15,165 15.165 -a Net income .................. $ 35.188 $ 30.714 $ 1( 3,795) $ 52,107 ~ Before Assuming All Any Warrants Are Warrants Exercised at Are $35.00 Per xercised Exercised ~ Forma Earnings Per Share(3) : a Income before gains on securities transactions and extraordinary item $2.07 $1.80 u Net gains on securities transactions ............................... .51 .35 'd Extraordinary item ............. ............................... 1.06 .73 ..~ U Net income ........................................ $3.64 $2.88 4i w ~ a cd 11 8 ~, ~ a a ~ yy 0 v cd ~ o 0 p~, a ~ O u 8.E ~~ ~ a E o W N E P 'O . cc C 3 0 ~ c a 0 ~ ~ ~ ~ N? v : a ~ NOTES : (1) Interest expense on $401,305,000 principal amount of 6%°fo Subordinated Debentures due 1993 issued by Loew's in exchange for the outstanding common shares of Lorillard and related effect on federal income taxes. (2) Assumes that Lorillard stockholders apply Debentures at par as payment upon the exercise of Warrants at the assumed exercise price. (3) After giving effect to the 3 for 1 stock split of Loew's Common Stock effected as of November 27, 1968. For accounting purposes, the Debentures and Warrants have been assigned a combined value equal to the principal amount of the Debentures. An Opinion of the Accounting Principles Board of the American Institute of Certified Public Accountants, which would require that values be assigned to the Debentures and the Warrants based on their 7espective fair market values, was suspended pending further study by the Board. The Board has recently issued a draft of an Opinion for comment in which it proposes that the latter accounting be reinstated retroactively. If a final Opinion taking the position in the above draft is issued, Loew's will record the value of the Warrants as Additional Paid-in Capital, and charge the portion attributable to discount on the Deb- entures to deferred debt discount, to be amortized over the life of the Debentures and the remainder, if any, to Excess Cost of Investment in Lorillard over Equity in Net Assets. It is estimated that, in such event, the discount to be recorded would be approximately $40,130,000 and the approximate annual amortization, before taxes, (computed on the "compound interest" method) would range over the life of the issue from a_ low of $900,000 in the first year to a high of $2,050,000 in the 13th year, then declining to $1,600,000 in the 25th year. In this event, Excess Cost of Investment ir Lorillard over Equity in Net Assets would be increased by approximately $63,430,000, Other Assets (deferred debt discount) would be increased by $40,130,000 and Additional Paid-in Capital would be increased by approximately $103,560,000 over the amounts which appear in the condensed pro forma combined balance sheet appear- ing on the following page. 7

CONDENSED PRO FORMA COMBINED BALANCE SHEET (Unaudited) The following condensed pro forma combined balance sheet has been prepared by combining amounts shown iu the consolidated balance sheet of Loew's as of August 31, 1968 and amounts shown in the con- solidated balance sheet of Lorillard as of June 30, 1968, giving effect to the pro forma adjustments described below, and should be read in conjunction with the separate financial statements of the companies and related notes included elsewhere herein. ASSETS I Pro Forma Pro Forma Loew's Lorillard Adjustments Combined In Thousands of Dollars Current assets .................... . ... .... $ 92,822 $297,098 $389,920 Property, plant and equipment (less accumulated depreciation and amortization) .............. 160,207 55,101 215,308 Excess cost of investment in Lorillard over equity in net assets .............................. $191,719(3) 191,719 C)ther assets ................................ 19,546 11,164 30,710 Total .......................... $272,575 $363,363 $191,719 Stoc 196< Genei LIABILITIES AND SHAREHOLDERS' EQUITY $827,657 Current liabilities ............................ $ 30,390 $ 77,287 $107,677 Senior long-term debt, less current maturities .... 109,079 56,050 165,129 Subordinated long-term debt .................. 13,720 $401,305(1) 415,025 Reserves and other liabilities .................. 7,892 6,720 14,612 \linority interest ............................ 1,029 1,029 Shareholders' equity (4) : Common stock .. ................. 14,306 33,436 Additional paid-in capital ................. 29,032 Retained earnings ....................... 109,879 157,~21 Less common stock in treasury ............. (10,403) 14,306 (209,586) (2) 109,87- '1'otal shareholders' equity ......... 124,185 209,586 (209,5861, 124,185 Total ....................... $272,575 $363,363 $191,719 $827,657 Noxcs: (1) The issuance by Loew's to each Lorillard shareholder of a $62 principal amount, 6%°Jo Subordinated Debenture due 1993 ($401,305,000 in the aggregate) and a Warrant (as to which no value has been assigned for accounting purposes) to purchase one share of Loew's Common Stock. (2) The elimination in consolidation of the shareholders' equity accounts of Lorillard. .G (3) The recording of $191,719,000 as excess cost of investment in Lorillard over equity in net assets. Sufficient o-+ information is not available at this time to determine whether any portion of the excess may be allocated to tangible v assets of Lorillard or intangible assets having limited terms of existence. 0% W (4) Effect has been given to the 3 for 1 stock split of Loew's Common Stock and the transfer of $6 000 45 632 , , tA 905 from Additional Paid-In Capital and $2 000 from Earnings Retained in the Business to Common Stock , , . ^J Reference should be made to the last two paragraphs on the preceding page for information concerning the method of accounting followed in the preparation of the condensed pro forma financial statements. S I locate capita I exhibi pictur States structi marl.e of cig< Sourc( D "income admini income unders theatre (1) stock. f

) ag amounts in the con- d j ustments companies Pro Forma Combined $389,920 215,308 191,719 30,710 $827,657 $107,677 165,129 415,025 14,612 1,029 14,306 109,879 MARKET PRICES The following table sets forth the range of approximate reported closing sale prices on the New York Stock Exchange for shares of Common Stock of Loew's (adjusted for 2/ for 1 stock split in January, 1968 and for 3 for 1 stock split in November, 1968) : High Low 1963 ......................... 3 3/is 2 ii1s 1964 ......................... 3 % 1 % 1965 ......................... 4 % 3 %s 1966 ......................... 5 %6 2 34 1967-First Quarter ............ 6 %6 3 / Second Quarter .......... 9 51/is Third Quarter ........... 13 % 9 %ls Fourth Quarter .......... 19 5/6 1113/i6 1968-First Quarter ............ 21 Yi 6 14 Second Quarter .......... 3311i6 20 %ls Third Quarter .......... 40i1/ts 25 %s Fourth Quarter .......... 49 % 39 (to November 19) General BUSINESS OF LOEW'S Loew's was organized in 1954 under the laws of the State of New York. Its executive offices art located in New York City. Loew's is principally a holding company, owning directly or indirectly the capital stock of a number of operating subsidiaries. Loew's operates 14 hotels in the United States and the Caribbean and is engaged in the business of exhibiting motion pictures in the United States and Canada through owning or operating 110 motion picture theatres and the related real estate and other facilities connected with such theatres in the United States and Canada, owns a combination office-luxury apartment building in New York City and is con- structing another such building in New York City. Loew's has also derived income from its portfolio of marketable securities. Through Lorillard, Loew's has recently become engaged in the production and sale of cigarettes and other tobacco products, candy and pet food. Year Ended August 31 1966 1967 1968 Hotel Operations ............... $3,546,000 $5,449,000 $7,362,000 Theatre Operations ............. 1,816,000 2,294,000 3,335,000 Securities Transactions .......... - -7,114,000 7,364,000(1) ~ 457 000 Dividend Income 898 000 1 962 000 ~ , ............... , , , a- (1) Exclusive of $15,165,000 gain on sale of Commercial Credit Company and Control Data Corporation common tJ ~ stock. tst 9 ca Sources of Income During the periods indicated (all of which are prior to Loew's acquisition of Lorillard) Loew's net income was derived from the sources set forth in the following table. No interest expenses or general and administrative expenses have been allocated to securities transactions or dividend income, and accordingly income from these sources may be overstated to this extent and income from other sources correspondingly understated. In addition, no interest has been charged on intercompany transactions. Hotel operations and theatre operations include allocations of rent and other income.

Because of the decline in market prices of securities during the latter part ot the hscal year ended August 31, 1966, Loew's established a reserve for unrealized losses of $1,990,000. The unused portion of the reserve, amounting to $1,862,000, which was no longer required, was restored to income in the fiscal year ended August 31, 1967. If the excess of cost over market values of the Company's portfolio at August 31, 1966 had not required the establishment of this reserve, income from securities transactions for the year then ended, as shown in the foregoing table, would have amounted to $1,550,000 (i.e., $1,990,000 less taxes of $440,000). The restoration of the unused portion of the reserve in the fiscal year ended August 31, 1967, increased income from securities transactions in the year then ended by $1,422,000 ($1,862,000 less taxes of $440,000) over the amounts which would otherwise have been reported for that period. Income from securities transactions for the year ended August 31, 1968, was not affected. See "Other Interests" for information regarding Loew's transactions in stock of Commercial Credit Company (now Control Data Corporation). Hotel Activities and Properties Loew's now operates 14 hotels of which five are in New York City, one is in Chicago and one is in San Francisco, four are resort hotels (one in San Juan, Puerto Rico, one in Bal Harbour, Florida, one in Paradise Island, Nassau, Bahamas and one in Atlantic City, New Jersey) and three are motor hotels (in New York City). A 500 room hotel to be operated by Loew's under a lease agreement is under construction in London, England and is expected to open during 1970. A new hotel in Washington, D. C., on land owned by Loew's is in the planning stage, but no date for commercement of construction can presently be set. Loew's regularly has under review opportunities for expansion of its hotel business. The following table sets forth information and operational data concerning hotels operated by Loew's during at least 11 months of the years ended on the dates indicated : Year Ended August 31, Number of Hotels Number of Rooms Percentage of Occupancy Average Rate per Occupied Room 1963 .................... 3 2,946 75.18 $18.63 1964 .................... 7 4,979 77.31 20.23 1965 .................... 8 5,623 82.32 20.55 1966 .................... 11 7,439 81.44 20.31 1967 .................... 11 7,449 83.63 21.55 1968 .................... 12 7,887 83.36 23.38 No one hotel property contributed as much as 10oJo to the net earnings of Loew's in the fiscal year ended August 31, 1968, although on an interim basis one or more resort hotels may make a greater contribution to earnings due to seasonal factors. The principal sources of revenue of the hotels are rentals of rooms (54.6% in fiscal 1968) and receipts from the sale of food and beverages (34.2%). Additional revenues are received from supplemental services customarily offered in hotels such as parking, telephone and valet services, from a gaming casino in the hotel in Puerto Rico and from rentals of stores and shops comprising parts of the hotels. In addition to the usual dining room facilities, the hotels contain specialty restaurants, cocktail lounges and bars. Some of the supplemental services and facilities are operated directly by the hotels, while others are operated by lessees or concessionaires. The hotels are subject to mortgage indebtedness aggregating approximately $77,400,000 at interest rates ranging from 5 jc to 6/ % and maturing from 1970 to 1988. Apartment buildings referred to below are subject to mortgages aggregating approximately $11,100,000 at interest rates of 6/ % and 6/ c/`c and maturing in 1986 and 1998. Extensive facilities, accon 76 offices locate The follo• time to time, a The Rege New York Cit and cocktail lt facilities neces: and the tenant The Amei Avenue and 5" and contains 1 restaurants an sary for opers The Szcuc New York Ci occupied by th 1990, with the The Dral Avenue, New portion which banquet room, has renovated The War Americas and 502 rooms to; for the opera The Asrt owned by it k sador West w East and the together with operation of a Mark H Francisco, Cz rooms and st other facilitie. by Loew's. L, between the 1 2062. The va Legal Procee 10

year ended ised portion :ome in the y's portfolio transactions 50,000 (i.e., in the fiscal !n ended by ! have been )68, was not Commercial nd one is in Florida, one motor hotels iin London, d owned by mtly be set. d by Loew's ~rage Rate per cupied Room $18.63 20.23 20.55 20.31 21.55 23.38 Extensive advertising and other forms of publicity are used to bring to public attention the Company's facilities, accommodations and services. Loew's operates a reservation service for all of its hotels through 76 offices located throughout the United States, Canada and abroad. The following are Loew's hotel properties. Since the number of rooms in a hotel varies trom time to time, all numbers of rooms in the following descriptions are as of August 31, 1968: The Regency: Loew's operates this luxury hotel upon leased land at 61st Street and Park Avenue, New York City. The hotel opened on March 1, 1963, and contains 489 rooms, together with a restaurant and cocktail lounge, banquet and meeting rooms, on-premises parking and the other concessions and facilities necessary for operation of the hotel. The initial term of the ground lease expires June 30, 1991, and the tenant has options to renew the lease for successive terms of 22, 23 and 24 years, respectively. The Americana: Loew's operates this first class convention hotel upon land owned by it at Seventh Avenue and 52nd-53rd Streets, New York City. The hotel opened for business on September 24, 1962, and contains 1,843 rooms, together with ballrooms and meeting rooms, an exhibition hall, a supper club, restaurants and cocktail lounges, on-premises parking, stores and other concessions and facilities neces- sary for operation of the hotel. The Summit: Loew's operates the Summit, a 781-room hotel at Lexington Avenue and 51st Street, New York City, which opened on July 31, 1961. On September 6, 1961, a subsidiary sold the land occupied by the hotel for $3,200,000 and the subsidiary leased the land for a term expiring September 30, 1990, with the privilege of renewing the lease for four successive 20-year periods. The Drake: Loew's has operated this luxury hotel upon land owned by it at 56th Street and Park Avenue, New York City, since June, 1964. The hotel contains 642 rooms of which 457 are in the main portion which opened in 1926 and 185 are in a new wing which opened in 1962, together with restaurants, banquet rooms, a cocktail lounge and other facilities necessary for the operation of a luxury hotel. Loew's has renovated and refurnished the hotel. The L!/a.rwick: Loew's has operated this first-class hotel upon land owned by it at Avenue of the Americas and 54th Street, New York City, since hlarch, 1965. The hotel, which opened in 1926 contains 502 rooms together with a restaurant, cocktail lounge, stores, concessions and other facilities necessary for the operation of a first-class hotel. Loew's upon acquisition renovated and refurnished the hotel. The An.bassadors, East and West: Loew's has operated the Ambassadors, East and West, on land owned by it located at 1300 North State Street, Chicago, Illinois, since September 10, 1965. The Ambas- sador West was originally opened in 1921 and the Ambassador East in 1927. The 17-story Ambassador East and the adjoining 12-story Ambassador West, operated as one hotel, provide a total of 648 rooms together with restaurants, cocktail lounges, stores, concessions and other faci?ities necessary for the operation of a first-class hotel. Loew's upon acquisition renovated and refurnished the hotel. Mark Hopkins: Loew's has operated the Mark Hopkins Hotel, located at One Nob Hill, San Francisco, California since February, 1967. The hotel, originally opened in 1926, contains 426 guest rooms and suites, meeting and banquet rooms, restaurants, cocktail lounges, stores and concessions and other facilities necessary for the operation of a first-class hotel. The hotel was renovated and refurnished by Loew's. Loew's purchased the leasehold interest in a lease, which lease was amended by an agreement between the lessor and Loew's to grant an option to Loew's to extend the term of the lease from 1989 to 2062. The validity of the option has been questioned in a lawsuit brought by the lessor; see "Pending Legal Proceedings: " 11 f

Paradise Island Hotel and Villas: Loew's operates under lease this hotel located on Paradise Island, Nassau, the Bahamas, which opened for business on December 1, 1967. The hotel contains 503 rooms, together with beach and swimming facilities, a supper club, restaurants and cocktail lounges, ballroom, meeting rooms, stores and concessions, and other facilities necessary for the operation of a resort hotel. The lease is for a term of 20 years, from December 1, 1967. Americana o f San Juan: Loew's operates this resort hotel upon land owned by it at Isla Verde, San Juan, Puerto Rico. The hotel opened on November 29, 1962 and contains 450 rooms, together with beach and swimming facilities, a supper club, restaurants and cocktail lounges, a ballroom, meeting rooms, stores and concessions, and the facilities necessary for the operation of a resort hotel. The Company has been granted tax exemption through 1972 for the income from hotel operation of this hotel under the Puerto Rican Industrial Incentives Act of 1954 and a license, which must be renewed quarterly, to operate a gaming casino. Americana of Bal Harbour: Loew's has operated this hotel, located at 9701 Collins Avenue, Bal Harbour, Florida, pursuant to a lease agreement, since January 31, 1965. The hotel opened for business on December 1, 1956 and contains 717 rooms together with beach and swimming facilities, a supper club, cocktail lounge, ballrooms, meeting rooms, stores and concessions and all facilities necessary for the operation of a resort and convention hotel. The lease is a net lease which terminates on April 14, 1980 with the option to renew until April 14, 1995. Traysnore Hotel: Loew's has operated this resort hotel, located on the Atlantic City, New Jersey boardwalk at Illinois Avenue, pursuant to a management agreement, since March 1, 1968. The Traymore Hotel, constructed in 1915, is a 14-story structure containing 560 guest rooms. The hotel was recently renovated and refurnished. The hotel contains several restaurants, coffee shop, indoor swimming pool, health club and banquet rooms and other concessions and facilities necessary for the operation of a resort hotel. Adjoining the hotel there is a new banquet and convention structure which has a seating capacity for 2,500 persons. No part of the cost of construction of the convention hail or the renovation and refurnishing of the hotel has been or will be borne by Loew's. The owner bears all operating expenses in connection with the Traymore and also reimburses Loew's for various home office services provided by Loew's and out-of-pocket expenses as well as for reservations made through the Loew's reservation service. Loew's receives a fixed minimum management fee of $50,000 per annum, payable in equal monthly installments, against a percenta.ge fee on the gross revenues ranging from 2% to 5°fo. See "Management-Certain Transactions". The City Squire: Loew's operates this motor hotel at Broadway and 51st to 52nd Streets, New York City, which opened on September 9, 1963. The motor hotel contains 722 rooms, a restaurant and cocktail lounge, public rooms, a swimming pool, on-premises parking, stores and other facilities necessary for the operation of a motor hotel. A subsidiary has a net lease of the land for a term expiring October 31, 1989 with successive renewal options until October 31, 2051. Howard Johnson's Motor Lodge: Loew's operates this motor hotel at Eighth Avenue and 51st-52nd Streets, New York City. The hotel opened for business on June 25, 1962. It contains 300 rooms, a Howard Johnson restaurant and cocktail lounge, on-premises parking and the facilities necessary for the operation of a motor hotel. Loew's has been licensed to use the name "Howard Johnson" for this hotel. rh t{tc; casc loca %%•hit .1nlU tury moti, Whol Subsi let;: Other . Z a:;grep: 12

ise Island, ~03 rooms, ballroom, sort hotel. Terde, San ether with ing rooms, npany has under the arterly, to •enue, Bal r business pper club, •y for the I 14, 1980 ew Jersey Traymore s recently iting pool, ttion of a a seating ; ation and cpenses in ovided by eservation in equal 5°fo. See Loew's Midtown Motor Inn: Loew's operates this motor hotel upon land owned by it at Eighth Avenue and 48th-49th Streets, New York City. The hotel opened for business on December 12, 1962 and contains 367 rooms, restaurant and cocktail lounge, roof swimming pool, on-premises parking and the facilities necessary for the operation of a motor hotel. Theatre Activities and Properties Loew's owns or has leasehold interests in 110 theatres in the United States and Canada. The theatres operated vary in size and include suburban theatres, drive-in theatres and large, deluxe "show- case" theatres. The majority of the theatres present the first showing of feature pictures in given localities. Loew's theatres exhibit feature motion pictures and, occasionally, accompanying short subjects which are licensed for exhibition by film distribution outlets in the United States and Canada, including, among the major distributors, Columbia, Buena Vista (Disney), M-G-M, Paramount, Twentieth Cen- tury-Fox, United Artists, Universal and Warner Brothers-Seven Arts. As of August 31, 1968, Loew's owned, leased or operated under management contract a total of 110 motion pictures theatres, classified as follows : wned in Fee Built on Part Fee and Part Leased Land Built on Leased Land eased Operated Under Management Contract otal Wholly Owned Subsidiaries .... 34* 5 7 54 1 101 Subsidiaries more than 50% but less than 100% owned ...... 5 - - 1 - - 6 Other Affiliates .............. 3 - - - - 3 42 5 7 55 1 110 * These theatres, some of which are also commercial properties, are subject to mortgage liens securing indebtedness aggregating approximately $14,700,000 at August 31, 1968. Four of the above theatres are leased to other operators. ~ ~. v ~ w 4:1- 13 °

The chart below shows the location of the theatre properties as of August 31, 1968 (figures in paren- theses indicate number of theatres in each state) : Location Number Number of Theatres Location of Theatres :lrizona ( 3 ) Phoenix 3 Calif ornia (26) Anaheim 1 Bakersfield 1 Beverly Hills 1 Buena Park 1 Covina 1 Chatsworth 1 Fullerton 1 Glendale 1 Granada Hills 1 Hollywood 2 Inglewood 2 Los Angeles 3 Oxnard 1 Pasadena 2 Redondo Beach 1 San Bernardino 2 Santa Monica 1 Stanton 1 West Covina 1 W estwood 1 Colorado (1) Denver 1 Connecticut (2) New Haven 1 Waterbury 1 Delaware (1) Wilmington 1 District of Columbia(2) Washington 2 Florida(8) Bay Harbor 1 Boynton Beach 1 Coral Gables 1 Fort Lauderdale 1 Miami Beach 1 Miami 1 St. Petersburg 1 West Palm Beach 1 Indiana(3) Evansville 2 Indianapolis 1 Louisiana (1l New Orleans 1 \Iaryland(1) Oxon Hill 1 Missouri(2) St. Louis 2 New Jersey(3) Jersey City 1 Newark 1 Parsippany-Troy Hills 1 New York (31) Bayshore 1 Buffalo 2 Rochester 1 Syracuse 1 i\Tew York City 24 New Rochelle 1 White Plains 1 Ohio(12) Akron 2 Cleveland 5 Columbus 3 Dayton 2 Rhode Island (1) Providence 1 Tennessee(3) Memphis 1 Nashville 2 Texas (2) Houston 2 Virginia(3) Fairfax 1 Norfolk 1 Richmond 1 Georgia (2) Canada(3) Atlanta 2 Toronto 3 On November 1, 1967 Loew's purchased the fee interest or leasehold interests in 26 of the theatres in California and the three theatres in Phoenix, Arizona. Loew's has operated the theatres since that date and has extensively renovated and refurbished some of them. Additional theatres are under agreement to be acquired or under construction for operation by Loew's in Tampa, Florida ; Warren, Ohio ; Natick, Massachusetts ; New York, New York ; Dallas, Texas ; East Brunswick, New Jersey; and Woodland Hills, California. Since August 31, 1968, Loew's acquired a theatre in San Francisco, California. The Natick and New York theatres are owned by Loew's and the balance are leased. Other theatre projects, as to which Loew's has conditional arrangements pending required court approvals, are in various stages of planning. 14 Oth( that and sharf Com effec• 1968 Subc merc Offe: appr, appr Loe,v appli value 1968 signi will I able servi- who inves such lesse: sales the s New See ` 53rd was J. C. Bank floor, Aver 1969. to rel renta intert merci to inc made loan ; f

s in paren- :mber heatres 2 1 1 1 > Other Interests Exchange Offer for Cosiz;nercial Credit Conipany Common Stock: In April, 1968, Loew's announced that it had acquired 1,000,700 shares of common stock of Commercial Credit Company ("Commercial"), and would make an Exchange Offer to the holders of common stock of Commercial to exchange their shares for Loew's 5% ~/'o Convertible Subordinated Debentures due 1993, convertible at any time into Common Stock of Loew's at $30.00 a share. A Registration Statement was thereafter filed which became effective on June 13, 1968. Loew's acquired through such Exchange Offer, which expired on June 28, 1968, 11,787 shares of Commercial for which it issued $530,400 principal amount of its 5/% Convertible Subordinated Debentures due 1993. Control Data Corporation ("Control Data") sold its assets to Com- mercial for stock, effective on or about August 15, 1968. Subsequent to the expiration of the Exchange Offer through November 15, 1968 Loew's sold Commercial stock and Control Data stock for a profit of approximately $28,500,000 before related taxes and expenses. At November 15, 1968, Loew's held approximately 5,300 shares of Control Data stock. Marketable Seciirities: In order to pursue di, ersified acquisition opportunities and for other purposes Loew's has maintained a significant cash position. In order to utilize this cash productively pending application to such purposes, Loew's has invested a portion of it in marketable securities. The market value of these securities was in excess of $48,000,000 (including Control Data stock) on August 31, 1968. Income from transactions in such portfolio and dividends on portfolio securities contributed significantly to the total income of Loew's in fiscal 1968. There can be no assurance that such income will be derived in the future. Loew's does not employ an investment adviser ; its transactions in market- able securities are under the direction of one of its employees who receives a fixed salary for such services. These services are performed under the supervision of the chief executive officer of Loew's, who devotes less than 10% of his time to such supervision, and under the general supervision of an investment committee of the Board of Directors which periodically receives reports of and reviews such portfolio transactions. Primary emphasis is placed on the possibility of capital appreciation and lesser importance is attached to achieving current income. Loew's has on occasion engaged in short sales, but Loew's had no short sales contracts on August 31, 1968. Westchester Foraon: Loew's has an 80ofo interest in a partnership which has been designated as the sponsor of the commercial portion of an Urban Renewal Project Plan by the City of `Vhite Plains, New York. The project has not been commenced and is subject to fulfillment of various conditions. See "Management-Certain Transactions . Tower 53: Loew's operates on leased land located on the northeast corner of Seventh Avenue and 53rd Street, New York Citt•. a 39-story combination commercial and apartment building. Construction was completed in September, 1967. The commercial portion consists of 8 stories completely rented to J. C. Penney Company, Inc. under a long-term lease and ground floor space leased to Chelsea National Bank. The residential portion contains 213 apartments, all of which were rented as of August 31, 1968. Tower 58: Loew's is constructing a 33-story apartment building, comprising 169 apartments, 4 floors of commercial space and an underground garage, located on 57th and 58th Streets, between Fifth Avenue and Avenue of the Americas in New York City. Construction is expected to be completed during 1969. Loew's has agreed to sell the leasehold interest nz this building for $5,000,000, with an obligation to repurchase such interest payable at the rate of (a) $400,000 per annum plus (b) 50ofo of the net annual rental income less the sum of $448,000, for a period of 40 years. 89th & Madison: On August 28, 1968 Loew's sold, at a price in excess of its investment its 50~fo intere: t in a partnership which is engaged in construction of a luxury apartment complex with cor.i- mercial space, located at 89th Street and Madison Avenue, New York City. The purchaser also agreed to indemnify a subsidiary of Loew's against any liability which may arise under a guaranty of completion niade by the subsidiary of Loew's and Loew's partner, jointly and severally, in connection with a building loan mortgage of $7,750,000 obtained by the partnership. 15 ~

Capitol Theatre Property: The land under the Capitol Theatre on Broadway in New York City, together with adjoining property owned by Loew's has been leased for an initial term of 43 years to a developer who is presently demolishing the theatre and buildings on the property and is erecting a new office building which will contain no less than 1,000,000 square feet. Concurrent with the lease, Loew's purchased the adjoining premises (which is a part of the leased premises) at the northwest corner of 50th Street and Broadway. Other Pi'operties: Loew's also operates four commercial office buildings located respectively in New York City ; Syracuse, New York ; Kansas City, Missouri ; and Los Angeles, California ; and owns approximately 6,700 acres of unimproved land in Brevard and Volusia Counties in Florida. Competition Loew's considers its hotels and tneatres to L)e leading establishments in the areas in which they are located in respect to desirability of location, size, facilities, physical condition and quality of service. The business of providing hotel accommodations and services is highly competitive. There is sub- stantial competition from other hotels, some of which are owned by local competitors and some of which are owned by international or nationwide chains. The business of motion picture exhibition is also highly competitive. Loew's is one of several theatre chains which are nationwide in scope. Loew's operates theatres in certain areas of the United States which are heavily saturated with the theatres of various national and local exhibitors. Conseouently, Loew's faces intense competition from locally signif;cant competitors. In addition to competition from other motion picture theatre operators, Loew's film exhibition business is confronted with other forms of competition in the entertainment field, including television. Employee Relations Loew's employed approximately 9,650 persons as of August 31, 1968. A substantial part of such personnel are represented by labor unions under separate contracts with many local unions which expire at varying times and are then severally renegotiated and renewed. Loew's considers its employee rela- tions satisfactory. The Company has amended the Retirement Plan for Employees of Metro-Goldwyn-Mayer ("M-G-M") which covered the employees of the Company and its subsidiaries prior to March 1, 1959. All "eligible employees", as therein defined, of the Company and its subsiuiaries are entitled to share in the benefits provided in the amended Plan. BUSINESS OF LOEW'S CONDUCTED THROUGH LORILLARD Products Cigarettes-Cigarettes represented approximately 90% of Lorillard's consolidated net sales in 1967. The principal filter cigarette brands of Lorillard are KENT, NEWPORT (menthol), TRUE and TRUE (menthol), OLD GOLD Filters and SPRING (menthol) and the principal non-filter cigarette brand is OLD GOLD Straights. In 1967 distribution of CENTURY 100's filter cigarettes was begun in a limited number of areas. Other Tobacco Products-Other tobacco products represented approximately 5ojo of consolidated net sales in 1967. Lorillard's more important smoking tobacco brands are BRIGGS, UNION LEADER, FRIENDS, INDIA HOUSE and BURGL'NDY. Its chewing tobacco brands are BEECH-NUT, BAGPIPE and HAVANA BLOSSOM. Lorillard's little cigar brands are BETWEEN THE ACTS, MADISON and filter-tipped OMEGA, and it also markets a small cigar brand, ERIK. Sub Con chus Stoc "poc natic Proc facto acqu an II of Lc of inl label. acqui Swee is opc five-c adde~ tion t• I and F were tured such : Comp A T and tb Lorilla *Sc Lc little ci share c O] tobaccc 16

Subsidiaries In February, 1965, a wholly-owned Delaware subsidiary of Lorillard, now known as Usen Products Company, acquired substantially all of the assets, business and goodwill of Usen Canning Co., a Massa- chusetts corporation, and assumed substantially all of its liabilities in exchange for shares of the Common Stock of Lorillard. For accounting purposes, the transaction was accounted for in accordance with the "pooling of interests" concept. Usen Products Company is a leading producer of canned cat food with a national distribution of its Tabby and 3 Little Kittens brands. In August, 1968, a subsidiary of Usen Products Company acquired three fishing vessels to supply raw material to its Louisiana cat food factory. In April, 1966, a wholly-owned Delaware subsidiary of Lorillard named Reed Candy Company acquired substantially all of the assets, business and goodwill as a going concern of Reed Candy Company, an Illinois corporation, and assumed certain of its liabilities in exchange for shares of the Common Stock of Lorillard. For accounting purposes, the transaction was accounted for in accordance with the "pooling of interests" concept. Reed Candy Company produces packaged hard candies and rolls under the REED'S label. In July, 1967, Golden Nugget Candy Company, a Delaware subsidiary of Lorillard (which had acquired for cash certain assets and the business and goodwill as a going concern of Golden Nugget Sweets, Ltd., a California corporation, in November, 1965) was merged into Reed Candy Company and is operated as a division thereof. The Golden Nugget Division, which until recently principally produced five-cent nougat candy bar7 with distribution of its B_a Hurrx and Loox bars in eleven Western states, has a(lded the five-cent and the ten-cent nougat candy bar SIR to its line and has increased its area of distribu- tion to 35 states. In September, 1968, substantially all the assets of Lorillard's wholly-owned subsidiary, Federal Tin and Paper Products, Inc., and the factory in Baltimore, Maryland, leased by Lorillard to such subsidiary were sold for cash approximately equivalent to the book value of such assets. Such subsidiary manufac- tured and sold to Lorillard and to others metal and paper packaging for a variety of products. In 1967 such subsidiary accounted for about 1°fo of consolidated net sales. Competition All of Lorillard's products are sold in highly competitive markets. '."he following table, which sets forth the total unit production of all cigarettes in the United States and the total unit sales of all cigarettes by Lorillard, indicates the relative position in the industry of Lorillard : Calendar Year Industry* (000) Company (000) Company to Industry 1963 ..................... 550,558,727 57,168,726 10.4qo 1964 ..................... 540,906,845 50,941,646 9.47fo 1965 ..................... 556.80r 053 51,211,701 9.2% 1966 ..................... 567.264.483 53,051,966 9.4% 1967 ..................... 576.182,539 57,566,575 10.070 * Source: Reports and bulletins of Commissioner of Internal Revenue. Lorillard for many years has occupied a leading position in the scrap chewing tobacco field. Lorillard's little cigar brands, bIADisoN, BETwEErr TaE ACTS, and filter-tipped OMEGA, accounted for a substantial share of the total little cigar market in 1967. On the basis of information currently available, Lorillard ranks fifth among the major producers of tobacco products in the country. 17

Advertising and Sales Promotion Lorillard's principal brands are advertised and promoted extensively. Advertising and sales promo- tion expenses, accordingly, have been substantial during the past years, and the policy of Lorillard is to continue substantial expenditures for these purposes. The advertising media used by Lorillard include television, radio, magazines, newspapers, outdoor advertising and point-of-sale display materials. In addition, Lorillard nationally distributes Gift Star coupons on its SPRING, OLD GOLD Filters, and OLD GOLD Straights cigarette brands. Sales promotion activities are carried on Uy Lorillard through salesmen, by distribution of samples, point-of-sale display advertising and personal contract with distributors, retailers and consumers. Lorillard's as well as the industry's sales of cigarettes declined following the publication in January 1964 of the report of the Advisory Committee to the Surgeon General, which purported to associate smoking with a number of diseases. (See "Statement of Consolidated Earnings" herein.) Pursuant to Federal legislation, effective January 1, 1966, packages of cigarettes are required to bear the following statement :"Caution : Cigarette Smoking May Be Hazardous To Your Health." The same legislation also provided that no statement relating to smolcing and health would be required in cigarette advertising, if the packages of such cigarettes were labled in conformity with its provisions. Such provision with respect to cigarette advertising will terminate, unless extended, on July 1, 1969. The Secretary of Health, Education and Welfare is directed by such legislation to transmit a report to Congress not later than July 1, 1967 and annually thereafter, concerning (A) current information on the health consequences of smoking and (B) such recommendations for legislation as he may deem appropriate. The Federal Trade Commission is also directed to submit a report to Congress at the same time concerning (A) the effectiveness of cigarette labeling, (B) current practices and methods of cigarette advertising and promotion and (C) such recommendations for legislation as it may deem appropriate. Such reports were submitted to Congress in 1967 and 1968 with recommendations for legislation. Included in such recom- mendations are legislation to ban or limit cigarette advertising on television and radio, to require a revised caution notice in all advertisements and on all cigarette packages reading "Warning : Cigarette Smoking is Dangerous to Health And May Cause Death From Cancer And Other Diseases", and to require a statement setting forth tar and nicotine content on packages and in all advertising. None of such recom- mendations has been enacted. The nine leading manufacturers of cigarettes in the United States, including Lorillard, voluntarily established a Cigarette Advertising Code, effective January 1, 1965, which imposed uniform standards for cigarette advertising for the member companies. Under the Code, no advertising may be used t:nless it has first been subnr" --d to an indel endent Code Administrator and determined by him to comply with the Code standards which relate primarily to such matters as health representations and advertisements directed toward persons under twenty-one years of age. On March 25, 1966, the Federal Trade Commission announced that a factual statement of the tar and nicotine content in cigarette smoke on cigarette labels and advertising would not violate its Cigarette Advertising Guides provided no col- lateral representation is made as to reduction or elimination of health hazards. As Lorillard believed that the Commission's policy as expressed in such announcement provided a greater opportunity to develop and market cigarettes low in tar and nicotine content for thos:e consumers who desire such products, Lorillard resigned from the Code. In so resigning, Lorillard stated that it still intended to adhere to the principles underlying the Code's limitations on advertising to youth. It is the intention of Lorillard to utilize data regarding tar and nicotine content in cigarette smoke ,o wherever appropriate in future advertising. v O- It is not possible to predict the effect of the foregoing developments on Lorillard's sales and earnings. EJ .p n- Distribution Methods Lorillard secures its products distribution through direct sales to jobbers who in turn service retail outlets, and through chain store organizations and vending machines operators who purchase their ,4 I c I S si 11' S m P H A co P. Lc brr ci~ frc ott otl pre To in S and bur for its Nei van tob< n in t acrf trol end froi ave to a tob pro inv 18

promo- -d is to autdoor ft Star motion display anuary sociate :o bear ° same ;arette Such The igress iealth . The rning ; and were ,ised king re a om- rily rds : sed to nd i requirements directly. Lorillard tobacco products aic stocked in public warehouses throughout the country to provide for rapid distribution to customers. International Operations About 8ofo of Lorillard's total unit sales of cigaretts in 1967 were manufactured in the United States and exported. Such exports sales were made directly by Lorillard and through two wholly-owned subsidiaries, P. Lorillard Pan American, Inc., a Western Hemisphere Trade Corporation which services marketing areas in Central and South America and Canada, and P. Lorillard International S. A., Zug, Switzerland, which primarily services the marketing areas of Europe and Africa. License agreements are in effect with thirteen cigarette manufacturers in foreign countries for the manufacture and sale of Lorillard's products on a royalty basis. P. Lorillard Limited, owned jointly by P. Lorillard International S. A. and the stockholders of Lorillard's former licensee and manufacturer in Hong Kong, manufactures certain of Lorillard's brands and other cigarettes for markets in Southeast Asia and the Middle East. In 1968 P. Lorillard (Asia) Limited, a subsidiary of P. Lorillard Limited, commenced the manufacture and sale of OMEGA little cigars in Thailand under license from Lorillard. P. Lorillard s.a.r.l., a Luxembourg corporation jointly owned by P. Lorillard International S. A. and Lorillard's former licensee and manufacturer in Luxembourg, also manufactures certain of Lorillard's brands for markets in the Benelux countries, France, Italy and parts of Africa. In 1967, the number of cigarettes manufactured abroad by such affiliates and by other licensees exceeded the export unit sales from the United States. In several countries ownership of some of Lorillard's brands is claimed by others and in several other countries prior registrations of the name "KENT", or a variation thereof, are claimed by others. About 11% of Lorillard's net earnings in 1967 were attributable to exports, foreign licensees and other foreign operations. There are no restrictions as to repatriation of Lorillard's foreign earnings at present and, to Lorillard's knowledge, none is anticipated. Tobacco and Tobacco Prices The two main classes of tobacco grown in the United States are flue-cured tobacco, grown mostly in Virginia, North Carolina, South Carolina, Georgia and Florida; and burley, grown mostly in Kentucky and Tennessee. Lorillard purchases flue-cured tohac-) primarily for use in cigarettes and purchases burley tobacco for use in cigarettes and smoking tobacco. Lorillard also purchases Maryland tobacco for use in cigarettes and cigars. Most of the tobacco of these classes used by Lorillard is purchased by its own buyers and commission buyers at tobacco auctions. Lorillard also purchases various types of Near Eastern tobacco, most of which is grown in Turkey and Greece. In addition, Lorillard uses seed leaf tobacco, which is grown mostly in Wisconsin, Ohio, Pennsyl- vania and Connecticut, in the maufacture of various brands of chewing tobacco and cigars. These tobaccos are largely purchased directly from the growers by Lorillard representatives. Due to varying size and quality of the annual crops and other economic factors, tobacco prices have in the past been subject to wide fluctuations. Among those economic factors are government control of acreage-poundage in the flue-cured producing areas and acreage control in the burley areas. These con- trols together with support prices substantially affect the market prices of tobacco. In the five years ended 1967, the national average auction price per pound for all grades of flue-cured tobacco varied from a low of 58.0 cents in 1963 to a high of 66.9 cents in 1966. Over the same period, the national average auction price per pound for all grades of burley leaf increased from a low of 59.2 cents in 1963 to a high of 71.9 cents in 1967. The price paid by Lorillard increased with such trend. In addition to purchases at auction warehouses, Lorillard purchased substantial quantities of aged tobacco from various sources, principally cooperatives financed under the Commodity Credit Corporation program, to supplement tobacco inventories during those years. Lorillard believes that its current leaf inventories are adequately balanced for its present production requirements. 19

In view of the fact that the process of aging tobacco normally requires approximately two years, Lorillard at all times has on hand large quantities of leaf tobacco. In accordance with generally recog- nized trade practice, Lorillard averages the cost of tobacco in inventory and charges to the cost of cur- rent production the tobacco used from inventory at the then average cost. Accordingly, increases or decreases in prices paid for tobacco currently purchased are reflected only partly in current production costs. Borrowings The cash requirements of Lorillard are usually at a maximum between September and March, because of heavy leaf buying during this period, and at a mini.num 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 1967 short-term borrowings ranged between a minimum and maximum of $5,000,000 and $54,300,000, respectively. Such short-term borrowings on September 16, 1968 were $38,050,000. Sales Prices The list prices per thousand of Lorillard's principal cigarette brands are as follows : 100 mm. filter, $9.95 ; and filter and non-filter king-size, crush-proof box and regular size, $9.45. Such figures reflect a price increase, announced on June 2, 1967, of 75¢ per thousand for 100 mm. filter cigarettes and 250 per thousand for filter and non-filter king-size and crush-proof box, filter regular size and non-filter regular size cigarettes and a price increase effective November 2, 1968 of 200 per thousand for non-filter regular size cigarettes. 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 September 15, 1968, excise taxes on cigarettes, which are levied upon and paid by the distributors, were in effect in forty-nine States and the District of Columbia. Such taxes, many of which have been recently increased, range from 2% cents to 15 cents per package of twenty cigarettes. In addition, many municipal taxing authorities impose taxes on cigarettes. Employees On September 15, 1968, Lorillard and it~ subsidiaries had approximately 7,000 employees, of whom 4,300 were hourly rated production and service employees covered by collective bargaining agreements. The remaining 2,700 employees were salaried, hourly, or sales employees not covered by collective bar- gaining agreements. For more than the last five years Lorillard has not experienced a major inter- ruption in operations involving any labor disputes. Collective bargaining agreements for a term of 3 years and covering approximately 4,000 production employees represented by the Tobacco Workers' International Union of Lorillard's plants in Greensboro, North Carolina, Louisville and Lexington, Kentucky, and Danville, Virginia, were entered into in the Spring of 1968. Included in the settlements were : hourly rate increases, wage adjustments for certain jobs, improvements in employee benefits coverage and increased pensions. The projected increased costs of these contractual settlements will approximate $2,718,000 for 1968, an additional $882,000 in 1969, and an additional $987,000 in 1970. Collective bargaining agreements covering approximately 500 other employees of Lorillard and of its subsidiaries are scheduled to expire at various dates to February, 1970. Pursuant to a commitment made in the course of collective bargaining negotiations in 1965, Lorillard has a deferred Profit Sharing Plan which became effective on January 1, 1968. Contributions under such plan, which are based upon annual earnings, will be made to a trust fund for the benefit of all regular and full-time employees of Lorillard and its tobacco subsidiaries, including directors and officers, who have completed 36 months of continuous service (and to certain seasonal employees) in 20 prc ter: eff: par gat is i Loi inst of t Prc the prol by1 and Lou and mat sq. as w tuck of al acre plan Com in a The Calif Soutl Incor ceedi Act a tion z of tha enter ] conse upon sition I

wo years, fly recog- st of cur- reases or roduction ,because ; season. urchases mum of 58 were 1. filter, figures ;arettes :ze and ousand $4 per )utors, e been dition, .vhom nents. ! bar- inter- proportion to their wages and salaries for the year. Distributions from the trust will be made after termination of employment except discharges for cause as defined in such plan. If such plan had been in effect in 1967, approximately 4,400 employees, including nineteen directors and officers, would have participated therein and payments by Lorillard for 1967 to the trust under such plan would have aggre- gated approximately $2,000,000 (deductible for Federal income tax purposes). Lorillard has separate non-contributory retirement plans for hourly-rated employees. (Reference is made to note 7 to the Lorillard Financial Statements for further information concerning such plans.) Lorillard also has a discretionary bonus program for members of its sales organization and group life insurance, disability and major medical insurance plans. Similar plans are also in effect for employees of the subsidiary companies. Property The properties of Lorillard are employed generally in the processing and storing of tobacco and in the manufacture of Lorillard'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 Lorillard 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. Lorillard 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 of approximately 700,000 sq. ft. on a plot of approxi- mately eighty acres. The Louisville plant, consists of multi-storied buildings totaling about 800,000 sq. ft. of floor space on a plot of about twenty-four acres, is utilized for the manufacture of cigarettes, as well as little cigars, chewing tobacco and smoking tobacco. Lorillard also has facilities for receiving, processing and storing leaf tobacco at Lexington, Ken- tucky; Danville, Virginia; and Lancaster, Pennylvania. Construction of a research facility to consist of about 70,000 sq. ft. at the Greensboro plant at an estimated cost of $3,000,000, was recently begun. Usen Products Company has a plant and facilities of approximately 103,600 sq. ft. on a sixty-two acre plot in Woburn, Massachusetts and in 1966 it commenced operations in a processing and canning plant of approximately 57,500 sq. ft. on a five-acre plot in Golden Meadow, Louisiana. Reed Candy Company has plant space of about 70,000 sq. ft. ir. Chicago, Illinois and has recently begun operations in a 72,0)0 sq. ft. manufacturing facility on approximately fifty-three acres at Campbellsville, Kentucky. The Golden Nugget Division of Reed Candy Company leases a 10,000 sq. ft. plant in San Francisco, California. Lorillard leases executive offices at 200 East 42nd Street, New York, New York 10017. PENDING LEGAL PROCEEDINGS Consent Judgznent. The Consent Judgment entered by the United States District Court for the Southern District of New York on Feburary 6, 1952, in The United States of America v. Loew's Incor-5orated, et al., represented, as to the M-G-M and Loew's enterprises, the culmination of pro- ceedings instituted in 1938 by the United States Department of Justice under Section 4 of the Sherman Act against the major companies in the United States engaged in the integrated film production, distribu- tion and exhibition businesses. Under the Consent Judgment the District Court has retained jurisdiction of the cause in order to ensure and enforce compliance with its numerous substantive provisions and to entertain motions thereto requesting construction or modification of such provisions. L oew's was required by the terms of the Consent Judgment to file with the District Court its consent to be bound by the terms of certain provisions. Loew's may acquire additional theatres only upon a showing to the court that the acquisition will not unduly restrain competition, unless such acqui- sitions are replacements as defined in the Consent Judgment. 21 f

I Other Antitrust Litigation. Three civil suits for damages, injunctive relief or both for alleged viola- tions of Federal antitrust laws were pending on August 31, 1968, against Loew's and other exhibitors, producers and distributors of motion pictures, in each of which actions either Loew's or one of its theatre subsidiaries was named a defendant or in connection with which Loew's will be liable for a portion of any damages awarded, pursuant to a Reorganization Agreement with M-G-M entered into as a result of the 1952 Consent Judgment. 117anagement is of the opinion that the outcome of these suits will not adversely affect the business or assets of Loew's. The only one of these suits wherein the amount sought as damages from all defendants exceeds 15~f'o of the current assets of Loew's and its consolidated sub- sidiaries as of August 31, 1968 is Broadway and 96th Street Realty Company, et al., v. Loew's Incor•- porated, et al., commenced in the United States District Court for the Southern District of New York on or about June 1, 1953. Although neither the Company nor any of its subsidiaries is named as a defendant in this action, Loew's Incorporated (now M-G-M) is sued as an exhibitor as well as a producer and distributor, and consequently the Company will be liable, pursuant to the Reorganiza- tion Agreement, for a portion of costs, counsel fees and other expenses of M-G-M and of any damages awarded against M-G-M. Plaintiffs seek an injunction and treble damages amounting to $14,382,996. Messrs. Davis Polk & Wardwell, counsel for M-G-M, have expressed the opinion that M-G-M has valid defenses to this litigation which should be established successfully in court. Other Litigation. Except as noted above, Loew's is involved in only two legal proceedings which are not routine in nature. An action was commenced on October 20, 1967 in the Supreme Court of the State of New York, Count}, of "New York by Ruth Jody, a shareholder of Loew's, naming Loew's as a nominal defendant and each of its directors as defendants. Onh- the Company and Messrs. Laurence A. Tisch, Preston R. Tisch and Charles B. Benenson have been served with process. Plaintiff seeks in said action : (a) to impress a trust for the benefit of Loew's upon certain real property located in Chicago, Illinois, purchased by Laurence A. Tisch, Preston R. Tisch and Charles B. Benenson; (b) an accounting and damages (from the directors) ; and (c) a judgment directing Laurence A. Tisch, Preston R. Tisch and Charles B. Benenson to offer Loew's an opportunity to purchase the real property upon the terms and conditions under which they acquired it. Messrs. Laurence A. Tisch, Preston R. Tisch and Charles B. Benenson have interposed answers denying the material allegations of the complaint and asserting various affirmative defenses. An action was commenced on May 1, 1968, in the United States District Court for the Northern District of California, by the lessor of the Mark Hopkins Hotel, claiming that the option granted to Loew's in the lease of the Mark Hopkins Hotel to extend the term of the lease from 1989 to 2062 was included in the Agreement under a mistake of fact. The lessor does not seek monetary damages. An answer has been interposed by Loew's denying the material allegations of the complaint. Messrs. Goldstein, Barceloux & Goldstein, counsel for Loew's in the litigation, have expressed the opinion that Loew's has meritorious defenses to this litigation which should be established successfully in court. Lorillard. The following summarizes material legal proceedings to which Lorillard is a party and for which its insurance carriers or other parties have not assumed full responsibility. 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 o f America v. The American Tobacco Company and others, under the Sherman Act, each of fourteen corporations, including Lorillard, was prohibited from taking specified action, including (1) making transfers of its property to any other of those corporations, (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 particular brand. Lorillard is a defendant, along with one or more other tobacco manufacturers, in three cases which involve claims that the respective plaintiff or plaintiffs' decedents contracted cancer or other involvement of the lung as a result of the use of tobacco products. Damages which range from $9,999 to $1,208,000 are alleged. None of stich cases has yet been tried. D he Se. 19( he of cor. T_o Cei Ex 22

viola- bitors MANAGEMENT , of its Directors and Executive Officers le for The directors and executive officers are as follows : d into Name Office Date First Elected Director ts will ought Charles B. Benenson ............ Director 1960 d sub- J. Edgar Bennett* .............. Director ; President of Lorillard 1968 Incor- ................ James Bruce Director 1960 New New named ell as aniza- mages .... Ernest Emerling ................ Richard C. Godfrey .............. Lewis Gruber ................... Vice President Vice President Director 960 I 2,996. Herbert A. Hofmann ............ Director, Member of the Execu- valid tive Committee and Senior Vice President 1959 h are State William A. Jordan* .............. Director ; Executive Vice President, Sales, of Lorillard 1968 minal Tisch, Peter G. Levathes* .............. Director ; Vice President, Advertising, of Lorillard 1968 ction : John F. Murphy ................ Director 1957 inois, ; and i and Bernard Myerson ............... Director and Executive Vice President 1963 s and es B. rious Lester Pollack .................. Arthur J. Raporte ............... Simon H. Rifkind ............... Secretary and General Counsel Vice President Director 959 thern :)ew's ed in Jacob Stillman .................. Laurence A. Tisch .............. Treasurer Director, Chairman of the Board, President and Member of the Executive Committee 959 has ;loux rious Preston R. Tisch ................ Director and Chairman of the Executive Committee 1960 Manuel Yellen* ................. Director and Vice Chairman of the Board ; Chairman of the Board and Chief Executive Officer of Lorillard 968 s . * Proposed to be elected as a Director. Mr. Godfrey was elected a Vice President of Loew's on May 12, 1966. Since prior to April 30, 1963, he was employed as an executive by International Basic Economy Corporation. Mr. Pollack was elected Secretary and General Counsel of the Company on November 10, 1965. From July 1 to November 10, 1965, he was Vice President and General Counsel of Fox Eastern Theatres Corporation and prior thereto he was a partner of the firm of Booth, Lipton and Lipton. Esqs., of New York City. With the exception of Messrs. Godfrey and Pollack, all the executive officers of Loew's have been engaged actively and continuously in the business of Loew's, its predecessors or its subsidiaries for more than the past five years. Each of Mr. Bennett, Mr. Jordan and Mr. Yellen has been engaged actively in the business of Lorillard for more than five years. Mr. Levathes, before joining Lorillard in 1965, served Twentieth Century-Fox Film Corporation in various capacities. including Vice President, and later served as Executive Vice President of the advertising firm of Clyne-Maxson, Inc. 23

Remuneration of Directors and Officers With respect to each director and each of the three highest paid officers of Loew's whose aggregate remuneration exceeded $30,000, and all directors and officers of Loew's as a group, there is set forth below information, on an acer,!al basis, as to (i) the aggregate direct remuneration paid by Loew's during the fiscal year ended August 31, 1968, for services in all capacities, and (ii) the total annual benefits proposed to be paid pursuant to Loew's Retirement Plan in the event of retirement at normal retirement date. ame of Individual or Identity of Group irect Aggregate Remuneration ,, Annual Benefits Estimated to be Payable Under Retirement Plan From Normal Retirement Date(1) LAURENCE A. TISCH, Chairman of the Board, President, Director ....... $104,000(2) $ 22,176 PRESTON R. TISCH, Chairman of the Executive Committee, Director .... $104,000(3) $ 25,000 HERBERT A. HOPMANN, Senior Vice President, Director .................. $ 82,500(4) $ 14,520 BERNARD MYERSON, Executive Vice President, Director .............. $ 68,700(5) - ARTHUR M. TOLCHIN, Assistant to the President, Director .............. $ 69,231(6) $ 18,154 All directors and officers as a group, including the foregoing (15 persons) ........................ $642,269 $117,595 (1) The Loew's Employees Retirement Plan is a plan under which payments are made on an actuarial basis which provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service. Directors who are also employees of Loew's are eligible to participate in the Plan. (2) As of February 28, 1968, the employment contract of Mr. Laurence A. Tisch was extended to February 28, 1971 and modified to provide that he will be paid $?,500 per week during his employment. Commencing with the termination of his active employment, he will be paid $500 per week for a period equivalent to the number of weeks elapsed between May 2, 1960, and the date of termination of his active employment, provided that after such termination he will render advisory services, and will not be engaged in any business which is in direct or substantial competition with the business of Loew's except service to certain specified corporations in which he had a stock interest on May 2, 1960. During the fiscal year ended August 31, 1968, Loew's accrued $26,000 for the deferred compensation. (3) As of February 28, 1968 the employment contract of Mr. Preston R. Tisch was extended to February 28, 1971 and modified to provide that he will be paid $2,500 per week during his employment Commencing with the termination of his active emplovment, he will be paid $500 per week for a period equivalent to the number of weeks elapsed between March 1, 1965, and the date of such te:..iination. During the fiscal year ended August 31, 1968, Loew's accrued $26,000 for ;ie above. (4) On February 28, 1968 the employment contract of Mr. Hofmann was extended to February 28, 1971 and modified to provide that he will be paid $90,000 per annum during his employment. Commencing with the termination of his active employment, he will be paid $250 per week for a period equivalent to the number of weeks elapsed between March 1, 1965, and the date of such termination. During the fiscal year ended August 31, 1968, Loew's accrued $13,000 for the above. (5) As of February 29, 1968 the employment contract of Mr. Myerson was extended to February 28, 1973, and modified to provide that he will be paid $75,000 per annum during his employment and, commencing with the termination of his active employment, he will be paid $192.31 for 156 weeks and $288.46 per week for a period equivalent to the number of weeks elapsed between March 1, 1968 and the date of such termination. During the fiscal year ended August 31, 1968, Loew's accrued $12,500 for the above. (6) Mr. Tolchin resigned as Assistant to the President and Director of Loew's, effective August 2, 1968. A termi- nation agreement dated August 2, 1968 confirms Loew's previous obligation to pay Mr. Tolchin or his estate, deferred compensation of $373,602; $23,602 (not included in Direct Aggregate Remuneration above) on August 5, 1968 and the sum of $50,000 on each of January 15, 1969, 1970, 1971, 1972, 1973, 1974 and 1975. (7) The total amount accrued under employment agreements providing for payment after termination of employment for all directors and officers as a group, including those named above, aggregated $97,500 during the fiscal year ended August 31, 1968. Mr. Benenson entered into a contract with Loew's on May 1, 1962, whereby he is to render services as a real estate consultant for 10 years and receives $5,000 per annum. The agreement recognizes Mr. Benenson will continue to have substantial real estate interests, both for his own account and for the account of others, and that any new real estate interests which he may find need not be offered by him 24

ggregate set forth s during benefits tirement s s which service. 28, 1971 iination ~ )etween render usiness : -ing the ~ '8, 1971 • unation ; etween ; :R20 nnn i i ~ to Loew's, but may be reserved by him for his own purposes. In addition, Mr. Benenson and Loew's entered into an agreement pursuant to which Loew's purchased life insurance policies upon Mr. Benenson's life for which Loew's is obligated to pay a portion of the premiums approximately equal to the cash sur- render value of the policies. Loew's is the owner of the policies and is the beneficiary thereunder to the extent of the portion of the premiums paid by it and Mr. Benenson is entitled to appoint the beneficiaries who will receive the remainder. Loew's share of the premiums for the fiscal year ended August 31, 1968, was $25,986. The firm of Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison, of which Mr. Rifkind is a mem- ber, rendered legal services to Loew's during the fiscal year ended August 31, 1968, for which the sum of $183,046 was accrued for fees and expenses. Remuneration of Directors and Officers of Lorillard to Become Directors of Loew's The following table sets forth all direct remuneration paid by Lorillard and its subsidiaries to the persons named for the fiscal year ended December 31, 1967: ame of Current N Capacity in which incentive individual remuneration was received Salary compensation(1) J. Edgar Bennett ........ President $65,000 $57,632 William A. Jordan ...... Executive Vice Preseident, Sales 50,000 49,267 Peter G. Levathes ....... Vice President, Advertising 50,000 50,000 Manuel Yellen .......... Chairman of the Boarc'. and Chief Executive Officer 75,000 54,815 (1) Incentive compensation is paid under Article XII of the By-Laws of Lorillard which provides for such payment to officers and key personnei in an amount equal to stated percentages of net operating income (ranging from 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 five Vice Presidents and not in excess of 4% each to other officers and key personnel. The Agreement of Merger provides that the By-Laws of Lorillard shall continue in force and that Article XII shall not be altered, amended or repealed and Loew's covenants and agrees, for the benefit of the employees of Lorillard presently entitled to participate in the incentive compensation plan, that it will cause such Article not to be altered. amended or repealed, during a period of five years after the effectiveness of the merger, unless provision shall be made for such employees to receive in lieu of the benefits thereunder alternate benefits of value not less than those provided by such Article. (2) Lorillard has an agreement which, as renewed, terminates on November 30, 1969, with Mr. Gruber, who retired tovember 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 and the payment of $2,512 a month. The foregoing table reflects all current awards for 1967 to the named officers and directors under 1.orillard's incentive compensation plan. Under such plan, incentive compensation is paid to key employees currently and as contingent awards. Under an amendment to the plan approved by the stock- holders. contingent awards of incentive compensation for 1964. 1965 and 1966 were made contingently payable in three equal instalments, commencing with the second year following the year for which the awards Nvere 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 preju- dicial to l..orillard are complied with. Contingent awards for 1967 to the directors and officers referred to in the foregoing table are payable in the following annual instalments in each of the years 1969, 1970 and 1971, if earned out : J. E. Bennet.. $36,136; W. A. Jordan, $25,935 ; P. G. Levathes, $25,935: and NA. Yellen, $46,004. Under an amendment approved by stockholders on April 9, 1968, all or part of such contingent awards may instead be payable (pursuant to statements of preference of the participants) over a ten year period following termination of employment. 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 officers and directors 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: J. E. Bennett, $4,682; W. A. Jordan, $1,835 ($388) ; and M. Yellen, $4,682. 25

All the remuneration set forth was received by, or is contingently payable to, the persons named in their capacities as officers or employees of Lorillard. Under the Employees' Retirement Plan of Lorillard, upon retirement, Messrs. Bennett, Jordan and Yellen will each receive total annual benefits of $50,000 and Mr. Levathes will receive annual benefits of $17,673 assuming his retirement at age 65 at his current level of compensation. Certain Transactions Loew's on March 5, 1968, entered into an agreement to direct, supervise and manage the Traymore Hotel, located in Atlantic City, New Jersey, owned by Tisch Hotels, Inc. The Board of Directors of Loew's in authorizing the agreement adopted the recommendation of Laventhol, Krekstein, Horwath & Horwath, independent certified public accountants who were retained by the Board to recommend a fair and reasonable compensation to Loew's for its management services. See "Management-Principal Shareholders" and "Business of Loew's-Hotel Activities and Properties." During the first half of 1966, Mr. Charles B. Benenson, a director of Loew's, who also renders services to the Company as a real estate consultant (see "Management-Remuneration of Directors and Officers"), invited Loew's to participate in the sponsorship of the commercial portion of an Urban Renewal Project planned by the City of White Plains, New York. The project contemplates the redevel- opment by the sponsor of approximately 20 acres of land in downtown White Plains, including the con- struction of approximately 10 office buildings, with parking, promenades, shops and plaza. A subsidiary of Loew's entered into an agreement with Mr. Benenson on October 19, 1966 to form a Limited Partner- ship to be known as Westchester Forum Associates. The subsidiary is the General Partner and Mr. Benenson is a Limited Partner. The funds required by the General Partner will be supplied by Loew's. Income and losses, if any, of the Partnership will be shared in proportion to each partner's contribution to the capital of the Partnership, except that Mr. Benenson as Limited Partner shall not be liable for any losses in excess of his contribution to the capital of the Partnership. Principal Shareholders The following table shows, as of September 15, 1968, the persons owning of record or known by Loew's to own beneficially more than 10ofo of the Common Stock of Loew's and the beneficial ownership of such shares by all directors and officers as a group : Approx. Type of Amount % of Name and Address Title of Class Ownership Owned Class Laurence A. Tisch 126 Birchall Drive Scarsdale, N. Y. and Common Stock Beneficial* 1,536,750 32.23% Preston R. Tisch 22 Hampton Road Scarsdale, N. Y. Directors and officers of Loew's as a group (including the above) Common Stock Beneficial 1,607,925 33.71% * Said shares are owned directly or indirectly by Tisch Hotels, Inc. Each of the Messrs. Tisch owns 50% of the Common Stock of Tisch Hotels, Inc. Tisch Hotels, Inc. and the Messrs. Tisch may be deemed to be parents of Loew's within the meaning of the Securities Act of 1933. Warrants OPTIONS TO PURCHASE COMMON STOCK As of November 29, 1968, there were outstanding warrants to purchase 6,477,357 shares of Common Stock of Loew's. The warrants are issued under the ternis of a Warrant Agreement dated as of November 29, 1968 between Loew's and The Chase Manhattan Bank (National Association), as Warrant Agent. The warrants are in registered form only. 26 Pisr Loew's t the next Debentu by him at the cl Ad j the nun includin: subdivis: distrib•it in the b; No increase Fra upon et holding Loew's business Stock 0 Lo. Key Err holders purchas certain t either a granted Th+ and emF of the sl or emplc tee of tl employe whom o grants, under tt events z Plan wi one emF at whic granted Ar grant. t employt exercise which e Ac event oo the sha

amed in 3an and aefits of aymore :tors of wath & i a fair rincipal ,ervices cers"), enewal edevel- :e con- sidiary Lrtner- 3 Mr. oew's. )ution !e for n by •ship Purchase Price-Each warrant entitles the holder thereof to purchase one share of Common Stock of Loew's upon the exercise thereof at a price of $35 per share for the first four years, $37.50 per share for the next four years and $40 per share for the final four years. The principal amount of any of the Debentures (in amounts of $100 or integral multiples thereof) held by a warrant holder may be applied by him in payment of the purchase price upon the exercise of said warrant. The warrants will expire at the close of business on November 29, 1980. Adjustments to Purchase Price and Nugnber of Shares of Common Stock-The purchase price and the number of shares of Common Stock purchasable are subject to adjustment in certain events, including the following : payment of dividends or distribution in shares of Common Stock of the Company, subdivision or combination of the outstanding shares of Common Stock, issuance of rights or warrants. distribution of evidences of indebtedness or assets (excluding any cash dividends out of earnings retained in the business) or subscription rights. No adjustment in the purchase price is required unless such adjustment would require an increase or decrease of at least 1 fo in such price. Fractional Warrants and Shares-Loew's is not required to issue fractional shares of Common Stock upon exercise of warrants. As to any final fraction of a share of Common Stock which any person holding one or more warrant certificates, the rights under which are exercised in the same transaction, Loew's is required to pay a cash adjustment therefor based upon the value of the fraction on the business clay which next precedes the day of exercise. Stock Options Loew's Key Employees' Qualified Stock Option Plan-In September, 1968, Loew's adopted a Key Employees' Qualified Stock Option Plan (the "Loew's Plan"), which was approved by the share- holders of the Company on November 26, 1968. The Loew's Plan authorizes the granting of options to purchase a total of 808,905 shares of Common Stock of the Company, subject to adjustment in the event of certain changes in the shares of the Company. The shares to be optioned are to be made available from either authorized but iulissued shares or shares issued and reacquired by the Company. Options may be granted under the Loe«'s Plan up to September 27, 1978. The Loew's Plan provides that Key Employees of the Company and its subsidiaries, including officers and employees who are directors of the Company, are eligible to receive options. Holders of 5% or more of the shares of Common Stock of the Company and members of the Board of Directors who are not officers or employees of the Company are not eligible. The Loew's Plan is administered by a Stock Option Commit- tee of the Board of Directors appointed by the Board of Directors. The Committee, or in the case of employees who are members of the Committee, the Board of Directors, will determine the employees to whom options will be granted, the number of shares to be optioned to each employee, the dates of the option grants, the option price and certain other terms and conditions governing the option. An option granted under the Loew's Plan will be exercisable after the expiration of such period or the happening of such events as the Committee (or the Board of Directors) may determine. There is no limitation in the Loew's Plan with respect to the number of shares available under the Loew's Plan which may be optioned to any one employee or group of employees. Except for options substituted for Lorillard options, the option price at which shares may be purchased shall be the fair market value of the shares on the date the option is granted. The option price must be paid in full at the time of exercise of an option. Any option granted under the Loew's Plan must expire not later than five years from the date of its grant. Options will not be transferable, except by will or by the laws or descent and distribution. If employment with the Company is terminated for any reason, provision is made in the Loew's Plan for the exercise of an option under certain circumstances within specified periods. Shares subject to an option which expires or is terminated will again be available for option under the Loew's Plan. Adjustments may be made in the number, character and price of shares covered by the options in the event of a corporate reorganization, recapitalization, stock split or stock dividend or other event affecting the shares of Common Stock of the Company. 27

The Board of Directors may alter, suspend or discontinue the Loew's Plan. However, the Board may not, without shareholder approval, increase the number of shares subject to options, or decrease the option price, except as specified in the preceding paragraph. All options to be granted under the Loew's Plan are intended to be "qualified stock options" under Section 422 of the Internal Revenue Code, as amended. For the Section to be applicable, each employee, except in the case of death, must hold any stock acquired upon the exercise of an option for three years from the date the stock is transferred to him and must be in the employ of the Company or a subsidiary at all times from the date of the grant of an option until three months prior to its exercise. If the conditions of Section 422 are met, an employee will not realize taxable income upon the exercise of an option ; any difference between the option price and the amount received on a subsequent sale of the stock would be treated as long-term capital gain or loss; and the Company will not be allowed an income tax deduction in connection with the granting or exercise of an opt ion. Except for the options granted in substitution for options to purchase shares of Common Stock of Lorillard, no qualified options have, as of November 29, 1968 been granted under the Loew's Plan. Restricted Stock Option Plan-In October, 1957 Lorillard adopted a Restricted Stock Option Plan (the "1957 Plan") which provided for the granting to key employees of Lorillard, 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 Lorillard. The 1957 Plan expired by its terms on November 1, 1967 and no further options can be granted thereunder. The 1957 Plan specifies a maxinntm term for options granted thereunder of ten years f: om the date of grant and all outstanding options are fc. a Lerm of ten years. Each outstanding option agreement contains a provision under which the employee agrees to remain in the employ of Lorillard 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. As of November 15, 1968, 27 key employees, including 11 officers and directors_ of Lorillard held options granted on June 20, 1962 to purchase at $43.50 per share an aggregate of 27,800 shares of Common Stock of Lorillard. Such option price was not less than 95% of the fair market value of the Common Stock at the time the options were granted. Included in such total were options for a total of 14,300 shares to persons who were directors or officers, including options held by the following : Mr. Bennett 3,000 shares; and Mr. Jordan 1,000 shares. On November 29, 1968, the effective date of the Loew's-Lorillard Merger, options to purchase shares of Common Stock of Loew's were substituted for these options to purchase shares of Common Stock of Lorillard. The number of such substitute options was determined by dividing (a) the product of the market price of the Lorillard Common Stock on November 29, 1968 multiplied by the number of shares of Lorillard Common Stock previously covered by such stock options, by (b) one-third of the market price of the Loew's Common Stock on November 29, 1968 (without giving effect to the three-for-one stock split which became effective on November 27, 1968). Stock Purchase, Option and Incentive Plan-In April, 1963, Lorillard adopted a Stock Purchase, Option and Incentive Plan (the 1963 Plan) under which its Common Stock could be sold through stock purchase or subscription arrangements or through stock options to key employees, including officers, of Lorillard. 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 November 15, 1968, 41 key employees, including 16 officers and directors, held options under the 1963 Plan to purchase an aggregate of 77,400 shares of Common Stock of Lorillard. Of these, options for 26,200 shares were granted on July 31, 1963 for a period of ten years at the price of $44.75 per share, and options for 51,200 shares were granted on December 1, 1965, 28 I

Board may lecrease the ions" under h employee, : }-ears from idiary at all )nditions of )ption ; any k would be '.eduction in -n Stock of v's Plan. -ck Option ng officers, to acquire ~67 and no n the date agreement Dr at least •ears after a sale or e Code of llard held shares of ; ue of the i a total of ~ •mg: Mr. ~ ; purchase i Common I ~ i ~ ~ I I I for a period of five years at the price of $45 per share. In each case the option price was not less than 100oJo of the fair market value of the Common Stock at the time the option was granted. Included in such options granted in 1963 were options for a total of 14,400 shares to persons who were directors or officers, including options held by the following: Mr. Bennett 3,000 shares; and Mr. Jordan 2,000 shares. Included in such options granted in 1965 were options for a total of 45,600 shares to persons who w ere directors or officers, including options held by the following : Mr. Bennett 7,500 shares ; Mr. Jordan 5,000 shares; Mr. Levathes 5,000 shares; and Mr. Yellen 10,000 shares. On November 29, 1968, the effective date of the Loew's-Lorillard Merger, options to purchase shares of Common Stock of Loew's were substituted for these options to purchase shares of Common Stock of Lorillard. The number of such substitute options was determined by dividing (a) the product of the market price of the Lorillard Common Stock on November 29, 1968 multiplied by the number of shares of Lorillard Common Stock previously covered by such stock options, by (b) one-third of the market price of the Loew's Common Stock on November 29, 1968 (without giving effect to the three-for-one stock split which became effective on November 27, 1968). 1967 Stock O ption Plan-In April 1968, the stockholders of Lorillard approved the 1967 Stock Option Plan (the "1967 Plan") which provides for the granting to key employees of Lorillard, including officers, of qualified stock options or non-qualified stock options to acquire shares of Common Stock of Lorillard. The 1967 Plan specifies a maximum term for options granted thereunder of 10 years from the date of grant. All outstanding qaalified stock options are for a term of 5 years and all outstanding non-qualified stock options are for a terul of 10 years. The option price under the 1967 Plan must be equal to at least 100~f'o of the fair market value of the Common Stock of Lorillard on the date of grant. Each outstanding option agreement contains a provision under which the employee agrees to remain in the employ of Lorillard for at least 2 years or is required to so agree as a condition of the exercise of the option. On November 15, 1968, 41 key employees, including 14 officers and directors held qualified stock options granted on September 20, 1967 to purchase at $49.25 per share an aggregate of 75,500 shares of Common Stock of Lorillard. Included in such total were qualified stock options for a total of 56,000 shares to persons who were directors or officers, including options held by the following: Mr. Bennett, 6,500 shares; Mr. Jordan, 7,500 shares: Mr. Levathes, 6,000 shares and Mr. Yellen, 10,000 shares. In addition, on November 15, 1968, 34 key employees, including 2 officers, held non-qualified stock options granted on September 20, 1967 to purchase at $49.25 per share an aggregate of 14,500 shares of Common Stock of Lorillard. On November 29, 1965. the effective date of the Loew's-Lorillard Merger, options to purchase shares of Common Stock of Loew's were granted pursuant to the Loew's Plan in substitution for these qualified options to purchase shares of Common Stock of Lorillard. The number of such substitute options was determined by dividing (a) the product of the market price of the Lorillard Common Stock on November 29, 1968 multiplied by the number of shares of Lorillard Common Stock previously covered by such stock optic.ns, by (b) one-third of the market price of the Loew's Common Stock on November 29, 1968 (without giving effect to the three-for-one stock split which became effective on November 27, 1968). FEDERAL INCOME TAX INFORMATION Upon the exercise of the Warrants by payment of the exercise price in cash, no gain or loss will be recognized by the holder thereof, whether or not such holder reports gain from the exchange of his Lorillard Common Stock on the installment method. His tax basis for the shares of Loew's Common Stock acquired upon such exercise will be his tax basis for the Warrants exercised plus the amount of cash paid on the exercise thereof. There is no clear authority as to whether, or to what extent, gain or loss will be recognized by a holder of Warrants who elects to malce payment of all or part of the exercise price thereof by the surrender of an appropriate face amount of Loew's Debentures. lt is possible that no gain or loss would be recognized on such surrender or that capital gain or loss would be recognized to the extent of the 29

difference between the holder's tax basis for his Debenture and the face arrLount thereof. It is the opinion of Loew's counsel however, that the appropriate tax treatment to a holder of a Loew's Debenture who surrenders such Debenture on the exercise of any Warrants will be the recognition of capital gain or loss measured by the difference between his tax basis for the Debenture surrendered and the lower of (i) the face amount of such Debenture or (ii) the fair market value of such Debenture on the date of surrender. Counsel for Loew's believes that this treatment will apply whether or not the Debenture holder reports his gain from the exchange of his Lorillard Common Stock on the installment method. His basis for the shares of Loew's Common Stock acquired upon exercise of any warrants will, in the opinion of such counsel, be equal to the sum of: (i) his tax basis for the Debenture surrendered, increased by any gain and decreased by any loss recognized upon such surrender, (ii) his tax basis for the Warrants exercised, and (iii) the amount of any cash paid on the exercise of such Warrants. It is suggested, in view of the absence of clear authority at present, that any Warrant holder who pays a portion of the Warrant exercise price by the surrender of Debentures consult his own tax adviser at the time for advice as to the appropriate tax treatment of the transaction. DESCRIPTION OF COMMON STOCK Full-Paid Character; Preemptive Rights; Rights on Liquidation. All of the shares of Common Stock issued and outstanding at the date hereof are, and all of the shares of Common Stock which may be issued pursuant to exercise of the Warrants and stock options upon issuance thereof will be, fully-paid and non-assessable. Holders of the Common Stock have no preemptive or subscription rights, and are entitled to share ratably in all assets of Loew's available for distribution in the event of liquidation or dissolution. Dividend Rights. Holders of Common Stock are entitled to dividends if and when declared by the Board of Directors. The Board's present policy, subject to availability of funds and other considerations, is to declare quarterly dividends of 10¢ per share on the stock as now constituted without giving effect to the 3 for 1 stock split ,vhich became effective on November 27, 1968; there is no assurance that such policy will be continued. The Indenture pursuant to which the 6%oJo Subordinated Debentures due 1993 are issued, which contains the most restrictive of the Company's funded debt covenants concerning funds available for dividends provides that so long as any of such Debentures remain outstanding Loew's will not pay or declare dividends or distributions on its Common Stock (other than dividends payable in Common Stock) and will not purchase any of its Capital Shares unless the sum of $5,000,000 and net earnings after August 31, 1968, at least equals the sum of such dividends and distributions and purchases ; provided, however, that the amount spent for stock purchases is reduced for this purpose by the amount received from stock sales, the surrender of Debentures to exercise Warrants and certain other credits. Voting Rights: Nosz-Cuircvlative Voting. Holders of Common Stock are entitled to one vote for each share held and have the sole right to vote for the election of directors and on all other matters requiring shareholders' action. The Common Stock has non-cumulative voting rights. This means that the holders of more than 50 fo of the Common Stock voting for the election of directors can elect 100oJo of the directors if they choose to do so, and, in such event, the holders of the remaining less than 50 fo of the shares voting for the election of directors will not be able to elect any person or persons to the Board of Directors. Miscellaneous. The foregoing summary of the terms of the Common Stock does not purport to be complete or to give full effect to pertinent statutory or common law, and is qualified in its entirety by reference to the applicable provisions of the Amended Restated Certificate of Incorporation and By-Laws. The outstanding Common Stock is listed on the New York Stock Exchange, and said Exchange has listed, subject to official notice of issuance, the Common Stock which may be issued upon exercise of the Warrants and the stock options. The Warrants are listed on the American Stock Exchange. First National City Bank, 55 Wall Street, New York, New York 10005, is the Transfer Agent for the Common Stock and Bankers Trust Company, 485 Lexington Avenue, New York, New York 10015, is the Registrar. Loew's furnishes its shareholders with annual reports which contain certified financial statements. Regi acco upoi The Reg: exte whic opin tow pert mati $G bein Mad Golc StatE offer men. ther: Stat, and, trati tion the fee F 30

he opinion riture who a,l gain or ~ lower of ie date of Debenture t method. ill, in the increased Warrants gested, in )n of the time for Common :k which wi11 be, scription ie event : by the rations, ; effect ce that !ntures 'enants •emain (other ss the dends >es is es to ! for tters EXPERTS The financial statements and schedules of Loew's included in this Prospectus and elsewhere in the Registration Statement have been examined by Lybrand, Ross Bros. & Montgomery, certified public accountants, to the extent stated in their report appearing herein, and have been so included in reliance upon such report which is given upon the authority of that firm as experts in accounting and auditing. The financial statements and schedules of Lorillard included in this Prospectus and elsewhere in the Registration Statement have been examined by Haskins & Sells, certified public accountants, to the extent stated in their opinion appearing herein, and have been so included in reliance upon such opinion which is given upon the authority of that firm as experts in accounting and auditing. The respective opinions of Messrs. Davis Polk & Wardwell and of Messrs. Goldstein, Barceloux & Goldstein referred to under "Pending Legal Proceedings" have been included herein on the authority of those firms as ex- perts. The information relating to federal income taxes referred to under "Federal Income Tax Infor- mation" has been included herein on the authority of Messrs. Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison as experts. LEGAL OPINIONS Legal matters in connection with the validity of the Common Stock covered by this Prospectus are being passed upon for Loew's by Messrs. Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison, 575 Midison Avenue, New York, New York 10022. Simon H. Rifkind, Esq., a partner of Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison, is a director of Loew's. ADDITIONAL INFORMATION Loew's has filed with the Securities and Exchange Commission, Washington, D. C., a Registration Statement under the Securities Act of 1933, as amended, for the registration of the securities being offered hereby. This Prospectus omits certain of the information contained in the Registration State- ment, and reference is hereby made to the Registration Statement and exhibits and schedules relating thereto for further information with respect to Loew's and the securities to which this Prospectus relates. Statements herein contained concerning the provisions of any document are not necessarily complete and, in each instance, reference is made to the coF~• of such document filed as an exhibit to the Regis- tration Statement. Each such statement is qualified in its entirety by such reference. Items of informa- tion omitted from this Prospectus but contained in the Registration Statement may be obtained from the Securities and Exchange Commission's principal office in Washington, D. C., upon payment of the fee prescribed by the Rules and Regulations of the Commission or examined there without charge. 31

To 7 shee earn five ards, as w split afore fairl} pany and ende( on a New excel as to Nove THIS PAGE INTENTIONALLY 32 LEFT BLANK r

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF LoEw's THEATRES, INC.: We have examined the balance sheet of LoEw's THEATRES, INC. and the consolidated balance sheet of that company and subsidiaries as of August 31, 1968, the related statements of income and earnings retained in the business for the three years then ended and the Summary of Earnings for the five years then ended. Our examination was made in accordance with generally accepted auditing stand- ards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion. subject to the approval by the shareholders of Loew's Theatres, Inc. of the 3 for 1 split of the Company's Common Stock referred to in Note 2 of Notes to Financial Statements, the aforementioned balance sheets and statements of income and earnings retained in the business present fairly the financial position of Loew's Theatres, Inc. and the consolidated financial position of that com- pany and subsidiaries at August 31, 1968 and the results of their operations for the three years then ended, and the Summary of Earnings presents fairly the consolidated results of operations for the five years ended August 31, 1968, and all are in conformity with generally accepted accounting principles applied on a consistent basis. LYBRAND, Ross BROS. & MONTGOMERY New York, N. Y., November 14, 1968, except for Notes 2, 8 and 9, as to which the date is November 29, 1968

LOEW'S THEATRES, INI:. BALANCE SHEETS August 31, 1968 ASSETS The Company and The Company Subsidiaries (Separately) (Consolidated) Current assets : Cash ..................................................... $ 1,939,579 $ 8,128,585 Time deposits ............................................. 13,000,000 27,888,475 Marketable securities, at cost (market approximately $3,380,000 and $48,050,000, respectively) ............................. 3,070,239 39,148,782 Accounts receivable : Trade, less allowance of $1,318,980 for doubtful accounts 8,121,646 Subsidiary companies ................................... 5,125,590 Other ................................................ 166,932 9,534,121 Total current assets ................................ 23,302,340 92,821,609 Fixed assets (Note 3 ) : Land .................................................... 45,422,003 Buildings ................................................. 137,337,995 Equipment ............................................... 32,866,350 Leaseholds ............................................... 12,718,994 228,345,342 Less, Allowance for depreciation and amortization .......... 68,137,962 160,207,380 Curi I L Long-~ (Nc Other Dc Other assets (substantially at cost) : Investments in subsidiary companies : O, Df Capital stocks ........................................ 27,104,113 Minorit Advances .............................................. 36,452,670 Ca Less, Reserves, principally for estimated losses on invest- ments in and advances to subsidiary companies ....... 63,556,783 4,077,983 Ad Ea Net investments and advances .................... 59,478,800 Land ..................................................... 4,074,833 Commil Mortgages receivable ....................................... 1,511,340 5,391,205 Other investments ......................................... 257,235 3,393,002 Miscellaneous assets ........................................ 592,185 6,686,743 Comtn< 61,839, 560 19,545,783 issue $85,141,900 $272,574,772 ~ Additic Earnin .0 ,.• The accompanying notes are an integral part of the financial statements. ~.t tr CJ F-2

e Compauy and Subsidiaries Consolidate d) _ LOEW'S THEATRES, INC. BALANCE SHEETS August 31, 1968 LIABILITIES e Company (Separately) he Company and Subsidiaries (Consolidated) 8,128,585 Current liabilities : Accounts payable : 27,888,475 Principally trade ......................................... $ 398,524 $ 8,687,744 Subsidiary companies .................................... 917 096 39,148,782 , Accrued liabilities : Payrolls ................................................ 50 000 1 066 571 8,121,646 , , , Interest ................................................ 18,408 1,490,821 9,534,121 Real estate and sundry taxes .............................. 2,437,846 92,821,609 Other ................................................. 1,104,203 68,408 6,099,441 United States and foreign income taxes ....................... 8,899,994 F5,422,003 Long-term debt due within one year (Note 4) ................. 6 702 871 ;7,337,995 , , . Total current liabilities . . . . 1 384 028 30 390 050 -2,866,350 ............... ... .... . . , , , , 2,718,994 Long-term debt, principally mortgages, less portion due within one year 8,345,342 (Note 4) ................................................... 480,900 109,078,864 3,137,962 Other liabilities and deferred income: ),207,380 lleferredfederalincometaxes ................................ 4,680,000 Other noncurrent liabilities (Note 5) ......................... 821,167 1,934,611 Deferred income (Note 6) .................................. 1,277,639 821,167 7,892,250 Minority interests : Capital stock .............................................. 343,853 Additional paid-in capital and partnership capital .............. 249,630 Earnings retained in the business ............................ 434,993 1,028,476 74,833 )1,205 Conunitments and contingent liabilities (Note 7) 3,002 SHAREHOLDERS' EQUITY 6,743 000 shares; ar value $1 per share; authorized 15 000 Common stock 5,783 , , , p issued 4,768,745 shares (Notes 8 and 9) ........................ 4,768,745 4,768,745 •,772 Additional paid-in capital (Note 10) .............................. 6,632,284 6,632,284 Earnings retained in the business, as annexed (Note 11) ............ 71,054,776 112,784,103 82,455,805 124,185,132 $85,141,900 $272,574,772 a- The accompanying notes are an integral part of the financial statements. w -SW CQ .p T F-3

LOEW'S THEATRES, INC. STATEMENTS OF INCOME AND EARNINGS RETAINED IN THE BUSINESS For the Three Years Ended August 31, 1968 1966 The Company (Separately) Income : Theatres, hotel services, etc . ................ Food and beverage sales .................... Gain on liquidation of subsidiaries .......... Dividends : From subsidiaries and 50oJo owned com- panies ............................... $ 3,268,450 I~rom marketable securities ............. 134,508 Rent, interest and other income : From subsidiaries ...................... 765,000 From others ........................... 141,356 4,309,314 Expenses: Operating ................................. General and administrative ................. 900,791 Depreciation and amortization .............. Interest on debt ............................ 97,301 T.oss on liquidation of subsidiaries ..... ... .•. Other ..................................... 44,983 1,043,075 ~ 3,266,239 ~ Income taxes : United States (Note 12) : Current ............................... 115,000 Deferred .............................. (65,000) Foreign, current ........................... 50,000 Income before securities transactions and extraordinary item ........... 3,216,239 Securities transactions (Note 13) : Realized gains ..................•..•...... 1,811,317 Related federal income taxes ................ 350,000 1,461,317 Provision for unrealized losses, net of taxes .. (300,972) Net gains on securities transactions ..... 1,160,345 Income before extraordinary item .. 4,376,584 Gain (expenses) on sale of Commercial Credit Company and Control Data Corporation common stock net of expenses, less income taxes of ($60,000) and $5,330,000 ...................... Net income ................... 4,376,584 Earnings retained in the business, beginning of year 67,016,700 71,393,284 C"C9L i6 Less : Dividends paid, $.40 per share .......... Charge in connection with retirement of 790,111 shares of treasury stock (Note 9) Earnings retained in the business, end of year (Note 11) ................................... $ 71,393,284 The Company and Subsidiaries (Consolidated) $ 79,127,649 28,915,538 25,000 469,623 5,722,479 114,260,289 85,427,684 4,635,169 8,093,994 5,600,709 994,094 104,751,650 9,508,639 3,450,000 150,000 90,000 3,690,000 5,818,639 1,990,122 440,000 1,550,122 (1,550,122) - 5,818,639 5,818,639 67,849,582 73,668,221 $ 73,668,221 1967 The Company (Separately) The Company and Subsidiaries (Consolidated) he Company (Separately) ~sss The Company and Subsidiaries (Consolidated) $ 87,921,542 $108,135,201 32,398,714 37,768,983 $ 210,976 4,697,057 35,000 $ 10,419,683 35,Q0i, 66,462 940,975 58,803 2,088,383 971,385 838,436 29'9,240 5,724,709 57,955 8,664,117 6,245,120 127,020,940 11,374,877 156,691,684 90,475,959 110,334,481 905,792 6,286,466 1,083,997 8,693,427 7,366,645 7,797,914 616,937 6,048,729 1,702,951 7,459,557 1,162,210 61,092 1,341,837 457,740 ^ 1,583,821 111,519,636 3,949,158 134,743,119 4,661,299 15,501,304 7,425,719 21,948,565 950,000 4,730,000 290,000 6,870,000 (40,000) 1,990,000 (40,000) 1,920,000 40,000 140,000 500,000 950,000 6,860,000 250,000 9,290,000 3,711,299 8,641,304 7,175,719 12,658,565 645,912 7,881,598 802,008 10,034,487 160,000 2,190,000 210,000 2,670,000 485,912 5,691,598 592,008 7,364,487 300,972 1,422,122 786,884 7,113,720 592,008 7,364,487 4,498,183 15,755,024 7,767,727 20,023,052 (777,302) 15,1(i4,922 4,498,183 15,755,024 6,990,425 35,187,974 71,393,284 73,668;221 75,891,467 89,423,245 75,891,467 89,423,245 82,881,892 124,611,219 (1,907,278) (1,907,278) (9,919,838) (9,919,838) $ 75,891,467 $ 89,423,245 71 054,776 ~ 112,784,103 ~-~ (D ' w ~L Cn1c) Cn 5. Q N '~ w En ro Q. ,-. ~ n~ ,0 n~

LOEW'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS 1. PRINCiI'LES OF CONSOLIDATION: 0 The consolidated financial statements include the accounts of all wholly owned and majority owned subsidiaries. The accounts of four Canadian subsidiaries have been translated at current or other appropriate 'rates of exchange. The principal subsidiaries acquired during the period subsequent to August 31, 1965 were : Loew's Bahamas Hotel Limited and Loew's Chicago Hotel Corp. in the year ended August 31, 1966; and Loew's San Francisco Hotel Corp. in the year ended August 31, 1967. Approximately 19 other insignificant companies were acquired and approximately 12 insignificant com- panies were liquidated during this period. The Company's equity in the net book assets of consolidated subsidiaries at August 31, 1968 exceeded its net investments in and advances to such subsidiaries by $41,729,327 after intercompany eliminations. In consolidation, this amount, representing the Company's equity in net undistributed earnings of such subsidiaries, is included in earnings retained in the business. 2. LORILLARD MERGER: On November 26, 1968, the Company's shareholders approved proposals (a) to authorize issuance, in exchange for all the outstanding common stock of Lorillard, of approximately $401,305,000 of 6% % Subordinated Debentures due 1993 and Warrants to purchase approximately 6,477,357 shares of the Com- pany's Common Stock, (b) to authorize an increase in the number of shares of the Company's Common Stock from 15,000,000 to 30,000,000 and to split each share three for one, and (c) to establish an em- ployees' qualified stock option plan. The merger with Lorillard became effective on November 29, 1968. 3. FIaED ASSETS : Fixed assets are stated at cost, except certain land and a building which are carried at 1925 appraisals. The excess of such appraisals over cost, after deducting related depreciation charged to income, was $2,827,849 at August 31, 1968. It is the general policy of the companies to provide for depreciation of property, plant, and equipment on the straight-line method over the estimated service lives of individual units or classes of properties. The principal service lives used in computing provisions for depreciation are as follows : Property Years Buildings ................................ 40 Hotel building fixtures ..................... 10 to 40 Hotel equipment ........................... 4 to 12 Theatre and other equipment ................ 10 L.easeholds are amortized over the terms of the related leases (including optional renewal periods "•here appropriate) or the lives of improvements, if less. F-5

LOEW'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS (Continued) The cost of maintenance and repairs is charged to income as incurred. Major renewals and betterments are capitalized. When a significant operating unit is disposed of in its entirety, the cost and accunullated depre- ciation are removed from the accounts and profit or loss on such disposal is recognized in the accounts at that time. Fully depreciated equipment is eliminated from the asset and depreciation allowance accounts without regard to whether such assets are still in use. Proceeds of equipment sold are generally credited to income. 4. LONG-TERM DEBT : Aggregate maturities of long-term debt at August 31. 1968 were as follows : Due within one year ..................... $ 6,702,871 Maturities during years ending August 31, 1970 ................................ $ 5,324,545 1971 ................................ 5,993,943 1972 ................................ 5,561,354 1973 ................................ 11,247,230 Subsequent maturities through 1998 ... .. .. . 80,951,792 Due after one year ....................... $109,078,864 Interest rates on long-term debt range principally from 5%ofo to 7%ofo per annum. On three obliga- tions which are not currently interest-bearing, interest has been imputed at 6% per annum. 5. OTHER NONCURRENT LIABILITIES: This includes $821,167 for deferred compensation payable more than one year after August 31, i968. 6. DEFERRED INCOME: This includes unamortized investment tax credits of $740,608, which are being reflected in income over the service lives of the related facilities. 7. COMMITMENTS AND CONTINGENT LIABILITIES: Minimum rentals payable by the Company and certain Subsidiaries under leases expiring more than three years after August 31, 1968 (exclusive of taxes and other charges by the lessees and additional rentals based upon gross receipts or net income from related properties) are as follows : rent: Cotr, of $ thtre Thes subsi busin busin 8. S• C durin I T were c F in sub Stock F-6

!wals and ed depre- : accotmts allowance generally obliga- 1968. LOEW'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS (Continued) t umber of Minimum Leases Annual Rentals Leases expiring during the five years ending August 31: 1976 ..................................... 7 $ 180,000 1981 ..................................... 15 2,000,000 1986 ..................................... 11 595,000 Leases expiring in subsequent years through 2066 .. 44 4,265,000 77 $7,040,000 Of the above, Loew's Theatres, Inc. has guaranteed ten leases having aggregate minimum annual rentals of $350,000, and has a maximum guarantee of $300,000 in connection with another lease. The Company is also contingently liable under one lease included above, having a minimum annual rental of $405,000, which has been assigned to a subsidiary. In addition, Loew's Theatres, Inc. is contingently liable under other leases expiring in 1982 and thereafter, having net annual rentals which decrease from $5,260,000 currently to $3,970,000 in 1982. These leases have been assigned as additional collateral for certain mortgage loans. Loew's Theatres, Inc., has guaranteed approximately $20,500,000 of mortgage and other loans of subsidiaries. The annual aggregate amount of interest guaranteed approximates $1,640,000. Pending litigation includes antitrust and other civil suits for damages incident to the companies' business. 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. iJ. STOCK OPTIONS : Options granted in f une, 1959 under the Company's restricted stock option plan were exercised during the year ended August 31, 1966 as follows: Fair Market Value (at Dates Options Number Option Price \Vere Exercised) of Per Per Shares" Share* Total Share* Total 60,000 $1.77 $106,000 $2.93 to $4.07 $234,260 me Fair market value at date of grant was $1.86* per share (an aggregate of $111,600). No options were granted during the period September 1, 1965 through August 31, 1968, and none were outstanding at August 31, 1968. The plan was tLrminated on November 20, 1968. N o charges were made against income for stock options at any time under the plan. For information concerning additional stock options granted by the Company on November 29, 1968 in substitution for options held by key employees of Lorillard, see "Options to Purchase Common Stock- Stock Options" in the Prospectus. :\4ter giciag ettect to 2%2 for I stuck spiit in January, 1968 and 3 for I stoclc split in November, 1968. ~II r-~ ~ w w 00 F-7 0'

LOE W'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS (Continued) 9. COMMON STOCK: On January 11, 1968, the shareholders approved a 2 j for 1 stock split. In connection therewith, .$2,860,917 was transferred from additional paid-in capital to common stock. On November 26. 1968. the shareholders approved a 3 for I stock split (see Note 2). In con- nection therewith, the Company made transfers from additional paid-in capital and from earnings re- tained in the business to common stock of amounts which aggregated the par value of the additional shares issued. In accordance with authorization of the Board of Directors, 790,111 shares of common stock held in the Company's treasury were cancelled as of October 31, 1967. The related reductions in earnings retained in the business and in additional paid-in capital have been reflected in the accompanying financial statements. At August 31, 1968 there \ere 16,350 i shares of common stock reserved for issuance on conversion of the Company's 5% o convertible subordinated debentures. 10. ADDITIONAL PAID-IN CAPITAL : Changes in additional paid-in capital since Septeiriber 1, 1965 were as follows : Balance, September 1, 1965 .................................. $13,258,637 Year ended August 31, 1966: Excess of cash received over par value of 8,000 shares (60,000 shares after giving effect to subsequent stock splits) of common stock issued upon exercise of stock options (Note 8) .......................................... 98,000 13,356,637 Year ended August 31, 1968: Excess of principal amount of $49,500 5/ °fo convertible subor- dinated debentures over the par value of 550 shares of com- mon stock issued in exchange therefor ................... 48,950 Transfer to common stock in connection with 2/ for 1 stock split (Note 9) ...................... ................ (2,860,917) Charge in connection with the retirement of 790,111 shares of treasury stock (Note 9) ............................... (3,912,386) Balance, August 31, 1968 ................................ $ 6,632,284 t After giving effect to 3 for 1 stock split in November, 1968. e. ri A of (s ex( 31, the 14, anc cer agE cot ma me rej F-s

LOEW'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS (Continued) 11. EARNINGS RETAINED IN THE .BUSINESS : Under the terms of one of the Company's loan agreements, approximately $48,000,000 of retained earnings at August 31, 1968 was available for cash dividends. Under the indenture for the 6% % subordinated debentures (see Note 2), the sum of $5,000,000 of retained earnings at August 31, 1968 plus net earnings after August 31, 1968 are available for cash dividends. 12. UNITED STATES INCObiE TAXES : The Company and its includible subsidiaries file consolidated federal income tax returns. Federal income taxes for the Company (separately) have been accrued at corporate rates on the basis of book income before taxes, reduced by the Company's share of benefits arising from the consolidated return. Deferred income taxes charged against consolidated income relate principally to the excess of accel- erated depreciation deducted for tax purposes over normal depreciation provided in the financial state- ments. 13. SECURITIES TRANSACTIONS: Because of the decline in market prices of securities during the latter part of the fiscal year ended August 31, 1966, the Company and subsidiaries (consolidated) established as a reserve against the cost of marketable securities the entire net capital gain of $1,990,122 realized during that year. The Company (separately) established a $400,972 reserve against the cost of marketable securities, equivalent to the excess of the cost of its marketable securities over corresponding market prices at August 31, 1966. The unused portions of the reserves for decline in market prices of securities established at August 31, 1966, amounting to $1,862,100 for the Company and subsidiaries (consolidated) and $400,972 for the Company (separately), were reversed to iucome in the year ended August 31, 1967. Costs of securities sold are determined on the identified certificate basis. 14. RETIREhIENT PLAN: The retirement plan provides retirement benefits for eligible employees on a noncontributory basis and also provides for additional benefits on a voluntary contributory basis. Eligibility is restricted to certain employees who have been in the employ of the companies for five years, and normal retirement age is 65. All contributions by the companies anc' voluntary contributions by employees are paid to a corporate trustee for investment and payment of benefits pursuant to the plan. The plan is voluntary and may be discontinued at the option of the companies. As the result of substantial actuarial gains, no provisions for contributions to the employees' retire- ment trust have been made since August 31, 1961. The Kwasha Lipton Company, Consulting Actuaries, report $21,466 as the plan's overfunded actuarial reserve as of February 29, 1968. F-9

LOEW'S THEATRES, INC. NOTES TO FINANCIAL STATEMENTS (Continued) 15. SUPPLEMENTARY PROFIT AND Loss INFORMATION: The following tabulation summarizes the consolidated information for the three years ended August 31, 1968: Charged Directly to Profit and Loss Operating Expenses Maintenance and repairs : Year ended August 31, 1966 .................. $3,302,296 Year ended August 31, 1967 ...... .......... 2,954,291 Year ended August 31, 1968 .................. 3,879,657 Depreciation and amortization of fixed assets : Year ended August 31, 1966 .................. 8,093,994 Year ended August 31, 1967 .................. 7,366,645 Year ended August 31, 1968 ............. .. ... 7,797,914 Taxes, other than United States and foreign income taxes(a): Year ended August 31, 1966 .................. 7,986,589 Year ended August 31, 1967 .................. 8,478,164 Year ended August 31, 1968 .................. 9,088,703 Management and service contract fees: Year ended August 31, 1966 .................. 95,503 Year ended August 31, 1967 .................. 93,686 Year ended August 31, 1968 . ... . ............. 100,111 Rents : Year ended August 31, 1966 .................. 3,769,438 Year ended August 31, 1967 .................. 4,511,952 Year ended August 31, 1968 .................. 6,356,565 Other Total $ 313,426 $ 3,615,722 211,594 3,165,885 144,652 4,024,309 8,093,994 7,366,645 7,797,914 1,125,416 9,112,005 1,790,049 10,268,213 2,177,241 11,265,944 95,503 93,686 100,111 3,769,438 4,511,952 7,398 6,363,963 Supplementary profit and loss information for the Company (separately) for the three years ended August 31, 1968 is not significant. (a) Consists of the following taxes: Year „F,pded August 31 1966 1967 1968 Real estate and personal property .................. $5,860,916 $ 6,278,126 a $ 6,511,918 Social security .................................. 1,847,515 2,086,584 ~ 2,368,129 Other .......................................... 1,403,574 1,903,503 Ej 2,385,897 $9,112,005 m ~10,268,213„ $11,265,944 Lox Con earr end( ingh nece ings and acco New Febr F-10

OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS years ended Loss Total $ 3,615,722 3,165,885 4,024,309 8,093,994 7,366,645 7,797,914 9,112,005 10,268,213 11,265,944 95,503 93,686 100,111 3,769,438 1-,511,952 5,363,963 ended LORILLARD CORPORATION : We have examined the consolidated balance sheet of Lorillard Corporation (successor to P. Lorillard Company) and subsidiary companies as of December 31, 1967 and the related statement of consolidated earnings for the five full years then ended and statement of consolidated surplus for the three full years then ended. Our examination was made in accordance with generally accepted auditing standards, and accord- ingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the above-mentioned consolidated balance sheet and statements of consolidated earn- ings and consolidated surplus present fairly the financial position of the companies at December 31, 1967 and the results of their operations for the stated years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. New York, N. Y. February 2, 1968 HASPCINS & SELLS 1968 i 11,918 368,129 385,897 ~ ~ 265,944 ~ W .~, ~ F-11 rs t

LORILLARD CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET December 31, 1967 and (Unaudited) June 30, 1968 ASSETS December 31,1967 June 30, 1968 CURRENT ASSETS : (Unaudited) CuRI Cash ................................................... $ 15,178,173 $ 15,011,974 Marketable securities (at cost which approximates market) .... 243,786 t Accounts receivable-customers (less $1,079,101 in 1967 and $1,210,029 in 1968 for cash discounts and doubtful accounts) 30,416,601 34,374,846 t Deposits and other receivables ............................. 6,652,109 3,632,383 Inventories (at average cost) (Note 2) : Leaf tobacco ... ..............:................... 223,081,061 201,849,544 Manufactured stock ................................. 30,754,390 33,786,420 Materials and supplies ............................... 8,372,632 8,199,192 LONG Total current assets ......................... 314,454,966 297,098,145 turi INVESTMENT IN ASSOCIATED COMPANIES (at cost nlus equity in un- distributed earnings) ...................................... ,141,870 ,219,767 T T 4; PROPERTY, PLANT, AND EQUIPMENT (at Cost) : Land .................................................. 1,266,642 1,266,642 6~ Buildings and building equipment .......................... 25,839,483 27,973,539 :l,Iachinery and equipment ................................. 56,941,002 60,625,605 Total .. .................... 84,047,127 89,865,786 RESERA Er Less accumulated depreciation (Note 3) .................... 33,244,878 34,764,786 Dc Property, plant, and equipment-net ........... 50,802,249 55,101,000 OTHER ASSETs: Unamortized debenture discount and expense (being amortized S HAREI Prc ~ over the lives of the respective issues) .................... 882,687 837,929 Trade-marks and goodwill (Note 1) ........................ 2 157 422 2 157 422 7 ~c Prepaid expenses, deferred charges, etc ...................... , , 2,819,619 , , 3,948,984 a Total other assets ........................... 5,859,728 6,944,335 Col ] f Ad Ea Le: TOTAL ..................................... $375,258,813 See the accompanying Notes, which are an integral part of the financial statements. ~ M ~ . ~ W $3fi3,363,247 ~ cs COb13II F-12

'ART II LORILLARD CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET December 31, 1967 and (Unaudited) June 30, 1968 June 30, 1968 LIABILITIES December 31,1967 June 30, 1968 (Unaudited) $ 42,800,000 $ 27,800,000 5,000,000 5,000,000 1,265,000 11,342,139 9,563,708 22,402,832 21,947,788 3,198,891 2,856,428 394,568 619,529 6,969,525 8,235,281 92,107,955 77,287,734 9,692,000 9,400,000 13,652,000 13,050,000 34,807,000 33,600,000 13,720,000 58,151,000 69,770,000 5,061,770 5,671,179 1,225,800 1,048,712 6,287,570 6,719,891 9,800,000 33,417,395 33,436,470 28,872,418 29,031,569 155,930,161 157,520.781 (9,307,686) (10,403,198) 218,712,288 209,585,622 $375,258,813 $363,363,247 Jnaudited) CURRENT LIABILITIES : 5,011,974 Notes payable-banks ................................... 243,786 Notes payable-other .................................... Current maturities of long-term debt (Note 5) ............... Accounts payable-trade ................................. ~,37=1,846 Accrued taxes (Note 4) .................................. 3,632,383 Accrued payrolls ........................................ Accrued interest ........................................ Other accrued liabilities .................................. ,849,544 ,786,420 ,199,192 ,098,145 219,767 '.66,642 73,539 25,605 55,786 i-1,786 )1,000 7,929 %,422 Total current liabilities ....................... LoNG-TERxi DEBT (less amount held by Company and current ma- turities) (Note 5) : Twenty-five year 3% debentures, due March 1, 1976 (held by Company-1967, $408,000; 1968, $58,000) ................ Twenty-five year 3y4ofo debentures, due April 1, 1978 (held by Company-1967, $748,000; 1968, $534,000) .............. 4/% sinking fund debentures, due June 1, 1986 (held by Com- pany-1967, $1,993,000; 1968, $768,000) ................ 6/ fo subordinated debentures, due April 1, 1993 ............ Total long-term debt ........................ RESERVES: Employee benefits ....................................... Deferred income taxes (Note 4) ........................... Total reserves .............................. SHAREHOLDERS' EQUITY: Preferred stock (without par value)-authorized 1968-2,000,000 shares ; issued-none 7% cumulative preferred stock (par value $100 per share)- authorized, 1967-99,576 zhares; issued, 98,000 shares (Note 1) .................................................. Common stock (par value $5 per share)-authorized, 1967- 10,000,000 shares, 1968-20,000,000 shares ; issued, 1967- 6,683,479 shares, 1968-6,687,294 shares (Notes 1 and 10) Additional paid-in capital ................................ Earnings retained for use in the business (Note 5) ............ Less common stock in treasury (at cost), 1967-204,987 shares; 1968-228,587 shares .................................. Total shareholders' equity .................... COhL3IIT.MENTS AND CONTINGENT LIABILITIES (Note 6) TOTAL ..................................... See the accompanying Notes, which are an integral part of the financial statements. F- 13

LORILLARD CORPORATION AND SUBSIDIARY COMPANIES STATEMENT OF CONSOLIDATED SURPLUS For the Three Years Ended December 31, 1967 and (Unaudited) the Six Months Ended June 30, 1968 Year Ended December 31 ADDITIONAL YAID-IN CAPITAL: Balance at beginning of period ........... Excess of proceeds received from sale of common stock to employees over par value of stock issued ...................... Excess of cost of treasury shares plus ex- penses of pooling over the stated value of the capital stock of pooled company (ex- clusive of portion charged to retained earn- ings) (Note 1) ...................... Balance at end of period ................ _,,,Six.Months E " nded 1965 1966 1967 June 30,1968 (Unaudited) $ 29.130,089 $ 29,165,512 $ 28,623,370 35,423 $ 28,872,418 469,874 249,048 159,151 (1,012,016) $ 29,165,512 $ 28,623,370 $ 28,872,418 $ 29,031,569 EARNINGS RETAINED POR USE IN THE BUSINESS: Balance at beginning of period ............ Net earnings .......................... Total ....................... Deduct : Cash dividends declared: Preferred stock (at annual rate of $7 per share) ............................ Common stock (see statement of consoli- dated earnings for dividends paid per share) ............................ Portion of excess of cost over par value of common treasury stock issued in pooling of interests (Note 1) ................. Excess of the principal amount of debentures over the par value of the preferred stock converted into such debentures (Note 1) Total ....................... Balance at end of period (Note 5) ........ $122,592,952 $132,114,016 $141,824,285 $155,930,161 26,846,172 29,315,305 31,034,228 14,091,738 149,439,124 161,429,321 172,858,513 170,021,899 686,000 686,000 686,000 171,500 16,639,108 16,439,502 16,242,352 8,409,618 2,479,534 3,920,000 17,325,108 19,605,036 16,928,352 12,501,118 $132,114,016 $141,824,285 . $155,930,161 $157,520,781 See the accompanying Notes, which are an integral part of the financial statements. ~ v ~ W ~ F-14 ~ Lq 1. PRIN The owned. " the apprc fluctuati( net asset the Con, earnings the busir On acquired Canning 156,250 : shares) a for as poc and Reed plus the ( stock «•a: earnings expenses capital ar On-n assets of goodwill. On Corporatt outstandi $13,720,C and each into a sha amount o. to retaine On; Inc., subj were solc Products, financial l 2. INvEr The generally hand incl not realk Inve 1968, pri 1966, $24 3. DEPR It i: and cost f

PART II LORILLARD CORPORATION AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS For the Three Years Ended December 31, 1967 And (Unaudited) The Six Months Ended June 30, 1968 Six Month5 Ended June 30,1968 (U - u na $ 28,872,418 159,151 $ 29,031,569 $155,930,161 14,091,738 170,021,899 171,500 8,409,618 3920,000 01,118 20,781 1. PRINCIPLES OF CONSOLIDATION, ACQUISITIONS AND GENERAL MATTERS The financial statements include the Company and its subsidiary companies all of which are wholly- owned. The financial statements of the Swiss subsidiary were translated into United States currency at the approximate rate of exchange prevailing on the date of the balance sheet, there having been no material fluctuation in such rate since organization of the subsidiary. At December 31, 1967 and June 30, 1968 the net assets of the subsidiaries exceeded the amount at which the investments are carried on the books of the Company by $16,565,304 and $17,614,880, respectively, which amounts represent undistributed earnings since date of acquisition or organization and have been included in earnings retained for use in the business. On February 24, 1965 and April 5, 1966, respectively, wholly-owned subsidiaries of the Company acquired the businesses and substantially all the assets and assumed substantially all the liabilities of Usen Canning Co. (Usen) and Reed Candy Company (Reed.). In consideration, the Company issued to Usen 156,250 shares of its common stock (of which 74,056 were unissued shares and 82,194 were treasury shares) and to Reed 74,913 shares of its common treasury stock. These transactions have been accounted for as poolings of interests and, accordingly, in the accompanying financial statements the accounts of Usen and Reed have been combined with those of the Company. The excess of the par value of unissued shares plus the cost of treasury shares issued and the expenses of pooling over the stated value of Usen's capital stock was charged in part ($999,280) to additional paid-in capital and in part ($2,514,461) to retained earnings in the year ended December 31, 1964; the excess of the cost of the treasury shares issued plus expenses of pooling over the stated value of Reed's capital stock has been charged to additional paid-in capital and retained earnings as shown in the accompanying statement of consolidated surplus. On November 8, 1965, a wholly-owned subsidiary of the Company purchased the business and certain assets of Golden Nugget Sweets, Ltd. Of the total cost, $2,157,421 was allocated to trade-marks and goodwill. On April 9, 1968 P. Lorillard Company (a New Jersey corporation) was merged into Lorillard Corporation (a Delaware corporation), the surviving corporation. As a part of the merger the 98,000 ollt5tanding shares of 7% cumulative preferred stock of P. Lorillard Company were converted into $13,720,000 principal amount of 6%% subordinated debentures due April 1, 1993 of Lorillard Corporation aud each issued share of common stock, par value $5 per share, of P. Lorillard Company was converted into a share of coinmon stock, par value $5 per share, of Lorillard Corporation. The excess of the principal amount of the debentures over the par value of the preferred stock, amounting to $3,920,000, was charged to retained earnings. On September 9, 1968, substantially all the assets of a subsidiary, Federal Tin and Paper Products, Inc., subject to certain liabilities assumed by the buyer, and certain real estate owned by the Company, were sold for $3,000,000, subject to adjustment upon completion of an audit of Federal Tin and Paper Products, Inc. In the opinion of the Company, such sale will have no material effect upon the consolidated financial position or results of operations of the Company. 2. I N VENTORIES The entire inventory of leaf tobacco has been classified as a current asset in accordance with a generally recognized trade practice although, due to the duration of aging processes, the tobacco on hand includes requirements beyond the period of one year. It is not practicable to determine the amount not realizable within one year. Inventories at the beginning and end of each of the years 1965-1967, inclusive and at June 30, 1968, priced at average cost, were as follows: December 31, 1964, $256,802,654; 1965, $252,458,806; 1966, $241,390,612 ; 1967, $262,208,083 ; and June 30, 1968, $243,835,156. 3. DEPRECIATION It is the policy of the companies to provide for depreciation based on the estimated useful lives and cost of the various classes of property. With the exception of certain equipment (cost at December F-15

LORILLARD CORPORATION AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS-Continued 31, 1967 and June 30, 1968 approximately $4,900,000), depreciation on which is provided on a unit of production basis, the provisions for depreciation have been computed on the straight-line method at, with minor exceptions, the following annual rates : buildings and building equipment-principal items, 2°fo, other items, 5%; machinery and equipment-principal items, 5ofo, other items, 10% and 2000 ; office tnachinery-10oJo to 25oJo ; automobiles, 25oJo. Upon the retirement or other disposition of property. accumulated depreciation is charged with the amount therein applicable to such property, and profit or .;)ss is taken up in earnings. Maintenance, repairs, and renewals are charged to earnings as incurred. Betterments are capitalized. 4. FEDERAL INCOME TAXES For Federal income tax purposes, alternative methods of computing depreciation are used for certain assets. The Federal tax reduction resulting from the use of such alternative methods has been compensated in the accompanying statement of consolidated earnings by charges for deferred Federal income tax. At December 31, 1967 and June 30, 1968 the accumulated reserves for deferred Federal income tax (arising from the use of alternative methods of computing depreciation for tax purposes for the years 1957-1967 and for the six month period ended June 30, 1968) amounted to $5,018,746 and $5,114,473, respectively. From this amount the prepaid Federal income tax applicable to the reserves for employee benefits has been deducted. leaving net credit balances at December 31, 1967 and June 30, 1968 of $1,225,800 and $1,048,712, respectively, as shown in the consolidated balance sheet. The Federal income tax liabilities of the companies have been settled up to and including 1958. While the liabilities for subsequent years are subject to final determination, the amount provided in the consolidated balance sheet is believed to be adequate to cover any additional assessments which may be made by the Treasury Department. The companies have followed the practice of reducing their provision for Federal income tax by the estimated permanent tax saving resulting from the investment credit, the amounts of which have not been material. 5. LONG-TERM DEBT The sinking fund requirements under the debenture indentures during each of the five years ending June 30, 1973, less debentures held by the Company for sinking fund purposes, are as follows : 1969- $1,265,000; 1970, 1971, 1972 and 1973-$2,625,000. Covenants limiting the payment of dividends on common stock and the purchase, redemption, or retirement of such stock are contained in the debenture indentures. Under the most restrictive of these covenants the amount which could have been expended for the foregoing purposes at December 31, 1967 and June 30, 1968 was limited to approximately $87,000,000 and $78,000,000, respectively. The covenants also prohibit the Company from creating, guaranteeing or assuming any non-subordinated long-term debt if, after giving effect to such additional debt, the excess of consolidated tangible assets over consolidated current liabilities shall be less than 200°fo of consolidated funded debt (as defined). At December 31, 1967 and June 30, 1968 consolidated tangible assets less consolidated current liabilities exceeded 200% of such consolidated funded debt by $164,000,000 and $171,000,000, respectively. 6. COMMITMENTS AND CONTINGENT LIABILITIES At December 31, 1967 and June 30, 1968 outstanding commitments for the purchase of property, plant, and equipment amounted to approximately $3,173,000 and $4,917,000, respectively. At December 31, 1967 and June 30, 1968 the Company was a defendant, along with one or more other tobacco manufacturers, in three cases which involve claims that the respective plaintiff or plaintiffs' decedents contracted cancer or other involven~ent of the Iung as a restut of the use of tobacco product-~. Damages which range from $9,999 to $1,208,000 in such cases are alleged, none of which has yet been trHed. 7. RETIRE The C production employee 1 plans. Ret months en years of .r pnor servi value of b( plus intere that the ur $10,966,00 8. INCEN' Incen consolidat( During th, 9. PROFI7 The I January 1 tributions 10. REST STOC The approved Shares of Dece June Options ( 1965 196E 1967 Six ~ (a) ( options fo values at t , • (b) ( ^ 7 33 anc $52 c+- w ;" . t C $57.82anc ~ (d) ~ $46.37 anc F-16

PART II LORILLARD CORPORATION AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS-Continued 7. RETIREMENT PLANS The Company and its subsidiaries have non-contributory retirement plans for eligible salaried and production employees. The companies' policy is to fund the accrued pension cost relating to all salaried employee plans and to maintain reserves for the accrued pension cost relating to production employee plans. Retirement plan costs charged to earnings ($2,332,040 in 1967 and $1,379,703 in the six months ended June 30, 1968) represent as to the funded plans, normal cost plus amortization over 20 years of unfunded prior service cost and as to the unfunded plans, normal cost plus interest on unfunded prior service cost. In prior years, the retirement plan costs of the unfunded plans were based upon the value of benefits for employees becoming eligible to retire during the year; the change to a normal cost plus interest basis did not have a significant effect on net earnings. An independent actuary has estimated that the unfunded past service cost applicable to the retirement plans at December 31, 1967 approximated $10,966,000. 8. INCENTIVE COMPENSATION Incentive compensation for officers and key personnel pa~able under the By-Laws (based on consolidated income, as defined), was as follows : 1965, $1,519,668 ; 1966, $1,884,825 ; 1967, $2,078,496. During the six months ended June 30, 1968 $947,000 was provided for incentive ec _npensation. 9. PROFIT SHARING PLAN The Profit Sharing Plan of the Company, approved by stockholders on April 4, 1967, became effective January 1, 1968. During the six months ended June 30, 1968, $999,000 was provided for the con- tributions (based upon consolidated income, as defined) to be made under such plan. 10. RESTRICTED STOCK OPTION PLAN, STOCK PURCHASE, OPTION AND INCENTIVE PLAN AND 1967 STOCK OPTION PLAN The following information relates to the Restricted Stock Option Plan for Employees which was approved by the shareholders otI April 8, 1958: Option Price Fair Market ket Value Number Per Per of Shares Share Total Share Total Shares of common stock under option : At Dates of Grant December 31, 1967 ........................ 30,700 (a) $1,334,650 June 30, 1968 ............................ 29,400 $43.50 1,278,900 Options exercised : 1965 .................................... (a) $1,403,687 $45.75 1,345,050 At Dates Exercised 1966 .................................... 9,800 (b) 419,900 (b) 468,138 1967 .................................... 2,100 (c) 116,550 (c) 167,143 Six months ended June 30, 1968 ............ 1,300 (d) 55,750 (d) 62,800 (a) Options for 200 shares granted in 1959 exercisable at $39.50 per share at any time up to September 18, 1969 and options for 30,500 shares granted in 1962 exercisable at $43.50 per share at any time up to June 20, 1972; fair market values at dates of grant, $41.56 and $45.75, respectively. (b) O tions for 1,600 shares at $39.50 and options for 8,200 shares at $43.50; fair market values at dates exercised, $52.33 and $46.88, respectively. (c) Options for 2,400 shares at $39.50 and options for 500 shares at $43.50; fair market values at dates exercised, $57.82 and $56.75, respectively. (d) Options for 200 shares at $39.50 and options for 1,100 shares at $43.50; fair market values at dates exercised, $46.37 and $48.66, respectively. F-17

LORILLARD CORPORATION AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS-Continued The following information relates to the Stock Purchase, Option and Incentive Plan adopted by the shareholders on Apri12, 1963 : Option Price Fair Market Value Number Per Per of Shares Share Total Share Total Shares of common stock under option under stock At Dates of Grant purchase and option arrangements : December 31, 1967 ........................ 83,200 (a) $3,736,475 (a) $3,736,475 June 30, 1968 ............................ 82,100 (b) 3,687,250 (b) 3,687,250 Options exercised under stock purchase and option At Dates Exercised ements : arran g 1965 .................................... 500 $45.00 22,500 $45.00 22,500 1966 .................................... 100(c) 44.75 4,475 52.69 5,269 1967 .................................... 300 (d) 13,450 (d) 16,107 Six months ended June 30, 1968 ............ 100(e) 44.75 4,475 47.50 4,750 Shares of common stock reserved for sale to emplov- ees under stock subscription rights granted in and exercised in 1964 (shares issuable after full payment up to July 1968) : December 31, 1967(f) ..................... 14,480 44.75 647,980 46.00 666,080 June 30, 1968(f) (g) ...................... 11,850 44.75 530,287 46.00 545,100 (a) Options for 30,100 shares granted in 1963 exercisable at $44.75 per share at any time up to July 31, 1973 and options for 53,100 shares granted in 1965 exercisable at $45.00 per share at any time up to December 1, 1970; fair market values at dates of grant, $44.75 and $45.00, respectively. (b) Options for 29,000 shares granted in 1963 exercisable at $44.75 per share at any time up to July 31, 1973 and options for 53,100 shares granted in 1965 exercisable at $45.00 per share'at any time up to December 1, 1970; fair market values at dates of grant, $44.75 and $45.00, respectively. (c) Not including options for 6,000 shares as to which the Company elected to pay the holders the option price plus $28,219 (the excess of the market price at the dates of exercise over the option prices) instead of issuing the shares. (d) Options for 200 shares at $44.75 and options for 100 shares at $45.00; fair market values at dates exercised, $51.63 and $57.81, respectively. (e) Not including options for 1,000 shares as to which the Company elected to pay the holders the option price plus $4,750 (the excess of the market price at the dates of exercise over the option prices) instead of issuing the shares. (f) In 1967 and 1968 subscriptions for 2,025 and 2,415 shares, respectively, were fully paid and the shares issued. (g) Options for 215 shares lapsed in 1968 and the applicable shares were made available for the granting of additional options under this Plan. On September 20, 1967 the Board of Directors adopted the 1967 Stock Option Plan and, subject to certain conditions, including approval of the Plan by the shareholders, granted key employees options to purchase 95,750 shares of common stock at $49.25 per share (fair market value at date of grant, per share and in total, $49.25 and $4,715,687, respectively) exercisable at any time within five years as to 77,500 shares, and within ten years as to 18,250 shares. The Plan was subsequently approved by the shareholders on April 9, 1968. At June 30, 1968 no options under this plan had been exercised and options for 2,000 shares of common stock had lapsed. The applicable shares were made available for the granting of additional options or rights to subscribe under either the Stock Purchase, Option and Incentive Plan or the 1967 Stock Option Plan. At June 30, 1968 a total of 122,317 shares of common stock were available for thP ffranfin~ f arirlitinnal nntinn~ ; ,L,+ a t_ _ .n. _ _ On t. stock is cr to additioi arrangeme purchase 1 11. SUPPi Depre Y Y Y S Taxes Y Yl Y( Si Rents : Yt Ye Ye Si: (a) Comprise Excise ta Import dt Payroll ts Property No managen L:V1111114-

3 1 adopted by the r Mar=alue Total ~ e Dates of Grant $3,736,475 3,687,250 Ltes Exercised 22,500 5,269 16,107 4,750 666,080 545,100 31, 1973 and ; fair market 31, 1973 and ; fair market "n price plus shares. s exercised, I price plus ares. issued. : additional !, subject S options rant, per irs as to I by the Options ; ranting Plan or ting of for the s were Stock I LORILLARD CORPORATION AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS-Continued On tile exercise of options, or the purchase of shares under stock purchase arrangements, common stock is credited with the par value of the shares issued and the remainder of the purchase price is credited to additional paid-in capital as received. On the issue of shares, when fully paid, under stock subscription arrangements, common stock is credited with the par value of the shares issued and the remainder of the purchase price is credited to addtttonal paid-tn capttal. 11. SUPPLEMENTARY PROFIT AND Loss INFORMATION Charged Directly To Profit and Loss Maintenance and repairs : Year ended December 31, 1965 .......... Year ended December 31, 1966 ......... Year ended December 31, 1967 ......... Six months ended June 30, 1968 ......... Costs Other Total 3,131,568 $ 110,631 $ 3,242,199 3,404,812 123,953 3,528,765 4,079,824 138,302 4,218,126 2,155,194 114,475 2,269,669 $ Depreciation : Year ended December 31, 1965 .......... 3,075,337 665,798 3,741,135 Year ended December 31, 1966 ......... 3,135,607 656,995 3,792,602 Year ended December 31, 1967 ......... 3,519,079 772,014 4,291,093 Six months ended June 30, 1968 ......... 1,835,574 422,459 2,258,033 Taxes other than income taxes(a) : Year ended December 31, 1965 .......... Year ended December 31, 1966 ......... Year ended December 31, 1967 ......... Six months ended June 30, 1968 ......... Rents : Year ended December 31, 1965 .......... Year ended December 31, 1966 ......... Year ended December 31, 1967 ......... Six months ended June 30, 1968 ......... 195,705,945 941,508 196,647,453 201,973,788 1,110,660 203,084,448 219,480,761 1,250,804 220,731,565 108,692,764 695,245 109,388,009 377,084 846,739 1,223,823 361,208 824,791 1,185,999 375,990 866,136 1,242,126 163,439 458,141 621,580 Six Months Year Ended December 31 Ended (a) Comprises: 1965 Excise taxes ........................... $192,443,758 Import duties ........................... 1,'28,377 Payroll taxes ........................... 1,407,890 Property taxes .......................... 1,067,428 Total .......................... $196,647,453 1966 1967 June 30, 1968 $198,725,665 $215,975,896 $106,847,315 1,753,387 1,936,818 1,043,409 1,832,987 2,059,515 1,149,016 772,409 759,336 348,269 $203,084,448 $220,731,565 $109,388,009 No management or service contract fees or royalties were paid during the above periods. F-19

PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 23. Other Expenses of Issuance and Distribution. The following is an itemized statement of the estimated amounts of all expenses of the Company in connection with the exchange and distribution of the securities registered hereby: Registration Fee ............................................... $ 58,280 New York Stock Exchange Listing Fee ............................ 18,513 Printing Expenses ............................................. 52,000 Engraving Expenses ........................................... 19,920 Legal Fees and Expenses ........................................ 20,000 Accounting Fees and Expenses ................................... 15,000 Miscellaneous ................... .......................... :.... ~ 1,287 Total ................................................... $185,000 Item 26. Recent Sales of Unregistered Securities. Loew's made the following recent sales of unregistered securities, all of which constituted guarantees of notes or mortgages made by subsidiaries of Loew's and all of which were exempt transactions under Section 4(1) of the Securities Act of 1933 as transactions by an issuer not involving any public offering. All of the guarantees shown below are set forth in Schedule XI hereto. I. Guarantee date•' December 15, 1965 by Loew's of quarterly payments of principal and interest commencing March 1, 1966 to and including the payment due December 1, 1972 under a mortgage made to The New York Bank For Savings in the sum of $4,425,000 with interest at °%ofo per annum covering premises owned by Firm Amurement Corporation. 2. Guarantee dated December 15, 1965 by Loew's of quarterly payments of principal and interest commencing March 1, 1966 to and including the payment due December 1, 1972 under a mortgage tnade to The New York Bank For Savings in the sum of $1,200,000 with interest at 5y4% per annum covering premises owned by Loew's Theatre & Realty Corporation. 3. Guarantee dated December 15, 1965 by Loew's of quarterly payments of principal and interest commencing March 1, 1966 to and including the payment due December 1, 1972 under a mortgage made to The New York Bank For Savings in the sum of $1,000,000 with interest at 5Y4ofo per annum covering premises owned by Orpheum-86 St. Corporation. 4. Guarantee dated December 15, 1965 by Loew's of quarterly payments of principal and interest commencing March 1, 1966 to and including the payment due December 1. 1972 under a mortgage made to The New York Bank For Savings in the sum of $1,000,000 with interest at 5y4% per annum covering premises owned by Putnam Theatrical Corporation. 5. Guarantee dated as of July 1, 1968 by Loew's of a promissory note in the sum of $6,000,000 due and payable on September 30, 1973 made by Loew's California Theatres, Inc. to Security First National Bank with interest at the rate of %7o per annum in excess of the bank's prime rate from time to time. 6. Guarantee de.ted July 11, 1968 by Loew's of a loan of $1,250,000 to Putnam Theatrical Corpora- tion conforming to the terms of two notes and mortgages held by the Onondaga County Savings Bank, said notes and mortgages having been consolidated to constitute a single mortgage covering premises located in Syracuse, N. Y., for the above sum, bearing interest at the rate of 7%% per annum, and due and payable August 1, 1994. Item 27. Subsidiaries of Registrant. Except as noted in the paragraph immediately below, a list of the names of all subsidiaries of Loew's as of August 31, 1968, is set forth in Item 3 of the Annual Report of Loew's, on Form 10-K (File No. 1-4204), for the fiscal year ended August 31, 1967, which list is incorporated herein by reference thereto.

Several additional subsidiaries have been acquired subsequent to August 31, 1967, which if con- sidered in the aggregate as a single subsidiary would not constitute a significant subsidiary. Several subsidiaries have been dissolved subsequent to August 31, 1967, which if considered in the aggregate would not constitute a significant subsidiary. The accounts of all the subsidiaries oF Loew's are included in the consolidated financial statements of Loew's set forth in the Prospectus. Item 31. Financial Statements and Exhibits. (a) Financial Statements: (1) Included in the Prospectus: Loew's Theatres, Inc.: Report of independent certified public accountants Balance sheets of the Company (separately) and of the Company and Subsidiaries (con- solidated), August 31, 1968 Statements of income and earnings retained in the business of the Company (separately) and of the Company and Subsidiaries (consolidated) for the three years ended August 31, 1968 Summary of earnings of the Company and Subsidiaries (consolidated) for the five years ended August 31, 1968 Notes to financial statements Supplementary profit and loss information for the three years ended August 31, 1968 (included in Notes to Financial Statements) Lorillard Corporation and Subsidiary Companies: Opinion of independent certified public accountants Consolidated balance sheet, December 31, 1967 and (unaudited) June 30, 1968 Statement of consolidated earnings for the five years ended December 31, 1967, and (unaudited) for the six-month periods ended June 30, 1967 and 1968 Statement of consolidated surplus for the three years ended December 31, 1967, and (unaudited) for the six months ended June 30, 1968 Notes to financial statements Pro forma: Condensed combined balance sheet of Loew's and Lorillard (unaudited) Condensed combined summary of earnings of Loew's and Lorillard (unaudited) (2) Included in Part II: Report of independent certified accountants Consents of independent certified public accountants Schedules - Loew's Theatres, Inc. : Number Title I-Marketable securities, August 31, 1968 III - Investments in securities of afflliates, for the year ended August 31, 1968 IV -Indebtedness of affiliates-not current-for the year ended August 31, 1968 V - Property, plant and equipment, for the year ended August 31, 1968 VI - Reserves for depreciation and amortization of property, plant and equipment, for the year ended August 31, 1968 IX - Bonds, mortgages and similar debt, August 31, 1968 XI-Guarantees of securities of other issuers, August 31, 1968 XII - Reserves, for the year ended August 31, 1968 XIII-Capital shares, August 31, 1968 XVII - Income from dividends-equity in net profit and loss of affiliates, for the year ended August 31, 1968 II-2

Schedules other than those listed are omitted as the information is either not applicable, not significant, or has been furnished in the financial statements or notes thereto. Schedules II, III, IV. V, VI, XII and XVII for the years ended August 31, 1966 and 1967, and the reports of independent certified public accountants with respect thereto, have previously been filed with the Commission in Forms 10-K and are incorporated herein by reference. Schedules-Lorillard Corporation and Subsidiary Companies: Schedules V, VI, V II, IX, XII and XIII (unaudited) for the six months ended June 30, 1968 are incorporated by reference to Registration Statement on Form S-1, File No. 2-30386, filed on September 30, 1968. Schedules V, VI, VII and XII for the three years ended December 31, 1967, and the opinions of independent certified public accountants with respect thereto, are incor- porated herein by reference to Forms 10-K filed by Lorillard. All other schedules of Lorillard are omitted because the required matter is not present or is shown in the financial statements or notes thereto. The individual financial statements of Lorillard are omitted as that company is primarily an operating company and all subsidiaries included in the consolidated financial statements are totally-held subsidiaries. (b) The following is a list of Exhibits filed as part of the Registration Statement: Exhibit No. 3 -Amendments to By-laws of Loew's adopted on October 17, 1968, and November 20, 1968. 4(b) -Amended proposed form of Indenture to be dated as of December 1, 1968, between Loew's and First National City Bank, as Trustee, incorporated by reference to amended Exhibit T3C to the Application of Loew's, on Form T-3, for Qualification of Indentures under the Trust Indenture Act of 1939. 5 -Amended Loew's Key Employees' Qualified Stock Option Plan. 6 --Opinion of Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison. {

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have examined the balance sheet of Loew's Theatres, Inc. and the consolidated balance sheet of the Company and subsidiaries as of August 31, 1968, the related statements of income and earnings retained in the business for the year then ended, and the supporting schedules. 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 supporting schedules at August 31, 1968 and for the year then ended (pages S-1 to S-10, inclusive) present fairly the information required to be set forth therein, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. LYBRAND, Ross BROS. & MONTGOMERY New York, N. Y., November 14, 1968

The consent of Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison is contained in their opinion filed as Exhibit 6 to this Registration Statement. We consent to the references to our firm in this Registration Statement under the captions "Pending Legal Proceedings" and "Experts". November 21, 1968 DAVis, POLE & WAItDWELL We consent to the references to our firm in this Registration Statement under the captions "Pending Legal Proceedings" and "Experts". November 21, 1968 GOLDSTEIN, BAHCELOUx & GOLDSTEIN CONSENTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the inclusion of the following reports in Amendment No. 1 to Registration State- ment No. 2-30386 of Loew's Theatres, Inc.: (1) our report dated November 14, 1968, except for Notes 2, 8 and 9, as to which the date is November 29, 1968, accompanying the financial statements of Loew's Theatres, Inc. and the consolidated financial statements of that Company and its Subsidiaries, and the consolidated summary of earnings, included in the Prospectus; (2) our report dated November 14, 1968 accompanying the supporting schedules listed in Item 31 of the Registration State- ment; and (3) our reports on schedules for the years ended August 31, 1966 and 1967 which have previously been filed with the Commission in Forms 10-K and which are incorporated herein by reference. We also consent to the references to our firm under the captions, "Summary of Earnings of Loew's" and "Experts." New York, N. Y., November 21, 1968 LrsaANn, Ross BROS. & MomxooasESev We hereby consent to the use in Amendmant No. 1 to Registration Statement No. 2-30386 of our opinion dated February 2, 1968 appearing in the Prospectus which is part of such Registration State- ment, and to the references to us under the heading "Statement of Consolidated Earnings of Lorillard" and "Experts" in the Prospectus. New York, N. Y. November 21, 1968 I'IASSINS & SELI.S 11-5

CONSENTS OF PROSPECTIVE DIRECTORS Each of the undersigned does hereby consent, pursuant to the provisions of Rule 438 under the Securities Act of 1933, as amended, to being named in this Registration Statement as persons to be elected to the Board of Directors of Loew's Theatres, Inc. (Manuel Yellen) II-6

SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York, on the 21st day of November, 1968. LAEw'S THEATRES, INC. (Registmnt) By LAURENCE A. Tiscx (Chairman of the Board and President) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature -, Title „ -- . Date Principal Executive Officer: Chairman of the Board November 21, 1968 LAURENCE A. TIscH an ,, d President , (Laurence A. Tisch) Principal Financial and Accounting Officer: JACOS STILLMAx Treasurer Nopenxb,ex 21, 1968 Directors: (Jacob Stillman) PRESTON R. TISCH• .. , , , lr ecto;„ November 21, 1968 (Preston R. Tisch) HEREERT.k. HOF\[ANN* , _ _. ,., ..,.. Director , ... , . ., - „-, . Not'ember, 21, 1968 (Herbert A. Hofmann) BERNARO MYERSON* , Director November 21, 1968 (Bernard Myerson) CHARLES B. BENENSON* Director , ,,.,, ... „ ,,'„m :Vqyep76er 21, 1968 (Charles B. Benenson) JAMESBRUCE* Dirgctor . , , November 21, 1968 (James Bruce) LEwls GRUBER* Director _ November 21, 1968 (Lewis Gruber) JoI1N F. MURPHY* Director November 21, 1968 ..furphy) S1afoN H. RIFIaNn* Director \orember 21, 1968 (Simon H. Rifkind) LESTER POLLACK, by signing his name hereto, does hereby sign this amendment to its Registration Statement on behalf of the Directors after whose printed names an asterisk appears, pursuant to Powers of Attorney duly executed by such Directors and filed with the Securities and Exchange Commission herewith. LESTER POLLACK (Lester Pollack, Attorney=m-Fact) 2 11-7 -4 0' ua CA 0 V

SCHEDULE I-MARKETABLE SECURITIES August 31,1968 Column A ; Column B , „ „ Column C Column D Number of Shares or Units Value Based Principal Amount Amount at Which on Current Market of Bonds Carried in Quotations at Name of Issuer and Title of Issue _ and Notes Balance Sheet Balance,SheetDate The Company and Subsidiaries (Consolidated) : U. S. Government securities .................. $ 64,000 $ 63,562 $ 63,000 Corporate Bonds: Dayton Power & Light Co., 5,%fo, 5-1-97 .... $ 500,000 456,875 470,000 Gulf & Western Industries, Inc., 5r2% Conv. Deb., 7-1-93 ............................ $2,250,000 1,816,874 1,884,000 New York Telephone Co., 6%, 9-1-2007 ..... $ 300,000 286,500 291,000 Pacific Gas & Electric Co., 5%%, 6-1-99 ..... $ 320,000 290,576 295,000 2,850,825 2,940,000 Corporate Stocks : American Telephone & Telegraph Co......... 5,000 shs. 257,500 257,000 Arizona Public Service Co . ................. 20,000 shs. 445,800 445,000 Avco Corporation $3.20 Cum. Conv. Pfd...... 10,000 shs. 1,081,173 877,000 Bendix Corporation ....................... 20,000 shs. 804,217 810,000 Control Data Corporation .................. 129,429 shs. 9,821,623 16,955,000 Dynamics Corp. of America ................. 80,400 shs. 1,895,625 1,668,000 Franklin National Bank .................... 95,000 shs. 3,067,016 3,373,000 Hartford Fire Insurance Co . ................ 41,000shs. 1,105,000 1,384,000 INA Corp . ............................... 154,800 shs. 4,522,024 5,612,000 Kaiser Industries Corp . .................... 20,000 shs. 443,553 385,000 Mobil Oil Corp . .......................... 30,000 shs. 1,528,215 1,601,000 Phillips Petroleum Co. . .................... 30,000 shs. 1,923,548 1,890,000 Rapid American Corp . ..................... 19,500 shs. 448,500 480,000 Reliance Insurance Co ...................... 25,000 shs. 1,671,410 1,706,000 The Oil Shale Corporation ................. 150,000 shs. 675,000 881,000 Velcro Industries Ltd . .................... : 15,000 shs. 734,583 677,000 Western Casualty & Surety Co . ............. 17,000 shs. 731,000 748,000 31,155,787 39,749,000 Seventeen other securities .................... 5,078,608 $39,148,782 S-1 5,298,000 $48,050,000 r

LOEW'S THEATRES, INC. SCHEDULE III-INVESTMENTS IN SECURITIES OF AFFILIATES For the year ended August 31, 1968 ~ Column A Column B Column C Colamn D Column E Balance at Balance at Beginning of Period Additions Deductions Close of Period Name of Issuer and Title of Issue Number of Shares Amount in Dollars Number of Shares Amount in Dollars Number of Shares Amount in Dollars Number of Shares Amount in Dollars The Company (Separately) : Wholly owned companies: Abingdon Amusement Corporation, common .... 100 $109,582 100 $109,582(a Fairmont Theatre Corporation common 100 400 720 100 ~ 9,000(b~ ......... , , 391,720(a (n L.oew's Dayton Theatre Company, common ...... 100 492,148 75,000(b) 100 $417,148 t~ Loew's Hotels, Inc., common .................. 500 531,545 49,000(c) 500 482,545 Mayfair Building, Inc., common ............... 1,000 284,000 1,000 284,000( )a New Buffalo Amusement Corporation, common .. 150 488;627 50,000(6 150 438,627 Standard Evansville Realty Corporation, common 200 53,000 24,000(b) 200 29,000 Tower 58 Corporation, common .............. 1 $1,000 1 1,000 Seventy-one other wholly owned companies, no change during year ......................... 203,757 24,551,038 203,757 24,551,038 Majority owned companies: Gates Theatre Corporation, common ........... 1 G16Y3 727,607 1,616~4 727,607 Marcus Lo®w's Theatres Limited, common ...... 5,780 411,298 5,780 411,298 Parsippany Theatre Corp., common ............ 102 10,200 102 10,200 Root Main Street Corporation, Class A, common 130 650 130 650 Root Main Street Corporation, Class B, Common 130 35,000 130 35,000 $28,095,415 $ 1,000 $992,302 $27 104 113 , , m n NOTES: ~ (a) Company liquidated during year. d (b) Cash dividends paid from capital surplus of subsidlary. ~ (c) Cash dividend paid in connection with reduction of capital stoclr. ~y A 605£9LTb

SCHEDULE IV LOEW'S THEATRES, INC. SCHEDULE IV-INDEBTEDNESS OF AFFILIATES-NOT CURRENT For the Year Ended August 31, 1968 ! Column A Column B Column C ame of Affiliate , Balance Receivable at Beginning of Year Balance Receivable at Close o~Xeap The Company (Separately) : Americana of Puerto Rico, Inc . .............................. $ 1,036,972 $ 843,337 Columbia-Palace Corporation ................................ 823,000 660,000 57th Holding Corporation .................................. 2,080,000 3,885,000 56th & Park Ave. Corp . .................................... 2,065,000 840,000 Firm Amusement Corporation ............................... 225,000 lst Ave.-17th St. Corp . .................................... 40,000 45,000 48th St. & 8th Ave. Corp . ................................... 90,000 Hinsdale Amusement Corporation ........................... 301,700 472,700 Lawton General Corp . ...................................... 13,451,130 (a) Loew's Boulevard Corporation ............................... 190,000 (a) Loew's California Theatres, Inc . ............................. (b) 2,194,500 Loew's Chicago Hotel Corp . ................................ 3,747,262 3,282,808 Loew's Dayton Theatre Company ............................ 20,000 Loew's Theatre & Realty Corporation ........................ 100,000 9,000 Moredali Realty Corporation ................................ 60,000 205,000 Orpheum-86 St Corporation ............................... 20,000 Parsippany Theatre Corp . .................................. 218,720 187,720 Pen Val Realty Corp . ...................................... 2,294,000 (a) Poli-New England Theatres, Inc . ........................... (b) 995,000 Root Main Street Corporation .............................. 30,000 36,000 Sejo General Corp .......................................... 187,500 207,000 Squireco Building Corporation .............................. 245,000 Warwick Operating Corp . .................................. 4,586,000 3,850,000 Indebtedness of totally-held subsidiaries (thirty-six at August 31, 1967 and thirty at August 31, 1968) ........................ 18,709,549 18,404,605 $50,185,833 $36,452,670 Nores : (a) Subsidiary became totally-held during the year. (b) Subsidiary wa; tccally-Iuld at the beginning of the year. S-3

I LOEW'S THEATRES, INC. SCHEDULE V SCHEDULE V-PROPERTY, PLANT, AND EQUIPMENT For the year ended August 31, 1968 Column A Classification Column F Balanceat Close of Period The Company and Subsidiaries (Consolidated): Land ............................................... $ 45,422,003 Buildings ............................................ 137,337,995 Equipment .......................................... 32,866,350 Leaseholds ........................................... 12,718,994 $228,345,342 Noxe: The information required by Columns B, C, D and E is omitted because neither the total additions ($22,150,000 including approximately $8,700,000 resulting from the acquisition, renovation and refurbishing of 29 West Coast theatres) nor the total deductions ($3,080,000) amount to more than 10% of the balance at close of period. S-4 i

LOEW'S THEATRES, INC. SCHEDULE VI-RESERVES for DEPRECIATION and AMORTIZATION of PROPERTY, PLANT, and EQUIPMENT For the year ended August 31,1968 Column A Column B Column C Column D Column E tn ~ Additions Deductions Charged to Retirements, Balance at Pro6t and L harged to Renewals Balance at Beginning of Loss or Other and Close of Description Period Income Accowtts Replacements Other Period The Company and Subsidi- aries (Consolidated) : Buildings ............ $46,930,725 $3,754,054 $23,895(1) $ 303,206 $50,405,468 Equipment ........... 14,461,598 3,403,158 30,509(1) 2,196,532 15,698,733 Leaseholds ........... 1,393,121 640,702 62 2,033,761 $62,785,444 $7,797,914 $54,404 $2,499,800 $68,137,962 Noza: (1) Subsidiaryrs reserve at date of aaluisition. zTSe9Crb

LOEW'S THEA'PRES, INC. SCHEDULE IX-BONDS, MORTGAGES AND SIMILAR DEBT August 31, 1968 Column A Column B Column C Amount Amount Issued and Authorized Not Retired Name of Issuer and Title of Each Issue by Indenture or Canceled The Company (Separately) : Long-term debt: Loetv's Theatres, Inc.: 5%% convertible (at $90 per share) subordinated debentures due July 1, 1993 ............ $ 530,400 The Company and Subsidiaries (Consolidated) : Long-term debt: Americana of Ptterto Rico, Inc, : 6% First Mortgage due Decem- ber 1, 1982 ................. None 51st St. & 8th Ave. Corp.: 6% First Mortgage due January 1, 1986 ....................... None Proceeds of land sold (and leased baclc) with obligation to repur- chase January 1. 1986 ........ None 56th & Park Ave. Corp.: 67rFirst Mortgage due August 1, 1981 ....................... None 5% Second Mortgage due June 3, 1974 ....................... None 57th Ho;ding Corp. : 6%r/c 1"irst \Iortgage due June 1, 198ri ....................... None 53rd n tb ' rp.: 6,,_7 First Mortgage due Septem- ber 1,1998 .................. None Firm Amusement Corporation : 5% Jc First Mortgage due Decem- ber 15, 1980 ................ None 1st Ave,-17th St. Corp : Fee and Leasehold Trust Certi&- cates, 5y2% interest included in fixed anuaal payment of $51,000, no ntatttrity clatc ............. $ 850,000 48th St. & 8th Ave. Corp.: 5%% First Mortgage due Febru- ary 1. 1983 ................. None Hotel Americana of New York, Inc, : 6% First Mortgage due June 1, 1981 . ....................... None 6 fc Mortgage Note due December 21, 1976 (subordinate to first mortgage) .................. None Loew's California Theatres, Inc.: Note Payable, % k over prime rate, due September 30. 1973 ...... None Loew's Chicago Hotel Corp.: 6%°/'o First Mortgage due October 1, 1981 ..................... None Zero to 4% Second Purchase Money Mortgage due September 10, 1985 .................... None Loew's Dayton Theatre Company: Fee and Leasehold Trust Certi6- cates, 5/% interest included in fixed annual payment of $27,000, no niaturitv date ............. 451,).000 Loecv's Sunmtit, Inc.: 6y3cJa Leasehold Mortgage due December 1. 1981 ............ None Loew's Theatre & kealty Corporation: 5y4% First LSortgagcs due De- cemher 15, 1980 ............. None LoeW's Theatres, Inc.: 5%% Convertible (at $90 per share) Sulxndinated Debentures tn a due July 1. 1993 ............ Midland Investntent Corporation: General Mortga e Income Bonds, 530,400 Column D Amount Included in Column C Which Is Held by or Not Held by or for Account for Account of Issuer of Issuer Thereof Thereof $ 480,900 None Column E Column F Column G Column H Amount Included in Sum Extended Amount in Amount Held by under Caption " Sinking At6liates Bonds, Mortgages and and Other Special Amount Persons Smiliar Debt" Funds of Pledged Inuded in in Related Issuer by Issuer Consolidated Balance Sheet Thereof Thereof Statement Others 480,900 $ 480,900 $ 4,500,000 None $ 4,500,000 $ 4,500,000 1,726,149 None 1,726,149 1,726,149 2,000,000 None 2,000,000 2,000,000 5,075,728 None 5,075,728 5,075,728 5,000,000 None 5,000,000 5,000,000 2,100,000 None 2,100,000 2,100,000 8,984,959 None 8,984,959 8,984,959 4,135,547 None 4,135,547 4,135,547 850,000 $653,000 197,000 197,000 3,527,422 None 3,527,422 3,527,422 18,114,470 None 18,114,470 18,114,470 3,600,000 None 3,600,000 3;600,000 6,000,000 None 6,000,000 6,000,000 2,844,155 None 2,844,155 2,844,155 4,830,324 None 4,830,324 4,830,324 450,000 333,000 117,000 117,000 6,336,473 None 6,336,473 6,336,473 2,041,257 None 2,041,257 2,041,257 480,900 None 480,900 480,900 4% rlue Mav 15, 1978 ........ 557.263 None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None None $653,000 None None None None None None None None None None None None None None None None None None None None None None None None None None None 333,000 None None None None None None None Nr,ne None None None None None None None

Moredall Realty Corporation : 5%% First Mortgage due Decem- ber 1, 1973 ................. None 6%ofo First Mortgage due Sep- tember 20, 1970 ............. None Orpheum-86th St. Corporationi.~ 5Y4°fo First Mortgage due Decem- ber 15, 1980 ... ........ None Putnam Theatrical Corporation : 5Y4oJo First Mortgage due Decem- ber 15, 1980 ................ None 7/% First Mortgage due August 1, 1994 . ................ None 61st & Park Ave. Corp.: W47o First Mortgage due July 1, 1988 .... ......... None Squireco Building Corporation • 6ojo First Mortgage due May 3, 1984 .. .............. None Warwick Ogerating Corp.: 6% ofo First Mortgage due Novem- ber 1, 1970 ................. None Other mortgages and similar obliga- tions, interest ranges from zero to 7%ofo and maturities from 1969 to 1993 ........................... None Due within one year ............... Due after one year ................. Nors: See Note 4 to financial statements. bSae9Lt6 2,966,547 None 2,966,547 2,966,547 None None None None 2,700,000 None 2,700,000 2,700,000 None None None None 927,844 None 927,844 927,844 None None None None 927,844 None 927,844 927,844 None None None None 1,245,573 None 1,245,573 1,245,573 None None None None 9,985,417 None 9,985,417 9,985,417 None None None None 6,472,444 None 6,472,444 6,472,444 None None None None 1,569,314 None 1,569,314 1,569,314 None None None None 7,130,051 None 7,130,051 7,130,051 None None None None $116,891,995 $986,000 $115,905,995 $115,781,735 $986,000 $124,260 $ 6,702,871 $109,078,864

LOEW'S THEATRES, INC. SCHEDULE XI-GUARANTEES OF SECURITIES OF OTHER ISSUERS August 31, 1968 Column A Name of Issuer of Securities Guaranteed by Person for Which Statement Is Filed Column B Column C Column D Column E Column F Column G Nature of Any Default by Issuer of Securities Guaranteed in Principal, Amount Owned Interest, by Person Amount Sinking Fund or Persons in Treasury or Redemption for Which of Issuer Provisions, or Statement of Securities Nature of Payment of Is Filed Guaranteed Guarantee Dividends None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None I'ayment of principal and interest None None None Payment of principal and interest None None None Payment of principal and interest None None None Paytnent of principal and interest None Title of Issue Total Amount of Each Class Guaranteed of Securities and Guaranteed Outstanding (Note) The Company (Separately) : Americana of Puerto Rico, Inc. First mortgage, 6ofo, due December 1, 1982 .... $4,500,000 Firm Amusement Corporation First mortgage, 5%%, due December 15, 1980 ... 495,535 ~ Hotel Americana of New York, Inc. Mortgage note, 6010, due December 21 1976 . 3 600 000 v Loew's California Theatres, Inc. , .. Promissory note, 5%, due August 1, 1970 ...... , , 328,351 Promissory note, % ofo over prime rate, due September 30, 1973 ... 6,000,000 Loew's Chicago Hotel Corp. First mortgage, 6?/ ....... ~o, due October 1, 1981 2,376,524 Loew's Summit, Inc. Leasehold mortgage, 6Y4 5~;, due December 1, 1981 .. 1,336,473 Loew's Theatre & Realty Corporation First mortgages, 5% olo, due December 15, 1980 .... 273,175 Promissory note, 60, due March 13, 1973 ....... 95,000 Orpheum-86 St. Corporation First mortgage, 5Yj %, due December 15, 1980 .... 124,209 Putnam Theatrical Corporation First mortgage, 5,Y4fa, due December 15, 1980 .... 124,209 5t5E9L '[b First mortgage, 7 J%, due August 1, 1994 ...... 1,245,573 $20,499,049 Noxs: The annual aggregate amount of interest guaranteed approximates $1,640,000.

The Company (Separately) : Reserve to reduce net excess of investments in subsidiary com- panies to related book values at acquisition ............. Reserve for estimated losses on investments in and advances to subsidiary companies ..... SCHEDULE XII Column A Column B Column C Column D Column E Additions Charged to Balance at Profitand Charged to Deductions Balance at Beg~'nning Loss or Other from Close of Description of Period Income Accounts Reserves Period 1 The Company and Subsidiaries (Consolidated) : Allowance for doubtful accounts receivable ................ LOEW'S THEATRES, INC. SCHEDULE XII-RESERVES For the year ended August 31, 1968 $ 282,042 $1,164,087(a) $461,167(a) $1,907,296 2,400,000 $229,313(a) 2,170,687 $2,682,042 $1,164,087 $461,167 $229,313 $4,077,983 ~ 925,916 $ 870,228 $477,164(b) $1,3'.?,980 Nora : (a) Subsidiary liquidated. (b) Uncollectible accounts written off. S-8

LOEW'S SCHEDULE XI Aug THEATRES, II-CAPITAL ust 31, 1968 INC. SHARES Column A Column B Column C Column D Column E Column F Shares Outstanding Number of Shares as Shown on or Number of Shares Included in Column C Included in Related Held by Affiliates Which Are Balance Sheet for Which Statements Number of Not Held by nder Caption v " " Are Filed Herewith Numberof Shares Heldbyor orfor Capital Shares • Persons Shares Issued and for Account Account Amount at Included in Authorized Not Retired of Issuer of Issuer Which Consolidated Name of Issuer and Title of Issue by Charter or Canceled Thereof Thereof Number Carried Statements Others The Company (Separately) and the Company and Subsidiaries (Consoli- dated) : Loew's Theatres, Inc., common stock, par value $1 .................... The Company and Subsidiaries (Con- solidated) : Minority interests : Root Main Street Corporation, Class A conunon stock, no par value ...................... Root Main Street Corporation, Class B common stock, no par value ...................... Root Main Street Corporation, Class C common stock, no par value (nonvoting) .......... Gates Theatre Corporation, com- mon stock, par value $100 .... Parsipgany Theatre Corp., com- mon stoclc, no par value ...... Hawthorne Amusement Corpora- tion, capital stock, par value $100 ...................... Marcus Loew's Theatres Limited, common stock, par value $100 Broadway Ventures, Inc., capital stock, no par value .......... Americana, Inc., capital stock, no par value ................... Nos'E: See Notes 8 and 9 to financial statements. Column G Column H Number of Shares Reserved for Number of Options, Shares Warrants, Reserved for Conversions Officers and and Other Employees Rights 15,000,000 4,768,745 None 4,768,745 4,768,745 $4,~ 68,745 None None (note) (note) 130 130 None 130 None None 130 None None None 130 130 None 130 None None 130 None None None 40 40 None 40 40 $ 200 None None None None 3,000 3,000 None 3,000 1,383% 138,330 1,616/ None None None 2,500 200 None 200 98 9,800 102 None None None 100 100 None 100 33% 3,333 66% None None None 7,500 7,500 None 7,500 1,427 142,700 6,073 None None None 204 204 None 204 100 24,990 104 None None None 100 100 None 100 49 24,500 51 None None None $343,853 Information with respect to the capital shares of other subsidiaries consolidated is omitted as all the outstanding capital shares of such subsidiaries are owned by the Company and the answer to Columns G and H would be "None." LI5E9Gi6

LOEW'S THEATRES, INC. SCHEDULE XVII-INCOME FROM DIVIDENDS-EQUITY IN NET PROFIT AND LOSS OF AFFILIATES For the Year Ended August 31, 1968 Column A Column B Column C Amount of Dividends Total of Related Amount of Captions Equity in of Profit Net Profit and Loss and (Loss) or Income for the Name of Issuer and Title of Issue Cash Other Statement Period 1 The Company (Separately) : Totally held subsidiaries ............................ $ 578,000 $ 578,000 $26,347,794 Other wholly owned subsidiaries ...................... 9,760,000 9,760,000 11,510,190 Majority owned subsidiaries ......................... 46,683 46,683 346,873 50°fo owned companies .............................. 35,000 35,000 39,527 Totals for subsidiaries and 50% owned companies $10,419,683 SCHEDULE XVII $10,419,683 $38,244,384 Marketable securities ................................ $ 58,803 $ 58,803 IQ=

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