Tobacco Documents Online

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, 4,,«,- e P r ~~ al"l-c ezck~~ I ~ ~? Prom the desk of CURT JUDGE pm /- p Trz

MEMORANDUM January 25, 1982 TO: Mr. Roy E. Posner FROM: Sara R. Ridgway SUBJECT: Lorillard 1981 Activity - Loews Annual Report Roy, following is a chronology of significant events at Lorillard during calendar 1981. If you would like for us to assist in writing a verbal report on the year's activities for the annual report, we would be glad to prepare a draft for you. February - a 34,000 sq.ft tobacco warehousing facility was completed in Greensboro March - National introduction of TRIUMPH 100's in regular and menthol packings - BIG RED chewing tobacco product was reformulated and introduced in a new package design - KENT III cities advertising campaign rolled national April GOLD RUSH chewing tobacco was introduced into test markets in North and South Carolina AID program instituted to increase distribution Curtis H. Judge inducted into N.A.T.D. Hall of Fame Greensboro manufacturing plant observed its 25th anniversary May - NEWPORT LIGHTS 100's were introduced nationally - MAVERICK, Kings and 100's, introduced in Market Probes in Spokane and Lubbock June - NEWPORT RED, a non-menthol version of the very successful NEWPORT menthol product, was regionally introduced - a 122,000 sq.ft. structural addition to the Greensboro manufacturing facility was completed to provide for the large increase in number of packings requiring additional cutting, blending and storage capacity

R Mr. Roy E. Posner January 25, 1982 Page.../2 July - At Danville, the development and installation of computer-controlled conditioning and drying operations were completed ... the objective being to increase the yield of green leaf tobacco and to improve the quality of tobacco going into storage September - New TRUE "You Found It" advertising campaign introduced October - REBEL, Kings and 100's introduced in Market Probes in Roanoke and Erie - HERITAGE, Kings and 100's, introduced in Market Probes in Jackson and Lexington - New GOLDEN "de" LIGHTS advertising campaign launched December - In Louisville, the cigarette blending department was completely renovated in order to accomplish increased automation, higher quality product and tobacco savings Full Year - Lorillard Share of Cigarette Market declined from 9.7% to 9.2% - Competitors introduced 28 new brands or lower tar line extensions of existing popular brands with unprecedented advertising and promotional expenditures, thus creating dramatic new competition in this segment of the business where Lorillard's greatest strengths are Special Note NEWPORT's sales increased 23.3% over the previous year representing the largest percent increase of any cigarette brand W S. R. R. /cnr / cc: Messrs: C. J. H. R. Judge v Ave -o N ~ Dr. A. W. Spears ~ ~ ~ -j O~

• DRAFT -- January 22, 1982 SUBJECT: Lorillard 1981 Activity - Loews Annual Report ----------------- -------------------------------------------- TO: Mr. Roy Posner FROM: Sara R. Ridgway Roy, following is a chronology of significant events at Lorillard during calendar 1981. If you would like for us to assist in writing a verbal report on the year's activities for the annual report, we would be glad to prepare a draft for you. February - a 34,000 sq.ft. tobacco warehousing facility was completed in Greensboro March - National introduction of TRIUMPH 100's in regular and menthol packings - BIG RED chewing tobacco product was reformulated and introduced in a new package design - KENT III cities advertising campaign rolled national April - GOLD RUSH chewing tobacco was introduced into test markets in North and South Carolina - AID program instituted to increase distribution - Curtis H. Judge inducted into N.A.T.D. Hall of Fame - Greensboro manufacturing plant observed its 25th anniversary -0 ~ ~ .R ~ ~ ~ ~

DRAFT -- Mr. Roy Posner January 22, 1982 Page.../2 May - NEWPORT LIGHTS 100's were introduced nationally - MAVERICK, Kings and 100's, introduced in Market Probes in Spokane and Lubbock June - NEWPORT RED, a non-menthol version of the very successful NEWPORT menthol product, was regionally introduced - a 122,000 sq.ft. structural addition to the Greensboro manufacturing facility was completed to provide for the large increase in number of packings requiring additional cutting, blending and storage capacity July - At Danville, the development and installation of computer-controlled conditioning and drying operations were completed ... the objective being to increase the yield of green leaf tobacco and to improve the quality of tobacco going into storage September - New TRUE "You Found It" advertising campaign introduced October - REBEL, Kings and 100's, introduced in Market Probes in Roanoke and Erie HERITAGE, Kings and 100's, introduced in Market -0 ~ Probes in Jackson and Lexington ~ ~ New GOLDEN "de" LIGHTS advertising campaign m launched

DRAFT -- Mr. Roy Posner January 22, 1982 Page.../3 December - In Louisville, the cigarette blending department was completely renovated in order to accomplish increased automation, higher quality product and tobacco savings Full Year - Lorillard Share of Cigarette Market declined from 9.7% to 9.2% - Competitors introduced 28 new brands or lower tar line extensions of existing popular brands with unprecedented advertising and promotional expenditures, thus creating dramatic new competition in this segment of the business where Lorillard`s greatest strengths are Special Note NEWPORT's sales increased 23.3% over the previous year representing the largest percent increase of any cigarette brand

Loews Corporation Annual Report 1981 FINANCIAL HIGHLIGHTS Years Ended December 31, 1981 1980 1979 1978 1977 (Amounts in thousands, except per share data) Results of Operations: Revenues .................................. $4,776,219 $4,535,098 $4,065,475 $3,455,644 $3,238,412 Income from continuing operations.. 268,190 221,973 181,972 147,670 80,677 Per share-Income from continuing operations: Primary ................................ 20.96 17.99 15.87 12.70 6.33 Assuming full dilution .............. 14.82 11.47 8.86 4.76 Net income ............................... 253,213 206,099 208,580 168,165 174,349 Per share-Net income: Primary ... ............................. 19. 79 16.70 18.19 14.47 13.68 Assuming full dilution .............. 13.88 13.08 10.02 9.70 Financial Position: Total assets ............................... 9,914,071 9,125,112 8,842,683 7,745,867 7,005,068 Long-termdebt .......................... 765,218 848,713 968,2,'•6 950,315 990,525 Shareholders' equity .................... 1,356,641 1,194,589 1,040,754 856,053 728,054 Cash dividends per share ............... 1.20 1.20 1.20 1.20 1.20 PRICE RANGE OF COMMON STOCK Loews Corporation's common stock is listed on the New York Stock Exchange. The following table sets forth the reported consolidated tape high and low sales prices in each calendar quarter of 1981 and 1980: 1981 1980 High Low High Low First Quarter ................................................................... 863/a 73 73'la 5271e Second Quarter ............................................................... 107'ls 83`Ia. 75'/s 57'/s Third Quarter ................................................................. 103s/s 783/s 92t/z 73I1a Fourth Quarter ................................................................ 921/s 82314 931/4 75'Ia DIVIDEND INFORMATION The Company has paid quarterly cash dividends on its common stock in each year since 1967. Dividends of $.30 per share on common stock outstanding were paid in each calendar quarter of 1981 and 1980. APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS As of February 24, 1982 the Company had approximately 7,600 record holders of Common Stock. Letter To Shareholders and Employees ...................... . ............................... 2 Business Segments ...................................................................... 8 Management's Discussion and Analysis of Financial Condition and Results of Operations ............. 10 Financial Statements .................................................................... 13 Directory: Directors ............................................................................ 43 Officers ............................................................................. 44 l5

.__........_ ~ ~ .. ~ . . . . .._. _-:ras=-.c aa" TO OUR SHAREHOLDERS AND EMPLOYEES 2 1981 was the fifth consecutive year in which Loews Corporation reported record revenues and operating income. Assets grew to $9.9 billion. Shareholders' equity reached $1.4 billion. The results for 1981 are summarized as follows: Income from operations for 1981 increased 20.8% to $268.2 million, equal to $20.96 per share. Income from operations for the prior year amounted to $222.0 million, or $17.99 per share. Income from operations for 1981 includes gains totalling $58.3 million, or $4.51 per share, on sales of real property and of the Drake Hotel in New York City. Income from operations for the prior year included a gain on the sale of the Warwick Hotel in New York City of $18.8 million, or $1.56 per share, and a gain of approximately $6.4 million, or $.53 per share, relating to dispositions of real property by CNA Financial Corporation's Larwin subsidiary. Revenues mi!lions of dallsrs 5000 Farnings Per Share do!!an 20.00 3000 16.00 3000 12.00 2000 8.00 1000 a oo , a 11111 0 77 '78 '79 '80 '81 - '78 •79 '80 '81 Shareholders' Equity milkons of dallan 1500 III 7 '78 '79 '80 8 1250 1000 "50 500 250 0 Net income, which includes the gains on sales of hotels and other real property, amounted to $253.2 million, or $19.79 per share, for 1981, compared to net income of $206.1 million, or $16.70 per share, for 1980. Net income for 1981 also includes realized investment losses amounting to $11.1 million, or $.87 per share, and a loss of $3.8 million, or $.30 per share, relating primarily to discontinued operations of an unconsolidated affiliate of CNA. Net income for the prior year included realized investment losses of $15.9 million, or $1.29 per share. 1981 consolidated revenues increased 5. 3% to $4.8 billion from $4.5 billion a year ago. Lorillard Sales and earnings growth of Lorillard continued at very satisfactory levels during 1981 despite an intense competitive environment. Lorillard faced the introduction of an unprecedented number of competitive new brands, brand extensions and packings, primarily aimed at the low-tar segments of the market, where it has positioned itself so successfully in recent years. While competitors' introductions, supported by significant advertising and promotional expenditures, reduced Lorillard's share of the market, the Division has countered with aggressive and innovative marketing and development programs. Operating results reflect price increases during the year; however, they also reflect the growing state and local tax burden. A very substantial increase in the Federal excise tax on cigarettes was narrowly averted in early 1982, and Lorillard was gratified by the number of employees and shareholders who made their views known to lawmakers. FYet income mi!lront of dollsrs Total PLssecs 275 220 bi!lions of dollars 10.5 7.0 tG5 .tl0 ,A 55 11111: .5 0 7- '78 '79 '80 '81 '80 '81 O

:: . 1981 marked the twenty-fifth year of operations at Lorillard's Greensboro, North Carolina, plant and completion there of a 122,000 square foot manufacturing addition and a 34,000 square foot warehouse facility. This expansion will provide an ability to meet the demands of increased packings needed to compete effectively in the marketing climates the Division foresees. At Danville, Virginia, new computer- controlled conditioning and drying operations were completed and installed. At Louisville, Kentucky, the cigarette blending operation was completely renovated. These improvements will serve to insure increased yields of leaf tobacco, and more efficient and economical operations. Product introductions and extensions were extremely important during the past year. In addition, several new Lorillard products are currently being tested. New advertising campaigns for these and existing products were initiated with substantial success. The Division's very successful Newport brand registered a sales increase for the year in excess of 23 %, the second largest increase of any cigarette brand sold in America. Bold new advertising campaigns included extension of the Kent III cities campaign with themes tailored to particular locales. The True brand followed with a new True "You Found It" campaign, highlighted by extremely attractive copy featuring the distinctive True label positioned in the midst of colorful scenes. Other new advertising included the catchy Golden "de" Lights campaign. While small in comparison to cigarette volume, the chewing tobacco segment of the market continues to grow. Lorillard is directing heightened attention to its successful Beechnut brand and has reformulated, re-packaged and expanded distribution of Big Red. The effective distribution of Lorillard products is a very material part of the Division's success in its efforts to obtain that one vital step ahead of the competition wherever possible. Among other merchandising accomplishments, Lorillard's reputation for understanding its wholesale distributors' needs was enhanced with the introduction of an innovative incentive program for this important group. CNA Financial CNA Financial Corporation experienced generally satisfactory results in 1981, considering the strong negative pressures affecting both the economy and the industries in which it does business. Intense competition, inflation and extremely high interest rates, and the recessionary economy, adversely impacted the insurance industry. In 1981, the property and casualty industry recorded the worst underwriting loss in its history. CNA's insurance underwriting results reflect these adverse external factors. During 1981, however, the company continued to display strength and stability in the face of a harsh marketing climate. 3 j -77 _