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LOEWS CORPORATION ANNUAL REPORT 1973

Contents Shareholders and Employees Letter ... 1 Ten Year Financial Review .......... 2 Lorillard Domestic .................. 4 Lorillard International .............. 6 Loews Hotels ...................... 8 Loews Theatres .................... 12 Loews/Snyder ..................... 13 Financial Statement ................ 14 Notes ............................ 18 Opinion of Independent Accountants. .20 Directory .......................... 21

To Our Shareholders and Employees The fiscal year ended August 31, 1973 was eventful and successful. We achieved operating earnings dur- ing the past year of $51,232,000 equal to $3.61 per share (primary), the highest levels in our history. Last year's earn- ings from operations were $50,888,000, or $3.49 per share, before inclusion of the Company's equity in net earnings of Franklin New York Corp. Our shares of Franklin were sold in July of 1972. Security gains for the year were $11,- 885,000, or $.84 per share, compared with $13,522,000, or $.93 per share last year. Net earnings for the year were $63,117,- 000, or $4.45 per share as opposed to $69,621,000, or $4.78 for the prior fiscal year, reflecting the difference in secur- ity gains and the inclusion last year of both the Company's equity in net earn- ings of Franklin New York Corp., amounting to $2,282,000, or $.16 per share, and extraordinary items of $2,929,000, or $.20 per share. Gross sales and operating revenues for the fiscal year were $766,436,000 against $804,105,000 for last year. Fis- cal 1973 revenues were less than last year due principally to the lease or sale of six hotel properties and the sale of 48 theatres during the last part of fiscal 1972. Between March 12,1973 and September 7, 1973, the Company purchased in the open market 1,868,800 shares of its common stock. Earnings per share are based on the weighted average number of shares outstanding, 14,190,000 shares for 1973 and 14,567,000 shares for 1972. In October 1973 the Board of Directors declared a quarterly dividend on the Company's common stock of $.29 per share payable November 1, 1973 to shareholders of record on October 15, 1973. An additional dividend of $.03 per share was also declared in order to bring the per share dividend for the calendar year 1973 to a total of $1.19, the allowable amount for 1973 under the Phase IV Guidelines for Dividends. In May 1973 we executed an agreement for acquisition of 72 percent of the shares of Century Circuit, Inc., which operates 42 motion picture theatres located principally in the New York metropolitan area, looking toward ac- quisition of all of the outstanding shares. The transaction must be ap- Preston Robert Tisch proved by the United States District Court for the Southern District of New York; and preparation for a hearing on the matter, which has not yet been set, is progressing. In March and May of 1973 we made cash tender offers for Talcott National Corporation and Gimbel Brothers Inc., respectively. Neither offer resulted in acquisition of control by Loews due to competing offers by other parties. We continue to regularly and actively seek acquisition opportunities; until apply- ing funds for acquisition purposes or other development activities, we will continue to invest in marketable securi- ties in order to seek a return on our funds. Our development program was evident in all divisions. The Lorillard Division, which serves as the principal contribu- tor to our revenues and profits, further expanded its world-wide activities. This expansion was realized primarily through new licensing agreements, which significantly increased Lorillard's share of the overseas market. The Hotel Division opened new hotels in Washington, D.C., and Hamburg, West Germany, and concluded agree- ments for additional luxury hotels in key cities of Canada and Europe. The Hotel Division, which has attained an outstanding reputation, is directing its expansion toward operation for own- ers and developers under management agreements. In addition to the proposed Century Circuit acquisition, the Theatre Division continued construction of new theatres in important locations and divided ex- isting large theatres into more efficient twin units, resulting in economies of operation and construction. The Loews/Snyder residential develop- ment joint venture expanded into the Midwest with two projects and com- menced several new developments in California. The joint venture success- fully entered the field of condominium conversion, acquiring rental apartment projects and converting them, after renovation, to condominium ownership. It should be noted that the devaluation of the United States dollar as against other major currencies has had no ma- terial adverse affect on operating re- sults. We have continued to limit total investment abroad with this in mind. We believe that fiscal 1973 marked an- other period of important progress for your Company, and we would not want to close this letter without recognizing the dedication and loyalty of the thou- sands of company employees whose effectiveness has made this possible. We also express our gratitude to our shareholders for their confidence and support. k-r-k LAURENCE ALAN TISCH Chairman of the Board PRESTON ROBERT TISCH President October 31, 1973 4

Ten Year Financial Review '1973 1972 1971 Results for the Year Sales and operating revenues ............ . .............. Earnings before security gains (losses), equity in net earnings of former associated company and extraordinary items .... Security gains (losses) ................................. Equity in net earnings of former associated company ....... Extraordinary items ................................... Net Earnings ....................................... Earnings per share-primary: Earnings before security gains (losses), equity in net earnings of former associated company and extraordinary items .... Security gains (losses) ................................. Equity in net earnings of former associated company ....... Extraordinary items ................................... Net Earnings ....................................... Earnings per share-assuming full dilution: Earnings before security gains (losses), equity in net earnings of former associated company and extraordinary items .... Security gains (losses) ................................. Equity in net earnings of former associated company ....... Extraordinary items ................................... Net Earnings ....................................... Year-End Position Current assets and investment in securities ............... Current liabilities ..................................... Excess ............................................ Property, plant and equipment-net ...................... Total assets .......................................... Shareholders' equity .................................. NOTE: Sales and operating revenues declined in 1973 due principally to the lease or sale of six hotel properties and the sale of 48 theatres during the last part of fiscal 1972. Equity in net earnings of a former associated company previously reported in sales and operating revenues has been reclassified to a separate caption for 1972 and other applicable years. Data for 1969 include Lorillard Corporation from November 30, 1968. Gross Revenues by Major Business Activities $ 766,436 804,105 772,509 $ 51,232 50,888 41,859 $ 11,885 13,522 18,596 $ 2,282 4,472 $ 2,929 $ 63,117 69,621 64,927 $ 3.61 3.49 2.89 $ .84 .93 1.28 $ .16 .31 $ •20 $ 4.45 4.78 4.48 $ 3.01 2.81 2.40 $ .60 .64 .89 $ .11 .21 $ .14 $ 3.61 3.70 3.50 $ 820,012 795,858 676,714 $ 202,579 216,456 241,398 $ 617,433 579,402 435,316 $ 192,799 195,934 206,648 $1,268,102 1,260,378 1,153,959 $ 397,329 397,267 337,554 1973 total: $766,436,000 MANUFACTURED TOBACCO PRODUCTS-75.74% THEATRES-4.10% HOTELS-7.62% RESIDENTIAL DEVELOPMENTS-5.70 % OTHER REVENUES, PRINCIPALLY RENT & DIVIDENDS-6.84°/v 2

1970 1969 '1968 1967 '1966 1965 1964 (Dollar amounts in thousands, except per share data) 1 697,902 550,582 156,692 127,021 114,260 95,554 81,976 31,744 24,617 12,659 8,641 5,819 5,600 3,167 (5,624) 1,722 7,364 7,114 989 2,526 5,283 15,165 (3,247) 28,646 31,622 35,188 15,755 5,819 6,589 (80) 2.20 1.71 .89 .60 .39 .34 .17 (.39) .12 .51 .49 .06 .17 .37 1.06 (.18) 1.98 2.20 2.46 1.09 .39 .40 (.01) 1.90 1.62 (.27) .09 .12 .30 1.75 2.01 542,649 471,514 93,509 44,413 38,780 28,526 32,690 171,972 150,813 30,390 23,992 19,726 24,765 18,576 370,677 320,701 63,119 20,421 19,054 3,761 14,114 207,344 203,113 160,207 146,489 141,305 135,207 130,316 1,025,264 969,778 272,575 209,726 195,035 182,388 179,493 286,098 259,726 124,185 90,855 76,795 71,136 72,744 1972 total: $804,105,000 MANUFACTURED TOBACCO & CANDY PRODUCTS-69.37% THEATRES-5.80% HOTELS-13.67% RESIDENTIAL DEVELOPMENTS-5.80% OTHER REVENUES, PRINCIPALLY RENT & DIVIDENDS-5.36% 3

Th.,w.7h-y: Famulsb a a0aret4 ao bw In Ir and nboUn n caWa t~nmena. beab e°Mn° 1ow w °n°N`°"n°cqarene. nwomea. 6haAtln tyau natdparette beTrw7 ~ w_..._.._.-..-.-.:~~.._ .-.. - The Lorillard Division achieved a greater acceptance of its cigarette brands in 1973 than in any other year since it was acquired five years ago. This growth can be attributed to the strengthening of the Lorillard sales organization in 1973, more effective advertising and marketing strategies, and further improvement in manufacturing operations. Lorillard manufactures Kent, True, Newport, Old Gold and Spring cigarettes. The third and fourth quarters of the 1973 fiscal year were exceptionally good ones for Lorillard's Kent, True and Newport brands. In particular, Kent 100's, True (both regular and menthol), and Newport experienced sharp sales increases in the 1972-1973 fiscal fourth quarter. Newport Kings, Newport Box, and Newport 100's enjoyed greater consumer acceptance during the year. These gains illustrate the impact creative sales, advertising and packaging efforts can have on an already established brand. Lorillard's sales increases in 1973 are attributable in part to its outdoor advertising campaign. Lorillard is now the country's largest outdoor advertiser. The successful use of that form of advertising earned recognition from the Outdoor Advertising Association of America, Inc., which cited the Division "for outstanding creative use of the medium in 1973." While continuing to build sales of its existing cigarette brands, Lorillard tested additional entries in the full flavor segment of the market in 1973. Lorillard will attempt to add another full flavor cigarette to its family of brands, by employing highly sophisticated marketing and sales techniques susceptible to evaluation in small test markets with minimum investment and maximum opportunity. Lorillard's little cigars (Madison, Between- The-Acts and Omega) declined slightly in sales in a market where consumers were distracted by the introduction of a profusion of com- petitive products. The advertising by others of some products created such confusion that Lorillard was prompted to take the initiative in voluntarily withdrawing its little cigars from television and radio advertising. The company's decision was recognized by many as evidence of sound corporate responsibility. Subse- quently, Congress enacted a ban on broadcast advertising of little cigars. 1. The giant Kent sign in New York City is noted for being the most widely viewed outdoor display in the United States. Last year, 200 million persons were estimated to have viewed the huge display. 2. The recently installed Mark IX Cigarette Maker produces 4000 cigarettes a minute. Erik cigars, supported by the famous Viking-ship television campaign, continued to lead in its category. Lorillard's chewing tobacco brands performed most satisfactorily, with our new entry, "Big Red," increasing its volume by approximately 60 percent. In total, our chewing tobacco volume outperformed the total chewing market. One of the many reasons Lorillard has confidence in its future is the sophistication of its manufacturing and research operations. New equipment, including the Mark IX Cigarette Maker, was introduced in our Louisville, Kentucky, and Greensboro, North Carolina plants in 1973, further assuring Lorillard's reputation for quality and uniformity. Each Mark IX produces as many cigarettes in one minute-4,000-as three replaced machines produced. The modernization program will continue in fiscal 1973-1974. At all Lorillard's manufacturing and tobacco processing facilities, significant efforts are being devoted to implementation of the standards for a safe and healthy working environment established by the Occupational Safety and Health Administration of the United States Department of Labor (OSHA). 5

Lorillard International Operations

Lorillard's cigarette brands are manufactured in 17 countries, and Kent, the leading American cigarette sold in many parts of the world, accounts for a major part of our overseas volume. Lorillard's export unit sales in 1973 were 35 percent ahead of the previous year. In the last four years, Lorillard's share of exported United States cigarettes has increased from 13 percent to 19 percent. Combined exports and sales of licensee manufactured products overseas increased more than 14 percent in the fiscal year. Kent and other products in the Lorillard line reach the world market through both exports from the United States and manufacturing operations overseas under licensing arrange- ments. Lorillard's Kent cigarette volume manufactured by licensees overseas exceeds exports from the United States. Lorillard products manufactured overseas are in turn exported to other nations, and, combined with U.S. exports, satisfy people in over 200 markets on all continents. International operating profits for 1973 were up approximately 58 percent over the same period a year ago. These record earnings were achieved despite the currency rate fluctuations that increased the cost of doing business abroad. Several factors contribute to Lorillard's strength in world markets. A major factor is the growing preference abroad for American type cigarettes, and Kent, with its "Micronite Filter, mild, smooth taste," continues to capitalize on this trend. Another factor is Lorillard's international marketing program, organized to accommodate the characteristics of each market. Yugoslavia, Australia, the Philippines, Japan, Finland, Argentina, Lebanon, and the Republic of South Africa are but a few of the many markets where Lorillard's locally-oriented, international marketing expertise is being successfully implemented. Lorillard around the world: 1. A Paraguayan vendor is well "positioned." 2. Kent at a Madrid soccer match. 3. Kent is the fastest growing American cigarette in Hong Kong. 4. By a view of the famous cathedral in Brussels. 5. A familiar sight in Spain. 6. Kent's postered in Paris. 7. Addition to the Lorillard joint venture plant in Luxemburg. 8. TV commercial a la Francaise. The application of Lorillard's domestic pro- duction and quality control standards to brands manufactured overseas is also an important factor. The overall commitment of Lorillard to product research and development in the total tobacco field (including cigarettes, small cigars, and chewing tobacco) enables the Division to meet the varied and changing demands of the world market. Area management has been and continues to be an important contributor to Lorillard's international growth. Operations are directed from regional bases: New York City for the Western Hemisphere; Johannesburg for Africa; Hong Kong in the Far East; Brussels in Europe, and Beirut in the Middle East. Each region's management has sufficient authority to react to the specific needs of its particular market. Lorillard has a long record of success in manufacturing overseas through licensee and joint venture arrangements. Sales and earnings statistics attest to the effective use of these arrangements. In 1973 new licensing agreements were completed in Bolivia, Panama and Guatemala. 7

0 af i 31 'ffit: If ._, a:'ca REA 5 In 1973, Loews Hotels continued to expand in the United States and abroad, opening luxury hotels in two important cities and proceeding with projects for five additional luxury hotels in Canada, West Germany, Spain, Monaco and Greece. Loews Hamburg Plaza in Hamburg, West Germany, opened in March and was followed by Loews L'Enfant Plaza in Washing- ton, D.C. two months later. The newly opened hotels brought the total number of guest rooms in the Loews chain to 5,089. Present projects will increase the number of Loews Hotel guest rooms to over 9,000 by the end of 1977. Loews Hamburg Plaza, the first Loews hotel on the European continent, complements the successful operation of the luxury Loews Churchill in London. In selecting Hamburg for its first "on-the-continent" venture, Loews has taken advantage of an opportunity to participate in the growing European travel and meeting business. Loews Hamburg Plaza adjoins the City of Hamburg's new Congress Hall, which is expected to become a major center for industrial and commercial meetings. Hamburg is one of Europe's major port cities and an important manufacturing center. In planning its new hotel in Hamburg, Loews recognized that Europeans are becoming increasingly attuned to the meeting and convention concept, and will respond positively to a modern facility technologically equipped to meet their needs. The new hotel offers luxurious facilities for dining, entertain- ment and relaxation, while also providing excellent meeting facilities for all size groups. Although the hotel is contemporary in design, it incorporates a strong feeling for the local sense of tradition. Loews L'Enfant Plaza, which opened in Washington, D.C. on May 30, 1973, has 372 rooms and excellent facilities for meetings and conventions. It is located at the heart of L'Enfant Plaza, one of the nation's largest private commercial developments with an underground shopping mall of over 40 shops, restaurants, a theatre, and parking for 2,400 cars. Loews L'Enfant Plaza is close to a number of Government agencies including the Department of Housing and Urban Development, Health, Education and Welfare, Loews Hotels and services are expanding In the United States and abroad. 1. Loews Hamburg Plaza opened March 1973. 2. Loews L'Enfant Plaza, Washington, D.C. opened May 30, 1973. 3. The Regency on Park Avenue continues to enjoy its premiere role among fine hotels. 4. Loews Reserva- tions serves 112 Loews and associated hotels. 5. Loews Le Concorde will open May 1, 1974 in Quebec City, Canada. the National Aeronautics and Space Administration and such private organizations as AMTRAK and COMSAT. The hotel is also within walking distance of the Capitol. The Loews reputation for management expertise was a major factor in the selection of Loews to operate the hotel under a management contract with the L'Enfant Plaza Corporation. Between 1974 and the end of 1977, expansion of Loews hotels will take place in cities where the Loews concept of service and sales can be combined with the needs of the particular market. Loews Le Concorde in Quebec City, Canada, is scheduled to open in May 1974 under a management agreement. Rising 30 stories above the historic Grande Allee at Place Montcalm, the luxury hotel will have 450 rooms. The hotel's architecture combines the sophistication of the vieux regime with a bold, contemporary statement. The hotel is only a five-minute walk from the center of the old capital and just 20 minutes from Quebec Airport. Nearby are many museums, art galleries, cafes, boutiques, and some of the best ski resorts in the Northeast. Le Concorde is planned to appeal to both the tourist and the business traveler, offering a year-round heated swimming pool, seven restaurants and bars, a revolving roof-top restaurant and meeting and convention facilities. In addition, plans are progressing for Loews to manage two hotels in Montreal, Canada. The larger of the two hotels, containing 900 rooms, will rise 48 stories above the heart of the city near Dominion Square. Loews other Montreal hotel will have 500 rooms, will be located near the city's famous Mount Royal Park, and will be part of a proposed 25 acre, $250 million development including residential and office buildings, pedestrian walks, and a broad variety of shopping services. 9

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