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In May 1975 Loews Monte Carlo will open in the Principality of Monaco. The 665-room deluxe resort hotel in many ways represents years of achievement for the Hotel Division. An engineering feat in itself, Loews Monte Carlo is being constructed on the marble cliffs overlooking the Mediterranean. Lanai rooms will rest on the edge of the cliffs with an unobstructed view of the sea. The hotel will offer four exquisite restaurants, a gaming casino, a roof-top swimming pool, convention facilities for 2,000 persons, and banquet accommodations for up to 1,200 persons. Loews sales and marketing staffs in the United States and Europe have already experienced an exciting response to this hotel. The selection of Loews by the Principality of Monaco, and the association with Neue Heimat International, and its French affiliate, Manera, S.A., are further evidence of the outstanding reputation for management earned by Loews Hotels. Loews Monte Carlo will be adjacent to a large convention center and close to luxury apartments which, together with the Loews hotel, will allow more people to enjoy the excitement of this famous resort area. Loews hotel in Frankfurt, West Germany, will also open in 1975. Frankfurt is one of Europe's major financial and industrial centers. The 600-room hotel will be located atop West Germany's tallest building, a 45-story office and lodging tower near the Frankfurt Trade Mart. Loews Frankfurt will be followed in 1976 by another exciting Loews concept in resorts at Marbella on Spain's Costa del Sol, one of the preferred vacation spots for world travelers. Two luxury hotels will be opened at Marbella. The larger Loews unit will be a five-star deluxe facility similar in design to Loews Paradise Island Hotel and Villas in The Bahamas. Only a short distance away Loews will operate a 200-room golf hotel surrounded by an 18-hole golf course designed by Robert Trent Jones. Completing the Loews total resort concept will be a beach club pro- viding both swimming and recreational facilities for guests of the two hotels. Loews Monte Carlo opens May 1975. These architectural renderings illustrate the magnitude of the upcoming Loews resort complex in one of the world's most desirable settings. The opening of Loews Athens is planned for 1977. The new facility, located on the Bay of Athens, will fulfill a need for luxury accommodations at this desirable resort and business destination point. Highlights of the Loews Athens will be a "Boatel," a 92-room yachtsman's inn, a marina and private beach. Loews Reservations, a sales and reservation service initially established to serve Loews facilities, has become a separate profit center. Today, with fifteen service offices in the United States and Canada, "LRI," as it has become known, represents over 112 hotels and hotel chains around the world. 91 !

0 Loews Theatres 1. A good example of Loews twin theatre concept is Loews East 1 & 2 in the closed Richmond Shopping Mall in Shaker Heights, a suburb of Cleveland, Ohio. 2. The common lobby of the Loews Route 18 Theatre in East Brunswick, New Jersey illustrates the economics of "twinning." Audiences for both theatres use the same lobby and concession. The Loews Theatre Division continued to grow in fiscal 1973. Growth was essentially in two directions: new theatres were under construction in rapidly expanding suburban areas, and new auditorla were added to already existing theatres. In 1973, a major program was directed toward obtaining maximum utilization of existing seating capacity by "twinning" auditoriums so that different films can be shown at the same time to two different audiences. While two theatres are created out of one, economies of scale are sustained by sharing a common lobby and other facilities. The new twin theatres are created at a fraction of the cost of constructing a new theatre. In Cleveland, Ohio, three theatres with large seating capacities, and large parking areas, were divided into twin auditoriums during the year. The Loews Theatre in suburban Youngstown, Ohio, located in a large regional shopping center, was also twinned, as was the Loews East Brunswick, New Jersey, theatre. Two additional theatres, Parsippany- Troy Hills, New Jersey, and the Loews Paradise in the Bronx, NewYork, are undergoing a similar transformation. At the Loews Paradise, the balcony is being transformed into a separate auditorium, which will share a common lobby with the auditorium below. Construction of new theatres also continued. A new twin theatre is under construction in Brookhaven, Long Island, New York, and building will begin soon on Loews twin theatres in Rochester, N.Y., and Atlanta, Georgia. These new theatres are expected to open in fiscal 1974. The world premiere of "Papillon," the multi- million dollar movie version of the best selling novel, starring Steve McQueen and Dustin Hoffman, will take place at Loews State on Broadway on December 16, 1973. Other exciting productions in the coming year include: "The Godfather, Part II," already booked to premiere at four of our New York houses; "The Sting," starring Paul Newman and Robert Redford; "The Great Gatsby" with Mia Farrow and Robert Redford; the Mike Nichols thriller "The Day of The Dolphin", starring George C. Scott; the new Wait Disney cartoon feature "Robin Hood"; the cinema rendition of the best selling book, "The Exorcist," and "Magnum Force" with box office superstar Clint Eastwood. The outlook for the Theatre Division is promis- ing due to the technical innovations at our theatres and the production of new and exciting films by young creative talent. M

The Loews/Snyder planned condominium development at Coronado Shores near San Diego continued to grow. The third 15-story residential tower of the complex has been completely sold, and the fourth, with 150 sea-view tower apartments also opened for occupancy in fiscal 1973. When completed, Coronado Shores will comprise ten condo- minium towers at a 32-acre master-plan community on the Pacific shore. The fifth tower, El Camino, will be available for occu- pancy late in 1973. In the Los Angeles area construction of a 200-unit town house development at Fullerton is under way, another major residential development of 450 units is planned there, and ground will soon be broken for the second phase of the master-plan community of Beverly Glen Park, a mixture of 390 single family homes and town houses at the foot of the Santa Monica Mountains. Another successful innovation for Loews/ Snyder in fiscal 1973 was the acquisition and conversion to condominium ownership of a 69-unit rental apartment complex at Costa Mesa, California, adjacent to the recreational ports of Balboa and Newport. The project sold out immediately after opening. At Chino, in southern California, Loews/Snyder began marketing its Adobe Springs Village of two story, four-plex homes offering an attractive living environment at modest prices. Marketing is now being concentrated on the single family development of Willows West in Lancaster, a growing suburb about 50 miles from downtown Los Angeles. Construction and marketing are proceeding on the remaining 350 units of Westborough Green and Westborough Hills, in San Francisco. One thousand town house and condominium units have been sold there since marketing began in 1970. Sales and construction are also moving ahead at San Carlos Hills, a beautiful garden condominium development on the San Francisco peninsula. In Arizona, where Tenneco, Inc. has selected Loews/Snyder to develop its land holdings, initial sales have been very promising at the adjoining communities of Las Casas and Las Casitas near Fort Huachuca. In the Midwest, construction and marketing proceeded at Carol Stream, a 500-unit town house community 25 miles west of the Chicago Loop, and building commenced on Loews/ Snyder's mid-rise condominium and rental apartments at Indian Head Park near LaGrange, Illinois. On Staten Island, in New York City, two other master-plan villages in the 160-acre Village Greens development have been completed and are now occupied by more than 350 families. Loews/Snyder 1. Old and new San Francisco: Pacific Heights Towers, 20-story apartment landmark acquired by Loews/Snyder for condominium conversion. Project contains 128 apartments. 2. The new Coronado Shores Beach Club and lagoon. 3. Adobe Springs Village, a four-plex project, in Chino, California. 4. The five completed towers of Coronado Shores, with Coronado Bay and San Diego in the background. r_

Loews Corporation and Subsidiaries Consolidated Balance Sheet August 31, 1973 and 1972 1973 1972 / Assets Current Assets: Cash, including time deposits (1973, $8,505,000;1972, $7,595,000) $ 21,314,000 $ 16,908,000 Receivables-principally trade, less allowance for doubtful ac- counts and cash discounts (1973, $2,919,000; 1972, $3,160,000) 60,670,000 46,460,000 Inventories: Leaftobacco ......................................... 225,732,000 222,241,000 Manufactured stock ................................... 21, 985,000 23,296,000 Materials, supplies and other ............................ 6,491,000 8,375,000 Real estate held for development and sale .................. 47,112,000 55,048,000 Total current assets ............................. 383,304,000 372,328,000 Investment in Securities, at cost ............................. 436,708,000 423, 530, 000 Total current assets and investment in securities ..... 820,012,000 795,858,000 Investments and Advances: Investments in and advances to unconsolidated companies .... 14,111,000 14,000,000 Mortgages and notes receivable (maturing through 2008 at interest rates ranging from 4% to 10%) ................... 35,226,000 36,583,000 Land and other investments, at cost ........................ 19,652,000 27,132,000 Total investments and advances ................... 68,989,000 77,715,000 Property, Plant and Equipment, at cost: Land .................................................. 41,994,000 43,113, 000 Buildings and building equipment .......................... 154,053,000 154,810,000 Machinery and equipment ................................ 71,604,000 67,121,000 Leaseholds and leasehold improvements ................... 10,969,000 11,192,000 Total .......................................... 278,620,000 276,236,000 Less accumulated depreciation and amortization ............. 85,821,000 80,302,000 Property, plant and equipment-net ................ 192,799,000 195,934,000 Other Assets: Cost in excess of net assets acquired ....................... Trademarks ............................................ Patents and licenses, less accumulated amortization 67,115,000 100,033,000 71,711,000 -0 N 100,299,000 -.~ .t~ 03 (1973, $4,179,000; 1972, $3,320,000) ...................... Prepaid expenses, deferred charges, etc .................... 9,152, 000 10, 002, 000 9,996,000 W ch 8,865,000 o' Total other assets ............................... 186,302,000 190,871,000 Total .................................... $1, 268,102,000 $1,260,378,000 \ 14 See the accompanying Notes to Consolidated Financial Statements.

1973 1972 Liabilities and Shareholders' Equity Current Liabilities: Notes payable .......................................... $ 119,515,000 $ 101,823,000 Accounts payable and accrued liabilities .................... 51,929,000 66,335,000 Accrued taxes: Federal and foreign income taxes ........................ 5,243,000 16,326,000 Excise and other taxes ................................. 14, 754, 000 14,595,000 Current maturities of long-term debt, less unamortized discount 11,138, 000 17,377,000 Total current liabilities .......................... 202,579,000 216,456,000 Long-Term Debt, less current maturities and unamortized discount: Senior debt ............................................ 268,235,000 240,865,000 Subordinated debt ...................................... 372,533, 000 374, 978, 000 Long-term debt-net ............................. 640,768,000 615,843,000 Deferred Credits, Reserve and Other Liabilities: Deferred income taxes .................................. 17,316,000 18,972,000 Reserve for employee benefits ............................ 6,738,000 5,443,000 Deferred credits and non-current liabilities ................. 3,372,000 6,397,000 Total deferred credits, reserve and other liabilities. ... 27,426,000 30,812,000 Shareholders' Equity: Common stock, authorized 30,000,000 shares of $1 par value; issued shares stated at par value ......................... 14,791,000 14, 683, 000 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,522,000 113,113, 000 Earnings retained in the business .......................... 315,480,000 269,541,000 Total .......................................... 446,793,000 397,337,000 Less common stock held in treasury, at cost (1973, 1,733,000 shares; 1972, 4,000 shares) ............................. 49,464,000 70,000 Total shareholders' equity ........................ 397,329,000 397,267,000 Total ................................... $1,268,102, 000 $1,260,378,000 15

Loews Corporation and Subsidiaries Statement of Consolidated Earnings and Earnings Retained in the Business For the Years End"ed August 31, 1973 and 1972 Sales and Operating Revenues Excluding security gains: Sales of manufactured products and revenues of theatre and hotel operations ...................................... Other revenues, principally rent and dividends . . . . . . . . . . . . . . . Total .......................................... Costs and Expenses: Cost of sales and operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, advertising and administrative . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . ... .. . .. .... . . . .. .. . . . . ... Interest and amortization of debenture discount and expense. .. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total .......................................... Earnings Before Security Gains, Equity in Net Earnings of Former Associated Company and Extraordinary Items . . . . . . . . . . . . . . Security Gains: Realized gains .......................................... Less applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security gains-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in Net Earnings of Former Associated Company . . . . . . . . . . Earnings Before Extraordinary Items . . . . . . . . . . . . . . . . . . . . . . . . . Extraordinary Items ....................................... Net Earnings ............................................. Earnings Retained in the Business, Beginning of Year . . . . . . . . . . . Cash dividends (per share-$1.21 in 1973 and $1.03 in 1972). ... Equity in certain transactions of former associated company. ... Earnings Retained in the Business, End of Year . . . . . . . . . . . . . . . . Earnings Per Share-Primary: Earnings before security gains, equity in net earnings of former associated company and extraordinary items . . . . . . . . . . . . . . Security gains-net ...................................... Equity in net earnings of former associated company . . . . . . . . . . Extraordinary items ...................................... Net earnings ............................................ Earnings Per Share-Assuming Full Dilution: Earnings before security gains, equity in net earnings of former associated company and extraordinary items . . . . . . . . . . . . . . Security gains-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in net earnings of former associated company . . . . . . . . . . Extraordinary items ..................................... Net earnings ............................................ '1973 $714,021,000 52,415,000 766,436,000 505,655,000 120,266,000 10,124, 000 51,796,000 27,363,000 715,204,000 51,232,000 17,213,000 5,328,000 11,885,000 63,117,000 63,117, 000 269,541,000 (17,178, 000) $315, 480, 000 $3.61 .84 $4.45 $3.01 .60 $3.61 '1972 $761,067,000 43,038,000 804,105,000 537,077,000 129,938,000 12,157, 000 45,190, 000 28,855,000 753,217,000 50,888,000 22,542,000 9,020,000 13, 522, 000 2,282,000 66,692,000 2,929,000 69, 621, 000 215,158,000 (15, 002, 000) (236,000) $269, 541, 000 $3.49 .93 .16 .20 $4.78 16 See the accompanying Notes to Consolidated Financial Statements.

Loews Corporation and Subsidiaries Statement of Changes in Consolidated Financial Position For the Years Ended August 31,1973 and 1972 '1973 1972 \ ~ Funds Provided: Earnings before extraordinary items ........................ $ 63,117,000 $ 66,692,000 Charges not requiring current outlays: Depreciation and amortization .......................... 10,124,000 12,157,000 Deferred income taxes ................................. 427,000 1,581,000 Other-net ... ........................................ 1,094,000 491,000 Funds derived from operations exclusive of extraordinary items ............................................ 74,762,000 80,921,000 Extraordinary items ..................................... 2,929,000 Deferred income taxes related to extraordinary items ......... 2,328,000 Dispositions of property, plant and equipment ............... 4,773,000 20, 775, 000 Dispositions of other investments and advances .............. 16,358,000 10,485,000 Issuance of long-term debt ................................ 87,532,000 110,890,000 Reduction of cost in excess of net assets acquired attributable to: Income tax benefits .................................... 4,616,000 6,655,000 Sale of investment in former associated company .......... 16,528,000 Issuance of common stock ............................... 3,517,000 5,330,000 Total .......................................... 191, 558, 000 256, 841, 000 Funds Applied: Additions to property, plant and equipment .................. 10, 853, 000 17, 224, 000 Additions to other investments and advances ................ 7,632,000 34,399,000 Additions to common stock held in treasury ................. 49,394,000 Reduction in long-term debt ............................... 61,515,000 45, 823, 000 Exercise of warrants through application of 6~/a % debentures. .. 2,834,000 3,542,000 Dividends paid .......................................... 17,178,000 15,002,000 Other-net ............................................. 4,121,000 (2,465,000) Total .......................................... 153, 527, 000 113,525,000 Excess of Funds Provided Over Funds Applied Represented by: Increase in investment in securities ........................ 13,178, 000 68,436,000* Increase in working capital ............................... 24,853, 000 74, 880, 000 Total .......................................... $ 38,031,000 $143,316,000 Excess of Funds Provided Over Funds Applied by Component: Increase in investment in securities ........................ $ 13,178, 000 $ 68,436,000* Increase (decrease) in working capital: Cash, including time deposits ........................... 4,406,000 (3,106, 000) Receivables .......................................... 14, 210, 000 (11, 979, 000) Inventories ........................................... 296,000 48,606,000 Real estate held for development and sale ................. (7,936,000) 16,416,000 Notes payable ........................................ (17,692,000) (42,448,000) Accounts payable and accrued liabilities .................. 14, 406, 000 71, 271, 000 Accrued taxes ........................................ 10,924,000 1,530,000 Current maturities of long-term debt, less unamortized discount 6,239,000 (5,410,000) 24, 853, 000 74, 880, 000 Total .......................................... $ 38,031,000 $143,316,000 I ~*Net of transactions which did not result in the provision or application of funds. See the accompanying Notes to Consolidated Financial Statements. / 17

Notes to Consolidated Financial Statements ~ •( SUMMARY OF SIGNIFICANT ACCOUNTING ~ POLICIES Principles of consolidation-The consolidated financial statements include all subsidiaries and the assets, liabil- ities and results of operations (including provision for co-venturer's participation in profits and losses) of unin- corporated residential development joint ventures for which the Company-has provided or guaranteed prin- cipally all the required working capital. Certain amounts applicable to 1972 have been reclassi- fied to conform to the classifications followed in 1973. Inventories-Inventories are valued at the lower of aver- age cost or market. The entire inventory of leaf tobacco has been classified as a current asset in accordance with generally recognized trade practice although, due to the duration of the 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. Real estate held for development and sale-Real estate held for development and sale is valued at the lower of cost or estimated realizable value. Interest, property taxes and other expenses incurred in connection with the holding and development of real estate are capital- ized until the projects are sold. Real estate held for development and sale and other assets held as investments in the amount of $65,101,000 at August 31, 1973 have been pledged to secure certain notes payable and long-term debt. Investment in securities-The cost of securities sold is determined on the identified certificate or first-in, first- out method. The Company has invested in securities in order to secure a return on funds it is holding for develop- ment and expansion opportunities. The Company regu- larly and actively seeks development and expansion opportunities which may require application of such funds. In view of the uncertainty as to when such oppor- tunities may arise, the investment in securities has been classified as a non-current asset. Property, plant and equipment-Depreciation is com- puted principally on the straight-line method over the estimated useful lives of the various classes of proper- ties. Leaseholds and improvements are amortized over the related leases (including optional renewal periods where appropriate) or the estimated lives of improve- ments, if less than the lease term. Cost in excess of net assets acquired-Lorillard Corpo- ration (Lorillard) was acquired in November 1968, liqui- dated and merged into Loew's Theatres, Inc. (a wholly- owned subsidiary of the Company) in July 1969 and con- tinued operations as a division of such subsidiary. The cost in excess of net assets acquired related to this acquisition, amounting to $128,944,000 as adjusted to date and before deduction of the estimated tax benefits referred to below, has been attributed to other intangi- bles which, in the opinion of Management, have continu- ing value. It is the Company's policy not to amortize such excess as long as there is no diminution in value of the investment. 18 As a result of the aforementioned liquidation, the Com- pany will realize certain income tax benefits which will be considered as a partial recovery of the cost in excess of net assets acquired. The estimated tax benefits real- ized (which are presently under examination by the Internal Revenue Service) amounted to $61,829,000 at August 31, 1973. Excise taxes - Excise taxes of $197,054,000 and $194,752,000 paid on sales of manufactured products in 1973 and 1972, respectively, are included in "sales of manufactured products and revenues of theatre and hotel operations" and "cost of sales and operating costs" in the accompanying statement of consolidated earnings and earnings retained in the business. 2 EXTRAORDINARY ITEMS Extraordi nary items in 1972 consisted of the following: Gain on sale of forty-eight theatres located principally in California and Florida ....................... $8,049,000 Loss on sale of investment in former associated com- pany (see Note 4) .............................. 2,650,000) 5,399,000 Less applicable income taxes, including deferred of $2, 328, 000 .................................. 2,470,000 Net ...................................... $2,929,000 The sales and operating revenues and net earnings applicable to the theatres sold were not significant in relation to consolidated sales and operating revenues and net earnings of continuing operations. 3 LEASING OF CERTAIN HOTELS On August 1, 1972 the Company leased to subsidi- aries of American Airlines, Inc. four of its hotels under long-term lease agreements expiring from 1995 to 2002. While sales of manufactured products (principally tobacco) increased in 1973, the total operating revenues and costs of the Company declined, in part, due to this transaction. 4 INVESTMENTS The quoted market value of the, investment in securi- ties aggregated approximately $412,300,000 and $443,400,000 at August 31, 1973 and 1972, respectively. Securities with a quoted market value of approximately $14,600,000 are pledged as collateral in connection with the retirement plan covering production employees and to secure other liabilities. In July 1972, the Company sold substantially all of its investment in its former associated company, Franklin New York Corporation (Franklin), which investment had been accounted for under the equity method of accounting. The Company received $1,751,000 of cash dividends from Franklin from September 1, 1971 through the date of sale. Investments in and advances to unconsolidated com- panies include the Company's investments in 50% owned companies which are stated at cost, adjusted to give effect to subsequent earnings and dividends received, less, in 1972, allowance for losses of $1,958,000.

5 INCOME TAXES The components of income taxes for the years ended August 31, 1973 and 1972 were as follows: 1973 __ 1972 Federal (including deferred of $1,467,000 in 1973 and $1,581,000 in 1972) ..................... $21,971,000 $23,423,000 State .......................... 3,964,000 4,438,000 Foreign (including deferred credit of $1,040,000 in 1973) ............ 1,428,000 994,000 Total .............. $27,363,000 $28,855,000 Deferred income taxes have been provided for the tax 6 LONG-TERM DEBT Long-term debt at August 31, 1973 and 1972 con- sisted of the following: Rates of Interest (%) 1973 1972 Actual Senior debt: Effective (000's omitted) 25-year debentures due 1976. ... 3 3 25-year debentures due 1978. ... 3'/4 37/s Sinking fund debentures due 1986 47/s 5 Notes payable to banks under Revolving Credit Agreement for $60,000,000 terminating August 31, 1979, interest at 1% in ex- cess of the prime commercial rate (such prime rate was 9'/<% at August 31, 1973) .... . . . . . . Note payable to bank, due Septem- ber 30, 1974, interest at Y2% in excess of the prime commercial rate ........... ......_..... Other senior debt, principally mortgages ................. 4-9 4-9 Less current maturities and un- amortized discount .......... Senior debt ............ Subordinated debt: Convertible subordinated deben- tures due 1993 .............. 51/2 51/2 Subordinated debentures due 1993 6% 71/4 *Subordinated debentures due1993 6~/s 77/a Less unamortized discount ...... Subordinated debt ...... Long-term debt-net. . $ 7,172 $ 7,172 8,865 10,483 25,710 28,042 60,000 30,000 148,095 11,607) 268,235 60,000 153,104 ) (17,936 240,865 - 136 12,933 13,720 394,217 397,318 effects of items (principally interest, real estate taxes, depreciation and income related to certain installment accounts receivable) reported in different periods for financial and income tax reporting purposes. State in- come taxes are principally current. - Federal income taxes have not been provided on un- remitted earnings of a subsidiary (a Domestic Inter- national Sales Corporation) aggregating $2,363,000 through August 31, 1973 because the Company intends to postpone indefinitely the remittance of such earnings. *Redeemable in whole or in part, commencing in fiscal 1977 at 105% and decreasing percentages thereafter, and requiring annual sinking fund pay- ments of $4,000,000 in fiscal years 1977 to 1981 and $17,500,000 from 1982 to 1993. 6~/e% subordinated debentures applied in exercise of warrants, aggregating $7,032,000 through August 31, 1973, may be used to reduce annual sinking fund requirements. The aggregate of long-term debt maturing during the five years ending August 31, 1978 is approximately as follows: 1974, $11,164,000 (included in current liabilities after de- ducting related unamortized discount);1975, $38,989,000; 1976, $14,663,000; 1977, $7,072,000; 1978, $8,627,000. Presently the principal source from which dividends are payable by the Company is income from dividends re- ceived from Loew's Theatres, Inc., a wholly-owned sub- sidiary of the Company. The Revolving Credit Agreement and indentures relating to long-term debt of such subsid- iary contain, among other things, restrictive covenants relating to maintenance of minimum levels of working capital and net worth and payment of cash dividends on its common stock. At August 31, 1973, the subsidiary's working capital and net worth were in excess of the mini- mum requirements of the Revolving Credit Agreement 34,617 36,196)_ and the amount of earnings retained in the business avail- 372,533 374,978 able for the payment of cash dividends under the most $640,768 $615,843 restrictive indenture was approximately $210,000,000. 7 SHAREHOLDERS' EQUITY Changes in shareholders' equity, exclusive of earn- ings retained in the business, were as follows: Balance, September 1, 1971 .............. Exercise of stock options .......... Conversion of debentures ....... Exercise of warrants . Balance, August 31, 1972 Exercise of stock options .......... Conversion of debentures ....... Exercise of warrants . Purchase of 1,729,000 treasury shares ... Balance, August 31, 1973 Common Stock Issued Additional Paid-In Capital Common Stock Held In Treasury 14,517,000 $107,949,000 $ 70,000 52,000 1,647,000 2,000 51,000 112,000 3,466,000 - 14,683,000 113,113,000 70,000 14,000 497,000 4,000 129,000 90,000 2,783,000 49,394,000 14,791,000 $116,522,000 $49,464,000 At August 31, 1973, 6,275,000 shares of common stock were reserved for exercise of the warrants issued in connection with the acquisition of Lorillard. The warrants entitle the bearer to purchase for cash (or through appli- cation of the 67/s% subordinated debentures at principal amount) a share of common stock at a current price of $37.50 increasing to $40 a share in 1976. The warrants expire on November 29, 1980. As of August 31, 1973, 795,000 shares were also reserved for exercise of stock options. A summary of stock option data for the fiscal years 1973 and 1972 follows: 1973 1972 Number of Shares Option Price Per Share Number of Shares Option Price Per Share Outstanding, $25.00- $25.00- September 1 ..... 107,000 50.06 150,000 45.94 Granted ........... 10,000 26.25- 19,000 36.56- 54.31 50.06 Exercised .......... (14,000) 29.65- (52,000) 28.25- 40.50 45.13 Cancelled .......... (27,000) 28.25- (10,000) 28.82- 45.69 45.94 Outstanding, $25.00- $25.00- August 31 ........ 76,000 54.31 107,000 50.06 At August 31: Exercisable ...... 40,000 57,000 Available for grant. 719,000 725,000 19

I 8 EARNINGS PER SHARE Primary earnings per share are based upon the weighted average number of shares (1973, 14,190,000; 1972, 14,567,000) outstanding during each year. Earnings per share, assuming full dilution, give effect to assumed exercise of stock options and warrants computed, as applicable, through either (1) assumed application of the 67/s % subordinated debentures at par as payment of the exercise price of the warrants or (2) assumed repurchase of common stock of the Company with proceeds from exercise of stock options and warrants (limited to 20% repurchase of outstanding common stock) and use of the remaining proceeds to reduce various issues of debt. The computation takes into consideration the effect of elimi- nating interest expense and debenture discount, net of tax effects, where debt is assumed to be reduced. 9 RETIREMENT PLANS The Company and its subsidiaries have non-con- tributory retirement plans for eligible salaried and pro- duction employees. The provision for pension costs under the plans was $1,839,000 and $1,816,000 for the years ended August 31, 1973 and 1972, respectively. It is the companies' policy to fund the accrued pension cost relating to the salaried employee plan and to main- tain reserves for the accrued pension cost relating to the production employee plan. As of the most recent date for which computations are available, the actuarially com- puted value of vested benefits for the unfunded plan was $6,200,000 greater than the reserves for accrued pension costs and unfunded prior service cost, which approxi- mates $9,300,000, is being amortized over a forty-year period. 10 LEASE COMMITMENTS Rent expense, lease commitments and other in- formation relating to non-cancellable leases (principally hotels and theatres), exclusive of taxes and other charges payable by the lessees, were as follows: Rentals of $5,283,000, less applicable tax effect of $2,536,000. Such provision is included under the caption "security gains" in the accompanying statement of consolidated earnings and earnings retained in the business. Pending litigation also includes antitrust and other civil suits for damages incident to the companies' businesses. The outcome of such actions will not, in the opinion of Man- agement, materially affect the business or assets of the Company and its subsidiaries. OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Haskins & Sells Two Broadway Certified Public Accountants New York, New York 10004 To the Board of Directors and Shareholders of Loews Corporation: We have examined the consolidated balance sheet of Loews Corporation and Subsidiaries as of August 31, 1973 and 1972 and the related statements of consoli- dated earnings and earnings retained in the business and ofchanges in consolidated financial position for the years then ended. Our examination was made in accord- ance with generally accepted auditing standards, and accordingly included such tests of the accounting rec- ords and such other auditing procedures as we con- sidered necessary in the circumstances. In our opinion, such statements present fairly the finan- cial position of the companies at August 31, 1973 and 1972 and the results of their operations and changes in their financial position for the years then ended, in conformity with generally accepted accounting prin- ciples applied on a consistent basis. /OZroo/T.+ d JLeYO/ Year Ending August 31 Rentals• From Subleases Net t b 31 1973 O 1972 ................ , $ 9,748,000 $ 281,000 $ 9,467,000 o er , c 1973 ................ 9,420,000 1,870,000 7,550,000 1974 ................ 10,529,000 1,869,000 8,660,000 1975 ................ 10,281,000 1,868,000 8,413,000 1976 ................ 10,132,000 1,825,000 8,307,000 1977 ................ 9,879,000 1,755,000 8,124,000 1978 ................ 9,600,000 1,755,000 7,845,000 Five Years Ending August 31 1983 ................ 44,005,000 8,009,000 35,996,000 1988 ................ 39,212,000 7,448,000 31,764,000 1993 ................ 30,786,000 6,579,000 24,207,000 Years Subsequent to 1993 (in totat) .............. 118,640,000 2,072,000 116,568,000 *Includes minimum rental commitments except for 1972 and 1973 which also include additional rentals of $678,000 and $124,000, respectively, based upon gross receipts or net earnings of related properties. 11 CONTINGENCIES In March 1973 the Company had several transac- tions in the common stock of Equity Funding Corporation of America which have given rise to a lawsuit by the Company against the sel lers seeking damages and rescis- sion. The outcome of the lawsuit is not presently deter- minable. The Company has provided for potential losses f 20