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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