Tobacco Documents Online

LOli,7`L%~ L?L The inveIli:or{ eS COIi~I'.~l l ~:ty by i;}:E ~~ ;,ue ~v~.~llc are surr~~narized herounder: L Domestic 1,-)if tobacco in Z~~*,, ~:I~ua:.s Cig4rette toawcco in process Manufrotured stock inc1:..IU:n~- ~`~9,?U?•?5 for revenue stq7nS af'fixed ` Other materia.lc 2n d supplijes; Casing materia1: ,vrMppint, a.;iri cu,aplioQ : a.ctory surp].iF: s U. S. Int;erzial Re venue s ta.mps (umaffixEd) x.i ic)?_ 55'( . •_.: ' ~ • l~ U4 4, ~~a,~(:•~7 131, ~13.24 nr S)7v00 INr~M' Dc?me4tic Itepf Tobacco in Harehousec: .he doraes'~~ic 1erf tobacco, AC~reCa,ti!~9 1,Z01,00~ pound's, was Qtored ir_ cor.par;; t;o.re- housE and factory vuildi:i6s. During the period from' March 30 to April ?, 1945, our representatives made test counts of various lots of domestic leaf tobaec;;)~ yeleotEc~ !'rota t'h~,- coral»n~.rs inventory snd 1eN;f' recor,13. Such tast counte congi sted of an e:;a.rr.y nation of the tQOs 4t',~c?:wd to the melectt•d horr~3 1cea't:: Y,h`^h t?^s 'n.~_'ct~tea ; ho~-~,1 , c, ic a1 nur.7l~ers and t:P t usiFhts,, At esch locatl.on vis lted, ve.rious hor,sheQ;cjs, selected at rv:nclori by us, were ps.ri.Iy upwnca' to s~.t'sfy a:x•~_i;1~<~c +.ant they CoC'.5alfit)d Innf tobrICCO, ThetiogshQ2.dsof dcr-sstic leai tc'cv,ccoso coun;;td: by us~~~'I~~'~4~jll~.t~ r+ 11y l i~- i, t. ~ i. tu ..1 j, ~. .. ~l, ~: 11 dlon°stf.c Ieaf tolacco recor:?ed J.n the r-cmuit3 at Lcuiyv:Ille I~s of riurch' 31, 1945. C,}.-~C:C 1at,loti~nlca 1~t11 y'1~h1{c,~• £I1,1 r~tr•srltit~ { +q,~•~.• CI1 i':c":' 0 L':I ~+ r 7 ,Y • r•cJ l-, J'eec •;I L:1C' :J _CO'.C ',~1'rnnt•,~r~ -v~ 10

tobaccoi in prccess, manufactured stock, casing nlat€~^isls, I,-rappiii, C-1 and sliipping supplies, and iever_uz staMps. The employees did not take a physical inver.tory of fe.ictor;; ;;tizj)plii,as as of Ma7%cii 31, 1~45 because not only was such a physical invFI.to:-y 'U,C'.ken at FE'ui^uary 1, 1945 but an effective perpetual inventory recarel is also malntr Lned in connection therewith. Practicully all of the cigarotte tobacco in proceS3 wF.3 accounted~for by our inspection and estimates with respect to tize quantities involved. About 99 per cent of the total dollar Pmot.nt of ntanufactured stock on hand was also acccunted for by insp eaticn. Various test counts were applied b3r,,:s to other mater'_als and miscellaneous supplies. The packaged unaffixed revenue stamps were ccunted by us and the amount of sta:!ips affixed i;o manufactured stock on hani was computed by application of the respective tax rates to the inventory of such manufactured stock. rices: We made an extensive investigation of inventory prices and applied numerous tests thereto. In gen.era.l, the basis of pricing at Louisville was the same as hereinbefore outlined with respect to Richmond. NEW Y0 RK The balances of the inventory accounts at New York as of March 31, 1945 were as follows: Manufactured stock, including revenue stamps affixed Cidarette tobacco in process at Philadelphia Operating supplies at Pt7iladelphia Esdvances agairrst purchases of imparted leaf tobacco Less, Allowance for possible obsolescence of wrapping stock at fa.cto.ies I:et ir.ventory amount ,`6,772,6~5.40 32, 003 .00 42,174.G4 1.3191' 2217.0 1 ~- , ~.- llc>~,~,~ -DJ.3r 21() ,?0 7 .,'. 11

Manufactured Stoak: Phy sica1 counts were ms,c;e by us of cigarettes and smokl.n~ toba.cco stored a' warchou3es in the fol~~lowing cities: bost:on Jerse;,r City Nev Y,nrk (Tower's Camden Los fi.naEles Wareh'1011~~e) Chicago Milwaukee Port1'and (except Clevelend Ne~Tarl, Sea Stores) Dallas iVew Orleans San Fvancisco Detroit New York (119 Fifth (except Sea stores) Houston Avenue ) .~.t. Louis Jacksonville The stock at Jerse'y City, San Francisco and 119 FIfth AvenuA, New Yo„k City, is in the custody of cc ipany employees but stock at the other locations shown above is in the custody of p:iolic 1*arehov.ses. Shipments in transit at March 31, 1945 from the factories at Richmond and Louisville, and from Stepne.no Bros., PhilP.aelphia, to the various warehousea were accounted for satisfactorily by exam~Lnation of such recordsas railroed bills of1adino, warehouceadvlcesof receipts bearing later dates, invento,cy and shipping records at Rich~-aond and Louisville, and inventory ann"'A receiving records at New York and Son Francisco. Ttsts were made at a nu;mber of locations, to determine that merchandise rcported by the warelzouises as shippod to customers had actually left the premises prior to our co-lnt. The ba3lance of themanufactured stock at P:arch 31, 104.5consisted of cigflvettes and cmok:__is tobacco at va.ricus loc.ptions throughout the country, and of ciEs.rottes at Stephano 3ros., Philad'elphia. With the exception of a few relatively minor items, all of suc-i marrifncture:d stock was confirmed to us. by independent karehocises ~:nd custodians. The relative inipc)rtAnce of the three foreSo{ n- eroups, With respect to quantities, is indj,csted by the followins ta'oula.tio;~ Which s.iows the apprcxicnc.ta percenta--e in each Sroup to the to tal at March 31, 1945: 12

Per Ccn* of T') tn- ]. 0;~~i i-y Counted In transit from Richmond, Louisville and P?zilad-,_lphi& to warehouses Other stocks 41 The inventory of manufactured stock is priced at average cost, calculated separately for each brand of cigarettes and smoking tobacco. NvmRrous t~,gts of such avorn;;o +aontn were ni,l,r~o~ b;; lit;. A t'ow cll3c~6 or P,IvFrse r,hyr' on7i condttion9 at waroboa:,As, such as abnorlv.l teriperatur3s or humidity, f siluro to uso dunnage under ste.ck;,, proximity to o~lorous merchsnaisA, etc., were obderved by our representatives and reported to the company's traffic depirt- ment. 0tgarette T2tiit=,o in Proceca; Tho oigarette tobacco in process at Stephano Bros. was confirmed to us by that comp3.r.y, both as to weight and dollar cost. Oberatim.7. Stlpf.ie5; The following amounts, which were confirmed to us by Stephano Bros., represent the cost of :nateriP.ls held by that company for use in .r.anufacturing and shipping cigarettes fcr Philjp Niorria & Co. I,td., IncorPorateAa CJ WrRpping stock 321,524.70 Casing stock 2,155•24 M"- Shipping supplies 18,495.00 Advances AgAinst Pur^haQes of Imnorted. Leaf Tobs:cco: As of Narch,31, 1945, the company had rr.s.de e,dvances, e,ggreg~.tir.g 45,569,227.01, to The tL:7Aricr?.n Tobacco Compan,.,, aUainist p~!rchases of Tarkishi tobr.cco:s. I t is Fst1 mated that Ir5, 3J0, 000.00 of that totel 13

applies to the 1942-43 crop order and that the balance of $269,227.01 will be applied to the 1943-44 crop order. Purchases of 1942-43 crop tobaccos, amounting to $4,250,000.00, were applied aga•inst the ad- vances so made, leaving a balance of $1,319,227.01 at March 31,1945 which was confirmed to us by The American Tobacco Company. Allowance for Possible Obsolescence of Wra, stocl Factories: An allowance of $21b,307.63 has been made for possible obsolescence of wrapping stock at factories. This amount results from allowances made in prior periods. GENERAL During the course of our inventory tests, as outlined in the preceding paragraphs of this report, we received complete co- operation from officers and employees of the con.pany and also the personnel at the various independent warehouses visited by us. Based upon our examination, as outlined in preceding paragraphs of this'report, we are satisfied with respect to the general accuracy of inventory quantities and valuations as of March 31, 1945. Very truly yours, ~--• 14