Tobacco Documents Online

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1 Our original factory at 20th Street in Richmond 2 Our second Richmond factory built on Stockton Street in 1937 3 Our smoking tobacco factory on 19th Street in Richmond 4 Some of the new leaf storage warehouses being built in Louisville 5 One of the warehouses in Richmond where leaf is stored 6 In Richmond (foreground) the Archbell warehouse for storage of imported leaf. (Background) Imported leaf department building 7 Louisville factory showing new wing (not yet completed). The old building ends just to the left of the entrance door shown

text page Highlights of the Year 4 Summary 7 Financial 9 Taxes 10 Investment in tobacco 13 Increased facilities 18 Sales and Advertising 20 Distribution 22 Quality controls 22 Personnel 22 Conclusion 23 tables Highlights of the Year 5 Uses of added funds 10 Comparison with Industry center Philip Morris operations center Quarterly results center Audited Statements 24 charts Growth of sales 6 Use of sales revenue 12 Prices 13 Sales and inventories 18 Investment per job 23 other f eatures Map: Scope of Operations center Some of our stockholders 3 Philip Morris products .30-32

Philip Morris & Co. Ltd., Incorporated ~- <. . ..- _ _-. v _ : .. .. annuaUr.eport, 1951 directors G. P. Brauburger O. H. Chalkley W. C. Foley L. G. Hanson W. H. Hatcher officers Alfred E. Lyon, Chairman O. Parker McComas, President L. G. l4anson, Vice President and Treasurer C. T. Ames, Jr., Vice President E. W. Dinwiddie, Vice President W. C. Foley, Vice President Alfred E. Lyon O. Parker McComas H. E. Riddell K. H. Rockey W. B. Ryan, Jr. W. H. Hatcher, Vice President G. J. Henn, Vice President Ray Jones, Vice President W. E. Liebetrau, Vice President H. R. Blum, Controller C. H. Kibbee, Secretary and Assistant Treasurer Cornelia Craig, Assistant Secretary transfer agents Guaranty Trust Co. of N. Y., 140 Broadway, New York registrars The National City Bank of New York The Commercial National Bank & Trust Co. of New York counsel Conboy, Hewitt, O'Brien & Boardman, 39 Broadway, New York auditors Lybrand, Ross Bros. & Montgomery, 90 Broad Street, New York I I

S 9 Philip Morris dividends regularly increase the incon:e of thousands of nlell and lUO1nPl1 like these stockholders In New Orleans, Optician Samuel Carleton pauses from an afternoon stroll with his dog. r11rs. J. O. Berliner of Holly- wood, California, mounts a rare stamp in her collection. A collector of antiques, Dr. Killin- ger of Greencastle, Indiana, winds his 125-year-old clock. 'A~ a1r. Alichael Bernica, railroad machinist of Cheyenne, ff'yoming, is putting his four rhildren through col- lege with the help of his dividends. Octogeiearian Charles Hopper at his desk in his Grand Rapids, Michigan, home. Mrs. Harry Allendorfer of Johnstown, Pennsylvania, often uses her dividends to purchase gifts for her naval officer son and twin daughters. Mr. George Kurtzweil, Spanish American war veteran, has retired in Boise, Idaho, after an active • engineering career. He says his dividends are a welcome addition to his pension. In Passaic, New Jersey, Mrs. McCabe listens to her favorite program while she knits.

....~._.._.. - - ~.:,,.;~.~ our cigarette sales again increased ~ at a greater rate than the industry average and amounted to more than 11.4 % of the cigarettes manufactured in the United States last year. investment in tobacco leaf was increased • in accordance with our continued rate of growth and our stocks of tobacco are at our hightest year end level. a program of expansion was started to increase our productive and storage capacity in line with our sales growth. our permanent capital was increased approximately $29,000,000 through sale of additional preferred and common stock. pre-tax earnings were higher on the increased stockholder investment, but earnings per share after taxes • were slightly reduced on the common stock because of a 30% increase in taxes on income. on the common stock, regular cash ~ dividends of $3 per share and an extra dividend of 5% payable in common stock were declared. I 0 .0. r• -10 ~

total sales of .................................... $305,804,331 provided f or ... revenue stamps .......................... 147,312,301 tobacco and other costs of manufacturing and distributing Philip Alorris products ..................... 108,831,875 interest on borrowed money and other financial costs .................... 1,855,734 payments to employees and insurance, hospitalication, pensions and other benefits. .. .. .. .. .. .. .. .. . 124.00 .54 3.00 3.62 240,449,303 15,303,185 789,256 5,995,401 8,518,527 income taxes for support of State Governments ....................... federal normal and surtax on income ................................ federal excess profits tax ................ 2,686,000 balance..........•••..••••••••••••••••••• 16,689,145 available for: payments of'cash dividends to shareholders preferred ............................. 1,253,047 common .............................. 6,994,632 future operation and risk ................. 8,441,466 investment in Philip Morris o f ............. 227,139,146 was represented by ... unsecuredfoans........•••••••••••••.••.• fundeddebt,........•...••••••••••••••••d interest of preferred stockholders ........ interest of common stockholders ......... 12,717,276 648,000 15,064,000 total 289,115,186 75,000,000 32,000,000 31,510,101 88,629,045 1951 per common share $131.16 63.18 46.68 .80 5.45 .28 6.46 97.42 32.17 13.72 13.51 38.02 1950 total $255,752,488 125,046,000 92,463,252 1,579,245 11,496,806 464,000 9,400,000 171,220,801 55,500,000 32,000,000 18,965,100 64,755,701 per common share $127.97 62.57 46.27 .79 5.76 .23 4.70 120.32 .39 3.00 4.26 85.67 27.77 16.01 9.49 32.40 K] Qo O tl` cr ^t3

I box-full of the Philip Morris blend starts on the way to the making machine. Rolls of cellophane are delivered to the packing floor on the original shipping pallet. Here an operator prepares to re- load his machines. .

I summary We are pleased to be able to report that our sales growth con- tinued at a far greater rate than the industry as a whole. In the calendar year 1950 the industry manufactured 392 billion cigarettes, an increase of 1.8% over 1949. Philip Morris sales of 43 billion cigarettes during the same period were 17.7% over 1949. Increases in our sales over the first three months of 1950 continued during the final quarter of our 1951 fiscal year. Net sales totaled $305,804,000, an increase of $50,052,000 over the 1949-50 fiscal year. On July 28, 1950 a price increase of 2.8% was effected to offset higher costs of tobacco, labor and operating supplies. This accounted for $5,665,000 of our increased sales total but $44,387,000 resulted from our higher volume of business. Export sales of $8,041,000 showed im- provement over the preceding year's $6,627,000, but were still restricted by lack of dollars abroad. From our sales revenue we provided $12,717,276 for wages, salaries, bonus and benefits to employees. Our net earnings before tax provision increased $9,919,961 and amounted to $35,089,145 as against $25,167,184 in fiscal 1950. After all taxes, including nine months of Federal Excess Profits Tax, our net of $16,689,145 compared to $15,303,184 in the previous twelve months period when no Excess Profits Tax existed. A total of $8,247,679 was provided for cash dividends to our stockholders. To provide added capital $8,441,466 of net earnings was retained toward the future needs of the business. An extra common stock divi- dend was declared in February payable in common stock in April, in the ratio of one share for each 20 shares held. Our financing program was completed in June in accordance with the plan outlined in last year's annual report. Of the 333,077 shares of common stock issued, 97% was subscribed for at $48 per share. Together with the sale of 130,610 shares of new 3.90% Series of Cumulative Preferred Stock, this enlarged our capital structure by $28,492,956 to accommodate the financial needs of our larger business. Stockholder equity was increased during the year to 52% of total investment Shipping cases, each holding 50 employed in our operations. cartons of cigarettes, are auto- $200,151,000 is invested in leaf tobacco and current assets of matically filled, sealed and $241,889,000 were 2.4 times current liabilities. By August of d t le d bo cars lo d t . a e ruc s an x on o last year we had repaid all of our outstanding bank loans, but new loans to finance our leaf requirements were later secured.

These amounted to $75,000,000 on March 31, 1951. Our program of additions to production and warehouse facilities was begun in September, and an amendment to our registration statement outlining the expenditure of approxi- mately $11,000,000 was duly filed. With the completion of this program we will have the facilities to produce more cigarettes in a normal day-time shift than last year when over-time and extra shift operations were adopted to meet the continued up- trend of our business. In this period of emergency everyone must bear his propor- tionate share of the Nation's financial costs. All companies are now subject to increased normal taxes and surtaxes, and to Excess Profits Taxes retroactively applied to a portion of last year. Normal taxes and surtaxes are assessed uniforml our income and the income of all other companies. Profits Tax, however, is assessed according to e previous base period. Our earnings have successive- 8 from year to year and are, because of this, ta funds. R1any hours of examination and analysis of business records were spent in preparing the Financial Vice President L. G. Hanson discusses withh his staff and advisers plans for securing financing program. Left to right: H. B. Dalby, Consultant; Mr. Hanson; If'". J. Hammerslo Banker; C. H. Kibbee, Assistant Treasurer; Paul Smith, Attorney; H. R. Blum, Controller.