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2048020660 I

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PHILIP MORRIS I & CO. LTD., INCORPORATED 119 FIFTH AVENUE • NEW YORK 3, N. Y. Page Summa ry 3 Factory Efficiency 5 Board o f Directors 9 Wareho using and Distribution 9 Researc h 10 Tobacco Leaf 11 Financi al 12 Ten-Ye ar Record 14 Industr y Comparison 16 Sales an d Advertising 18 Export 20 Philip Morris Team 21 t+a 0 Certifie d Statements 26 4~1 Product s 32 csa ~ ~ 0 cr

E, v LYON: President . PARxER McCOHIns. Kxecutive Vzce-President RAY JONES, Vice-President G J. HENN, Vice-President : G. HANSON Vice-President & Treasurer ~ ~.WILLIAmI C. FOLEY, . Vice-President - T. F. GaNNON, Vice-President W: H. HATCHER, Vice-President W. E. LIESSTxnu, Vice President :. T AMES, JR., Vice-President E: W. DINFOIDDIE, Vice-President L. C. METZGER, Secretary H. `R. BLuwI, Assistant Secretary , , , , ; Guaranty Trust Co. of N. Y., 140 Broadway, New York . The National City Bank of New York The Commercial National Bank & Trust Co. of New York Conboy, Hewitt, O'Brien & Boardman, 39 Broadway, N. Y.

I I I $9Ux financial condition is the strongest in our history. Current assets at March 31st were $105,966,002 compared to current liabilities of $10,981,246 giving working capital of $94,984,756. We paid off bank loans of $5,500,000 during the year and cut down our inventory of finished products by over $2.5 million. We increased our inventory of high quality leaf without raising its dollar cost by using extraordinary care, making the most of unusual conditions in the tobacco market. Our domestic sales during the fiscal year ended March 31st totaled $163,- 968,000 compared to $157,557,000 in the preceding year, an increase of $6,411,000. Export sales during the period, in spite of a demand of large proportions for Amer- ican cigarettes in foreign countries, amounted to only $7,290,000, compared to $13,- 348,000 in the 1947 fiscal year, because management deemed it wise to maintain high credit standards for all foreign shipments. Lack of available dollars abroad, alone caused a decrease in our foreign sales. The net effect was to give us total sales in round numbers of $171.2 million compared to $170.9 million in the preceding year. 3

Improved methods of distribution reduced our inventory of finished goods by over 30 per cent and cut down the time between the manufacture of our products and their sale to the consumer. The net amount available for dividends after taxes was $6,035,278 compared to $4,958,150 last year. After payment of preferred dividends totaling $835,901, $2.60 per common share remained compared to $2.04 in fiscal 1947. We completed during the year the improvement in manufacturing facilities be- gun when we bought the Louisville plant in 1944. Since then a total of $2,900,000 has been added to the book value of our properties, $764,056 in the past year. This was large- ly for improvements at our factories in Louisville and Richmond. The equipment is of the best modern design and includes features developed by our own engineers. When the pressure of war production was over, we set about closing the gaps in our organization caused by our rapid growth and our loss of personnel during the war years. We employ expert counsel to help us applyy proven methods of job analysis, aptitude testing, and sales training. During the past yearr we have divided and reclassi- fied responsibilities in the intermediate management posts. The creation of new posts has lightened the burden on several key men and has increased the effectiveness of our planning and administration. In brief, during the twelve months ended March 31, 1948, we have accom- plished the following: strengthened our organization by re-align- ment of jobs and departments and the addi- tion of personnel. completed a three-year program of improve- ment in manufacturing facilities and reached the highest level of operating efficiency. improved our distribution methods, shorten- ing the time of our products in transit from factory to smoker. increased our inventory of high quality leaf without inflation of dollar costs. maintained our financial condition unimpaired by the inflationary influences of the times. A 4

I amply covered out of earnings our regular common dividend of $1.50 a share and a spe- cial dividend of 25 cents. provided for the future financial needs of the business with remaining net profits amounting to 85 cents per share. How these things were accomplished is discussed in more detail under ap- propriate divisions of this report. 11R. C. T. AMES, JR., Vice President in charge of manufacturing, moved his office during the year to the New York headquarters to better coordinate manufactur- ing with distribution and sales. The plants in Richmond are under the direct supervision of Mr. E. W. Dinwiddie and Mr. S. T. Grigg and the plant in Louisville, under Mr. W. N. McFadden. Guardite Installation in Louisvil'.e-Tobacco Z st have proper moisture content for han- ng in the manufacturing process. 10,800 pounds of fine leaf, aged and dry, are re- stored to proper moisture by this machine every 55 minutes. Conveyors under electric eye control move the heavy loads through this process to the stemming floor. 5

High Speed Making Machines Tip Marlboro Cigarettes - A special device puts Beauty Tips on these Marlboro cigarettes at a rate of 1100 cigarettes a minute. While you smoke your after breakfast Marlboro, this machine can completely fill 39 cartons.

The net investment in land, machinery, and buildings with almost a million square feet of floor space in use stands at $6,828,313. The deductions from income made to provide for replacement of equipment as it wears out and as more efficient machines are developed now total $3,774,184. The modernization and expansion pro- gram, begun in 1945, has accomplished major changes which should prove bene,ficial in the future. Today the capacity of our Louisville plant alone is almost equal to that of the entire company in 1941 although the number of machines and the net capital in- vestment is smaller. A complete new air-conditioning system has been installed. The Guardite installation is entirely new and can handle four times as much tobacco in the same time as the older methods. Two new oil burning boilers of the most efficient design have been installed in a new boiler house. Eighty-two making machines of the latest high-speed design do the work of a much larger number used before. New con- veyor belts have been installed and the entire plant from top to bottom is as nearly mechanically perfect as it is possible to make a cigarette factory at the present time. In Richmond, the replacement of twenty-eight making machines by eighteen new ones of the same total capacity typifies the developments there. I The final inspection of the packages of cigarettes is made by this young lady. As she places 10 packages in each carton, the mirror makes it possible for her to see the back and front of the packages at the same time. The batteries of packaging machines on upper floors send a continuous stream of cigarette cartons to this carton selector. It counts the cartons and puts 50 into each shipping con- tainer. 25,000,000 cigarettes per day are packed for shipment by this machine.

New machines have been installed which receive cartons of cigarettes from the packing machinery, count the cartons, pack the correct number in shipping containers and move the containers to the loading platform. Following a plan worked out as we met acute wartime difficulties, new machin- ery was set in place as it became available. The machines removed were of modern design and adequate for plants less streamlined than ours. We were able to cover part of the cost of our plant conversion by selling these machines to other cigarette makers. Standard ma- chinery in our plants has been given extra productive capacity by technical features developed by our own engineers. Improved electronic devices control quality and pre- vent breakdowns and delay. Our factories are modern hygienic production units through which materials flow without delay and at the lowest cost. The shipping containers are carried by a conveyor belt from the carton selector through this machine which automatically seals each shipping case. The man in the picture inspects each shipping case and places a safety label on it as it passes him on the belt. In the background the containers are being carried upstairs to the shipping department of the plant. CI

S O. Parker McComas was advanced to the post of Executive Vice President during the past year. ALL of us were saddened by the death of Mr. J. J. Switzer, for 17 years a director of our company. All who worked with hini over the years valued the warmth of his personality and the soundness of his judgment. During the year Mr. William C. Foley, a member of the Philip Morris team since 1919 and a Vice President since 1933 was elected to the Board, filling the vacancy created by the death of Mr. Switzer. 0 5irrCE the war we have improved our system of ware- housing and distribution with two major objects in view: (1) to have at all times an adequate supply of finished products stra- tegically placed throughout the country to meet the maximum demands of distributors and retailers in the shortest possible time and (2) to reduce our investment in finished goods to the most efficient level. In two years we have reduced our finished goods in- ventory from $15.2 million at the end of March, 1946, to $5.7 million at the end of March, 1948. Systematic checks made by our field men show that even in many outlying sections of the country our cigarettes are now sold at tobacco counters within 17 days of their manufacture in Richmond and Louisville. William C. Foley, our new Director.

'LE success of our company has been built upon the Philip Morris blend. Its quality comes not only from the fine tobaccos it contains but also from our method of making the cigarette. Our Philip Morris cigarette is the first truly modern cigarette, for in its making science has complemented and improved the product of the highly developed art of tobacco blending. Our research department, composed of graduate chemists, is continually search- ing for better methods for the control and improvement of our products and their labora- tory work is an important contribution to Philip Morris quality. Electronic Inspection - This device is designed to detect, by means of electrical impulses, the most minute particle of foreign matter present in the unending stream of tobacco now ready for cigarettes. A flake of rust or a tiny chip of metal automatically reverses the direction of the conveyor belt so that the tobacco containing this foreign matter is rejected. A

LEAF tobacco makes up a greater proportion of our total inventory than was the case a year ago. In pounds our supplies of high quality -leaf tobacco are larger, and in type and quality they are well balanced and suited to the strict production requirements of our blends. As noted in our report last year, the purchase of a substantial amount of aged tobacco in 1945 lessened our dependence upon purchases in the 1946 season of tobacco for aging. We were able to restrict our buying in 1946 to extending only our holdings of special types of top grade leaf. In the 1947-1948 tobacco buying season we were influenced by several factors. There are vintage years in tobacco just as there are in wines and 1947 was such a year for many types. British purchases of flue-cured bright tobacco, normally large, were smaller than usual and stopped entirely early in the season. With this buying withdrawn, there was a moderate decline in prices for flue-cured tobacco. This provided an economical op- portunity to purchase substantial quantities of 1947 tobacco at favorable costs. We do not anticipate any major change in tobacco costs in the immediate future. A restriction of acreage to be planted and the requirements of tobacco for export, together with the parity price floor established by the government, will probably prevent any siz- able drop in leaf prices. LEFT: A field of fine tobacco under cultivation. RIGHT: This is the Fourth Street Warehouse in Lexington, Kentucky. Some of our leaf is bought on this floor. Along the 29 aisles covering six acres, stocks of choicest quality tobacco await the arrival of buyers of the best burley. 2048020672

Irr THE past year we paid o$_$5,500,000 of bank loans so that we now have none and have added $764,056 to our production facilities in equipment and improved machinery. We bought 3,970 shares of 3.60°Jo and 4,000 shares of 4% preferred stocks. We bought large quantities of the year's vintage tobacco for aging to assure quality leaf in future years. We provided the funds to finance these developments in part from this year's undistributed earnings and in part through the reduction of inventories of finished goods. A summarv of the principal financial changes during the year is shown in the table on page 13. Federal revenue stamps affixed to products sold during the fiscal year, cost the Company $86 million. We must buy these stamps in advance and so the Treasury collects the money before the tax is paid by the taxpayer. We only get our money back when the buyers of our products pay us. During the past year our average daily advance to the Treasury of the United States was $6 million without interest. This sum, if advanced on loan at the prevailing bank rate, would earn approximately $120,000 a year. Net earnings included a net gain of.$409,890 after taxes, realized from the 12 sale of unlisted securities carried at a nominal value, thus making these funds available for use in our own business. A law suit which had been in litigation for many years was settled and is described in the proxy letter to be mailed about June 14, 1948. In this con- nection the contingency reserve estab- lished in the 1947 fiscal year was reduced in the amount of $263,000. GROWTH IN VALUE OF WHAT THE STOCKHOLDER OWNS ®O®®®EM/IE®/IEVIVI/~M/M/MM MMEME®EM®NEMEMIN ® ~~~ MOMM®~ ~~° /~~m MAIMME/®®M /N/NU/M/M ®MOMi®® M®®N®® . / M////i/ /AI//MUM/®/OM/E ~ ®/®//M®M/MM//M®/ ®=/Ri=M®®/®®/0 a ®/IR/i//®/®/®/i!//M /®//M//®/M/E/IB//N/IN ~ /,®///MMMMMM/®®®®M//® 'o ®U®N ®EM ®®®f®IM®!/1/®®®®®®® c °;

I Our current assets, including $84,049,803 of leaf inventory, were $105,966,- 002 as of llarch 31, 1948, compared with current liabilities of $10,981,246, giving us net working capital of $94.984,756. Current assets were nearly ten times current lia- bilities. We provided out of net earnings of the year $3,628,000 for Federal and State income taxes. After providing $835,901 for the dividend requirements of our preferred stocks, $3,497,353 was paid in dividends to holders of common stock. An additional amount for future needs was supplied by reinvesting in the business the $1,702,024 which was left when all obligations had been met. A SUMMARY OF PRINCIPAL CHANGES IN OUR FINANCIAL CONDITION During the last two fiscal years we used funds: 1948 1947 I To repay bank loans . . . . . . . . . . . . . . . . . . . . . . _ . . . . . - $5,500,000 $38,500,000 To redeem Twenty-year 3% Debentures, due in 1962 and 1963. . 11,294,250 To add to cash in banks. . . . . . . . . .. . . . . . . . . . . . . . . . . . 857,205 1,538,241 To add to plant facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764,056 1,832,400 To increase accounts receivable . . . . . . . . . . . . . . . . . . . . . . .. . __. . . 805,112 To redeem shares of preferred stock, pursuant to sinking fund require- ments . . . . . . . . . . . . .. . . . . - . . . . . _ 227,415 210,894 To pay charges against the contingency reserve . . . . . . . . . . . 263,000 To purchase shares of preferred stock held in treasury ..... .. ... 566,167 To write off cost of goodwill, trademarks and brands. . . . . . . . . . . . . . 50,000 $8,982,955 $53,425,785 We secured the necessary funds: From sale of 25/a% Sinking Fund Debentures, due in 1966. ......... _ $32,000,000 From reduction in inventories of leaf tobacco, manufactured stock, and operating supplies . . . ... . . . . . . . . . . . ._. . . . . . . .. . . . . . . . $4,898,975 13,932,124 From reduction in accounts receivable. . . . . . . . . . . . . . . . . . . . 3,391,419 From reduction in notes receivable from supplier . . . . . . . . . . . . . . . . . . 62,500 62,500 From depreciation reserve. 404,164 353,129 From sales of securities . . . . . . . . . . . . . . . .. . . . . . . . . . . ... . . . . . 29,414 From increase in accounts payables, accrued liabilities and miscellaneous charges . . . . . . .. . . . . . . . _ . . . . . . . . . . . . . . . . . . . . . . . . . 1,885,878 , 3,089,549 From net earnings in excess of dividends . . . . . . .. . . . . . . . . . . . . .. . . . . . 1,702,024* 597,064 $8,982,955 $53,425,785 * Includes net gain of $409,890 after taxes from sale of unlisted securities. I 13

1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 NET SALES (including Revenue Stamps) $64,595 $73,344 $87,352 $112,565 $141,047 $177,901 $185,299 $178,686 $170,906 $171,258 COST OF SALES (including Revenue Stamps) 48,205 56,579 67,639 87,175 113,682 152,290 159,051 159,799 148,412 146,694 GROSS OPERATING PROFIT 16,390 16,765 19,713 25,390 27,365 25,611 26,248 18,887 22,494 24,564 SHIPPING, SELLING, GENERAL & ADMINISTRATIVE EXPENSE 7,862 7,081 9,149 10,884 12,420 12,507 12,080 10,953 12,752 14,641 OPERATING PROFIT 8,528 9,684 10,564 14,506 14,945 13,104 14,168 7,934 9,742 9,923 OTHER INCOME 108 131 161 193 183 149 267 (3)2,323 (5)683 (7)725 TOTAL INCOME 8,636 9,815 10,725 14,699 15,128 13,253 14,435 10,257 10,425 10,648 INCOME DEDUCTIONS 551 675 594 445 515 672 (2)940 (4)1,476 (6)2,174 985 NET INCOME (before taxes) 8,085 9,140 10,131 14,254 14,613 12,581 13,495 8,781 8,251 9,663 FEDERAL AND STATE TAXES ON INCOME 1,534 1,704 2,771 6,462 7,682 5,930 6,692 2,633 3,293 3,628 NET INCOME 6,551 7,436 7,360 7,792 6,931 6,651 6,803 6,148 4,958 6,035 TOTAL DIVIDEND PAYMENTS - t ~:~ -CASH (1)4,004 4,455 4,549 5,103 5,091 5,340 5,363 3,815 4,361 4,333 NET INCOME RETAINED IN THE BUSINESS (8) 2,547 2,981 2,811 2,689 1,840 1,311 1,440 2,333 597 1,702 (1) Disregarding a stock dividend of one-half share of Common Stock for each share of Common Stock. Earned Surplus charged $2,597,950.00 for shares of Common Stock issued with respect to this dividend. (2) Including. provision of $250,000.00 for post-war and other contingencies. (3) Including claim in amount of $1,867,527.76 for refund of federal excess profits taxes of prior years, arising under the carry-back provisions of the Internal Revenue Code, and excess provision of $300,000.00 in prior years for federal income taxes. (4) Including charge of $492,221.95 for losses arising from termination of war, less amount thereof charged against provision of $250,000.00 for post-war and other con- tingencies. (See Note 2). Also including charge of $275,000.00 for reimbursement of withdrawing subscribers in the purchase of subscription rights to shares of Cumulative Preferred Stock, 3.60% series. (5) Including recovery of $310,000.00 in connection with government contracts, net pre- mium of $133,865.00 received in sale of 2%s% Debentures, and profit of $77,200.00 on sale of real estate. (6) Including premium of $472,000.00 paid on retirement of 3% Debentures, and pro- ~ vision of $500,000.00 for claims, litigation and contingencies. m (7) Including profit of $546,889.78 on sales of securities (before federal income tax of ~ $137,000.00 ) . o (8) Subject to minor surplus adjustments. ce Figures for the years 1939 to 1942 inclusive are on a consolidated basis (with English subsidiary). 14

1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 NET SALES (including Revenue Stamps) $64,595 $73,344 $87,352 $112,565 $141,047 $177,901 $185,299 $178,686 $170,906 $171,258 COST OF SALES (including Revenue Stamps) 48,205 56,579 67,639 87,175 113,682 152,290 159,051 159,799 148,412 146,694 GROSS OPERATING PROFIT 16,390 16,765 19,713 25,390 27,365 25,611 - 26,248 18,887 22,494 24,564 SHIPPING, SELLING, GENERAL & ADMINISTRATIVE EXPENSE 7,862 7,081 9,149 10,884 12,420 12,507 12,080 10,953 12,752 14,641 OPERATING PROFIT 8,528 9,684 10,564 14,506 14,945 13,104 14,168 7,934 9,742 9,923 OTHER INCOME 108 131 161 193 183 149 267 (3)2,323 (5)683 (7)725 TOTAL INCOME 8,636 9,815 10,725 14,699 15,128 13,253 14,435 10,257 10,425 10,648 INCOME DEDUCTIONS 551 675 594 445 515 672 (2)940 (4)1,476 (6)2,174 985 NET INCOME (before taxes) 8,085 9,140 10,131 14,254 14,613 12,581 13,495 8,781 8,251 9,663 FEDERAL AND STATE TAXES ON INCOME 1,534 1,704 2,771 6,462 7,682 5,930 6,692 2,633 3,293 3,628 ' NET INCOME 6,551 7,436 7,360 7,792 6,931 6,651 6,803 6,148 4,958 6,035 ';; TOTAL DIVIDEND PAYMENTS - s~ -CASH (1)4,004 4,455 4,549 5,103 5,091 5,340 5,363 3,815 4,361 4,333 NET INCOME RETAINED IN THE BUSINESS (8) 2,547 2,981 2,811 2,689 1,840 1,311 1,440 2,333 597 1,702 (1) Disregarding a stock dividend of one-half share of Common Stock for each share of Common Stock. Earned Surplus charged $2,597,950.00 for shares of Common Stock issued with respect to this dividend. (2) Including, provision of $250,000.00 for post-war and other contingencies. (3) Including claim in amount of $1,867,527.76 for refund of federal excess profits taxes of prior years, arising under the carry-back provisions of the Internal Revenue Code, and excess provision of $300,000.00 in prior years for federal income taxes. (4) Including charge of $492,221.95 for losses arising from termination of war, less amount thereof charged against provision of $250,000.00 for post-war and other con- tingencies. (See Note 2). Also including charge of $275,000.00 for reimbursement of withdrawing subscribers in the purchase of subscription rights to shares of Cumulative Preferred Stock, 3.60% series. (5) Including recovery of $310,000.00 in connection with government contracts, net pre- mium of $133,865.00 received in sale of 2%s% Debentures, and profit of $77,200.00 on sale of real estate. (6) Including premium of $472,000.00 paid on retirement of 3% Debentures, and pro- vision of $500,000.00 for claims, litigation and contingencies. (7) Including profit of $546,889.78 on sales of securities (before federal income tax of $137,000.00 ) . (8) Subject to minor surplus adjustments. Figures for the years 1939 to 1942 inclusive are on a consolidated basis (with English subsidiary). 14

1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 ASSETS Cash and Marketable Securities $ 1,501 $ 1,529 $ 9,524 $ 3,158 $ 3,175 $ 2,455 $ 2,320 $ 2,486 $ 4,024 $ 4,857 Receivables 3,705 3,854 5,172 6,255 8,219 11,017 10,063 7,914 6,391 7,196 Inventories 27,295 32,038 34,876 53,143 70,57~ 69,948 87,280 112,745 98,812 93,913 Other Current Assets 102 4,290 206 1,867 Total Current Assets 32,501 37,421 49,572 62,556 82,066 87,710 99,869 125,012 109,227 105,966 Net Property Account 2,885 2,783 3,099 3,729 3,723 3,471 5,110 4,989 6,468 6,828 Prepaid Items & Other Assets 1,757 2,051 2,044 2,534 3,286 3,304 1,929 1,391 1,049 937 Total Assets 37,143 42,255 54,715 68,819 89,075 94,485 106,908 131,392 116,744 113,731 LIABILITIES Notes Payable 7,000 9,000 52 8,000 5,000 16,000 44,000 5,500 Federal Taxes 1,426 1,700 2,706 6,212 7,917 6,028 6,992 2,681 3,440 3,431 Accounts Payable 877 665 3,708 3,425 5,127 6,552 5,047 2,574 3,866 5,753 Other Current Liabilities 1,206 1,298 1,552 1,795 2,074 2,045 2,255 1,369 1,834 1,797 Total Current Liabilities 10,509 12,663 8,018 19,432 15,118 19,625 30,294 50,624 14,640 10,981 I Long Term Debt 11,700 11,500 11,300 11,500 32,000 32,000 Reserves for Contingencies, etc. 250 500 237 Net Worth 26,634 29,592 46,697 49,387 62,257 63,360 65,064 69,268 69,604 70,513 Total Liabilities 37,143 42,255 54,715 68,819 89,075 94,485 106,908 131,392 116,744 113,731 Net Working Capital 21,992 24,758 41,554 43,124 66,948 68,085 69,575 74,388 94,587 94,985 Figures for the years 1939 to 1942 inclusive are on a consolidated basis (with English subsidiary).

i ~ - ~MPARISON 0 ILIP~_MORRIS~-O. ~- ~ figures of~~e four ~nalor 4om~etttors pre on a calendar 0 ERATIONS WITH ~ °~~~ :THE fISCAt. `YE ~ ear basis. For example, fhe 16 NET SALES (including Revenue Stamps) NET SALES (including Revenue Stamps) per $1,000,000 of net property ANALYSIS OF OPERATIONS Net Sales (Excluding Revenue Stamps) Shipping, Selling, General & Administrative Expense CAPITAL STRUCTURE % Long term debt P. M. Co. 4 Competing P. Ft. Co. 4 Competing Companies Companies 000 omitted 000 omitted 000 omitted 000 omitted $64,595£ $847,009 $73,344~ $851,838 -22,390 15,530 26,354 _ 14,925 25.10 1938 1939 16.29 ANALYSIS OF FINANCIAL POSITION Net Prop. Acct. as 0/6 of tang. net worth ,$5+~ 11.08 Current Liabil. as % of tang. net worth 14.45 Total Liabilities(3)as%oftang.networth 31.06 Inventories as % of net working capital ~' 98.19 Current Liabilities as % of inventories 3 0I.J. Long Term Debt as % of net working capitaf 20.22 16.60 P. M. Co.Y 000 omitted 22.46 1940 1941 P. M. Co.T 4 Competin -:~__A Companies 000Tomitted" 000 omitte $112,565 $1,045,5C 4 Competing Companies 000 omitted $87,352 $902,967 28,187 15,815 41~ .. 100 00% 100.00% 100.00 ° 100.00% 100.00% 100.00% 15.92 (1) After 50% stock dividend. (2) After exchange of 2 shares of $5 par value for each share of $10 par value stock. 1 0t= PHILI~ MQRf 138 comparison t ,30,186 ' 17,459 100.000_~ 100.000i Cost of Sales (Excluding Revenue Stamps) 48:07 62.32 52 55 .. 60.65 51.61 59.71 59.77 -.~ Gross Operating Profit 51~.93 , 37.68 ,4L45 = 39.35 48.39 40.29 .49.03 40.23 .21.02 Other Income Total Income Income Deductions 22.75 25.93 24.37 .63 .440. . .42 26.33 24.79 4p ;; 1.54 ;;.1.46 1.56 21.84 24.87 23.23 4.32 .6.80 6.59 =T60_~ 23.38 25.04 .57 25.61 1.58 Net Income before Taxes . Federal and State Taxes on Income Net Income as % of Net Sales (Excluding Revenue Stamps) 17.03 17.52 18.07 16.64 `I 5-04_ 13.26 - - -- ~`='--- - -- - - -- ~-- - - - -- Net Income as % of Net Worth ~4.60~ 13.43 13.75 15.76 13.70 12.00 Net Income per share of Common Stock (1j~50~ % Preferred Stock % Common Stock and Surplus 11.89 13.44 15.34 :86 . 74.67 } ~ 75.45 . ~68.09 ° 76.26 11.18 ___- 10.46 11.42 12.08 30.59 95.77 12.93 18.40 13.37 :31:91 13.28 30.17 13.37 L983_ . ~ . 76.75 11.79 33.09 48.41 114.55 ~: ~i~57 - -~ 30.38 15.24 IAG .~o ` : t7: 15.19 9.88

AGGREGATE`Ff: t" 7- °-~.. 0:' LTD , iNE ~ ENDS MAR H 31 ~ r:~ ~en the°March 31~,1939_`fiscal lrear of Phthp Morri s and GUR_ErS-__4T.-_ fTSFOURz MA10_R ear r1or the_other companies ~ e: r ~ e f,938 cal~en~ eG MP_ETITOR fl $ 1942 P. 6t. Co. 4 Competing { Companies 000 omitted 000 omitted $141,047 $1,206,242 1943 15.36 ~ 10.46 21.38 .32 21.70 €83?? 1.40 15.45 _ 20.30 `7.28' 11.37 All liabilities except Capital and Surplus. P. M.-Co. 000 omitted~ 1944 P. M. Co. 4 Competing Companies 000 omitted~ 000 omitted '3 $177,90 1 $1,408,276 $185,299 $1,419,195 4 Competing Companies 000 omitted P.YM. Co. 1945 4 Competing P. M. Co.- Companies 000 omitted 000 omitted 1946 1947 4 Competing P H. Co. 4 Competing Companies ~ Companies 000 omitted 000 omitted 000 omitted 000 omitte $178,686 $1,514,167 $170,906 $1,965,829 $171,258 $2,169,816 .®:~ ~ 100.00% 10 0.0 0%.,7 100.00% 100_.00% 100.00% 1_Qb 00%a 100.00% ~100 00%° 100.00% -100,00°~ 100.00% 58;65 62.15 ;68.54 J, 68.16 72.52 75.09 77 43, _~ 78.76 7~r70_ 77.73 7i.13~ 76.83 d.35 18.77 22.58 - 37.85 3T:46 31.84 27:48 ~ 24.91 22 7 21.24 26.30 " 22.27 28.87 23.17 22.86 12.54 25.31 .45 25.76 10.47 _ 10.72 11:13 10.72 6.10. 15.82 20.24 26.66 11.53 5732 68.23 2 1_ 10.80 33.57 61.89 112.49 25.40 16:28 .1,5,36 26.07 8. 7 ~ 68.00 W ~ 7;. 8.93 wM3 , ,. 7.68 QF_, 10.15 .T045~ 9.34 12.65 7.86 ..13.09 _14.83 _ 17.05 8 ~~ ~- ,~ 28 ~ .30 15.11 17.35 ,~7~26 14.13., . 7.00 - -_£._5.24_- 20.89 14~.79,'. 28.21 11.11 26 17__ 9.99 5~8 ~ 9.60 ~.7 $6~ ~ 8.81 3-1itQ ~ 36.99 66.60~ 42.86 66.48 568 112.48 12~4 107.84 25.91 33.98 8.82 ~ 7.! 2 L 11.68 ~8 ,56~ 13.28 (712.67 f ~ 2.04 5 ~,24 28.97 :2- 14.36 ~ 61.80 56.67 ~ 5.77 15.47 35 15.82 }2j5 ; 16.32 ~t „2 1~2 7.66 ~~.78 _: 8.60 Z-0,04 ; 8.75 6.18 17.21 16.09 .23 .29 16.65 1.80 :' 116 ~ 1.83 14.52 14.82 5.92 6.07 36.57 ~31;,22 q 35.18 ~~= 12.30 11.22 .~~, .~, 51.13 ~ 8 35`~ 53.60 6.81 16.36 7.69 9.22 11.09 ~ j 3 ] 4 45.26 48.10 54.06 90.13 111.08 112.75 118.25 1d4. 7 a 119.14 124.55 028.94 182 27.07 30.19 A- 33.61 41.99 _j3.64 ¢ 40.61 ® 17

During the past year we have improved our methods of selection and training of salesmen and have completed the rebuilding of our force. - Our sales organization, under Mr. Ray Jones, Vice President, consists of twelve regional managers and their staffs, almost '500 people in all. They are aided in their work by thousands of distributors and over a million retail outlets, which make our products available to many millions of smokers every day. Our salesmen in turn assist the distributors and retailers in many ways. Because we cannot have direct personal contact with 70 million American smokers, our sales and advertising program must cover this tremendous market. Only in this way can we maintain our position and grow. To cover this market, the industry must spend a great deal of money. With us, the proportion so spent is somewhat larger than in some other companies. The money thus spent in covering the market we consider an in- vestment in the future. The present sales trend indicates that the advertising and sales promotion is proving effective. In the face of vigorous competition, the advertising department is con- tinuing to make careful analysis of all advertising media so that the selling messages are strategically placed to make the greatest possible consumer contact for every dollar spent. At the same time the sales message is under constant study to be sure that it states in the strongest manner that it is to the consumers' benefit, to smoke Philip Morris cigarettes in preference to any other. In the field of radio, PHILIP MORRIS NIGHT WITH HORACE HEIDT, on Sunday evening over NBC; CALL FOR MUSIC, with Dinah Shore, Harry James and Johnny Mercer, on Tuesday night over NBC; EVERYBODY WINS, starring Phil Baker, Friday night over CBS, and two daytime programs, QUEEN FOR A DAY and HEART'S DESIRE, effectively reach many millions of consumers and potential consumers every week. Other specialized advertising media are judiciously used to reach the largest number of readers per dollar spent. Stockholders have been helpful in giving us their comments and their personal reactions to the Company's advertising and sales methods. Many have introduced their friends to the products of their company. This team work strengthens the efforts of our selling staff because each person who knows from experience that our products give more smoking pleasure will ove'r a period of time bring more smokers to Philip Morris. 18

'i te9t7zG}6'vf}T so •

!J}rrnEx the direction of Mr. G. C. Dawson, the export department sells our products through agents in foreign countries. Canada is excepted because an unrelated company of the same name operates there. This department of our business has grown since the war began in 1941 from sales of $700,000 to $7,290,000 in the 1948 fiscal year. There were unusual sales oppor- tunities during 1946 and 1947 because our fighting forces overseas created a world-wide demand of great proportion for American cigarettes. We took advantage of this demand to introduce Philip Morris products wherever possible to civil populations. Our foreign sales reached a peace time peak of $13,348,000 in the 1947 fiscal year. During the last sixteen months, however, exchange difficulties were intensified. The shortage of dollars in some sections of the world was so severe that all export of cigarettes to those areas ceased. We had gained 50% of the total volume of American cigarettes in one market in the two years following VJ Day and the 'cutting off of that market is responsible to a great extent for the drop in our export sales. Any major improvement in our foreign sales will depend upon the ability of for- eign buyers to obtain dollar balances.

I 1 o AMERICAN corporation can be stronger than the group of men and women whom it joins together for their mutual benefit. The varied contributions of stockholders, directors, and company personnel all are essential to a smooth and profitable operation. Each group depends on the cooperation of every other to make its efforts effective in the common interest. All contribute and all are rewarded for their contribution. For every job in Philip Morris there is now an investment of $31,210 in the fin- est tobacco; most modern equipment, and in working capital. Stockholders, as a group including people in every walk of life, have put up the major portion of this money. The balance comes to us as a loan from an insurance company reinvesting the savings of thou- sands of people. This large accumulation of savings would produce little without the skill, experience, and interest of the men and women who make up the Philip Morris team. On the other hand, without this investment, none of us could be productive. CAPITAL INVESTED PER JOB AND PAYMENTS MADE POSSIBLE BY ITS USE I 21

Dinner at Stockton Street, Richmond. Dinner at Twentieth Street, Richmond. 0 D~

I I This investment of $31,210 per job applied by our personnel to our business made it possible during the year to pay $27,337 toward the support of national and state governments in taxes, $1,319 to the stockholder group' for their contribution to the investment, $302 to the lenders who supply part of the funds, $2,556 to the per- sonnel who use the investment, and $522 for investment toward future jobs. These di- visions are shown for clarity in the chart on page 21 but many individuals belong to more than one of these groups. . At the close of our fiscal year 3285 people earned their living directly by work- ing in our plants and offices. Of this number, 2476 in our factories create Philip Morris products and start them on their way to our customers, 464 in the sales department serve the people who deliver our products by retail sales of every kind to millions of smokers daily, and 345 in our offices keep the accounts on which our plans are based and direct the operations of our company. In addition to these there are thousands of suppliers and hundreds of thousands of distributors and retailers whose earnings depend in part on the success. of our company. Since the end of the war we have been strengthening our organization by the de- velopment of junior executives and, where necessary, have added men to our team from outside. During the year we have advanced a long way toward the completion of this task. The company has operated smoothly. The joint committees of union and com- pany representatives have worked together during the year and we have had no work stop- pages. Increases in wages throughout the organization have been made to compensate for higher living costs. Hospital insurance is available to all and life insurance at low cost is made possible by means of a participating arrangement made by Philip Morris with the life insurance company. Under our retirement plan a fund maintained by the com- pany provides life incomes for employees who have reached retirement age. In our air-conditioned factories, attractively furnished rest rooms afford relief from fatigue during the working day and non-profit cafeterias run under company con- trol make attractive and wholesome dishes available at modest prices. Similar facilities were established in the New York Office during the year and a committee of employees there operates the lunch and recreation rooms in quarters supplied by the company. A dis- pensary under the direction of a registered nurse is maintained in each factory and in the New York Office. Every means to safeguard health and prevent accidents is used in our plants and offices and our safety record is high. The fine cooperation of every group and individual during the past year has done much to strengthen the effectiveness of our company. With a strong financial position, fine plants, and a smoothly operating team, Philip Morris may look forward with confi- dence to further progress in the coming year. A. E. LYON MAY 20, 1948 23 f

Some of our stockholders are pictured here- Mr. Rudolph Reimer, former Immigration Commissioner, in his apartment overlook- ing the East River in New York. Mr. and Mrs. Thomas D. Smith with their daughter Faith. Mr. Smith, who works in the accounting department of Philip Morris, expects that the savings which he and his wife have invested in the company will provide for his daughter's education. Mr. R. J. Barham, outside his home in Louisville. His work in our leaf accounting department contributes to the success of his investment in the company. Mr. Francis J. O'Sullivan of Chicago makes an emergency delivery to a super market in his sales territory. Mr. Anthony Hans of Ridgewood, Long Island, joined 'our sales force when he re- turned from Army service overseas. His outdoor hobby is gardening. Here he is test- ing the soil preparatory to the spring planting. Mr. Branch G. Crooks of Richmond shows Branch, Jr., some of the equipment in the factory where he works and explains how his savings have helped to buy the tools that he uses in his daily work. Bowdoin College in Maine is one of our stockholders. The students in Hubbard Hall, which is pictured here, in their studies of history and economics are equipping them- selves to be future managers of American business. The Children's Home Society of Virginia uses its Philip Morris dividends to help care for homeless children while finding suitable homes for their adoption. The Police Benevolent Association of Richmond, Virginia, uses the dividends from its _. investment in Philip Morris to help in carrying out its work for its membership. The Navy Relief Society assists Navy personnel and their families in every way in times of need. Its work is supported in part by the dividends from its investment in Philip Morris. Officers, department heads, and their families own 54,433 shares of Philip Morris capital stock.

CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Philip Morris & Co. Ltd., Incorporated: We have examined the balance sheet of PHILIP MORRIS & CO. LTD., INCORPORATED as of March 31, 1948, and the statements of earnings and surplus for the fiscal year then ended, have reviewed the system of internal control and the accounting procedures of the company and, without making a detailed audit of the transactions, have examined or tested accounting records of the company and other supporting evidence, by methods and to the extent we deemed appropriate. Our examination was made in accordance with generally accepted auditing standards and included all procedures which we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and related statements of earnings and surplus present fairly the position of Philip Morris & Co. Ltd., Incorporated at March 31, 1948, and the results of its operations for the fiscal year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. New York, April 27, 1948. .m co 0 Fa ~ Co 26

I NET SALES . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . .-. . . . . . . .. Cost of shipping goods, selling, advertising and general administration ..... Operating income . . . . . . . . . . . . . . . ..... . Nonoperating income . . . . ...... Interest on debentures . . . . . . . . . . . . . . . . . . . ,. . . . . . . . . . . . . . . . . Other interest charges . . . . . . . . . . . . . .. . . . __~.__ . . . . . . . . . . . . . . . Miscellaneous charges . . . . . . . . . . . . . . . . a . . F _ . . . , _.. . . . . . . . . . Provision for federal and state income taxes . . . . . . . . . . . . . . . . . . . . . . Income for year before items listed below . . . . . . . . . . . . . .... . . . Profit on sale of securities, less $137,000 provision for federal income taxes Profit on sale of real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery in connection with Government contracts . . . . . . . . . . . . . . . . . .. Premium received on sale of 25/e% Sinking Fund Debentures........... Deduct, Premium paid on retirement of Twenty Year 3% Debentures. . . Deduct: Provision for claims, litigation and contingencies . . . . . . . . . . . . . . Expenses in termination of litigation on behalf of stockholders, less $161,089 related saving of federal income taxes . . . . . . . . . . . . . . . . . $263,000 Less, Portion of reserve for claims, litigation and contingencies released . . . . . . . . . 263,000 Net Earnings . . . . . . . . . . . . . . . . . . . . . . ... . . . . $171,257,957 $170,905,550 146,693,591 148,411,919 14,641,285 12,751,765 161,334,876 161,163,684 9,923,081 9,741,866 _ 178,028 162,360 10,101,109 9,904,226 840,000 830,725 22,972 219,669 121,749 151,747 984,721 1,202,141 9,116,388 8,702,085 3,491,000 3,293,000 5,625,388 5,409,085 409,890 77,200 310,000 133,865 409,890 521,065 472,000 409,890 49,065 6,035,278 5,458,150 - 500,000 0 ~ co c~ :- ~ . ~ $ 6,035,278 $ 4,958,150 a- 27

ASSETS 1948 1947 CURRENT: Demand deposits in banks and cash on hand . . . . . . . . . . . . . . . . . . . $ 4,856,841 $ 3,999,636 United States Government obligations . . . . . . . . . . . . . . . . . .. . . . . 24,414 Accounts receivable from customers, less allowance for discounts and doubtful accounts, $640,857 for 1948 and $609,180 for 1947. ... 6,802,534 5,583,334 Accounts receivable from others. . . . . . . . . . . . . . . . . . . . . . . . . . 393,148 807,236 Inventories, at average cost: Leaf tobacco (including imported leaf in bond subject to duty) 84,049,803 85,217,504 Manufactured stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,. . 5,692,871 8,214,029 Stock in process, revenue stamps and operating supplies .. ...... 4,170,805 5,380,921 Total inventories . . . . . . . . 93,913.479 98.812,454 I Total current assets . . . . . . . . . . .. . . . . . . . . . . . . . . .. . 105,966.002 _ 109,227,074 PROPERTY, PLANT AND EQUIPMENT: Land, buildings, machinery and equipment, at cost . . . . . . . . ....... . _ . 10,602,497 9,838,441 Less, Allowance for depreciation .............. . . . . . . . 3,774,184 3,370,020 6,828.313 6,468,421 OTHER ASSETS: ~ ~ Investment (England) (Note 1) at cost in Philip Morris & Co Ltd 235 965 235 965 c::« ..... , , ., . , , ~ ~ Notes receivable and miscellaneous investments ............ 38,050 105,550 • r~- ~ Prepaid expenses and deferred charges 662,446 707,400 936,461 1,048,915 $113,730,776 $116,744,410 I 28

LIABILITIES CURRENT: 1948 1947 Notes payable to banks. . $ 5,500,000 Dividends declared, payable after March 31 . $ 1,456,844 1,464,486 Accounts payable. . . . . . . . . .. _. . _ . _ . 4,296,045 2,401,822 Accrued liabilities, interest, taxes (other than federal income taxes), advertising, etc. . . . . . . . . . _. 1,797,385 1,833,539 Provision for federal income taxes . . . . . . . 3,430,972 3,440,475 Total current liabilities . . 10,981,246 14,640,322 FUNDED DEBT: 2Fa% Sinking Fund Debentures, due April 1, 1966 (sinking fund pay- ments commence March 31, 1956) . . . . . . . . . . . . . .__ . . . . . . . . 32,000,000 32,000,000 RESERVE FOR CLAIMS, LITIGATION AND CONTINGENCIES.. 237,000 500,000 CAPITAL I STOCKHOLDERS' INVESTMENT, REPRESENTED BY: Cumulative preferred stock, authorized 350,000 shares issuable in series (Note 2): - 4% Series, authorized and issued 199,847 shares; outstanding 195,849 shares for 1948 (3,998 shares redeemed) and 197,848 shares for 1947 (1,999 shares redeemed), at par value of $100 per share .. ................................. 3.60% Series, authorized 149,883 shares, issued 19,543 shares; outstanding 19,347 shares for 1948 (196 shares redeemed) and 19,543 shares for 1947, at par value of $100 per share. ...... Common stock, authorized 3,000,000 shares of $5 par value; issued 1,998,467 shares (552,000 shares issued for equivalent of $2 per share) (Note 3) . . . . . _ . . .. . . . . . . . ._ . . . .. . . . .. . ... . . . . . . Surplus: Paid in by stockholders (in excess of par value of capital stocks, less financing expenses) . . . . . . . . .. .. . . . . . . . ... . .._. . . . . . . . Earnings reinvested or retained in the business (Note 4) ........ Less, Cost of cumulative preferred stock held in treasury, 2,001 shares of 4% Series and 3,774 shares of 3.60% Series ..... 19,584,900 19,784,800 1,934,700 1,954,300 8,336,335 8,336,340 15,941,480 15,949,390 25,281,282 23,579,258 71,078,697 69,604,088 K1 c ~ 566,167 c+~ v 70,512,530 69,604,088 Pwe aM ~ $113,730,776 $116,744,410 ~ 29

1948 EARNINGS REINVESTED OR RETAINED IN THE BUSINESS: 1947 Balance at beginning of year . ._ . .. . . ._ . . . . . . . . . . . . . . . . . . . . . . $ 23,579,258 $ 23,032,194 Net earnings for year. . . .. . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . 6,035,278 4,958,150 29,614,536 27,990,344 Deduct: Dividends declared: On cumulative preferred stock: 4% Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775,392 793,391 3.60% Series . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,509 70,355 On common stock ............................... . 3,497,353 3,497,340 4,333,254 4,361,086 Write-off of cost of good will, trade-marks and brands .......................... _. ..50,000 4,333,254 4,411,086 Balance at end of year (Note 4) . . . . . . . . . ...... . . ... . $ 25,281,282 $ 23,579,258 ADDITIONAL AMOUNTS PAID IN BY STOCKHOLDERS (in excess of par value of capital stocks, less financing expenses): Balance at beginning of year. . . ...................... .. . . .. . . $ 15,949,390 $ 15,960,374 Transfer of common stock heretofore reserved against scrip certificates which expired during year . . . . . . . . . . . . . . . . . . . . . _ . . . . 5 10 15,949,395 15,960,384 Deduct, Premium on cumulative preferred stock redeemed during year, 1,999 shares of 4% Series for each year and 196 shares of 3.60% Series for 1948 ........... . ................ ..7,915 10,994 Balance at end of year. . . . . . . . . . ....... _. . . . . . . . _ . . $ 15,941,480 $ 15,949,390 I 30

1. Net assets of this wholly owned English subsidiary are approximately equal to the investment amount, on the basis of the official rate of exchange. I 2. The Cumulative Preferred Stock is redeemable at any time, otherwise than through the sinking funds, at $108.50 per share for 4% Series (up to February 1, 1949) and $103.00 per share for 3.60% Series (up to February 1, 1950), and at di- minishing per share amounts after those dates but not less than $105.50 for 4°Jo Series and $100.00 for 3.60°Jo Series; plus accrued dividends in each case. Holders of the shares of each series are entitled to such specified payments upon voluntary liquidation of the company and to $100.00 per share, plus accrued dividends, upon involuntary liquidation. The company is required to set aside annually, in sinking funds, amounts sufficient to redeem 1% of the maximum number of shares that have been issued of each series, at $105.50 per share for the 4°o Series and $100.00 per share for the 3.60% Series. Preferred stock in treasury may be used in connection with such sinking fund requirements. The company holds a sufficient number of shares of preferred stock in treasury for use in lieu of sinking fund payments aggregating $230,495 to be made within one year from March 31, 1948. 3. Scrip certificates for which one share of common stock was reserved expired during the year. 4. The terms of issue of the 25~g%_ Sinking Fund Debentures include certain restric- tions with respect to the declaration or payment of dividends (other than dividends payable in stock of the company) on any shares of capital stock of the company, and to payments on account of the purchase, redemption or other retirement of its capital shares. At March 31, 1948, approximately $5,745,000 of the earned surplus was free of such restrictions. The terms of issue of the Cumulative Preferred Stock include certain restrictions with respect to the declaration or payment of dividends (other than dividends payable in stock of the company) on the common stock. The amount of earned surplus free of such restrictions was in excess of the $5,745,000 shown above. ~ ~ .c~ [v ~ Provision for depreciation of plant and equipment charged to costs and expenses ag- gregated $590,519 for the fiscal year 1948 and $475,112 for the fiscal year 1947. cr a3 ca 31

PRODUCTS OF THE PHILIP MORRIS COMPANY ~.~ ~ ~-... PHILIP MORRIS products are backed by a hundred years of fine cigarette making. The best tobaccos obtainable are used in the blends and their flavor and aroma are brought out by carefully guarded secret formulas employed in the course of manufacture. The cig- arettes and pipe tobaccos produced are designed to meet the taste of the most discriminating smokers. PHILIP MORRIS, sold at the popular price, has become our principal product in point of sale and has demonstrated its superiority for day-in day-out smoking pleasure. It wears well. MARLBORO cigarettes, enlivened by the rich aroma of selected oriental leaf, are created to suit the preference for extreme mildness in smoking. They are produced in three styles: Ivory Tipped and Plain End, appealing to both men and women, and Beauty Tipped (red) created especially for women. Other cigarettes produced are the well-known DUNHILL MAJORS, made in a long size, having a definite appeal to a select market; ENGLISH OVALS, manufactured in an oval shape since the year 1918 of a blend of best quality Turkish and domestic tobaccos and packed in crush-proof boxes, selling in the premium price class. PLAYER'S NAVY CUT "Me- dium" cigarettes are constituted principally of select bright Virginia tobacco packed in slide and shell crush-proof boxes and sold in the premium class. I FLEETWOODS, in the popular price class, are 20% longer than the standard cigar- ette and have a special trade and consumer acceptance. SPUDS, made in cork tip and plain ends, are an evenly mentholated blend of high quality domestic and imported tobaccos. For the pipe smoker the largest selling item is BOND STREET. It is an aromatic blend of selected tobaccos and is comparable in every way to the most expensive mixtures. REVELATION is a particularly mild blend of five of the world's finest quality to- baccos, skillfully combined. This tobacco is designed to appeal to the most discriminating pipe smoker seeking perfection. COUNTRY DOCTOR, HANDSOME DAN, BARKING DOG and WAKEFIELD ENGLISH MIXTURE are pipe mixtures, each varying slightly, to appeal to the special tastes of a wide range of smokers. LYON'S OWN is a very superior mixture in the premium price class. XZV12ail~ 32 tt is expected that notice of the Annual Meeting of the stockholders of Philip Morris & Co. Ltd., Incorporated, to be held on July 13, 1948, at Richmond, Virginia, will be sent to security holders on or about June 14, 1948. At the same time, the Management intends to send proxy statements to all security holders arid to solicit proxies from holders of the Common Stock, $5. par value per share. M I

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