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. 10 Philip Morris U.S.A. The Philip Morris Operations Center, in Richmond, Virginia, costing in excess of $200 million, is the most sophisticated cigarette manufacturing facility in the world. Dedicated in 1974 and now operating at about two-thirds of its planned capacity, the facility is a showcase of advanced manufacturing technology and unique employee work environment. The Center represents the largest single capital investment in Philip Morris's history and in the history of the U.S. cigarette industry. 1y,

12 Philip Morris U.S.A. le.ehin~4i,qafar , ME4Rvs y Ili,y.ml5ra¢a T!w,c.v„dsU~.-am i. vdvM. i}K s~cr:ry ~ ~ e2~iim ;lus YttME4RhvmSYmp.~'Iwm, o^.~._l)rc'Tft!e4.~.v.vc,r ~amvtnr}er!e~ 1l1JJ1t11 The "Marlboro Country" advertising theme is recognized as one of the most memorable in the history of advertising. The continuity of its humorous, offbeat advertising helped to strengthen Benson & Hedges' leadership in the 100mm category. I nformation-packed advertisements told the news of the 'Enriched Flavor' breakthrough for Merit. 7here's more to choosing a low-tar cigarette than just piclang a numbe 'W ~ ilvn:~nv~faya+v-,teu ~.u JvvMl,.+~ikr, \1',tTT'T_- ,~9'vYacrf~avRmk" f.a.Thaic"flnGsritJ~inr.~~.r.M~to<<vlu:Yt ~ T7rsE < W~:W ,hv'.,~Ln Ynr4v1!uliwa.v 1:~ iIn• ah e.a•.I'ukuni'~:fJ:ar .rJi„A.al~whvhh:U fnm YuhTM~.'~:ur ICn':inh.n'~ n,-fh,r t,a.dnck" lll:, nihv.m,.hl'Wvvni+u,a. Maetbanit=ato.wtarrn\mbs 1 alllanZent. In early 1977, advertisements like The Virginia Slims Tennis this introduced the reformulated Circuit has achieved full Parliament as a low-tar brand. stature as a major sports Fashionable, feminine competition. advertising helped to maintain Virginia Slims as the preeminent woman's cigarette. 1976 1975 1974 1973 1972 Operating Revenues $1,963,144,000 $1,721,549,000 $1,502,267,000 $1,303,629,000 $1,164,550,000 Operating Income $ 401,426,000 $ 337,314,000 $ 286,225,000 $ 227,282,000 $ 194,072,000 Clifford H. Goldsmith, President John T. Landry, Executive Vice President and Director of Marketing James J. Morgan, Vice President and Assistant Director of Marketing Max L. Berkowitz, Senior Vice President Frank E. Resnik, Vice President, Operations Administration N C!1 Benjamin A. Soyars, Senior Vice President, Manufacturing Richard D. Robertson, Vice President, , Ecology and Director of Energy Resources O 0 Robert H. Cremin, Vice President, Sales Edward M. Schaaf, Jr., Vice President, 0 Production r" M J. Paul Jeb Lee, Vice President, Marketing Services Dr. Robert B. Seligman, Vice President, Research and Development f~l -0 Fred J. Laux, Vice President, Personnel Richard L. Snyder, Vice President, Finance and Administration Q'' William G..Longest, Vice President, Leaf Dr. Helmut R. R. Wakeham, Vice President, Science and Technology W. Wallace McDowell, Vice President, Operations R. Nelson Beane, Controller

13 ~ ~- . ~ - Quality is monitored by elaborate The manufacturing area of the The research and development control devices, but quality Operations Center, where each personnel who achieved the responsibility still rests with of the most technologically scientific breakthrough for Merit highly trained and skilled advanced cigarette are working on new workers. making-packing modules developments that will meet available produces more than changing consumer preferences• Quality cigarettes begin with 4,000 units a minute. expert buying of the finest tobacco. Philip Morris U.S.A. Philip Morris U.S.A. U.S. Cigarette Industry Marlboro Share of Operating Revenues Operating Income Unit Sales Total U.S. Industry Millions of Millions of Billion % % Dollars Dollars Units 2100 "-' 420 700 35 21 ' 1800 360 600 30 18 PJ 1500 300 • 500 25 15 ~ Q a 1200 240 400 20 12 }.: 900 180 300 15 9 ~ 3 ~Q 600 120 200 10 6 v ' 300 60 100 5 3 0 0 0 0 0 1 67 68 69 70 71 72 73 74 75 76 6 1 4 6 70 71 72 73 74 75 76 67 68 69 70 71 72 73 74 75 76 ~ , = Total Filter Cigarettes = Marlboro 80-85mm Full Flavor i Total Non-Filter Cigarettes = Marlboro Line Extensions - Philip Morris Share of U.S. Industry (%) .. Operating revenues of Philip Morris Since 1967, operating income of Philip Total U.S. cigarette industry unit sales All categories of Marlboro represented U.S.A.have increasetl at an average Morris U.S.A. has increased at an average have grown at an average annual 15.5% Of the U.S. industry in 1976 vers us ~ annual compounded rate of 7 3.5% annual compounded rate of 21.9%. compounded rate of 1.6% over the Iast 6.6% in 1967. The Marlboro line extensions since 1967. 10 years, while the filter segment increased accounted for 23 3% of all Marlboros sold at an annual rate of 4.2%. in 1976.

14 Philip Morris International Philip Morris International unit sales have continued to grow at a significantly higher rate than the world cigarette industry, We are now actively involved in almost every major market worldwide. One of our important newer markets is West Germany, where the company's affiliate, Philip Morris GmbH, is growing rapidly and Marlboro now ranks as the sixth- largest selling brand in that country. 0

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16 Philip Morris International Brunette, produced by our affiliate Fabriques de Tabac Reunies, is one of the leading brands in the Maryland tobacco blend segment of the Swiss market. Marlboro is the number one selling international brand in Italy. Operating Income Mark Ten is the major cigarette brand of Benson & Hedges (Canada) Limited. Premier Tobacco Industries Limited, in Pakistan, increased its share of the rapidly growing filter market where the company's leading brands are Red & White and K-2 Filter. $1,083,970,000 $1,040,002,000 $887,077,000 $822,907,000 $623,699,000 $ 130,104,000 $ 112,975,000 $ 94,017,000 $ 92,150,000 $ 84,095,000 Hugh Cullman, President Hamish Maxwell, Executive Vice President, Eric M. Janssen, Vice President, Personnel Europe/Middle East/Africa and Asia / Canada R. William Murray, Vice President, Charles F. Lombard, Vice President Europe/Middle East/Africa O William J.0'Connor,Vice President, Australia/ William H. Webb, Vice President O New Zealand and Chief Administrative Officer F ~ Carlos E. Salguero, Vice President, Hans G. Storr, Vice President, Finance ~~ Latin America/Iberia d Albert E. Bellot, Vice President Aleardo G. Buzzi, Vice President Staffan Gunnarsson, Vice President Hamilton Hurley, Vice President s

1800 1200 900 600 r 4 N 150 125 100 75 50 25 67 68-69 70 71 72 73 74 75 76 120 100 80 60 40 20 67 68 69 70 71 72 73 74 75 3000 2500 2000 500 12 10 67 68 69 70 71 72'73 74 75 76 Total Filter Cigarettes Total Non-Filter Cigarettes Philip Morris Share of World Market (%) 1500 300 Benson & Hedges 100's continues as one of the company's leading brands in Argentina. In Brazil, Shelton Extra Suave, successfully introduced in 1976, continues to'post unit sales increases. Philip Morris International Operating Revenues 67 68 69 70 71 72 73 74 75 76 ft Consolidated = Unconsolidated Philip Morris International's operating . revenues of consolidated and unconsolidated affiliates have grown at an average annual compounded rate of 23.8% since 1967. Billion Units -' 175 Philip Morris's U.S. export shipments showed a significant increase in 1976. Lindeman (Hoidings) Limited, our affiliate wine company in Australia, is the leading wine producer in that country. Philip Morris International Cigarette Unit Sales Export, Affiliates, Licensees Since 1967, total unit sales of Philip Morris International's affiliates, licensees, and exports have increased at an average annual compounded rate of 17.6%. Philip Morris Brasileira S.A. de Cigarros' new factory in Curitiba represents the company's effort to produce quality products in modern, efficient environments throughout the world. Philip Morris (Australia) Limited has become the largest cigarette company in that country with Marlboro its leading brand. Philip Morris Internationai, Operating Income Since 1967, operating income of Philip Morris International has increased at an average annual compounded rate of 20.3%. Billion Units 3500 Total World Cigarette Unit Sales Excluding U.S.A. World cigarette industry unit sales (excluding the U.S.) were about 3.3 trillion in 1976, and over the last 10 years have grown at an average rate of 3.9%. 17 % 14

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f The Fort Worth, Texas, brewery Continued use of the highly like Miller's other facilities uses successful "Miller Time" theme highly automated equipment to helped Miller High Life sustain insure consistency and quality its rapid growth rate in 1976. in the brewing process. An architect's rendering of Miller's new corporate headquarters building now under construction in Milwaukee. 1976 1975 1974 1973 1972 Operating Revenues $982,810,000 $658,268,000 $403,551,000 $275,860,000 $211,262,000 Operating Income $ 76,056,000 $ 28,628,000 $ 6,291,000 $ (2,371,000) $ 228,000 John A. Murphy, President and Chief Executive Officer William K. Howell, Executive Vice President and Treasurer Lauren S. Williams, Vice President, Marketing Warren H. Dunn, Vice President, General Counsel and Secretary Travis G. Adler, Controller rJ Frantel Vice President Sales Edward W U'1 , , . O O Thomas A. Fulrath, Vice President, Personnel rJ r-: Larry K. Neuman, Vice President, ~' Plant Operations ~ O Allen A. Schumer, Vice President, ~ Material Flow Thomas B. Shropshire, Vice President, Market Planning Georgy Tarala, Vice President, Engineering

The new brewery now under construction in Eden, North Carolina, Miller's fifth facility, is scheduled to begin production in 1978. Miller High Life in six-packs of 12-oz. bottles on a high-speed packaging line at the new brewery in Fulton, New York. Miller Brewing Company Operating Revenues Miller now has three aluminum can manufacturing plants. Miller Brewing Company Barrel Shipments 67 68 69 70 71 72 73 74 75 76 67 68 69 70 71 72 73 74 75 76 &W Miller Unit Sales - Miller Share of U.S. Industry (%) Miller's multi-brand marketing approach concentrates on the premium segment of the market. Analysis conducted at quality control laboratories at each of our breweries helps to maintain Miller's high quality standards. Miller Brewing Company Operating Income Since 1967, operating income of Miller Since 1967, Miller's barrel volume has Over the last 10 years, Miller's operating has increased at an average annual risen at an average rate of 16.1 % per year. revenues have grown at an average compounded rate of 16.4%. annual rate of 20.6%. Since 1970, after Miller's growth in 1976 moved the company Millerwas acquired, revenues have into third place among U.S. brewers with a increased at an average rate of 26.1 %. share of about 12.2%. 21 Domestic Beer Industry Unit Sales 67 68 69 70-71 72 73 74 75 76 Regional and Non-Premium Beer (est.) Nationally Distributed Premium Beer (est.) Since 1967, total U.S. beer industry barrel sales have grown at an average yearly rate of 3.7%, and the premium beer segment, where Miller is positioned, has increased at an average rate of 10.6%.