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Presideut's _lte,s,1o'e Finaurial Opvr< tirnls Le, f JI;i rhetiiia Oa~~r.~~as I'hilij> .1[o~rri-~ ~Ind I)ivi,iuii, Pliilip 1Iorri~4 Centcc I:uitilo.vae Iielriti,,ii, Curhor;ite Citizenaiip audited Fiun nri.il 5taitenneiits Seven Fem. Suunmuirv TIMN 440289

t / Joseph F. Cullman, 3rd President Howard S. Cullman President, Cullman Bros., Inc. Richard W. Dammann Danamann, Roche and Goldberg, At to rn e Js-a t-Lccw Dr. Jess H. Davis I'resident, Stevens Institute r,f Technology Dr. Robert v. DuPuis Vice President, General Foods Corporation L. G. IIanson Retired Wirt H. Hatcher Se0or Vice President Cba3ucller H. Kibbee Exe<•utive Vice President-Finance T. \ewnian Lawler Lawler & Rockzcood, Attorneys-at-Laiv 11. f:. Riddell TVic1,•es, Riddell, Bloomer, Jacobi & JlrGnire, A ttmrn e ifs-u t-La tu Robert P. Roper Executive Vice President-Operations Arthur Snapper Chairmma, Jlilprint, Inc. Sidney Weil President, A•S•R Products Company Geot•,e jFeissman Executive Vice President-Overseas J. lIarvie Wilkinson, Jr. President, State Planters Bank of Comrnerce and Trusts, Richmond, Virginia DIRECTORS E1IERITUS Alfred E. Lyon Ilonorar;y Chairman K. H. Rockey V"eic ForA, eA'eic York 1lorl-an Unaranty Trust Company of \ew Y ork 30 West Broadway, New York, \ ew Y ork The First \ ational City BanIk of \ ew Y ork 55 Wall Street, New York, New York Chemical Bank New York Trust Company 100 Broadway, New York, ti ew York Conbov, Hewitt, O'Brien & Boardman 39 Broadway, New York, \ ew Y ork L,Ybrand, Ross Bros. & Montgomery 2 Broadway, \ ew York, New Y ork ,VIMN 440291

PHILIP MORRIS I N C O ft P O R A T E D * 1960 * ANNUAL REPORT !i tF,CL"'l16"1: OF'FIC1~;~: luu k'~trk .1venue, New 1'o~rk 17, Ae\~ ~ 1"orli I116'11Lj(.7H7T8 (.~000) «(1011) \ et Sales .................. $ 506,412 $ 4'.1.1~,-}5 \~et Income ................ $ 20,9S4 $ 1!),:~!)U Per Share of ('ommon ~'-,to~ck : \ et I nconme .............. $ 5.44 $ :,.US I)ividends I)eclared ...... l;ook Value .............. Taxes h'ederal Excise T<ites ..... I+'ecleral <zncl State Income $ 0.60 -1(i.-t(i $ 1 i-5,947 $ 44.79 $ 1 Taxes ................. $ `? ;,a i 0 $ `' 1,:>OS Otlier: Social Security aul(l Iocal taxes ............. $ ;,1)39 Total Taxes ....... $ 203,256 $ 1 S):;,'?-k9 Vurnber of 5tockliolders Preferred ............... '?.''35 ?,'?6? Common ................ ;-1,4:)1 ?4,4'?1 \tutiber of Sliarus Uutstaiid- Prefei•red (less treastir\ ~ stock) ................. 253,606 '::5,.7-)(N, Common (less treacnry stock) ................. :;.Eii1,G>`? :~(i,~~l Tlre ltotex to cortsolidaterl ft}uowiul sMte>>te7it.~ .tihuv.lct F)c• i•crir( in cwi- jzcpc•tion uitb the abovc data. TIMN 440293

TOP- RANKED TELEVISION SHOWS AND NEWSPAPER ADVERTISEMENTS CARRY PRODUCT MESSAGES TO MILLIONS OF CONSUMERS DAILY ...~: Sh0.. ~:reet=;` .. .,.. , ?pP ... ..i. t~.. ...... . 3';r. ..., ...., _ ... _ ..~d~id.'... ..,,... ,~'1

Joscph F. Cullman, 3rd Presiclerat «irt II. Hatcher Senior 1'ice President Chandler H. Kibbee T'xecictioe V ice I're.Odetrt-Piraauce Robert. P. Roper L'xeeutive Vice President-Opercrtinus (;eorg-e Weissman Executive I"ice President-Overseas Andrew C. Britton Vice President, C1aie f o f dlanrs factnre IIagh Cullman Vice Presirlen.t, Assistaaat Chief of Operatimrs John P:. Cookman Vice President, Diversification and Treasrn•er Georl-;e C. Dawson Vice President, Overseas Clifford H. Goldsmith Vice President, Subsidiary Relations Roger \I. Greene Vice Pre.sideot, Advertising George J. Henn y' Vice I're.qiilerrt, Distribution and (.'astorraer Service Ray Jones I'iee President, Sales George W. Macon, Jr. Vice President, Lerrf Ross R. Jlillhiser Vice President, Director o f lltm•1,-eting Pattl D. Smith Vice President, General Connsel Thomas F. Alirensfeld Associate General Counsel and Secretary IIenry R. Blum Controller .John A. Hampson assistant Treasr(rer Walter F. Sperber .I.csistant Co0roller Cornelia Crai--- tlssistant Secretary Mary E. Russell Assistant Secretary ` Retired, December 31, 1960 TIMN 440290

I-. iw T IWA '.~"-_ , ..- 4dW R RIIF ~ j:.. _ Marlboro q N 9A TIMN 440292 6.

1 l/.~~.•!~l.i'1).( 8 _l L _!_N (,i; ~/1A December 31, 1960 and 1909 (\"ote 1) ai Current: 1959 Cash ....................................... $ 11,r"95,531 $ 12,521,263 Accounts and notes receivable, less allowances for discounts and doubtful accounts ..... 27,350,535 27,523,056 Inventories ('Note 2 ) ........................ 209,325,774 210,967,270 Prepaid expenses ........................... 1,316,736 1,226,951 Total current assets .................. 249,818,576 252,235,5-10 Ec uity I of unconsolidated foreign subsidiaries (t5N ote 1) ............... . . ....... 7,555,077 5,152,516 Land, buildings, machinery and equipment, at cost .... 93,641,243 90,0-I9,SS9 Less, Allowance for depreciation ............. 33,650,910 30,395,128 59,960,333 59,654,761 Deferred charges and other assets .................. 2,7-16,-I00 2,6=15,025 Brands, trade-marks, patents and good will, less amortization ................................ 1.634,109 1,S9S,659 $321,71.7,495 $321,619,504 The accompanying notes are an integral part of the financial statements. TIMN 440306 14

PHILIP MORRIS INCORPORATED (INCORPORATED IN VIRGINIA) AND ITS CCNSOLIDATED SUBSIDIARIES ~ t. l. l i: i l, l 7'I i. ,. V)l,l) 1959 Current: \ otes payable .............................. $ 20,966,000 $ 29,960,466 Lono-term liabilities due within one y-ear ...... 2,000,000 1,600,000 Dividends payable .......................... 3,558,701 3,219,813 Accounts payable and accrued liabilities ....... 19,043,827 16, 7 S8,191 Federal and other taxes on income ............ 1=I,793,161 13,266,262 Total current liabilities ................ 60,361,689 64,834,732 Lonb-term liabilities (Note 3) ...................... 65,400,000 67,467,500 . Total liabilities ....................... 125,761,689 132,302,232 Stockholders' equity (Notes 4 and 5) : Cumulative preferred stocks, par value $100 per share ........................ 28,740,200 29,070,S00 Coninion stock, par value $5 per share (Note 5). 18,401,820 18,231,405 Capital surplus ............................. 45,613,512 44,605,434 E'arnin~s retained in the business (Note 6).... 106,744,669 100,364,650 199,500,201 192,322,259 Less, Cost of preferred and conunon stocks held in treasurN ............ 3,544,395 3,005,017 195,955,806 189,317,272 $321,717,495 $321,619,504 TIM~ 440307 V'J

l h,~ll~~_! Ii'IL~ I A, A-S-R PRODUCTS COJIPANY. Acquired in llay 1960, A-S-R Products division is expected to benefit from the resources of the parent company. In advertising, A-S-R will be able to utilize the greater efficiency of Philip Morris' extensive media franchises. This also permits A-S-R to advertise with ~Yreater flexibility of timing and weight. The merehandisin; and marketin~ skills of Philip JIorris have already proved useful to A-S-R. While separate sales staffs are maintained, the marketing experience of the parent company has been made available to the division. A-S-R has also availed itself of Philip Morris' research, engineering and new product development facilities. This division has, since the acquisition, teamed its own personnel with those of the parent company to explore areas of product improvement and new product development. All this is aimed at creating products of superior quality and demonstrable consumer advantabes. Sidney Weil, President A-S-R Products, at left, with Joseph F. Cullman, 3rd, President of Philip Morris, pictured with display of well-known A-S-R consumer and industrial products. Philip Morris acquired A-S-R in May 1960. TIMN 440302 10

PHILIP MORRIS INCORPORATED (INCORPORATED IN VIRGINIA) AND ITS CONSOLIDATED SUBSIDIARIES ; for tke years ended December .3Z, 1.960 and 1909 (\"ote 1) 1959 \ et sales ......................................... $506,412,297 $498,455,711 Cost of goods sold ................................ 384,340,057 379,060,557 Cost of shipping goods, selling, advertising and generall administration ...................... 75,494,329 73,932,450 -159,834,386 452,993,007 Operating income ........................... 46,577,911 45,462,704 Other income ..................................... 3,227,740 1,610,832 49,805,651 47,073,536 Interest .......................................... 3,465,285 4,192,763 Provision under deferred profit-sharing plan ........ 1,225,153 1,030,602 Other deductions .................................. 1,397,743 1,094,247 6,088,211 6,317,612 Earnings before provision for taxes on income and before equity in net earnings of unconsolidated foreign subsidiaries ................... 3,717,440 0,755,924 Provision for federal and other taxes on income ...... 23,370,292 21,508,447 20,3~7,148 19,247,477 I~(luit~- in net earnings of unconsolidated foreign subsidiaries, less related f ederal taxes on income (--N'ote 1) ............. 637,266 342,327 \ et earnings ............................... $ 20,984,414 $ 19,5SO,SO4 The accompanying notes are an integral part of t72e financial statements. `VIM~S 4,AO3QS 13