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Liggett &Xlyers Incorporated and Consolidated Subsidiaries Statement of Consolidated Paid-In Capital In Excess of Par Values of Capital Stock for the years ended December 31 1968 1967 (Note 1) BALANCE, JANUARY 1, AS PREVIOUSLY REPORTED $ 21,586,697 ADD Transfer from common stock in connection with the reduc- tion of the par value of such stock (Note 4) .................. 91,163,444 Excess of par value of capital stock and capital surplus of Austin, Nichols over par value of $5.25 cumulative con- vertible preference stock issued therefor (Note 1) ........ 3,946,586 BALANCE, JANUARY 1, AS RESTATED .......................... $117,080,671 116,696,727 ADD (DEDUCT) Excess of sales price over par value of common stock sold to officers and employees under the Incentive Stock Option Plan ................................................................... 02 ,037 Capital stock and surplus transactions of Austin, Nichols (1968 includes transactions for the period from August 1, 1967 through date of inerger) (Note 1) .................... 1,066,618 379,907 Costs incident to merger with Austin, Nichols .................... (435,988) - BALANCE, DECEMBER 31 .................................................. $117,711,703 $117,080,671 See Notes to Financial Statements. Statement of Consolidated Retained Earnings for the years ended December 31 1968 1967 (Note 1) BALANCE, JANUARY 1, AS PREVIOUSLY REPORTED $177,908,157 RETAINED EARNINGS OF AUSTIN, NICHOLS AT JULY 31, 1966 (Note 1) ............................................................ 5,162,610 BALANCE, JANUARY 1, AS RESTATED .......................... $186,332,662 183,070,767 ADD (DEDUCT) Net earnings for the period (Note 1) ................................ 24,066,287 25,127,358 Cash dividends-Liggett & Myers Preferred stock-$7 per share ...................................... (977,347) (1,036,637) Common stock-$2.50 per share .............................. (19,063,726) (19,216,910) Cash and stock dividends-Austin, Nichols ...................... (335,540) (767,439) Excess of cost over par value of preferred stock reacquired (44,400) (190,994) Excess of cash and stock dividends declared over net earn- ings ($785,750) of Austin, Nichols for the period from August 1, 1967 through December 31, 1967 (Note 1).... (298,948) - Excess of average cost over quoted market value of treasury stock issued in exchange for the net assets of National Oats Company ............................................................... - (653,483) BALANCE, DECEMBER 31 (Note 7) .................................. $189,678,988 $186,332,662 See Notes to Financial Statements. TIMN 446032 Zt

Smoking and Chewing Tobaccos Although domestic consumption of smoking tobaccos increased more than 4 per cent to approximately 70 million pounds in 1968, this was considerably below the peak level in recent times of 84 million pounds in 1964. Imports of smoking tobaccos increased more than 35 per cent. and exports of smoking tobaccos both in packages and in bulk increased more than 2 `' per cent. Our Smoking and Chewing Tobacco Division, headiluartered in St. Louis. Missouri, had increased sales during 1968. Sales of our leading brand, VELVET, increased more than the average for the industry. In the popular-price segment of the smoking tobacco market, Liggett & Myers has an important share of the market with VELVET and GRANGER pipe tobaccos. In the premium-price segment of the market, the Company's leading brand is MASTERPIECE pipe tobacco. The Pinkerton Tobacco Company Pinkerton, a wholly-owned sub- sidiary of Liggett & 34yers, located in Toledo, Ohio, is a large producer of scrap chewing tobaccos. The new foil-laminated pouches introduced in 1967 for its four principal brands. RED MAN, RED HORSE. PAY CAR, and UNION STANDARD, played an important role in ;aining significant increases in sales of each brand in 1968. TIMN 446020 9

Sales and Earnings Consolidated net earnings for 1968 were S3-1.066,287 (S~'.8-n per share of common stock), compared to S-25,127,358 for 1,-)67 (S21.93 per share). The 10 per cent Federal income tax surcharge enacted in 1908 reduced earnings by S.31 per share. If all of the convertible preference stock issued in connection with the Austin, Nichols merger were converted into common stock, the effect on earnings per share of common stock would not be material. Net sales in 1968 by the Company and its subsidiaries were S617,240,028, compared with S631,780,056 in 1967. SSales of non-tobacco products in 1968 amounted to approximately 36 per cent of consolidated net sales. Earnings and sales in both years include those by Austin, Nichols & Co., Incorporated, which was merged into Liggett & Myers on a pooling of interests basis on January 24, 1969. Operations of Brite Industries, Inc., which was purchased on September 30, 1968, are included in the finan- cial statements from date of acquisition. Dividend Record Common stock dividends have been paid each year since the Company was organized in 1911. Common stock dividends in 1968 amounted to S-1.50 per share (adjusted for the two-for-one stock split on May 31, 1968). Four quarterly dividends of S1.75 each were distributed on the 7 per cent preferred stock. There were 49,965 stockholders at the end of the year. Total cominott and preferred dividends paid in 1968 amounted to $20,041,073. Regular quarterly dividends have been paid in 1969 on the three classes of stock now outstanding as follows: 7 per cent preferred stock -$1.75 per share on January 1, 1969; $5.25 convertible preference stock -$1.31'/.~ per share on February 1, 1969; common stock -$.6'?!% per share on March 1, 1969. Financial Review / 1968 Taxes Income taxes amounted to S39.493,3-13 in 1968, equal to S3.87 per share of common stock. This compares with net earnings of S-2.82- per share of common stock. Federal and other excise taxes (including liquor import duties) included in consolidated sales amounted to S178.992,000. The Federal excise tax on cigarettes is eight cents on each package, and the liquor tax rate is S 10.50 per aallon (excluding duty of approximately one dollar). Although the industries generally do not collect state and municipal excise taxes, these add up to substantial additional taxes paid by the consumer. Capital Expenditures Capital expenditures during 1968 consisted chiefly of disbursements for construction of additional facilities for manufacturing ALPO products and for machinery and equipment for the manufacturing facilities of the Company and its other subsidiaries. These expenditures totaled S8.300,000, compared to $7,400,000 in 1967. Depreciation charges in 1968 aggregated 55,630,675, compared to 54,911,290 in 1967. Financial Condition The sound financial condition of the Company is indicated by the ratio of c:urrent assets to current liabilities which is 3.6 to 1, and to the fact that long-term debt is 20.9 per cent of total capitalization. The Company reacquired 26,800 shares of common stock during 1968 at an average cost of S36.11 per share, bringing the total number of common shares held in treasury to 301,768. The Company also reacquired 2,400 shares of non- callable 7 per cent preferred stock during 1968. The 85,520 shares of preferred shares held in treasury on May 31, 1968 were canceled as of that date. TIMN 446026 15

Brite Industries, Inc. On September 30. 1968, the Company acquired 100 per cent of the common stock of Brite Indus- tries. Inc. Brite, a major producer of watch bands, founded fifty years ago, has home offices and its principal Inanufacturing plant in Providence. Rhode Island. The Providence plant was constructed in 1967 and was expanded in 1968. Sales and earnings reached record high levels in 1968. While a con- siderable portion of the watch band production is sold to watch manu- facturers as "original equipment," the major portion of the product is packaged for consumer sales. Indi- cations are that more people wear BRITE watch bands than any other kind. The company markets three major brand names. BRITE watch bands have 80 per cent of the busi- ness in major drug chains and also sell in variety chains and, through wholesalers, to independent drug, tobacco and miscellaneous sundry retailers. MEDALIST watch bands, which include the new "Date- watcher" Perpetual Calendar Watch Band, are sold through the same channels but are generally confined to larger retail stores. ROGER WILLIAMS watch bands are distri- buted exclusively and are the largest-selling brand in the large dis- count stores. All BRITE watch bands are sold from self-merchandising, point-of- purchase displays designed to promote high turnover consumer im- pulse sales. These attractive counter fixtures are complete watch band departments and feature a large variety of metal-expansion, leather, nylon, plastic and fabric watch bands for women, men, teenagers and children in a wide range of sizes, colors and designs. Wrist watch sales are approaching double what they were five years ago, and this will mean a growing market for replace ment watch bands at popular prices. Products BRITE Watch Bands MEDALIST Watch Bands ROGER WILLIAMS Watch Bandti TIMN 446025 14

Alcoholic Beverages The Paddington Corporation The sales of J&B Rare Scotch Whisky, imported exclusively by The Paddington Corporation, increased to a record high in 1968. This was partially due to increased sales in anticipation of the dock strike in the latter part of the year. Indications are that the over-all popularity of Scotch whisky con- tinued to rise significantly during 1968 and that J&B is still the leading brand. J&B continued to have sales in- creases in most major markets, and made further progress in smaller markets, especially in the South and the West and in controlled states where alcoholic beverages are sold through state stores. Sales of the half-gallon unit also increased in areas where its sale is legal. Special promotions for Father's Day and the year-end holidays. including appro- priate packaging, were successful. Carillon Importers Ltd. Sales and ecu-ninu-s by Carillon again climbed to r~,-.'ord levels in 1968, with si<<niii,.int increases in the company', t~~,) I,nn.ip.il brands: GRAND MAEZ\II K , ,,I Itc>NTBAY English gin. ~ ~1, , 11 ( I II RRY MARNIER, iian-I ...,I , ,. r.d years ago, were also Ii i_n r With the trenICndO~U~ in~_rease in travel to foreign CowltriC, :und ex- p o s u re to foreign cuisine, the American public is showing greater interest in gourmet cooking and more eleaant dining. This is espe- cially beneficial to sales of GRAND MARNIER, not only because of its use as an after-dinner drink but also for its use in grand cuisine. Products J&B Rare Scotch Whisky GRAND MARNIER BOMBAY English Gin BOMBAY French Vermouth CHERRY MARNIER GOLD LEAF French Cognac BARDINET NAPOLEON French Brandy DOPFF, RIQUEWIHR Alsatian Wines ACHAIA CLAUSS Greek Liqueurs and Wines RHUM NEGRITA 10 TIMN 446021

Intern,ttional Cigarettes T h e ( o m pany's international ciga1-CttC business includes export sale> to more than 100 countries, equit\ in foreign cigarette manu- faCturinL1 companies in some countriC',. and licensing agreements for tlW munufacture and sale of our cigaret te products in a number of COlllltrlC~. L\hurt sales for the industry In- crea,eti t3uring 1968, according to the United States Department of Agriculture. Our principal filter brands, including the 100 millimeter versions of L&M and CHESTER- FIELD. have contributed signifi- eantlv to our export sales in overseas markets where the filter share of the market is increasing at a greater rate than it is in the United States. We strengthened our export product line by introducing new LARK 100 in mans• export markets in the last half of 1968. The volLune of our cigarette brands manufactured in foreign countries in 1968 was substantially greater than it was in 1967. In March. CHESTERFIELD Menthol was added to other brands which are manufactured under license in Costa Rica. and CHESTERFIELD Regular was added in Bolivia. In April. CHESTERFIELD Filter and L&M Box were introduced as brands locally manufacttred under license in ItalN'. In June, the Company SlgneCl a Illallllfac;tllring-hC:ellSing agreenlent with Rothmans of Pall Liggett & N7NIers cigarette brands are exported to more than 100 countries and are manufactured lucall% _ in: Argentina Australia Austria Belgium Mall (:1u.tr.tliat Ltd., and in November. ('HI.S I-I_RFIELD Filter. King and Re,ular were introduced in Australia. In March. 1968. the Company acquired an interest in Fabrica de Cigarros Florida, S/A. which was founded in S5o Paulo in 1935 and is today the second largest cigarette manufacturer in Brazil. In July, the Company acquired an interest in Eilebrecht Cigaretten Fabrik GmbH in Baden-Baden and West Be_rlin, Germany, and also in United Cigarettes Company Ltd. in Geneva, Switzerland. During the third quarter of 1968, the Company established, through a recently formed stlbsidiary, its new tobacco marketing headquarters for Europe in Brussels, Belgium. This provides the means for Liggett & Myers to develop its tobacco business in the EEC (European Economic Com- munity) and EFTA (European Free Trade Association) countries of Europe. The first important step was taken in October when CHESTER- FIELD Regular and King and L&M King manufactured in Germany were introduced in France. The Company now has an equity position in cigarette companies in Argentina, Brazil, Germany, Mexico. Peru and Switzerland. Royalties from sales of our ciga- rettz brands mamtfaCtured in foreign COLlntrles are making aIl Illlportallt contribution to corporate earnings. Bolivia Costa Rica Hotland Ital}~ Mexico Philippines Switzerland West German\• Factory Locations The Company has a smoking and chexving tobacco factor}• in St. Louis. Missouri. The Pinkerton Tobacco Company, a wh oll} -o\vned su bsidiary. has a chewing tobacco plant in Toledo, Ohio. Smoking Tobaccos BUCKHORN BUFFALO CORN CAKE COUNTRY GENTLEMAN DINNER BELL DU KE'S GRANGER GROWLER HOME RUN KENTUCKY LONG CUT KING BEE MASTERPIECE MOUNTAIN ROSE OLD STYLE PLOWBOY S&M SUMMERTIME SWEET TIP TOP VELVET VIRGINIA EXTRA Chewing Tobaccos Plug CLIPPER DRUMMOND NATURAL LEAF FISH HOOK HORSE SHOE J.T. KING PIN MASTERPIECE PICK NATURAL LEAF SPARK PLUG STAR TINSLEY'S THICK UNCLE SAM UNION STANDARD W.N.T. NATURAL LEAF Twist GR.ANGER HONEY DIP PICNIC Fine Cut RED BELL SWEET BURLEY Scrap PAY CAR RED HORSE RED MAN UNION STAND.4RD TIMN 446019

LiQ2ett &.lll•ers Incorporated and Consolidated Subsidiaries Five Years in Review ( Dollars expressed in thousands except per share hgtu•es) 1968 1967 1966 1965 1964 Operating Results-Year Ended December 31 Net sales ................................................ 5617.2-10 $631.780 $635,258 $533,153 S555, 719 Income taxes .......................................... 29.493 27.352 25.158 20,501 26.-105 Net carninLs .......................................... 24.066 25,127 23,439 22,597 26.941 Net earnings per share of common stock 2.82 2.93 2.71 2.56 3.07 Dividends on common stock-amount 19,064 19,217 19,218 19,509 19,761 Dividends on common stock-per share 2.50 2.50 2.50 2.50 ''.~; 0 Financial Position-Year End Inventories ............................................ 258,640 274,992 293,034 278,637 305,438 Working capital ......... ......... ._................. 247,728 250,303 270,345 265,455 309.109 Plant and equipment (net ) ..................... 48.224 42,773 40,263 35,170 35.551 Total assets ........................... .__. ........... 507,385 490,382 490,506 382,764 414,672 Lony~-term debt ....................... _.............. 84,019 75,636 73,322 564 38.138 Short-term debt ....................... .......... ..._.. 51,712 51,292 41,643 40,526 26,184 Stockholders' equity .............................. 318,104 315,334 313,177 311,448 318,120 Book value per share of common stock .. 35.96 35.45 34.91 34.58 34.52 By Ilslilg 1'olli' COYi2pail)''s prodt[ct.s', ti h1c'h are i1a7Yted in this report, and by recolYli'iZeiZd[71og 1he711 to 1'olfr friends, A'~~ll tt ill cl,r`(1 to the ValZfe of your investment. TIMN 446036 Printed in U.S.A_ _

Au.tin, Nichols & Co., Incorporated The merger of Austin. Nichols & Co.. Incorporated into Liggett & Myers Incorporated was approved at special stockholder meetings by Austin. Nichols stockholders on November 26, 1963 and by Lio,ztt &- Myers sto&holders on December 3, lt?b3. Austin. Ni.chols, foun(lCcl in 1855, is a leading importrr, rectifier and bottler of alcoholic beverages. Its headquarters, rectifying and bottling plant and Custom and Internal Revenue bonded warehouses are located in MaSpt th. Lon T Island. The conlpany is also a di;tributor of aleoholie bevera Tes in New York City and Washlllgton, D.C., \ti'lth \\•arehousts at JlaSpeth and %%'est- bury. Lon- Island. and White Plains. New York. _ The principal brand owned hy Austin. Nichols is WI LD TL.i RI:EY, a 101-proof, 8 -year-old hotlrbon whiskey. which is advertised as "b eyonti auplication." The company is the eXelusi\ e -iistributor of VIRGINIA GENTLE1IAN botu•- boIl \vhiskey in a number of states. As the exclusive importer of I11aI1V talllOtls bralllls, the conlpallVI s principal imported brand is GRANT'S 8-_vear-old, one of the more popular Scotch \vhiskics in the United States. Other important im- ported brands inelllde METAXA, the Greek brandy. and C'.aMPARI. the Italian aperitif. Other \vell known names include PADDY IRISH WHISKY. CHARLES FIEID- SIECK Champagne, CHAUVEtiE.T sparkling and still Bur11unLlti wines and NNIOUQUIN Italian brandy. Products WILD TURKEY Bourbon GRANT'S Scotch N[ET:aXA Greek Liqueur CAMPARI Italian Aperitif CHARLES HF.IDSIECK Fren,h t h u lt_nr CHATEAU LA MISSION HAl I Itk It tN French \b'ine CHAUVENET Sparkling and SttII Ior_undies GLENFIDDICH, Single Malt 'S, t, It it,rtnt's) LAGOSTA Rose Portuguese \~ inr MOUQUIN Italian Brand} NICHOLS Blended Whiskev PADDY IRISH WHISKY VIRGINIA GENTLEMAN 11'iurh-n \S'EDDING VEIL LIEBFR.\t'\III t II German \Vine ZELLER SCHWARZE KA I I l,rrnt.in ~\ine TIMN 446022 tt

Liggett &.lfyers Incorporated and Consolidated Subridiaries Statement of Consolidated Source and Application of Funds for the Years ended Deceniber 31 SOURCE OF FUNDS From operations 1968 1967 (Note 11 Earnings before minority interest ............................................... $24,849,835 $26,155,697 Depreciation and amortization .................................................... 9,371,170 7,740,317 Total 34,221,005 33,896,014 Decrease in working capital Market value of common stock issued for net assets of 2.575,087 20,042,337 National Oats Company .............................................................. 5,263,544 Increase in long-term debt .............................................................. Proceeds from exercise of stock options 8.382.617 2,314,736 Liggett & Myers ........................................................................... 412 6.537 Austin, Nichols ........................................................................... Net earnings of Austin, Nichols, less cash dividends of $227,685, for the period from August 1, 1967 through December 31, 1967 211,594 15.360 (Note 1) ................. ..................................................................... 558,065 - Other ................................................................................................ 423 .516 691,093 TOTAL .............................................:.:............. $46,372,296 $62,229,621 APPLICATION OF FUNDS Payments of cash dividends Liggett & Myers ........................................................................... $20,041,073 $20,253,547 Austin, Nichols ........................................................................... 335,540 402.892 Additions to franchises and goodwill .............................................. 2,035,127 22,815.663 Cost of common and preferred stock purchased ............................ Net additions to property, plant, and equipment (including 1,252,038 7,599,729 property of consolidated subsidiaries purchased) .................... 11,082,110 7,432,464 Acquisition of majority interests in foreign tobacco companies .... 6,735,941 - Increase in other investments .......................................................... Reductions in minority interest due to changes in capital and 2,266,367 2,070,131 payment of dividends to minority stockholders ........................ 346,996 1,750,168 Increase (decrease) in prepaid expenses and deferred charges ...... 1,841,116 (94,973) Costs incident to merger with Austin, Nichols .............................. 435,988 _ - TOTAL ............................................................ $46,372,296 $62,229,621 See Notes to Financial Statements. Notes to Financial Statements December 31, 1968 1. Principles of Consolidation, Acquisitions, Etc. All significant subsidiary companies are included in the accompanying consolidated financial statements. In 1968, the Company acquired majority interests in three foreign tobacco companies at a cost of $6,735,941. At December 31, 1968, the Company's equity in the net assets of these unconsolidated subsidiaries aggregated $3,424,620, and its equity in their net earnings since dates of acquisition aggregated $82,648. No dividends were received from these companies. On December 3, 1968, the stockholders of Liggett & Myers Incorporated approved a proposed merger of Austin, Nichols & Co., Incorporated with the Company (see Note 4). The merger was effective on January 24, 1969 and the Company will issue, in 1969, a maximum of 298,956 shares of its $5.25 cumulative convertible preference stock in exchange for the outstanding common stock of Austin. This transaction, which is being accounted for as a pooling of interests, has been given retroactive effect (based on the maximum number of $5.25 preference shares to be issued) in the accompanying consolidated financial state- ments. The 1968 consolidated balance sheet includes the December 31, 1968 balance sheet of Austin, and the 1968 statement of consolidated earnings includes Austin for the year ended December 31, 1968. The 1967 consolidated balance sheet includes the balance sheet of Austin as of July 31, 1967, and the 1967 statement of consolidated earnings includes Austin for its flscal year ended July 31, 1967. Net sales and net earnings, respectively, of Austin included in the statement of consolidated earnings were $58,912,277 and $1,072,678 in 1968 and 556.562?49 and $1,194,975 in 1967. The results of operations of Austin for the period from August 1, 1967 through December 31, 1967 have been credited directly to retained earnings. On September 30, 1968, the Company purchased for cash all of the outstanding capital stock of Brite Industries, Inc. and its affiliated companies, and the accounts of the acquired companies have been included in the consolidated financial statements since ;2 TIMN 446033

niore than 100 hospitals, universitizs, and research institutions, and 016 scientific papers have been in- dependently published as a result of' this research. The Council's 1968 Annual Report states: "The fact that reputable, indepenclen t scientists at leading research organizations and institutions See thC neeLi for more study is a clear indication that the smoking and health situation is not as simple- as somz people would have us believe." In 1963, the tobacco industry pledged 510.000,000 to the American Medical Association's Education and Research Foundation in support of its Project for Research on Tobacco and Health: and an additional pledge of at least S8,000,000 was made in 1968. In its published report in mid-1968 at the, ANIA Annual Convention in San Francisco, the A`IA-ERF indicated it had awarded 104 grants to 50 institutions; and in its review of the research activity it stated: "...the problems related to establishing any kind of cause and effect relationship between tobacco use and health are far more complex than had been supposed. "It is evident that we have a long road to travel and that this will be done slowly. Many years may be required to gather sufficient experimental facts and data to clear what is at best a muddied picture." Perhaps the most important adversity in the ci--a- rette industry in 1968 was the increasing use of anti-cigarette announcements on radio and television, which began in late 1967 as the result of the application of the "Fairness Doctrine" to cigarette commercials by the Federal Communications Commission. In November, the United States Circuit Court of Appeals for the District of Columbia upheld a ruling of the Federal Communications Commission requiring radio and television stations which carry cigarette advertising to devote a significant amount of broadcast time to free anti-cigarette announcements. The case involved whether the Federal Cigarette Labeling and Advertising Act of 1965 pre-empted the field of cigarette regu- lation, whether the ruling evJti authorized, and whether the ruling was constitutional. In February, 1969, The Tobacco Institute. Inc., eight cigarette manufacturers, including your Company, the National Association of Broadcasters, and several broadcast networks petitioned the United States Supreme Court to review the decision of the Circuit Court of Appeals. On February 5, 1969, the Federal Communications :~ommission announced its intention to adopt a pro- posed rule that would prohibit the broadcast ot' -igarette advertising on radio and television, "assuming, the absence of a contrary Congressional direction." The rising retail prices of cigarettes resulting from increasing state and local taxes continue to be a serious problem for the industry. Although manufacturers' prices have increased little since mid-1907. retail prices have risen more than 7 per cent. chiefly because thC weighted average state cigarette excise tax has climbed almost 17 per cent, from 7.8 cents per pack to Q.1 cents. Eight increases in these state taxes during 1968. althou0h less than twelve increases in 1967, was a greater amount than usual for an zvzn-numbered legislative year. Most unreasonable were the 7-cent per pack increase in Florida from 8 to 15 cents and the 5-cent increases in Oklahoma and Rhode Island from 8 to 13 cents. There were defeats of such legislation in twelve states. Seventeen states now have cigarette taxes of 10 cents per pack or more. Thirty-four states have taxes of 8 cents or more, which is the equivalent of the Federal excise tax on cigarettes. Forty-five states have taxes of 5 cents or more. Thz total state and local revenues from cigarette excise taxes (about S3.1 billion) have increased to about the same level as the Federal cigarette excise taxes, bringing the total direct cigarette revenues to approximately S4.2 billion. If there were no excise taxes on cigarettes, the consumer would pay about half as much as he now pays for his cigarettes. These tax figures do not include income and franchise taxes, state and local sales taxes and other direct and indirect taxes. The value of the Company's leaf tobacco inventories on December 31, 1968, was S-100,608.137. The United States Department of Agriculture estimated the production of flue-cured tobacco at 1,000 million pounds, the smallest crop since 1957 and 13 per cent lower than in 1967. The decline was caused by the dry weather in the flue-cured growing areas. The average price per pound increased about 4 per cent to 66.5 cents, almost equal to the record price of 1966. Based on sales of approximately 80 per cent of the burley crop through December 18, it is estimated that total production will be approximately 557 million pounds, slightly more than the 1967 crop of 541 million pounds. The average market price per pound increased to a record high of about 74 cents, approyi- mately 3 per cent above the 1967 average price. On behalf of the Board of Directors, I express our ~incerc appreciation for the cooperation and loyalty of oLu• omployees, and for the continued support of our •<OL LIloldersk z~v March 0, 1969 Milton E. Harrington Presiden t TIMNI 446016 5