Tobacco Documents Online

The 1959 crop of flue-cured tobacco, the sale of which was completed before the end of the year, amounted to 1,183,000,000 pounds, which quantity was about in line with the 1958 crop. The average selling price was 57.70 per pound or slightly higher than the previous year. The Government support price was 55.50 per pound for the 1959 crop. The U. S. Dept. of Agriculture has announced that the 1960 flue-cured acreage allotment will remain the same as last year. Due to opening a few days earlier, the burley markets sold approximately 90" of the 1959 crop before the end of the year. The burley crop is estimated at approximately 5?5.000,000 pounds or about 8°o more than the 1958 crop. Market prices through the end of the year averaged 60.70 per puund or about 9°0 lower than the comparable period in 1958. The support price for the 1959 burley crop was 57.2d per puund. On January 15, the U. S. Dept. of Agriculture announced the 1960 acreage allotment would be almost identical ,~ ith 1959. Our tobacco buyers cover every important tobacco mar- ket, selecting only the choicest tobaccos to meet the exactinQ standards set for all Liggett & Myers' products. TIMN 446199 9

F t - ' _ ? $ TWW 4 ~ k 'c_ ~- *: Y' E F I L" E R o CHESTER FlELD \LCHESTER Fl ELD TIMN 446200

>f the' manl• cigarette, smoking, and cheu•ing tobacco procG,- -• •.••-•,nufactured b}• .iggett & _1Iti•ers, those shown above are the best known anul - ~ 1. It conforms to_ 'te Ligtaett & Myers' high standard of excellence designed t,, ~t ;••piality leader in s respective fzeld. The Pinkerton Tobacco Compan}-, an uncun,i,ioGrn -r` •, %-idiarti• of Liggett Myers, manufactures as their principal brands Red Man. li ol Il~ r rnd PaY Car. ~ vr ~ ot Duke TIMN 446201 ll 1

12 The Company has been a pioneer and leader in the field of tobacco research for more than 40 years, and has expanded its program during the year by the addition of personnel and new equipment. The construction of the new addition to the research laboratories in Durhum, North Carolina, expected to be completed within a fe~~ months, will provide greatly expanded facilities for con- tinued developments in the research field. The Company's research program has contrihu<<•1 materially to new and improved products. Also nian~ improvements in the efficiency and economy of factor,, operation are constantly being developed by this de- partment of the Company. Basic studies of tobacco and tobacco products are bein2 pursued vigorously in an effort to increase our knowledge of this subject. The research department and the leaf buying organization work hand in hand in the testing of new crops of tobacco and purchasing the kind of leaf so necessary to the pro- ,Iuction of quality products. I n addition to the efforts of our own research de- rtment, the Company makes grants to universities and uther outside scientific organizations for major research. TIMN 446202

AdL'ertising and Promotion HERES A CHESfII7FIQD EXCUISNE The Big Clean T of top-tobacco e '4 - ...everypeiffir- by top-porosity BEST TASTING SMOKE IN THE U.S.A.! One menrhol cigareae has m raem best- and that', Oasl,' TIMN 446203 13 Several new brands of cigarettes were introduced by the industry in 1959, adding to a previous long list, and resulting in even more competition for the established brands. It therefore became more necessary than ever for the Company to intensify its promotional activities and to use every prac- ticable means of advertising and sales promotion to convincingly bring the Company's brands of cigarettes to the favorable attention of smokers. Every proven medium of advertising was used to promote the Company's products. Wide use was made of television and radio, ma`azines and newspapers, special sports events, outdoor sians, and point-oP sale display advertising. ~ Television continued to be the larQest me- dium used in the Company's over-all advertising program. Television programs currently being sponsored are THE REBEL, THE ALASKANS, AD- VENTURES IN PARADISE, LARAMIE, THE UN- TOUCHABLES, HOTEL DE PAREE, BLACK SAD- DLE, BONANZA, and GUNSMOKE. Experienced salesmen supplement the Com- pany's advertising program by regularly visiting jobbers and retail dealers throughout the coun- try. They render service wherever possible to the trade in stockiniz, distributing and selling the Company's products. Wherever tobacco prod- ucts are sold, they are there to see that the Com- pany's brands are well displayed. In addition, the salesmen engage in consumer sampling and spe- cial promotion plans to gain new consumers. Liggett & Myers salesmen are proud to promote their Company's products for they know they are of best quality and made according to the highest,, standards of manufacture. ~

Sales Net sales for 1959 were 5554,936,026, compared to $556,045,710 for thr previous year, representing a reduction of $1,109;68-l or less than 2/10ths of 1%. This slight decline tG.i S due to reduced volume of CHESTERFIELD regular size cigarettes. Sales of L & M, CHESTERFIELD king size and OASIS ciga- rettes were higher in 1959.y The accompanying chart gives comparative net sales figures for the past seven years. 0 &9. 1953 1954 1955 Earnings Net earnings for the year were $30,038,689, the second highest in the history of the Company. They were equivalent to $7.28 per share of common stock compared with $7.60 per share in 1958. The ratio of net earnings applicable to the common stock declined from 5.35% in 1958 to 5.16% in Millions 32 1959. 24 The net earnings for the past seven years are shown on this graph. Taxes The tax burden for the past year remained high. The provision for Federal and State income and franchise taxes amounted to $35,036,000. This fig- ure alone is equivalent to $8.91 per share of com- mon stock. This chart shows the Federal and State income and franchise taxes (dark area) compared with net income after taxes (light area) 1953-1959. 1953 1954 20 1955 .0 4 0 M ! O ~ M M ^ N 1 ~ N iJ r cli 30 28 26 22 Millions Dividends 25 In 1959 dividends paid on the common stock amounted to $22,585,258 compared with 20 $19,570,955 paid in 1958. This increase resulted from the transition to a regular $1.25 quarterly 15 rate per share, which became effective with the June 1, 1959 payment. There was declared on 10 January 20, 1960 the usual quarterly dividend of $1.25 per share, payable March 1, 1960. 5 This graph shows the amounts paid in dividends on the common stock during the past seven years. 0 1953 1954 0 0 C.o o`$ ~ o a' - LrT .~ --- ~ 00 p Q) n - n n 1956 1957 1958 1959 1956 1957 1958 1959 00 N 99 N N 1955 1956 1957 1958 1959 14 TIMN 446204

Disposition of Total Eccrrzin.gs for 1959 The following tabulation shows how the Company used or set aside a total of S555,757,000 received by it from its customers for -oods sold and from dividends, interest and miscellaneous sources during 1959: Leaf tobacco, wages, other manufacturing costs and freight 181,085,000 Dividends Total $555,757,000 TIMN 446205 15

Liggett & Hyers Tobacco Com pcrjaV CONSOLIDATED BALANCE SHEI ASSETS CURRENT ASSETS: 1959 1958 Cash . . $ 7,328,241 $ 4,458,642 U. S. Government securities-at cost (quoted market value, 54,99'_,485) . . . . . . . . 4,992,485 - - - Accounts receivable, customers . . . . . . . . . 21,189,902 23,095,-151 Accounts receivable, others . . . . . . . . . . . 1,159,595 1,103,323 Leaf tobacco, at averaQe cost . . . . . . . , . . 292,005,364 306,965,046 Manufactured stock and operating supplies, at average cost . 38,388,176 34,352,9-19 TOTAL CURRENT ASSETS . . . . . . . , . 365,063,763 369,974,311 PROPERTY, PLANT AND EQUIPMENT-AT COST: Land and buildings . . . . . . . . . . . . . 20,229,351 19,658,449 Machinery and equipment . . . . . . . . . , . 57,361,691 55,461,969 Total . . . . . . . . . . . . . . 77,591,042 75,1 20,418 Less accumulated depreciation . . . . , . . . 41,390,536 39,538,898 NET PROPERTY, PLANT AND EQUIPMENT 36,200,506 35,581,520 OTHER ASSETS: Brands, trade-marks and good will . . . . . . . . s t s 1 1 Investments in unconsolidated subsidiary companies, at cost. 887,004 863,004 Investment in foreign tobacco company, at cost .. . 4,000 4,000 Foreign currency deposits subject to withdrawal restrictions. . 1,025,076 1,0-10,643 Prepaid expenses and deferred charges . . . . . . . 1,210,726 1,639,229 TOTAL OTHER ASSETS . . . . . . . . . . 3,126,807 3.5-I6,877 TOTAL . . . . . . . . . , . . . $404,391,076 I S409,102,708 16 TIMN 446206

OF DECEMBER 31 LIABILITIES CURRENT LIABILITIES: Accounts payable . . . . . . . . . . . . . Notes payable to banks . . . . . . . . . . . . Dividend payable on preferred stock . . . . . . . . Accrued interest on debentures . . . . . . . . . . Funded debt payable within one year (less, for 1958, $1,294,000 of debentures redeemed and held by Trustee) . . . . Taxes payable and accrued . . . . . . . . . . TOTAL CURRENT LIABILITIES . . . . _. FUNDED DEBT: 25/$°o Sinking Fund Debentures, $5,750,000 payable annually during the years 1961 through 1964, $23,750,000 payable in 1965, and 537,500,000 payable in 1966 . . . . . . STOCKHOLDERS' EQUITY: Preferred stock 7% cumulative, par value $100-authorized, 341,398 shares; issued, 225,141 shares; in treasury, 1959, 29,460 shares, and 1958, 16,400 shares ...... Common stock, par value $25-authorized, 5,000,000 shares; issued, 1959, 3,931,462 shares, and 1958, 3,917,842 shares (Note 1) . . . . . . . . . . . . . . . Paid-in capital in excess of par values of capital stocks (Note 2). Retained earnings (Note 3) . . . . . . . . . . . TOTAL STOCKHOLDERS' EQUITY . TOTAL . . 1959 1958 $ 3,295,512 $ 4,575,553 - 3,000,000 345,067 365,?97 721,875 759,867 5,750,000 4,456,000 22,794,378 23.763,869 32,906,832 36,920,586 84,250,000 90,000,000 19,568,100 20,874,100 e< d!' 98,286,550 97,946,050 20,211,080 19,632,691 149,168,514 143,729,'_81 287,234,244 282.182,122 $404,391,076 $409,103,708 TIMN 446207 17

Liggett &- -l tVers Tobacco Co1npccrz. ti- St(6tf?772e1t t Uf Co7zsolidatecl Eenairz-bS (fr rears encled Decentber 31) NET SALES . OTHER EARNINGS: lnterest and dividends received . . . . . . . . . . Profit from sale of land and buildines . . . . . . . . Profit from redemption of sinking fund debentures . . . . Miscellaneous . . . . . . . . . . . . . . TOTAL EARNINGS. COSTS AND EXPENSES: Cost of aoods sold, selling, administrative and c7eneral expenses . Pro` ision for depreciation . . . . . . . . . . . Interest and amortization on funded debt . . . . . . Interest on bank loans . . . . . . . . . . . . Miscellaneous . . . . . . . . . . . . . . Provision for Federal income tax . . . . . . . . . Provision for State income and franchise taxes . . . . . TOTAL COSTS AND EXPENSES . . NET EARNINGS FOR THE YEAR . DIVIDENDS ON PREFERRED STOCK . NET EARNINGS APPLICABLE TO COMMON STOCK . 1959 1958 $554,936,026 S556.0-15.710 370,848 275, 865 100,547 - - 97,073 349,897 69,998 555,757,318 556.488.646 484,407,387 -180,839,626 3,705,075 3,707,895 2,466,176 2,641,303 76,333 1,371,583 27,658 16,231 32,350,000 34,100,000 2,686,000 2,589,000 525,718,629 525,265,638 30,038,689 31. 223,008 1,430,107 1,-161,187 $ 28,608,582 S 29,761,821 TIMN 446208