Tobacco Documents Online

LIGGETT & MYERS TOBACCO COMPAN ASSETS DECEMBER , CURRENT ASSETS 1957 1956 Cash .......................................................................................... $ 12,262,953 $ 11.635,118 Accounts receivable, customers ...... ........ ..... .................... ............ 23,089,890 22,578.754 Accounts receivable, others ........................................................ 1,030,079 1,407,961 Leaf tobacco, at average cost ...................................................... 346,471,691 372,484,364 Manufactured stock and operating supplies, at average cost........ 34,557.606 36.58 6.972 TOTAL CURRENT ASSETS ............................................ 417,412,219 444.693.169 PROPERTY, PLANT AND EQUIPMENT - AT COST Land and buildings .................................................................... 19,421,927 19.24-1.0 ( 7 Machinery and equipment ...... ........ ____ .................................. 53,355,351 48,601.413 Total ................................. .................................... 72,777,278 67,845,430 Less reserves for depreciation................. ........................... 36.562,302 34,178,235 NET PROPERTY, PLANT AND EQUIPMENT............ 36,214,976 33.667.195 OTHER ASSETS Brands, trade-marks and good will .............................................. 1 1 Investments in unconsolidated subsidiary companies, at cost........ 829,004 736.00-1 Investment in foreign tobacco company, at cost ........................ 4,000 4.000 Deferred charges ........................................:............................... 1.979,598 2,570.967 TOTAL OTHER ASSETS .................... _........................ 2,812,603 3.310.972 TOTAL ............................... .r. .... ...... ................. $456,439,798 $481,671,336 TIMN 446262 20

During 1957, your Company's distributors and servicemen called on almost one million four hundred thousand retail outlets ... helped to arrange special displays and promotions. .0 Oasis First to introduce a King companion to the Regular Chesterfield in 1952, and one of the first companies to introduce a filter brand (L&M in 1953), Liggett & Myers in 1957 met a growing consumer demand for the menthol- type cigarette with the introduction of its "Oasis" brand. Distinguished by the same pure white patented filter tip used on L&M, Oasis contains "Menthol Mist," is packaged in the "flavor-tight" box and sells at the popular filter price. A sharp increase in menthol-type cigarette sales from less than 2 per cent of the market in 1956 to over 6 per cent by the end of 1957 indicates an increasing number of smokers in this field. Your Company is proud of Oasis - the "Big 0" - with "soothing Menthol Mist." Menthol Mist makes the Big O's rich tobaccos taste fresher while you're smoking, and the fresh- ness stays with you long after smo' king. We urge you to try this new brand of your Company, and tell your friends about Oasis. Distribution and sales promotion Liggett & Myers products are sold all over America by almost one million four hundred thousand retail outlets from roadside stands to shopping center supermarkets. This breadth of distribution has been achieved by the unceas- ing efforts of our six thousand distributors and the Company's own sales force. From coast-to-coast every working day, Liggett & Myers servicemen visit retail outlets. promoting the sale of the Company's products. TIMN 446252

RECORD FOR FIFTEEN YEARS SALES-EARNINGS-DIVIDENDS NET SALES NET INCOME APPLICABLE TO COMMON STOCK DIVIDENDS PAID ON COMMON STOCK YEAR AMOUNT AMOUNT PERCENT OF SALES PER SHARE I AMOUNT I PER SHARE 1943 $347,258,296 $14,195,223 4.09 % $4.53 $10,979,286 $3.50 1944 374,032,971 13,332,272 3.56 4.25 10,979,286 3.50 1945 399,212,620 13,477,648 3.38 4.30 10,979,286 3.50 1946 464,507,825 16,907,740 3.64 5.39 12,547,756 4.00 1947 513,771,422 21,439,504 4.17 6.83 14,116,225 4.50 1948 556,506,847 27,799,934 4.99 8.86 15,684,695 5.00 1949 557,733,433 28,105,507 5.04 7.18 18,783,023 5.00 - 1950 530,547,285 27,597,044 5.20 7.05 19,557,605 5.00 1951 539,947,406 20,292,047 3.76 5.19 19,557,605 5.00 1952 603,080,876 19,987,339 3.31 5.11 19,557,605 5.00 1953 586,498,727 21,517,389 3.67 5.50 19,557,605 5.00 1954 548,861,959 20,740,177 3.78 5.30 19,557,605 5.00 1955 546,964,616 25,259,785 4.62 6.46 ~. 15,646,084 4.00* 1956 564,965,808 24,989,563 4.42 6.39 19,561,325 5.00 1957 570,384,860 26,812,420 4.70 6.85 19,563,805 5.00 ` Represents four quarterly payments of $1.00 each. The payment of the extra dividend of $1.00 per share was deferred until March 1, 1956. Similar action has been followed for subsequent years. Earnings per share are based on the number of shares of Common Stock (including Common B Stock prior to 1949) outstanding at the end of each year. In addition to the annual dividend of $7.00 per share on its Preferred Stock, the Company has paid a substantial cash dividend to holders of its Common Stock in every year since its organization in 1911. TIMN 446258 16

)NSOLIDATED BALANCE SHEET 7 AND 1956 LIABILITIES CURRENT LIABILITIES 1957 1956 Notes payable to banks ................................................................ $ 53,310,000 $ 78,000,000 Accounts payable ........................................................................ 3,808,567 4,468,956 Dividend payable on preferred stock 365,297 365,297 Accrued interest on debentures .................................................. 814,844 861,328 Funded debt payable within one year .......................................... 5,750,000 5,750,000 Taxes payable and accrued ........................................................ 24,992,145 26,325,425 TOTAL CURRENT LIABILITIES .................................. 89,040,853 115,771,006 FUNDED DEBT 25/s % Sinking Fund Debentures, $5,750,000 payable annually during the years 1959 through 1964, $23,750,000 payable in 1965, and $37,500,000 payable in 1966 ................................ CAPITAL STOCK AND SURPLUS 95,750,000 101,500,000 Preferred stock 7% cumulative, par value $100.00 Shares - authorized, 341,398; issued, 225,141, in treasury, 16,400 .................................................................... 2~,874,100 20,874,100 Common stock, par value $25.00 Shares - authorized, 5,000,000; issued, 3,912,761 (Note 1) .................................................................... 97,819,025 97,819,025 Paid-in surplus ............................................................................ 19,417,405 19,417,405 Earned surplus (Note 2) ............................................................ 133,538,415 126,289,800 TOTAL CAPITAL STOCK AND SURPLC'S 271,648,945 264,400,330 TOTAL ........................................ ...... $456,439,798 1 $481,671,336 TIMN 446263 21

Net earnings for 1957 amounted to $28,273,607, equivalent to $6.85 per share of common stock based on the shares outstanding at the end of the year. This was an increase of $1,822,857 or about 7%, over the 1956 earnings of $26,450,750 which were equal to $6.39 per share. The ratio of earnings on common stock to net sales in- creased from 4.42% in 1956 to 4.70% in 1957. The net earnings for the past seven years are depicted on the opposite page. Net sales for the year were $570,384,860, repre- senting an increase of $5,419,052 over 1956 when the net sales amounted to $564,965,808. The dollar sales volume was the highest recorded since 1953. The chart shows a record of the Company's sales for the past seven years. In 1957 four quarterly dividends of $1.00 each per share of common stock were paid in addition to an extra dividend of $1.00 per share which was paid March 1. In line with the current policy of the Company, there was declared on January 15, 1958 an extra dividend of $1.00 per share, payable March 1, 1958. The graph on the opposite page shows the amounts paid in dividends on the common stock during the past seven years. There has been no relief during the past year from the tremendous tax burden placed on ciga- rettes and other tobacco products. For the year 1957 your Company made provision for Federal and State income and franchise taxes in the total amount of $33,621,000. Such taxes alone were equal to $8.59 per share of common stock. The chart to the left gives a graphic compari- son of Federal and State income and franchise taxes (shown in black) with net income after taxes (shown in yellow) for the past seven years. DISPOSITION OF TOTAL INCOME FOR 1957 This chart shows how the Company used or set aside a total of $570,723,000 received by it from its customers for goods sold and from dividends, interest and miscellaneous sources during 1957. Federal and other excise taxes Leaf tobacco, wages other manufacturing costs and freight Selling, advertising, administrative, interest and other expenses Federal income and State income and franchise taxes Dividends to stockholders Earnings retained for future needs $251,599,000 189,809,000 67,420,000 33,621,000 21,025,000 7,249,000 rrIM1v 446261 19

TIMN 446249 Liggett & Myers looks to young people in increasing numbers not only as new customers for your Company's products, but as valued employees who will assume tomorrow's management responsibilities.

Millions EARNINGS SALES n ~ M N N ~.[') ~ 00 I- ~ m p N - ^ m O o ^ Lf7 I~ d' ~t CV N N ^ p ~ p N ~ N N N r- 0 ,-R M ~ N '0 N 1951 Millions 700 600 500 400 300 200 100 0 1952 1954 1953 1955 1956 ~ ~ r~ cm to 00 ° ~ n OR N n tc') ai -4 (.0 ~ ~ 00 n (m 00 1-1 cY tC) ~Y' ~ 00 O ~p CD 00 CO Ql (G ~ W M LO M 0 ~ CO 00 Un 00 ct ~ ~ ~ U11) ~ ~ O ~ ~ 1951 1952 1953 1954 1955 1956 1957 Millions 20 15 DIVIDENDS 10 5 0 1957 F O ~ O O O O O N O t0 CO tO GO O M 00 1- 1--z 1~ 1~ CO .-i M ~ L!') LC) ti l L2% C D l.[) L!') C~ , C; m pn cCf m T ~ eF 1951 1952 1953 1954 1955 1956 1957 TAXES " ~ ' ~1 Li r~tJ d t 1951 1952 1953 1954 1955 1956 1957 18

ONE OF TOBACCO'S MOST RESPECTED NAMES 1911-1957 TIMN 446268

CONSOLIDATED SURPLUS for the years ended December 31, 1957 and 1956 EARNED SURPLUS 1957 1956 EARNED SURPLUS AT BEGINNING OF YEAR ...................... $126,289,800 $120,861,562 ADD - Net income for the year ........................................................ 28,273,607 26,450,750 TOTAL .......................................... 154,563,407 147,312,312 DEDUCT Cash dividends of $7.00 per share on preferred stock ................ 1,461,187 1,461,187 Cash dividends of $5.00 per share on common stock .................. 19,563,805 19,561,325 TOTAL .......................................... 21,024,992 21,022,512 EARNED SURPLUS AT END OF YEAR (Note 2) ...................... $133,538,415 $126,289,800 PAID-IN SURPLUS 1957 PAID-IN SURPLUS AT BEGINNING OF YEAR ........................ $ 19,417,405 ADD - Excess of sales price over par value of common stock sold to officers and employees (Note 1) PAID-IN SURPLUS AT END OF YEAR ...................................... $ 19,417,405 1956 $ 19,364,550 52,855 $ 19,417,405 ,rIMN 446265 2_3

CONSOLIDATED INCOME for the years ended December 31, 1957 and 1956 1957 1956 NET SALES .................................................................................... $570,384,860 $564,965,808 OTHER INCOME Interest and dividends received .................................................. 191,715 174,040 Profit from sale of land and buildings .......................................... 78,757 Miscellaneous ............................................................................ 68,089 104,687 TOTAL INCOME ............................................................ 570,723,421 565,244.535 DEDUCTIONS Cost of goods sold, selling, administrative and general expenses.. 499,052,009 498,601,231 Provision for depreciation .......................................................... 3,488,428 3,138,132 Interest and amortization on funded debt .................................... 2,801,347 2,954,629 Interest on bank loans ................................................................ 3,462,528 2,1 13,414 Miscellaneous ............................................................................ 24,502 70,379 Provision for Federal income tax ................................................ .1?, 30,855,000 29,165.000 Provision for State income and franchise taxes ............................ 2,766,000 2.7 51.000 TOTAL DEDUCTIONS .................................................. 542,449,814 538.793.785 NET INCOME FOR THE YEAR .................................................. 28,273,607 26,450.750 DIVIDENDS ON PREFERRED STOCK ........................................ 1,461,187 1.461,187 NET INCOME APPLICABLE TO COMMON STOCK ................ $ 26,812,420 1 $ 24,989,563 TIMN 446264