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AN 10TUAL REPORT--1J 5 6 Liggett & Mjrers Tobacco Co., Inc.

$pur , Cigarettes These are YOUR PRODUGTS: Because of regional tastes, you may not know all these brands, the 25 most active of your Company. But wherever sold, they have thousands of loyal friends, because the Liggett & Myers name has come to mean superior quality in tobacco products. Liggett & Myers currently makes 63 ~ different kinds of cigarettes, smoking, and chewing tobacco. Almost 100 brand names have been registered. Red Man, Red Horse and Pay Car, the principal brands of The Pinkerton Tobacco Co., an unconsolidated subsidiary, are not illustrated.

V TO THE STOCKHOLDERS: You will find in the twenty-one pages of this Report an illustrated description of the Company's cigarette and tobacco brands, and an interesting pictorial description of "a cigarette from plan- tation to package."" Also you will find the comparative results of the financial details of the Company's operations for the years ended December 31, 1956 and 1955, story pictures of valuable information about distribution and_sales promotion, pictures and descriptions of the Company's thirty-five-year-old research program, and a cordial invitation to visit our factories. Both dollar sales and unit cigarette sales showed a steady increase throughout the year-the largest increase occurring in the last quarter. Earnings per share of Common Stock amounted to $6.39. This compares with $5.97 a share for 1955, after deducting the non-recurring items of income for that year. Filter-tip cigarettes continued their increase at the expense of all others to a point where they probably have more than 30% of the total market. This trend meant an investment of approximately $5,000,000 added to our manufacturing facilities during the year. There were no important additions to land and buildings. The book value of our Common Stock rose from $60.85 per share to $62.24 at the end of the year. The number of Common and Preferred stockholders increased_by 1,700 during the year. Holders of stock ranged from a few shares in the hands of thousands of individuals to many hundi•eds _ of shares owned by investment corporations, educational institutions, insurance companies, trusts, estates and banks. An authoritative analysis of basic data from the U. S. Census Bureau predicts a population increase of fourteen million in the next five years and a total increase of sixty million by 197, 5. Your Company is optimistic about the future, and with the finest tobacco products its entire resources can produce, expects to get its full share of this e,ver increasing market. The Board of Directors joins me in expressing sincere appreciation for the cooperation and loyal support of stockholders and employees. Respectfully, January 28, 1957 TIMN 446271

TRANSPLANTING SEEDLINGB Growing fine tobacco is truly an art, calling for the highest degree of judgment and skill. In spite of constantly improving farming methods, the quality of the crop still depends entirely on the farmer. The picture shows the care with which the seedlings are transplanted, one at a time, to the field where the tobacco will grow and ripen. 3 TOBACCO GROWING This is a typical field of tobacco, shortly before harvest. Now the farmer spends more and more time watching his plants, for the better he tends his crop, the finer the tobacco, and the higher the price he % ill get for it. At this time Liggett & Myers tobacco buyers pay him a visit, to size up the crop they will later be buying at the auction sales. SEED AND THE SEED BED To the tobacco farmer, the seed bed is his most important plot of land. With infinite care, and using skill and knowledge gained from years of working with tobacco, the farmer grows seed- lings for later transplanting. Inset shows tobacco seeds-so small that a single spoonful grown to seedlings could cover 6 or 7 acres with set-out plants.

from plantation to package... AROMATIC TURKISH TOBACCO For spice and aroma in the various Liggett & Myers blends, millions of pounds of various Turkish tobaccos are imported each year. The picture shows Turkish tobacco leaves alongside their American cousins, "Bright" tobacco. These small leaves require skillful and careful handling. S READY FOR CURING After harvest, this scene is typical of thousands of farmers. They tie the tobacco into "hands" and place them on sticks. These sticks are then placed in the curing barn as the picture shows.

GRADING TOBACCO After curing, the tobacco leaves are graded by color, texture and aroma. Here the farmer and his helpers patiently examine each and every leaf, sorting out the fine, mild tobacco which brings premium prices at the auction. : BEFORE THE AUCTION : ~ Before the auction, Liggett & Myers tobacco ~ buyers move up and down the rows in the ; warehouse, examining the tobacco to be offered. : When the bidding starts, they know which ' ; are the mild, ripe tobaccos, so vital to the ~ famous Liggett & Myers blends. ; . i . . . . . . . . . : AGING Now the tobacco has been prepared by the Company's leaf department and packed into great hogsheads. In the picture, it is on the way to rest and age for dozens of months. As the time slowly passes, the tobacco grows sweeter and milder, until judged just right to meet Liggett & Myers quality standards. TIMN 446274

, 11 9 MODERN STORAGE WAREHOUSES Stretching for 52 z miles, these warehouses are scientifically designed to properly age the tobacco, using only natural temperature changes. MAKING L&M FILTER CIGARETTES Here is a close-up of the machine that processes the L & M exclusive Miracle Tip. Faster than the eye can follow, tips and cigarettes meet, are joined, and flow out of the machine as perfectly formed L & b'I Filter Cigarettes. L6M CRUSH-PROOF BOX MACHINE The flat sheets of printed packages enter this machine at one end; from the other end flows a continuous stream of perfectly formed L & M Crush-Proof boxes, ready to be filled Hith L & M Cigarettes. It makes hundreds of boxes per minute. T,1MN 446275 --- S

12 I THE ACCU-RAY PROCESS ~ The Accu-Ray was developed ~ by the Industrial I Nucleonics Corporation. It is really a nuclear gauge which passes a continuous- stream of electrons through the cigarette and analyzes it while it is actually being made. This nuclear stream transmits what it sees to the electronic brain which adjusts the pro- duction machinery down to millionths of a pound. Accu-Ray controls are now used by such industrial giants as: U. S. Steel, International and St. Regis Paper Companies; Goodrich, Firestone and Goodyear Rubber Companies; the Du Pont Company and a host of others. Illustrated is the Accu-Ray quality control as used by Liggett & Myers. G ,J3 MAKING CIGARETTES From this machine fto w 20 cigarettes every single second ... each one a true representative of the quality, smoothness, flavor, and mildness which have made your Company's cigarettes world-wide favorites. Tending these machines are key men, many of whom have spent their entire working life with the Company. The Liggett & Myers Research Department has made many important contributions to the development and design of the cigarette-making machines.

1956 OPERATIONS A SUMMARY OF THE HIGHLIGHTS OF THE YEAR 1956 Net sales Profit from operations Percentage of net sales Profit before taxes Income and franchise taxes Profit before preferred dividends Net income after preferred dividends Percentage of net sales Net income per share of common stock Dividends paid per share of common stock Current assets Current liabilities Ratio Funded debt Capital stock Paid-in surplus end of year Earned surplus end of year Approximat = ber of stockholders 1956 $564,965,808 63,226,445 11.19% 58,366,750 31,916,000 26,450,750 24,989,563 4.42% $6.39 $5.00 $444,693,169 115,771,006 3.8 to 1 101,500,000 118,693,125 19,417,405 126,289,800 45,400 ANNUAL STOCKHOLDERS' MEETING The Annual Stockholders' Meeting will be held at 43 Park Avenue, Flemington, New Jersey, at 2:00 P.M., Monday, March 11, 1957. Proxies will be mailed to stockholders February 8, 1957. Stockholders who are unable to attend the meeting are urged to sign their proxies and return them promptly to the Company so that the stock of the Company will be represented as fully as possible at the meeting. 43,700 - TIMN 446277 1955 $546,964,616 60,134,062 10.99% 56,677,972 29,957,000 26,720,972 25,259,785 4.62% $6.46 $4.00 $425,252,089 92,453,907 4.6 to 1 107,250,000 118,662,125 19,364,550 120,861,562 . 7

iffiffim EARNINGS 0 ~ N ~ s!' cD ^' p N p N "' N ip N ~ M t0 ~y• Lq CP N 64 N C! n! c0• O~O M N ~ Lep O N cn o ^ t~ Op N N ~ ~ N N d N p n ~ lf! e!~ N N N N 47 1948 1949 1950 1951 1952 1953 1954 1955 19! Millions DIVIDENDS 1947 Millions 1948 1949 1950 1951 1952 1953 1954 1955 1956 1947 1948 1949 1950 195fk 1952 1953 1954 1955 1956

I Net earnings for 1956 amounted to $26,450,750 compared to $26,720,972 for the previous year. In making this comparison it should be pointed out that net earnings for 1955 included a total of $1,905,308 of non-recurring items, as explained in Note 3 on Paga 14 of this report. The ratio of profit from operations to net sales increased from 10.99% to 11.19% in 1956x. The net earnings for the~"pr~st ten years are shown on the opposite page. Net sales increased substantially during the past year- $564,965,808 in 1956 compared to $546,964,616 for 1955. The major portion of this gain was due to the increasing popularity of L&M Filters. The chart shows a record of the Company's sales for the past ten years. Effective with the year 1955, your Company reverted to its original plan of taking action with respect to extra dividends in the following January after final results for the year are known. In 1956 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 this policy there was declared on January 16, 1957 an extra dividend of $1.00 per share, payable March 1, 1957. The amounts paid in dividends on the Common Stock during the past ten years are shown opposite. The tax burden placed on cigarettes and other tobacco products continued to increase during the past year. The provision made by your Company for Federal and State income and franchise taxes for 1956 amounted to $31,916,000. This alone is equivalent to about $8.16 per share of Common Stock. The chart to the left gives a graphic comparison of Federal and State income taxes and franchise taxes (dark area) with net income after taxes (light area) for the past eight years. TOTAL INCOME FOR 1956 This chart shows how the Company used or set aside a total of $565,244,000 received by it from its customers for goods sold and from dividends, interest and miscellaneous sources during 1956. r. .rrrll I I_J III I II111 1 I11 1 111111 I 111 1 IIII11 I III I IIli1 111 Federal and other excise taxes Leaf tobacco, wages, other manufacturing costs and freight i 1 Ur1111 1 ~n 1 ', w111I I I III 1 ~TAll $256,515,000 Selling, advertising, administrative, interest and other expenses Federal income and State income and franchise taxes Dividends to stockholders Earnings retained for future needs W W lll 1111111 I III 1 1111111 1 11I 1 1111111 1 III 1 111I1 1 III 1 Illl t l I Itl 11111 I I III mr r r r ni ml t l 1 III (J11111 1 III Iu l 1 1 I 111 61,889,000 31,916,000 21,022,000 I t 1 111 1 5,428,000 TIMN 446279 w W 9

3 Liggett & Myers Tobacco Company Consolidai 0 ASSETS CURRENT ASSETS Cash ........................................... Accounts receivable, customers ................. Accounts receivable, others .................... Leaf tobacco, at average cost .................. Manufactured stock and operating supplies, at average cost .............................. TOTAL CURRENT ASSETS ......................... PROPERTY, PLANT AND EQUIPMENT - AT COST Land and buildings ............................. Machinery and equipment ........................ Total ................................... Less reserves for depreciation ............... NET PROPERTY, PLANT AND EQUIPMENT............ OTHER ASSETS BranlL,_trade-marks and good will ............ 4 Ats in unconsolidated subsidiary ies, at.cost ........................... InvegGent in foreign tobacco company, at cost ...................................... Deferred charges............................... TOTAL OTHER ASSETS ........................... TOTAL ................................... 1956 1955 $ 11,635,118 $ 11,652,010 22,578,754 23,410,069 1,407,961 1,176,001 372,484,364 360,197,288 36,586,972 28,816,721 444,693,169 425,252,089 19,244,017 19,185,180 48,601,413 43,823,000 67,845,430 63,008,180 34,178,235 32,374,575 33,667,195 30,633,605 1 1 736,004 627,004 4,000 4,000 2,570,967 2,075,445 3,310,972 2,706,450 $481,671,336 $458,592,144 TIMN 446280 10

alance Sheet •, December 31, 1956 and 1955 . LIABILITIES CURRENT LIABILITIES 1956 1955 Notes payable to banks ......................... $ 78,000,000 $ 52,000,000 Accounts payable ............................... 4,468,956 5,855,755 Dividend payable on preferred stock............ 365,297 365,297 Accrued interest on debentures ................. 861,328 907,812 Funded debt payable within one year ............ 5,750,000 5,750,000 Taxes payable and accrued ...................... 26,325,425 27,575,043 TOTAL CURRENT LIABILITIES .................... 115,771,006 92,453,907 FUNDED DEBT 21% Sinking Fund Debentures, $5,750,000 payable annually during the years 1958 through 1964, $23,750,000 payable in 1965, and $37,500,000 payable in 1966 .............. 101,500,000 107,250,000 CAPITAL STOCK AND SURPLUS Preferred stock 7% cumulative, par value $100.00 Shares -- authorized, 341,398; issued, 225,141, in treasury, 16,400 ................. A0,874,100 20,874,100 Common par value $25.00 Share °t~uthorized, 5,000,000; issued, 1956, 3,912~ ,1, and 1955, 3,911,521 (Note 1)...... 97,819,025 97,788,025 Paid-in surplus ................................ 19,417,405 19,364,550 Earned surplus (Note 2) ........................ 126,289,800 120,861,562 TOTAL CAPITAL STOCK AND SURPLUS .............. 264,400,330 258,888,237 TOTAL ................................... $481,671,336. $458,592,144 TIMN 446281 11

CONSOLIDATED INCOME for the years ended December 31, 1956 and 1955 ; 1956 1955 NET SALES ......................................... $564,965,808 $546,964,616 OTHER INCOME Interest and dividends received ................ 174,040 166,990 Profit from sale of land and buildings ......... 839,184 Balance of reserve after deducting loss on sale of stock in a foreign tobacco company ...................................... 1,066,124 Miscellaneous .................................. 104,687 82,666 TOTAL INCOME (Note 3) ........................ 565,244,535 . 549,119,580 DEDUCTIONS Cost of goods sold, selling, administrative and general expenses .......... 498,601,231 484,049,950 Provision for depreciation ..................... 3,138,132 2,780,604 Interest and amortization on funded debt ....... 2,954,629 3,020,313 Interest on bank loans ......................... 2,113,414 2,535,541 Miscellaneous .................................. 70,379 55,200 Provision for Federal income tax ............... A 29,165,000 27,275,000 .~ ~ Provi~r for State income and fra~&e taxes .............................. 2,751,000 2,682,000 . TO~AIs DEDUCTIONS ........................... 538,793,785 522,398,608 NET INCOME FOR THE YEAR ........................... 26,450,750 26,720,972 DIVIDENDS ON PREFERRED STOCK ...................... 1,461,187- 1,461,187 NET INCOME APPLICABLE TO COMMON STOCK ................................... S 24,989,563 S 25,259,785 `TIMN 446282 .. 12

CONSOLIDATED SURPLUS for the years ended December 31, 1956 and 1955 EARNED SURPLUS 1956 1955 EARNED SURPLUS AT BEGINNING OF YEAR ............... $120,861,562 $111,247,861 ADD - Net income for the year .................... 26,450,750 26,720,972 TOTAL ......................... 147,312,312 137,968,833 DEDUCT Cash dividends of $7.00 per share on preferred stock .......................... 1,461,187 1,461,187 Cash dividends on common stock $5.00 per share in 1956 and $4.00 per share in 1955 ..................... 19,561,325 15,646,084 TOTAL ......................... 21,022,512 17,107,271 EARNED SURPLUS AT END OF YEAR (Note 2) ............ $126,289,800 $120,861,562 PAID-IN SURPLUS 1956 1955 PAID-IN SURPMAT BEGINNING OF YEAR .............. $ 19,364,550 $ 19,364,550 ADD - Excess of sales price over par value of common stock sold to officers and employees (Note 1) ................ 52,855 PAID-IN SURPLUS AT END OF YEAR .................... $ 19,417,405 $ 19,364,550 13

NOTES TO FINANCIAL STATEMENTS 1. During 1956 options were granted, under the Incentive Stock f~tion Plan approved by stock- holders March 12, 1956, to 36 officers and key employees to purchase, subject to certain limita- tions, an aggregate of 56,700 shares of the Company's common stock for an aggregate option price of $3,824,338 (representing the closing quoted market value on the dates the options were granted). Options for 1,240 shares having an aggregate option price of $83,855 were exercised during 1956, and options for the remaining 55,460 shares were outstanding at December 31, 1956. Options for an additional 63,300 shares may be granted on or before March 31, 1961. 2. Under the terms of the Indenture covering the 2%% Sinking Fund Debentures $60,282,541 of earned surplus is restricted as to payment of cash dividends on common stock. This limitation does not apply to stock dividends on common stock, nor does it restrict payment of dividends on preferred stock. 3. Earnings for the year 1955 included non- recurring items of $839,184 and $1,066,124, the latter amount representing the balance of the reserve of $4,473,163 (established in 1942 to provide for possible loss on investment in a foreign tobacco company) after deducting the actual loss from sale of such investment in 1955. ACCOUNTANTS' CERTIFICATE HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK 4 To the Directors and Stockholders of Liggett & Myers Tobacco Company: We have examined the consolidated'balance sheet of Liggett & Myers Tobacco Company and its wholly-owned subsidiary as of December 31, 1956 and the related statements of consolidated in- come and surplus for the year then ended. Our examination was made in accordance with gener- ally accepted auditi~ standards, and accord- ingly included such•'~tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statements of consolidated in- come and surplus present fairly the financial position of the companies at December 31, 1956 and the results of their operations for the year then ended, in, conformity with generally ac- cepted accounting principles applied on a basis consistent with that of the preceding year. January 21, 1957 TIMN 446283

PACKAGING THE CIGARETTES Cigarettes travel from the making machines by conveyor to long rows of packaging machines. Here, billions of Chesterfields and L & M's, and other Liggett & Myers brands are packaged to meet the world- wide demand for our fine products. In one simultaneous operation the cigarettes are inspected, counted, wrapped with foil, inserted into the package, tax stamped, and sealed in its moisture-proof cellophane jacket to keep it factory fresh. Skilled operators watch the process every step of the way. Forming machines assemble flat printed sheets into finished cartons. These travel by belt past unbelievably deft operators, who with two quick motions fill them with packages of cigarettes. At this point the cartons are inspected with special mirrors and packed into the familiar 60-carton shipping container. SHIPPING It is in the shipping room that the visitor fully realizes the tremendous scope of the Liggett & Myers Tobacco Company opera- tion. Here, almost as fast as they can be placed at the loading docks, freight cars and huge tractor-trailer trucks are loaded with Liggett & Myers brands to start their way across the world. TIMN 446284 15

LIFE ® SIR WINSTON CHURCHILL HE RITES OF HENRY VIII, A WILY KING, AND OF HIS ROMANTIC MISADVENTURES TY ~ ~ 0 0 ' ~ ~` ~. I i~ t~~I ~~LY .~ ME~~Cr~N ~W~. ~' t E PLIGHT OF THE JEWS IN SOVIET RUSSIA Poi Saw~rr~ ~UARC7TE5 0 a 0 o gum ~ /HO,~tis lONGINES lI~!'UCy 'solatif (~"Eo, ~ REGULAR & KING SIZE . ItwA 8 K L Y N ® &-,ga Proposed Parking Changes OIIQ9IOD Tabled by SC Last Night 15,110YEYKR22,1956 fikeatI1111M More than 1% million retail outlets in the United States carry Liggett & Myers tobacco products, in addition to hundreds of thousands overseas. This mass distribution, which is the vital factor in the sales success of the products made by your Company, has been achieved by the combined efforts of our 6,000 distributors, plus our own sales force. The majority of smokers today prefer stand- ard size cigarettes. Others like King Size. Chesterfield gives you both sizes. L & M Filters is now the first to give smokers their choice of a package or a box. TIMN 446285 SQUAREffJOURNAL Urtober 6. 1956 • /.;r rht• Saturda, 1:,<,I,ing The Case for Zhe Lawrence ~~~ayna 1 1 I I ~ ~ ~ 1 ~ 1 ~ Illustrated above are some i 'frames from the Chesterfield TV commercial "Couple In A ~ Crowd", which you have prob- ~ ably seen on your TV screen. ' ...--------- J F'OR LIGGETT & MYERS TV COMMERCIALS SPONSOR and ADVERTISING AGE, two of the advertising industry's leading publica- tions, selected Chesterfield commercials as among the 10 best for all products in 1956. L&M commercials were also selected by SPONSOR. The ""° `aw Stassen Praises ~ ~ The Republicans; Upholds Record DISTRIBUTION Al

) SALE S PROMOTION Our current promotion of King Size Chesterfields and L & M Filters is in line with the continuing consumer trend toward King Size and Filter Tip cigarettes. This promotion includes extensive newspaper, magazine, tele- vision, radio, car card and outdoor advertising. Point-of-sale advertising includes posters, displays, carton and package racks, counter displays, shelf strips and many other items. From coast to coast every working day, Liggett & Myers service- men visit retail outlets, promoting the sale of the Company's products in every possible way. Whenever you see a poster or display for Chesterfield or L & M Cigarettes, you can be sure that one of your Company's servicemen has been there, to help sell more of our fine tobacco products. FILTr•ut - - - -~~=w~ -..,. ! rf !d ! tAf tk TIlVIN 446286 17

V RE SEARCH More than 35 years ago (1920), your Company realized that through continuous research, the qual- ity of tobacco products could not only be con- trolled, but raised to a point of unmatched excellence. Today, such quality in Liggett & Myers products is an accomplished fact. Through study of our own and competitive products, through analyses of thou- sands of pounds of tobacco, your Company's prod- ucts enjoy the benefits of the many improvements which have been made in the growing and proc- essing of tobacco. Liggett & Myers Research Program is centered in its Durham, N. C. laboratory, considered the finest in the industry. Working closely with our modern factories, these laboratories make constant quality tests to make sure Liggett & Myers tobacco products measure up to the most exacting standards. The research program is further implemented by grants to universities for tobacco research and the use of outside scientific organizations, including Arthur D. Little, Inc., for major research programs. TIMN 446287

t PEOPLE Liggett & Myers is justly proud of its excellent rela- tions with its more than 10,000 employees, whose average length of service per employee is well over 10 years. Working conditions are unsurpassed. The fac- tories are the most modern in the industry, air con- FACTOPIES The main Liggett & 1lfyers factories are located at Durham, N. C. and Richmond, Va., where cigarettes and a number of our pipe tobacco brands are manu- factured. In St. Louis, Mo., a third main factory makes chewing tobacco and many brands of pipe tobacco. In the bright and burley tobacco-growing states, storage facilities covering hundreds of acres are located. In the important tobacco market centers, Liggett & Myers maintains processing plants for condition- ing the millions of pounds of tobacco purchased each year from the farmers. These plants are located at Danville, Va., Durham, and Rocky Mount, N. C., Lexington, and Paris, Ky. and Watertown, Wis. The Company also has plants in the Near East to process the delicate Turkish tobaccos grown there for our cigarette blends. These plants are at Izmir and Samsun, in Turkey, and Cavalla and Xanthi, in Greece. ditioned, superbly lighted, and equipped with every known device to insure safety and guard health. Available to all employees is a complete progressive benefits plan, a medical staff in attendance at all times, and cafeterias serving excellent meals at cost. it Each year, many thousands of people visit the famous Liggett & Myers cigarette factories at Durham and Richmond. These visitors frequently comment on the cleanliness and efficiency of the whole opera- tion and the unmistakable emphasis placed on product quality. INVITATION You are cordially invited to visit the Chesterfield and L & M factories located in Durham, N. C. or Richmond, Va. No appointment is necessary. A corps of trained hostesses will greet and show you through the factory. We are certain that you, like so many visitors before you, wiU find the lightning-fast making ma- chines and thefAccu-Ray Control, the L & M filter cigarette machines and crush-proof packaging ma- chines of great interest. TIMN 446288 19

RECORD FOR- FIFTEE~T YEARS SALES-EARNINGS-OIVIOENOS NET INCOME DIVIDENDS NET APPLICABLE TO PAID ON SALES COMMON STOCK COMMON STOCK YE_1R A\tOC'\T A3tO[;\T PERCENT OF SALES PER SHARE t\.NfOU\T PER SHARE 1942 829-1,351,573 $14,293,355 -1.8ff~ $4.56 $10,979,286 53.50 1943 347,258,296 14,195,223 4.09 4.53 10,979,286 3.50 19-1-1 3 ; -I,032,971 13,332,272 3.56 4.25 10,979,286 3.50 1945 399,212,620 13,-I77,6-18 3.38 4.30 10,979,286 3.50 19-I6 46-L50 7,825 16,907,7-I0 3.64 5.39 12,547,756 4.00 19-I7 513,771,-122 21,-I39,504 4.17 6.83 14,116,225 4.50 19-I8 556,506.847 27,799,934 4.99 8.86 15,684,695 5.00 1949 557,733.-133 28,105,507 5.04 7.18 18,783,023 5.00 1950 530,547,285 27,59 7 ,04-1 5.20 7.05 19, 55 7,605 5.00 1951 539,9-1 i ,-106 20,292.047 3.76 5.19 19,557,605 5.00 1952 603,050,876 19,987,339 3.31 5.11 19,557,605 5.00 1953 586,498,7 27 21,517 ,389 3.67 5.50 19,557,605 5.00 195-1 .3-18.861,959 20,740,177 3.78 5.30 19,557,605 5.00 1955 5-16,96-1,616 25,259, 785 4.62 6.46 15, 6-1.6, 08-1 4.00 * 1956 561,965,808 24,989,563 4.42 6.39 19,561,325 5.00 *See DIVIDENDS on Pages 8 and 9. Earnings per share is based on the number of shares of Common Stock (including Common B Stock prior to 1949) out-tanding 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 hulders of its Common Stock in every year since its organization in 1911. STOCILHOLDERS • The Common and Preferred stockholder; now number approximately 45,400, representing att in- crease of 1,700 during the past year. The stock of your Company is widely held, ran«in~.* from a few shares in the hands of thousantL --I' stockholders to many hundreds of shares owned l,y investment groups, educational institutions. insur- anre companies, trusts, estates and banks. \t the last annual meeting of stockholders nn \Ltrrh 12, 1956, there was voted, either in ht•r,nn iir hv proxy, about 78% of the total Common and ['rrferred Stock of y our Company. TIMN 446289

RECORD FOR FIFTEE\T YEARS SALES-EARNINGS-DIVIDENDS NET INCOME NET APPLICABLE TO SALES COMMON STOCK DIVIDENDS PAID ON COMMON STOCK YEAR A1fOUNT A`IOUNT PERCENT OF SALES PER SHARE Ai1OUNT PER SHARE 1942 $294,351,573 $14,293,355 4.867, $4.56 $10,979,286 $3.50 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;-i06 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 5-16,964,616 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 *See DIVIDENDS on Pages 8 and 9. Earnings per share is based on the number of shares of Common Stock (includittg 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. STOCIEMOLDERS The Common and Preferred stockholders now number approximately 45,400, representing an in- crease of 1,700 during the past year. The stock of your Company is widely held, ranring from a few shares in the hands of thousands of stockholders to many hundreds of shares owned by investment groups, educational institutions, insur- ance companies, trusts, estates and banks. 1t the last annual meeting of stockholders on NLdrt•h 12, 1956, there was voted, either in person ()r by proxy, about 78% of the total Common and Preferred Stock of your Company. TIMN 446290 .7

OFFICERS President l-ice President I'ice President Uice President Uice President & Treasurer Vice President & Serretar}, BENJAMIN F. FEW WILLIA1i A. BLOUNT FRaNCIS H. HORAN WILLIAM B. LEWIS, JR. WILLIA-vi L. PERRY ZACH Totils Assistant Treasurer J. BOWLING ANDERSON Assistant Secretaries RUSSELL M. CHENOWETH RUFUS H. HOSEA FREDERICK J. GRAEFF CHARLES B. MORGENTHALER HENRY A. PETRY DIREC'TO~~ '% ILLIA,-,I A. BLOUNT LAS9RENCE W. BRUFF FREDERICK R. DARKIS BE:VJAMIN F. FEW MILTON B' . HARRINGTON FRANCIS H. HORAN J. CAMDEN HUNDLEY WILLI?,m B. LEWIS, JR. WILLIam L. PERRY EUGENE C. RINGLER LoY D. THOnIrsON ZACH To ms GENERAL COUNSEL FRANCIS H. HORAN DIRECTOR OF RESEARCH DR. FREDERICK R. DARKIS AUDITOR EUGENE C. RINGLER EXECUTIVE OFFICES 630 FIFTH AN-ENUF:. NEW YORK 20, N. Y. TRANSFER AGENT REGISTRAR CHEMICAL CORN ERCHANGE BANK _ Ti1F. FIRST NATIONAL CITY BANK OF NEW YORK 30 BROAD STREET 55 WALL STREET NEW YORK 15, N. Y. NEW YORK 15, N. Y. TIMN 446291

ONE OF TOBACCO'S 11OST RESPECTED NAMES 1911-190-0 TIMN 446292