Tobacco Documents Online

CORK T/P ~ , Cigarettes PRODUCTS Your Company manufactures sixt three different brands of tobac, products -each and every one made to the highest standards of qualit Pictured on these pages are the principal cigarettes, smoking ai ~ GOOD OLD TINE' R~ 50n~lE 0, A L I G G E T T & M Y E R S .,~. O N E 0 10 TIMN 446328

I LIABILITIES kLANCE SHEET - DECEMBER 31, 1954 AND 1953 1954 1953 CURRENT 1_,IABILITIES Notes payable to banks ......................... $ 95,220,000 $ 99,000,000 Accounts payable .............................. 4,041,183 4,176,635 Dividend payable on preferred stock ............ 365,297 365,297 Accrued interest on debentures ................. 929,687 929,687 Funded debt payable within one year ........... 2,000,000 Taxes payable and accrued ..................... 26,478,195 29,665,157 TOTAL CURRENT LIABILITIES .............. 129,034,362 134,136,776 FUNDED DEBT 238 o Sinking Fund Debentures, $5,750,000 pay- able annually during the years 1956 through 1964, $23,750,000 payable in 1965, and $37; 500,000 payable in 1966 .................... 113,000,000 115,000,000 CAPITAL STOCK AND SURPLUS Preferred stock 7% cumulative, par value $100.00 Shares-authorized 341,398, issued 225,141, in treasury 16,400............ 0,874,100 0,874,100 Common stock, par value $25.00 Shares-authorized 5,000,000, issued 3,911,521 ............................ 97,788,025 97,788,025 Paid-in surplus ................................ 19,364,550 19,364,550 Earned surplus (see statement annexed ) ........ 111,247,861 110,065,289 TOTAL CAPITAL STOCK AND SURPLUS ..... . 249,274,536 248,091,964 TOTAL .............................. $491,308,898 $497,228,740 TOBACCO'S MOST R E S P E C T E D NAMES TIMN 446333 15

The pension and retirement plan, of which the Company pays the entire cost, is considered to be liberal. The plan is administered by the Equitable Life Assur- ance Society of the United States. Working conditions for the employees compare favorably with the highest in any industry. Our cigarette factories are air-conditioned, well lighted and have every device to safeguard health and to provide comfort for our employees. The employees' cafeterias provide excellent and varied meals at modest prices. MANAGEMENT CHANGES ~ William L. Perry, a Director and Treasurer of the Company, was elected Vice President in Charge of Finance, to succeed Hugh E. White who retired under the Employee's Retirement Plan the previous December. William B. Lewis, Jr., a Director, was elected a Vice President to direct the sales of the Company, succeeding George W. Thompson, who had retired as Vice President and Director under the Employee's Retirement Plan. Francis H. Horan, General Counsel, was elected a Director of the Company to fill the vacancy on the Board created by the resignation of Edward S. Peters. Eugene C. Ringler, Auditor, was elected to the Board, replacing George W. Thompson. STOCKHOLDERS ; Common and Preferred Stockholders now number approximately 40,900, representing an increase of 3,000 during the year. Liggett & Myers stock is rather widely owned. It is held in quantities ranging from a few shares to many thousands owned by banks, estates, trusts, insurance companies, investment funds and educational institutions. At the last annual meeting of the stockholders on Marclf'8, 1954 there were present, either in person or by proxy, stockholders representing in terms of votes approximately 79% of the Common Stock and approximately 83~'/0 of the Pre- ferred Stock or a total representation of approximately 8070 of the voting stock of the Company. The management is pleased that so many stockholders indicated their interest by exercising their right to vote. T O B A C C O'S M O S T R E: SP E: C T E D N A M E S TIMN 446327 9

CONSOLIDATED EARNED SURPLUS FOR THE YEARS ENDED DECEMBER 31, 1954 AND 1953 1954 1953 EARiVED SURPLUS AT BEGIN\'ING OF YEAR.......... $110,065,289 $108,105,505 ADD Net Income for the Year ................... 2?201,364 22,978,576 132, 266, 653 131, 084, 081 DEDUCT CASH DIVIDENDS $7.00 per share on Preferred Stock....... 1,461,187 1,461,187 $5.00 per share on Common Stock ........ 19,557,605 19,557,605 21,018,792 21,018,792 E ARvED SURPLUS AT END OF YEAR (see note )..... $111,247;861 $110,065,289 NOTE: Under the terms of the Indenture covering each issue of 2;~'c Sinking Fund Debentures $58,898,960.47 of earned surplus is restricted as to pavment 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. TOBACCO'S l1IOST R E S P E C T E D NAMES TIMN 446335 17

t CERTIFICATE OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS HASKINS $o SELLS CERTIFIED PUBLIC ACCOUNTANTS BOATMEN'S BANK BUILDING SAINT LOUIS 2 January 20, 1955 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 31,1954 and the related statements of consolidated income and earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly 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 income and earned surplus present fairly the financial position of the companies at December 31, 1954 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the p-receding year. LIGGETT & TNTYE RS ~. O N E O F 18 TIMN 446336

t TOBACCO'S MOST R f: SY ECTED NAMES TIMN 446339

0 DISPOSITION OF TOTAL INCOME oFOR 1954 The Company received from its customers for goods sold and from Divi- dends, Interest and miscellaneous sources a total of $549,097,000 in 1954. This chart shows how it was used or set aside: Federal and other excise taxes ......... $254,773,000 Leaf tobacco, wages, other manufactur- ing costs and freight ................ 197,805,000 Selling, advertising, administrative, interest and other eYpenses .......... Federal income and State income and franchise taxes ..................... Dividends to stockholders ............. Earnings retained for future needs..... 48,683,000 25,634,000 21,019,000 1,183,000 -C: TOBACCO'S MOST R E S P E C T E D N A M E S TIMN 446337 19

r SUMMARY Domestic cigarette sales for 1953 showed a decline for the first time in many years. In 1954 there was a further decline from the all time high of 1952. The Company's sales followed the industry trend. Much has been written and said about this turn of events. The sales of king size and filter tip cigarettes have been markedly on the increase during the past two years and this trend may continue in the foreseeable future. Since there has been an overall unit sales decrease, the increase in the sales of king size and filter tips were necessarily made at the expense of regular size cigarettes. King size cigarettes are about one fifth longer and contain approximately 171,"~ more tobacco. It follows that the extra length of the kings affected unit sales downward. The Tobacco Division, Agricultural Marketing Service, U. S. Department of Agriculture makes continuing studies of tobacco sales trends. Stephen E. Wrather, Director, believes that one of the most important factors in the two-year decline of cigarette sales is the change in the population composition since the 12 year period, 1940-1952, when cigarette consumption went up 119 '/-C". During those years the consumption per capita doubled and the number of cigarette smokers increased by 501 ~, due to the larger age group of 20-39 years. A diminished birth rate in the 1930's has been responsible in the last two years for a slight decline in the 20-39 age group, somewhat approximating the decline in cigarette sales. Unwarranted attacks on tobacco products are as old as the industry itself. Today, after reviewing extensive research of many other professional groups, our Re'search Department, as it has consistently reported from the beginning, says that proof that cigarette smoking causes lung cancer is lacking. In fact the cause of this disease is still unknown. Accusations without proof in the past have not prevailed. Thus, it appears that this factor should be of diminishing significance. The management greatly appreciates the cooVeration and loyal support of its stockholders and employees during the past year. Respectfully, LIGGETT & NI YE RS January, 1955 O N E O F 7CIlVIN 446330 12

t CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1954 AND 1953 1954 1953 NET SALES .................................... $548,861,959 $586,498,727 OTHER INCOME Interest and dividends received ............. 160,617 225,275 Profit from sale of land and buildings ........ - 482,596 Miscellaneous ............................ 74,451 153,168 TOTAL INCOIIE ......................... 549,097,027 587,359,766 DEDUCTIONS Cost of goods sold, selling, administrative and general expenses ................... 492,771,480 526,838,878 Provision for depreciation .................. 2,497,855 2,434,058 Interest and amortization on funded debt.... 3,042,188 3,042,188 bnterest on bank loans ..................... 2,925,243 3,065,024 Miscellaneous ............................ 24,897 16,042 Provision for Federal income tax ............ 23,595,000 25,495,000 Provision for Federal excess profits tax....... - 895,000 Provision for State income and franchise taxes 2,039,000 2,595,000 TOTAL DEDUCTIONS ..................... 526,895,663 564,381,190 NET INCOME FOR THE YEAR ...................... 22,201,364 22,978,576 DIVIDENDS ON PREFERRED STOCK ................. 1,461,187 1,461,187 NET INCOME APPLICABLE TO COMMON STOCK ..... $ 20,740,177 $ 21,517,389 16 L I G G E T T & M Y E R S O N E O F TIMN 446334

chewing tobaccos made by Liggett & Myers Tobacco Company. Following the Company's policy of maintaining a complete line of cigarettes and other tobacco products - the L&M king size filter cigarette was added in the summer of 19K FOBACCO'S MOST The Pinkerton Tobacco Company at Toledo, Ohio, an unconsolidated sub- sidiary, has as its principal brands: Red Man, R~il Horse and Pay Car. R E S P E C T E D N A M E S ~- ~~i= TIMN 446329 Y