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LIGGETT & MYERS TOBACCO Co. TIMN 446395

FoRTY-FIRST ANNUAL REPORT LIGGETT & MYERS TOBACCO CO. December 31, 1951 11 he Annual Stockholders Meeting will be held at 43 Park Avenue, Flemington, New Jersey, at 2:00 p. m., Monday, March 10, 1952. Proxies will be mailed to stockholders February 7, 1952. Stockholders who are unable to attend the meeting are urged to sign their proxy and return it promptly to the Company so that the stock of the Company will be represented as fully as possible at the meeting. TIMN 446396 E

`rable of Contents Officers and Directors ......................................... 3 President's Letter to Stockholders .............................. 4 Operating and Financial Summary ............................. 5 Leaf Tobacco Processing Plants ............................ 6 - 7 Manufacturing ............................................ 8 - 9 Distribution and Sales Promotion ....................... 10 - 11 Principal Products ...................................... 12 - 13 Research Laboratories ................................... 14 - 15 Story of Visitors to our Factories ....................... 16 - 17 Our Employees .............................................. 18 Export Sales ................................................. 19 Consolidated Balance Sheet ............................. 20 - 21 Consolidated Income ......................................... 22 Consolidated Earned Surplus .................................. 23 Report of Certified Public Accountants ........................ 24 Record for Fifteen Years-Sales, Earnings, Dividends ........... 25 TIMN 446397

OFFICERS 4 B. F. Few W. A. Blount G. W. Thompson J. N. Wellman H. E. White Zach Toms W. L. Perry W. A. Blount J. E. Farley B. F. Few J. C. Hundley W. L. Perry E. S. Peters DIRECTORS 4 President Vice President Vice President Vice President Vice President Vice President & Secretary Treasurer J. E. Scales G. W. Thompson L. D. Thompson Zach Toms J. N. Wellman H. E. White All of the Officers and Directors have been in the employ of the Company for 20 years or more. DIRECTOR OF RESEARCH Dr. F. R. Darkis TRANSFER AGENT The Hanover Bank 70 Broadway New York 15, N. Y. EXECUTIVE OFFICES 630 Fifth Avenue New York 20, N. Y. GENERAL COUNSEL F. H. Horan REGISTRAR The National City Bank of New York 55 Wall Street New York 15, N. Y. TIMN 446398 0

LIGGETT & 1dIYERS TOB,&CCO CO. ~c. Ti:$0 YFEFTHa&V0XX7_U \'~]~'~ Y~DI2I~ 2®. eT ~: January 25, 1952 To the Stockholders: The Forty-First Annual Report of Liggett & Myers Tobacco Company is presented in this form to give you a clearer and more comprehensive picture of its products, facilities, organization and operations. Net income for the year. 1951 applicable to Common Stock, after deducting all charges and all taxes, amounted to $20,292,047., equal to $5.19 per share corn- pared to $7.05 per share in the year 1950. Federal income and excess profits taxes and State income and franchise taxes for 1951 amounted to $27,918,713. equal to $7.14 per share of Common Stock. Dividends aggregating $5.00--four quarterly dividends of $1.00 a share and $1.00 extra--were paid on the Common Stock. As you know, the Federal excise cigarette tax was increased 1~ a package as of November 1 and this was added to the prices of our cigarettes. With this exception, there was no change in the prices of the Company' s cigarette brands during the year. The total number of cigarettes sold advanced from a loss of 5.9% reported a year ago to a slight gain as compared to 1950 sales. Both CHESTERFIELD and FATIMA, our'principal brands, participated in the increase. Bank loans at the end of the year were in excess of those at the end of 1950 due principally to a larger inventory of leaf tobacco, higher prices paid for tobacco out of the last crop and funds required to redeem at maturity on August 1, the 5% Bonds of the Company amounting to $12,886,600. It is estimated that these loans, as in prior years, will be materially reduced by the end of the second quarter. The Directors of the Company wish to express their appreciation to the stockholders for their loyal support and to the employees for their efficient work and fine spirit of cooperation. R es pe ctfully, 6. B. F. FEW P re s ident TIMN 446399 4

Comparative Operating and Financial Summary 1951 1950 Net value of sales ........................... $539,947,406 $530,547,285 Profit from operations ........................ 53,792,213 58,659,900 Percentage of net sales ........................ 9.96% 11.06~0 Profit before taxes ........................... 49,671,947 55,550,321 Income, excess profits and franchise taxes ....... 27,918,713 26,492,090 Profit before preferred dividends .............. 21,753,234 29,058,231 Net income after preferred dividends ........... 20,292,047 27,597,044 Percentage of net sales ....................... 3.76% 5.20% Net income per share of common stock ........ $5.19 $7.05 Dividends paid per share of common stock ..... $5.00 $5.00 Current assets .............................. $452,211,563 $414,587,986 Current liabilities ........................... 119,091,983 82,440,503 Ratio ..................................... Funded debt ............................... Capital stock ............................... Paid-in surplus end of year .................... Earned surplus end of year ................... 3.8 to 1 115,000,000 118,662,125 19,364,550 107,675,771 5 to 1 115,000,000 118,662,125 19,364,550 103,557,748 (Further details on pages 20, 21, 22, and 23) Approximate number of stockholders ........... 36,300 31,600 TIMN 446400 5

The Company's Leaf Tobacco Plants Efficient Handlint> 0 0 LEAF PLANTS IN U. S. A. 0 6 WATERTOWN. WIS. ~ ~ ~ ~ 1 i ST. LOUIS I f PARIS, KY. S !'~ LEXINGTON, IiY. ~ ..- 1/ . ~i .- . -, N. RICHI~SO.ND, VA. ' DANVILLE, VA. • /' ROCKY DiOL'NT, N. C. ~ / ® r~f DURHAM. N. C. / . ~..- ...•~''~~ l ~ TIMN 446401 ..~k- ~- ~ V

are Well Located for the Economical and of Tobacco Purchases. he Company's experienced tobacco buyers purchase leaf tobaccos in many States and in several hundred market towns, where farmers sell their tobacco in auction warehouses. Turkish tobacco is bought by our own resident buyers who specialize in that type of leaf. From these markets, the tobacco is shipped to our various plants where, with the most scientific and modern methods of moisture control, it is carefully prepared and packed for ageing. This initial operation in the Company's business is the very foundation of the high quality and uniformity of all its products.

In Our Progressive, Modern Factories, as Never Before in the Industry, Tobacco Manufacture Approaches an Exact Science. r 2nz~ - ~"E~. ° _ -.&. ~ _ MILES of storage houses provide our factories with a constant supply of properly aged tobaccos. C cientific methods and the highest standards of quality control are used in every operation in our factories, located at Durham, N. C., Richmond, Va., and St. Louis, Mo.* Our making, packaging and wrapping machines are of the most efficient type and each machine is in charge of a well trained and skilled operator. Inspectors keep constant check on the products to make sure that everything about them is exactly right. To make doubly sure that our products conform to a definite standard of excellence, electronic control devices stand guard over operations from the moment the tobacco enters the factory until it leaves as the finished product. 8 * In addition, the manufacturing plant of The Pinkerton Tobacco Company, an unconsolidated subsidiary, is located at Toledo, Ohio. Its principal brands are Red Man, Red Horse and Pay Car Chewing Tobacco. TIMN 446403

HOGSHEADS of properly aged tobaccos on their way to be made into Chesterfield and Fatima Cigarettes. LEAF TOBACCOS of many types are used in making our various cigarette blends. THE BLENDED and shredded tobaccos are fed into a cigarette making machine. MAKING MACHINES turn out 1250 cigarettes a minute, and all cigarettes are carefully inspected. OPERATOR fills rack on packaging machine with tax stamps, _ one of which is put on every pack. CELLOPHANE wrapping helps keep the cigarettes fresh and di red pull tab makes the pack easy to open. TIMN 446404 9