Annual Report /196 0

Liggett & Myers

Tobacco Company, Inc .
 Stockholders'
Annual Meetin g

The Annual Meeting of Stockholders

will be held on Tuesday, March 23, 1961
at Hotel Plaza, Journal Square, Jersey
City, New Jersey, at 2 :30 P.M .

Formal notice of this meeting, together

with the proxy and proxy statement,
will be mailed to stockholders on Feb-
ruary 24, 1961 . Those of you who are
unable to attend the meeting are urged
to sign your 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.

Today your Company is owned by

approximately 48,200 stockholders . About
82% of the total Common and Preferred
stock was voted by person or proxy at
the last annual stockholders' meeting on
March 29, 1960 .

FC (- t7GG)77

LG 0073391
Contents page 2 Highlights of Operations
3 President's Letter
4 Officers and Directors
5 Sales, Earnings and Dividend
Record
6 Financial Condition and Capital
Expenditures
7 Taxes and Manufacturing
8 Export and Leaf Tobacco
9 Researc h
12 Disposition of Total Earnings
13 Opinion of Certified Public
Accountants
14 Consolidated Balance Sheet
18 Consolidated Earning s
17 Consolidated Retained Earnings and
Notes to Financial Statement s
18 Ten Years in Review
20 Advertising and Sales Promotion

Liggett & Myers

Tobacco Compan y

1960
Annual Report

LG 0073392
 Liggett Sr. Myers, Tobacmc) Company

Highlights of Operations

1960 1969.

Vet Sales . . . - . . . . . _ . . . . _ $543,172,58 7 $554,936,026

Earnings before taxes . _ . . . - . . . . 62,712,895 85,0T4,68 9

Income and franchise taxes 34,004,000 35,036,00 0

F.araiags before preferred dividends . 28, 708,895 30,038,68 9

Net earnings after preferred dividends . 27,407,640 28,608,58 2

Percentage of net sales . . ` . . 5 .05 0 5 .16%

Net earnings per share of common stock . $6 .96 $7.2 8

Dividends per share of common stock . . $5 .00 $5 .75

Current assets . . . . . . . . . . _ . .. $354,845,972 $365,063,763

Current liabilities . . . . . . . . . . _ _ 21,463,405 32,906,83 2
Ratio _ . . . . . . . . . . . . . . . . 16.5 to 1 11.1 to 1
Funded debt . . . . . . . . . . . . . . 73,500,000 84,250,000

Capital stock . . .. . .. . . . . . . . . . 116,262,425 117,854,650

Additional paid-ia capital . . . . . . . . 20,534,676 20.211,080
Retained earnings . .. . . . . . . . . . 156,071,334 149,168,514

Approximate number of stockholders . . 48,200 47,000

rZ. 'C - 6 0 o h ,.

LG 0073393
 To the Stockholders:
%VUJJA.M A: BLOUNT
This 1960 Annual Report, the 50th report of Liggett & Myers Tobacco
Company, presents the operations and audited financial statements of the
Company for the year 1960, with comparative figures for the previous
year .
Research has long been an important activity of our Company . One of
the most significant developments during the past year was the com-
pletion of the new wing and dedication of the Company's Research Center
in Durham, North Carolina. This expansion should provide the necessary
space for our growing research program over the next decade . In the
following pages we give you a more detailed report about our research
activities which we hope will be of interest .
There is good reason for an optimistic outlook in the cigarette industry
today. Domestic consumption of cigarettes reached a new high level in
1960 for the sixth consecutive year . The outlook for the next several years
should be equally promising .
While the Company is unable to report an increase in sales for last year,
there are encouraging signs in our business for the future . The sale of
CHESTERFIELD king size cigarettes continued its upward trend . The decline
in sales of CHESTERFIELD regular size, which has persisted for several years,
continued in 1960 but at a reduced rate .
The sale of L&M king size cigarettes also showed a healthy increase
during the past year. We have strengthened the OASIS advertising and
redesigned the package and carton in an effort to gain a larger share of
the menthol cigarette market . We are hopeful that these changes will
produce results. -
On behalf of the entire organization, I wish to express appreciation to
the shareowners for their continued confidence, interest and helpfulness
during the past year.

WILLIAM A . BLOUNT
February 3, 1961 President

LG 0073394
 Liggett & Myers Tobacco Company
Executive Offices -630 Fifth Avenue New York 20, N .Y.

Officers Directors

WaauAbr A . BLouNT' President. & -chief Executive Oficer J. Bowrnvc ANDERSON

Zacs Toms Executive Vice Presiden t Wa.raANz A. BLOVNr
Wrrri rtc L.PEBRY Vice President&Chaismamof Executive Committee L&wRENcE W. BRUFr
WII.u. B. LEwrs, Ja. Vice President, Sales FRmERnc R. DABxis
FRaNCrs H. HORAN Vice President & General Counsel M ILTON E. HARRINGTON

Lor D. THObPsoN Vice President .,, Production FRANCS EL HoRA zi

M1LroN E. HL4RBINCION Vice President, Lea f J. CAbmE,r Hwnc.EY

Fx ,xaxcx R . D.axs Vice President l: Director of Research GRAYDON B . LEAxE
J. BowLiNc A .=SsoN Treasure r WmLLmm B . LEwis, JR.
RussEL.. VI. CBE: SowErs Secretary C. GRICE MC2vIuu.A .Y
RALPK B Moor z Assistant Treasurer EDWARD J. PARRZSH

RussELL G. Cu rr a Auditor W ri.i L . PEnur

FBmEiucL J. GR Azrr Assistant Secretary Loy D . TBoNasoN
RUFus H . Hosz . Assistant Secretary ZAca ToNrs
CSniLFS B. MoRcEwrr tr.Ea Assistant Secretary

Transfer Agent - Chemical Bank New York Trust Co. ,

30 Broad Street, New York 15, N . Y.
Registrar - The First National City Bank of New York,
55 Wall Street, New York 15, N . I

Executive Personnel
At its meeting on March 30, 1960, the Board
of Directors voted to increase the number of
Directors. of the Company from 12 to 14.
C. Grice McMullan, Manager of the Richmond
Branch and Edward J . Parrish, Manager of the
Export Department of the Company were
elected to fill the new positions on the Board .
Two new Vice Presidents were elected by
the Board of Directors at the March 30, 1960
meeting. These were Dr. Frederick R . Darkis.
Director of Research and Milton E . Harring-
ton, Leaf Department Manager. At the same
meeting Russell M. Chenoweth was elected
Secretary of the Company to succeed Zach
Toms who resigned from that position.

LG 0073395
 Operations 196 0

There is presented on the following pages some of the

accomplishments of your Company for the year 1960 .
For the industry, it was a year of intense activity char-
acterized by increasing competition and further switch-
ing of brand loyalties among the consumers.
Net Sales

000
Sales
500 Net sales of the Company declined from S554,936,02 6
in 1959 to $5 43,172,387 in 1960, or about 2 .1 0 . The
:00
major por tion of this decline took place during the first
:0 0 nine months of the year . For the year as a whole the
sale Of CHESTERFIELD king size and L &-'l king size
200
cigarettes each showed a substantial gain from the pre-
vious year and offer encouragement for the months
:00
ahead . CHESTERFIELD regular size continued to decline ,

however, the rate of decline was considerably reduced .

4 55 56 57 58 59 50

Earnings

Net Earnings
Earnings after taxes amounted to $28,708,895 as com-
pared with $30,038,689 in 1959 . Based on 3,939 .053
common shares outstanding at the end of the year, net
earnings amounted to $6.96 per share as compared with
$7?8 in 1959 . Earnings in the fourth quarter were equal
to $1 .76 per share whereas earnings in the comparable
period of the previous year were $1 .47 per share .

Dividend Record
The Company's record of continuous dividend pay-
ments on the Common Stock was extended for the 49th
consecutive year . Total payments in 1960 amounted t o
2 C Cv Uv d7 ~$~
5

LG 0073396
 $5.00 per share, consisting of four quarterly dividends
of $1 .25 each .
The total amount of dividends paid in 1960 on both
Common and Preferred stock was $20,987,746. The
balance of 1960 earnings amounting to $7,721,149 was
retained for use in the business .
On January 18, 1961, a regular dividend of $1 .25 per
Common share was declared, to be paid on March 1,
1961, to stockholders of record February 17, 1961 .

Financial Conditio n
The financial condition of the Company continued
Net Worth Compared
With Long-Term Debt to grow stronger in 1960 . For the second successive year
Net Woli n there were no short-term borrowings at the year end .
,„ag- term peat
300 The investment in United States Government securi-
ties, including tax anticipation notes, amounted to
$14,932,468 on December 31, 1960 compared with
$4,992,485 at the end of the previous year .
Long-term debt was $5,730,000 lower at the end of
.c0
1960 as a result of retirement of debentures through
operation of the Sinking Funds . This reduction, together
with the addition of $5,634,191 to net worth, produced
a further improvement in the ratio of funded debt to
net worth . At the end of 1960 funded debt was only
26 .8%a of net worth compared with 45 .31x, at the end
of 1954.
Further steps were taken to reduce the number of
shares of non-callable 7 o Preferred stock of the Com-
pany outstanding . During the year your Management
succeeded in reacquiring 17,820 shares of such stock .
As of December 31, 1960 there was held in the treasury
a total of 47,280 shares .
In the absence of unusual developments no need for
new long-term financing is anticipated in the foresee-
able future .

Capital Expenditures
The construction of the new addition to the Com-
pany's research building in Durham, North Carolina,
was completed on schedule during the past summer and
appropriate dedication ceremonies took place on Sep-
tember 30, 1960 . t - 6aa
6

LG 0073397
 The program of maintaining plant and equipment
at maximum efficiency was continued during the year
1960. Capital expenditures amounted to approximately
$2,800,000 or slightly more than the amount of pur-
chases in 1959 . No major capital expenditures appear
necessary in the near future . Depreciation charged to
cost and expense in 1960 amounted to $3,909,369 .

Taxes
Taxes continued to be an important factor in th e
FMaral anC 5tat . Income
and fnncn,,. ra»a Company's operations . Excise taxes in 1960 totaled
Taxes
$232,786,174 . Although the Treasury Department
Yet Income Alto rai n

70
adopted in June 1959 a semi-monthly method for pay-
ment of such taxes instead of a daily basis formerly in
effect, it has not resulted in any material savings to the
Company. The excise taxes must still be paid several
weeks prior to the time when the Company receives
payment from its customers . The industry has every
right to expect that further adjustments will be granted
in the future .
Federal and State income and franchise taxes in 1960
54 55 56 57 36 39 60
amounted to $34,004,000. Such taxes alone came to
$8.63 per share of common- stock compared with net
income of $6 .96 per share.

Manufacturing
Our factories are strategically located near the sourc e
of supply of leaf tobacco and are considered to be
among the most modern in the industry . The up-to-date
machinery used in all departments is the finest equip-
ment available . Our cigarette factories are located in
Durham, North Carolina and Richmond, Virginia . You
are cordially invited to visit either of them whenever
you are in the vicinity.
Since the manufacturing methods used in producing
the finished product contribute greatly to quality and
consumer acceptance of the product, the Company is
constantly exploring the possibility of making furthe r

almost 800,000 people have visited

our modern cigarette factorie s
in Durham . V . C. and Richmond, Va.

LG 0073398
 improvements in manufacturing methods that will pro-
tect the standards of quality and at the same time pro-
duce greater efficiency in operations.

Export
The export sales of the Company's products, prin-
cipally its cigarette brands, continue to make an impor-
tant contribution to the Company's over-all business .
We have engaged in trade with many loyal, well estab-
lished customers throughout the world for a long num-
ber of years and through a mutually cooperative and
satisfactory relationship with them we have been able
to develop good markets for our products. Wherever
American cigarettes are sold, whether to foreign tobacco
monopolies, ship's-stores, U . S . military overseas, air
lines, diplomatic corps or other outlets, we are adver-
tising and actively promoting the sale of the Company's
brands.

Leaf Tobacc o
Our tobacco buyers are present on every important
tobacco market, selecting only the choicest tobaccos to
Lr'' gett [ yers buyers meet the exacting standards set for all Liggett & Myers'
bid at auctions for mild, products .
top quality tobaccos.
The 1960 crop of flue-cured tobacco totalled 1,368,-
000,000 pounds, compared with 1,185,000,000 pounds in
1959. The season average price was 59.9¢ per pound, the
highest on record and more than 20 per pound above
the average for the 1959 crop . The Government support
price for the 1960 crop was 55.5¢ per pound. The U . S .
Department of Agriculture has announced a national
marketing quota of 1,1221,000,000 pounds for the 1961
crop .
The burley markets had sold approximately 800/70 of
the 1960 crop before the end of the year . The crop
is estimated at approximately 500,000,000 pounds, or
slightly lower than the previous crop . Market prices
through the end of the year averaged 652c per pound,
just a shade lower than the all-time high average of
66.2c established for sales of the 1958 crop . The support
price for the 1960 crop was 57 .20, the same as the
previous year . /2C- 6&U
c

LQ 0073399
 Researc h At dedication ceremonies for the new Liggett & Myers
Research Center on September 30, 1960, Governor
Luther H . Hodges of North Carolina said : "I would
like to commend Liggett & Myers Tobacco Company
on the wisdom and initiative they have displayed in
expanding their research activities . . . we gather here
to dedicate a great research establishment second to
none in its field." In his dedication address, General
James M . Gavin stated : "We look upon Liggett & Myers
as being outstanding in its awareness of the importance
of research." General Gavin, famous for his World War
II combat record and his scientific roles in the United
GEN. J .4-MES M . G.+Vt N
States defense program after the War, is today Presi-
dent of Arthur D . Little, Inc., one of the nation's leading
engineering and research firms.
When Liggett & Mvers was incorporated in 1911,
scientific research was conducted at the Company's
St . Louis plant. In 1950, the Company completed the
most modem research laboratory in the industry in
Durham, North Carolina, primary location of the Com-
pany's leaf buying and cigarette manufacturing opera-
tions . By 1958, it had become apparent that the "new"
research building, despite its generous size and modern
design, would soon be inadequate for the Company's
rapidly expanding research program. A new wing tha t

The new Liggett & )leers Research Center

is more than twice the sire
of the ori-ginal building .

LG 0073400
would more than double the size of the building was
planned, and construction was completed on schedule
in 1960 . This 100 percent increase in capacity should
provide for the Company's needs in the next decade.
The new Liggett & Myers Research Center represents
an investment of more than $2,250,000 and contains
over 48,000 square feet of floor space, largely devoted
to laboratory work space . Included in these amounts are
27,00 square feet of floor space in the new wing, which
was constructed at a cost of approximately 51,250,000 ;
and it has been constructed so that a third level can be
added when further expansion is needed.
The upper level of the new wing houses a 120-seat
auditorium, five new organic chemistry laboratories and
seven new specialized laboratories, including a Tracer
Laboratory, an Instrumentation Laboratory, Hood and
Chromatography rooms and a Cold Laboratory . The
lower level is primarily devoted to engineering research
and development. It contains two conventional chem-
ical laboratories, an explosion-proof laboratory, two
Temperature and Humidity Controlled laboratories, an
Electronics Laboratory, a Dust Controlled Laboratory,
a drafting room and a machine shop .
Occupying both levels of the new wing at the North
end, is a 90-foot by 67-foot Engineering Pilot Plant
Area, which will house the facilities necessary to
perform all cigarette manufacturing operations, thus
making it possible to investigate all variables in these
operations under controlled conditions . With these
facilities, the Company's research engineers are now
better equipped to improve present manufacturing
processes, to develop new ones and to test all changes
and innovations before they are incorporated into the
production line .
The original building now contains four large physi-
cal chemistry laboratories on the ground floor. In the
basement, there is a new glass blowing shop, three Tem-
perature and Humidity Controlled laboratories, a pho-
tographic dark room, Preparation and Grinding rooms
and a new, expanded area specially equipped for flavor
investigations, including a new Flavor Laboratory and
new Flavor Storage and Smoking Panel rooms . The top
floor now houses six modern analytical chemistry labo-

LG 0073401
 ratories, standard Kjeldahl and Titration rooms and
an expanded area, for the growing research library
facilities .
At the dedication of the Company's new Research
Center, Dr . Frederick R. Darkis, Vice President and
Director of Research, made the following remarks about
the Company's research program . "During the past sev-
eral centuries, tobacco in the form of numerous manu-
factured products has been used in ever increasing
quantities by a continuously greater number of people .
The use of tobacco has made a significant contribution
to the pleasure, satisfaction and sense of well-being of
those who use it .
"Beginning with the period when tobacco was first
used in Europe, many people have vigorously opposed
its use. Over the years, many criticisms of it have been
made and numerous impediments to its use, including
legislation, have emerged from time to time . In large
part, these accusations and impediments have fallen
by the wayside, due to the unreliable information on
which they were based. During the first half of the
20th century, the use of tobacco became rather gen-
erally accepted and was subject to less criticism . How-
ever, during the past decade, the use of tobacco has
experienced its most severe opposition . This opposition
is based on the contention that using tobacco in the
form of cigarettes will seriously impair the health of the
smoker .
"Those medical and statistical investigators who have
produced the information that has led to the most seri-
ous indictments ever leveled against tobacco have been
quite vigorous in their attack on its use . They have
drawn and given wide circulation to many conclusions
from their findings that most people trained in the same
disciplines fail to find justifiable. Some of their findings
merit consideration and they should not be ignored .
"We have carried on cooperative work with govern-
ment agencies over the years, and have contributed
financially and otherwise to the programs of research
carried on by governmental and private organizations .
"We have devoted much effort to fundamental re-
search and have and are publishing information
obtained as a result of this work . We have not restricte d
r
Vacuum system for handling 11
gaseous materials in a Physical `- 6-00 6 a~f Sr
Chemistry Lahoratory. U

LG 0073402
 our research program to that necessary developmental
work so pertinent to the everyday operations of the
Company.
"We have organized and developed what we believe
is the most inclusive program in existence directed
toward the separation, identification and the quantita-
tive determination of the numerous constituents that
make up those two complex materials, namely tobacco
tissue and tobacco smoke. This program goes even
further in that the biological activity of the component
parts as well as that of the whole are being studied by
the best available techniques . It is hoped that these
findings will help to clarify the maze of opinion that
exists at present in respect to the problem of tobacco
and health ."

Disposition of Total Earnings for 196 0

The Company received for goods sold to customers and
from dividends and interest a total of S344,06_°,000 .
This is how it was used or set aside .

7-N 7 .
. ~ Earnings retained
Federal andsatRerincGiswtzxes
.000
~I .$2'32a86.000: ' .~, • ate', r, ?' 04 ~- ;y $7,721

-o" 0
Dividend s
.f Y_r: $ 20,988.00 0
• -' ~~~~ ~

Federal and State income and

~'`,~s~ ~ :'., . `, • ~'~-. .;,~_ franchise taxe s

$34,004,00 0

Sefiing.advertising, administrative ,
Leaf Tobaccoq .wages: others
manufacturing Costs and freigh t

s 181,2e3;ono i .

12

LG 0073403
 Ffnancia1
Section

Opinion. of Certified Public Accountant s

HASKtNS &- SELLS

CZM7R15 IU .UC ACCOUNTANTS

TWO eRO*OWAY
N[W YORK 4

To the Dftwtorsand Stockholders at

Liggett &r Myers Tobacco Company:

We have examined the consolidated balance sheet of Liggett &

Myers Tobacco- Company and its wholly-owned consolidated subsidiary
as of December 31, 1960 and the related statements of consolidated
earnings. and retained earnings for the year then ended ., Our examina-
tion was made is accordance with generally accepted auditing stand-
ards, 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 earnings and retained earnings present
fairly the financial position of the companies at December 31, 1960
and the results of their operations for the year then ended. in con-
formity with generally accepted accounting principles applied on a
basis consistent with that of the preceding year .

January 25, 1961 `~" v CU

13

LG 0073404
 Liggett & Myers Tobacco Compan y

Assets 1960 195 9

CURRENT ASSETS :

Cash . . . . . . . . . . . . . . . . . . . . . $ 11,059,994 8 7,328.24 1

U . S. Government securities - at cost plus accrued
interest (quoted market value : 1960, $4,999,750;
1959, $4,992,485) . . . . . . . . . . . . . . . 4,998,055 4,992,485
Accounts receivable, customers . . . . . . . . . . 23,223,13 0 21,189,90 2
Accounts receivable, others . . . . . . . . . . . 1,151,657 1,159,595
Leaf tobacco, at average cost . . . . . . . . . . 282,169,184 292,005,364
Manufactured stock and operating supplies ,
at average cost . . . . . . . . . . . . . . . . 32,243,932 38.388,17 6
TOTAL CURRENT ASSETS . . . . . . . . . . 354,845,97 2 365,063,763.

PROPERTY, PL. 1DNT ND EQUIPMENT - AT COST :

Land and buildings . . . . . . . . . . . . . . 20,378,094 20 .229,331

Machinery and equipment . . . . . . . . . . . . 58,170,734 37,361,69 1
Total . . . . . . . . . . . . . . . . . . 78,748,828 77,591,042
Less accumulated depreciation . . . . . . . 43,626,750 41,390,53 6
NET PROPERTY, PLANT AND EQu1 1E .-rT . . . 35,122,078 36,200,506

OTHER ASSETS :

Brands, trade-marks and good will . . . . . . . . 1 1

Investments in unconsolidated subsidiary companies,
at cost . . . . . . . . . . . . . . . . . . . . 919 .004 887 .004
Investment in foreign tobacco company, at cost . . . 4,000 4,00 0
Foreign currency deposits subject to withdrawal
restrictions . . . . . . . . . . . . . . . . . . 1 .005 .034 1 .025 .076
Prepaid expenses and deferred charges . . . . . . 1,153 .91 1 1 .210 .72_ 6
TOTAL OTHER ASSETS . . . . . . . . . . . 3,111 .95 0 3,126 .50 7
TOTAL . . . . . . . . . . . . . . . . 3393,080 .000 5404,391 .07 6

14

LG 0073405
J onsoLidate d

Balance Sheet
as of December3 1

Liabilities 196 0 195 9

CuBRL'n LL-.BU.rri s :

Accounts payable . . . . . . . . . . . . . . . . 3,167,198 3,295,512

Dividend payable on preferred stock . . . . . . . 311,607 345,067
Accrued interest on debentures . . . . . . . . . . 673,39 1 721 .37 3
Funded debt payable within one year . . . . . . . 5,750,00 0 5,750,00 0
Taxes payable and accrued (less, for 1960, U .S.
Treasury tax anticipation notes, $9,934,413) . . . 11,559,20 9 22,794,378
TOTAL CURRENT LL .Ba1TIES . . . . . . . . 21,463,40 5 32,9 06,3 3 2

Fu.in
-m DEBT :
75/% .Sinking Fund Debentures, $5,750,000 payable
annually during the years 1962 through 1964,
$23,750,000 payable in 1965, and 537,300,000 pay-
able in 1966 . . . . . . . . . . . . . . . . 78,500,000 84, 250, 00 0

RESERVE :

For deferred contingent compensation (net of esti-

mated future income tax reductions) . . . . . . 248,16 0

STOCKHOLDERS' EQurrY :

Preferred stock 70.10 cumulative, par value $100 -

authorized, 341,398 shares ; issued, 225,141 shares;
in treasury, 1960, 47,280 shares, and 1959, 29,460
shares . . . . . . . . . . . . . . . . . . . . 17, 786,100 19,568,10 0
Common stock, par value $25 - authorized, 5 .000 .000
shares ; issued, 1960, 3,939,053 shares, and 1959,
3,931,462 shares (Note 1) . . . . . . . . . . . 98,476,32 5 98 .286 .55 0
Paid-in capital in excess of par values of capital stocks
(Note 2) . . . . . . . . . . . . . . . . . . 20,534,676 20211 .080
Retained earnings (Note 3) . . . . . . . . . . . 156,071,334 149 .168 .51 4
TOTAL STOCKHOLDERS' EQUITY . . . . . . . 292,868,4:35 _287 .234,2 44
TOTAL . . . . . . . . . . . . . . . . $393,080,000 S404 .391 .07 6

((' 6Q)c -, ,~
15

LG 0073406
 L .iosett 8i Myers Tobacco Company

Statement of
Consolidated Earning s
(for years ended December 31)

196 0 195 9

NET SALES . . . . . . . . . . . . . . . . . . . . . . . $543,172,587 $554,936,02 6

OTHER EARi'nNcs :

Interest and dividends received . . . . . . . . . . . . . 889,33 0 370 .548

Profit from sale of land and buildings . . . . . . . . . . 100,547
Other . . . . . . . . . . . . . . . . . . . . . . . . '349 .397

TOTAL EAR . .-ics . . . . . . . . . . . . . . . . . 544,061,91 7 535, 1 57,31 3

COSTS A..ND EXPENSES :

Cost of goods sold, selling, administrativ e

and general expenses . . . . . . . . . . . . . . . . . 474,847,617 484,407 .387
Provision for depreciation . . . . . . . . . . . . . . . . 3,909,1-369 3,705 .075
Interest and amortization on funded debt . . . . . . . . . 2,341,50 4 2,466,17 6
Interest on bank loans . . . . . . . . . . . . . . . . . 6 .333
Other . . . . . . . . . . . . . . . . . . . . . . . . 250,532 27 .658
Provision for Federal income tax . . . . . . . . . . . . . 31,573 .000 32,350 .00 0
Provision for State income and franchise taxes . . . . . . . 2,431 .00 0 2 .686 .00 0

TOTAL CosTS AND EXPENSES . . . . . . . . . . . . 515,353,02 2 525,713,629

NET EAR.NINCS FOR THE YEAR . . . . . . . . . . . . . . . . 28,708,895 30,0 :38,68 9

DIVIDENDS ON PREFERRED STOCK . . . . . . . . . . . . . . . 1,301,25 5 1,430,107,

NET EARNINGS APPLICABLE TO COMMON STOCK . . . . . . . . . S 27,407,64() $ 28,608,38 2

16

LG 0073407
 Liggett & .Myers Tobacco Compan y

Statement of
Consolidated Retained Earning s
(for dears ended December 31)

196 0 195 9

BALANCE AT BEGINNING OF YEAR . . . . . . . . . . . . . . . $149,168,514 $143,729,281

ADD - Net earnings for the year . . . . . . . . . . . . . . . 28,708,89 5 30,038,689
ToT. L . . . . . . . . . . . . . . . . . . . . . 171,87 7,40 9 173,767,97 0

DEDLTCT :
Cash dividends of S7 per share on preferred stock . . . . . 1,301,25 5 1,430,10 7
Cash dividends of $5 .00 per share for 1960, and $5 .73 per
share for 1959, on common stock . . . . . . . . . . . . 19,686,491 22.585,25 8
Total dividends . . . . . . . . . . . . . . . . . . 20,987,746 24,015,365
Excess of cost over par value of preferred stock reacquired . 818,32 9 584 .09 1

TOTAL . . . . . . . . . . . . . . . . . . . 21,806,07 5 24.599,45 6

BA"vcE AT END OF YEAR (Note 3) . . . . . . . . . . . . . $156,071,334 $149,168,314

Notes to Financial Statements

December 31 . 196 0

1 . At January 1, 1960 there were outstanding
options granted under the Incentive Stock Op-
tion Plan to officers and key employees to pur-
chase, subject to certain limitations, 40,359
shares of the Company s common stock, and
39,700 shares were reserved for the granting of
additional options. During 1960, options for
11,600 shares were granted for an aggregate
option price of 3955,550, options for 7,391
shares were exercised for an aggregate option
price of 551 :3,371, and options for 600 shares
were cancelled. At December 31, 1960, options
were outstanding with respect to 4 :3, 7 68 shares
having an aggregate option price of $3,160,799,
and 48,7 00 shares were reserved for the grant-
ing of additional options on or before March 31,
1961 . In accordance with the Plan, option prices
represent closing quoted market values of the
shares on the dates the options were granted.
Paid-in capital in excess of par values of
capital stocks increased in 1960 by 5323 .396.
representing the excess of sales price over par
value cf common stock sold to officers and em-
ployee .- under the Incentive Stock Option Phin .
:3. Und=r the terms of the Indenture covering the
2'+ o Sinking Fund Debentures, S60 .282.541
of retained earnings is restricted as to payment
of cash dividends on common stock . This limi-
tation does not apply to stock dividends on
common stock, nor does it restrict payment of
dividends on preferred stock .

/~~` CGS c~ l

17

LG 0073408
 Advertising
and
CKHORN' ."
FFALa'. Sales Promotio n
CKAQE 7,
RN cAKE
UNTRr GENTLEMAW
;NER-9ELL`•F -
KE'S
On these pages you will find all of the principal products
manufactured by Liggett & Myers Tobacco Company .
RMCNY '
ME RUN-: r' . Notice that the OASIS package and carton have been
NTUCKY- Eamm cur redesigned with a new oasis scene . This scene is highly
IG BM-
:`,iURKA =
:. suggestive of the characteristics of the product : fresh-
SrERF/ECE ~' ; ness, coolness, mildness.
EERSCHAUW.- ;` -
UNTAM RasE-
The CHESTERFIELD carton has also been given a "new
I STYLE` look." Gold trim has been added to give a ri chness and
w aar heighten its consumer appeal .
ERTiMEr= In order to increase the consumer's awareness of the
Er TI tar r: Company's leading brands, one of the primary objectives
of the advertising and sales departments is to make the
same sales message which is used in print and on TV
and heard on the radio, also visible in hundreds of
thousands of retail outlets . When the Liggett & Myers
salesman goes into the field, he is armed with special
display material and promotion plans to sell the Com-
pany's products to both the wholesale and retail trade .
You may have seen our windproof lighter offer at point
of sale; the "Get Out The Vote" L&M poster, which was
widely distributed prior to Election Day ; or the exclu-
sive L&N/I Christmas gift pack offering a free Christmas
Carol record with the purchase of two cartons of L&M .
The media used in the Company's advertising pro-
gram is carefully selected for each brand . We strive to
reach the greatest number of potential consumers with
convincing sales messages . In TV, for example, "Gun-
smoke" for L&M, and "The Untouchables" for CHESTEIn-
FiELD, consistently appear in the top ten of all television
programs, according to the rating surveys .
~ayr
20

LG 0073409
1911-1960
(- 09pr o

LG 0073411