l&m 1961 annual report

8/14/2019 L&M 1961 Annual Report

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Annual Report /1960

Liggett & MyersTobacco Company, Inc

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StockholdersAnnual MeetingThe Annual Meeting of Stockholders

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

Formal notice of this meeting, togetherwith the proxy and proxy statement,will be mailed to stockholders on Feb-ruary 24, 1961. Those of you who areunable to attend the meeting are urgedto sign Your proxies and return thempromptly to the Company so that thestock of the Company will be representedas fully as possible at the meeting .

Today your Company is owned byapproximately 48,200 stockholders. About82% of the total Common and Preferredstock was voted by person or proxy atthe last annual stockholders' meeting onMarch 29, 1960 .


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Contents page 2 Highlights of Operations3 President's Letter4 Officers and Directors5 Sales, Earnings and DividendRecord6 Financial Condition and Capital

Expenditures7 Taxes and Manufacturing8 Export and Leaf Tobacco9 Research

12 Disposition of Total Earnings13 Opinion of Certified PublicAccountants14 Consolidated Balance Sheet18 Consolidated Earnings17 Consolidated Retained Earnings andNotes to Financial Statements18 Ten Years in Revie w20 Advertising and Sales Promotion

Liggett & MyersTobacco Company

1960Annual Report

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Liggett & Myers Tobacco Company

Highlights of Operations

1960 1959Net Sales . . . . . . _ . . . . . . . . $543,173,587 $554,936,026Earnings before taxes . . . . . . . . . . 62, 712,895 65,074,689Income and franchise taws . . . . . . . 34,004,000 35,038,000tgs before preferred dividends . . . 28,708,895 30,038,689Net earnings after preferred dividends 2-7,407,640 28,608,582

0 -ercentage of net sales 5 .0 5 0 5 .16%Net earnings per share of common stock $6 .9 6 $7.28Dividends per share of common stock . . . $5 .0 0 $5.75

Current assets . . . . . . . . . . . . _ $354,845,972 $365,063,763C u r r e n t liabilities . . . . . . . . . . _ . 21,463,405 32,908,832Ratio _ . . . . . . . . . . . . . . . 16 .5 to I ILI toIFunded debt . . . . . . . . . . . . . . 78,500,000 84,250,000Capital stock. . . . . . . . . . . . . . 116, 262,425 117,854,650Additional paid-ia capital . . . . . . . . 20,534,676 20211,080Retained earnings . _ . . . . . . . . . 156,071,334 149,168,514

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


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wII LLC4 A. BLOUNT To the Stockholders:This 1960 Annual Report, the 50th report of Liggett & Myers TobaccoCompany, presents the operations and audited financial statements of theCompany for the year 1960, with comparative figures for the previousyear.

Research has long been an important activity of our Company. One ofthe most significant developments during the past year was the com-pletion of the new wing and dedication of the Company's Research Centerin Durham, North Carolina. This expansion should provide the necessaryspace for our growing research program over the next decade . In thefollowing pages we give you a more detailed report about our researchactivities which we hope will be of interest .

There is good reason for an optimistic outlook in the cigarette industrytoday. Domestic consumption of cigarettes reached a new high level in1960 for the sixth consecutive year. The outlook for the next several yearsshould 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 ofCH ST king size cigarettes continued its upward trend . The declinein sales of Cmrsrzru:iELn regular size, which has persisted for several years,continued in 1960 but at a reduced rate .The sale of Ld&M king size cigarettes also showed a healthy increaseduring the past year. We have strengthened the Oasis advertising andredesigned the package and carton in an effort to gain a larger share ofthe menthol cigarette market . We are hopeful that these changes willproduce results .

On behalf of the entire organization, I wish to express appreciation tothe shareowners for their continued confidence, interest and helpfulnessduring the past year .

February 3, 1961WILLIAM A . BLC

President RC- 6C)(_)628C

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Lggett 8z Myers Tobacco CoaapaayEzecutioe O (ices - 830 Fifth Avenue, New York 20, N.Y

OfficersWn * LAM;BLou r President tr Chief Ewcufte OfficerZs- ToMSi Executive Vice PresidentWTrT *m L_ PE1IRY Pus President 1r Chairman o f Executive CommitteeWII.unx B. LEWIS, JR_ vice President, salesFR Nis H. HORA.-r Vice President & General CounselLoy D. THoa>psoNVice President, Production

MILTON E. HAwaNctONVice President, LeafFaEzruc RD.aus Vice President & Director of BeseanchT BoWLiNG ANDESSON TreasurerRuss T- M. CB=vowtrE secretaryRALPH E MooRZ Assistant TreasurerRvsssLL CCure= AuditorFmmma= J. Ga*II? Assistant SecretaryRt7ros H. Hosts Assistant SecretaryCHARLES B. MORCENrsALgt Assistant Secretary

DirectorsJ. Bows arc ANDmt.SO NWn r r.mA. BL ouNTL&wRENcE W. BRmtFmmznns R. DAnusMn.tmc E. HARnai(;rONFRANcs H. HoRA.YJ. CANma'r HtNDL .E YGRAYDON B . LEAxEWmLtam B. LEwts, JR .C_ G iucE Mcrvlm .I .ANEDWARD J. PABRUUWILLIAM L . PERRYLoy D THOMPSONZZcs Tons

m anarer Agent - Chemical Bank New York That Co ,36 Broad Street, New York 15, N . Y .Ruse-The First National City Bank of New York55 Wan Street, New York 15, N. Y.

Eaecative Personnel

4

At its meeting on March 30, 1960, the Boardof Directors voted to increase the number ofDirectors of the Company from 12 to 14C. Grice McMullan, Manager of the RichmondBranch and Edward J . Parrish, Manager of theExport Department of the Company wereelected to fill the new positions on the Board .

Two new Vice Presidents were elected by

the Board of Directors at the March 30, 1960meeting. These were Dr. Frederick RDarkisDirector of Research and Milton E . Harring-ton, Leaf Department Manager. At the samemeeting Russell M. Chenoweth was electedSecretary of the Company to succeed ZachToms who resigned from that oositin n

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Operations 1960

Net Salessc o

50 0

:00

20 0 RH54 55 56 57 $6 59 5

Net Earnings32

2 6

4

20

545556 575859 50

There is presented on the following pages some of theaccomplishments 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 .

SalesNet sales of the Company declined from 5354,936,02 6in 1959 to $543,172,587 in 1960, or about 2 .10". . Themajor portion of this decline took place during the firstnine months of the year. For the year as a whole thesale of CHESTERFIELD king size and L&-M king sizecigarettes each showed a substantial gain from the pre-vious year and offer encouragement for the monthsahead. CHESTERFIELD regular size continued to decline,however, the rate of decline was considerably reduced .

EarningsEarnings after taxes amounted to $28,708,895 as com-pared with $30,038,689 in 1959. Based on 3,939 .053common shares outstanding at the end of the year, netearnings amounted to $6.96 per share as compared with$7 .28 in 1959. Earnings in the fourth quarter were equalto $1.76 per share whereas earnings in the comparableperiod of the previous year were $1 .47 per share .

Dividend RecordThe Company's record of continuous dividend pay -

ments on the Common Stock was extended for the 49thconsecutive year . Total payments in 1960 amounted t o

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$5 .00 per share, consisting of four quarterly dividendsof $1 .25 each .

The total amount of dividends paid in 1960 on bothCommon and Preferred stock was S20,987,746 . Thebalance of 1960 earnings amounting to $7,721,149 wasretained for use in the business .

On January 18, 1961, a regular dividend of 51.25 perCommon share was declared, to be paid on March 1,1961, to stockholders of record February 17, 1961 .

Net orth Comparedwth Long-TermDebts.t nort hs. .nt . r . . .- 0-37 0

5556 9756 59 60

Financial ConditionThe financial condition of the Company continued

to grow stronger in 1960. For the second successive yearthere were no short-term borrowings at the year end .The investment in United States Government securi-ties, including tax anticipation notes, amounted toS14,932,468 on December 31, 1960 compared with54,992,485 at the end of the previous year.

Long-term debt was $5,730,000 lower at the end of1960 as a result of retirement of debentures throughoperation of the Sinking Funds . This reduction . togetherwith the addition of $5,634,191 to net worth, produceda further improvement in the ratio of funded debt tonet worth. At the end of 1960 funded debt was only26 .810 of net worth compared with 45 .30 at the endof 1954 .

Further steps were taken to reduce the number ofshares of non-callable i o Preferred stock of the Com-pany outstanding. During the year your Managementsucceeded in reacquiring 1; ,820 shares of such stock .As of December :31, 1960 there was held in the treasurya total of 47,230 shares.

In the absence of unusual developments no need fornew long-term financing is anticipated in the foresee-able future.

Capital ExpendituresThe construction of the new addition to the Com-

pany's research building in Durham, North Carolina,was completed on schedule during the past summer andappropriate dedication ceremonies took place on Sep-tember 30, 1960 .

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The program of maintaining plant and equipmentat maximum efficiency was continued during the year1960. Capital expenditures amounted to approximately$2,800,000 or slightly more than the amount of pur-chases in 1959 . No major capital expenditures appearnecessary in the near future. Depreciation charged tocost and expense in 1960 amounted to $3,909,369 .

Taxes70

I %NM PCSltt. ,ncpn.ladFran,,. rl.fvN tncom.M.r Ta

545556 5756 59 60

TaxesTaxes continued to be an important factor in the

Company's operations. Excise taxes in 1960 totaled$232,786,174. Although the Treasury Departmentadopted in June 1959 a semi-monthly method for pay-ment of such taxes instead of a daily basis formerly ineffect, it has not resulted in any material savings to theCompany. The excise taxes must still be paid severalweeks prior to the time when the Company receivespayment from its customers . The industry has everyright to expect that further adjustments will be g antedin the future.

Federal and State income and franchise taxes in 1960amounted to $34,004,000. Such taxes alone came to$8.63 per share of common- stock compared with netincome of $6.96 per share .

ManufacturingOur factories are strategically located near the source

of supply of leaf tobacco and are considered to beamong the most modem in the industry . The up-to-datemachinery used in all departments is the finest equip-ment available. Our cigarette factories are located inDurham, North Carolina and Richmond, Virginia . Youare cordially invited to visit either of them wheneveryou are in the vicinity

Since the manufacturing methods used in producingthe finished product contribute eatly to quality andconsumer acceptance of the product. the Company isconstantly exploring the possibility of making further

Almost 'S00,000 people have visitedour modern cigarette factorie sin Durham. N. C. and Richmond, Vi . F'C- b)06284

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

Liggett & Myers buyersbid at auctions for mild,top quality tobaccos.

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ExportThe 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 andsatisfactory relationship with them we have been ableto develop good markets for our products . WhereverAmerican cigarettes are sold, whether to foreign tobaccomonopolies, ship's-stores, U. S. military overseas, airlines, diplomatic corps or other outlets, we are adver-tising and actively promoting the sale of the Company'sbrands.

Leaf TobaccoOur tobacco buyers are present on every important

tobacco market, selecting only the choicest tobaccos tomeet the exacting standards set for all Liggett & Myers'products .

The 1960 crop of flue-cured tobacco totalled 1,368,-000,000 pounds, compared with 1,185,000,000 pounds in1959 . The season average price was 59.9c per pound, thehighest on record and more than 2 per pound abovethe average for the 1959 crop. The Government supportprice for the 1960 crop was 55.50 per pound. The U . S .Department of Agriculture has announced a nationalmarketing quota of 1,12-0,000,000 pounds for the 1961crop .

The burley markets had sold approximately 800/10 ofthe 1960 crop before the end of the year. The cropis estimated at approximately 500,000,000 pounds, orslightly lower than the previous crop . Market pricesthrough the end of the year averaged 65 .2E per pound,just a shade lower than the all-time high average of66 .2c established for sales of the 1958 crop. The supportprice for the 1960 crop was 57?, the same as theprevious year .

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Research

CAN. Ji\LES M. GAVIN

The neu. Liggett 1.7 Myers Research Centera more than twice the siz eof the original building

At dedication ceremonies for the new Liggett & MyersResearch Center on September 30, 1960, GovernorLuther H Hodges of North Carolina said: "I wouldlike to commend Liggett & Myers Tobacco Companyon the wisdom and initiative they have displayed inexpanding their research activities . . . we gather hereto dedicate a great research establishment second tonone in its field." In his dedication address, GeneralJames M. Gavin stated: "We look upon Liggett & Myersas being outstanding in its awareness of the importanceof research.- General Gavin, famous for his World WarII combat record and his scientific roles in the L nitedStates defense program after the War, is today Presi-dent of Arthur D . Little, Inc., one of the nation's leadingengineering and research firms .

When Liggett & Myers was incorporated in 1911,scientific research was conducted at the CompanysSt. Louis plant. In 1950, the Company completed themost modern research laboratory in the industry inDurham, 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 moderndesign, would soon be inadequate for the Company'srapidly expanding research program. A new wing that

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would more than double the size of the building wasplanned and construction was completed on schedulein 1960. This 100 percent increase in capacity shouldprovide for the Company's needs in the next decade .

The new Liggett & Mvers Research Center representsan investment of more than $2,250,000 and containsover 48,000 square feet of floor space, largely devotedto laboratory work space. Included in these amounts are-27,300 square feet of floor space in the new wing, whichwas constructed at a cost of approximately $1,250,000 ;and it has been constructed so that a third level can beadded when further expansion is needed .

The upper level of the new wing houses a 120-seatauditorium, five new organic chemistry laboratories andseven new specialized laboratories, including a TracerLaboratory, an Instrumentation Laboratory, Hood andChromatography rooms and a Cold Laboratory . Thelower level is primarily devoted to engineering researchand development. It contains two conventional chem-ical laboratories, an explosion-proof laboratory, twoTemperature and Humidity Controlled laboratories, anElectronics Laboratory, a Dust Controlled Laboratory,a drafting room and a machine shop .

Occupying both levels of the new wing at the Northend, is a 90-foot by 67-foot Engineering Pilot PlantArea, which will house the facilities necessary toperform all cigarette manufacturing operations, thusmaking it possible to investigate all variables in theseoperations under controlled conditions . With thesefacilities, the Company's research engineers are nowbetter equipped to improve present manufacturingprocesses, to develop new ones and to test all changesand innovations before they are incorporated into theproduction line .

The original building now contains four large physi-cal chemistry laboratories on the ground floor . In thebasement, there is a new glass blowing shop, three Tem-perature and Humidity Controlled laboratories, a pho-tographic dark room, Preparation and Grinding roomsand a new, expanded area specially equipped for flavorinvestigations, including a new Flavor Laboratory andnew Flavor Storage and Smoking Panel rooms. The topfloor now houses six modern analytical chemistry labo-10


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ratories, standard Kjeldahl and Titration rooms andan expanded area, for the growing research libraryfacilities.

At the dedication of the Company's new ResearchCenter, Dr. Frederick R. Darlds, Vice President andDirector of Research, made the following remarks aboutthe Company's research program. "During the past sev-eral centuries, tobacco in the form of numerous manu-factured products has been used in ever increasingquantities by a continuously greater number of people .The use of tobacco has made a significant contributionto the pleasure, satisfaction and sense of well-being ofthose who use it .

"Beg ftming with the period when tobacco was firstused in Europe, many people have vigorously opposedits use. Over the years, many criticisms of it have beenmade and numerous impediments to its use, includinglegislation, have emerged from time to time . In largepart, these accusations and impediments have fallenby the wayside, due to the unreliable information onwhich they were based. During the first half of the20th 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 hasexperienced its most severe opposition . This oppositionis based on the contention that using tobacco in theform of cigarettes will seriously impair the health of thesmoker .

"Those medical and statistical investigators who haveproduced the information that has led to the most seri-ous indictments ever leveled against tobacco have beenquite vigorous in their attack on its use . They havedrawn and given wide circulation to many conclusionsfrom their findings that most people trained in the samedisciplines fail to find justifiable. Some of their findingsmerit consideration and they should not be igncred .

"We have carried on cooperative work with govern-ment agencies over the years, and have contributedfinancially and otherwise to the programs of researchcarried on by governmental and private organizations .

"We have devoted much effort to fundamental re-search and have and are publishing informationobtained as a result of this work. We have not restricted

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Vacuum system for handlincgaseous materials in a PhysicalChemistry LaboratoryPC- tI


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our research program to that necessary developmentalwork so pertinent to the everyday operations of theCompany.

We have organized and developed what we believeis the most inclusive program in existence directedtoward the separation, identification and the quantita-tive determination of the numerous constituents thatmake up those two complex materials, namely tobaccotissue and tobacco smoke. This program goes evenfurther in that the biological activity of the componentparts as well as that of the whole are being studied bythe best available techniques. It is hoped that thesefindings will help to clarify the maze of opinion thatexists at present in respect to the problem of tobaccoand health . "

Disposition of Total Earnings for 1960The Company received for goods sold to customers andtrom dividends and interest a total of S544,062,000 .This is how it was used or set aside .

.+~Y~ ~ . "";. Earnngs retainedFederjar d~o~has~eneGaaagces - ~ ~. _J SOQw~i "~~~yi $7121000r ,r ice '

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Dvidends~"ter" ~120bed00Fetds/ and State incom and~~~9ti~.v___~. . . . ...ti, o-, fraeahsotaxe' '' s K~~134004000~~

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in ad n tratl^ a21dv9 m ie v91-.nLeaf TebactOv~geOhesoher ( r t t e r e i s t a ix f o t h e r e x p e n s e smnuf*eturiITQpeSts endfrvo t v--a.. 067900000RC- 6(7f:)i128 9

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Financial

Opinion of Certified Public AccountantsHASKINS & SELLS

eamnu rowC ICOU TANTSrwp seo*owAr

MW YOLK A

T -B, Dbsctorsand Stockholders ofLiggett (r Myer Tobacco Company.We have enmimed the consolidated balance sheet of Liggeft &

Myem Tobacco, Company and its wholly-owned consolidated subsidiaryas of December 31, 1960 and the related statements of consolidatedeamiags. and retained earnings for the year then ended. Our examina-tion was made in accordance with generally accepted auditing stand-asds;, and accordingly included such tests of the accounting records andsuch other auditing procedures as we considered necessary in thecsences

In our opinion, the accompanying consolidated balance sheet andstatement of consolidated earnings and retained earnings presentfairly the financial position of the companies at December 31, 1960and the results of their operations for the year then ended . in con-forauty, with generally accepted accounting principles applied on abasis consistent with that of the preceding year~a~nvJ dJanuary 25, 1961

Section

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AssetsC L-RRENT ASSETS :

Cash . . . . . . . . . . . . . . . . . . . . .U . S. Government securities - at cost plus accruedinterest (quoted market value : 1960, 34.999 .750 ;1959 . 34.992,485) . . . . . . . . . . . . . . .Accounts receivable, customers . . . . . . .Accounts receivable, othersLeaf tobacco, at average cost . . . . .Manufactured stock and operating supplies,at average cost . .

TOTAL CLRRE. T AsSEEs . .

PROPERTY, Pta. 'T .,.Yn EQvIPVtE.vT - AT Cos-r :Land and buildings .Machinery and equipment .

Total . . . . . . . . . . . . . . . . . .Less accumulated depreciation . . . . . . .NET PROPERTY, PL xT w EQu PytE . T . . .

OTHER A SSETS :Brands, trade-marks and good will . . . . . . . .Investments in unconsolidated subsidiary companies,at cost . . . . . . . . . . . . . . . . . . . .Investment in foreign tobacco company, at cost . . .Foreign currency deposits subject to withdrawal

restrictions . . . . . . . . . . . . . . . . . .Prepaid expenses and deferred charges . . . . . .ToTAL OTHER ASSETS . . . . . . . . . . .

TOTAL . .

14

L .IG;-- 64 _!]

1960

S 11,059,994

4,998,05523,223,1301,151,657

282,169,18432,243 .93 2

354,845,972

20,5 7 8 .09458,170,73478,748,82843,626,75035,122,078

919.0044,0001 .005 .0 :3 41,183 .91 1

:3 .111 .95 053 9 .3 .080.000

1959

S 7.323.24 1

4 .992.48521 .189.9021,139.393292,005,364

38 .388.176365,06:3,76 3

20.229.351 -37,361,69177,391,04241,390,53636, 200,306

1 1887.0044 .000

1 .025 .0761 .210 .7263,126.507

$404.391 .076

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~onsol datesBalance Sheetas of December 3 1

Liabilities 1960 1959CL-xBLNT LMu-ITIES :

Accounts payable . . . . . . . . . . . . . . . . 3,167,198 $ 3,295,512Dividend payable on preferred stock . . . . . . . 311,607 345 .0 6 7Accrued interest on debentures . . . . . . . . . . 675,391 721 .87 5Funded debt payable within one year . . . . . . . 5,750,000 5,750,000Taxes payable and accrued (less, for 1960, U . S .Treasury tax anticipation notes, 59,934,413) 11,559,209 2 _ 2 .794,375

TOTAL CL-RRE- ;T LIAEII.ITIES 21,463,405 .32,906 .S .3 2FL-mED DEBT :

25/s0-0 -Sinking -Fund Debentures, S5,750.000 payableannually during the years 1962 through 1964 ,$23,750,000 payable in 1965, and $37,500,000 pay -able in 1966 . . . . . . . . . . . . . . . . 73,500,000 84,250,000

RESERV E :For deferred contingent compensation (net of estimated future income tax reductions) . . . . . . 248,160

STOCYI3oLDERS' EQUrrY :Preferred stock 71/", cumulative, par value $100 -authorized, 341,398 shares ; issued, 225,141 shares;in treasury, 1960, 47,280 shares, and 1959, 29,46 0

shares . . . . . . . . . . . . . . . . . . . . 7,786,100 9,568.100Common stock, par value $25 - authorized, 5,000 .0 00shares; issued, 1960, 3,939,053 shares, and 1959 ,3,931,462 shares (Note 1) . . . . . . . . . . . 98,476,325 98 .286.3.5 0Paid-in capital in excess of par values of capital stocks(Note 2) . . . . . . . . . . . . . . . . . . 20,534,676 20 .211 .0 8 0Retained earnings (Note :3) . . . . . . . . . . . 156,071,:334 14 9 .168 .5 1 4

TOTAL STOCYHOLDERS' EQcrrY . . . . . . . 292,368,435 237,_23-1 244TOTAL . . . . . . . . . . . . . . . . $393,080 .000 $404 .391 .076

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Statement ofConsolidated Earnings


for years ended December 31)

1960 1 1959NET Saz.F s . . . . . . . . . . . . . . . . . . . . . $543,172,587 1 $554,936,026

OTHER EA Y NiNcs :Interest and dividends received . . . . . . . . . . . . . 889.330 30.848Profit fromsale of land and buildings . . . . . . . . . . 100,547Other . . . . . . . . . . . . . . . . . . . . . . . . 349.397

TOTAL EARNZres . . . . . . . . . . . . . . . . . 544, 061, 917 553,757, 318

COSTS AND ExPENsEs:Cost of goods sold, selling, administra tiveand general expenses . . . . . . . . . . . . . . . . . 474,847,617 484,407 ,3 8 7Provision for depreciation . . . . . . . . . . . . . . . . 3,909,369 3,705.075Interest and amortization on funded debt . . . . . . . . . 2,341,504 2,466.176Interest on bank loans . . . . . . . . . . . . . . . . . 76 .33 3Other . . . . . . . . . . . . . . . . . . . . . . . . 250,532 27 .658Provision for Federal income tax . . . . . . . . . . . . . 31,573 .000 32 .350.000Provision for State income and franchise taxes . . . . . . . 2,431.000 2 .686.000

TOTAL COSrs AfvD E .CPE.vsES . . . . . . . . . . . . 515,353,022 325,713 .6 2 9

NET EARNINGS FOR THE YEAR . . . . . . . . . . . . . . . . 28,708,895 30,035,689

DIvmL ns ONPREFERRED STOCK . . . . . . . . . . . . . . . 1,301,255 1 .430,107

NET EARNINGS APPLICABLE TOCOMtfONSTOCK . . . . . . . . . $ 27,407,640 S 23 .608 .582

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Statement ofConsolidated Retained Earnings(for years ended December 31 )

BA1axcE AT BECW,''LNC OF YEAR . . . . . . . . . . . . . . ._ADD - Net earnings for the year . . . . . . . . . . . . . . .

TOTAL . . . . . . . . . . . . . . . . . . . . .DEDUCT :

Cash dividends of 37 per share on preferred stock . . . . .Cash dividends of S5 .00 per share for 1960, and 85 .75 pershare for 1959. on common stock . . . . . . . . . . . .Total dividends . . . . . . . . . . . . . . . . . . .

Excess of cost over par value of preferred stock reacquired .TOTA L . . . . . . . . . . . . . . . . . . . . .

BALANNCE AT END of YzAn (Note 3) . . . . . . . . . . . . .

Notes to Financial StatementsD.a,Hr 31 . 19601 . At January 1, 1960 there were outstandingoptions granted under the Incentive Stock Op-tion Plan to officers and key employees to pur-chase, subject to certain limitations, 40,359shares of the Companys common stock, and.59,700 shares were reserved for the granting ofadditional options . During 1960, options for11,600 shares were granted for an aggregateoption price of $955,550, options for 7,591shares were exercised for an aggregate optionprice of $513,371, and options for 600 shareswere cancelled. At December 31, 1960, optionswere outstanding with respect to 4.3,768 shareshaving an aggregate option price of S.3,160799,and 48,700 shares were reserved for the grant-ing of additional options on or before March 31,

Liggett & .Myers Tobacco Company

1960$149,168,514

28,708,395177,877,409

1,301,25519,686,49 120,987,746

818,32921,806,075

S156,07 1,334

1959$143,729,28 1

30,038 .6 8 9173,767,970

1,430,107?? .385,35824 .015,365

384,09124.599,456

$149,168,314

1961. In accordance with the Plan, option pricesrepresent closing quoted market values of theshares on the dates the options were granted .2. Paid-in capital in excess of par values ofcapital stocks increased in 1960 by $323,596 .representing the excess of sales price over parvalue cf common stock sold to officers and em-ployee : under the Incentive Stock Option Plan .3. L'nr1=r the terms of the Indenture covering the2o Sinking Fund Debentures, $60,=92,541of retainer! earnings is restricted as to paymentof cash dividends on common stock, This limi-tation does not apply to stock dividends oncommon stock, nor does it restrict payment ofdividends on preferred stock .

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CigarettesESTERFIEL1 3UPONK E

Smoking tobaccosC K H Q R NFFALa -

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AdvertisingandSales Promotion

On these pages you will find all of the principal productsmanufactured by Liggett & Myers Tobacco Company .

Notice that the OAsis package and carton have beenredesigned with a new oasis scene. This scene is highlysuggestive of the characteristics of the product: fresh-ness, coolness, mildness .

The CHEsr oFumm carton has also been given a "newlook." Gold trim has been added to give a richness andheighten its consumer appeal.

In order to increase the consumer's awareness of theCompany's leading brands, one of the primary objectivesof the advertising and sales departments is to make thesame sales message which is used in print and on TVand heard on the radio, also visible in hundreds ofthousands of retail outlets . When the Liggett & Myerssalesman goes into the field, he is armed with specialdisplay 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 pointof sale; the "Get Out The Vote" L&M poster, which waswidely distributed prior to Election Day ; or the exclu-sive L&M Christmas gift pack offering a free ChristmasCarol 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 toreach the greatest number of potential consumers withconvincing sales messages . In TV, for example, "Gun-smoke" for L&tiM, and "The Untouchables" for CHESTER-FiELD, consistently appear in the top ten of all televisionprograms, according to the rating surveys .

20

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1911-1960

RC_ bi~i~b29

l&m 1961 annual report

Documents