The!

Board of Directors

HERBERT A . KEtiT' i1939t WILLIAM J . HALLEY (1941U FRANK HOPEWELL (1940) .

Chairman of the Board . President Exerutire Vice President

JOSEPHJ . BLACKNALL (1950) . LEw~ts GRURER(i1'946) ALDENJA'MES (19SO) : IRCtN H . PE .A'K (1943u
NVice President'and Vice President and Vice President and Vice President and'
Director oj :Nnnufacturin5 Director of Sales Director of Advertising Directorof'Leaf' .9ctirities

DR . HARRIS B . PA'R&6ELE . (1970) . HeROLD F . TEMPLE (1943) FREDERICK~ M . W'ALSON~ (1953) ~

Director of, Director of Directorof'
Research Brand Development Purchasing

MELVIN E . DAWLEY( .19SO) DONALD A . HENDERSON(199G) ' F.GLADDE-N, SEARLE (1943).

{'ice President'and Director, Treasarerand Secretar,v:
lndustrialist
Lord'g Taylor Trnentieth Century-Fox,Film Corp .

The y :ear shown in parentheses is the rear oj first election as a Director

 TABLE OF CONTENTS

I. . . .: _ .,,

Letter to Shareholders
~.~~
' (1IP I ~-
, : JL, . ~~ . .;, _ Page 2'

Our 1953 Results at a Glance .

Page 4'

ANNUAL REPORT Ten-Year Comparison of

Financial Statistics
i
for the Year Endied December 31, 1953
Page 5

Sales Volume Reached

a New High
a Page 6
D
Maker of OLD GOLD, EMBASSY and' KENT Cigarettes, The Advertising
MURIEL Cigars, and other Tobacco Products Investment Yielded,
Greater Dividendi
Page 8
OF'F'ICERS'.
Our
HERBERT A . KENT . . . . . . . . . . Chairman of the Board New Greensboro Plant
WILLIAMj . HALLEY . . . . . . . . . Presidea Centerfold
FRANK HOPEWELL . . . . . . . . . Executive Vice President
JOSEPH, J . BLACKNALL Vice President and Director of' Manufacturing Leaf Costs Went Up,
LEyVIS'GRUBER . . . Vice President andl Director of Sales Page 12
ALDEN JAMES . . . Vice President and Director of Adverti'sing
IRVINi H. PEAK, . . . Vice President and Director of'Leaf Activities Every Plant Worked
GEORGE O . DAVIESI . . . . . . . . . . . . . . . Treasurer at Full Capacity
ANNA F . WOESSNER Secretary Page 13
JOHN J . DARBY . . . . . . . . . Comptroller
Research . . . in Lorillard's
Other Corporate I'nf'ormaition . Greater Service .
General Counsel . . . . . . . . . . . . . . Perkins, Daniels & Perkins Page 14
Auditors . . . . . . . . . . . . . . . Haskins & Sells
Transfer Agent . . . . The
Registrar . . . . . . :VewYork Trust Company, New York, NL YThe NationallCity Bank oflNew York, New York, NL Y . Consolidated
Advertising Agencies LennenA Newell, Inc . (OLD GoLn, E54BASSY,,MUR[EL)', ; Balance Sheets
Young & Rubicam, Inc . (KENT)i ; Page 16
Albert Frank-Guenther Law, Inc . (Finaneial) .
Executive Of6bes . . . . 119 WesU 40th Street, New York 18 ; N : Y
Corporate Offices . . . . . 15 Exchange Place, Jersey City, N . J . Consolidated Income
Manufacturing Plgnts . . Jersey City, N . J. ; L.ouisville, Ky. ; Richmond, Va . .
and RetainedlEarnings
Leaf=Storage Warehouses Louisville . Ky . ;, Richmond, Va . ; Lexington, Ky. ;
Danville, Va. ; Lancaster, Pa . ;,Madison, Wis. ; Page 18'
La Crosse, Wis . ; Evansville, Wis. ; Windsor, Conn .,
Stemmeries . . . . . . . . Louis vi11e,,Ky . ;, Lexington, Ky: ;, Danville, Va .
., I-nA'll Principal Cities, Accountants' Certificate
Field land Division , Sales Offices
Subsidiary . . . . . . . . Federal Tin Company, Inc., Baltimore„Md . Page 19'
 THE YEAR IN REVIEW
! YEAR1953' was marked by higher salles
THE and higher profits and somewhat higher divi!
dends.
It was also a, year of the stiffest competition the
Industry has ever known .
Over-all sales in 1953, the largest in the his-
tory of the Company, were $253 ;933 ;462 ; whichh
was $39,424,980 more than sales in 1952 . Profit
of $7,193,571 was the highest ever recorded and
26% over 1952 . It amounted to $2 .28 a share of'
common stock, compared with, $2 .01 in 1952 :
Price control came to an end
The year 1'953' also brought relief from Gov-
ernmental price control, which gave Manage-
ment an opportunity to make adjustments in
many ways to balance partially the increased
costs of'tobacco,,labor and other materials . Relax-
ation of this restriction accounted for almost
$7,300,000 of' the $39 ;424,980 increase in sales .
Dividend payments were up :
Increased profits permitted the Board of Direc-
tors to declare dividend payments for the year
of'$1 .60 per cornmon~ share, up 10¢ from! 1952 .
This is especially noteworthy because in 1953
additional stock was sold in the ratio of one new
share . for eaeh seven old shares. We sold 356 ;5733
shares of common stock last year as part of a
refunding, program undertaken to refinance, in
part, outstanding short-term bank loans . Such
loans, reflecting, increased leaf purchases, peri-
odicall'y require replacement with more perma-
nent capital . The profit of $2 .28 a share off
2
common stock noted above would have amounted
to $2 .61 & share had not the additionall 356,573
shares been sold .
Sales set a new record high
Our sales continued to rise . Most noteworthy
was the performance .of'QLn GOLD, the only major
brand among cigarettes offering both~regular and
king-size~ to enjoy a sales increase in 1953 . The
debut of king-size OLU~ GOLD in April„ a step
prompted by a definitive ! trend, contributed to the
brand's growth during the balance of the year . .
Filter-tipped cigarettes in 1'953' doubled the
share of the market they had in 1952 . KE :vTT
doubled and redoubled its volume and showed
the greatest percentage of increase of any brand
over 1952 . Shareholders will be interested to know
that normally it takes four or five years for a neww
brand to get into the black ; KENT accomplished
it soon after we! achievedlnation-wide distribution .
You may have read some of the recent news-
paper stories which accented the fact that the
cigarette Industry in 1953 failed to show an in-
crease over 1952 . We cannot honestly become
alarmed . Many factors require mature consid-
eration.
King-size brands went, ahead
For example, there was the : increased sale of
king-size cigarettes - in 1953 they aecountedl for
27% of the market, 9%~ more than in~ 1952I-
which naturally tended somewhat to reduce unit
consumption. And, there were a number of new
brands - as welll as new size old brands - intro-
duced during the year which required inventory
adjustments by distributors . Too, there is doubt
whether the 4% increase in factory withdrawals
in 1952 representedl a 4% increase in~ actual con-
sumption or may have been a reshuffling of in-
ventories .
Wide publicity was given during 1953' to re-
ports of experiments with mice and' to suggestive
statistical analyses which attempted to link exces-
sive cigarette smoking with lung cancer . While
these are unproved and' inconclusive studies„ylan-
agement does not believe they shouldi be lightly
dismissedi Accordingly, we have sought the facts.
Shareholders will be interested'to know, that many
distinguished doctors and'research scientists have
publicly questioned the validity of' these experi-
ments and their significance . There is no proof
that cigarette smoking is a cause of'~ lung cancer,
and there is no agreement among the medical
authorities on what the cause may be .
We believe Lorillard products are not injurious
to anyone's health, but we accept as an inherent
responsibility of'our corporate citizenship the ob-
ligation to make the public's health our business .
In addition to continuing a program of'~ research
in our owm laboratories and, through consulting
research organizations„we have joined with other
1'
Cltairman of th,e Board
ANNUAL MEETING' AND PROXY : The Annual
Meeting of, Lorillard shareholders will be held on April
6, 1954 . Notice of this Meeting is enclosed with this
Report,,along with proxy and proxy statementL
Approximately 77% of our shareholders are individuals
holding,101D shares or less . As we said in a previous An-
nual Report : "This means we,are financed by'_41ain Street .
We like this situation because it makes small holders
important . It makes eaoh proxy, for however few shares,
cigarette manufacturers in the formation of the
Tobacco Industry Research Committee, which„we
are confident, will get the true facts .
In 1953 your Company honored its long-service
employees. Gold pins in recognition of loyal and
continuous service, ranging from 20 to 50 years,
were presented to 629~ Lorillard men and women .
With, this group of seasoned, mature people of
hard-won knowledge and experience we have
blended'middle~aged men and women at the peak
of their potential, and' energetic, young blood
with an earnest desire to learn and to serve .
Thus the Management team has balance and as-
surance of continuity of'leadership .
Planning for tomorrow
Programming f'or our new plant' in Greensboro,
North Carolina, advanced as planned . Ground'-
breaking ceremonies will be held there at mid-
year . An architectural perspective drawing, is
showm at the centerfold. This new source of! pro-
d'uction~ will permit the Company to sustain its
growing stature in the Industry .
In the past year we strengthened our funda-
mental posi'tion iit the Industry . We are confident
and optimistic about the future .
spokesman for an, individual who works, saves and
invests in his future security ."
Your proxy is thus your way to approve or disapprove
of ManagementPs stewardshipi Your vote is therefore
important personally to Management. If youi are unablee
to attend our Annual Meeting in New York on April 6,
1954, please sign and, return your proxy before you
put it aside. It will let us know of' your continuedd
interest .
 Our 1953 Results at a Glance
PERCENT
1953' 1952 IN CREA'SE

We received :
From sales of our products . . . . . . . . . . . $253,933,462 $214,508,482

Our costs were :

Federal Internal Revenue stamps ; . . . . . . $1112,685,338 $1100,213,9541 12 %,
Leaf tobacco ; other materials and services ;
and miscellaneous costs . . . . . . . . . . . 95,3i60 ;197 79,257,349
Wages and salaries . . . . . . . . . . . . . . 21,259,213 18,317,437
Depreciation . . . . . . . . . . . . . . . . . 1,051,457 950,870
Interest paid to banks and bondholders . . . . 2 ;520 ;216 2 ;026 ;607
Federal andl State taxes on~ income and other taxes . 13,863,-1 .70 8,0411,323

These costs totaled . . . . . . . . . . . . . . $246,739,891 $208,807,540

Leaving us net' income o f . . . . . . . . . . . $ 7,193,571 $ 5,7'00,94'2

Which was allocated as : follows :'

Cash dividends . . . . . . . . . . . . . . . . . $ 5,143,477 $ 4,430,307
Retained for future growth . . . . . . . . . . . 2,050,094, 1,270,635

Our shareholders' investment at year-end was $ 77,878,061 $ 67,820 ;512'

W hich belonged'to our shareholders as f ollows .:

Preferred shareholders . . . . . . . . . . . . . . . 113 % 14% .
Common shareholders (including retainedl earnings) . . . 87 % 86 %

And bene f:ts these members o f' the Lorillard f amily : ,

Preferred shareholders ( year-end ) ~ . . . . . . . . . . . 2,021 2 ;089'
Common shareholders (',year-end ) . . . . . . . . 26,404 26 ;320
Salariedi employees (year-end ) . . . . . . . . . . . . 1,458'. 1,322
Wage-earning employees ( year-end ) . . . . . . . . . . 5 ;128'. 5,17 :9

Results per common share :

Net income . . . . . . . $' 2 .28' $ ~ 2 .01'.
Dividends . . . . . . . . $1 .60' $ 1 .50.
Book value . . . . . . . $23.86 $23 .24'

TOBACCO, OTHER'PURCHASES WAGES' & SALA'RIES'

& DEPRECIATION / IR37E
37.97f \
INTEREST
_,0 .99 i
HOW OUR SALES DOLLAR
' INCOME AND OTHER TAXES'
WAS' DISTRIBUTED - - s.Ab 41

``REFERRED 8 COMMONi
' DIVIDENDS
s.os e
RETAINED EARNINGS .
0400!
 TEN-YEAR COMPARISON OF FINAN~CIAL STATISTICS

RELATING TO OPERATIONS
Income Dividends
Year Income Income and per per
Ended Net before Taxes Excess Net Common Common
Dec . 31 Sales on Income ProftsTases Income Share* Share

1953' $253,933,462 $'18,787,571 $11,594,000 8:7,193,571 $2 .28'. $1 .60 .

1952, 214,508,482 11,640,942' 5,940,000 5,700,942 2 .01 . 1 .50
1951 188,447,430 10 ;943,472 59 817,000 : 5, 126 , 472 1 . 78'. 1 . 50
1950 167,936,9311 12 ;632,768' 5,895,000, 6,737,768 2.69, 1.85 ~
19491 153,500,123 11,211,133 4,387,000 6,824,1133 2 .73 1 .75
1948'. 140,279,236 9,143,839 3,498,900 i 5,644,939 2 .21 1 .50
1947 ' 127,919,655 8,9464625 39430,700 5,515,925 2 .15 : 1 .50
1946 124,047,263 5,661,513 2 ;149 ;300 3,512,2113 11.26 : 1 .00,
1945 126,429,130 7,645,170 4,110,713 3,534,457 1.27 1 .00,
1944 123,790,406 9,928,791 6,3201942 3,607,849 1 .30~ 11 .00,

RELATING TO BALANCE SHEET'

Property, Plant
and Equipment
Book Value
At Total 1Corking Gross N 'et af ter Sha reholders' per Com .
Dec. 31 Inventories Capital Amount Dep reciation In vestment mon . Share•
1953 $135,727,170 $1 11,269,498 $ 24,392,884 $16,218 ;6W $77,878;061 $23,86
1952 125,008,096 81,369,651 22,605,222'. 15 ,085,844 67, 820,512 23 .24
1951 101,995~679i 81,658,130 2 1,342,441 14 ,200,835 66, 549,877 ' 22 :73 .
1950 84,461,181 69,907,552 19,433,534 12 ,734,785 60 ; 876,008' 22 :73
1949 74,992,955 70,474,585 17,707,279 , II 11 ,094,041'. 58, 980 ;453 2'1 .89
1948 72,538,273 69,537,669 16,726,561 10, 509,406 56, 773,8691 20:91
1947 73,237,247 69 ;893 ;204 15,291 , 608 9 ;153 , 150, 55 , 184 , 829 20!20
1946 77,834j711 69 ;476,241 1 4,581,737 8, 456,319 53, 724,799 119 .55
1945 87,196j404 71,458,027' 1 1,806,0811 5 ,793,0911 52, 740 ;209 ! 19:11
1944 . 69,204,385 701201,362 ' 1 1,818,588 5, 984,078 5'2, 138,344 118 .84
• Based on number of'shares outstanding st end of each year .

LORILLARD SALES OVER 10 YEARS LORILLARD EARNINGS OVER 10 YEARS

(sroµ in .rs~ d ddfa.,) . LORILLARD NET WORTH OVER 10 YEAR :
(Scale in nriAionr ci dcllon) I fScot* in ieANimn ot dolfer.l ~

c M

.0b

YI 'If 7{'. 'q' .N .y .~

'fl 'S2 .53 N
C~CC~CC~C
'If u r 'MI •1 . .54 'f1 S2 'A
10

4 If
K
fl .W
N 'SI 'f2 'fs
Although competuion was keener in 11953, Lorillard brands went ahead 12% . Sales Division's well-planned m.erchan,
dising programs for introducing king-size OLD Go[ .D and pushing KENT helped bring the Company its best sales year .

Sales ~Volume Reached a New High

Our ma jor brands showed gains higher than Liudu ;rtry averages

BRIGHT NEW CHAPTER was written into the
1-1 Lorillard book of sales in~ 1953 . While the
Itidustry as a whole failed to advance,, Loril'lard
brands were up 12% .
Our OLD GOLD was the only brand in its cate-
gory to show an increase over 1952 sales accord-
ing to published figures widely held as authorita-
tive and whi& we use as a yardstick to measure
comparative Industry growth . Our filter-tip brand
KENT' showedithe greatest percentage gainof'~ any
cigarette, regardless of' classification .
King .-size cigarettes as a whole adbanced 45%
cigarette which has the heritage of fine quality
long associated with~ OLD Got .Dr
Filter-tip cigarettes continued to grow in popua•
larity and showed a 128% gain over 1952 : The
sales progress of KENT was the talk of the Indi,ls-
try; our filter-tip brandl turned in a spectacular
500% sales increase. By late Spring of 1953 pro-
duction facilities enabled us, tb make' KENT avaiil-
POST:WAR GROWTH OF LORILLARD CIGARETTES
x,E VS. ALL OTHER INDUSTRY BRANDS
19 . 6 S. I.. TA%-PAID SAIES'. 19Y619!] ~.

and in, 1953 accounted' for 27% of the market .

1I
Our king-size OLD GOLD made rapid strides in the
eight months i't was omi the market and enabled
our principal brand to end the~ year as the only
cigarette in both regular andl king-size to show
an increase .
Introduction of' OLD, GOLD king-size was ac-
complished with over-night nation-wide market
availability,, an achievement unique in cigarette
history .
Swrea_ P.'Willard .ewnwl~.fqur. . .f-Old Ge1d, En,tlewr.K .n1;
When king-siie OLD GOLD made its debut, we IM.nnd l...nw S-ice/w roal ra .poid rit~dnaral . :

logically shifted promotional emphasis to it in-

stead of EMBassY, which could not' be expected to I III I I! I
,,, '.t : ~a9~ ~7D~. 71 ~52 .~ 70
respond as dramatically ini the king-size field as a

6
 Ahtong 1953's dramatic displays to launch OLD GOLD Sampling activity took salesmen everywhere, even intoo
king-size was this new rack for large markets . The rackk disaster areas,, to make f riends f or OLD GOLD . This is a
also features OLD~ GOLD regular,, KENT and EMtsAssy : scene at tornado-swept Morcester, Mass ., last Summer .

able ini every U. S . city . More of each salesman's
time was assigned to assuring a wider availability
of KENT, and we gave greater emphasis to smoke
demonstrations before medical and dental con-
ventions to prove the superiority of KEVT's
Micronite filter .
Cigar sales throughout the Industry fluctuated
during the year and, while up slightly in volume ;
were disappointing from~ the standpoint of profit .
HEADLINE, now available in, a vacuum-pack,
showedi the greatest strength in 1953 . MURIEL,
our leading cigar brand, which showed an 18 `•"o
gain in 1952, did not advance in 1953 .
Industry sales of'chewing,tobaccos fell off'3%
during the year, bufi our brand' BEEax-N'uT, the
Industry's leader in its class„ continued to enjoy
a sales gain, advancing, 4'% over 1952 . On the
other hand, sales of'smoking tobaccos, following,
a trend of'several years, continuedl to fall off in a
narrowing market .
Throughout the year the Lorillard sales organ-
ization was stabilized and strengthenedL; at noo
time in Company history have we had a more
hard?working and alert force of' merchandising
specialists.
Nb channel to the consumer was overlooked
and'some new ones were developed . Merchandis-
ing,through, food and grocery stores,,which Loril-
lard pioneered and which now accounts for about':
one-third' of all cigarette sales, received greater
attention . The importance of vending machines
was seen by Lorillard several .years ago ; such
sales now represent 1i6`,7a of the Industry volume .
In 1953 we developed new devices to draw smok-
ers to the OLD GOLD columns in vending, ma-
chines. At every opportunity - in RFD country
stores and sleek new airlines terminals, fromi
Social Register functions to county fairs - Loril-
l'ard salesmen were winning new friend's for our
brands . .

Creating eye-arresting window displays is Yending machines received added atten- In-store smoke demonstrations to prove su•
one phase of'Lorillard salesmen's activity . tion in 1953 with new advertising devices periority of KEN'r's Micronite filter became
This is a typical display forM[7tucL cigars . designed toattract smokers to our columns . an ever-widening activity of our salesmen .

0
 The Advertising Investment Yielded
Greater Dividends
Lorillard brand messages
reached 100,000,000 people weekly in 1953

DVERTISIhG is an investment in product devel-
opment, brand loyalty and Company growth .
Confronted with the stiffest competition the In-
dustry has ever known, Lorillard strengthened this
investment in 1953 to gain greater prominence
for our brands. .
The test of any investment is the dividend it
yields . In 1953,, the dividend was reflected in the
fact that Lorillard' was one of'~ the few tobacco
companies-and the only major one-that could
point to a unit' sales increase during the year, an
advance of'~ 12` over 1952 .
The advertising investment enables the Com-
pany to balance production and consumption-
and tip the scales in favor of safeguarding the
shareholder's interests . Each passing year encoun-
ters new cigarette brands which are making an
impressive bad for consumer recognition . To fend
off these attempts to penetrate the lines held by
oldi established brands ; it may even be necessary
in the future to broaden the program of advertis-
ing as a protective measure .
Because Lorillard cannot divert the trernendbus
sums of money to ; advertising,that some firms can ;
the Company's advertising architects in 1953 had
to get more than a dollar's value for each dollar
spent . The Company concentrated its magazine
advertising for OLD GOLD in Life, Look and! The
SattLrday Evening Post, through~ which it reached
an audience of 58,550,000 with~ ea& ad . In addi-
tion„ O0 LD GoLn messages were placed in publica-
tions having a specific appeal . In 1950 Lorillard
became the first cigarette producer to advertise
in, the mass circulation ma ;azines sold through
grocery chains and super-markets . In 1953 the
Company decided to expand its use of these pub-
lications, a step dictated by the fact that during
the year one-third of'al!1 cigarette sales were made
over the counters of food stores .
Hbw welli the Company succeeded in getting,
more than : a dollar's value for each dollar spent
was reflected in continuing, surveys to determinee
the number of magazine readers whol note OLD
GOLD advertising. OLD :GoLD showedl25% higher
recogni'tion per dollar spent than other brands .
Of' similar interest was the survey report that
51% of all smokers-regardless of their brandl
preferences-remembered specific .features of OLD :
GOLD'S advertising . This has special significancee
for us because, in 1953, the tend'ency, of'smokers~
to switch brands showed a marked increase :
We expanded our use of television on behalf'
of' OLD GOLD in 1953' . Our two established shows
- T wo f or the Money and Chance o f a Li f etime -
continued to reach large weekly audiences, and
we added a bright' new show, ,Ludge for Yourself,

Popular Hoosier humorist Herb Shriner Popularity of OLD GOLD Dancing Packs KENT commercial given by Jonathan Blake
reaches 18 ;000;000 weekly via radio-TV was seen in 20,000 requests for their faces . won many TGV advertising honors in 1953 .
 A QUICK' LOOK AT LORILLARD'S NETWORK AD\rERTISING'
Tro Far Judp. For Ch'o nc. Of Ov..n For . ~I Toylor Monday Morninp .
A Day. ~, Grant N.ws N.odlinos K.nt Tl..otr .
Th. ,Mon.y, I Yeurs.lA A Lif.time Th. W.b

A'udi.nc. (WMkly) 1t.~171A00 I 1II,927;600. 3,242 ;600 13;200,000. 11,0581000 3;060,900 . 1,800A00 . 4,243,017

I Numer i VeNey Myat.ry Pub4ic N+wscost New.co.n DromatFc Show

Fornwt Ca .e.dy .0ui.
Sonp Jadyinp Show Drama Serrin
Gir.-oway
N.rp Fr.d D.nni . Jonatl:en Jock 1eYlor pon. Gardi- V6 .riou .
Star . Gront L .n 6.crdsl .y,
Shrin.r Albn Joms 81ok.- beiley
N8C DuMent C6S Awtual ABC ABC Vnriour
N*two.k CBS .
Ftidoys S .days Man .-F .i . S: .nd6y Sundoyr Verious
DoyandiNourtESTi Suturdhys Tusdoya
9-9_30iFM 10-10 :30 .PM 10 .I0i30'PM, 10-10:30PM' )1 .43+12'.NOOn 9: :15-9:30PM~ 6 :00,6':15 .PW
Radio Rodiu . Rodic . TV'
TVond .orRodio TV'+Rndio TV . TV TV
631i ..- 208w S01ire I - . - 25.
NwafStations-TV' 77.uiw
48filrn 33.fi1m Ifilm 43fi/in
530 331 331 -
N6 .ofStotions-Rudio . 209 . - - -
OLD : GOLD OLD GOLD ~ I K .nt . K.nt
P .oducr Feotin.d I OLD : GOLD. OLD . GOLD. OLD ~GOLD K.nt .
OM .r Pioducts . Muri.l Murirli Muriel. Muri.l - . - I - -
Includid-TV.
ONienModuch~ Mariel - - - - N.adlin. . - -.
IncLudid-Rodio
Dot.Mpon 9 ;30'!21 8 :'18's3 38'!2 9,28'12 1/1!S1 10U 52. 1Da6/!2 10 31r33 .

Aitnewwr . p~nnis D.nnis D .nnis~. Jonathon G.m Toylor Don Gordin .r~ JonaMwn
Jam.. Jems~. 8]ck . . 8bker Grant L.nMordsLY. 81ak'v*
JotMS

starring Fredl Allen . These three TV productions uting' to Company profits, This, we believe, is
took OLD GOLD's message : to more than 30,598,- somewhat of' a record . .
20I0 Americans weekly. As a result wemere able to give additional pro-
To reach that vast portioni of the American motional support to our filter-tipped brand . In
public which relies on radio for its entertainment 1953 we launched Kent Theatre to supplement :
and news, the Company presented Two f mr the the widely popular mystery-drama The Web on
Money, Queen for a Day ; and Ta^vlor Grant News television, and also assigned our radio news
on behalf of OLD GOLD . show Mondav Morning, Headlines to promoting
To ~ introduce OLD : GOLD king-size . Lorillard em- KENT .
ployed to advantage : all its TV and radio shows
as well as the' regularly scheduled program of' K E1+rT conz mQr c ia l won ,. manyhon+ors
magazine advertising . In addition ; dominant in-
sertions in 2416' newspapers were : lined' up . The effectiveness of our KENT advertising won
Experience with KENT in 11953'libeled the popu- many honors in 1953, including being picked
lar notiom that it takes many years to get the as the No . 1 commerciall for the "hard' sell" by
advertising, dollar back in the Company's coffers . AdveTtising, Age - The National Newspaper of
KENT cigarettes, were introduced in the Spring, of Marketing.
1952 . As production and distribution ; made pos+ Throughout the year Lorillard put it's brand
sible wider market availability, effective advertis=
ing, followed in its support. Consumer response messages before more than! 100,000',000peopleweekly, getting the maximum effectiveness from
was so gratifying that in the Summer of 1953' each d'ollar invested in advertising . In 1954 the
Ke~rtT was in the black and absorbing the cost Company will demand even, greater performance
of' its over-all promotionall program, andl contrib• of' each advertising dollar .

Since Lorillard launch'ed AnFerican Indian nrnnis James . OLD GOtn annoeJncer„also Jack'Bailey's Queen, fNtr a Den• on behalf
ftlm series, 75,000,000 haue viewed th'em . stars in TV show Chance of a Lifetime . o/'OLD GoLD continued as top radio show .
 The Bronx River Mill, built about 1840
by Peter Lorillard, son o f'the Company's f ounder, was at
one time the largest tobacco-producing, unit
in the United States .
The origin.al'structure, now part'of'the
Btonx River Park system, still stands . To contrast'this
edifice with Lorildard's plans for tomorrow,
please turn the page .
OUR NEW GREE,NSB0R0 PLANT'
R?hen cornpleted~ it' will~ bet~ter enabl'e~~~ ~

Larill~ard '~ to~~ sustain its~gro~u=ing

stature in the Industry

Three yearsagoVlanagement foresaw that in-
ability to force more production through exist-
ing facilities would be our principal deterrent
to, growth and progress . Aspeciall committee
was named to study ai program for more effec-
tive ; productive, economucalland flexible opera-
tions . The economics of' leaf-storage, process,
ing, and cigarette manufacturing are eomplex ;,
many months of detailed examination of the
facts were required before a course of action
could be advanced . Under studv came new ad-
vances initechnology and equipment, a5 well as
strategin locationfpr goodi distributioni chan-
nels . These, and hundreds of other factors,
were broughtiilto focus in the preliminary
planning for the creation of one ofi the coun-
try's most modern cigarette plants which . when
added to present' facilities, will enable Loril-
lard to meet its needs for growth . Of primary
importance was the choice of a site,, and late in
19i;21 an 80-acre tract was acquired at Greens-
boro,, North Carolina, for the new Lorillard
plant . Since then architects and engineers have
huddled, over drafting boards with, Lorillard
factory specialists to convert to workable blue•
prints a, master plan for a cigarette factory of
latest'design, ineorporat'ing,all the advances in
production efficiency known to science . They
have come up with plans for the most completely
integrated eigarette-malcing, operation in the
country . In the latter months of 1953, while
planning,entered the finallphase and production
layouts were being made, specialieedl equip-
ment was, being designed to our specifications
by manufactiurers in, both Europe and, the
United States for instalQationi in the new plant .
 Scene artobacco ; auction during the burley mart last year shows Vice President and Director of
Leaf' Activities Irvin H . Peak (center) examining crop . Drought in 1953 helped' boost prices .
Leaf Costs Went Up
Demarcd fbr fiuie•cured and burley tobacco hits all-time high .
TOBACCOPRICES IN 1953 gave opportunity for
study of a tough~ lesson in the realistic trans-
lation of'~ the economic principle of' supply and
demand . Supplies were cut when 1953's drought
shrank the yield per plJanted acre. Surplus pro-
dhction, normal under ordinary times, was made
impossible by the Government's regulations which
limited the : acreage for tobacco growing .
Demand' climbed to an allltime high, helped
along by the accelerated trend to king-size ciga-
rettes, which require more tobacco per unit! .
m
Thus, despite the fact thatGovernmen2 support
prices : in 1953' wem on tlie average less than in
1952, your Company had to~ pay a higher price
last year for flue-cured and' burley tobacco leaf
than it did in 1952 .
The higher costs were not sprung on us without
warning . We anticipated increased leaf costs at
the outset of 1953 ~and accordingly made our plans
for purchasing by developing & rigid timetable
for our tobacco ~ inventory acquisitions . Purchases
were timed strategically so that we were success-
fullin obtaining,top quality leaf as is our custom-
but': without the penalty of paying a, premium to
do so . The market situation deniedl opportunity
for savings, but careful planning enabled Lorillard
to get a full! dollar's worth of quality leaf for
each dollar spent . .
The Government has announcedi a small in-
crease in acreage for the : 1954~ flue-cured crop .
which should help in some measure to alleviate
the supply picture for the corning year,, but it is
doubtful if it will' be sufficient to balance out the
crop losses caused by the 1951 drought . On the
other hand, the Government has also announced
its intentioni to decrease the 1954 burley crop
acreage .
Because,of the continuing increase in sales of our major
brands, it'has been necessary for us to purchase greater
quantities offlue,cured and burley tobncro than b'eforr .,
12
Every Plant
Worked at
Full Capacity
These production lines worked two shifts, six days a week
throughout year to meet demand for KEwT'and'king•size OLD
Introduction of' king-size OLD GOLD Ctioto, b'otb' of which added to our normal producti .on loads .

and' increased demand f or' KENT '

added to regular production loads .

L RILLARD'S' PRODUCTION FaCILITIES began~ the

year at full capacity-and hadn't slackened the
pace when the year ended ., Time clocks were
punched on a two-shift, six-day-a,week basis to
keep up with the increasing flow of orders .
It was the first' year since the war that' the usual
seasonall slack months, normal to the Industry,
were absent .
Reason for the year's heavy manufacturing
schedule was the introduction of'OLn GOLD : king-
size and the constantly swelling demand for KENT
which added to normal production loads,

Conversion m king-size a problem

The decision to puU OLD GOLD on the market in
king-size created many production problems. Man~
uf'aeturing, equipment for producing the longer
cigarette, packing and preparing it for shipment,
allirequi,red technological modifications. Machine
parts to convert standard! equipment, which had
been farsightedNy acquired earlier, were flown to
Lorillard plants in Jersey City and Louisville .
Teams of factory specialists and highly trained
mechanics were shuttledi between plants to ex-
change time-saving ideas and techniques :
Production deadlines were established by the
sales, advertising, and' merchandising timetables
and, as a, result, the Director of Manufacturing
and his assistants forgot the cloek and ignored
the calendar until'theyhad!accompli'shed the task
of' stripping, down equipment and rebuilding, it
for its new function :
It became obvious early in 1953 that manufac-
turing facilities for KENT cigarettes would be
inadequate as each day's new, orders piled up . AA
supplemental, prodliction unit was hastily estab-
lished in Louisville in March to enable the Com-
pany more readily to meet the demand .
At, the outset of 11953' Lorillard had orders for
new, equipment and additional machinery to manu-
facture KENTS, but deliveries could not meett
demand . As rapidly as new machines did arrive,,
round-the-clock crews installed them and they
were put into immediate production .

13'
 Research . . . in Lorillard's Greater Service
While stead'f astly maintaining
quality control' over current' products ; it constantly
looks ahead f or new ones

EI VERY CIGARETTE, every pack, every carton

shipped from our plants is being made better
than it was last year, last month and often just
widespread popularity of KENT with its Micronite
filter provides one dramatic example of how the
laboratory contributes to the growth of the Com-
last week . From plant to, smoker's lips, every pany. Having a king-size OLD GOLD ready to sat-
phase of cigarette manufact'ure is screened' by the isfy market demand was another . Tomorrow the
Research and Development Department to pro- smoking public may require the Industry to pro-
vide assurance that the characteristic Lorillardd vide still another entree on the tobacco menu .
quality will not be found wanting . Research enables us to keep pace with the public's
Competitive marketing of cigarettes demandss changing, tastes and always to have,ready a Loril-
that Lorillard's researchers stay alert to quality lard product that will keep the nation's oldest to-
control . To keep Lorillard's produets ahead of' bacco company's growth-curve steadily climbing .
competing brands, it is essential that' they be
manufactured' to tight specifications . Nbthing Leaf buying challenges the lab .
eludes the t¢ained eyes of'the laboratory men„not, tobacco, nor paper, nor the seemingly most in-
The greatest single cost factor in cigarette pro-
significant items which go into our products . ductiom is tobacco ; which has been rising, yearly :
To effect economies in all related leaf' activity -
Trends create new problems purchase, curing, aging, blending,- the Research
and Development Department in 1953 accelerated
At no time in the Company's history have the its studies to seek out new opportunities for sav-
brand loyalties of the smoking public been Iess ings without sacrificing the high quality which
predictable : The swing to king .-size and filter- identifies P . Lorillardl Company products .
tipped cigarettes sums up the story of radically It is the goal of the : laboratory to establish
changing smoking, habits . scientific yardsticks by which all leaf'activity may
Responsibility resides with research to see that be measured . Intense emphasis is being given this
Lorillard anticipates such trends . The current project because,, as Loriilard sales continue to

Test of'paper's tensile strength is one Analytical balance weighs minute quantities o/ Nicotine determination in stnok'eandlea/ involves filtration procedures
of many to assure cigarette's quality . ash to determine non-eombustibleaeaf elements . .
mount, more and more capitall must be : invested
in tobacco leaf inventories .

Research guides the sales effort

To aid and guide the formulation of Lorillard's

marketing, policies andl aetions, market research
at Lorillard has the assigned funct'ion of gather-
ing, interpreting, and reporting to Management
data which may be hel~full in brioging into clearer
focus the current ancii probable future marketing
situation for Lorillard and the entire Industry .
This activity provides Management wit'h a con-
tinuing, appraisal of' the sales performance of all
Lorillard' products as againsU competition . It pro-
vides constant examination of marketing trends Market'research cotnplements product research, helps evalu .
for both Lorillard and the entire Industry for the ate the e8ectivenessof Lorillard's advertising and'sales e jf orts .
purpose of'making periodic :brand sales forecasts
L'ab'oratoryactivi,ty providesq,uality control on al mar u-facturing
that can be used as gpideposts in budgetary and ; assurance of continued high quality products .
other considerations. It further provides periodic
consumer surveys to make available detailedl in-
formation on such subjects as buying habits,
brand preferences and, attitudes toward various
tobacco products and their uses„ all of which en-
ables Management to gain marketing advantages
over competitors .
Market research gives intensive study to media
and costs to determine the effectiveness of'~ Loril-
lard advertising, ini achieving desired objectives
as compared' with competitive advertising,, and
makes related consumer studies to determine the
comparative extent of consumer awareness and
acceptance of Lorillard's advertising messages .
Thus market research guiides the way for the
efforts of product': research-making a combina-
tionithat Management is confident will always find
Lorillard ready and waiting to meet new trends .

Lorillard-developed instrument determines "draw" o f cig= General view of Lorillard laboratory which was responsible
arettes and tightness of cellophane wrapper on packages : for development of KE*tT cigarette and king-size OLD GOLD .
 P. Lorillard Company
: 'I
CONSOLIDATED

ASSETS
. December .31 '
Ct1RRENT, ASSETS'i', 1'953' 1952
Cash . . . . . . . . . . . . . . . . . . . . . .: . . . . . . $' 7,622,449 $ 8,547,344'
Accounts receivable - customers (less $660,839 in 1953' and .
$643,8111 in 1952 for doubtfyl aceounts and cash discounts) . 11',629,297, 9,602,442
Other accounts receivable . . . . . . . . . . . . . . . . . . . 453,609 323:262'
Inventories (at average cost) :
Leaf'tobacco . . . . . . . . . . . . . . . 116,690,466 140 .093 .684
Manufactured stock and revenue stamps . . . . 14,188.749 10,365,707
Materials and supplies . . . . . . . . . . . . . . . . . . 4.8474955 4 .548:705
Total current assets . . . . . . . . . . . . . $155.432,525 S143 .481,144

PROPERTY,, PLANT ;, AND EQUIPMENT (as adjusted D6cember' 31, 1932 by'
authorization of stockholders, plus subsequent additions at cost, less
retire.ments) : .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . $ 991,874 $' 866,529
Buildings and buildsng, equipment . . . . . . . . . . . . . . 7,979,883 7,730;775 .
Machinery and eqpipmenG . . . . . . . . . . . . . . . . . . . 1 .51421,127 14,007,918'
$ 24;392;8841 8'22,605,222 ~
.Less accumulated depreciation . . . . . . . . . . . . . . . . 8;174',245 7,519;378
Total property, plant, and equipment'- net $ 116 :2118.639. $' 15,085,844

PREPAID EXPENSES AND DEFERRED CHARGES . . . . . . . . . . . . $ 1,387,373 $, 1,340,361

UNAMORTIZED DEBENTURE'DISCOU.NT AND EXPENSE . . . . . . . . . $' 952;550 . t 424,655

BRANDSi TRADE MARKSi AND GOODWILL $

TOTA L . $1'73,991,088'. $160,332,005' ,0

ca
N
N.
~
O+
16 a*
V
 ' ik

and Subsidiary ComRany

BALANCE SHEETS

LIAB'ILITZES,
December 31'
CURRENT LIABIIITIES :' 1953 1952
Notes payable (banks) . . . . . . . . . . . . . . . . . . $ 25,700,000 $ 49,700,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 3,450,467 . 3 ;9-4fi,273' .1 .
Debentures due within one year . . . . . . . . . . . . . . . . 950,000 600,000
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . 12,042,934 6,502,735
Accrued payrolls . . . . . . . . . . . . . . . . . . . . . 1,225,779 801,317
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . 476,438 270,000
Other accrued liabilities . . . . . . . . . . . . . . . . . . 3'1I7;409 291,168'
Total current liabilities . . . . . . . . . . . . . . . $' 44,163,027 862,1111,493 .

LoNC.TERn I DEST :

Twenty Year 3% Debentures, due October 1, 1963

('5600,000 to, be retired annually to 1962) . . . . . . . . . . . $ 14,800,000 $ 15,400,000
Twenty-five Year 3% Debentures, due March 1, 1976
( $350,000 to, be retired annually to 1975) . . . . . . . . . . . 14,650,00'0 15,000 ;000
Twenty-five Year 33/4% Debentures„ due April 1, 1978'
( ;675i©00 , to be retired annually 1956.19777) . . . . . . . . . . 22;500,00&
Total long-term debt . . . . . . . . . . . . . . . . $' 51,950;Q00 $ 30,400,000

CAPITAL AND RETAINED EARNINGS :

7~`/o Cumulative Preferred Stock (par value $100 per share) -

authorized 99,576 shares,, issued 98,000 shares . . . . . . . . . t 9,800,000 3' 9,800,000
Common Stock (par value $10 per share) - authorizedl 5 ;000,000
shares ; issued 2,852,854.89 shares in1953i 2,496,281 .89 in, 1952I . 28,528,549 24,962 .819.
AdditionalI paid-ini capital (premiums less expenses
on common stock issued) . . . . . . . . . . . . . . . . . . 8,085,578 3,643 ;8;3'.
Earnings retained for use in the business . . . . . . . . . . . . . 31 ,463,934 29 ;413 , 840 .
,o~
Total capital and retained earnings . . . . . . . . . $ 77,878,061 $' 67,820,512' ~
TOTAL . . . . . . . . . . . . . . . . . . . . $173 .991 ,088 $160 i332 :005 IV~ i
~
tr
See Notes 1 and 2„ on, page 18 . 00

~
17

~
~
 CGNS'OLIDATED INCOME AND RETAINED EARNINGS

Year E'nd'ed December 31

1953 1952

SAUS (less discounts, returns, andl allowanc es) . . . . . . . . . . . . $253,9333462' 8214,508,482

Cost of'Goods Sold, Selling, Adverti'sing,,and Administrative Expenses 232,777,823 201,096,117

OPERATING INCOME'. . . . . . . . . . . . . . . . . . . . . . . . $ 21,155,639 $ 13;412,365

Other Income ( net ) . . . . . . . . . . . . . . . . . . . . . . 152,148 255,184

$ 21,307,787 $ 13,667,549

Interest Expense 2,520,21'6' 2,026,607.

INCOME BEFORE TAXES ONi INCOME . . . S 18,787,57:1 $ 11,640,942

Federal Income Tax . . . . . . . . $ 9,503,000 : $ 5,798,000

Federal Excess Profits Tax . . . . . 1,712 ;000 : 72,000
State Income Taxes . . . . 379 ;000 214,000

Total Taxes on Income . . $' 111,594,000 $ 5;940,000

NET' INCOME . . . . . . . . . . . . $ 7,193,571 $' 5,700 ;942'

Retained'. Earnings i at beginning, of year 29,413,840 28,1I43 ;205

$ 36,607,411 $'33,844,147'

Dividends on Preferred Sto& ($7' .00 1per share ) ea 686,000 $ 6815 ;000'

Dividends on Common Stock ($1 .60 per share in 1953, $1 .50 in 1952) 4,457,477 3,744,307

$5 ;143,477 S 4 ;430,307

R$TAINED EARNINGS AT END OF YEAR' _ $' 31 .463,934 $' 29.413'.840

Notes :

(1) As a resudu of'restrictions contained in the debenture indentures on the payment of dividends on
common stock andl the purchase, redemption, or retirement of such stock, the amount which
couldi have been expended' for such purposes at December 31, 1953 was limited to $9,550,094. .

(2) Funds held by disbursing, agents for payment of' preferred and common dividends, debenture
interest, etc ., aggregating, $2,246;977' at December 31,1953' and $511,918 at December 31,
1952,, and the related liabilities, have been excludedi from the balance sheet .

(3), Provisioni for depreciation amounted to $1 .051',4457 in 1953' and, $950:870! ini 1952 .

18
HAS'KIINS & S ELLS
CERTIIFIED. PUBLIC ACCO :UtiITANTS~:
67 BROAD STR'EET'

NEW' YORK 4

February 116, 1954.

To the Board o f Directors and Stockholders

of P. Lorillard Company :

We have! examined the consolidated balance sheet of' P Lorillard Com-

pany and its subsidiary company as of December 31, 1953 and the related
statement of' consolidated income and retained earnings for the year thenn
ended . Our examination was made in accordance with, generally acceptedd
i
auditing standards, and accordingly included such tests of the accounting,
records and such other audi'timg proeedures as we considered necessary in
the circumstances .

In our opinion, the accompanying consolidated balance sheet and state+

ment of consolidated income and retained earnings present fairly the
financial position of the companies at December 31, 1953 andi the results
of their operations for the year then endedy in, conformity with generally
accepted accounting principles applied on a basis consistent with that' of
the preceding year .

,:
41ZI 4~ ele&

19,
 A shareholder at last year's .-Lnnual'Meeting takes the floor t~oask31anagementaq,uestion
relating to our business . The audience also was shown latest Lorillard' documentary film . .

Annual Meeting $rings

Shareh olders and
i
Management Together

The Annual Meeting provides shareholders an

opportunity to get better acquainted with
Lorillard executives and their problems .

A'shareholder and one of our underwriters

meet at last year's Annual Meeting and
exchange views on year's developments .