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Acquisitions:
In L970, the Company invested 520,086,000in convertible notes, capital stock and related options of Mission Viejo
Company, a planned community builder . During 1972 ;the Company converted the notes and invested an additional i
$13,500,000 to exercise the options . Also in 1972, the Company acquired, under new agreements, all of the remaining
ownership interest in Mission Viejo for a maximum purchase price of $30,011,000 . Ofthis amount, $21,010,000 i s
payable over a five-year period and is subject to downward adjustmentif'Mission Viejo's cumulative earnings, as defined, do
not reach a specified level . The acquisition of Mission Viejo has been accountedfor as a purchase and its accounts have
been included in the consolidated results since September 30, 1972. The consolidation of Mission Viejo since September 30,
1972 affected the comparability of'net earnines for the years 1972 and! 1971 only2o a minor extent . Investment cost in
excess of net assets of btission Viejo is included in brands, trademarks, patents and goodwill Excess cost of $24,309,000
attributable to the 1970 agreements is not being amortized'because, in the opinion of management„there has been no
diminution in the value of the related investment . Excess cost attributable to the 1972agreements of $176,000 a t
December 31,1972 and the excess cost which will arise on payment of the remaining purchase price under such agreements
will be amortized over a period of forty years .
A number of other small acquisitions were made during 1972. None of these materially affeetedthe reported operating results .
Foreign Subsidiaries:
Principalfinaneialdata of foreign subsidiaries are as follows :
1972 :
Consosdaed uneonsoiidwed
Assets . . . . .. . . . .. . . . .. . . . . . . . . . .. . . . .. . . . . .. . . . . . . . . ._ . .. ._ . .. . . .. . . . . . .. . . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . . .. $391,353,000 $241,151,000
Liabilities, other than due the Company. . . . . .. . . . . .. ._ .. . . . . . . . . .. . . . . . .. . . . . .. . . . . .. . . .. . . . . . .. . . . . .. . . . .. .. . . .. . . 198,572,000 1114,554,000
Net assets . . . . . .. . . . .. . . . . . . . . .. . . . . .. . . . . . . . . .. . . . . . . .. . . . .. . . . .. . . . .. . . . . . .. . . .. . . . . .. . . . . .. . . . . . .. . . . . .. . . .. . . . . .. . . . . . .. . . . . .. 192,781,000 126,597,000
Company's equity and advances . . . . . . . .. . . . . .. . . . .. . . . .. . . . . .. . . . . .. . . . .. . . . . .. . . . . . .. . . . . .. . . .. . . . . .. . . . . . .. . . . .. . 192,781,000 83,695 :000
Operating revenues .. . . .. . . . . .. . _ . .. . . . . .. . . .. . . .. . . . .. . . .. . . . .. . . . . . .. . . . . .. . . . . .. . . . .. . . . .. . . . . . .. . . . .. . 521,159 ;000 456,131 .000
Netearnings . . . .. .. . . . .. . . . . . . . . . . . _ . .. . . . .. . . . .. . . . . .. . . . . .. 25,031,000 19,168,000
Company's equity . . . . . . . . . . . . . . .. . . .. . . . .. .. . . . . . . . . . . . . . . .. . . . . . .. . . .. 25,03 (,000 11,478,000
1971 :
Operating revenues .. . . . . .. . . . .. .. . . . . .-_ . . .. . ._ . . . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . .. . . . . . .. . . . .. . . . . .. . . . . .. . . . 434,874 ;000 389,739,000
Net earnings . . . . . .. .. . . .. . . . . .. . . . . .. . . . _ . . . . . .. . . . .. . . . .. . . .. . .. . . . . . .. . . . . .. . . .. . . . . . .. . . . . .. . . . .. . . . . .. . . . .. 19,39_ ;000 16,279,000
Company's equity . . . . . . .. . . . . . . ._ . . .. . . . . . .. _ . . . . . .. . .. . . . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . .. . . . . .. . . . . 19,392 ;000 9 ;928,00 0
At Decemben 39, 1972, the Company's investments in unconsolidated foreign subsidiaries exceeds its equity in their net assets
by approximately $8,700,000 . The Company is amortizing $3,000,000 oflthis excess which arose subsequenCt o
November 1, 1970 j
Federalincome tax has not been provided on $110,000,000 of undistributed earnings of foreign subsidiaries, accumulatcd
since inception of the Company's investments in such subsidiaries„which is expected to be permanently invested abroad .
Expansion of Facililies
Construction of the new cigarette manufacturing complex in Richmond, Virginia is proceeding on schedule . The construction
cost, including interest and real estate taxes during the construction period, will total approximately 5100,000 ;000 .
Installation of the latest machinery and equipment over the next five years will bring the total cost of this complex to over
$200,000,000: Actual commitments at December 31, 1972 at all locations for plant, equipmentandimachinery approximated
$125,000,000.