Tobacco Documents Online

C O N F I D E N T I A L 1 1 STATE OF MINNESOTA DISTRICT COURT 2 COUNTY OF RAMSEY SECOND JUDICIAL DISTRICT 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - 4 The State of Minnesota, 5 by Hubert H. Humphrey, III, 6 its attorney general, 7 and 8 Blue Cross and Blue Shield 9 of Minnesota, 10 Plaintiffs, 11 vs. File No. C1-94-8565 12 Philip Morris Incorporated, R.J. 13 Reynolds Tobacco Company, Brown & 14 Williamson Tobacco Corporation, 15 B.A.T. Industries P.L.C., Lorillard 16 Tobacco Company, The American 17 Tobacco Company, Liggett Group, Inc., 18 The Council for Tobacco Research-U.S.A., 19 Inc., and The Tobacco Institute, Inc., 20 Defendants. 21 - - - - - - - - - - - - - - - - - - - - - - - - - - - 22 DEPOSITION OF ANDREW J. SCHINDLER 23 Volume I, Pages 1 - 274 Ln -J 24 25 Q, ~ N w N STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C O N F I D E N T I A L 2 1 (The following is the deposition of ANDREW 2 J. SCHINDLER, taken pursuant to Notice of Taking 3 Deposition, at the offices of Womble, Carlyle, 4 Sandridge & Rice, Attorneys at Law, 3300 One First 5 Union Center, 301 South College Street, Charlotte, 6 North Carolina, on September 22, 1997, commencing at 7 approximately 9:05 o'clock a.m.) 8 APPEARANCES: 9 On Behalf of the Plaintiffs: 10 Daniel A. O'Fallon 11 Robins, Kaplan, Miller & Ciresi LLP 12 2800 LaSalle Plaza 13 800 LaSalle Avenue 14 Minneapolis, Minnesota 55402-2015 15 On Behalf of Lorillard Tobacco Company: 16 Connie S. Iversen 17 Doherty, Rumble & Butler 18 2800 Minnesota World Trade Center 19 30 East Seventh Street 20 St. Paul, Minnesota 55101-4999 21 Ln 2 N V F-~ 01 2 3 F~-+ rv 24 w w 25 STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C O N F I D E N T I A L 4 1 I N D E X 2 WITNESS EXAMINATION BY PAGE 3 Andrew J. Schindler Mr. O'Fallon 5 4 Mr. Weber 250 5 Mr. O'Fallon 268 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Ln ~ ~ 22 ~ 23 rn N N 24 W Ln 25 STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C 0 N F I D E N T I A L 3 1 On Behalf of Philip Morris Incorporated: 2 Daniel J. Ballintine 3 Dorsey & Whitney LLP 4 Pillsbury Center South 5 220 South Sixth Street 6 Minneapolis, Minnesota 55402-1498 7 On Behalf of R. J. Reynolds Tobacco Company 8 and the witness: 9 Robert C. Weber 10 Jones, Day, Reavis & Pogue 11 Attorneys at Law 12 901 Lakeside Avenue 13 Cleveland, Ohio 44114 14 ALSO APPEARING: 15 Charles A. Blixt 16 Senior Vice President and General Counsel 17 R. J. Reynolds Tobacco Company 18 Winston-Salen, North Carolina 27102 19 20 ~ 21 ~ ~ ~ 22 rn ~ 23 N w ~ 24 25 STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C 0 N F I D E N T I A L 5 1 P R O C E E D I N G S 2 (Witness sworn.) 3 ANDREW J. SCHINDLER 4 called as a witness, being first duly 5 sworn, was examined and testified 6 as follows: 7 ADVERSE EXAMINATION 8 BY MR. O'FALLON: 9 Q. Could you please state your full name for the 10 record. 11 A. Andrew Jerome Schindler. 12 Q. And what is your current address? 13 A. 2605 Club Park Road, Winston-Salem, North 14 Carolina. 15 Q. And what is your current position? 16 A. President and CEO of R. J. Reynolds Tobacco 17 Company. 18 Q. Mr. Schindler, my name is Dan 0'Fallon. I 19 represent the state of Minnesota and Blue Cross Blue 20 Shield in the currently pending action, an action 21 against numerous tobacco companies including R. J. 22 Reynolds. Are you familiar with that litigation? 23 A. Yes, I am. 24 Q. When did you become president and CEO of R. J. 25 Reynolds? STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953 I

C O N F I D E N T I A L 9 1 Q. And how long did you remain vice-president of 2 personnel? 3 A. It was from October of '88 till around July of 4 1989. 5 Q. What position did you move into in July of 1989? 6 A. In July of 18 -- 1989 I became senior VP of 7 manufacturing, engineering and quality assurance. 8 Q. And how long did you remain in that position? 9 A. From July of '89 up until the time I became 10 president. And during my tenure in that job I was 11 the senior VP, then I was promoted to executive VP. 12 So I -- 13 Just to clarify all this, I started off, as I 14 said, with the cigarette manufacturing, engineering, 15 the quality assurance, and then over time 16 distribution, tobacco processing, our RJR Packaging 17 Division was -- was added to the job, so I -- in that 18 five-year period I eventually had all of those 19 functions and was an executive vice-president. 20 Q. And from 1994 you became president? 21 A. Yes. 22 Q. Was there a president prior to that time? 23 A. No. 24 Q. So that was a newly created position? 25 A. It was a newly created position. STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C 0 N F I D E N T I A L 7 1 tobacco company. That job lasted from April of '76 2 till around June or July of '78, something like that. 3 Q. And what was your next position? 4 Now just for clarification purposes, from April 5 of '76 until June or July of '78, you were working 6 with RJR Tobacco Company. 7 A. Tobacco Company, yes. 8 Q. Okay. What was your next position? 9 A. My next position, I -- 10 In the summer of '78 I went back to R. J. 11 Reynolds Industries as a manager of organizational 12 development. 13 Q. And how long did that job last? 14 A. That was about a year and three or four months 15 or so. 16 Q. And where did you go next after that? 17 A. Then I went back to Reynolds Tobacco Company in 18 late -- as I recall, late '79, and as the director of 19 organizational development for R. J. Reynolds Tobacco 20 Company. 21 Q. How long did that position last? Ln 22 A. That was from roughly September or October of ~ ~ m 23 '79 till October of '81. 24 Q. In October of '81 what was your next new 25 position? ~ w ~ - STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953 i

C 0 N F I D E N T I A L 10 1 Q. Prior to that time R. J. Reynolds Tobacco had 2 been primarily operating with simply a chief 3 operating operator -- 4 A. Well it was -- 5 Q. -- or chief executive officer? 6 A. Jim Johnston was chairman and CEO of -- of 7 Reynolds Tobacco domestic operations, and he -- at 8 that point in time he was -- was assuming 9 responsibility for the international tobacco 10 operations. 11 Q. And you still occupy the position of 12 president -- 13 A. President and CEO. 14 Q. So the president and CEO functions are no longer 15 split. 16 A. No. Ln ~ N 17 Q. Now is that a decision you make? Is it up to a' 18 you whether at some point you want a president? 19 A. My decision? 20 Q. Well for instance -- 21 Yeah. Just for instance, could you become the 22 executive officer, the CEO, and have someone else 23 step in to be president? 24 A. I am the president, so there wouldn't be two 25 president titles there. Theoretically, I mean, H N ~ ~ - STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C 0 N F I D E N T I A L 11 1 you're -- you could have a -- I suppose you could 2 have a chief operating officer if you wanted to 3 arrange the reporting relationship so that certain 4 functions reported to somebody else instead of 5 directly to me. 6 Q. Just so I'm clear, at some point in time Mr. 7 Johnston decided to do that, to separate out the 8 president's job and the chairman's job; correct? 9 A. Yes. 10 Q. Or the chief executive officer's job? 11 A. Yes. 12 Q. But under you they're now consolidated back? 13 A. Yes. I have full responsibility for the 14 domestic tobacco operations. 15 Q. Who do you report to, sir? 16 A. Steve Goldstone, who's the CEO of RJR Nabisco. 17 Q. Do you sit on the board of RJR Nabisco? 18 A. No, I don't. 19 Q. As president and chief executive officer, are 20 you responsible for the profit -- profitability of 21 RJR Tobacco? 22 A. Yes. That is one of my responsibilities. 23 Q. And one of your responsibilities would be to 24 maximize the profitability of that company; correct? 25 A. Well there are a lot of responsibilities for a Ln ~ ~ ~ m ~ N N STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953

C 0 N F I D E N T I A L 13 1 you're talking about RJR Nabisco; correct? 2 A. Well we're part of RJR Nabisco, so our, you 3 know, business performance, our financial performance 4 in some way would influence the value of the stock of 5 RJR Nabisco. 6 Q. Are you a wholly-owned subsidiary of RJR 7 Nabisco? 8 A. Yes. 9 Q. So RJR Nabisco is the shareholder of R. J. 10 Reynolds Tobacco Company; correct? 11 A. Yes. 12 Q. Would it be okay with you if during this 13 deposition we refer to RJR Tobacco as simply RJR or 14 Reynolds? 15 A. That would be fine with me. 16 Q. I just don't want to be confused as the 17 difference between RJR Nabisco. And other than the 18 questions we've just done today, I believe we.'re 19 going to be directing most of our questioning toward 20 RJR Tobacco. And so with your agreement, we'll go 21 with RJR or RJR Reynolds or Reynolds. 22 A. Or Reynolds. Yeah. They're terms that are used 23 by us. 24 Q. Now as president and CEO of RJR, there are times 25 when you make public statements concerning the STIREWALT & ASSOCIATES P.O. BOX 18188, MINNEAPOLIS, MN 55418 1-800-553-1953 Ln ~ ~ ~ ~ N 1