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c HARVARD MEDICAL SCHOOL AU fp 25 SHATTUCK STREET BOSTON. MASSACHUSETTS 02115 OFFICE OF THE DEAN June 10, 1980 Lee E. Stanford, Esq Shook, Hardy, & Bacon 1101 Walnut Street Kansas City, Missouri 4106 Dear Mr. Stanford: As you recall, in May 1979 Harvard prepared an analysis of the expenditures of the tobacco-industry-supported portion of the Smoking and Health Research Program for the period prior to March 31, 1979. On the basis of this analysis and at your request, we separated those expenditures into two major categories. The first of these consisted of expenditures about which all necessary information was then available; these were presented for reimbursement and to a large extent have been reimbursed. The second major category consisted of expenditures for which sufficient information was not then available. This second category included a number of sub-groupings: a) expenditures similar to those in the first major category, which had been incurred but not yet entered on the Harvard books; b) expenditures which had to be investigated further before a decision could'~be reached as to whether they were appropriate for reimbursement; and c) expenditures paid by Harvard from other funds and which Harvard feels should be reimbursed. We have now completed our review of all the subgroupings of the second major category of expenditures, and believe it is possible to bring to a close the financial matters relating to the industry-supported portion of the Smoking and Health Research Program for the period ending March 31, 1979. Accordingly we have prepared the following for your review and submission to the industry: 1) Final Statement of Expenses For the Period Ending March 31, 1979, Presented for Reimbursement. Additional detail of the project expenses as approved by Dr. Huber, less balances on hand and reimbursements received, is provided by Schedules A, 6, C, and D, showing expenses by budget category for the period 7/1/77 through 3/31/79 and including all charges attributed to that period which have appeared on Harvard IBM runs through 4/30/80, as well as such additional charges, adjustments or credits that will appear on later runs, and by Schedule E, showing expenditures incurred from Medical School funds and for which the Medical School wishes reimbursement. (You will note that this statement also includes an item for the balance still unpaid from our previous statement for this time period. ) " 03'7500-3'7 2) Report on disposition of costs referred to in material presented to you in May 1979 - This merely details the handling of these items for your information.

c Lee E. Stanford, Esq. -June 10, 1980 Page Two We assume the industry will wish to consider separately the matter of the Stemmerman and Goldberg~salaries and the settlement with Pitney-Bowes. Beth Israel is preparing material relating to these items (totalling approximately $65,000) which we will present on their behalf at a later date. Once there has been an opportunity to discuss this material with you and answer any questions you might have, hopefully we can work together to prepare appropriate reports and back-up schedules for presentation to the various industry sponsors. ~ Sincerely Mitchell Adams Dean for Finance and Busi'ness MA/lh Enclosures cc: Dr. Huber Mr. Meadow Mr. Moriarty

. 4: FINAL STATEMENT OF EXPENSES IN CONNECTION'WITH THE SMOKING AND HEALTH RESEARCH PROGRAM THE-PERIOD ENDING MARCH 31, 1979, PRESENTED FOR REIMBURSEMENT Net Expenses (not previously billed - Schedules A, B, C, and D) $218,190:38 Additional Costs (incurred which have not been charged to "industry accounts" - See'Sc-hedule E:for detail) - 68,448.92 Total this bill $286,639.30 Previously billed and not yet paid 24,120.09 Total Reimbursement Required $310,759.39 S W .co

Schedule A NET EXPENSES FOR SMOKING & HEALTH RESEARCH PROGRAM FOR THE-PERIOD ENDING MARCH 31, 1979* Personnel Equipment Supplies Travel Stipends Other expenses Hospital Personnel , $ 267,116.42 114,205.24 212,849.08 51,508.65 27,400.00 191,899.33 306,038.17 Total 1, 7 ,0 86 10% Supplement** $ 116,185.02 Total $1,287,201.91 Balance 6/30/77 (42,103.86) Income received and applied (1,002,787.58) Net unreimbursed expenses $ 242,310.47 Less amount previously billed 24,120.09 and not yet paid Net expenses $ 218,190.38 * See Schedules B, C & D f or further detail. This schedule includes all expenses for the period which have appeared on Harvard IBM runs through 4/30/80 as well as all additional expenses, adjustments or credits that are known to date. Dr. Huber indicates that there should not be any further charges for this period. *~ Computed on,expenditures subject to 1977 agreement only - totalling $1,161,850.23 (i.e., excluding expenses in accounts 4714-2 and 4715-2).

Adjustments which have been processed and which appear.on the Harvard books. - Dr. Huber's staff has now completed making the adjustments needed to remove from accounts 4714-2, 4715-2, 4717-2, and 4719-2 charges pertaining to the period after 3/31/79 and charges which required reallocation to other sources of support. In addition, various outstanding invoices have been received and processed. These included the following items: 1) Realloc ation of TNT charges for the period October 1978 - March 1979 ($30,000) leaving 25% charged to 4717-2. 2) Removal of the $10,000 TNT option payment made in Spring 1978 for the sixth floor of the TNT building; this item -is presented separately. (See Schedule'f ). 3) Removal of the $7,000 rent/option payment made in March, $5,000 of which was applied toward April rent and $2,000 of which was a non-refundable option. 55% of this sum has been ch arged to the "phase-down" account 4716-2 and the remainder has been allocated to other grant sources. 4) Removal of Pitney=Bowes rent for the period October 1978 to December 1978. No rent payments to Pitney-Bowes were charged to 4717-2 after December 1978. (Rent and taxes for the period after October 1978 are a portion of the settlement with Pitney-Bowes. The Hospital has requested that Harvard present the settlement to the industry for reimbursement and we will do so separately.) 5) Reallocation of salaries f rom industry accounts to the Nicotine Titration contract, resulting in a credit to the industry accounts. 6) HSPH invoices for the period have now been processed. 7) BIH invoices for the period have now been processed. 8) Major items of equipment ordered prior to M arch 31 h ave been received and invoices processe6for payment. Dr. Huber indicated that there should be no further charges for the period prior to 3/31/79 but should any such invoices be received, it would seem wise for them to be p aid for the "phase-down" account 4716-2 so that accounts for the period prior to 3/31/79 may be closed.

SCHEDULE E Additional expenditures incurred~ whi'ch are not charged to the "industry accounts" 4714-2, 4715-2, 4717-2, 4718-2 or 4719-2 and f or wh i ch H ar v ard requests reimbursement by the industry: 50% of charges from Medical Facilities Planning Associates $ 8,761.00 for services provided by Sophie Koch-Weser. Harvard is assuming 50% of these charges f or Mrs. Koch-Weser's eff orts to provide the usual sorts of material included in funding applications. The remaining 50% is seen as extra effort specially requested by the industry. Bill from George Woron for his services in obtaining a new $5,100.00 lease on the Charlesgate f acility and maintaining Dr. Huber's occupancy during the period of negotiations. Mr. Woron billed Beth Israel Hospital separately for his services pertaining to the Hospital's lease difficulties with Pitney-Bowes. Unreimbursed portion of the bill-from Walsh Brothers for 9,530.85 renovations perf ormed at Dr. Huber's direction (and approved by Mr. Shinn). Harvard has reimbursed BIH for this expense. - Remaining over-expenditure in account 9006-2 (after receipt 107.07 of re imbu rsement f rom Beth I srael Hosp i tal f or advance payment made by Harvard in the amount of $16,000). Option on 6th floor of the TNT building. At a time when Dr. 10,000.00 Huber was considering utilizing the 6th floor of the TNT building in addition to the Charlesgate building as a new site for his industry-related research, option payments were made to reserve that space for a two-month period. Since at the end of that two-month period, Dr. Huber, Harvard and the industry agreed that the 6th floor space would not meet the industry's criteria, the option was terminated. Accrued interest charges on the over-due payments 33,300.00 (January 1, 1978 through M arch 31, 1979) at the Treasurer's office rate. Repair/Restoration of Beth Israel's space after Dr. Huber's 1,650.00 programs moved to Mt. Auburn Hospital. Total $ 68,448.92 A W (These items are not ones directly relating to the scientific work of the ~i program and thus it seems inappropriate to request Dr. Huber's approval to ~ change these items to the above-mentioned accounts; rather Harvard is p presenting these expenses directly for reimbursement.) ~ . iV

,. .. .. _ . .. - . . . . . . : .,_ .. . ._ , .C _ Report on disposition of costs referred to in material presented to Mr. Stanf ord on May 16: 1) Option on 6th floor of TNT building (a total of $10,000) This has been removed f rom account 4717-2. It is, however, being presented for reimbursement along with a number of other charges in a separate item on the enclosed statement (see Schedule E). 2) Rent/Option for the period October 1978 - March 1979 for the Charlesgate animal f acility @ $5,000/month (a total of $30,000). . This has been allocated among the various funding sources per Dr. Huber's recomnendation of 25% to 4717-2, 15% to 6296-2 (m arijuana) and 60% to the BIH pigeon contract. 3) Option/Rent payment in March 1979 of $7,000 for the Charlesgate animal facility. $5,000 of this sum has been applied to April rent and has been allocated among the various funding sources according to Dr. Huber's recommendation of 55% to 4716-2, 15% to 6296-2 (marijuana) and 30% to the BIH pigeon contract. $2,000 of this sum was a non-refundable option and this too has been allocated among the funding sources as above. PITNEY-BOWES CHARGES 1) Rent to Pitney-Bowes for October 1978 - December 1979. Rent for this period has been removed from account 4717-2. No rent payments to Pitney Bowes were charged to 4717-2 after December 1978. 2) No real estate tax p ayments were m ade f rom this account after those paid in early 1978 for the first half of the year. 3) Real estate tax for the period January-June 1979. In f act no charge to this account was made for this period. Item 1 above has been handled as part of the settlement with Pitney-Bowes.

I PITNEY-BOWES SETTLEMENT possibilities of any future claims. The Hospital is preparing a report of the events leading to the eviction of Pitney-Bowes and wishes us to present the settlement to the industry for reimbursement. This will be done later and thus this item is not included in the Final Statement. none has been charged to industry accounts. Releases f rom all parties end the October 1978. Beth Israel Hospital and Harvard each paid half the settlement: Negotiations have been completed and the settlement is $45,000 which includes all claims for any outstanding rent or taxes for the period after These adjustments have been completed as requested and authorized by Dr. Huber. NICOTINE TITRATION SALARY ALLOCATION ADJUSTMENT STEMMERMAN AND GOLDBERG SALARIES The Hospital has reviewed this matter and is preparing a report based on thdt review. The Hospital wishes us to present these costs to the industry - for reimbursement. This will be done separately and this item is not included in the Final Statement. RESTORATION OF BETH ISRAEL SPACE Restoration work was quite limited, costing $1,650. This charge is being presented for reimbursement in a separate item on the enclosed statement (See Schedule E).

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