Tobacco Documents Online

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~B&W) PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER THE T~BACCO CONFERENCE June 7 - June 12, 1983 Z Tuesday~ June 7 - Winston-Salem ~.'00 - 6:~5 p.m. ~:~5 - 8:30 p.m. Wedmesda),~ June 8 - Winston-Salem 7:00 - 8:00 a.rn. 8:15 a.m. 8:30 - 8:~,5 - 9: I 5 ~.m. 9:15 - 9:30 a.m. - 9:30 - I0:~ a.rm 10:00 - 10:30 o.m. I0:30 - II:30 a.m. I 1:30 a.m. I 2:00 - 1:00 p.m. 1:00 p.m. R.J. Re/raids Welcome J. P:ul Sticht, Chairman of the Board Corporate Overview of Non-Tobacco Businesses Joseph F. Aberly, Jr. Vice Chairman Reception and dinner Hotel: Hyott House 300 West 5th Winston, Salem 27102 Breakfast Depart by bus for Reynolds Plaza Building Opening Remarks and introductions - J. Tylee Wilson, President Corporate Strategy of Domestic and Intenational Tobacco Businesses - E.A. Horrlgan, Execut ive V~ce President Break R.J. Reynolds Tobacco Company Operations, Present Prospects for the Future Gerald H. Long, President and Chief Operating Officer R.J. Reynolds Tobacco International, Inc's Operations, Present and Prospects for the Future - Lester W. Pullen, President Question and Answer Period Depart for World Headquarters Building Buffet lunch at World Headquarters Building Video presentation on tobacco from field to cigarettes

~ ,. ~ ,5...-,'~'r,- ........... "~rC-S~TA "r,C)Bs, CCO LITIG.&TI_ON PROTECTIVE ORD.ER 2:00 - ~:.~S p.m. ~:45 p.m. S:00 p.m. 5:30 p.m. 7:00 p.m. Thvrsdo,/~ June Y - Richmond Y:00 a.m. 10:IS a.m. I 0:30 o.m. 12:00 noon 2:00 p.m. 3:15 p.m. 3:30 p.m. 6:30 p.m. on Tour Whltaker Park, Distribution Center and Research and Development Center Wrc;p-up at R&D Center Depart for Winston-Salem airport Depart for Richmond Dinner at Holiday Inn Richmond, Va. Roundtable: The Tobacco Institute William O'Flaher~, Counsel The Tobacco Institute William Kloepfer Jr. St. V.P. - Public Relations Coffee and Soft Drink Break Universal Leaf Tobacco Co. Gordon L. Crenshaw, President Lunch break Lorrill~d Curtis H. Judge, President J. Robert Ave, Executive V.P. - Marketing Coffee (~nd Soft Drink Break Brown & Willlamson John Alar, President Henry F. Frlgon, Chief Financial and Administrative Officer, BATUS, Inc. B&W reception and dinner at Virginia Museum of Fine Arts

PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Frlda),~ June I0 -,Richmond Morning through lurw::~ 2:30 p.m. ~:00 p.m. SaturdayT June [I - Willlamsburq 12:00 noon Sunday~ June 12 2:30 p.m. Philip Morris Hugh Cullmon, Chairman, Philip Morris Hans G. Storr, V.P. and Chief Financial Philip Morris, Inc. buses wiil deport from Philip Morris to Williamsburg, VA Hotel: Colonial Williamsburg American Brands - reception and dinner Luncheon and presentation by Ameri~ Br~x~ Edward W. Whittemore, Cha{rman of the ~i and Chief Executive Officer Charles A. Mehos, Executive V.P. and Chi~ Financial Officer buses will depart from Williamsburg to Nor~t~ airport (I/2 hour away)

PROTECTED BY .~IINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Welcome and Corporate Philosophy Remarks by J. Paul Sticht Chairman and Chief Executive Officer R.J. Re~nolds ~ndustries, Inc. to the Tobacco Seminar Winston-Salem, North Carolina 7 June 1983

_ ,n ~.u:~ PP__C~TF~'~'FD BY 3IINNEgOT~. TOBACCQ.I_LTIGATION PROTECTI'~E ORDER =. Z -1- On behalf of all of us at R.J. Reynolds, I want to welcome you to Winston-Salem. I'm pleased that Jack Maxwell agreed to kick-off his 1983blennial Tobacco Conference here. It means, of course, that we'will have significantly more time to tell you what is going on at RJR. And, I hope that the time spent with us this evening and tomorrow will give you adequate indication of where we are currently and where we expect our businesses to be heading. Time will also allow us to demonstrate to you the degree of put commitment to the tobacco business worldwide not only in terms of physical and financial resources but in terms of human resources as well. At our annual meeting of stockholders in April, I said that OUr major accomplishment of 1982 was the successful, friendly acquisition of Heublein. And, with the acquisition, we essentially achieved the goal we established for RJR early in the 1970s to bec~me a world class, diversified consumer package goods company. This year our consumer businesses aione will likely produce sales in excess of S12 billion dollars. Not only are those sales being generated by a vast array of products that meet consumer demands around the world, but we are now one of the predominant suppliers to the U.S. supermarket. Also, when you consider that almost one-third of our sales are generated outside the U.S. and almost one-half of our i00,000 full-time employees perform their duties outside the U.S., it is apparent that we have largely become what we set out to be. Thus, while I would not rule out further diversification through acquisition, I can say that for the foreseeable future our attention and our priority will be to concentrate our efforts to develop fully the companies that we now have. We will do so in order to realize the extraordinary potential that we see for those businesses. As all of you well-know, these past dozen years during which the transformation of RJR has taken place have not been without problems. It has been a period where the world economy, for the most part, has been in a continual state of disarray, and capital formation markets have not only been volatile but uncertain, at best. In short, it has been a difficult time in which to diversify and grow. ~0 0 °° Nevertheless, I take considerable pride in the record of cur company in meeting our goals during this most difficult and challenging period. Despite rapid internal change and generally difficult external conditions, our company has prospered and produced more than a decade of successive record results. If history is in fact a prologue, I can confidently predict bright and prosperous future for R.J. Reynolds. Certainly, th~s is not only our objective but our expectation.

IB&W) PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER 7- ! would now like to turn the program for the evening over to our Vice. Chairman Joe Abely who I no introduction to this group. Joe. ### rest of. the am sure needs

tB&W) PROTECTED BY MINNESOTA TOBACCO LITIGATION PROTECTIVE ORDER Corporate Overview of Non-Tobacco Businesses Remarks By Joseph F. Abely, Jr. Vice Chairman of the Board R.Jo Reynolds Industries, ~nCo to the Tobacco Seminar Winston-Salem, North Carolina 7 June 1983

~B&~,$") PROTECTED BY .~II.N...NI.E. SQTA TOBACCO LITIGATIO.'s PROTECTIVE ORDER Thank you, Paul, and good evening ladies and gentlemen. I also want to welcome you to Winston-Salem and to RJR as well. is a pleasure to See so many familiar faces. It Since I am sure all of you know R.3. Reynolds Industries in somedetail, I am not going to belabor you this evening with a historical review of our businesses. What I plan to do in the next 25 minutes or so is to outline the various factors, some internal, but most primarily external, which will affect our performance this year and in the immediate Z Z: future. Within this discussion, I'll also tell you about the strategies we've implemented to deal with those factors. I will not discuss tobacco as a separate line of business since, as you know, most of tomorrow will be devoted to a detailed discussion of that business. Let's.start with our food and beverage business. With the Heublein merger last October, we virtually doubled our worldwide food and beverage business. I believe we have met the challenge of integrating these businesses into RJR smoothly and efficiently. Our Food and Beverage Group -- consisting of Del Monte, Heublein Spirits & Wine and Kentucky Fried Chicken -- is only six months old. The three companies all report to Hicks Waldron, who merger, was chairman and chief executive officer of Heublein before the These companies, which will have combined sales this year of about four and one-half billion dollars, are largely self-sufficient and free-standing organizations. Most staff services that previously had been centralized are now integrated into the three companies and their operating units as part of the reorganization. The objective of this 'move was to make the staff functions more immediately responsive to the needs of each of the businesses. With this structure, we think that the companies will be able to react quickly to their own specific opportunities and problems. As part of this process, we have isolated and addressed a number of opportunities of a synergistic nature. Synergy is a word that has been much abused. But if it does have a use, it would be to describe most of the 30 pr6jects under study or under way in our Food and Beverage Group. Some are already paying off. These projects, by current estimates, will save the company in excess of $I0 million annually by allowing us to do a more effective job with existing resources.

"tB&V,') PROTECTED BY 3IIN.'SESOTA TOBACCO LITIGATION PROTECTI~,E ORDER --2-- For example, we will save a significant amount through advertising ef£iciencies. Oust by combining Heublein's print advertising purchases'with those made by the domestic tobacco company, we can get ~the same advertising reach for a good deal less money. And, in the next few months, we will be combining television advertising purchases across our food and beverage businesses as well. Packaging also offers potential savings. Del Monte is exploring the economies of making cans for new Heublein products. Heublein Wines has a glass bottle manufacturing plant that may be able to supply Del Monte with catsup bottles. And Kentucky Fried Chicke, is beginning to use its expertise to help Del Monte buy chicken more economically. Zn looking at the Group's operations, a good place to start iS with Del Monte Fresh Fruit. In the last half of 1982, results were penalized by a worldwide over-supply of bananas, resulting in severely depressed prices. While this situation had already begun to improve in this year's first quarter, it was further impacted by a major storm that swept through Central America in March. That storm wi~ed out approximately 15 million boxes of the industry's banana crop, of.which approximately i0 million boxes were Del Monte's. But the realities of the marketplace are such that it is likely our volume loss will be more than offset by the supply/demand effect on prices. For example, when the news of the blowdown was reported, the price of bananas jumped quickly on the East Coast from 19 cents to 49 cents per pound. So our expectation is that the net of all this will be a return to somewhat more normal results in 1983. In looking at the remainder of Del Monte, which now includes Heublein's specialty grocery products, the restructuring which involved Plant consolidation, pruning product lines and reducing overhead, has been compl6ted. And the related charge-offs are now behind us. We're now in the final stages of completing the conversion of Del Monte from a production-driven to a consumer-driven company. This means you should soon see the introduction of the kinds of value-added products that will make this transition work. While this is not a short-term project, this year we expect dramatically improved operating earnings from Del Monte. And this expectation is based on the cost reduction efforts and the inventory and pricing disciplines which are now making themselves felt.