Tobacco Documents Online

• • Keep in mind although the seller has exercised all reasonable care, all we could do is not good enough if the product is bad. The industry trivialized the danger. Contributory negligence is not a defense to strict liability (there were internal documents read in court. Other numbers to bear in mind for damages. Mr. Rogers medical expenses were $71,000. He made about $27,000 a year. If he would have retired at 65 $424,000 -- age 70 $560,000. RE94W First Call Corporation - all rights reserved. 617/345-2500 END OF NOTE mm 0

02:26pm EDT 22-Aug-96 Salomon Brothers tDiana K. Temple (212) 783-6671) MO RN 7obacco -- Rogers Closing Statements • Tobacco -- Rogers Closing Statements 08/22/96 The Rogers case is expected to go to the jury today. We do not expect a decision until tomorrow because the jury has to answer 15 questions. They were told to bring suit cases, but we expect a decision before the weekend. We see a 40;<-50X chance of a loss. Philip Morris could rally to $93 with a win, but drop to $80 with a loss. We did feel better about the case after Rogers testimony via deposition. Its interesting he got his wife to quite, while dating as he didn't like women smoking in public. Also, Yvonne Rogers quit smoking during each of her three pregnancies. If she could quit smoking at will, why couldn't he? The jury consist of five women and one man. Figure 1. Tobacco Companies-Valuation Comparison Code Price EPS P/E 1996E 1997E 1996E Philip Morris HOLD $86 $7.70 $8.85 11.1 RJR Nabisco HOLD 25 5/8 $2.50 $2.75 10.3 0 Loews BUY 75 $8.35 $10.10 9.0 B.H.T BUY 13 3/8 f1.62 $1.75 8.3 UST BUY 31 1/4 $2.40 $2.70 13.0 The plaintiff presented closing arguments. 40 Going for strict liability -- incurred risk is not an issue in strict liability. Other chose is negligence -- plaintiff attorney wants strict liability. The plaintiff suggested $2 million number for damages. "The most precious gift is our children -- Rogers started smoking when he was a child". We hear about choose and professional responsibility -- when you're addicted free choice is impacted. Cigarettes are like cocaine but the manufacturers want people to use it -- they understand the true risk. The industry denied lung cancer and addiction. Then they say Rogers incurred the risk of lung cancer and addiction because he knew that it does both. Its an impossible slippery slope. There is no question this case meets criteria for strict liability.