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CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION Annual Report to the Board of Directors William Kloepfer, Jr. December 13, 1984 Following David and Roger this morning is a natural. Because the sole objective of our public relations is to support their divisions on every issue they described. We do it in four ways: Producing documented materials. Providing expert witnesses. Developing coalitions. Challenging the anti-smokers. In a moment I'll recall some anecdotes which have illustrated our public relations pursuit of that goal and those methods. First a word about the public affairs climate. I think 1984 is the year that the anti-smokers came of age. They settled on a leader, an individual capable of uniting the many competitive organizations intent upon closing the doors of this industry. That individual is the United States Surgeon General. Dr. Koop has called for a smoke-free society by the year 2000. He has made that his personal and ofticial crusade. He has attracted funding. He has attracted journalists. He has inspired anti-smoking militarism. That militarism is more than a mere P.R. theme. We see it clearly in our own research. The gestation of the anti-smoking TIMN 0013747

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION movement during the past two decades has brought forth a stampeding elephant. I'll remind you of what we saw in our biennial poll, last spring. A full third of the sample did not regard our industry as important to the U.S. economy. More than two-thirds said we are not at all concerned about the health and safety of our customers. Nearly one-fifth wanted smoking banned altogether in the workplace. Nearly TO percent believed that cigarette smoke in the air is probably hazardous. Nearly 70 percent of the smokers said they frequently or occasionally feel uncomfortable about their custom. The public relations challenge seems more severe than even during the days of Wilbur Cohen and Joe Califano. That is the bad news. The good news is our responses. We are substantially more aggressive, but never at the sacrifice of truth or ethics. We are tighter knitin our division, as an organization. We are filling the communications needs of our political divisions. We are earning dood will for The Institute with other communications projects. Look at the fire issue. It took Congress three years to kill preempting legislation and pass the study bill. In the meantime, our f.Lre prevention program met a public need and created the contacts and an environment which made it easier for our lobbyists to do their jobs. 2 'TIMN 0013748

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION We started in 1982, took hold in 1983, and produced results this year. Before we began, the fire service was slowly uniting against us. Uniformed firefighters were appearing at legislative hearings, writing articles and g'.Lving interviews, demanding self-extinguishing cigarettes. Our small grants for fire prevention education, enabling purchase of hardware and materials, have reached 42 metropolitan communities. Our materials to help volunteer departments recruit and raise funds and teach fire prevention have been requested by 1,500 other communities. Our support has resulted in two studies of comparatively low accidental fire rates in Europe and the Far East, and they are being widely read by American experts for the lessons they contain. One of them is that the authorities in Asia and Europe have focused on more important measures than regulating cigarettes. Our prevention education material for senior citizens -- statistically they are a special problem -- is in draft. Our evaluation project to enable testing of the effectiveness of local education projects is in draft. Our manual to help fire departments promote smoke detector use is being readied for fire service use with rural and city poor families. 3 TIMN 0013749

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION We have been told we have the best structured fire prevention project ever sponsored by the private sector. By this past summer several of the largest fire service groups were working with us on legislation. We are not out of the woods. But we face the rest of it with the fire fighters. And the youth problem. The proponents of labeling and promotion restriction bills say over and over that this industry promotes its products to kids. Just four-and-a-half months ago the Executive Committee told us to launch our Responsible Living Project, in effect to prove our policy that smoking is an adult custom, not just talk about it. In eight weeks we pulled together our advertising, our previews and promotions, and last September 25 we and the National Association of State Boards of Education announced the availability of our booklet, "Helping Youth Decide", to help parents communicate better with youngsters about a variety of decisions better made as adults -- such decisions as drinking, driving, sex, enlisting in military service, and smoking. The anti-smokers were speechless. The people genuinely interested in youth welfare were generous with praise and offers to help. Educators from New York to Oregon and civic leaders from the Urban League to the Kiwar_-s and Hispanics and police officers are enthusiastic about the project. Members of Congress pitched in. The news media reported that we had 4 TIMN 0013750

CONFIDENTIAL: MINNESOTA TOBAC(.O LITIGATION done something right. The Pennsylvania State Legislature passed resolutions commending us. As of yesterday, more than Ire, P of the booklet "Helping Youth Decide," were in the hands of parents around the country. Our lobbyists in Texas, Minnesota, Massachusetts and California have requested that we specially promote the project locally to help offset those blue ribbon panels, to deal with sampling bills, and to help fight excises earmarked for public education. Here, I hope, is a harbinger. John Rupp went up to Methuen, Massachuetts two months ago to testify before the Board of Health on incipient proposals for smoking restrictions and a sampling ban. He pointed out that the industry has gone the extra mile regarding youth smoking on many occasions and exhibited the current project as the latest. The Board asked for ten more copies of the booklet and tabled its proposals. I'll leave this subject with one more remark. You know you've done something good when a teenage girl writes you and says, when I sent for your booklet I didn't know what to expect. I'm now able to talk and organize things out with my mom for the first time in two years. Or when a man sends a postcard with thank you in caps, and says, it really opened the door of conversation between my son and me. 5 TIMN 0013751

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION And then there were the antics of the Civil Aeronautics Board last spring. It was very satisfying, to put it mildly, to the staff of the Public Relations Division to spearhead the drive which demonstrated that the American public, frequent flyers in particular, were opposed to stricter smoking rules on airlines. We ran polls, pushed petitions, developed letter-writing campaigns, and worked with the field staff to analyse the effect the rules would have on airlines, airports and air passengers. We pulled together groups to testify on our behalf, coordinated air carrier response and we even helped filled all of the seats in the hearing room. Resu:Lts? You know the results. Each of our contacts remains alive and vigilant for any next round which could occur at the Department of Transportation. Smoking restrictions? This year we found a prominent labor lawyer who argues that workplace smoking rules ignore collective bargaining. We found an economist who refutes the notion that smokers are costlier employees. We found a well-known police official who states that minor ordinances are a drain on police resources and morale. We commissioned major research which found that labor officials and first line supervisors do not see smoking as having any effect on productivity. We ran polls in a half dozen cities and counties which showed that public majorities do not support 6 TIMN 0013752

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION workplace restrictions. We caused a study by a corporate planning and design firm which has found-that efficient space planning is befouled by smoking restrictions. We wrote a who-what-how-to manual on the convenience store industry to help our field staff develop that ally at the local level. With help from counsel we set up a tobacco industry labor-management committee to advertise that attacks on smoking are attacks on jobs, and with labor in Erie County, with the media and behind the scenes, made the vote on the non-binding smoking restriction referendum that the Commissioners, by their own admission, are thinking twice about what to do. We have asked the president of the American Associat:ion of Affirmative Action to propose how, with our support, his group may address the question of how smoking restrictions hit minorities hardest and are, therefore, an indirect means of discrimination. We produced a compelling kit full of documentation for personal visits with employers considering smoking policies. Our first road test was a few days ago with a Maryland state agency and we are awaiting the feedback. Now, the largest immediate issue -- excises. This year we popped consulting economists into Secretary Regan's regional hearings on tax simplification, each of them building into the records testimony that excises are lousy. 7 TIMN 0013753

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION With our support five of them have formed a Committee on Taxation and Economic Growth and published their views in-a pamphlet. They'll go anywhere to testify. We helped the Vietnam Veterans of America -- they're coming into their own now -- publish a pamplet summoning its members to lobby. It has a long title and a specific message: "Excises are the most flagrantly discriminatory and regressive taxes that exist." We have completed a letter-to-editor how-to pamphlet,, ready for dispatch by Sam Chilcote the first of the year to tobacco related organizations and TAN activists, explaining how to write in opposition to excises, including addresses of daily paper editors, to be ready for the new year's tax bills. We helped labor officials prepare the testimony they presented in Congress and before the National Conference of State Legislatures in opposition to earmarking of excises. We opened dialogue and prospects for cooperative prospects with The National Chamber Foundation, the AFL's Citizens for Tax Justice, the liberal Save Our Security organization, Women in Farm Economics, The League of United Latin American Citizens. We found the best key in opening these doors to coalitions is to talk of the evils of excises ir. generic terms, without the cigarette adjective. We have brought you a kit of the tax materials that are already out of the pipeline. It will grow. ~cIMN 0013754

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CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION Such issue management, subordinate to the needs of our political divisions, meets our basic objective. At the same time, we spent 1984 in substantial strengthening of our media relations and news output. Our speakers appeared more frequently on assignments by our issue managers. Example: Anne Browder two weeks ago in a speech to the National Caucus of Black State Legislators. At the same time, they are being more cautious about accepting appearances which result in more publicity for the anti-smokers. Example: Our consistent refusals to appearr on talk shows with Elizabeth Whelan or Peter Taylor during their anti-smoking book promotion tours. It's still easier for us to rebut someone else's news than to make our own. But we made some progress this year. Examples: Our releases which told many different communities about the smoking flight blackouts they faced if the CAB went the wrong way. Or the overnight poll we released on the Great American Smokeout day which reported that three-quarters of the public wished the Cancer Society would spend its money on research instead of stunts. The PR team in your shop is more effective, more cohesive, more productive and better directed today than a year ago. That is to their credit. Much of the credit also goes to Tom Humber and his Communications Committee. They have been patient, generous with their time and expertise, and supportive throughout. 9 TIMN 0013756