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CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION DANIEL A. MILWAY Remarks before Board of Directors Meeting December 13, 1984 The normal role of an administrative division is to deal with the many routine tasks that need to be performed to make an organization function smoothly. While we do that and do it efficiently, we also provide more specific, focused support to the other divisions of T. I. In 1984, our medical group continued to work closely with all other divisions. We monitored the principal meetings of scientists, health professionals and various anti-smoking groups, and provided analysis and information on a continued basis, because the attacks against our industry on scientific grounds hit almost weekly in professional journals or the press. In this work...we place an emphasis on thorough...disci.plined work. Methodologies must be critiqued...Math must be checked... Citations verified. We are...in effect...one of the very few organizations carefully reviewing the work of the anti-smoking scientists. Our criticisms must be made understandable. Therefore...we work closely with the other divisions to interpret our findings for legislators...journalists...and the general public. An example is the Repace Study on Passive Smoking, which asserted that the An«rican Cancer Society study of cancer in non-smoking women conformed to the Hirayama study. We were successful in having published in Lancet,-the British Medical TIMN 0013758

CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION Journal, a Letter to the Editor demonstrating the fallacies in Repace`s study. REDACTED Our Issues Analysts and Staff Economist serve very much the same function as our medical department...but on other issues such as smoking restrictions, advertising and taxes at the federal and state level. As with our medical department, these professionals must be thorough and they must be quick. For example, the Minnesota Blue Ribbon Panel on nonsmoking and health put out a book of recommendations. This 198 page volume weighed in at 2 pounds, 3 ounces. We needed to and did provide a careful, thoughtful analysis of its content within a few days of receipt. We continually update and upgrade our estimates of the potential impact of excise taxes in all states. When an attack in this area is mounted, we immediately shift gears to help the field staff and lobbyists with the latest information focused on the particular problem. Our third, major study of the overall economic contribution - of tobacco...wi11 be ready in the first Quarter of 1985. It is being conducted by Chase Econometrics...Under the guidance of our economist ... This report will provide our staff with yet more ammunition for the battles ahead. Incidentally, I appreciate the cooperation that we have received from the members in providing much of the information needed by Chase Econometrics in their work. 2 TIMN 0013759

CONFIDENTIALe MINNESOTA TOBACCO LITIGATION During the year, our _P,ublications group...much the same as our analysts...did an excellent job of producing attractive... effective...materials for use by P.R. and our lobbyists. The Tobacco Observer...which all of you receive...underwent a dramatic change in look and format. This was accomplished by our staff...in close cooperation with PR, the great variety of pamphlets ... topic papers...periodicals and other print materials used by our line divisions also were handled by this group. The great assortment of mailing lists we require...is also expertly managed by these people. Our Data Processing group installed separate microcomputers at each of our field offices. The training of field personnel was handled by data processing staff to ensure uniformity and the staff has continuing responsibility to ensure the best utilization of the hardware. Further, we implemented a headquarters capability to provide full graphics of important information for the use of headquarters and field staff. In Accounting and budgetary control, we had plannedd on continuing to do a difficult job in an exemplary manner. You should know that this is a small department of five people. During the year, two of these people, each with more than five years of service, moved on. In spite of this, we did not miss a beat. We also were instrumental in negotiating a, contract with our advertising agency that materially reduces the amount of money we pay them. 3 TIMN 0013760

REDACTED These are highlights of what we have accomplished during 1984. We fully expect 1985 to be even more challenging and we are confident in our ability to meet the challenges. CONFIDENTIAL: MINNESOTA TOBACCO LITIGATION 4 TIMN 0013761