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1 2 3 4 5 7 8 9 10 II 12 i3 14 IS 16 17 18 ~9 20 21 22 23 24 ORIGINAL 461 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT O~ KENTUCKY LOUISVILLE DIVISION BROWN AND WILLIAMSON TOBACCO CORPORAT~0N vs. PHILIP MORRIS, INCORPORATED ) VOLUME NO. C-89-04740-L-B ) PAGES 461-677 CONFIDENTIAL Continued deposition of NANCY G. NAUGKTON, held at the offices of Fish & Nea~ve, 875 Third Avenue, New York, New York 10022, commencing at i0:i0 A.M., Thursday, September 1.0, 1992, before JOYCE G. ABELES. 230 Par~ Avenue Sui(e 847 New York, New York 10t69 212-490-3430 Fex: 212,-4~).-3534

1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 !5 16 17 18 19 2O 21 22 24 25 462 APPEARANCES OF COUNSEL FOR THE PARTY BROWN AND WILLIAMSO~ TOBACCO CORPORATION: MORGAN & FINNEGAN BY: JAMES W. GOULD, ESQ. 345 Park Avenue New York, New York I~154 FOR THE PARTY PHILIP MORRIS, INCORPORATED: FISH ~ NEAVE JOHN M. HINTZ, ~SQ. 875 Third Avenue New York, New York 10022 ALSO PRESENT: KEITH TAKEDA NOON & PRATT

1 2 3 4 5 6 7 8 I0 11 12 13 14 15 16 17 18 19 21 24 25 463 NANCY G. NAUGHTON, having been first duly sworn by JOYCE G. ABELES, a Notary P'ublic within and for the State of New York, was examined and testified .as follows: o0o EXAMINATION CONTINU~ED BY-MR. HINTZ ................................... Q. Ms. Naughtcn, it's a silly question we often ask but you are the same Ms. Naughton who was deposed earlier in ~his z~ction? A. That's right. Q. Since that deposition, which was May 14th and 15th, have you had any c<onversatioas with a man named Dennis Dugan? A. No. Q. How about a Dudley Smith? A. No. Have you ever heard ~f either of ~hose gentlemen? A. No. Q. Have you zevl~wed anT deposition NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 NANCY G. NAUGHTON - CONFIDENTIAL transcripts from this case? A. Just mine and some of Bonnie McCafferty's. Q. Why did you review s,ome of Bonnie McCafferty's? A. Mr. Gould and I just went through it, little portions of it. Q. Did you ask to see ilt? A. NO. Q. Have you reviewed an~ expert witness statements in this cas~? A. No. Q. Let me Just give you some names and see if these are familiar to you :in relation to this case: Dr. Hausman? A. No. Q. Dr. Meyer? A. No. Q. Mr. Zerschling? A. No. Q. Do you know a person by the name of Corky Newton from B&W? A. Yes. Q. who is that person? NOON & PRATT

l 2 3 4 5 6 7 8 9 i0 11 12 13 14 15 16 17 18 19 20 21 23 24 465 NANCY G. NAUG~TON - CONF'IDENTIAL A. Right now she's in MIIS, used to be director in marketing research. And what is her part.icular area of expertise if any? A. When Corky and I wor'ked together, she was in marketing research. Q. Is that MRD? A. That's right. Q. And when was that? A. I.don't remember the full time frame we worked together but it was up through April of this year. Q. Do you have any deal~ings with her now in her new position? A. Just a little as far as systems are concerned in terms of purchasing ]PCs, issues like that. Q. What are her responsibilities now, to your understanding? She handles O- terms of A. I don't really know ~peclfically. a lot of the systems work. But your interaction with her is hardware and software? That's correct. NOON & PRATT

1 2 3 4 5 6 v 9 I0 ii 12 14 15 16 17 18 19 2O 21 22 25 466 NANCY G. NAUGKTON CONFIDENTIAL Q. Acquisition and purclhase? A. That's right. Q. In your dealings witlh her, have those dealings involved creation ,of software in-heuse at B&W? A. Well, that's not -- :in terms of getting ~nformation out of our ma:in frame and how that's structured, that's an area that I would talk to her about if I had a ques~tlon. Q. Let me hand you what"s been previously marked as Exhibit 707. Have you seen this document before today? A. I don't believe so. MR. GOULD: You should look through all the pages. THE WITNESS: Oh, ~es, I did see this yesterday. BY MR. HINTZ: Q. And if you turn to the third page, what's called Schedule A, you'11 see that there's an item 8 regarding B&W's Bal~imo~e heavy spend program and other B&W heavy spend activity, do you see that? A. That's right. NOON & PRATT

1 2 3 4 5 7 8 I0 11 13 14 15 16 17 18 19 2O 21 23 25 467 NANCY G. NAUGHT0~ - CONFIDENTIAL Q. Is it your understan,ding that part of what you're being asked to do today is to testify on behalf of B&W regardln!g that paragraph MR. GOULD: Ceunseil, that's subject to all the objections I m~ade of record during Mr. Fitzmaurice's depositi,on with respect to generally B&W's so-called heav~y spend activity, not related to reduced ~circumference cigarettes. You can answer subje~ct to that objection. BY MR. THE WITNESS: I un~derstand that I HINTZ: Q. And is the same true for paragraph 9, that part of your responsibilizy or part of our purpose of being here today is for you to testify on behalf of B&W with regard to paragraph 9 of Exhibi~ 707? A. That's correct. Q. And paragraph Ii of ~xhibi~ 707? MR. GOULD~ Again, subject to the same objections of record. NOON & PRATT

5 6 v 9 i0 ii 12 13 15 16 17 18 19 2O 24 25 NANCY G. NAUGKTON - THE WITNESS: BY MR. HINTZ: A. Q. CONF~IDENTIAL That's correct. 468 And paragraph 12 of IExhibit 707? That's right. Is it your understan~ding that you're also here to testify as a cOntlnu~tion of your individual deposition that was taken earlier? A. That's right. MR. GOULD: Counsel, I don't want to have any confusion as to when Ms. Naughton is testifying as a 30(b) {6) witness ~r as an individual. So if you would tell me now which you elect to start with -- MR. HINTZ: I don'~ think it's possible to do one first and then the other. MR. GOULD: I will not allow mixed deposition, counsel, I will not a~low that. MR. HINTZ: Then you may want to seek a protective order because I"m not going to operate under that procedure. MR. GOULD: That's the way the rules require it. MR. HINTZ: Read mR the rule. MR. GOULD: When y~u notice a NOON & PRATT

1 2 3 4 5 6 7 8 I0 II , 12 13 14 15 16 17 18 19 2O 22 23 24 25 469 NANCY G. NAUGHTON CONF'IDENTIAL 30(b) (6), it's limited to ths categories and it's clear the person is testifying as a representative of the party. As .an individual the testimony is not limited to tlhose specified categories and in that as a representative of Now, that case she i~s not speaking the corpor~atlon. is the pra,ctice that we've been following throughout the cas,e and that is the practice we are going to foll~ow now. MR. HINTZ: It's n~ot true that the rules require that. There's case law that says when a 30(b) (6) witness testifies., raises their hand and swears to ~estify, they ~can testify and they can testify to all matters t~ey are asked to testify and are net limited to 30 (b) (6) matters. Secondly, that has n~t been the practice in this action. And fun~tionally, it's going to be difficult to do that because we are talking about different matters amd differe,nt times and her individual and representative capacities are going to cross. So to the best we can, we will try to make it clear- MR. GOULD: So you"resaying yoU're proceeding with'both simul~aneously here? NOON & PRATT

1 3 4 5 6 7 8 9 i0 II 12 13 14 15 16 17 18 19 20 21 23 24 25 470 NANCY G. NAUGHTON CONF'IDENTIAL MR. HINTZ: Yes, e:ir. And to the extent we can make it clear -- MR. GOULD: Then, counsel, I will have to interpose objections when.ever I think it's appropriate, whe~ever I thln.k this is inside or outside of the scope and I will have to do that with respect to every question since you're insisting that we proceed that way. MR. HINTZ: The alternative will be to double the time that's required because we have to finish the individual and I will have to ask all those questions and then .we will have to do the 30(b) {6) and I will have t,o ask all ~hose questions again. MR, GOULD: You do]n't have to ask the same questions. If it's done under the 30(b) (6) and the topic is covered, there's absolutely no need to reask the s~ame questions as an individual, counsel. That's am absurd suggestion. MR. HINTZ: Are yom saying that Ms. Naughton's individual view is the same as B&W's in all instances, that her ~view is no different from the company line, ~he company NOON & PRATT GSZ l.3 84

1 2 3 4 5 6 7 8 I0 ii 12 13 14 15 16 17 18 19 21 25 policy? NANCY G. NAUGHTON - CON~YDENT~AL 471 M~. GOULD: Counse~l, if you insist on doing it this way and wasting the time you have for this deposition, go ahea.d and ask your questions and I'll pose my ebJect, iens. I object strenuously to this waste of time~ in going forward this way. Ask your questions. MR. HINTZ: If you can tell me her position is sot going to be any different than B&W'S co~porate position -- MR. GOULD: I'm telling respect ~o the ~opios of the 30(b ) (6) , to you with the under the extent she can testify, she is te~stifylng the rules as a representative of ~&W. To extent her testimony is outside t~hess categories, she is not tsstifylng as a 30(b) (~6) witness. So go ahead and ask your questions. MR. HINTZ: All right, let's start. ADd this is clearly as an individual. BY MR. HINTZ: Q. Let me hand you uhe ~ransorlpt from the May 14th session of your depomitlon. This is the minuscrlpt version. If you look, if you find NOON a PRATT

2 4 5 6 7 8 9 10 11 12 15 14 15 16 17 18 19 21 22 23 24 25 472 NANCY G. NAUGHTON - CONF'IDENTIAL page 56. i~'s in the middle towar'ds the ~op, there are multiple pages on this 8 and a half by ii sheet. At line 8 there's a question: "Question:" Is there .a general on a program that rule you you will more or principle to your understandln.g that if spend more money from th~at program? there's not, certainly spendin!g more will get likely obtain more volume • Answer: No, no rule that we have that you more." Do you A. Yes. Q. Is that A. Yes. Q. Now, in your answer ton May 14th, you said, "there's not, certainly no ~rule that we have," and I just want to make sucre we're clear. My question was, is ~there a general see that? rule? ~t seems to me B&W there's no rule. rule? still your wiew today? you're answering that at Are you aware of a general GOULD: Are you asking a as an expert inmarketing, or MR. general question, what? NOON & PRATT

1 2 3 4 5 7 8 9 i0 ll 12 13 14 15 16 17 18 19 21 22 24 25 NANCY G. NAUGHTON MR. HINTZ: she's aware as a general rule o~ 473 CONFIDENTIAL If, as an individual, thumb if you spend more on advertising of volume. THE WITNESS: you ge~ more in terms NO, I'm not aware of a general rule oE that nature. MR. HINTZ: Let me~ show you a document that we need to mark as Defendant's Exhlbit 731. (Defendant's Deposition Exhibit-No. 731 was marked for identification. Exhibit retained by counsel.) MR. HINTZ: It's a:n excerpt from a book entitled Strategic Advertisilng Campaigns by Don E. Schultz, and it's the thir,d edition, 1990. MR. GOULD: numbers, counsel. Has us before? MR. HINTZ: MR. GOULDh referred to in any of your in any way? MR. HINTZ: MH. GOULD: this ever ]been produced to NO. Has it ever been expert witness reports in has not. I object to this late NOON & PRATT

1 2 5 7 8 9 10 Ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NANCY G. NAUGHTON - CON~IDENTIAL production of the document. You're trying to, under the guise of marking a depolsition exhibit, put something in evidenc~e after the cutoff date because you failed to. get it in timely. MR. HINTZ: This is a available to the public. MR. GOULD: This entire book and only an excerpt. M~. HINTZ: I'm not saying anything mark it and move on. MR. GOULD: can establish a foundation ever seen it, uses or rscognizes ~it as authoritative. MR. HINTZ: a break, five minutes. MR. GOULD: ahead. document 474 is also not the That's correct, and other tha:n that. Let's Mark i~t and see if if the witness has we Mr. Go~uld, let's take Ask yomr question, go MR. HINTZ: Let's Eake a break. MR. GOULD: Let it be known that Mr. Hintz has left the room in a state of agitation and we're staying in th~ room and NOON & PRATT

1 2 3 4 5 7 8 9 I0 11 13 14 15 16 17 18 19 2O 21 23 25 waiting counsel has question. 475 NANCY G. NAUGHTON CONFIDENTIAL £or him to return and as~ his question. (Recess take~.) MR. GOULD: Let the record show returned and we're st~ill awaiting his MR. HINTZ: I'm to~id Mr. Gould has taken the opportunity to say a fe~w things on the record. Rather than reading them~ back, let me note that I don't care what he said, but if he's going to conduct himself outside the bounds of professionalism by giving speeche:s and lecturing, we will not put up with it today. MR. GOULD: You kn.ow perfectly well this is a fact witness; you said yoursel£ she's not an expert witness. You're trying to put in front of her a selected ex,cerpt from a book ~hat has never been relied o~ by your experts and never been produced s,o far in the case. And we're beyond the date of producing documents and all docum~ents upon which you're going to rely on trial havre been produced or testified to and now you're trying Lo put this one in through the back door, and I think that's NOON & PRATT

1 2 5 6 9 II 12 13 14 15 16 17 18 19 2O 21 22 24 25 improper this case. question? 476 NANCY G. NAUGHTON CONF'IDENTIAL and contrary to the scheduling order in MR. HINTZ: Are you finished? MR. GOULD: Yes. MR. HINTZ: Thank MR. GOULD: Do you have a MR. HINTZ: it works. I ask questions, object and it's limited to MR. GOULD: pending question, counsel. MR. HINTZ: to make speeches? BY MR. HINTZ: Q. Ms. Naughton, That's usually the way that. You dom't have a So tha~ entitles you heard of this book, Strategic Advertising Campaigns? MR. GOULD: form. You can answer. THE WITNESS: Not ~hat I recall. BY MR. HINTZ: 0hject~on, compound Where did you receiv~ your MBA, Ms. Naughton? NOON & PRATT

5 6 8 9 I0 ii 12 13 14 16 17 18 19 20 21 22 24 2S NANCY G. NAUGHTON CONF[IDRNTIAL A. From Northwestern. Q. Have you ever heard ~of a Mr. or Dr. Schultz from Northwestern? A. I might have. I don't recall at this point. Q. And the r~ason I ask obviously is 477 he's indicated as being from Northwestern and he is the author of this book. Would you turn to th~ page of this book that's page 266; it's the second page of the exhibit and it bridges to 268. The very last sentence on 266 reads: "One of the most well-accepted approaches is that developed by J. O. Peckham using Nielsen data. From his studies, Peckham found that to ho~d marke~ share, the advertiser should spend at the same level as sha~e of market. To gain sales, ~t was necessary to spend at 1.5 to 2.0 times market share." Do you see that? A. Yes. Q. Are you familiar with that "well-accepted approach developed by J. O. Peckham"? NOON & PRATT

1 2 3 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 time to you wish. NANCY G. NAUGHTON MR. GOULD: read whatever portions 478 CON~IDENTIAL Ms. Nmughton, take the o£[ this excerpt I also object to hawing taken simply selected pages out of context. context of this quote here and improper. Q. Just so we're clear, what I'm asking, I'm just asking Me don't have the thLis is highly MS. Naughton, if you're aware Of or familiar with the portion that I Just read to you? A. I don't recall it. courses or advertising courses, it may have come During marketing up. It's certainly not something that top of my head anyway. Q. Do you have any reason to dispute the section that I just read into the record? MR. GOULD: Oh, co:unsel, come en. iS at the This is a textbook. do this. sir? objection. You should h;ave your expert MR. HINTZ.: Is tha~t an objection, MR. GOULD: Yes, t]his is an NOON & PRATT

1 2 3 4 5 6 8 9 ii 12 13 14 15 16 17 19 20 21 22 23 24 25 479 NANCY G. NAUGHTON - CONFIDENTIAL MR. HINTZ: I'd l~ke tO hear the word objection; state your object;ion please as if you were in court. You know how to do that. MR. GOULD: And y~u know how to properly get a piece of evidence or an article into evidence properly and this i.s no~ it, counsel. MR. HINTZ: ~'m no~t tying do that. I'm trying to discover facets. I'm trying to discover if she's aware of cer'tain facts. MR. GOULD: And shoe said she's not -- she said no, she's not awa.re of this p~Inciple. MR. HINTZ: I can't wait to read this transcript. That's not what she said; she said she may have come across it in school and she doesn't remember. MR. GOULD: foundation. Objection, lack of BY MR. HINTZ: Q. NOW, would you turn Iplease to 277 which is the second to the last p~age of Exhibit 731 and there's a bold-lanced heading, Competitive Expenditure Approach. De you see NOON & PRATT $2 36493

! 2 3 4 5 6 7 8 9 10 ii 12 13 14 15 16 17 18 19 20 21 23 24 25 that? NANCY G. NAUGHTON CON¥'IDENTIAL 480 A. Yes. Q. And • The competitive the first p~rt o,f this reads, expenditure appr'oach to budgeting is widely used. The ruble of thumb says the advertiser must spend at a rate of one and one-hal£ to two times the annual advertising rate per share point of competitors to. reach a share objective." Do you see that? A. Yes. Qo Further down in the inext paragraph, the first sentence reads, "Over a period of several years, J. 0. Peckham gath,ered evidence of a strong correlation between what is invested ±n advertising as a share cf the cat~egory total and the share of market Do you A. Yes. 0. achieved." see that? DOeS that help refre~sh your recollectio~ as to J. 0. Peckham'~s work and this rule of thumb regarding spend of ~ahare? A. NO. MR. GOULD: Counsel, I'm going to NOON & PRATT

1 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 23 24 25 481 NANCY G. NAUGHTON - CONWIDENTIAL interpose an objection. If what you're attempting here is to get this so~mehow into the record and then have your expertsl rely upon this because you read it during this dlepositicn, I will strenuously object. I hope that's no~ what you're attempting to do here. MR. HINTZ: what I'm attempting to do, foreclose the possibility order. to do, order. That's: certainly not but I will not that my" experts may rely on this document in whole or' in part. MR. GOULD: That's contrary to the If you say that's what yo~u're attempting then clearly you're trying to evade the You told us specific~ally tha~ everything relied upon by your ex]perts has been identified and has been produced, we have that explicitly in writing from you. deposition. brought out. MR. HINTZ: Or Idelntified at their MR. GOULD: NO, an~ further things None of your expert~ identified this at their deposition as an exhibit. MR. HINTZ: That's correct, NOON & PP~ATT

1 2 3 5 6 ? 8 9 10 11 13 14 15 16 17 18 19 21 22 23 24 482 NANCY G. NAUGHTON - CON~IDENTIAL were they asked anything about i~. MR. GOULD: How c~n I ask if we haven't been provided this document or it hasn't been identified? If you attempt to put this into evidence with your experts by virtue of your having read it in this deposltio~, we're ~oing to move in limine and bring it to t~e attention o~ the court. That is entirely impr~oper. MR. HINTZ: interrupting, Mr. Gould. This answer session. It's not time your arguments for the future. Why do*n't you stop is~ a question and fo,r you to plan And I will tell you right now, I will not use my reading of this d.ocument and Ms. Naughton's answer in any way to get this document in. MR. GOULD: Thank MR. HINTZ: I will also tell you that does not mean we will not trly to get this document or other documents in if we think this is appropriate and we can do it u~nder the court's order. BY MR. HINTZ: Q. Back to this exhibit, one last NOON & PRATT 68213649

8 9 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 1 2 3 4 6 7 NANCY G. NAUGHTON - CONFIDENTIAL 483 thin~. MR. GOULD: Do youL have the entire, at least the chapters of these excerpted pKgee, counsel, so the witness cain look at the context of the quotes you're takl.ng? these pages, the book ~t came from? MR. HINTZ: understand, Mr. Gould? MR. GOULD: of the paragraphs MR. HINTZ: another break, Mr. Gould? BY MR. HINTZ: MR. HINTZ: NO. MR. GOULD: NO, yo,u just have you don't have in yo,ur possession What w'ords I'm sa[ying do you not the context Do you want to take I said no. Q. If you would look, p~lease, in Exhibit 731, a~ain at the second ~age of the exhibit, it's page 266 of the booR, Strategic Advertising Campaigns, under Competitive Comparisons you'll see the third ~entence begins, "relating," and I'll read it for ~he record. "Relating share of m~rket, share of units, or other Eactors to the sh~re of NOON & PRATT

6 7 8 9 ii 12 13 14 15 16 17 2O 21 24 25 , 484 NANCY G. NAUGHTON - CONF'IDENTIAL advertislng, a ratio is establish~ed. " -Fro~ this, the advertising planner then seek~s to achieve a 'share of voice' or share of adve~rtising which is, in general, equal to the shar'e of market which the brand holds." DO you see that? Yes. In your experience Q. a.t B&W, • performed any calculations where yo~u detePmined the share of voice or share of ad~vertising in relation to market share? A. I don't use it frequently. There may be some .in the media p.!annlng group or, you know, some brand managers might h,ave. I generally don't use that calculation. Are you familiar wit[h that calculation? A. Q. Yes. Is that something th~at in the past but have abandoned? A. I haven't really use(d it very much. I don't really recall relying on ~it too .heavily outside of a~ example or somethin~g of that nature. you have used NOON & PRATT

1 3 5 6 7 8 9 I0 Ii 12 13 14 15 16 17 19 20 21 23 24 25 485 NANCY G. NAUGHTON - C0N~IDENTIAL Have you considered using that measure and decided not to use it:, or have you just not considered it? A. I just don't really consider it when putting together plans. Q. But it's your unders~tanding that other people at B&W have used tha~t method? A. I'm sure it's been c:alculated. Q. What I'd like to do now is try to conclude some of the issues from your deposition. And to do that, it w~ould if you would look at your transcr'ipt, It's on the bottom rlght-hand sidle the mlnuscript. On page beginning at line 16 the end of that page yourself, please? MR. GOULD: whatever you need for the THE WITNESS: BY MR. HINTZ: Q. Have you finished re.ading that section and whatever else you nee,ded to read? .. NOON & PRATT individual be helpful page ISS. of the page of 158 there's a question and your answer continues 6~ 158. Could you ~ead that to Read b~efore and after, context, MS. Naughtonc'- okay. "

1 3 4 5 6 7 8 9 I0 11 12 14 15 16 17 18 19 20 21 23 24 486 NANCY G, .NAUGHTON - CONFIDENTIAL A. YeS. Q. Is it still your temtimony that the time frame where spending was becoming more focused started i~ 1989, that's the spending on Capri? A. AS best I can recollect, we began to think in a more focused way in imte 1989. .... Q. When did Zhe actual spendingbecome more focused? A. I don't know off the top of my head without looking at some spending numbers. -- Q. What would you need to look at, actual numbers? A. Actuals. Q. Okay. .. MR. HINTZ: Let me~ mark as Exhibit 732 a collection of documlents produced by B&W bearing production numbers EWrT308-99 through 196 in which we have inserted tab, s 1 through 12 corresponding to the 12. monthsof the year for ease of reference. And these are~ 1988 documents. (Defendant's Deposition Exhiblt-No. 732 was marked for identification.. Exhibit retained by counsel.) NOON & PRATT

1 3 4 5 7 8 9 ID ii 12 13 14 15 16 17 18 19 23 24 25 again bears NANCY G. NAUGHTON - MR. HINTZ: continue marking we've inserted the production numbers CONF'IDENTIAL While we're at 487 it. let a set fo, r 1989 in which- tabs. T'he document BWT308-197 to 303. 733 was retained by counsel.) MR. HINTZ: Exhibit 734, the set for BWT308-304 through 392. (Defendant's Deposition Exhibit-No. marked ~or identification.. Exhibi~ And the next exhibit, 1990, pr'oduction numbers (Defendant.'s Deposition .Exhlbit-No. 734 was marked for identification. Exhibit retained by counsel.) MR. KINTZ: And the final set is a set for January through September 1991 of documents bearing production numbers BWT308-393 through 420, and BWT363-01 throug[h 031. (Defendant's Deposition Exhibit-No. 735 was marked for identification, Exhibit retained by counsel.) BY MR. HINTZ: Ms. Naughton, have y,ou had a chance to look through, at least in some part, these exhibits as they have been marked and placed in NOON & PRATT G82136501 --

1 2 3 4 5 6 7 8 9 I0 11 12 13 14 15 17 18 19 2O 21 22 23 24 25 488 NANCY G. NAUGHTON - CONFIDENTIAL front of you, 732, 733, 734, and 735? A. I've looked at a comple of pages. Q. My question -- let me ask it and we'll see if this hslps. Are yo~ familiar with reporte of Brown ~ Williamson? I'm familiar with bm~get mats. And what's a budget mat? The monthly budget ~eport. Is that document conltained within these kinds of A. Q. A. 0. any one of these exhibits? A, I believe it's in al.1 o£ them. Q. Can you identify wha~t you're calling a budget mat just so I'm clear on~ the terms? A. There are reports th~at say monthly budget report on the top of it. Q. So if we could just pick whatever exhibit you're looking in so we c:an make everything clear? A. 732. Q. All right. For January, the first first page~ is Monthly Free ,Goods Summary. tab, Are you A. Q. familiar with that page? I don't usually receive that. Second page is Monthly Variable NOON & PRATT

1 3 4 5 6 7 8 9 I0 II 12 14 " 15 17 18 -19 2O 21 22 23 24 25 Margin A. Q. Summary? A. Q. A. Q. that tab, Specific? A. Q. least? A. Q. NANCY G. NAUGHTON - CONF~IDENTIAL Summary? I receive that. Third page is Monthl.y Variable 489 Cost I don't believe I re~ceive that. Next page is Monthl~ Budget Report? And those continue o~n to Advertising Media and S:ales the end of Promotion That's right. You're familiar with. those pages Yes. Now, I believe what got us into these documents is your testimony' that you would need to see actual numbers to determine when -~ spending became more focused. And it's somewhat up to you how we go about doing that. I believe these are the actual numbers. I'~m tryin~ to give you what you need to answer the q[uestion. If yo~/ could kind of walk me through what you're looking at. A. Well, just from looking at these, NOON & PRATT

2 3 4 5 7 8 9 l0 ii 12 13 . 14 15 16 17 18 2O 21 22 23 24 490 NANCY G. NAUGHTON CONF'IDENTIAL like the December budget mats for~ December 1989 versus December 1990. Q. Okay. A. Just in terms o~ £oc:using spend. Q. And what particularly are you looking at? Are you looking at d~omestic media? A. No, sales promotions:. Q. Okay. And are you looking at the -" grand total or are you looking at particular line items? A. Well, for example, a.fter all this time it's pretty hard to say exactly what is -- within each line item and how it was charged out, but coupon redemption, for example, is a good area of where we focused and were more nactical in our approach with a significant change, we pulled back significantly on coupon redemption. For example, you can see in 1989 through December we spent about $15 million in coupon redemption in the field, w[hich then in 1990 was just a little, like arou:nd $3 million. Q. So that's the 15 mll[lion that's shown in Exhibit 733 on page 308-~301, line item "coupon redemption-field"? NOON & PRATT

1 2 3 4 6 7 8 9 10 II 12 13 14 15 16 17 21 22 23 24 25 at 308-392, right? A. really go tell you. NANCY G. NAUGHTON CONFIDENTIAL A. That's right. Q. And for comparison, iyou were looking Exhibit 734, the page with pro,duction number~" "coupon redemption-field" there also, Right. And at this !poin~ 1 can't back and lock at each l:ine item and .-- I know we were tightening up our focus versus some of the big national p:rograme that we did. We didn't have a wide range of national programs because we knew we had r,egional skew, so that's in reference to tightening our focus in the fourth quarter of 1989, I thilnk. In 1990 we executed against that position. Q. But this shows you t~at on a year-end basis that ~ha~ change w~s made~ Can you identify what particular time during the year 1990? A. On a budge~ mat basis I really can't because it's not billed that way. I mean, I wouldn't know how coupons are expensed and to look at a monthly actual won't indicate that. Q. How about media, foc~slng media, what was done to focus media? NOON & PRATT

1 2 3 4 6 7 8 9 i0 ii 12 13 14 15 16 18 19 21 22 23 24 25 be much more smokers. We focused our out of more selective group of markets opportunity markets. NANCY G. NAUGHTON - CONF~IDENTIAL We tightened up our magazine targeted once 492 list to we kne~w more about OUr h~ome on a much t.hat were high Q. And that's also show, n in Exhibits 733 and 774 in tab 12, again the December numbers, let's say the media? A. Well, between Decemb,er of 1989 and 1990, you can see our reduction in out of home spend as well as a reduction in m~agazine spend. Q. They were both cut about in half? A. Roughly. Q. So that shows that t.he amount of money that B&W was spending on those two vehicles was reduced, obviously? down down? that the number of placements of advertisements went or Just the amount of time plurchased went A. That's right. Q." Does that show anything about how reduction came about, for ex~ample, whether A. You can't tell that ~from the b~dge~" numbers. NOON & PRATT

1 2 3 4 5 7 8 9 ii 12 14 15 16 17 18 19 2O 23 25 NANCY G. NAUGETON CONFIDENTIAL Q. Is there any source for that information? 493 A. It would have to be in the media recap, something from the agency as far as what magazine insertions we had. Q. so these numbers ~ha~ we've loomed at show decreases that occurred b~etween 1989 and 199'I? First we'll take a if you 1990, correct? That's right. Q. What happened in can from your memory and then at the actuals. A. I don't recall 1991 at this point. was look their dollars, A. efficient 0. money OUr a.ctual plan for Q. Do you recall if the, spend for media to remain the same, increase or decrease? A. I don't recall. Q. Wasn't B&W'S focus o,n targeting ~" advertising and focusing their advertising isn't that what B&W learned? We were looking to be the possible. And spend the minimu:m amount to get the maximum gain? of NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ll 12 13 14 15 16 17 18 19 20 21 23 25 against Q. NANCY G. NAUGHTON - CONF'IDENTIAL We Just wanted to sp, end smartly our target. Spending smartly spending less? A. testified at 494 doe~sn't always mean Not necessarily. But prior to 1990, a.s you've some point, B&W began learning that their spending was inefficient, r'ight? A-. There were some inef ficiencies in the way we were executing program,s. Q. the ame~nt answered And you made a choice to cut back o£ expenditures? MR. GOULD: Objection, asked and~- in the prior deposition. You can THE WITNESS= We just -- we evaluated the programs, what was "working, and w~. could be more focused, we knew wh,o our consumers were. Previous to that, we had h~ad a lot of national programs and we knew the brand was more regional. We had a better sense ~for that consumer and how to speak to that consumer versus broad national vehicles and thlng:s like direct mail and broader scale programs. FSIs, for NOON & PRATT

1 2 3 4 5 7 8 I0 II 12 14 15 16 17 18 19 2O 21 22 23 24 25 495 NANCY ~. NAUGHTON CONFIDENTIAL example, weren't necessarily cost efficient. BY MR. HINTZ: Q. And you're sayin~ "we," who is the we, who was involved in makin~ these .... determinations? A. Certainly the brand group and those recommendations were forwarded t~ the next level of management. .... Q. And who is in the bEand group at this time, '89/'90? A. I don't remember exactly who was there what year. One time Susan Osborne was director. Q. A. was the senior brand manager. Who else? Carrie Canavan was t:he brand manager the spend cu.ts came about, at one point. Q. And you testified i~ your last deposition, and if you would like~ to refer to it, it's at page 171 of the May 14th transcript, about whether you and the brand hLad asked for less money in 1990. See page 171., lines i0 through 23? A. Yes. Q. So when NOON & PRATT 6S 136509

3 4 5 7 8 9 ii 12 13 14 15 16 17 18 19 20 21 24 25 NANCY O. NAUGHTON - CONF'IDENTIAL those of you in the brand who wer'e learning about targeting and learning about beco~ming more ~£ficient didn't come right in in~ 1990 and voluntarily give away millions of dollars of your budget? A. ~o. ~ut £ think we recommended much more efficient programs and it wa.s -- the concept was there. As ~ brand manager yo,u always go in with an aggressive position. Oo position? A. plan was. magazines and out And how aggressive w'as don't remember what your initial the initial actually A. was. Q. plan, to in half? A. Q. brand, who Was the initial plan to cut of home in half as we saw happened? I don't recall what the initial plan So that might have b,een the initial go in with a recommendat,lo~ to cut those I don't recall at th:is point. Who made the recomme~ndation from the had the final responsi]bility from the, NOON & PRATT 68 g136510

1 2 3 4 5 6 9 1O ii 12 13 14 15 16 17 18 19 20 21 23 24 25 497 NANCY G. NAUGHTON o CONFIDENTIAL brand? Was that you? This is far the 1990 budget. A. Not -- no, not as b~and manager. Q. You and your brand group would make a recommendation and pass that up to someone else? A. That's right. The ~lannins process was evolutionary. The initial thinking was present.ed, the issues, so ~t evolves over time. And sometimes you're told to make cuts from above, correct? .... A. That can happen. Q. Did that happen for the 1990 A. I don't recall at t~is point. Q. So you're sure that for the 1990 .... budget, you d~dn't come in with m low number right from the beginning, but you don't know whether you were asked to make t~e cuts or whether you suggested them yourselves later on;.. budget? said I didn"t remember in with ini~ially. I'm sure That's normal.ly how brand is that correct? A, Well, I exactly what we went it was aggressive. managers do.it. NOON & PRATT

l 2 3 4 5 7 8 9 10 iI 12 14 15 16 17 18 19 2O 21 22 24 25 NANCY G. NAUGHTON - CONFIDENTIAL AS I mentioned, it is an evolunlonary process, we are alwmys challenged to be as efficient as possible. I can't tell you every step of what happened, whe~. The planning process is long and I certainly don't recall back in 1990 what happened each step of the way. Q. But you seem to recmll that yon were becoming more focused and you were trying to spend more efficiently. You had that thinking beginnin~ in 1989, correct? A. That was ~he strategic direction we were looking at, it made sense a~d we're still doin~ it today and that's when it: started. Than was a b~g event in ter~s of how ~e were handling and managing nhe brand. In terms; of presenting budgets and plans, there are so m~any iterations ..... in any plan, any year, you csn't remember what process went on from year to year'. Q. What phase in the budgeting process are you in now for 1993? A. ~ can't really speak: to that, where we are right now. I'm currently the director of advertising and promotion, so I run the operational side of that business, so I'm not " • NOON & PRATT

2 3 5 8 Ii 12 ~4 19 2O 22 ~3 NANCY G. NAUGHTON - CONFrIDENT~AL actively involved in the planning[ role. When was the las~ time you actively involved in the planning[ role? A. Last year. Q. And when did 499 were that pr:ocess begin for the '92 budget? A. I don't recall exact~ly when. At this point, I would -- this would[ be just a guess on my part, mid-year, so June, Juily. Q. And when you left yo*ur previous position in April of this year, h~ad the budget been established for '92? A. We were certainly sp,ending against authorized. Whether it had been throughthe formal channels, I don't know. Q. So you don't know if BAT had approved the 1992 budget at that point? A. I don't know. Q. BAT always approves correct? A. the budgets, I'm not really well 'versed in that approval process. I don't get in'volved in that. Q. It's something that iMr. Fitzmaurice might know about? NOON & PRATT

2 3 4 5 6 7 8 9 ii 14 15 17 18 2O 21 23 24 25 NANCY G. NAUGHTON That's right. MR~ HINTZ: C0NF'IDENTIAL I'il ask the reporter to mark as Defendant's Exhibit 736 a multipage .... document bearin~ production numbe~rs BWT316-1708 through 1716. (De~e~dant's Deposition Exhibit-No. 736 was marked ~or identifications. Exhibit retained by counsel.) BY MR. HINTZ: Q. If you look on the first page of Exhibit 736, you'll see your initials in the upper right-hand corner, do you see that? A. Yes. MR. GOULD: Counse~l, so it's clear, sometime ago you indicated, you were proceeding with Ms. Naughton as an individual, cleanlns up areas from her prior testimony. Are we still in the individual capacity or are we switching to 30 (b) (6) or what? HINTZ: We're in GOULD: All ri,ght. individual." MR. MR. BY MR. HINTZ: Q. Does that document that indicate tlhat this is a you prepared, Exhibit 736? NOON & PRATT

1 2 6 7 9 10 ll 12 13 !4 15 16 17 is 19 20 21 22 Ao assuming it's 0. that right? A. Q. 501 NANCY G. NAUGMTON CONFIDENTIAL It'S my secretary's writing so I'm mine. It look like hers, anyway. And the date is Jun~ 6, 1989; is That's right. First page has a he~ding, ~o you Planning see tha~? Considerations Target Audience, A. Yes. Q. Is this document 736; a part of the planning that you were going through for the Capri brand? A. Just looking at this~ document I tell how it was used, quit~ frankly. Q. But at least on the first page it these are plannin~ considerations you indicates that as far as the target audience A. That's right. Q. The first bullet ite~m mentions source of business and recontact s~udles, do see that? A. Yes. Q. the middle no Were such studies co~nducted in about to the end of 19897 I don'~ xeally recal, l. I know we NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 II 12 14 15 16 17 18 19 20 21 22 23 24 25 NANCY G. NAUGHTON had several consumer studies for those -- I don't know which ones implemented. MR. HINTZ: to mark as Exhibit 737 a bearing production numbers It's dated June 14, 1989. research authorization. 5O2 CONFIDENTIAL Capri. Some of were exactly I'll ~sk the reporter three-p~e document BWT324~-0143 to 0145. It's m marketing (Defendant's Deposit~ion Exhiblt-No. 737 was marked for identificatiom. Exhibit ~. retained by counsel.) BY MR. HINTZ: Q. MS. Naughton, can you identify Exhibit 737? A. It's a authorization for a marketing res~earch recontact stuLdy in Louisiana. Q. And this is somethinLg that you requested be done, the study that~ is? A. That's what this indicates. Q. And about a third of[ the way from the bottom c~ the ~i~st page, the~re's a recommended supplier Admar, do yo,u see that? A. Yes. Q. That's Admar l~esearc:h Incorporated NOON & PRATT

! 2 3 4 5 6 7 8 9 10 ii 12 14 15 16 17 18 19 2O 21 22 23 24 25 here NANCY G. NAUGHTON in New York? A. That's right. Second page of CONF~IDENTIAL 503 Exhib~it 737 is something entitled Marketing Rese~arch Request, Summary and Proposal, do you see that? Yes. Is that something that you prepared Ao personally? A'. No. It was prepared[ by the marketing research group. Q. Y0u'll see in the ba.ckground section, the second paragraph reads, "Based on the source of business study, the: primary Capri target audience is defined as 21-35 year old females with a secondary target o.f females 36 pl~s. However, in recent A&Us conducted in Baltimore, most often and occaslo~nal usage was comparable among females 21-35 an.d females 36 plus." DO you see that? Ao Yes. Q. What was the reason if any why th~ Baltimore A&U studies resulted in these comparable most often and occasio~nal usage NOON & PRATT

l 3 5 7 9 lO II 12 14 ~9 NANCY G. NAUGMTON CONFIDENTIAL figures for these different a~e ~anges? A, I don't know what t~e reason was. Q. The third l±ne says, "This apparent change in the composition of Cap~i's most of%en smoker base may be due to the acclimation/converslon period required in the 36 plus age sroup," Do you see tha~? A. Yes. Q. Is that correct? A. Is that statement c~rrect? Q. Yes. A. Not to my knowledge. That was a hypothesis as far as why the 36 plus age group usage pattern was not comparable olds. Q, And that hypothesis was disproven some point? A. I don't recall whezh~er it was ever proven or disproven. Q. But you're saying thLat you don't believe that ~t's correct? to 21 to 35 year that, at A. All I'm sayin~ is I couldn't verify Q. 80 you couldn't say it' s i~correct NOON & PRATT 682136518

1 4 5 6 7 9 l0 ii 12 14 15 17 18 2O 21 22 24 25 NANCY G. NAUGHTON either, could you? A. No. Q. Is it posslble heavy spend test was the cause for comparable usage figures, was that ever put forward? MR. GOULD: That's two questions. MR. HINTZ: BY MR. HINTZ: CONFIDENTIAL that the Baltimore these hypothesis objection, compound. I'ii Eephraee. 505 Q. wis the hypothesis ever put forward that the Baltimore heavy spend test was the cause of these comparable usage figures? A. Not to my knowledge. Q. Was the study that ~ou requested in Exhibit 737 conducted? A. I don't recall at this point. As I mentioned earlier, there were several consumer research studies that were done. MR. HINTZ: Let me mark as Exhibit 738 a multipage document bearing production numbers BWT324-02 through 041. The document is entitled Capri Recon~act Study, Study ~esults. It's dated September 1989. NOON & PRATT

1 2 4 5 6 7 8 9 10 Ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 738 was retained by counsel.) BY MR. HINTZ: Q. Exhibit 738? A. Q. 506 NANCY G. NAUGHTON - CONFIDENTIAL {Defendant's Deposition Exhibit-No. marked for identificatiom. Exhibit Ms. Naughton, are you familiar with Is it your understanding that Exhibit 738 is the results from t~he study that you requested in Exhibit 737? exhibit, 324-04, A. O. which most time." Yes. If you look at the t~hird pa~e of the it's the page with production number Research Objectives, Yes. First item is, often smokers do you see that? "Dete~rmine extent to remain loyal over September 1989, what was the valu.e of that information to you in planning? A. Well, you need to kn.ow if your franchise is loyal, that they hav'e some commitment In your position in this time frame, to the brand. Sometim~es the programs NOON & PRATT

1 2 3 4 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 507 NANCY G. NAUG~TON - CONF'IDENTIAL that should be run would be dic£a.ted by that. Q. And how does that af[fect the kinds of programs? Let's ~ake the case~ where your franchise is highly loyal, what k:inds of programs would you use? A. Well, it's really an~ issue of if you lose your franchise, people move in and out of your brand relatively quickly, tr'ial generation for new smokers is a critical issue to offset any loss. Q. My question though goes to when you' have a loyal franchise, what types of programs do yon r~n. And my next question so. you'll know it is, when you don't have a loyal franchise, what programs do you run? I want to see bo~h sides o£ the coin. A. When you have. a loyal franchise in my opinion it would be reinforcement of ~he attributes that they find appealilng about the brand, image reinforcement, that sort of a program. Q. Maybe I'm not understanding you but what types of programs speciflcal[ly, coupons packs, coupons for cartons, billb,oards, NOO~ ~ PRATT

1 2 3 4 5 6 7 9 i0 ii 12 13 14 15 16 17 18 21 23 24 25 NANCY G. magazinss, A. differ. Q. A. cigarette, important. Q. A. Q. A. consistent, NAUGETON CONYIDENTXAL sampling? Depending on the brmnd, it would Let's try Capri. Capri because it's aLn image brand image reinforcem~ent is 508 based How is that done phy'sically? Media support, magaz:ines. Any particular -- Tape-on items that a.rs image that's another way of! reinforcing your franchise in the image and the quality they see in the brand. Q. For media you mentio,ned magazines. How about out of home? Would tha.t also be useful in reinforcing the image? A. A lot less than magazines in a brand llke Capri, because it is targeted outside of some very high opportunity markets. But £or franchisej magazine support is aplpropriateo Q. With a loyal smoker ibase, do you spend a different amount as far a~s a ratio, as far as advertising and promotion, than you do for NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 Ii 12 13 14 15 16 17 18 19 2O 21 9.2 23 24 25 509 NANCY G. a hen-loyal A. about that. Q. NAUGHTON smoker base? I've really not In 1989, the have a loyal smoker base, use your terms? A. I think to a trying to determine that. and this was reporting in CONFIDENTIAL formed any opinion end of 1989, did Capri a loyal, franchise to large extent we were Based on this study, Septemb>er, it indicated that we had a loyal franchise. Q. And where is that i~dicated? A. On page 4 of the exhibit, 324-07. Q. That's the first ite~m? A. That's right. Q. "Most often Capri ushers have remained loyal to the brand and a~re likely to continue to do A. That's right. Q. What does the secondl bullet item say? A. Number two? ~.. Q. Yes. A. "Secondary purchaser's of Capri have not been euccessfully converted to most often NOON & PRATT

¢ 5 6 7 8 9 I0 ii 12 13 15 16 17 18 19 20 21 22 23 24 25 NANCY G. NAUGHTON CONFIDENTIAL 510 So does that indicate that Capri had a set base of smokers in this study and that was the extent of it, that other peeple weren't being drawn into the franchise? A. NO. That means there is an occasional user base who buys it occasionally but just hasn't moved into most often. Q. So there's a group of people that purchase most often and there's ~nother smaller group that purchase occasionally and there's a large Stoup that don't purchase mt all? A. That's right. And this is smokers in Louisiana, correct? A. Q. Capri's A. That's correct. And Louisiana has al_ways been best market? It's been up in the top five consistently. Q. Do you have an understanding of these secondary purchasers weren't converted most often users durin~ this time~ frame? why to NOON & PRATT

1 3 4 5 6 7 8 9 l0 ii 12 13 14 16 17 18 19 20 21 22 24 25 NANCY G. NAUGHTON - CONFIDENTIAL Q. Turn ro nhe page production number 324-04, the page entitled Implicmtions, and the first item reads: "Secondary users of the brand, and to a lesser degree past purchasers, need to be given a reason, either through promot±ons and/or further line extensions, ~o smoke Capri more often." Do you see that? A. What page is this? Q. I read that first i~em there from page 324-08. Would you agree wi~h that, do you agree with that statement, that kt was true in about September of 1989? A. In terms of the secondary user base, we need to know how they use it mnd why they use it on a secondary or occasional basis. So to that extent, if there is an opportunity, if there's an opportunity to convert~ them to most oEten, that would be beneficial. Q. And this indicates t~he way to do that is through promotions or fur'ther line extensions, correct? A. Line extensions as f'ar as occasional users, it doesn't make sense to m~e. Occasional NOON ~ PRATT

1 2 3 4 5 6 7 8 9 ii 13 14 15 16 17 19 2O 21 23 24 25 512 NANCY G. NAUOMTON - CONFIDENTIAL users smoke you for a reason on ~n occasional basis not because you don't offer them the right style. Past purchasers, maybe those would be appropriate and maybe they wanted a differsnt style. 0. promotions? A. A promotion may be m way of getting occasional users to purchase you more frequently. Q. And Capri used a great deal of promotions when you worked on the brand, correc£? A. Yes, we did promote the brand. Q. More heavily than your competition, correct? How about the other aspect, time frame. MR. GOULD: 0bJec~ion, lack o£ Throughout the entiEe time frame Capri has been on the market that you worked on it. • A. I don't know that I"d agree with that. We aggressively supported it in the beginning in terms of trial offeEs. Q. And the beginning would be what time frame? NOON & PRATT G82136 6

1 2 5 6 7 8 9 ii 12 13 14 15 16 17 18 19 2O 21 22 24 ao phase, maybe Lonisiana? A. Q, after that? A. Q. middle of A. compete A. 513 NA/~CY G. NAUGHTON - CONFIDENTIAL During its, you know, initial launch the first six months cf its launch. So beginning in Janmary 1987 in That's right. And then through each expansion And those expansions~ finished in the 1988? . That's correct. In 1989 what brands did Capri against? Capri didn't compete! against anyone. until the launch of Super Slims i.n 1989. We drew smokers from slims brands were ouLr primary source, but because ef its unique~ nature and being one brand in a segment, it compete directly with anyone. Q. In 1989 what brands compete indirectly against? A. Well, Capri drew pretty wide range of brands. slims brands were the really didn't did Capri smo,kers from a AS I mentioned, primary don.ors. NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 15 16 17 18 19 21 24 25 donor 100's most of Eve. O. A. NANCY G. NAUGHTON Q. And what brands A. Virginia Slims, brand but they had which I'm assumins our smokers from. 514 CONFIDENTIAL would those be? Salem was a big the Salem Slim Light is wher~ we were pulling we pulled some from Any other brands I'd have to look we were pulling from. Q. Kow about nonslims, what cigarettes did Capri compete indirectly against in 19897 A. As I recall, we pulled smokers from -- some from Marlboro, some from B&H. That's really all I can recall at~ this point. Q. In 1989 did Capri p~omote more than Virginia.Slims? A. You know, it's hard to say. I don't -- without knowing what Virginia Slims spends, but Virginia Slims runs s~ome pretty wide ranging programs and so, you know, they're an aggressive -- they're aggressivel.y promoted. Q. Is the answer then t:hat you don't know whether Capri promoted more than Virginia Slims in 19897 in the slims group? ba~k and see where NOON & PRATT

5 6 7 8 9 i0 Ii 13 14 15 16 17 18 19 20 21 22 23 24 25 515 NANCY G. NAUGHTON CONFIDENTIAL A. On a dollar to dollmr basis, know that. Q. Mow about on a dollmr per shsre point achieved basis? Ao I have no idea. Q. In 1989 did Capri p~omote more heavily than Salem Slims Light 10)0'S? A. I don't recall what Salem Slims Light 100's was running. Q. How about in relation to Eve, did Capri promote more heavily than ~ve? A. I really can't answe~r that without looking at what Eve was doing an~ I don't recall what those brands were doing in 1.9~9. Q. If you look back in Exhibit 738 to the third page of the exhibit, p~oduction number 324-04, the last research objecti.ve is "Investigate the impact of the CaLpri 120's the Summary that Admar st6di.es, "120's I don't introduction." Do yo~ see ~hat? Yes, I do. Q. If you look then at Findings on page 324-07, you see determined in the recontact of NOON & PRATT

1 2 3 4 5 6 7 8 9 l0 ll 12 13 14 15 16 17 18 19 2O 22 24 25 516 NANCY G. NAUGHTON - CON~IDENTIAL introduction appears to have had a significant impact on Capri." Do you see thmt? A. Yes. Q. Was that conclusion correct in September 1989? A. Without looking at ~he data, I don't recall. We were watching that to see hew -- we expected some cannibalizing of iO0's from Q. Let's go ba~k to Exhibit 736 if we can, that's a document that contains planning considerations, target audience, and the second bullet item reads, "In 1993 key smoker groups should be targeted to maximize franchise growth." Do you see A. Yes. Q. And the smokers 21 that? three Hreups have female to 35, female smokers 36 to 44 and black female smokers. Were those ~hree groups in fact targeted in 19907 A. In our media plan t~ey would have been covered. I believe the primary audience was 21 to 35, but 36 to 44 and black female smokers would have been included in the plan coverage. Q. So in about the middle of 1989, was NOON & PRATT

5 6 9 ll 13 14 15 16 17 18 19 20 21 23 24 25 517 NANCY G. NAU~MTON CON~IDENTIAL it your view that these three groups were key smoker groups that should be targeted? A. They're important g~oups of female smokers. The concept here was t~at there may be a way to appeal to them in a morel precise way based on that age difference. Q. That's all a part o~[ focusing the advertising and promotions? A. That's right. And i.n a women's service book, you might run a loses, or more conservative creative to appeal t;o the 36 to 44 versus the 21 to 35 where you wouLld run something a little more aggressive on a st~le basis. Q. So in the middle of 1989, you were already starting to plan to focus~ your message to certain target audience, right? A. That's right. Q. And that would be do,no through communications directly to the co,nsumer, right, as opposed to trade advertising o,r -- A. That's right. Q. If you'll turn the page in Exhibit 736, production number 1709, you "Planning considerations for consumer NOON & PRATT

1 3 4 5 7 8 9 i0 Ii 13 14 15 16 17 18 19 21 22 23 24 NANCY G. communications." A. Yes. Q. The 518 NAUGHTON CONFIDENTIAL Do you see that? second item reads, "In 1990 the the impact o£ all and there are two items is, "Lmrger more unique focus must be to maximize consumer communications," listed underneath. First out o£ presentation through multiple pa~e units, home extensions." Do you see thmt? A. Yes. Q. What's an out Of ho~e extension? A. It's an extension that's added to a 14 by 48 billboard. It gives yo~ a more ~ut of home -- b~illboards with tha, n the impactful presentation. Q. Are those types of let me start a~ain. Are these types of the extensions more expensive traditional billboards? There's an upcharge for extensions. And the reference he,re to multiple that would be magazin.e spreads? That's right. And magazine spreads are more than single paSes, corr'ect? Ao page units, A. Q. expensive NOON & PRATT

1 3 4 5 6 7 8 I0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 519 NANCY G. NAUGHTON CONFIDENTIAL A. That's correct. Q. So this bullet item in Exhibit 736 would require additional expenditures a base level of extensions, A. Q. else and putting it A. Q. Exhibit 736 whether at this poin~ re-allocate funds or to increase previous year? A. In relation to what?' Q. The 1990 plan at this point in the planning process compared to what~ was done in 1989, either as a budget or an ac~tual. compared to not using not using spreads and correct? Or just a re-allocation. Taking money from s~mewhere into this? Right. Can you tell from the remainder of the plan was to funds over the ~ don't think I can tell from here. Q. If you look on page 1713 o£ Exhibit 736, you see the first bu~llet item, "1990 spend per plan is $76.6 million"?' A. Yes. Q. If you will turn the~ production number 1714, there's a page to spend preview NOON & PRATT

1 2 3 4 5 6 7 II 12 13 14 15 17 18 19 21 24 25 NANCY G. NAUGRTON - CON~IDENTXAL of how that's broken out? A. Yes. Q. And you'll see the magazines millio~ out of 46 million for media? That's right. So magazines were a the media budget? That's right. And out of home is percent Of A. Q. 46? 520 are 25 little under 50 1.4 million Out Of A. That's right. Q. Which is about 30 pe~rcent of the media budget? A. Yes. MR. HINTZ: I thin.k we've been going about an hour and I need to, set an exhibit so we can take a short break now. (Recess taken.} BY MR. HINTZ: Q. Ms. Naugh~on, could [you find 738, think that's the one that'S open in front of you, the page with production number 324-05, where it mentions secondary users. In the time frame of this study, the NOON & PRATT 68 1865 4

1 2 3 4 5 6 9 I0 Ii 12 13 i% 15 16 17 19 2O 23 25 52X NANCY O. NAUG~TON - CON~IDENTIAL conclusions about secondary user~, I beliove you testified that yo~ need to know how and why people were secondary users. Wh~ would you need to know that information? Why did you need to know it in that time frame? A. In terms of if you ~ave an opportunity to convert them to most often or not. If for example a smoker li~es to smoke Capri on the weekends, then that's what they p~efer and that's how they want to do it and there might not be that much of a,n opportunity to convert them to most often. But there's nothing w~ong wiUh having an occasional u.ser base. But the more occasional users you to most often, the better for the can convert brand? A. O. it's a nice opportunity. So those people repr,esent a~ opportunity to expand the franchi:se? A. Yes. O. And expand your terms of a percentage? A. That's correct, users have the same effect. starve of market in. NOON & PKATT

l 2 3 4 5 6 7 9 10 12 13 15 16 17 18 19 21 24 25 ef these frame? A. that in my 522 NANCY G. NAUGETON - CONFIDENTIAL How did Capri try to get conversion secondary users in the "89/'90 time The only offers tha~ I can recall opinion worked towards moving secondary users into most often were multiple pack offers. I believe in that time period, we did three pack tape-one, multiple pack. Q. Are there any other things included in multiple pack offers sc I know what that includes, such as buy two, get one free; is that a multiple pack offer? A. That's correct. Q. What else would be m multiple pack offer that was done for Capri? A. Those are the two I recall using. Q. There was no buy-one~-set-one-free? A. Oh, yes, we did buy-one-get-on~. But giving the consumers five pac:ks is a little bit better opportunity ~o get the~m to use it more frequently. Q. Now, we left Off beflore Zhe break in Exhibit 736 talking about whether' the 1990's spend preview was an increase, de,crease or the NOON & PRATT

523 I NANCY G. NAUGHTON - CONFIDENTYAL 2 same as 1989. Let me show you Exlhihit 667 and 3 see if we can answer that. 4 If you'll look on pa!gs 0824 of 5 Exhibit 667 and compare that with Exhibit 736, 6 there's a page 1714, you'll see tlhat the '90 7 budgets in the Lwu ~hiblt are th,e same at 76.6, 8 do you see that? 9 A. Yes. i0 Q. And if you'll turn t~O the page 1713 ii in Exhibit 736, you'll see there'~s an A/P split 12 of 60/40 recommended? 13 A. Yes. 14 Q. And in Exhibit 667 t~ere's also a 15 60/40 A/P split recommended for 1990, do you see 16 that? 17 A. Yes. 18 Q. 1989 authorized budget was $72.4 19 million, do you see that? 20 A. Yes. 21 Q. And the 1990 budget ~n Exhibit 667 22 is 76.6, correct? 23 A. Yes. 24 Q. So that was an increase in 1990 25 compared to 19897 NOON ~ PRATT

1 2 3 4 5 7 9 II 14 15 16 17 18 19 2O 22 23 524 NANCY G. NAUGHTON CONF'IDENTIAL A. That's correct. Q. And the A/P split is changed in 1990 to 60/40 from an A/P spl±t of 50/H0 in 1989, do you see that? A. Yes. Q. Why was that change recommended, more advertising, less promotion? A. I do~'t recall exactly. In my opinion, g~ven you're moving more into -- you know, out of the ~±g tr±al stages, you might want to move more money into magazines. I'm sorry, I couldn' t hear that. A. The requirement for ~trial generation as the brand becomes mere establi~shed may have been more but at this point -- th~at's just my opinion at this p0in~. I don't r,ecall exactly the rationale that went Into the ~A/P spli~ change. Q. So an increase in ad~ertleing relative ~o promotion will do wha~t for the brand? A. Well, the 50/50 A/P isplit -- when you're looking at launch expenses, case allocations, by definition your p~romotion is going to be more balanced, where ~it's overstated

1 3 4 5 6 7 8 9 10 ll 12 13 14 15 16 17 18 19 2O 22 23 24 25 525 NANCY G. NAUGHTON CONFIDENTIAL when you're launching; you have m lot mo~e trial offers, trade incentives. Q. But in 1989, Capri was already lainched everywhere? A. Right. Q. So why would ~here Lave been an overstatement in 19897 A. Well, to the extent o£ trial generation up front, you can have~ more promotion to the extent of, in a new brand. sO your understandinLg now of the is that that was done~ for trial Oo 50/50 split generation? A. opinion. I Like I said, this is: just my don't recall without seeing what our rationale was for moving to a 60/40 from a 50/50. Q. But the 60/40 move w,ould indicate to you there was less interest in generating trial and more interest in creatlug ove.rall awareness through advertising? A. Again that was just an opinion, at But that's correct, 'what I've -- I to make sure I understa:nd what you're this point. 0. JUSt wan~ NOON & PRATT

1 2 4 5 6 7 8 9 i0 12 13 14 16 17 18 19 22 23 24 25 526 NANCY G. NAUGHTON - CONF'IDENTIAL saying about the change and what the reasons would be for the change. A. When you start out w, ith a new brand and it's relatively new, you tend. to do a lot of trial generating on a real broad base because you dun'~ know where it's going to co,me from, you don't know what kind of stores yo.u're going to pull from. As you get a little m~ore established, we know we were looking more at C! stores, there are certain types of outlets we wouldn't promote, so you set tighter on where you are going to spend these dollars. So your focus on tri.al generation is maybe a little tighter than it was because you know a little more about your consumer and the type of retail accounts you're going to focus on. Q. Would a change empha~sizing more advertising tend to allow you to imaintain your franchise rather than expand it? A. I think it could do ]both on an image driven brand like Capri. Q. What got us into thils comparison between 1989 and 1990 was whether there was an increase, decrease or the same in recommendations NOON & PRATT "" 68 .36540

2 4 7 9 I0 11 12 ~4 16 19 2O 2~ 527 NANCY G. NAUGHTON - CONF'IDENTIAL being made in this time frame of Exhibit 667, which is June 1989. And £rom this, is ±C. your understanding that at that time t~here was going to be an increase in the 1990 bud[get? A. From these two docum%encs, it appears that the 76.6 came from the plan so that must be the 1989 flve-year plan. Given t.his plan, I would assume that's what that mea.ns. On this document whe~re it says 72.4 of 1989 authorized -- Q. Yes. A. -- authorized contai.ns any accounting adjustments so that's not the actual budget, it's where we are as of w,henever this document was written, including a~ny accounting for example, prior y'ear coupon adjustments, adjustments. Q. you and the So at this point in June of 1989, brand were using as a 1990 budget figure the five-year plan number? A. Well, that's - I'm Just assuming that from this first bullet, that the 1990 spend per p]an is 76.6. NOON & PRATT

7 8 10 Ii 13 14 17 18 20 21 22 23 2~ 25 528 NANCY G. NAUGHTON - CONFIDENTIAL Q. And which exhibit a=e you looking at, that's in -- A. That's in 736. Q0 Okay. A. On 1713. Might. Just so we're clear, I'm looking at DX 640 and I don't have a copy Zor you but it's the 1989 five-year plan for 1990. There's a listing of 76.6 so if t:hat helps close that chapter. in June 1989, you h~d already @tarted to learn that you wanted to target your audience, right? A. That's true. Q. And you wanted to be~come more efficient in your spending, right-? A. I think we were lear'ning more about, you know, who we were attracting. Q. Yet at this time, yo~u were using budget numbers that had been esta.blished over a year prior to that, A. Well., getting into these, really very initial right? that's true, b,ut as you start as you can see that this is a thinking sort Of document. NOON & PRATT

2 3 5 6 7 8 529 NANCY @. NAUGHTON CONFIDENTIAL And Just considering where you st:art is really the five-year plan, not next yea~; I mean, that's not uncommon to start there and m%ovs away from it as the plan is discussed. Q. So you start with t~e five-year plan which called for an increase in s~pen~ing for 19907 MR. GOULD: Object~ion. She's already testified whether that is~ or is not an compared to various plams. You can answer. It's an objection as to form. THE WITNESS: I do~n't know what I'm juLst -- from this that ~as actually the the 1989 plan number was. authorized I can't tell if plan. BY MR. HINTZ: Let me show you my c!opy of Exhibit 621 which is unmarked. T'his is the 1989 media sales promotion marketing s~pend, total for the year, 69 million, do you see that? A. And that's probably an actual number. Q. Yes, that is an actu.al number. NOON & PRATT

2 3 5 6 .! 8 9 10 ii 13 14 15 16 17 18 19 22 25 530 NANCY G. NAUGHTON CONF'IDENTIAL A. That again goes back. to the same comment I had about authorized. To the extent it has prior coupon adjustments in it, the actual plan number would be different than what we actually ended up with. Q. Then let's take the situation where compared to the actual expenditure in 1989, this planning number of 76.6 represents an increase over what was actually spent in 1989, correct? A. That's correct to the extent that there wasn't a prior yeax coupon .adjustment because a prior year coupon adjustment will actual arti£icially. It's a credit. reduce your Q. And what's the magnitude of prior year coupon adjustments dollarwis,e? A. It depends on the briand. On something like Capri, to the extelnt that they ran a lot of FSIs that didn't redeem to what they budgeted, you could get a large o]ae of the -- I don't know if we had any in 1989 ,or not, but I can'~ confirm the numbsr value, y~ou know, knowing what the prior year was. Q. Do the prior coupon ~adjustment show up in ~he budget mat? NOON & PRATT

1 2 3 4 5 6 12 13 14 16 18 ~9 2O 23 24 NANCY G. A. They should or at I don't know if they did Q. Would you look at NAUGHTON CONFIDENTIAL le~ast they do then. E~hibit 733? Why don't you use my copy and I'm goi.ng to get your copies bound so it's easier. A. On ~he prior year co, upon adjustment, they made a million dollars prior: year coupon adjustment in December. It looks~ like the total prior year was 2.4 million in 198~9. Q. Okay. And that's £r~om which page, what production page? A. 301. Q. And those adjustments tend to obviously drive the actual number' down because of their credit? A. It can be down or up,. If you're over-redeemed, it would increase your authorized. MR. HINTZ: I'll a.sk the reporter to mark as Exhibit 739 a multipag'e document bearing production numbers BWT316-1614 to 1624, titled Capri 1990 Plans. (Defendant's Deposition Exhibit-No. 739 was marked for identification.. Exhibit retained by counsel.) NOON & PRATT

I0 II 12 13 14 15 16 17 18 19 2O 21 22 24 25 S32 NANCY G. NAUGHTON CON~IDENTIAL BY MR. HINTZ: Q. If you look at the Last page of Exhibi~ 739 you'll see that it's a document ~hat you prepared? A. That's right. Q. I've notice~ on a l~t ot the documents, the numerical prefix in this case is 0112, is it your understanding t~at those documents numbers increase as time goes on, each new document you create from day to day gets a higher number? A. I have no idea. Q. If you turn to the ~age with the production number 1616, the first bullet item talks about building awareness a~ong the target audience, A. do you see that? Yes. Q. So at this point whi. ch is about July which you'll find on the imst page of the you were already planning to target your right, which we've talked about before? That's right. The last portion of this first item reads, "Defend agains~t competitive 1989, exhibit, audience, A. Q. bullet NOON & PRATT

1 2 3 4 5 6 7 9 i0 iI 12 13 14 15 16 17 18 19 22 23 24 25 NANCY G. NAUGHTON - ultra slim entry." What is to? A. I think at a PM Super Slims entry. 533 CONF'IDENTIAL that in reference that point we had more of Q. If you turn to page 1617, the first Pullet item Degins, "Targeting key smoker groups," and there are three grou>ps listed. Do you see that? A~ Yes. Q. And those are the three groups we looked at earlier, correct? A. That's correct. Q. If you turn to the page 1619, youJll see the spending strategies overview with the total spend of 75.4 million, do you see that? A. Yes. Q. And that's a slight reduction from the 76.6 we were looking at earli.er, correct? plan? A. 0. advertising That's right. What caused that red'uction from I don't recall at this point. The split shown for 1990 is 56 to 44 to promotion and that's a change from NOON & PRATT

1 2 3 4 7 9 10 ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 534 CONF'IDENTIAL that right? NANCY G. NAUGHTON what we saw earlier of the 60/40; ~s A. That's right. Q. And why was that cha.n~e A. I don't know at this. Q. 72.3 million, A. Q. And comparing at least the estimate to the 1990 planning number hers, the index of 104 indicates that there's an increased plan for 1990 over that estimate; is that correct? made? point. The 1989 estimate he:re is shown as do you see that? Yes. to have A. Q. A. That's correct. Q. The media split ~rom~ on page 1619 of Exhibit 739 shows increasing at an index of 135 and. increasing at an index of 104; is That's right. SO both of those by increased expenditures? That's right. the last entry magazines out of home that right? this plan were Let me hand you what's been previously marked as Exhibit 669. If you'll turn to the last page, you'll see that this is a document that you prepared and it's dated August NOON & PRATT SZ13 8

I 2 3 5 6 7 8 9 i0 ii 17. 13 14 15 16 17 18 19 2O 21 2~. 23 24 2S 3rd, page NAUGHTON DO you see that, in Exhibit What is Do you follows the previous page that exhibit which is 999? A. Yes. MR. HINTZ: Mr. have objection if we add page exhibit when it's prepared? NANCY G. 1989. I000 A. 0. MR. GOULD: No. BY MR. HINTZ: Q. The only reason I is to show you your initials frame of August 1989, do you A. Yes. Q. So we've been going CONFIDENTIAL the -very last 669? the last pag.e? see that numerically it 535 page, you have in your Gould, would you i00 0 to that show that to you and .give you a time see that? through June and July and now we're in August. If you would look please to the page marked 979 of Exhibit 669, do you have that page? A. Yes. Q. That shows an A/P split of 56/44 which we looked at and a spend of 75.4 which is the same as the previous document from July; is NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 Ii 12 13 14 15 16 17 18 19 21 23 24 25 NANCY G. NAUGHTON that right? A. That's right. Q. And on page 977 of E:xh~bit you'll see the same three target smoker sorry, key smoker groups? A. Exhibit 669? Capri had been couponed at a hlgh~er level its competition? A. Promoted you said. Q. Promoted. All rlght:. about couponln~. The third bulle~t talks about how Capri was coupene~d C0NF'IDENTIAL 536 That's right. Would you turn to pa.ge 973 of We talked earlier a.bout whether than Let's talk item here significantly higher than slims competition, do, you see that? A. Yes. Q. Does that compor~ wl.th your recollection of events in 19897 A. We did coupon quits heavily in 1989. Q. Significantly higher' than slims competition? A. It was definitely higher and that was -- in that I think we saw it listed in some NOON & PRATT

1 2 3 6 7 9 ~0 ii 13 14 ~5 16 17 ~8 19 20 21 22 23 25 NANCY G. of the different higher. Whether NAUGHTON CON~IDENT!AL tracking stndies~ we were 537 statistic:ally significant or not I don't know, but As a percentage it was. Q. This doesn't mentio~ statistically; your document was significantly ~igher, correct? M~. GOULD: I'm go;ing to oDject. This precise question of this pre~cise exhibit was asked at the previous deposition at page 144. Yo~ read the same t~ing to the witness in that deposition: "Evem though the percentage of Capri stock coupon is significantly higher," you read the same thing and you asked questions about it. We covered t~his exact same ground and this exact same quote before. MR. HINTZ: That's~ two different things you just said. One is thmt I asked the precise question and we found thmt's incorrect, but we did cover this ground and we're covering it again. MR. GOULD: You'r~ covering the same exhibit, the same page, the same quote over a~ain. MR. HINTZ: Now, Let's see -- MR. GOULD: This i.s a repetition, NOON & PRATT

4 5 6 7 8 9 I0 ll 12 13 14 15 16 17 18 19 2! 23 24 25 NANCY G. NAUGKTON not a continuation of the MR. Gould, take your and relax. CONFIDENTIAL 538 pTevious deposition. HINTZ: That's right, Mr. nap. Lean back, close your eyes MR. GOULD: I'm wa.iting for you to ask something new, but I' ±i put the transcript of the witness in front of her so she can see how she testified before and if she has anything to add to what she's testified to be:fore -- MR. HINTZ: That's enough, Mr. Gould, I object to your attitude. We'll break for lunch now. I'm sick and tired e,f your attitude interfering w, ith my do~e it to Ke~isey Nix, you've you've done i.t to every and your methods of deposition. You've done it to Mr. Lee, single attorney from FiSh & Neave,. It is discourteous and it is improper. We'll be back here a.t 1:15 and we'll invite you to join us. We'll be back as close as we can to 1:15. (The deposition ef N[ANCY G. NAUGHTON was adjourned at 12:35 p.m., for a luncheon recess.) NOON & PRATT

1 4 5 6 7 8 9 i0 Ii 12 13 14 15 16 17 18 19 21 22 23 24 25 APPEARANCES ALSO PRESENT: REPORTED BY: OF COUNSEL: (P.M. SESSION) JOHN M. HINTZ, ESQ. JAMES W. GOULD, ESQ. KEITH TAKEDA JOYCH G. ABELES NOON & PRATT

1 2 3 4 5 6 7 9 i0 ii 12 13 14 15 16 17 18 19 2O 540 (The depositio~ of NANCY G. NAUGHTON was resumed at 1:30 p.m.) NANCY G. NAUGHTON, having been previously dul~ sworn, testified further as follows: EXAMINATION CONTINUED Ms. Naughton, let me show you Exhibit 619 and ask you to turn ~o page with production number 308-483. You'll see there under Capri 1990 a budget marketing spend of see that? A. Yes. Q. And that's $75.4 n~illion, do you at before lunch in Exhibit 669, million for a total spend? A. Yes. Q. Exhibit 669 was Exhibit 619 was in November 1989, just so you have the time frames in mind. Do you the front of Exhibit 619? the same number we looked mamely $75.4 in August 1989 and see that on NOON & PRATT

1 5 6 8 9 !0 12 13 14 15 16 . 17 18 19 2O 21 22 24 25 NANCY G. NAUGHTON - A. Yes. Q. That indicates, 541 C0~FIDENTIAL fro~ the comparison to the previous page on Exhibit 6;19, that the 75.4 million budget for 1990 was an increase over the estimated 1989 marketing spemd of 70.5, correct? A. That's right, which included the 120's launch. Q. I'm sorry. Which imcluded the 120's launch? A. The 75.4 for 1990 a~d that has that 38 percent expansion on it. Q. Some 120'8 were incl_uded in 1989, correct? A. Yes, just sort of llke maybe 7 percent. I think Florida was in there and the continuation of Louisiana. Q. Let me hand you a document we marked at yonr last session, I believe, Exhibit 672, which has your initials and indicates a date of October 6, 1989, do you see that?' A. Yes. Q. This document, Exhi~i~ 672, was prepared right after the Vlrgini~ Slims Super NOON & PRATT

1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 15 16 17 18 19 20 21 2~ 24 25 NANCY G. NAUGHTON CONIFIDENTIAL Slims launch, correct? A. That's right. Q. If you'll turn to th,e second page of the exhibi£, 1498, under the headling Fourth Quarter Activity -- and so Mr. Go~uld is clear and he's following along, on page 202 of your former "Are the items listed already i:n the budget for transcript I asked you: here programs that were the fourth quarter? "Answer: That I don"t know without looking at the budget. I mean, tlhis could be a recommendation at this point." Do you see that on line 23 on page 202 through llne 4, page 203? A. Yes. Q. Let me hand you Exhi[bit 634 and ask if that helps you in answering th.e question that I posed in your May 14th depositi.on about wheKher the items in Exhibit 672, page 1498 were already in the budget or were additions t.o the budget. A. This is the budge~ v'ersus, you know, was lai.d out whenever It was like it was in a buy~olne-get-one-free I don't -- this is how it the budget was submitted. the plan, given ~here was ~OON & PRATT

5 6 .! 8 9 I0 Ii 12 14 15 16 17 18 19 20 21 22 2~ 24 25 budgeted and this was in for about Q. where yon're 543 NANCY G. NAUGHTON CON'FIDENTIAL in the fourth quarter, a free product, estimated at 2 million and that was a million four hsre. Can you be a little :more speci£ic looking and picking things off when you make a reference like "here"? A. It's on the fourth p.age including the title page, let's see, 470. .Anyway, it's the fourth page of this. Q. The numbers I side there. A. 308-426. Q. That's the 1991 budg.et. think .are on the other This would be fourth quarter activity in 1989, right? I believ~ that 1989 starts on 432. A. I can't tell. This is an initial budget and they have again this budget -- for example, within this budget, for ,example, it's got money in the feurth quarter f,or sweepstakes; a lot of these will change by lin,e items so I can't tell. There is some fgee p:rcduct in September/October. I can't reall~y tell. Q. The free product, is that on page NOON & PRATT

6 9 I0 ii 12 13 14 15 16 17 IS 19 20 21 22 23 24 25 NANCY G. NAUGHTON CONFIDENTIAL 434 Of Exhibit 634? A. Yes. Q. And that's the buy-one-get-one-free product -- A. Right. Q. -- in September of k47 and change? A. Right. And they go into October, but we can't because this is the way -- when they ran the budget or they wsre layimg it out the way they thought it would hit, that doesn't always work out when you're laying a budget out early in the prior year. Q. I understand that but this is the 1989 budget In Exhibit 634, ish'~ it? A. That's right. Q. So the question I a~ked you on May 14th and the question I'm asking you today is wh~th~r the items in Exhibit 672 were in this budget or not? A. I'm just suggesting that while this is the budget by line item, ~t cmn change during the year. The budget by program can -- sometimes you make deviations, 5hat milllom dollars in buy-one-get-one-free in July mlg~t in fact have NOON & PRATT

1 7 8 9 10 ii 12 13 14 16 17 18 19 2O 21 22 25 24 25 545 NANCY G. NAUGHTON CONFIDENTIAL hit in October. I don't know fro~m looking at the initial budget. Q. Working wi~h the bud.get that you have in front of you, which is the only thing you have to work from, Exhibit 634, are the items in Exhibit 672 on page 1498 in that ibudget or not? A. They could easily be. There's a million dollars in buy-one-get-one-free in local programs in July, in the local mo,dule. That could easily be running in this buy-three-get-three because the field can allocate it. When we lay out the initial budget, it really gets expensed when it laying it out this way. So that could have s[hips versus r'un in October. I can't tell from local funds, local programs in terms of field promotional funds. Those were decided by the field but those co'uld be some carton coupons that they're runni:ng, display plus -- and the coupon redemption field line, there's a million six in Septembelr. And that, have got that redemption running ~all the way out through the fourth quarter. That could easily be the coupons. Bu~ this isn't brok,en out in that NOON & PRATT

8 9 10 ii 12 13 14 16 17 18 19 2O 23 24 25 546 NANCY G. NAUGHTON - CON~FIDENTIAL kind of detail that I can tell wheat those are. Q. This being the budge~t? A. This budget. Q. Well, the budget, on,e of the items you looked at was the buy-one-get-one-free on page 434? A. That's right. Q. And Exhibit 672 talk~s about a buy-three-get-three-free, correctS? A. The budget isn't lai~ out by buy-three-get-~hree or buy-two-ge~-two. The buy-one-get-one concept to us meams a comp deal. Q. You indicated there was some couponing shown in the budget for September. That's on page 345? A. Well, I was looking ~t 343. It actually shows you -- I don't know what's ~n field promotional funds, local programs, like there's 400,000 there in SeptembeE. I don't know what that is, but oftentimes it could be couponing. Q. That 363,000? A. Yes. That's what it looks like. Q. Or 383 -- 36~, 383, one or the NOON & PRATT

1 2 3 4 5 6 7 I0 iI 15 16 17 18 19 20 21 25 other? A. Exhibit and a NANCY G. NAUGHTON - CONIFIDENTIAL 547. Yes. And the coupons that are shown in 672 are the $2.00 coupons at 2 million free coupon for 1.4 million, right? A. Yes. Q. For a total of 3.4 m~illion, right? A. Yes. So the amount in the budget in Exhibit 634 would account for maybe -- Ao Then you get on the ~next page, coupon redemption field local pro!grams. Now, the way a budget would lay that out, [I don't know when these coupons were actually ~shipped and that's when they're expensed, but there's, you know, heavy coupon shipments in June, July and then again in September. So when you recap something like that, you know where they were spmnding their VPR money. It's hard to say what they had year-to-date here from the budge~;; I can't do it from the budget. Q. Let me ~o back to th~ question I asked you on May 14th -- it wasn'~ the question I NOON & PRATT

1 2 3 4 5 6 7 9 i0 II 12 13 14 15 16 17 18 19 21 22 23 24 25 548 NANCY G. NAUGHTON - CONFIDENTIAL asked, it was the answer you gave, You said you needed ~to look at the budget, now we've leoked at the budget. What else would you need to be provide~d to determine whether the items in Exhibit 672 ~on page 1498 were in the budget or were added ~as an expense, and I should say were to be added? I can't tell if this is incremental This being 672 is in,cremental from 634? This is the budget, yes. At your last session you said you suggested A. from this. the budget A. Q. needed the items are the numbers budget and now you havre it and that's not good.enough. A. I canJt tell. The l:ine not broken out by these programs and are different -- I can'~ tell. Q. I'm trying to determine if you can or can't do it. And if you can d~ it, I'd like to get you to tell me how because it's a matter of some importance; and if there'~ nO way to do it, then that's your answer. NOON & PRATT 68Z136562

! 2 4 5 7 8 9 I0 Ii ~2 14 15 17 18 19 2O 22 23 24 25 NANCY G. NAUGHTON - Would the that would help? A. Well, the problem incremental, you w~uldn't know. a stand alone. If we saw the actuals misht -- I don't know. 549 CONIFIDENTIAL actuals sh~ow us anything is: if this is This is sort of act.uals and I mean, I the couldn't look at a lump sum actual and know. Q. In Exhibit 672 on the same page we're lookin~ at, page 1498, ther'e's an asterisk, "Includes one million of 120's Florida support. All 100's OOH canceled for fourth, quarter., Do you see that? A. Yes. Q. Did the budget for 1989 provide for canceling all of the out of home in the fourth quarter?" A. laid out, In the budget when it was initially there was out of home iln October and November and December. Q. From the budget, you can't tell whether it's 100's or 120's, corr~ect? A. No. Q. Lookin~ at the budge~t, make sure we're on the same page, the media 1989 budget, NOON & PRATT

9 i0 11 ~2 13 z6 18 21 23 24 2~ 1 2 3 4 6 7 8 550 NANCY G. NAUGHTON - CON]FIDENTIAL page 433 of Exhibit 634, is that what you're looking at? A. That's correct. Q, October, November an~ December each have total media spends of over $2 million, correct? A. That's right. Q. For a total of well over $6 million fcr that quarter? A. You mean the total m~dia in terms of fees and production and space? Q. Yes. A. That's right. Exhibit 672 on page ~498 shows media of 4.4 million, do you see that? A.. That's right. Q. Is it fair to the numbers in Exhibit 672, for media were recommended to be incremental to what was in the don't think say baaed on that that budget? A. there. less could say thaifrom Q. Even though the numbers in 672 are than what's shown in the budget? MOON & PRATT

9 I0 II 13 14 15 16 17 18 19 2O 22 2~ 24 25 1 2 4 5 6 7 8 551 NANCY G. NAUGHTON - CON~FIDENTIAL A. Sure, but thls budge.t was as of February 24th, 1989. Q. And it's the only budget we have to work with so -- A. But the budget is what it is. It was laid out in February 1989, th,at does not mean that come, you know, October 6, t[hatXs what we're spending. It just doesn't work tlhat way. Q. I understand that. I'm looking at it in terms of looking af the bud!get and comparing what came later. I'm t:rying to figure out if the items in Exhibit 672 w,ere incremental recommendations to the budget or ~if they were already in the plan that was made up in February of 1989. A. I can't tell from this. Q. Okay. If you turn t~o Exhibit 672, the last page of the exhibit, production number 1499, the first bullet item is, "(Capri heavily promoted at retail during fourth quarter." Do you see that? A. Yes. Q. Was that in fact don~? A. I don't recall a~ this point. NOON & PRATT

1 3 4 5 6 8 9 I0 II 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 the 1989 actuals? A. Q. 5S2 NANCY G. NAUGHTON CON[FIDENTIAL Could we find that o~ut by looking at budget and comparing it ~to the 1989 Would you do that, pilease? In Exhibit 634 you have the budget a~nd Exhibit 733 are the actuals. And in 733, cor:rect me if I'm wrong, the fourth quarter would b~e behind tabs i0, ii and 12, October, November ~nd December. And again, correct m~e if I'm wrong, but the way that you would look to determine whether Capri was heavily promote~ at retail was to look at sales promotion specifiC? A. Right. Q. Monthly budset repor~ for each of those months? A. That's right. Q. Was Capri heavily promoted during the fourth quarter based on your ~eview of Exhibit 733? A. Well, it looks llke we had coupon activity based On lookln~ at the ~oupon redemption field line. We also had a tape-on of 3.2 million that was purchased in October. And NOON & PRATT

1 2 4 5 6 7 8 9 i0 ii 12 13 14 15 17 ~8 19 2O 21 24 25 there was each month. it. Exhibit 733 553 NANCY G. NAUGHTON - CON]FIDENTIAL some buy-one-~et-one-fr~ee shipped in And that looks like Jthe extent of DO those expenses sh~own in confirm the statement in Exhibit 672 that Capri was heavily promoted a~t retail during fourth quarter? A. It seems that it was reasonably supported with bny-one-get-one-fr(ee, some sort of tape-on activity, as well as some couponing activity. Q. Now, is there any wa~ for us to tell, comparing what was done in ~xhibit 733 with what was budgeted in Exhibit 634, to determine whether those expenses were already in the budget or were incremental to the budget~? A. Well, it would look ~ike -- just looking at these two documents, i~ would look llke it's in there because we're ~ot mver what our budget was. And you're looking aZ the total the budge=? I'm just looking at ~he total for sales promotion specific. number in A. December 1989 NOON & PRATT

1 2 3 4 5 6 7 8 9 ii 12 13 14 15 16 17 18 19 21 22 23 24 25 1989 NANCY G. NAUGHTON - CON[FIDENTIAL Q. Right. A. Was 38. Q. I'm sorry? It was 38 million four total 554 December 303 in Exhibit 733? A. ~i~ht. Q.. That's the fourth quarter, a~? And what page are yolu on fo~ that, Yes, 508-303. the year-to-d~ate. What though, that ~e're looking Let me see if this h~elps. Would the months, October, November and each of December, sales promotion specifi~ budget reports, looking at the favorable., the variance column, whether favorable or unfavorable, would that tell you whether the spend im those mouths was inside the budget or outside ~he budget? A. NO, because you can ~a~s time about variance like I said, laying this out versus what you actually spend. I don't thin~ you can do that. Q. Let's see if we can ~o back to the beginning ~hen. Is the budget la~d out to show NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 2O 21 22 23 24 25 when the A. out budget. Q. NANCY G. NAUGHTON expenses will be Yes. We try CONFIDENTIAL incurre~d? to do tlhat when we 555 lay So you try to account for the timing 'would be they would act~ually be shipped differences between when coupons purchased and when out? That's right. why can't you comlpare the budget that contains tho~se timing It doesn't always wo~rk that way. get changed, modifie,d. For Kool has a program r~nning in the Ao Q. So with the actual differences? A. The programs instance, if second quarter, we don't want to ~run Capri on top of it. Those kinds of changes in times happen all the time. I mean, it's very :rare that your budget will match throughout the ~year, month by month. Q. And all those changels in plans have to be supported by documents, don't they? Not necessarily. Sometimes programs w:ill be shifted you pick up the phon~e and call O. just because NOON & PRATT

1 2 3 4 5 V 8 I0 Ii 13 14 15 16 17 18 19 2O 21 22 23 24 25 556 someone? A. was going NANCY G. NAUGHTON - CON]FIDENTIAL If I was going to -- if a program to be del~yed because i~t conflicted with a KO01 promotion, for exampl~e, [ would tell my director and my director would make it known that that was going to happen so ~t~at we would have a variance in the budget tha~t the timing was going to change. And that would be dome verbally? A. Oftentimes. The only time it would be documented was if we made a shrift between brands or a shift between promoti~on and media. That's tb~ only time a documentat~ion requirement would be put in place. Q. And if you made a sh:ift be£ween brands or a shift between promotion and media, you would have to issue an MMDR? A. That's correct. Q. That's pursuant to B~&W guidelines, correct? A. That's right. Q. So when shifting money within the brand, you're not required to iss~ue written documentation on that? NOON & P~ATT

1 2 3 5 6 7 8 9 I0 Ii 12 14 16 17 18 19 2O 21 22 25 24 25 557 NANCY G. NAUGHTON - CONfIDeNTIAL A. Not on a month to momth basis. Let's put it this way, we did not do that or I did not do that. Q. The second bullet item on page 1499 of Exhibit 672 is the Capri media support reduced in fourth quarter, do you see thaZ? A. Yes. Q. What's the reference "reduced" there, what is that in reference Zo, budget or previous expense or something else? MR. GOULD: Objection. The same question was asked on pase 204 Of the prior deposition, whether that was in a plan or a budget, the same quote you read. MR. HINTZ: I don'~ see that, Mr. Gould. Page 204? MR. GOULD: Yes. Page 203, you read the bullet point about Capri media support reduced in fourth quarter from DX 672. Then you asked, is your understanding the ~ame, that that was already in the plan or the budget. MR. HINTZ: Uh-huh.. And what's your point? MR. GOULD: Objection, asked and NOON & PRATT

1 2 3 5 6 ./ 8 9 11 12 13 14 15 17 18 19 21 23 24 NANCY G. NAUGHTON - CON~IDENTIAL 558 answered. MR. HINTZ: Could X have my question back, please? (The pending questlom was read,) MR. HINTZ: That q~estion was never asked in the previous deposition. Can ! have an answer to that question, ~lease? THE WITNESS: What was ~he question again? X'm sorry. (The pending questiom was read.) THE WITNESS: From this I can't tell. It could be a reference to the budget; it could be a reference to authorized~ BY MR. HINTZ: Q. Let's see if we can ~eter~ine if it's in reference to budget. Wou~d you look in Exhibit 733, the budget mat for m~dia I would assume is where we need to look, again behind tabs i0, ii and 12 since we're ta~king about the fourth quarter. The October media is on page 282, is on page 291 and D~cember is on the November page 300. Do you have all of t~nose? NOON & PRATT 6SZ13657

1 3 6 V 12 16 24 559 Q. Exhibit NANCY G. NAUGHTON CONFIDENTIAL Yes. From those three pag~ee of 733, is it possible from ~the variance column to determine in those months whether the media support was reduced compared to the budget? A. You can see versus t~e budget there mre favorable variances in Octobe~r, November and December. media -- A, 0. And are you looking total basic that because if moved money I was looking at out o£ home. Okay. My question I thought was just directed to media. A. Okay. Total basic m~dia, October, ~here's a favorable variance, November and December. Q. Does that indicate t~at the reference i~ Exhibit 672, "Capri media support reduced in fourth quarter," was a~tually done relative to the budget? A. I still can't answer authorized was different, if they from the fourth quarter into the ~econd quarter because we wanted to run somethin~ in magazines, NOON & PRATT

1 2 3 4 5 6 7 I0 11 12 13 14 15 17 18 19 2O 21 22 23 560 NANCY G. NAUGHTON CONFIDENTIAL I don't know. Just looking at th~s monthly, I just can't tell. Q. What does the variance column tell you in Exhibit 733? A. That the spend in th~s particular month is different than what was Budgeted in that month in the actual budget that was lald out in February. So a favorable variamce shows that you underspent relative to the budget, right? A. Versus the budget, that's right. Q. So authorized doesn'~ enter into it; maybe you did, maybe you dld~'t? A. Based On these three,, right. Q. My question is whether Exhibit 73~, the actual expenditures, show tha~ for the fnurth quarter media was reduced for Capmi relative to the budget? A. budget, yes. Q. Versus those three months of the Okay, thank you. Why was that done? I don't remember. It was done as a defensive measure NOON & PRATT

I 5 6 7 8 9 ll 15 16 17 18 19 2O 22 24 25 561 NANCY G. NAUGHTON - CONFIDENTIAL against Super Slims; is that correct? A. TO reduce media spen~? Q. Yes. A. Well, that doesn't m~ke sense to me. I don'~ know why it wasn't. Q. It doesn't make sens~ to me either but it's listed under a defensive program issue on pass 1499 of Exhibit 672 and I"m trying to understand if that's an issue in ~he sense of a recommendation or an issue in the sense of a problem or something else? A. It would appear to m~e that that was an issue in the problematic way g~iven that tactical ROP support was recommen,ded right underneath it. Q. So f~om Exhibit 672, is it fair to say that in light of the launch of Super Slims and the corresponding planned red~uctlon in fourth quarter Capri media spend, you recommended an increase in ROP expenditures? A. From looking at this:, I mean, this recommended using tactical ROP dusting the launch. Q. Yes.

1 2 4 5 6 7 8 9 I0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 562 NANCY G. NAUGHTON CONFIDENTIAL A. I don'K remember wha~ was going on and why this -- I mean, I jus~ dom't recall this particular presentation. But it Mould appear to me that that was related to the first bullet or the second bullet, Capri media support reduced. Q. It's fair to say whe~ a competitor is entering the market that you w;ant to get out and compete against them, right? Yes, there's always ~a concern when a direct competitor comes in. Q. When Super Slims cam,e onto the market -- and this question I thi:nk was asked and answered -- you didn't just give 'up and say oh, they're here, we're going to go a'way; you kept on your programs, right? A. Yes. Q. And Exhibit 672 reco:mmends tactical ROP to the amount of $6 million? A. That's correct. Q. Meaning what you wer'e going to spend in response to ths competition? A. That's what this xec~ommendation is. Q. And that was in the fourth quarter of 1989 when Super Slims first ca.me out? NOON & PRATT

1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 563 NANCY G. NAUGHTON CONFIDENTIAL A. That's right. Q. Why then did B&W cut the expenditures in 1990 on Capri in ~ight of Super Slims competition? We didn't cut the support. We focused it and it was part o£ ~he whole strategic effort of focusing which is a bet~ter use of our money and more effective than Super Slims -- than previous programs with a much bro~ader base. Q. You chopped over $30 million out of your budget, didn't you? MR. GOULD: 0bjectlicn, asked and answered. Objection, argumentati've. Q. Relative -- 1989 to [1990, the 1990 budget was reduced by half, wasn''t it? Right? A. We can look at the n'umbers. Q. Right. And you have them in £ront of you. In Exhibit 634, the smaller -- and we're talking media and SPS, the marketing budget, SPS ibudget as shown see ~hat, page 436? right? A. Okay. Q. And in 1989 the on pase 436 was 48.6, do you A. Yes. NOON & PRATT

6 7 8 9 i0 iI 12 13 14 IS 16 17 18 2O 21 22 24 25 NANCY G. NAUGHTON And on page 433, the for 1989 is $29.7 million, do you A. Yes. And the 1990 -- that my math is correct. In 1990, the 564 CONIFIDENTIAL media budget see that? totals 78.3 if SPS budget on page 431 is difficult to read, lo,oks like it's $26, maybe 28 million, but it's less than 30 million. ~ight? A. Right. Q. And the media on page 429 again is hard to read but given the numbers above it, looks like it's 25 million? A. That's right. Q. So than's somewhere between, if my math is correct, 51 or 53 m~illion versus 78 in 1989 on budge~ terms:? again in 1990 A. That's correct. Q. What got us looking at the budget my question of why the budget~ spend is sb much advertising? A. Q. A. less when you're talking abo~ut focusing your Why would we spend slo much less? Yes. Well, just by defini, tion, being NOON & PRATT

1 2 3 4 5 6 7 8 9 ll 12 14 15 16 17 18 2O 22 24 25 565 NANCY G. NAUGHTON - CONfIDENTiAL focused and more efficient was part of the whole strategy that we had been moving ~long in terms of being more efficient. ME. HINTZ: suggestion and start in on? ii. I'll t~ake Mr. Gould's on a 30(bl) (6) topic. MR. GOULD: Rhlch ~toplc are we MR. HINTZ: II in front We're ~on topic number MR. GOULD: I'm pl~aclng paragraph of the witness. Agai:n, that's subject to our objections that we put in writing and handed in prior to this deposition. BY MR. HINTZ: Q. Ms. Naughton, you Just testified in your individual capacity about thinking that had been coming along at B&W about yo'ur ability to focus your advertising and become more efficient. And I say that to dsv-elop the subject matter, net as an attempt to pare.phrase what you just testified about. My question is, what. documents support your statement that B&W i.ntended to focus its advertising and become more e~fficient in NOON ~ PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NANCY G. NAUGHTON - CONFIDENTIAL 19907 MR. documents we're her deposition? MR. 566 GOULD: This is aside from the been looking at o~ver the days of HINTZ: No, sir, includins those and any others because I do,n'~ believe those do support it. BY MR. HINTZ: Q. What documents suppo, rt the fact that B&W came to the realization that it could target its spending and be more efficien~t in its advertising and promotion? MR. GOULD: Counse~l, she can answer the question if she can. I do not agree that's within the 30(b) (6) which just ~alks about the program. You're asking now four a specific citation of documentary support which is not part of paragraph ii, but certainly shoe can answer to the extent possible. MR. H~NTZ: Your o~bJection is completely out of line and it's t:ypical of the kind of objections you make where~ you give speeches in an attemp~ to obstruc:t the NOON & PRATT

1 5 6 8 9 i0 II 12 13 14 15 16 17 18 21 22 24 25 NANCY G. NAUGHTON - deposition. The topic is to that's what I'm asking about. documents that support that? CONIFIDENTIAL cut spending and Where are the She's here to B&W and I haven't seen them. You or they don"t 567 represent either haven't given ~hem to us exist. MR. GOULD: They a.re in existence and perhaps you should bring in your experts to testify about them. MR. HINTZ: Mr. Go~uld, I will not sit here and -- MR. GOULD: You're: makins the argument that we've not produced them and that they do not exist. MR. HINTZ: All ri.ght. If they exist, le~ the witness identify t.hem. M~. GOULD: This i.s net part of her job, to identify -- it is not part of her job. it's time MR. HINTZ: All ri.~ht, Mr. Gould, for another break. MR. GOULD: To the~ extent she can, NOON & PEATT S213SSSl

1 2 5 6 7 8 9 10 ll 12 13 14 15 16 17 18 19 2O 21 24 ~-5 568 NANCY G. NAUGHTON CONIFIDE~TIAL MR. HINTZ: Would the reporter mark the time as 1:56? I'm sorry, but we're going to take a break because of ~Mr. Gould's attitude and his continuing to obstruct this deposition. MR. GOULD: I'm making an objection as beyond the scope of 30(b) (6) . She can testify to the extent she can.. MR. HINTZ: You're wrong, Mr. Gould. The rules say a 30(b)(6)witness must testify about everything within her knowledge, whether individually or whether it's covered by her knowledge as a representative of the company. She can talk about everythinH and I will cite the case that tells you that. MR. GOULD: I'm no,t directing her not to answer. I'm saying she will not respond as a 30(b) (6}, but she can answer" the question. MR. HINTZ: Wrong, Mr. Gould. She will respond as a 30(b) (6} because that's what she's here to testify about. You tell me that I'm supposed to inform you when she's being asked as a 30(b) (6) or in her individua~l capacity and I'm telling you ~'m asking these questions now as

1 2 3 4 5 6 7 8 9 i0 ii 12 ~4 15 17 3.8 2O 21 23 25 569 NANCY G. NAUGHTON - CONFIDENTIAL a 30(b) (6). MR. GOULD: I make objection that it's not within the scope. MR. HINTZ: She has to testify anyway, whether it's within or wh.ether it's not within the scope. She has to respond to the question whether it's within the scope of the 30 (b) [6) or not. MR. GOULD: That, I don't agree with. MR. HINTZ: I have~ to get it as a 30[b) (6) and if you're right, it's stricken and if you're wrong, it comes in. MR. GOULD: You're: right, and that will be decided another day. I m~ade my objection and she can answer. MR. HINTZ: DO ycuL have the question in mind? THE WITNESS: NO. MR. HINTZ: DO youL think you can find-it? (The pending question was read.) MR. HINTZ: That'sL it. THE WITNESS: I d~n't -- you know, NOON & PRATT

! 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 25 NANCY G. NAUGHTON I really don't understand the know every document we wrote. like I keep a list of all the through -- all these in terms 570 CONIFIDENTIAL que~s~ion. I don't I imean, it's not documents that go of .our evolution and thinking, the Baltimore heavy spend test, Louisiana versus -- from a spendi~n9 high in Louisiana and reducing our spend. The sales record itsel~ would indicate that what we did was right and 12O's did well in Florida on a reduced spen.d rate. The Baltimore programs didn't work well and the program was unsuccessful. We red.uced our in the market and held our share Slims being in the market. These are the kinds of things -- we don't write everything down but w'e talk a lot about the strategic direction of the business and those kinds of hard facts in termls of Nielsen, MSA and switcher are there. And those are the kinds of documents that would indlicate that the focus spend did work for us. BY MR. BINTZ: Q. You mentioned 120's as one of the things that showed that you could[ decrease your spend despite Virginia NOON & PRATT

i 2 3 4 6 7 9 l0 ii 13 14 15 16 18 2O 21 22 24 25 571 less, NANCY G. NAUGHTON Relative to Louisiana, spend. Florida for the 120's relative 120's was less, correct? A. Yes. Q. The results correct? A. Yes. COnFIdENTIAL thLe spend in to~ the Louisiana with LouLisiana were Q. You have five times -- ! think it's twice the CSP in Florida from whaLt you had in Louisiana, correct? A. That's correct. Q. Five percent to abou~t two percent? A. That's correct. Q. And the index in LouLisiana after a year was over 100 you exceeded yo~ur objective for the 120's, correct? A. That's correct. Q. Your index for Pleri.da after a year was about 80 ~n relative -- A. I don't remember wha.t we ended up But it was lese than. you planned? Correct. So it didn't meet ob,Jective, with. A. Q. NOON & PRATT

1 2 8 9 lO 13 19 2O 21 22 24 correct? A. Q. A. performance NANCY G. NAUGHTON - CONIFIDENTIAL With reduced spend? But it was still ver!y and it made sense. good W]hy spend $I10 million to do what you the Florida? Q. answered. 0. A. did meet 572 did in Lcu~isiana versus . It was a good busin,ess judgment. But it didn't meet o]bjective? MR. GOULD: 0bjectlion, asked and Right? It didn't meet the o]bjective but it strategic objective in that we built the share of 120's in Florida for a very efficient level of spend. Q. You got incremental !gains? A. Yes. Q. And that helped the ,overall brand because the Capri 100"s share was flat? A. I don't remember exa,ctly what Florida looked like but it did im]prove the overall family performance. that Q. We looked last time ;at some document in 1989 Capri's share was fl~aE? NOON & PRATT 6 2136586

1 2 3 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 573 NANCY G. NAUGHTON - CONFIDENTIAL MR. GOULD: Objection, mischaracterlzes, counsel. The document said slow, slight growth, whatever, but there was growth ~oin~ on. You might be co,nfusing it with your expert's report. MR. HINTZ: I don' t think so, sir. MR. GOULD: We hav'e the MSA figures month by month. MR. HINTZ: And yo,u tried to testify last time with this witne~ss about MSA and if yo~ want to rely on MSA, do th~at in your brief. MR. GOULD: You ju.st referred MR. HINTZ: One ofl these times you're going to let me finish a s~entence before you cut me off and I don't know w,hat your reward will be with that, but it's going~ to be great. MR. GOULD: You're~ the one that started share. MSA, I testifying abou~ MSA shar'e and Nielsen MR. HINTZ: • have~n't mentioned haven't mentioned Nielsen. MR. GOULD: Could you point to the NOON & PRATT

! 3 4 5 7 8 9 ii 14 15 16 17 2O 21 24 ~5 574 NANCY G. NAUGHTON CONIFIDENTIAL prior testimony about the perform~ance share that you're referring to and perhaps t]hat would cut through this? MR. MINTZ: Thank ~ou, no. MR. GOULD: I pres*umed you had a page number since you had so stat~ed that she had testified tO that. MR. HINTZ: break for five minutes. Mr. Gould, ask questions tomorrow. I'm sorry you have this, MS. Naughton, but counsel cooperative. 204. ~nd we'll take a you'll ha~e your ~urn to t<o go through i~s not being (Recess taken.) BY MR. H~NTZ: Q. As far as the 120's ~xpansion, when did that begin? A. I believe it was in October of 1989. Q. When did B&W cut its spending on Capri? A. You mean the budsets~, 1989 versus 1990? Q. I'm lookin~ more in ~erms of when in NOON & PRATT

! 2 5 7 8 9 I0 ii 12 14 15 16 17 18 19 20 21 22 23 25 575 NANCY G. NAUGHTON - CONFIDENTIAL 1989 or when in 1990 B&W cut back its spending on Capri? A. I don't know. Q. Can we determine that from looking at a comparison of the actual expenses in 1990 to the expenses in 1989? What may help you is in Exhibit 734, the first page behind every tab is the monthly brand contribution and there's a listing for market spend broken out as media [promotion specific, coupon spend and then total market spend, do you see that? A. Yes, Q. I believe there's a similar type page in the beginning of each tab, in Exhibit 733 for 1989. Can you tell the particular month or months or quarter when Capri spending was cut? A. I can't tell just from looking at these documents. I mean, 1990 was less than 1989. Q. On a yearly basis, right? A. Right. Q. But how the monthly spend falls really dependent on how the programs are NOON & PRATT

8 9 l0 ll 15 16 17 !9 20 21 22 23 24 25 1 5 6 7 576 NANCY G. NAUGHTON - CON[FIDENTIAL scheduled which is related to how, the rest of brands are being promoted as well. Q. When did B&W obtain results from Florida expansion as far as share, or any other objective measure? We p~etty much watch~ed it one of our best reads continuously. Nielsen was as I recall. Q. There's a lag data, correct? A. That's correct. Q. How many months is when they make the measure and the the involv'ed in Nielsen that lag between when you get the report? A. I'm going to say a couple of months. Q. Can you be a little :more specific; a. couple being two, three, four? A. I believe it's about two months. Q. So for the Florida 120's, you didn't get the Nielsen read until December 1989, maybe even January 19907 A. Yes. Q. Is that right? A. That's correct. NOON & PRATT 2136 90

1 2 4 5 6 7 8 9 i0 Ii 12 13 14 15 16 17 18 19 2O 21 22 25 577 NANCY G. NAUGHTON CONFIDENTIAL Q. YOu didn't base any of your de~isions about the ability to cut spend on one month's sample, did you? A. NO, although we have -- once we were in the market fn November, December, and had trade acceptance of how things were going and -- those are, you know, more field feedback type measures. But we felt it was going well. Q. what types of field :measures were yon obtaining for 120's? A. Just in talkins to our field managers who were selllng in the ip~oduct, talking to retailers, people going into tlhe market and what you looking at it. Q. And what did those people tell you? A. Well, I don't recall at this point. In general, I mean, I don't remem~ber exactly where we were but I think there w~as a feeling that you know, 120's were okay. Q. They were okay; is said? A. Yes, they were doing all right at a reduced level of spend. So based on that and the Baltimore NOON & PRATT

1 2 3 4 6 7 8 9 10 ll 13 14 15 16 17 18 19 20 21 23 24 25 test, Capri answered. 578 NANCY G. NAUGKTON - CONFIDENTIAL B&W concluded that they could cut spend on by about half? MR. GOULD: Objection, asked and You can answer it again. THE WITNESS: I mean it was a combination of things As you learn more about the brand and who we're appealing to, we were just tightening up all over. I m~ean, to a large extent, Just all that learning allows you to be more efficient and start reducing your spend versus the broad approach that we took when we initially launched it. BY MR. HINTZ: But you knew you wer'e targeting or should be targeting geographically and smoker groups in 1989, in the middle of 1989, didn't you? A. We were starting to think that because that's what I'm saying, y'ou are learning more about the brand the longer y'ou're in the market. go along, 1989 from the So it's a combination, of things. AS you you svaluate the brand properties. So you started learn.ing in early Baltimore heavy spend about the NOON & PRATT

579 1 NANCY G. NAUGHTON CONFIDENTIAL 2 ability to cut spend, you continued learning 3 about targeting and efficiency th~roughout 1989 4 and then in the end of 1989, beginning of 1990, 5 you learned about Florida? 6 A. That'S r~ght. 7 Q. And then in 1990, yo.u, Deing B&W, 8 decided tO cut the spend on Capri? 9 A. Well, in terms of what did we need 10 to run the business, yes, we thought w~ could do ~i it more efficiently. 12 Q. You decided you didn't need as much 13 money to get the same amount o~ share? 14 A. That's right. 15 Q. Were you expecting to ~row share? 16 A. I think we could grow share, yes. 17 Q. You think you could ihave? 18 A. Yes. 19 Q. Were you expecting to? 20 A. Yes. 21 Q. D±d you grow share as -- 22 A. As I expected. 23 MR. GOULD: You me.an before or 24 after, we're talking 19907 25 MR. HINTZ: 1990. NOON & PRATT

1 3 4 5 6 7 8 9 i0 II 12 13 14 15 16 17 19 20 21 22 23 24 25 580 NANCY G. NAUGHTON - CON[FIDENTIAL MR. GOULD: All right. THE WITNESS: Well, we certainly wanted to but it was a much more difficult battle because Super Slims was in there doing the same thing. BY MR. HINTZ: Q. I understand. A. But at least we -- e~ven with direct competition, aggressive direct co~mpetition, we even held share which would indlc~ate that our efficiency and our plans were well conceived. Q. How was the competition aggressive? A. In terms of advertis~ing and promotion, my sense is it was rea.lly aggressive is my opinion. our initial thought month period and as a little bit longer. Through what time pe~rlod? Through its launch. How many months? I don't remember was maybe I recall now, than exa.ctly. I know it would be a three I think it was Q. What happened to the~ extra money was budgeted for Capri in 1990 that was not NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 12 13 14 15 16 17 18 19 2D 21 22 25 NANCY used on Capri? A. Q. used, ±t had right? A. It my call. I was NAUGHT0~ 581 CONIFIDENTIAL I have no idea. If it was in the bud!get and not to be reallocated to another brand, may or may not ~a've, that wasn't dealin9 with Capri. I didn't allocating brand manager make the decisions of how we were money within the organization. Q. But you as the Capri would have to have given that monkey to someone else, that was your decision, rig]ht? You wo~id be the one to say, I have this momey available, someone else take it, even if you were not allocating it anywhere in particuilar, right? A. It's just -- I mean, operationally it's in the budget. I track to a~n authorized Of spend level. Q. Right. A. So to the point that that is modified either up or down, I'm n~ot cognizant where those chunks Of money go thmoughout the organization. Q. Right. Again you're put in the NOON & PRATT

1 8 9 i0 ll 12 13 14 16 17 18 19 2D 21 2~ 24 25 582 NANCY G. NAUGHTON CONFIDENTIAL position of speaking for B&W under paragraph MR. GOULD: Counsel, not as to that. That is not within paragralph ii where money is allocated within B&W on nonrednced circumZerence cigarettes. I made the objection, about spending beyond the Capri and again I'm letting her answer the question, but I object as beyond the scope of the 30 (b) (6) . Q. The requirement at B&W is when money is allocated between brands, an MIMDR is issued, correct? We talMed about that earlier? A. That's correct. Q. Was an MMDR issued in 199D for the money that Capri had been budgeted but did not use? A. I don't know. That 'would not, I would not initiate that MMDR. Q. Have you ever seen s'uch an MMDR? A. I donJt know. Q. You should know whet[her you've seen it or not. Bave you seen an MMD~ reallocatin~ -- A. I see many MMDRs in a given year. I don't recall seeing that one, if .one was written. NOON & PRATT

2 3 5 6 7 9 11 13 14 16 17 19 20 21 24 25 5B3 testify about paragraph notice, Exhibit 707? A. Q. B&W? A. NANCY G, NAUGHTON - CONIF~DENTIAL What did you de to prepare to ll of the Nothing. You didn't review an[y documemts at Not mt B&W. I revie'wed my deposition from the May 14th depo;sit±on. Q. Did you review any d,ocuments with Mr. Gould or other attorneys? A. We reviewed some doc~uments yesterday. Q. And i~ the documents you reviewed, did you see an MMDR reallocating ,Capri money in 19907 A. I don't recall seeln!g one. Q. In preparing to testlify today, did you talk to anyone mt B&W about B,&W planning to cut Capri marketing spend and conltinue to grow volume? A. No, I didn't. Q. Are you the most knowledgeable person at B&W ooneerning B&W's pr~ogram to cut Capri marketing spend and continue to grow NOON & P~ATT

1 2 3 4 5 6 7 9 i0 Ii 12 13 14 15 16 17 19 20 23 25 NANCY G. NAUGHTON CON|FIDENTIAL volume? A. My role in that was as a brand manager. Now I can't -- that's t~he extent, as 584 far as my expertise will go, was side and talking about the strate~gies brand as I saw them as brand mana:ger. I can speak to. Q. And those strategies~ were set forth the operational of the That's all in all the planning documents tha~t we looked at this morning, the various exhibit.s which I can identify for the record, 736, 667', 799, 669 -- A. That's right. MR. HINTZ: I doub, t ~hat it's possible for Mr. Gould and I to Rave an exchange without getting into an argument, but I would say for the record that I don't think: this witness is properly prepared t~ testify as a. witness on behalf of B&W, but I wrill continue of course and see where it leads. MR. GOULD: I will. remind you th~ she was co-designated with Mr. Fitzmaurice on topic ii. We have really the tes:timony of two individuals at diEfere~t levels w, ithin B&W. So we must look at the cumulative te~stimony of both NOON & PRATT

3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 23 24 25 585 NANCY G. NAUGHTON witnesses. And I do disagree characterization. Most o~ the CONIFIDENTIAL wi.th your te~stimony you've taken today is repetitious of wha.t she's already given in her first deposition tra.nscript and the exhibits that you put in front of' her in many cases were in the first deposltio~n transcript. Certainly a review of all those is part and parcel of her preparation to testify today. MR. H~NTZ: AS far" as the co-d~slgnatlon~ I'll note that Mr. Fitzmaurice identified Ms. Na~ughton least a dozen instances as a person who know more about it than he did. fr'om my checking, in at would MR. GOULD: has so testified about brand manager that Mr. of. MR. HINTZ: testified that That's correct and she levels of .detail as a Fitzmauric.e was not aware And sh,e has she does not know ,where also the money went to, she doesn't know if an M~DR was submitted, she doesn't know a lot of things that Fitzmaurice didn't know. And our position is that we're entitled to thDse documents if they NOON & PRATT

1 3 4 5 6 7 8 I0 Ii 12 13 14 15 16 17 18 19 21 24 586 NANCY G. NAUGHTON - CON'FIDENTIAL exist and we're entitled to a prolper witness who can testify. I will take whatever she knows and that's great. But she need a witness who can MR. GOULD: statement as set forth you as a matter of law doesn't kn,ow enongh and we answer the questions. [ do n,ot agree that a ~n paragra]ph II entitles to a preci~se identification of documents or pr,ecise testimony as to every possible number that you might dream up as beyond the reasonable scope of a 30(b) (6) . MR. HINTZ: Mr. Go~uld, you keep making your objections and we'll ]keep issuing notices until you and we can r~ac~ some sort of agreement on proper discovery. MR. GOULD: If you plan to ~ssue a notice saying where if anyplace wme any cost savings from the spend placed within Brown & Williamso~, that is ~ different t~oplc. And at such point as you issue such a one, we'll respond. MR. KINTZ: Thank ~ou for your suggestion. Do you have any othems that would help us fi~d missing information ~hat B&W has not NOON & PRATT 6S2136600

1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 15 16 17 19 2O 22 23 24 25 587 NANCY G, NAUGHTON - CONIFIDENTIAL produced to us? MR. GOULD: That i:s not a suggestion of how to find information which you wrongly allege has not been prcdu,ced. that's true. MR. HINTZ: Or it ~may not exist, MR. GOULD: I'm su!ggesting the proper way to proceed as a 30(b) (,6) . MR. HINTZ: I'll alsk the reporter to mark as Exhibit 740 a multi-pa!ge document bearing production numbers BWT316 ~0522 through 0536. The first page reads, Page Intentionally Blank, and the secomd page is Capri 1989 Performance. (Defendant's Deposition Exhibit-No. 740 was marked for identification.. Exhibit retained by counsel.) BY MR. HINTZ: Q. Ms. Naughton, if you"ll turn please to the page with production number 0528? If you don't mind, I'm going to lean across and find Rxhibi~ 619 and open it ~o page 3~8-483. 619 was one of the many exhibits we looked at earlier as NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 ~9 20 21 22 2~ 24 25 far as and it million, A. correct? A. Q. we looked at copy if that's makes A. Q. Exhibit 740, 588 NANCY G. NAUGHTON - CONFIDENTIAL budget numbers for the Cap*ri 1990 spend indicates the budget spend~ of $75.4 do you see that? Yes. Exhibit 740 similarly indicates a spend of $75.4 million on pa~ge 528, correct? That's correct. And it indicates a 56/44 A/P split, That's right. And that was the sam.e A/P split that in Exhibit 669. I'll show you my it easier, correct? That's risht. And sc we're clear o[n the date of would you turn ~o th,e page 0534? You'll see that shows you launch-to-date performance for Capri 120's volum~e versus objectives, November 24, 1989, do you see that? A. Yes. Q. So from that date it's fair Eo say that the document Exhibit 740 muslt have been prepared sometime after November ~4th, 1989, correct? NOON & PRATT

1 3 4 5 6 7 8 9 10 Ii 13 14 15 16 17 18 19 21 23 24 NANCY G. NAUGHTON - A. That's correct. Q. So in that time plan correct? A. 0. for Capri in 1990 589 CONFIDENTIAL fram~e, the spending was for 75.4 million, That's correct. And that's the same as the amount of spend same or roughly the that "we looked at this morning during the 1989 time were planning on using for Capri, from June, July, August, 0c~ober, you recall that? A. For 1990? Q. For 1990 looking for,ward? A. That's right. Q. Is it fair to say th,en that frame that you ~he documents November. Do the Capri brand group did not begin t,o plan reduced marketing expenditures for the 19!90 year until at least December of 1989 or later? A. Well, no. The 1990 mumber had a 120's component in it where, you ~now, 1989 had a little one. But the spend on 100~'s for 1990 was planned as a reduction versus 198!9 and that was as e~rly as whatever that one was., whatever date 669 was. NOON & PRATT

1 2 3 4 5 7 8 9 10 ii 12 13 14 15 17 18 19 20 21 22 24 25 590 NANCY G. NAUGHTON CONFIDENTIAL Q. 669 is August 3rd, 1989. And i'm sorry, you were -- I'm going to h~ave to ask to have that read back. (The preceding answelr was read.) BY MR. HINTZ: Q. Ms. Nau~hton, I'm goling to ask you to switch hate a~ain to testify oln behalf of B&W under Exhibit 707, paragraph 9 whlich reads, "The required $12 million Capri budget cut presented to management (BWT316-274 to 48) . " I should note that t]here's a typographical error, that should Be 2746 to 48. MR. GOULD: As parlt of the record, I'll incorporate by reference the objections we've made to paragraph 9 both in writin~ and orally to the deposition of Mr. Fitzmaurlce. BY MR. HINTZ: Q. Ms. Naughton, what d~d you do to prepare to testify about paragrap~ 9 in Exhibit 707? A. Yesterday we looked at a document written I think by Carrie Canavan about a budget cut. Q. Let me hand you Exhibit 708; Capri is that NOON & PRATT

1 2 3 4 7 9 11 14 15 16 17 18 19 21 22 23 ~4 25 NANCY G. the document A. yesterday? A. NAUGHTON CONFIDENTIAL that you're referrin.g to? Yes, it is. Had you seen that do.cu~ent prior to Not that I recall. Have you ever discus~sed that document with Ms. Canavan? A. No. At this time, I don't -- the way I re~ember, I was ~ot on Capr:i for a short period in the beginning of 1990. What were you doing :in the beginning of 1990 that you were o£f Capri? A. ~ was promoted to di~rector of new products and I only had new products at that time so there was, as I remember, like a two to two and a half to three-month period ~here I didn't have Capri, I just had new produc~s. Q. Okay. On page 9 of pour May 14~h deposition, I understand that you said it with the preface that as best you coul~ recall, that promotion took place in January of 1991. Are you remembering now that it's January of 1990? A. I think it was 1991 -- or 1990 but I might be wrong. I can't -- this ~f I was manager NOON & PRATT

1 2 3 5 -! 8 9 ii 12 13 14 15 17 18 19 21 24 25 NANCY G. NAUGHTON - CON'FIDENTIAL and the reason -- I mean, I wasn' t copied on and there was a period and it was January to the middle of March, Susan Osborne was the director on Capri and Carrie Cana'van was the 592 this like manager. So I think it was 1990 .a.nd when we ~iscussed £his yesterday -- that' s why I thought it was 1990. The "we" being when [you and Mr. Gould discussed it? A. Yes. When I looked ~at this, I thought that was the period of time and like I said, it was very short that I wa~sn't on the brand. I'm sorry, I can't rememb,er exactly if it was 1990 or 1991. Q. Other than meeting w:ith Mr. Gould and looking at this document, Exh:ibit 708, did you do anythin~ else to prepare t(o testify about paragraph 9 of the 30{b)(6) notice, Exhibit 707? A. No, I didn't. Q. Yesterday when you l~oked at Exhibit 708 with Mr. Gould, did y~u review the entire document, all three pages? A. I scanned it. Q. And from that documemt,.your NOON a PRATT

5 6 ,! 8 9 10 12 13 14 15 16 17 18 19 20 23 24 25 NANCY G. NAUGHTON CONrFIDENTIAL recollection was not refreshed th.at you were involved in any way with this? A. No, it wasn't. Q. So sitting here today, you can provide no more factual information about what's contained in Exhibit 708? No, I can't. MR. HINTZ: Mr. Gould, I chink there can be no doubt t~at as hard as MS. Naughton might try, she can not provide a~y testimony about ~his 30{b) (6) or ,otherwise, and to that extent she's no~ a co-designee for paragraph 9. And I'm not even su:re she was a co-designee to begin with. She might have been the only designee. MR. GOULD: Certailnly it would appear on the face of the documen~t chat Ms. Canavan is certainly the most knowledgeable person about this. However, as you well know, she is not an employee of B&W and we don't control her so we can't produce M~S. Canavan, who to you. She has already or Mr. Nix an~ that's been wrote this document, been deposed by you done. NOON & PRATT

1 3 4 5 6 7 8 9 i0 ll 12 13 14 15 16 17 !8 19 2O 22 23 24 25 594 NANCY G. NAUGHTON - CONFIDENTIAL Perhaps if the quest~ions were directed to Ms. Osborne, she coul.d have answered better, but she's also been deposled previously. She is presently seconded out of B&W and she's abroad so we can't produce her either. MR. HINTZ: That's~ not true that she's not within your control. T'hls documen~ was produced after the first cutoff d~ate when her deposition was taken. You could bring Ms. Osborne -- Ms. Trebilcock, th.at was her former name, I guess Osborne is h.er current name. MR. GOULD: Well, we won't resolve that today. MR. HINTZ: that this witness is no~ the 30 (b) (6) witness. MR. GOULD: MR. HINTZ: indisputable. There's no dispute properly designated as That's your statement. It's t[he truth. It is want to spend that's your MR. GOULD: If you the deposition arguing about that, choice. MR. HINTZ: You ar!gue when it NOON & PRATT

1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 19 23 24 25 NANCY G. NAUGHTON suits you but you won't doesn't. MR. GOULD: I was asked of Mr. Fitzmaurice and again we can look at the this. discuss 595 CIONFIDENTIAL things when it August do recall testimony about this document transcript later on MR. H~NTZ: Fitz~aurlcs t~anscript 25th, page 356, line 25: "MR. GOULD: Coumsel, I will note that this appears to be catsgor~ 9 in your new 30(b) [6) deposition notice and we have not designated Mr. Fitzmaurice to testify about that area." To date, we do not have a 30 [b) (6) witness f~om B&W on paragraph 9. MR. GOULD: You made your ststement. MR. HINTZ: And ~s. Naughto~, so you know what's going on, this Ls one of the many things that lawyers do to try t~ find out information and you do not happen to have the information through no fault of your own. I'll ask the report~er to mKrk as Exhibit 741 a two-page document bearing NOON & PRATT

9 10 Ii 12 13 14 15 16 17 18 19 2O 21 22 25 1 2 3 4 5 6 7 8 596 NANCY G. NAUGHTON - CONIFIDENTIAL production numbers BWT316 2721 to, 2722. (Defendant's Deposition Exhibit-No. 741 was marked for identification.. Exhibit retained by counsel.) MR. HINTZ~ It's a document with the front page that reads Capri 1990 Revised Quarterly Budget Splits. BY MR. HINTZ: MS. Naughton, have y,on seen Exhibit 741 before today? A. I don't know. I may have. Q. Did you review this ~document with Mr. Gould yesterday? A. No, I didn't. Q. If yon look at the b~ottom left, it's dated January 25th, 1990, do you see that? A. Yes. Q. And there's numbers and the letters MCC, that to be Carrie Canavan? A. That's correct. Q. This document indicates a total advertising promotion and ~D promotion for 1990 of $52.31 million; Is that correct? one of t~ese identifying do y©u understand NOON & PRATT

1 2 6 7 9 ii 12 13 14 16 17 18 19 2O 21 22 25 NANCY G. NAUGHTON CONIFIDENTIAL A. That's right. Q. Is FD field directed'? A. That's correct. Q. So from the document,s that we've 597 looked at today, the total 1990 s~end, this is the first one which shows a budge~t reduction, correct? A. That's correct. Q~ Actually, I pushed y~u a little toc quickly. There were some earlier ones of 75.4 millilon, but as far that's thi~ document of the say generally 5~is was the time Capri Revisiens to 1990 Budget. 76 milliou and down to as a larger reduction, Exhibit 741, right? A. Yes. Q. Were you involved wi~h any quarterly budget splits? And whem I involved, I mean in the preparation? A. The brand manager would handle the cuts. Q. And you think that when you were off the brand? A. I believe so. Q. on the second page listing, Do you NOON & PRATT

4 5 7 9 i0 ii 12 13 14 15 16 17 19 21 22 23 24 NANCY G. NAUGHTON - C0~FIDENTIAL see that? A. Yes. Q. Were you involved in any way in setting these up or -- A. To the best of my re~collection, 598 not in initially setting these MR. HINTZ: I'Ii a~sk the reporter to mark as Exhibit 742 a single p, age bearing p~oduction number BWT316-1823 ent. ltled ~990 Spend and the date June 13, 1990. (Defendant's Deposition Exhibit-No. 742 was marked for identification.. Exhibit re~ained by counsel.) BY MR. HINTZ: Q. Ms. Naughton, you see Exhibit 742 initials after that, TE, was 1989 has your initials at the bottom? A. Yes. And the that your secretary at the time? A. That's right. Q. Wa~ that your secre~ary in also? A. I believe Terry was. If you would look qu~ickly back to NOON & PRATT

5 6 7 8 9 i0 ii 14 15 16 17 18 21 23 ~4 ~5 1 2 3 4 NANCY G. NAUGHTON - CONFIDENTIAL Exhibit 741, after Ms. Canavan's initials, there's the initials TE, is ~hat the same secretary? A. That's right. Q. So the secretary sta.yed rather than coming with you when you j oh? A. you know, Q. works for? A. That's right. Q. Back to Exhibit 742, this iS a document that you prepared? 1990. Does of when you A. mentioned off. you were A. 599 with the job left the No. She can handle ipeople in other, bra~d groups a~d s~ on. So she's not restric'ted to who she like it. document is dated June refresh your recollection It looks And this this help were cn or off the Capri brand? That would be right 81nee I it was a short time period that I was When you wer~ off th~ Capri brand, off it completely, correct? That's right. NOON & PRATT

2 3 4 6 ? 9 I0 iI 14 15 16 17 19 20 21 23 24 25 what was A. Q. 600 NANCY G. NAU~HTON - CON;PIDENTIAL Meaning you weren't kept advised of Exhibit 742, shows an going on? That's right. This document, authorized through May 31, 1990 f.or the spend of $46.3 million; is that c,orrect? A. That's right. Q. Where did you obtain that number when you prepared Exhibit 742? A. [ would assume it woluld have come off oF a May 31st budget mat. Q. which we have in Exh~Ibit 734, tab 5; is that correc~ or not? well, this is -- thi~ is budget. Q. I mean, I show you E)~hibit 734 because I understood from your earlier testimony that when you talked about a budget mat, that's what these kinds of documents are,, but I may have assumed incorrectly. A. See, on a monthly -- well, it locks like we don't have authorized here on these monthlies. If you look a~ the December 31st, 1990. Q. Yes. You're looking at the las~ NOON & PRATT 6SZ136614

1 6 7 i0 11 12 13 14 16 19 20 2~ 24 page NANCY G. NAUGHTON of Exhibit 734? A. That's right. line - - Q. A. ~uthorlzed C0~FIDENT!AL The a~uthorized 601 -- versus budget. Ii mean, is different than budg'et. Theme budget numbers; but not authorized adjusted we have actual an.d we have budget for a:~y changes that yo~ ~ake as you go. Q. I'm ~fraid -- A. So as far as these a~dJustments, where I picked up the 46.3, I can't tell from these. Q. so is it fair to say that it wasn't from -- A. It would have been a May mat like this. Q. Like ~he kind of pages behind tab 5, media is at production number 340 and SPS is 341 to 42, those are the May 1990 budget ma~s, right? A. That's right ~nd ~ha~'s ~ctual versus budget. Q. so that did not -- A. For the month and yemr-to-date. NOON & PRATT

2 3 4 5 6 .! 8 9 I0 II 14 15 16 17 18 19 2O 21 24 25 602 NANCY G. NAUGHTON CONIFIDENTIAL Q. So that does not giv~e authorized? A. Right. The authoriz~ed number for the year was -- you could get the authorized number from the media and promoti~on. By adding -- A. For the year or -- Q. By adding 17.57~ and 15.5? A. That's right. So that would be about 33 million? A. Right. Q. Which also is not 46,.3, so is it fair to say that the authorized m~st have changed point after June 1990 whem you prepared at seme Exhibit 742? A. 1990 if 1990 That'S correct. How did ~he authorized change in -- namely, is there m document issued that says the authorized hms been changed to this number? A. There's a monthly authorized report as I recall. Q. A. is. Does that have a particular title? I don't know what its official title NOON & PRATT

3 5 6 .! 9 i0 II 13 14 15 16 17 19 2O 21 24 25 authorized? A. NA~CY G. NAUG~ON - CONIFIDENTIAL Does that track actu~al versus 60~ MR. HINTZ: Mr. Go,uld, I don't Delieve that such a document has iDeen produced. We would request production o~ all those types Of ~eports. MR. GOULD: Your r,equest is noted. I~FORMATION REQUESTED TO-BE SUP~PLIED: BY MR. HINTZ: Q. Is that report still prepared at A. I believe authorlzed is oN the mat now. And that might have been when we didn't have monthlies with authorizeds. have ~aken A. O. very little identify if A. Q. Do you know when place? I don't recall. I'm looking at Exhibit information le£t on thaz changeover may 742, it has Can you it's from a larger I can't tel~ what it"s from. Exhibit 742 lists adjiustments and NOON & PRATT

9 10 ll 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 NANCY G. spend reductions, A. Yes. Q. What indicated? A. I don't know. Q. What were the indicated on Exhibi~ 742? A. From this, is. A. adjustments 0. A. NAUGHTON CON'FIDENTIAL do you see that? 6O4 were those adju;etments that are spend :reductions can't tell what that were these adjustments and spend reductions implemented, to your kmowledge? A. Well, for 1990, we spent pretty close to that authorized, 14.6 an~ 17.6. So ~hat would be 32.2? Plus you got prior year coupon of 3.4. And where do you fln~ mark as those at? promotio~ specific. I'll as:k the reporter single pa.ge bearing Under sales MR. HINTZ: Exhibit 743 a production numbe~ BWT~I6-1817, entitled Brand Spend, dated July 27, 1990. At the same time I'll ask the reporter to mark as Exhibit 744 a ,document with NOON & PRATT

1 2 3 4 5 6 .! 8 9 12 15 16 17 19 23 24 25 605 NANCY G. NAUGHTON CONFIDENTIAL production number BWT316-1809 entitled Current Authorized Marketing Spend, dated August 2nd, 1990. (Defendant's Deposit~ion Exhibit-No. 743 was marked for iden~ificatlon~. Exhibit retained by counsel.) (Defendant's Deposition Exhibit-No. 744 was marked for identification. Exhibit retained by counsel.) BY MR. HINTZ: Q. Both 743 and 744 are in front of you. Let's start with 7~3, thRt'~s a document from you dated July 27, 19907 A. That's correct. Q. And it shows a 1990 ~uthorizsd of $46.3 million, cerrect? A. That's right. Q. And that's the same mumber that we saw as authorized in the previous exhibit, Rxhibi~ 742? A. That'S right. Q. In the right-hand column, 46.0, what does ~hat number represent? A. Just from looking at this, I'm NOON & PRATT

I 3 5 9 14 15 16 17 19 21 assuming epending? A. It's NANCY G. NAUGHTON - CONFIDENTIAL that would be 1991 brand, spend. A plan for what you plan on I don't just numbered. 606 know what this document is. document that you prepared dated ~August 2, A. That's right. Q. And that document sh~ws the authorized marketing spend of 43.'731 for 1990, correct? A. ~Q. If you look a~ Exhibit 744, that's a 19907 That's right. Which is a reduction over the previous authorized spends that we saw in Exhibits 742 and 743, correct? A. That's right. Q. Now did that reduction come about? A. I don't know from th~s. Q. Would there be a docmment that indicates that the authorized spemdin~ had been reduced? A. Well, it could be a ~onthly adjustment.for a prior year. Who authorizes ~he au~thorized spend? NOON & PRATT 6821366Z0

1 2 3 4 5 6 8 I0 ii 12 13 14 15 16 17 18 20 21 22 24 25 607 NANCY G. NAUGHTON CONFIDENTIAL A. Well, it's really i~ the finance department, although -- any chan~es or anything gets filtered through the finance~ department, and they issue authorized spend. Q. How do you use that number for your purposes as brand manager? A. Well, it's a Number we track to in terms of our monthly spend. Q. When you were Capri ]brand manager, did you get an authorized spend every month? A. Yes. We had an annuml authorized number and eventually we got monthlies. We didn't always have monthlies authorized, that's very recent. Q. When you you track a~ainst the had menthly authorized, did budset? A. Yes, to a certain extent, yes, yon did. On an annual basis you look for your annual authorized. That's why in nhis d~cument we don't have a monthly authorized because we didn't break it out that way. There was Just a~n annual authorized, Q. That's Exhibit 744, just tO make s~re everyone is on the same page and working to NOON & PRATT

2 3 4 5 .6 7 8 9 12 13 14 15 ~7 19 23 25 608 NANCY H. NAUGHTON - CONFIDENTIAL the right number. This document, Exhib:it 744, shows a breakout between first half and s~cond Half 19907 A. That's right. Did there come a tim~ when the authorized was broken? A. NO. Q. How was this information generated, if you know? A. That would be basically what was spent that we knew from our budge~ mats aCtUal, and then what we had projected fo~ the second half of the year. Q. So the first half actual tells you what you spent out of your authorized? A. That's right. I meam, it's Just what you've actually spent. MR. HINTZ: I'll a~k the reporter to mark as Exhibit 745 a document bearing production numbers BWT316-2419 to 2426. (Defendant's Depositi.on Exhibit-No. 745 was marked for identification. Exhibit retained by counsel.) BY MR. HINTZ: NOON & PRATT

5 6 7 9 I0 ii 13 14 15 16 17 19 9-0 22 25 609 NANCY G. NAUGBTON CON|FID~NTIAL Q. MS. Naughton, if you.'ll look on the last page of Exhibit 745, you'll see the date October 17, 1990, do you see that? A. Yes. Q. You see Ms. Canavan'~s in~tials, a~ain, correct? A. That's right. Q. In October 1990, you were still Capri brand ~anager, correct? A. See, I think when -- you know, I was -- I'll check. I'll double-c~eck. I think it was a 1990 as we talked about ~ith that document, In 1990 I was promoted directo~ instead of 1991. I just recalled it was incorrect when I ~irst stated it. I believe that's the case. You th~k that pa~e 9~ of your May 14th transcript when you said 1991. probably should be 19907 believe that's true~, that'S correct. exhibits, and then from June And we saw from these we saw one from January Ehrough August, last several for MS. Cana~an you had NOON & PRATT

2 3 5 6 8 9 Ii 12 13 15 16 17 18 19 ~0 22 24 610 NANCY G. NAUGHTON - CONFIDENTIAL involvement with Capri, correct? A. That's right. As o director then. Q. AS a d~rector of wh~t? A. I had Capri and new products, Q. Capri and new products? A. Yes, Q. Are you familiKf wi~h Exhibit 745, have you seen it before? A. ~'m sure I've seen i.~. I don't remember it without looking at it.. Q. I'd llke to focus si:mply on page 2423, ~or starters. You'll see tlhere it's 1991 proposed spend? A. Yes. Q. Total spsnd proposed do you see that? A, Yes, Q. At this time, in October 1990, why proposed spend for 1991 9~eater than was the 1990? is 46 million, MR. GOULD: Take y~ur time ~o review whatever other pages of thi.s documen~ for context that you need, TRE WITNESS: Okay. NOON & PRATT

1 2 3 4 5 6 ? 8 9 10 11 12 13 14 15 16 17 18 19 21 23 25 short BY MR. 611 NANCY G. NAUGHTON - CIONFIDENTIAL M~. KINTZ: Why ~on't we take a break? Exhibit there's that? A. looked at A. Q. 740, page (~eesss taken.) H~NTZ: MS. Naughton, if you look at 745, on page production number 2424, a 1990 A/P split o~ 49 ~o 51, do you see Yes. That's different f~om the split we earlier today of 56 to 44, right? That's right. And if you need to see it, it was in 558. Why was the change made in the advertising to promotion split ~n 1990? A. I don't recall exactly. Q. This document, Exhibit 745, indicates the A/P split is goin~ to be changed to 52 to 48, advertising versus to promotion. Why was that proposed? A. The o~ly thing I cmn assume is that we have money in that 46 millio~ for the 120's expansion and 38 percen~ which ~ou!d have NOON & PRATT

2 3 4 5 6 8 9 I0 iI 14 16 17 19 20 21 24 612 NANCY G. NAUGHTON CON[FIDENTIAL increased our media support potenltially because of regional ma~azine runs and thalt sort of thing. Q. Doesn'~ the media sp~lit in the next section show that the magazine in,creases were small relative to the out of home[? A. Well, bu~ magazines, it could be -- I mean, y~u have regional upcharses potentially for 120's; out of out cf home, you'd have potential support for 120'8 and n~at was 38 percent so that would explain why out of home might be up a little bit, The OUt of home increase in ExhiDit 745 is more than double, correct? A. That's right. Q. What's your understamdlng of why that occurrsd? A. Well, Just from look~ng at this document, I'm assuming it's because of the 120's launch. And the 38 percent, some off that would 1990 of home w~ich we used for have gone to launch out the 38 percent. And the 38 percent l~unch was when? A. AS I recall, we bega~ shipping ~n but the retail start was in ~arly 1991. NOON ~ P~ATT .-- 6 Z1366Z6

l 2 3 4 5 7 8 9 iI 12 13 14 16 17 18 19 20 21 23 24 25 that launch? A. A. 0. 613 NANCY G. NAUGHTON CONFIDENTIAL Were you involved in the planning of In your capacity as a director? That's correct. And in that capacity as a director, when did you begin to have respon~ibillty for Capri? A. I was -- it was abou~ March; that's the best that I can recollect. So you were off the ~apri brand AS I recall, it was just about two mean, it might have been a little £or -- A. months. I 126, lines 6 use a lot of you to? 1990 At your May 14th deposition, page and 7, see where you say, "We don't out o£ home, it's too broad"? Do see that? A. Yes. Q. What time frame were you referring A. Well, as i recall, I think in ~- at least in 1990, and them I'm just in NOON & PRATT

5 6 7 9 l0 ii 12 13 14 15 16 18 IS 20 21 23 ~4 25 614 NANCY G. NAUGHTON CON~IDENTIAL priority markets where you have those high opportunity markets and out of hone is a good medium for building of awareness ~f a big brand image, but we didn't put it in markets where we had average or lower development. Q. " Similarly at page 31~8, which is on your next day, you see at line 14 -- A. What page is this? Pa~e 318, line 14 yo~u say, "we use very little out of home now." A. I don't have that. Q. 3187 A. NO. MR. GOULD: The he~ading says Volume II, pages 263 to 460, but ~if you look at it, the actual pages included sta:rt with page which is a computer error or some~thing. MR. HINTZ: You se,e what the problem is. (Discussion of£ the ~record.) Exhibit 734 BY MR. HINTZ: Q. If you take a look at which is the 1990 actuals, tab of hcme actual year-to-date is 12, page 390, out 4.5 million, NOON & PRATT

1 3 4 5 6 7 8 9 I0 Ii 12 13 14 15 16 17 18 19 2O 21 22 25 correct? A. Q. million A. Q. NANCY G. NAUGHTON - Tha~s right. Out of total I mean 13.5? That's right. I've opened Exhibit 615 CONI~IDENTIAL basic m~edia of 3.5 735 to the page 'You'll see tough to read, with production number 363-011. since we've bound your copy it's but you see on the top right, September 19917 Yea. Q. And under year-to-date actual, you'll see that the out of home component basic media is 8.4 million out of a ~otal basic media of 16.2, correct? A. That's right. Q. What's your understa~nding of why the full year expenditure on Out of home in 1990 was 4.5 million whereas in the first ~nine months of 1991, B&W spe~t 8.4 million on out of home? A. I believe that's due to the 120's launch because you don't have as :many media options when you're regional, local, such as out of home is more heavily used. And that resulted in a doubling of NOON & PRATT

1 2 3 4 5 7 8 9 10 ll 12 13 14 IS 16 17 18 2O 22 23 24 25 616 NANCY G. NAUGKTON CON~IDENTIAL the out of home expenses? A. I believe that's wha~ it is. It was the launch of 120's, because if y~u look at the. first three months -- well, at least I looked at the first three, but out of home is heavy in January, it's heavy in February, mnd then it starts dropping off like in April., more down to sort of a base level, but it's quite heavy in the beginning of the year which would coincide with zhat expansion. Oo if we could. 397, Exhibit A. Q. 2.8 million? A. Q. year-to-date. A. expenses to to Let's look at a few ~f those Out of home in January 1991, 735, is 1.4 million? That's right. And in February, on page 404 it's numbers pa~e It's 1.4 million, i'm sorry. Yes, And in March, That's right. oult of home. I'm looking at ~he 1.4 ~as well? And in April, 700,0010, so those you indicate that they were related the 120's? A. That's right. ~OON & PRATT

1 2 3 4 5 6 7 8 9 I0 iI 12 13 14 15 17 18 19 2O 22 23 24 25 also out of correct? A. Q. markets? A. Q. actuals and NANCY G. NAUGHTON - CON[FIDENTIAL During that time frame, there home being spent on the was 617 There's the way I re,call it, yes. In what were known a.s priority That's right. I think we're finish.ed with all the budgets and financials for a while. What I'd like to fin.ish up from your deposition of May 14th is an area. that we discussed on page 144. MR. GOULD: We're back to as a fact witness again? MR. HINTZ: Yes. I was under the understandisg we had been there for quite some time. MR. GOULD: Fine. BY MR. HINTZ: You'll see in your alnswer on lines 22 and 23 on page 144 where you say, "They're not value sensitive smokers" in reference to Capri smokers, do you see that? A, That's right. ~00~ & PRATT

2 4 5 9 i0 II 13 14 15 16 17 18 19 22 24 25 NANCY G. NAUGKTON - CONFIDENTIAL Q. What was your basis ~for that statement? A. When we looked at sw~itcher data, we didn't appear to be very sensitive to value for money brands, small base but it d:idn't really Jump up as Misty came into the ma~rket. But more on judgment., a brand like Capri that is, you know, a slim circumference, a real value ssnsitive smoker is pr~obably not going to selec~ that brand just because of its slim circum£erence and the possible pe~rception o£ not getting real value for money. Th~ey're smoking it for the style and elegance that t~e brand has and its overall image based on that c~ircumference. Q. Are you aware of any studies that support or contradict that conclu~slon? On value sensitivity~? Yes. I mean yon mentioned switchers. A. Switchers is one source. Probably the best source is how we performed so far on the market. AS Misty has grown so ra~idly, it's up 8/10 of a share now~ and Virginia Slims and some of the other slims brands appear Zo be somewhat NOON & PRATT

1 2 3 4 6 7 8 9 !0 ii 12 13 14 15 16 17 19 21 22 2S 619 NANCY G. NAUGHTON - CON]FIDENTIAL vulnerable and have lost some sha:re while Capri has really stayed rock solid, so we don't appear to be losing, certainly not dispr~oportionately, and it appears below our fair sha:re of any losses to value for money. Q. During the same time that Misty has been gaining it's .8 share and Capri has been rock solid, what has Virginia Slims Super Slims been doing? A. I think it's decline~d a little. Q. What effect during t~is same time frame when Misty has been growing and Capri has been rock solid has Virginia Slim~s Super Slims had on Capri? A. Could you repeat tha~t question? Q. Yes. During this ti~e when Misty has been growing and Capri has helen rock solid and virginia Slims Super Slims ha~s been declining, what effect has ~uper ISlims had on Capri? A. To the extent that, ~ou know, we haven't gained new smokers, becau~se Super Slims despite its decline could still b~e attracting new smokers; they might be losing smokers for other NOON & PRATT

2 5 9 11 12 :13 14 17 18 "~9 21 22 24 25 NANCY G. NAUGHTON CON|FIDENTIAL reasons, you know, taste issues, Ithings like that. So potentially they are inhibiting our growth. I mean, we could be potentially. Q. How do you know growing because of because of Misty? and not Misty? think super grow:i ng, that you could be Super Slims raZher than Why do you blame Super Slims Smokers that smoke Misty I don't are smokers that would be a~tracted to slim propcsltlon because of the reasons 6~0 explained on the circumference and value events advertised, where Super Slims is our direct competitor. And to the extent that they're getting new inflows into that bus~ness, those inflows could be coming to us and since we're not losing share and we could have those inflows, that would yield a growth position ~o us. Q. Since you're speaking hypothetically I'll ask, isn't it possible that Super Slims is driving people toward Capri because they're dissatisfied with Super Slims so they switch to Capri? A. ! don't know. I don"t know. NOON & PRATT

1 2 3 4 5 7 9 I0 ii 12 13 14 15 16 17 18 19 21 22 23 24 25 A. Super Slims, Q. studies? A. Super Slims NANCY G. NAUGHTON CON[FIDENTIAL Would that be -- I don't know why smo]kers are so that is a possibiility. Would that 621 leaving show up i]n switcher It should. Has the presence of Virginia Slims increased the awarene:ss of both Super Slims and Capri to consumers? A. I don't think so. I would not argue that it somewhat confuses the issue, but to the extent that they have been named ~the descriptor, that's a possibility, But as far as capri's awareness is concerned, now we ha~e to sort of share our message with Virginia S~lims, so in that sense it hurts us. Q. And what's the Capri message? A. Well, that we are a ~nique super slim proposition in Just our ima~ and what we're providing to the consumer. When ~ou have a direct competitor, it's going to dilute your message. That's what it means. Q. What's Virginia Slims Super Slims' message? NOON & PR31TT --- 6 2136635

l 2 3 4 5 6 7 9 I0 Ii 12 13 14 16 17 18 19 21 22 23 25 NANCY G. it's basic~lly super slim. Q. What do you mean, slim? 622 NAUGHTON - CON~IDENTIAL with the current advertising A. Got their name, basically super a large headline. The most the most recent ads do have claim. Q. So Super Slims' current different message than Capri? you ~now, in sort of recen~ -- actually some of the low smoke ads have a A. To the extent that t~ey have the smoke claim in there, but it's still talking fashionable smoking style which in Capri's premise. Q. Capri's basic premise is fashionable -- A. Well, it's elegance that surrounds and what, you know, elegant cues, fashion that clrcumfere~ce gives off. An~ that's low basic the circumference and the the clgar~tte is its base cues basic position. Q. Super Slims' positiom is being £rom Virsinia Slims, right? A. Yes, I'm sure it say~ somewhere in NOON & PRATT 68Z136636

1 2 3 4 6 9 I0 12 14 15 16 17 18 20 21 24 623 NANCY G. NAUGHTON CONFIDENTIAL ~he ad from Virginia Slims. Q. So par~ of its percemtage is brand family, Virginia Slims? I don't recall exactly where that's ao in the ad. A. But you remember ini~ially -~ ~ know they have dons it in the Super Slims from Virginia Shims. Can you recall a tim~ when they did Virginia Slims as part of the percentage? No. You testified tha~ ~ained new smokers S%uper Slims in ~a~ Capri misht your opinion have ~ained. Is there any other ~ay that Super Slims has taken smokers or sales Erom Capri? A.. Well, ~rom the reduced inflows and we lost some smokers to Super Sli~s from the Capri brand. So our outflows tc ~rginia Slims had -- which had been relatively ~w, increased with the launch of Super Sl~ms. Q. Those are outflows f=om ~he switching study? A. That's right. Q. Is there any other h~sis for your NOON & PRATT

2 3 5 6 7 8 9 ll 13 14 15 16 17 18 19 2~ 21 22 23 24 25 624 NANCY G. NAUGHTON - CONIFIDENTIAL view on how Super Slims has affec'ted Capri other than switcher studies? A. Outside of just looking at the trend lines in Nielsen and MSA as well ~as share of smokers in Switchers, ! means our trends certainly Elattened out as soon als Super Slims was launched. Q. As soon as Super Slilms was did you reach any concluslcns abo~ut the that it would have on Capri? A. Well, as soon as it ,was launched, I mean, we were certainly c~ncerned. I mean, you know, a direct competitor comins ,out. Q. How about after it hiad been on the market for several months? A. As I recall, I think we were still concerned about it and, you know, we became more concerned as we just watched our ~trend line flatten out. And when you look a~t switchers and all of a sudden our inflows are d,screasing and our outflows to Virginia Slims ar~e decreasing, that long-term picture doesn't lo~k ~ood. So there was some concern the more i~nformation we got. launched, effect NOON & PRATT

1 2 3 4 5 7 9 I0 ii 12 13 14 15 17 18 22 24 25 625 NANCY G. NAUGHTON CONFIDENTIAL Q. Is it your understanlding that Capri would have sold every cigarette t~hat Super Slims sold had Super Slims never been o~n the market, every single one e~ those outflows would have the inflows would have come to stayed and all Capri? A. I believe there's a certain number of smokers out there who like a 1.7 millimeter cigarette. And to that extent, that Virginia Slims was out there with the same, product, mean, for ~hose smokers that are smoking it because of that slim circumferencle, yes, I would expect those to be ours because o,f the uniqueness of the 17 millimeter circumferenc.e. And that's like the smoke it, I mean, they talk about circumference, either you love it reason people that slim or yo~ hate it, but the people who like it really" like it. And being the only one out there, eve:n though it was a slower build than we anticipate.d, I would have expected to get those smokers over time. Q. Are there any smokers who smeke Virginia Slims Super Slims who do so because it is a Virginia Slims prod~c~? NOON & PRATT ( 8213 639

l 3 4 5 6 7 8 9 i0 ii 12 13 14 17 18 19 2O 24 25 626 NANCY G. NAUGHTON - CON~IDENTIAL MR. GOULD: Objection to form. Solely, partly? MR. HINTZ: Solely. THE WITNESS: I dom't think solely, because you would have to llke the circumference too. BY MR. HINTZ: O. In October 1989, pri~r to that, they had Capri; if they wanted the circumference, they bought Capri, right? A. If they knew about t~is. Q. After October of 1989 with Super Slims on the market, they had two choices for the circumference? Right. What makes them choose Super Slims over Capri? A. Well, and we knew it was had to get product it's a new product, trial generation process takes Capri it's goimg ~o take -- slowly goins t~ build and we in people's hamds. I mean, a new name, amd that whole ti~e. And we were getting better at focusing in on ~he prime prospecte for the proposition and eventually they NOON & PRATT

1 2 4 5 6 7 9 I0 ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 627 NANCY G. NAUGHTON - CON~FIDENTIAL might have given us a try. A lot c£ people won"t try new brands right off the top, they have to g,et used to it. And to that extent Capri wouldn't generate trial as quickly, but that doesn't mean that a conversion couldn't have come abo~ut down the road once you pot the product in their hands. Why in October of 19~89 would they suddenly try the new Super Slims ~when you say people don't like to try new bran~s? A. First of all, Virginia Slims Super Slims was supported with a very a~gressive campaign u~der the Virginia Slims umbrella. You know, they had a bigger base to jump off of versus a new product like Capri. Q. so it is it fair to say that some people bought Super Slims because it was a Virginia Slims product? A. I'm sure that's a possibility, that some smokers did that. Q. And some of those smokers would have never bought Capri because it was not a Virginia Slims product, correct? A. I'm not sure that's ~rue. NOON & PRATT 68: 1366 1

1 2 3 9 19 12 ~_4 2O 22 2~ 24 628 NANCY G, NAUGHTON - CON'FIDENTIAL Q. They could have bought it prior to Super Slims and didn't? A. If they knew about it. And all I'm saying is a new product has a harder time in terms of getting smokers to try them and getting used to t~e product because it's .a definite departure, but we could still con'vert those smokers over time, it would just take us longer. Q. Super Slims was a ne'w product when it came out so it faced the same ,difficulty as Capri, correct~ in terms of getti:ng people aware and getting people to try it? A. That's correct, but ~a line extension like that is a little bit easier "than what Capri was up against. Q. And why is a llne ex~tension easier? A. Awa~eness levels, di~strlbution base, everything is a little bit easier that way. Q. So Super Slims was able to achieve advantages being a Virginia Slims that Capri couldn't? A. That's a Q. Now, you family b~and hypothesis. testified that you were your target and getting better at getting to NOON & PRATT 682136642

1 2 3 4 5 6 7 I0 I! 13 14 15 16 17 18 19 2O 22 24 25 k~ows figure out who the franchise was. easier to come in and once it's a[ll you knew, target your programs on~ce somebody's experience in market. So it's your underst~nding that 629 NANCY G. NAUGHTON CON'FIDENTIAL so you had a two year h.ead start On Slims at that point, correct? A. Well, we had been in market but, you we had to do the learning u[p front and It's a lot settled you can see Philip Morris was watching Capri'~s experience and then targeted its Super Slims pro!gram according to what Capri had done? A. I would expect if yolu're going to launch a brand that's a direct competitor to something on the market thaC you would investigate that, what that franchise looks like and what kinds of programs ~hey're doing and what worked. That's what I would think. Q. Do you understand thmt that's what happened? A. I don't know t~at fo~ a fact. ~'m assuming they would look at that kind of information. Q. Based on your review of what Super NOON & PRATT

2 3 5 6 7 8 9 II 12 14 15 16 18 19 20 21 25 630 NANCY G. NAUGHTON - CONFIDENTIAL Slime actually did when it came o:nto the market, were the programs targeted and ta.ilored in the same way that you had learned to ,do on Capri? A. I don't recall exactily what promotione they ran but I'm sure ~they were reaeonably focused. Q. What makes you so su:re? A. ~'m not sure, that was Just an assumption on my part. Q. What got us down thi~ road wae my queetlon of why coneumers would choose Super Slims over Capri, what reasons they would do that. One of the reasone you identified wae an aggressive Campaign under ~he Virginia Slime umbrella. Any other reason~ why oonsum~re would chooee Super Slims over Cap,i? A. Because of the way coneumers talked about the I? millimeter and that ~as like its number one characteristic that wo~id really, that led a consumer to adopt or not to was the 17 mill~meters. I mean, I think that's the primary reaeon, would be that difference. Q. But you guye at B&W ~ad already gone NOON & PRATT 6 2 36644

1 2 4 5 6 7 8 9 i0 II 12 13 14 15 17 18 2O 21 23 25 after all and you target, A. prospects Q. bushes, smoke a A. NANCY G. NAUG~TON these consumers and the were starting to contract correct? 631 CONIFIDENTIAL 17 millimeter the focus and That's right, agains~t the prime as we could see it deve~iop. So you had already b~eaten the if you will, to find who ~as going to 17 millimeter product, comrect? NOt overmight, it's mot that easy. Not every consumer at any given time. millimeter product, is looking for another bra~d Particularly on a 17 you would havo to overcome skepticism. That was one of the Zhings we learned right up front, that some smokers wouldn't try a 17 millimeter because they assumed i~ wouldn't taste good so there's e~ill all those consumers out there that hadn't t~ied it. So our programs stil~ have evolved in term of how to get product into consumers' h~nds. There's a lot of people o~t there who haven'~ tried Capri and those are still potential consumers down the road. Q. Super Slims got to those consumers., is what you're saying? NOON & PRATT

1 2 3 4 5 6 7 8 9 Ii 12 13 14 16 17 2O 21 22 23 25 Q. They overcame these people had? A. They may have opportunities. AS I said, and neat. Q. Your assumption Super Slims learned from Capri your footsteps as to how to go market. NANCY G. NAUGHTON C0~FIDENTIAL Potentially, yes. the sk:epticlsm that 632 gotten~ different trial it's n~ot all that nice earlier was that and followed in after the target Now you say that Sup.er Slims found people Capri didn't find by doing things different? A. NO. I'm eaying the 17 millimeter circumference, that's nonnegotiable. Either you love it or you hate it. That hap~pened to drive trial along wi~h some consumers d'uring their launch period. And as I said, co~nsumers don't all come running to try it nhe mo~men~ you launch a brand. And to my understanding, when they did hit s,ome of those to do with it being is that what you're eaying? initial launch trials, they consumers. It had nothing from Virginia Slims, NOON ~ PRATT 682136646

1 2 3 5 7 9 IC 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 NANCY G. NAUGHTON - COnfIDENTIAL A. I don'~ know. All I~'m saying is with a 17 millimeter product, bec:ause it's so 633 nonnegotiable, either you love it or you hate it, if there's only one on the market, those would have been Capri smokers. If I'm the only one and people like that and there are sm~okers out there that like it, it doesn't have to have Virginia Slims on it for them to adopt it. Q. So if Virginia Slims the market, your trends would hav.e way they were going? A. Q. A. out. I think there's that will entertain a it's not for everyone. Q. And what it have peaked? A. A share point maybe. again just my opinion. Q. Isn't Slims, Capri" 100's share point? hadn't come on continued the I think so. Never weuld have pea]ked? Eventually it would ]have flattened a certain a~ount of people 17 millimet~er product, but share is thmt, where would ~he aggregate ~hare of Super and Capri 120'~ m~re than a NOON & PRATT

1 2 3 4 5 8 9 i0 Ii 14 15 16 17 18 19 2~ 22 23 25 634 NANCY G. NAUGHTON - CONFIDENTIAL A. I don't know. I haven't looked at Nielsen. On a Nielsen basis, I don't think so. In some areas of the country~ that's certainly true. Q. Well, what share points were you taLKing about, na~ionally? A. National. Q. Had Super Slims not come on the market, when would have Capri remched its peak? A. I don't know the exmct answer to that but I think we would have c~ntinued to see some steady srowth because we were able to talk to those consumers more effectively. We had several prosrams that worked ver~ well for us in terms of converting smokers once we got product in their hands, those programs, our share. 0. consumers? A. Q. because and to the extent: we extended I think we would have extended But Super Slims beat~ you to those Yes. Did any smokers buy Super Slims it was an ultra low tar? MR. GOULD: Objection, solely or NOON & PRATT 6821366439

1 4 7 12 NANCY G. NAUGHTON - 635 COnFiDENTIAL partly? MR. HINTZ: Let me~ change the question completely, BY MR. HINTZ: Q. Did any smokers buy Super Slims instead o~ capri because Super Sl i~s was ultra low tar? A. I don't know for a fact. I'm not sure I have any real data that wo.uld indicate that they bought it opinion, both Capri consumex perception for ultra low' tar. In my and Super Sli~ms have a of being very light and airy and the difference between a 6 an,d a 9 weren't on a taste basis very considerable a:nd they really didn't tout it, you advertising. Q. You're know, real bi!g in their sure about th~at, that they didn't tout it in their advertislmg? A. No. It was in there but it wasn't like a huge selli~ point, as I r~call, i~ their advertising. So I'm not sure ult~ra low tar was -- and from a consumer percepltion point, Capri was perceived as a very light cigarette as well, so it wasn't all that unique. NOON & PRATT

636 1 NANCY G. NAUGHTON CONFIDENTIAL 2 Q. Once people smoked it or before they 3 smoked it? 4 A. I don't know if I hmve direct, you 5 know -- or I don't recall consume~r comments after 6 they smoked it. 7 Q. Did any consumers buy Super Slims 8 instead of Capri because of Supe~ Slims' low 9 smoke feature? l0 A. I don't think low sm~oke was a big Ii selling point for them based on c,ur consumer 12 research that indicated that a lo~t of your -- 13 well, a lot of smokers attribn~edl the same 14 attribute to Capri. A lot of smo~kers didn't even 15 knew that the brand was low smoke,. I~ And some felt that - - well, to some 17 consumers any smoke is too much. If you promise 18 low smoke, if there's any smoke coming out of 19 there, then it's not really low s~moke. So that 20 attribute I don't thimk was a real strong one and ~I net a reason for, or at least certainly not a 22 primary one, for people 23 Q. My question was, was there any 24 single Super Slims sale that was ~made because of 25 low smoke that would not have beeln made to Capri? NOON & PRATT

1 2 4 5 6 8 9 i0 ii 12 14 15 16 17 18 19 21 22 23 24 637 NANCY G. NAUGHTON - C0~FIDENTIAD A. I don't know that fo*r a fact. Q. And the flip side of[ that is you don't know for a fact that Super Slims smokers bought Super Slims solely because~ it was low smoke and Capri wasn't? A. No, I don't-know tha.t. Q. Similarly you don't .knOw that some of the Super Slims smokers bought Super Slims instead of Capri because it was u.ltr& low tar? A. No, I don't know that, only that both those attributes were often ~attributed to, particularly the low smoke, to Calpri. And in my opinion, ~hat product perception ~difference between Super Slims and Virginia Slims would not be all that great. Q. And those produc~ pe~ceptlon differences would arise after trial, correct? A. Pardon? Q. Those product di£fer~ntiation issues would arise in Consumers" eyes after trial? A. That's right, potentially. So if they had never t£ied Capri and they bought Super Slims because theysaid low smoke, then there's no comparison to be made in NOON & PRATT

1 2 5 6 7 10 ~2 13 14 3.'7 19 20 21 22 23 24 638 NANCY G. NAUGHTON CONFIDENTIAL your mind, right? A. When you ask consumers about Capri or about low smoke, they'll say Capri has low smoke. Once they think about it, they attach low smoke to the circumference. I m~an, it is because of the 17 millimeters. Q. But Virginia Slims Sluper Slims says 60 percent less smoke? A. Right. Q. So consumers seeing that before nrying the product would perceive, a product benefit from Virginia Slims Super" Slims? MR, GOULD: That claim was MR. HINTZ: period. Objection as to time only made for ~ particular Obviou:sly the question claim was ]being made in impossible to answer Coul~d you repeat Read i~t back, please. is related to when the the advertising. It's otherwise. THE WITNESS: your question? MR. HINTZ: (The pending quesUicm was read.) THE WITNESS: TO t~e extent that NOON & PRATT

i0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 639 NANCY G. NAUGHTON - CON|FIDENTIAL they think low sidestream like th~at is relevant. BY MR. HINTZ: As far as your respo~nse to my question of why people chose Supe~r Slims over Capri, are there any other reasons that you can think Of? A. No. Q. What got us down this road was the question about what effects you tlhought Super Slims would have on Capri early i~n Super Slims launch period. Did you personally c,onduct any investlga~ion to determine what t]hose effects might be, Super Slims" effects on Capri? A. I'm not sure I under,stand what type of investigation. May of 19907 A. 0. document I don't Market checks? I don'~ recall, DO you recall I ma~ have. ~olng ~o Phoenix I guess I did. Well, when you see know if you'll I'll the date on the a~ree. ask the reporter NOON & PRATT

3 4 5 6 9 i0 11 12 14 15 17 18 19 20 21 23 24 640 NANCY G. NAUGHTON - C0~FIDENTIAL to mark as Exhibit 746 a three-pmge document bearing production numbers BWT316-~E41 to i~43, dated May 7, 1990. THE WITNESS: I iLke to get trip r~ports out of the way. (Defendant's 746 was marked for identifications. retained by counsel.) BY ME. HINTZ: Q. Ms. Naughton, is Ex~ibit 746 a document you prepared? A. Yes, it is. Q. And it is a a field visiz in Phoenix, correct? A. That's right. Q. The date of ths mark,et check document is May 7, 1990 and you'lll see under the purpose there's a reference to Ma~y 18t~ field visit, do yon see that? A. Yes. Q. Can you explain the ~difference in those dates? A. Well, one is an error: which. Deposi~:io~ Exhibit-No. Exhibit Capri market check from I don't know NOON & PRATT

1 3 4 6 7 8 9 i0 12 13 14 15 16 17 19 21 22 23 24 traveling to Phoenix roughly May 1990? A. I don't recall I wrote this so I was there. Q. If you turn to Exhibit 746, you'll see the 641 NANCY G. NAUGHTON CONFIDENTIAL In any event, do you recall to perform m market check in exactly b~t I'm sure "Capri in the Virginia A. O. sentence does not the s~econd page of first: sentence, appears to have sustained product movement Phoenix market despi~e the~ launch of Slims Super Slims"? Yes. And skipping a sente~nce, the next reads, "Based on retailer commentS, it appear that Virginia Slims Super Slims significantly impacted Capr±' s movement to you see ~hat? Yes. Was that accurate wh,en written? Yes, I think so. Did Super Slims at s~ome point later has date." Do A. 0. A. 0. impact Capri in the Phoenix marke~t, to your knowledge? A. I don't k~ow if it d~clined there but -- or I mean, I don't r~member what the NOON & PRATT

8 9 i0 12 13 14 15 16 17 18 19 20 21 22 23 24 1 2 3 4 5 6 7 642 NANCY G. NAUGHTON - C0~FIDENTIAL trends were for the Phoenix market exactly. Q. Is this your conclusion that you are reporting, the part that I read, "It does not appear that Virginia Slims Super Slims has significantly impacted Capri movement to date"? Yes, and I based that on retailer Q. check, to 19907 You made this report, this market H. C. Howells. Who wa~ that in May He was the director of brand management I think was his offici.al title at time. Q. A. Your immediate super'visor? That's right. Did other people at Brown & Williamson make similar market ch.ecks to determine the effects of Super Slims? A. I'm sure there were some made. donJt recall exactly who went. Q. And some of those were you, correct? A. That would be correc~t. MR. HINTZ: I'll alsk the reported the reporter NOON & PRATT

8 9 i0 ll 12 13 15 16 17 18 19 2O 21 22 23 24 25 1 2 643 NANCY G. NAUGHTON - CONFIDENTIAL to mark as Exhibit 747 a documen~ with production numbers BWT316-2582 to 2588. (Defendant's Deposition Exhibit-No. 747 was marked for identificatiom. Exhibit retained by counsel.) BY MR. HINTZ: Q. Can yo~ identify Exhibit 747, please? A. It's a Tampa market check written by Carrie Canavan. Q. And that's a reporn to you? A. That's right. Q. Turn to the second ~age of Exhibit 747. You'll see under the heading Virginia Slims Super Slims, the t~hlrd sentence reads, "Retailers and salespeople~ report initial trial and interest of Super Slimsl at its introduction bu~ recently consume~r offtake has been very slow." Do you see that,? Yes. Does recollection that comport wi.th your of the sales of Supe~r Slims in markets o~hur than Tampa in about May Of 19907 A. Is your question, do. these market NOON & PRATT

1 3 4 5 6 7 8 9 II 13 14 15 16 17 18 19 21 22 24 25 644 NANCY G. NAUGHTON CONFIDENTIAL checks we felt translate to evsr~ place? Q. Yes. Did that concl_usion from this market translate -- A. I don't think we did that. market checks are very anecdotal and you have to be very careful with your initial leok at a general feel, but we were waitl.ng for sales data and things like that. Q. My question goes mor'e tO whether the sales data confirmed this conclus.ion, that at the introduction, Super Slims had a certain amount of trial and interest but then eventually the offtake was very slow? MR. GOULD: DO you mean as of the date of this, May 19907 MR. HINTZ: Yes. THE WITNESS: I th~ink, you know, it still was reasonably early. I mean, it wasn't that slow. We --I mean, it wasn't slow because it did grow to 3/10. And one of Ithe problems when you go ont and do a market c~eck, you talk to a retailer and you ask about a brand that's pretty small, I mean, they referemce everything them. I thl.nk we lo0k -- the market glives you sort of NOON & PRATT

5 7 8 9 i0 iI 13 14 15 16 17 18 2O 22 23 24 25 NANCY G, NAUGHTON - C0~FIDENTIAL in terms of Marlboro. And they say, well, it's not as fast as Marlboro. And they just don't have a feel for this. BY MR. HINTZ: Q. But you and Ms. Canmvan a~d the people that write these reports ~re the ones making the conclusions, right? A. Yes. I think in my report I said that Capri's business wasn't impa~ctsd. A~d the fact that we weren'~ declining, i.t would appear, based on what I saw in Phoenix an~d I think that bore out in the market as well, w,e didn't decline real rapidly up front but we also, didn't, you know, continue on a ~rowth curve, which would be harder to discern in a market check situation. MR. HINTZ: I would ask the reporter to mark as Exhibit 748 a three-page document with production numbers [BWT316-2267 to 2269. (Defendant's Deposition Exhibit-No. 748 was marked for identification. Bxhibit retained by counsel.} BY MR. NINTZ: Q. MS. Naughton, can yo~ identify NOON & PRATT

2 3 4 6 7 8 9 i0 iI 12 13 14 15 16 17 18 19 2O 21 23 24 25 Exhibit A. Cawood. Q. to MS. Canavan, NANCY G. NAUGHTON - 748, please? This is was this you? you? 646 COI~F IDENTIAL a market che~ck done by Betsy This market check correct? is: being reported A. ThaK's right. Q. Whereas the last one: we looked at reported to you? That's right. Q. Do you have an understandin~ of why report was sent to Ms. Canav;an rather than A. Betsy Cawood reporte,d to Carrie. Q. And at this time, Ca~rrie reported to That's right. Q. on the second page y~ou'll see that this report of field visit to New York indicates under Competitive Activity, "Vir~inia Slims Super Slims were seen in distribution i~ most outlets; however, slow." retailers commented that sales were Do you see that? Yes. NOON & PRATT 682186660

l 2 3 4 5 7 8 9 i0 ii 12 13 14 16 17 18 19 23 24 25 NANCY G. NAUGHTON - CONFIDENTIAL IS it fair to say t~at that's the Tampa 647 similar result as was shown from market check? A. That's correct. ME. HINTS: I'll a~sk the reporter to mark as Exhibit V49 a t~ree-paLge document with production numbers BWT316-~600 to~ 2602. (Defendant's Depasit~ion Exhibit-No. 749 was marked for identifications. Exhibit retained by counsel.) BY M~. HINTZ: please? A. It's a market check made in Louisiana. And the date Can you identify Exhibit 749, C~rrie Can~an is Jnne 5th, 1990, correct? A. That's risht. And this is addresse*d to you? A. That's right. Q. The second page unde:r Virginia Slims Super Slims reads, "Super Slims d~oes not appear to be performing well at all here." Do you see that? NOON & PRATT 6 1 6661

2 3 4 5 8 9 I0 11 13 14 15 16 17 18 19 21 22 23 24 NANCY G. NAUGHTON - CONFIDENTIAL A. Yes. Q. Louisiana was Capri' s best or one its best markets always, corr~cK?~ A. to m&rk yet 648 That's correct. MR. HINTZ: I'll msk the reporter another market check as Exhibit 750. The document bears document produlction numbers BWT316-1818 to 1820. (Defendant's Deposit~ion Exhlbit~o. 750 was marked for identifications. Exhibit retained by counsel.) BY MR. HINTZ: Q. Can you identify Exh.lbit 750, please? A. My trip report to Nashville. Q. And this document is dated July 16, 1990? A. That's right. Q. On the second page of this Exhibit 750, you'll see the follo'wing: "Based retailer comments, Capri eutper£olrmed Virginia Slims Super Slims and was not beilng cannibalized." DO you see that? of NOON & PRATT

1 3 4 5 7 8 9 I0 11 14 15 16 17 18 19 20 21 23 24 NANCY G. NAUGHTON A. Yes. Q. What's your meaning caanibalized as used here? 649 CONFIDENTIAL of the term A. Well, to the extent that we weren't losing share to Super Slims. in your Nashville ma.rket check, don't report that Capri is losing~ potential smokers to Super Slims, correct? A. No, not in this trip, report. to mark as production MR. HINTZ: Exhibit 751 a single ~umber BWT316-2529. ask the reporter page bearing 751 was marked for identification. retained by counsel.) ~Y MR. HINTZ: Q. You see at the bottom of this document it has the date July 4th, 1990? A. Yes. Q. A~d from the initials, is it your understanding that it's a documen~t prepared by Ms. Canavan? A. Q. (Defendant's Deposition Exhiblt-No. Exhibit ThatJs correct. Are you familiar with this document? NOON & PRATT

2 5 6 7 9 10 12 14 15 16 17 18 21 22 23 24 R5 but - - A. 650 NANCY G. NAUGHTON - COnFIDENTiAL I don't remember w~t it's from, You think you've se~n it before? It's possible. If you look under the fourth bullet, first subpart w~ic~ Slime showing low consumer deman~ but overall effects on Capri are currently u~certai~ (MSA share .21)." DO you see that? A. Yes. D~es that comport wi.th your recollection that as o£ July 1990~ the effect of Super Slims on Capri was uncertain? A. Yes, that's true I t.hink. Q. when did B&W reach c~ertainty on the effects that Super Slims were hav'ing on Capri? A. Well, I think once w'e, you know -- actually I don't know how m~h da,ta we had at this point, but you need mor~ of a base of information than Just, you know, ~market checks and anecdotes, looking a~ Nielsen and lookin~ at MSA, because the initial MSA woul,d be pipeline volume so that will be distorted ~and then there's a lag for switcher so you really ,can't tell reads, "virsinia Slims Super NOON & PRATT

5 7 8 9 I0 12 13 14 15 17 18 19 20 21 22 23 24 25 2 3 4 NANCY G. immediately. Qo If you you see a June is~, A. Yes. Q. For 10o's, A. Yes. NAUGHTON C0~FIDENTIAL icok at the top of this 1990 shipment forecast? 120'8 and total? 651 page, And then a revised ~udset number or numbers for each of those? Yes. Q. And an index for I00~'s, 120~s and total, do you See all that? A. Yes. Based upon the index:, is it your understanding that Capri was unde!rpexforming relative to the revised budget as: of June 19907 A. That's correct. Q. And as of June 1990, determined that Capri marketing could be cut and still maintain no fair to say objectives? A. B&W had already expenditures Share, correct? That's right. AS of ~hls time, Jul~y 1990, is ~t that Capri was not me,eting its I couldn't answer th~at just from NOON & PRATT

l 2 3 4 5 9 I0 ii 13 14 16 17 18 19 2O 22 23 24 25 looking recall. able to NANCY G. NAUGHTON CONFIDENTIAL at the shipment Somebody from talk about it. 652 forecasts and I don't forecastin,g would be mo~e BUt in terms of the budget and what load assumptions, talked about that last time, makes a bis difference. It also makes a and I think we are .in the budget dlff,erence what we assumed in the budget for when we were launching 120's, so that might be high as w~ell because that's definitely Q. Exhibit 751 does not attribute any of the low index numbers to Super Slims, correct? A. I don't think this is really dlscusein~ this volume forecast u~ here. I meanj none of these bullets are really .-- it's more, here's the snapshot. Q. And the snapshot is Chat Super Slims' e~fects were currently uncertain? A. At this point, yes. According to I mean, that was what Carrie's point of view was here. Q. And her point of view was also that, as the first bullet item reads, "~00's volume trend is relatively flat"? NOON & PRATT

1 2 4 5 6 8 9 i0 II 12 13 14 15 16 17 18 19 2O 21 23 24 25 NANCY G. A. That's right. Q. Let me hand you previously marked as Exhibit Brand Switching Study No. 49. NAUGHTON - CONFIDENTIAL National Now, i£ you 10ok also at, I don't know i~ you nave your copy, I'll show you mine. This is Exhibit 707, the 30 (.b) (6) notice. Paragraph 12 says one cf the swit.ching studies you're going to testify about on ibehalf of B&W is No. 49, correct? A. That's correct. Q. What did you de to prepare to testify on behalZ of B&W, to testlify about switching study NO. 49? A. Nothing. Q. Did you review swltc]hing study NO. 49 yesterday? A. NO, I didn't. Q. Did you talk to anyone at Market Facts about this switching study ~or any other switching study? A. No, • didn't. Q. Did you review eithe~ o£ the other switching studies in paragraph 12 of Exhibit 707~ PRATT

1 2 4 5 6 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 24 25 NANCY G. NAUGHTON - namely 45 and 47? A. No. Q. Did you Facts about those? A. No. Q. any of the 654 CONFIDENTIAL talk with an[ybody at Market Did you talk to anyb,ody at B&W about switching studies preparation for your deposition t,estimony today? A. NO. Q. If you turn please t,o the page with production numbers 350091, you sere the legend underneath this graph or chart wh,ere Capri is indicated as having shading from ~the upper left to the lower right A. Yes. Q. -- on the graph? A. Yes. Q. If you look on the glraph, you'll see that between 1986 and 1987 there'~s a shaded portion representing Capri at the very top, do you see that? A. Yes. Q. What's your understamding of how Capri is represented in the composition of the NOON & PRATT

1 2 3 4 5 6 8 i0 Ii 12 13 14 15 16 17 19 20 21 22 24 25 655 NANCY G. NAUGHTON - C0~FIDENTIAL total slims segment in a year when it wasn't even being sold? A. I don't know. Q. And had you ever comsidered that before today? A. No. Q. So this graph to your understanding is incorrect? A. Yep. I mean, someone at market research may be able tc talk to ~hat. MR. HINTZ: Again, this is no reflection on you but you are the~ one that was designated and I believe Mr. Fitz:maurice was also to testify on behalf o*f B&W about this designated document. counsel. MR. GOULD: That's~ created by B&W in the flr'st So some of your questio,ns directed to Market Facts. correct, which place, may be benter MR. HINTZ: They c~ertainly are, but I'm trying to establish what this witness does and does not know who is being put forward as being most knowledgeable at B&~W about these studies. NOON & PRATT

1 2 3 4 5 7 9 i0 ii 13 14 15 17 18 19 2! 23 25 NANCY G. NAUGHTON CONFIDENTIAL MR. GOULD: That's correct, And there may be not be anyone at B&W who can answer your precise questions. MR. HINTZ: That's true and as Ms. Naughton just said, someone at market research may be more knowledgeabl,e. And that's the whole purpose of a 30 (b) (6) , to produce the most knowledgeable witness, must be prepared to testify; in the rule. and also that people that's a requirement MR. GOULD: She's testified at length in her prior deposition ab,ou~ switching studies, how to use them and spec:ific conclusions she's drawn from them. She certa:inly is knowledgeable about that and she'~s already demonstrmted her knowledge about ~th~t in the last two days of deposition. MR. HIN~Z: All that knowledge. BY MR. HINTZ: Would you turn does this graph represent? A. The super slims segm~nt~ Q. I'm sorry? right, let's test to page 093? What NOON & PRATT

1 2 3 4 5 6 7 8 9 II 12 13 14 15 17 18 21 22 24 25 657 NANCY G. NAUGHTON C0~FIDENTIAL A. The super slims segment, the composition of it between Capri mnd Super Slims. Q. What do the percentmges that are on the left and right sides of the page indicate? A. That's my understanding, that's s~are of smokers. Q. Is that a national s~hare? A. Well, it's in the st~udy, the share o~ smokers in the study which is -~ I mean, again, I'm net, I can't talk to t~he switcher in terms of how it's constructed aad[ how the samples are constructed, but this to my u~nderstandlng is a share of smokers in the study itself. Q. This was the exhibit that yon directed me to at your last deposition to show the trend for Capri; is that corr'ect? A. That's correct. Q. Is it fair to say that this trend representation is the trend of sm~okers who would be included in B&W's switching st'udies? A. Pardon me? Q. The trend ~hat you r~eferred me to, this graph, this line, that's the trend with the percentage of smokers who would h~ave been in NOON ~ PRATT

1 2 3 4 5 6 7 8 9 i0 Ii 12 13 14 15 16 17 19 20 21 22 23 24 25 658 NANCY G. NAUGHTON - C0~FIDENTIAL future switching studies? A. This is the share of~ smokers which -- it's not volume based, i.~'s smoker based but it's representative of the ma~rket through 1990, and that's Capri's trend ~hlrough 1990. And this goes to those smokers who we, re in the switcher through 1990. And your testimony i.s that the data is representative of s:mokers the country who smoke Capri and Super on page~93 throughout Slims? A. The share is reasonably reflective o~ the market. Switchers overstate Some categories and I believe it under'states black smokers, and it may overstate older smokers. But it's the same -- ~ mean, any meas'ure has shortcomings but these shares are roughly comparable Ko the shares o£ each [bra~d in the marketplace. Q. All right. Let's talks a look at that. I'm going to hand you for ~your reference a copy of Exhibit 696 which is repo:rt of D~nnis J. Dugan. I have it open to the peg,e with production number BWT~68-064 and ~it's also NOON & PRATT

1 2 3 4 5 6 7 8 9 ii 12 13 14 15 16 17 18 19 2O 21 23 24 25 659 NANCY G. NAUGHTON CONFIDENTIAL numbered BBI-212. And it continues on to the next page which is in that same production sequence. Would you look a~ the 12 month moving average for Capri in Decem~ber '87? A. Okay. Q. What percentage is t~hat? A. .17. Q. Would you look in Ex~hibit 679 on page 93? And wha~ percentage is shown there for Capri in 19877 A. °2° Q. DO you co~sider those to be reasonably close? A. Yes. Q. Would you look in 1988 in the Dugan report, December 1988, 12 month m.oving average, what percentage is shown there? A. .5. Q. And would you look i:n Exhibit 679 for 1988, what percentage is show:n for Capri? A. .8. Q. Would you consider t~ose to be reasonably close? NOON & PRATT 682136673

1 2 3 4 5 6 7 9 i0 Ii 12 13 14 15 17 18 19 21 22 23 24 ~5 the time somewhat 650 NANCY G. NAUGHTON C0~FrDENTIAL Well, given that I ~on*t know about lag here, I mean it is groing to be overstated probably for females but this also has you growing and you've g[ot expansion steps in here so the i2 month mov'ing may be understated, I don't know. But t.his is probably somewhat overstated for females. Q. "This" being Exhibit 679, the switcher study? A. Switcher. Q. It's overstated for females? A. It might be. Again as I mentioned, I don't zun the switcher studies, I just look at the data. As far as directional, I don't report my share based on switcher and sa[y only Capri is 1.2 percent based on share of smo[kers. That's not how I used it. Q. You pointed ~his pag,e out to me to show the trend of smokers? A. Exactly. Q. And I'm trying to fiend out what the validity of those numbers are bec~ause you tell me they are reasonably close to real llfe shaEe. A. If yon look at the t~ezd, they went NOON & PRATT

2 3 4 5 6 7 9 I0 ii 12 13 14 15 17 18 19 2O 22 ~3 24 25 NANCY G. NAUGHTON Well, given that lag here, I mean 660 CO~?TDENTIAL I don't know about it is g~oing to be the time somewhat overstated probably for also has you growing steps in here so the understated, X don't females but this and you've g~ot expansion i2 month mowing may be know. But t.his is probably somewhat overstated for females. Q. "This" being Exhibit 679, the switcher study? A. Switcher. Q. It's overstated for females? A. It might be. Again as I mentioned, I don't run the switcher studies, the data. As far as directional, my share based on ewitcher and easy only 1.2 percent based on sha~e of smo[kers. not how I used it. Q. You pointed this pag,e OUt to show the treed of smokers? A. Exactly. Q. And I'm trying validity they are A. just look at don't report Capri is That's me to to fiend out what the Of those numbers are bec~ause you tell me reasonably close to real llfe share. If you look at the t~rend, they went NOON ~ PRATT

1 2 4 5 6 7 9 i0 ii 13 14 16 17 18 19 22 NANCY G. NAUGHTON - from .5 in December to almost share data. This went from .8 less than a share. Q. Why don't 661 CONFIDENTIAL .6. I mean, this to; -- maybe that's we continuLe on this exercise? If you look at the 12 month moving average in the Dugan report, Exhi.bit 696 for December 1989. A. Yes. Q. What percentage is t.hat? A. .57. Q. And what percentage is shown Exhibit 679 for Capri in 19897 A. LOOKS like .85 or so. Q. Isn't it I? A. Yes, it's .95 or som~ethin~. Q. About i? A. I mean, just eyeball.ins it. Q. I understand that. is close to 1 compared to .57 for :So .9 something the 12 month moving average? A. Right. Q. Are those reasonably close? A. No. Well, 6/10, 9/1(0, when you're looking at this -- and it's overstated for NOON & PRATT 682136675

1 3 4 5 ? 8 9 i0 Ii 12 14 15 16 17 18 19 21 23 24 662 NANCY G. NAUGHTON - CONFIDENTIAL females. As far as trends, it's not absolute share in going from 5/10 to 6/10 roughly, or from 2/10 to 5/10. I mean, there's definitely the same trend and this is MSA which, you know, who k~ows about in terms of how you'~e running the 12 month moving changes from month t:o month; both of them are sort o~ shaky. I use t~is for trend and I think this is wha~ I said the l.ast time we looked a~ Q. And the trend in thi.s, Exhibit 679, the trend slope of ~hs line ~s fo~rever continuing upwards in tame, correct? at 1990. Q. forever, a txend form. MR. GOULD: Object. ion. It stops Where do you get foreve~r, counsel? The trend of the lin.e continues correct? By definition, isn't that what is? MR. GOULD: Objection. Compound THE WITNESS: NO. I don't it. I mean, this is a growth ~re:nd. That doesn't mean it's going to consensus -- I mean, to my mind, and we talked about that earlier as well, it doesn't say Capri and th,e acceptance of see NOON & PRATT

9 ii 12 13 14 15 16 17 18 19 22 23 24 25 NANCY G. NAUGHTON - CONFIDENTIAL Super Slims is taking over the mark by any means. It was Just a growth cur~le a positive indicator. BY MR. HINTZ: Q. So is your testimony about 663 there that was trend that Capri would have made the sales in the shaded area for Super Slims and mo mo~e in outyears, you don't have any understanding of what would happen in the later y~ars? A. I think we saw what we were looking at. In terms of the forecast, Cmpri would in fact over time flatten out as we hit that ceiling of sorts as far as acceptance of 17 millimeters in a marketplace. Q. And you also predict.ed in documents that Super Slims would expand the~ market, correct? We looked at those last time. A. That was a hypothesis that maybe that was an option, given their n.ame was Super slims and it was a product descriptor. Q. That was a prediction you made? That's the A. That was one theory. brand manager's job to do that. Q. To put forth the best theory they NOON & PRATT

1 2 3 4 5 6 7 8 9 l0 ii 12 13 14 15 16 17 18 19 20 21 23 25 had NANCY G. NAUGHTON - at the time? A. Yes, of course. 664 CONFIDENTIAL And as I recall, that was more key issues, Q. Let me report, BWT366-055, THat's Nielsen data, A. Yes. Q. And I believe can get is a December 1988 correct? A. February 1988. Q. Would you look at the 1988? What share is shown there?' Exhibit in 1988, A. Q. A. Q. things to consider. show you a pmge in the Dugan also numbered BBI-217. correct? Exhibit 696, A. the e~rliest date we share;~ is that There's nothing for 19817? That's correct. It's January, D~cember A. .61. Q. Would you look again~ back at 679, the graph from the slwitching the share is .8, correct.? study That's right. Are those reasonably close? NO. This is overstatsd. In 1989 the Dugan relport, what's the share for Capri there? And what was the dat,e, excuse me? NOON & PRATT

1 2 4 5 6 7 $ 9 I0 ii 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 NANCY G. NAUGMTON C0~[DENTIAL Q. December 1989. A, .61. December 1989 is .61. Q. And what -- I see t~ere's no December 1988 there. December 19887 A. Yes. Q. What's A. .56. Q. If it's any consolat~ion, ~ had wrong in my notes ~oo. Is .56 reasonably cl.ose to the switching s~udy .8 number? Do we need to ~o back to the December 19887 665 it A. NO, it's lower. Q. And the Dugan Neilse,n 1989 which you testified is .61, is that reasonably close to what we agreed w~s .9 something, or I? A. No, that's lower in the switcher. Q. And in the Dugan Nielsen data, Exhibit 696, for DecemDer 1990, wlhat's the share there? A. .59. Q. And is that reasonab~ly close to the .9 that is shown in Exhibi~ 679? A. No, that's lower. NOON & PRATT

1 3 5 6 7 9 10 ii 12 15 16 17 18 19 2O 21 22 23 24 ~5 NANCY G. MR. HINTZ: finished with that. NAUGHTON C0~FIDENTIAL Ccuhsel, we're 666 MR. GOULD: You don't want to show her any others? MR. HINTZ: No, I don't want to show you work product on other pmges. MR. GOULD: ~ presumed you were showing us exhibits. We don't h~ve them, counsel. BY MR. HINTZ: Would you turn to page 598 of Exhibit 679? This page represents~ and noB-menthol, correct? A. That's correct. Q. In terms of the comp, esition of the sample for this switching study? A. That's right. Q. So that's what those: percentages represent, percent of the overall sample, that is, Capri menthol or Capri non-menthol? A. That's correct. Q. What trend is indicated ~or the Capri non-menthol in this graph o~n page 598? Capri menthol NOON & PRATT

2 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 menthol in this graph? A. It's declining. Q. Starting in 1987, shown for Capri non-menthol? NANCY G. NAUGHTON - It looks pretty stea.dy. What trend is shown for A. About .I. Q. menthol? Ao Q. The A. Yes, Q. In 1988 non-menthol? A. menthol? A. Q. A. Q. non-menthol? A. About .3. Q. .3 or .4? And what's the share same? that's right. what's the s[hare A little over 2/10. And what's the share for About 6/10. About triple for men~hol? Yes. 1989, what's the shame 667 C0~FIDENTIAL a Capri wh.at's the share shown ~or Capri for Capri Capri shown for NOON & PRATT

1 2 3 4 5 6 7 8 9 10 ll 12 13 14 15 17 18 19 2O 21 22 23 24 25 non-menthol? A. A. Q. A. 0. NANCY G. Looks like And what's About .6. 1990, NAUGHTON CONFIDENTIAL .3 to me., Closer to the share fcr menthol? what's the sh~re for the shar~ ove~ .4. .5? .4, And what's A little Close to .5° Are those relative s~hares for menthol? 668 .4. representative of actual sales of! Capri during those years on a menthol/non-ment.hol comparison? A. I don't think we wer'e that skewed for menthol in actual sales. But that would go sort of hand in hand with, you kn.ow, potential female overstatement in this study, that there's more menthol use. I don't know if that would pan out Or no~ but that might be some sort of skew. Q. So for two of the gr~aphs we looked at, you hypothesized that it's du.e potentially to female overstatement in the swltclher studies? A. Yes. Again, I don't construct this and l'm not real familiar with wh,ere it NOON & PRATT

1 2 4 5 6 7 8 9 i0 iI 13 14 15 16 17 18 19 21 22 23 24 25 669 NANCY G. NAUGHTON - C0~FIDENTIAL overstates and where it understat~es, and I use switcher as a general trend indic~ator. I would not use this as necessarily what's happening to my menthol~non-menthol skew becau~se I could see what that's like in the market. Q. So why would you use: page 93 what the trend ~s? A. 0nly as a sort of in.dicator. I mean, we look at that and say, do. we have a problem with menthol, which is an indicator, which is the way I used this as f.ar as trends are concerned, you know, as an indicator of what is goins on. MR. HINTZ: As we ~aSreed, it's five o'clock. For everyone's ben,efit we should break un£il tomorrow at 9:30. (TIME NOTED: 5:00 P.M.) o0o to show NOON & PRATT

9 i0 ii 14 15 16 17 21 22 24 25 l 2 5 6 7 8 NANCY G. NAUGHTON STATE O~ NEW YORK ss: COUNTY 0F NEW YORK ) CON[FIDENTIAL 670 I, NANCY G. NAUGHTON', the witness herein, having read the foregoing testimony of the pa~es of this deposition do h.ereby certify it to be a true and correct transcri[pt, subject to if any, shown on the attached the corrections, pa~e. oOa NANCY G. NAU@HTON Subscribed and sworn to before me this day of 19__ NOON ~ PRATT

1 2 3 4 5 8 10 Ii 12 13 14 15 16 17 18 2O 21 23 24 25 NANCY G, STATE OF NEW YORK COUNTY OF NEW YORK I wish to make the the following reasons: PAGE LINE CEANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: CHANGE: REASON: NAUGHTON CONFIDENTIAL Pg__of__Pgs followimg changes, for 671 NOON & PRATT

1 3 5 6 8 9 i0 11 13 14 15 16 17 18 19 20 21 22 24 672. STATE OP NEW YORK ) COUNTY OF NEW YORK ) I, JOYCE G. ABELES, a Shorthand Reporter and Notary Public withim and for the State of New York, do hereby certify: That the witness whose deposition is hereinbefore set forth, was duly sworn and ~hat the within transcript is a true ~ecord of the testimony given by such witness. I further certify that I am not related to any of the parties to this action by blood or marriage and that I am i.n no way interested in the outcome of this matter. IN WETNESS WHEREOF, I have hereunto set my hand this 16th day ofSept~ember , 1992 . // / z' " NOON & PRATT

8 9 12 14 16 17 18 20 21 22 24 25 1 2 3 5 6 7 INDEX NANCY G. NAUGET0~ EXAMINATIONS CONDUCTED: By-Mr. Hintz By-Mr. Hintz Information requested NOON & PRATT PAGe: 463 540 6O3 673 LINE: ii i0 I0

l & 5 6 7 8 9 10 12 13 14 16 17 18 19 2O 2~ 23 24 NANCY G. NAUGHTO~ NO : 731 73~ 733 735 736 DESCHIPTION: Document entitled "Strategic Advertising Campaigns" 3rd 1990 by Don E. Schultz Document bearing Bates NOS. BWT308-99-196 Document bearing Bakes Nos. BWT308-197-303 Document beariug Bates Nos. BWTSOe-304-392 Document bearing Bates Nos. BWT308-593-420 and BWT363-001-031 Document bearing Bates Nos. BWT316-1708-15 NOON & PRATT edition 674 PAGE; 473 486 487 487 50O

2 3 4 5 NO : 6 737 7 8 9 738 I0 12 739 13 14 15 740 16 17 18 741 19 2O 21 742 22 23 24 743 25 EXHIBIT INDEX NANCY G. NAUGHTON DESCRIPTION: Document bearing Bates Nos. BWT324-0143-145 Document bearing Bates Nos. BWT324-02-041 Document bearing Bates NOS. BWT316-1614-6~4 Document bearing Bates Nos. BWT316-0522-36 Document bearing Bates NoS. BWT316-~U21-722 Document bearing Bates NO. BWT316-1823 Document bearing Bates No. BWT316-1817 675 PAGE: 502 506 531 587 596 598 605 NOON & PRATT

1 2 3 4 5 6 I0 ii 12 13 14 15 16 17 18 19 21 23 24 25 EXHIBIT INDEX NANCY G. NAUGHT0~ NO: 744 745 746 747 748 749 750 DESCRIPTION: Document bearing Bates No, BWT316-1809 Document bearing Bates Nos. BWT316-2419-26 Document bearing Bates Nos. BWT316-1841-43 Document bearing Bates Nos. BWT316-258Z-88 Document bearing Bates Nos, BWT316-2267-69 Document bearing Bates Nos. BWT316-2600-02 Document bearing Bates Nos. BWTSI6-1818-20 676 PAGE: 6O5 608 64O 643 645 647 648 NOON & PRATT 682 .36690

l 2 4 5 7 8 9 I0 ii 12 14 15 16 17 18 2O 21 22 NO: 751 EXHIBIT INDEX NANCY G. NAUGHTON DESCRIPTION: Document bearing Bates NO. BWT316-2529 NOON & PRATT 677 PAGE: 649