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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