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PHILIP MORRIS MANAGEMENT CORP. INTER-OFFICE CORRESPONDENCE P.O. BOX 26583, RICHMOND, VA 23261-6583 TO: Steve Parrish .~/ Craig Fuller FROM: Clare Purcell RE: National Smokers Alliance DATE: June 14, 1994 Attached is an Operating Plan and Budget for the second half of 1994 for the NSA. Please note that the bulk of the line items are tied to the estimated membership growth. As the NSA seems to be outpacing initial expectations on its membership growth, we may want to revisit the budget figures in a few months. CCP/dr Attachment

:' " NATIONAL SMOKERSAI,I JANCE June 9, 1994 Thomas Humber President & CEO RECEIVED LEGAL Ms. Claire Purcell Legal Assistant Philip Morris, U.S.A. P.O. Box 26583 Richmond, VA 23261-6583 ......... Dear Claire: Enclosed is the Operating Plan and Budget for the National Smokers Alliance for the second half of 1994. Please note the following regarding the budget: * Approximately, half the line items are directly tied to the size of the membership. Every single member adds cost which ripples down the line from fulfillment through newsletter to mobilization. At current rate, we are recruiting 30,000 new members a week. For every one of those, we must immediately book an initial cost of $5.00 which remains our nominal average. To maintain the level of commitment and service we must have from our recruiters and fulfillment suppliers, we are paying as fast as logistically possible -- generally within i0 days. The budget assumes a total of 600,000 new members for the period, which also assumes that the current rate suffers some diminishing returns. Frankly, that's not a bet I would take right now. * Legal costs do not include the implications of becoming a plaintiff in any potential litigation. * Advertising costs assume no more than some highly specialized, highly targeted test efforts in reasonably inexpensive media. * We are rapidly and radically reducing our dependence on Burson-Marsteller and seeking the most cost efficient suppliers, but it will be next year before ! can accurately maintain that we are at absolute cost effectiveness. For example, we are developing a plan to bring our Hotline operation in-house, which will result in gigantic cost savings over the long term, but will require initial investments in space and equipment. Gina and I will be delighted to discuss details of both the plan and the budget with you at your earliest convenience. Best Personal Regards, 901 N. Washington Street Suite 400 Alexandria, VA 22314 Tel, 703,739.1324 Fax 703.739,1328

NSA Operating Budget July 1, 1994 - December 31, 1994 I CATEGORY OPERATIONS 624,600 Payroll Consultants Legal G&A Relocation Board of Advisors Occupancy Travel MEMBERSHIP RECRUITMENT Feet on the Street Other List Processing -96"0;800 20o,ooo 113,5oo 1~0,000 267,500 ~,5o0 90,000 5o0,00o' 132,000 300,000 TOTAL 2,444,90C 3,932,000 Fulfillment MEMBERSHIP COMMUNICATIONS .... 1,915,500 Hotline 275,000 Newsletter 1,640,500 100,000 500,000 MEDIA Ad Development Ad Placement Board/Speakers 100,000 Board Media Training 120,000 MOBILIZATION Direct Mail Telemarketing 45~,000~ 200~000 200,000 1,500,000 MATERIALS Research Promotional Materials 820,000 650,000 1,700,000 POLITICAL ACTIVITIES ~ 1,00~,000 1,000,000 TOTAL 12,46~,400 12,462,400

Operating Plan National Smokers Alliance July 1, 1994 - December 31, 1994 Objectives • Build membership to at least 500,000 Educate, inoculate and mobilize membership Establish media awareness Educate, media train and activate Board of Advisors Develop communications and public affairs programs Build ally communications Expand contributor base Engage in highly selective, targeted political activity Test membership income generation

Membership Recruitment • Expand Feet On The Street to at least 1/3 of the U.S., as measured by adult smoker population. Subject to cooperation, work with other manufacturers to recruit from company-established smokers' rights groups, data bases and 800 consumer numbers. Using grower organization support in ne~vsletters, NSA executive meetings with grower groups, NSA Membership HotIine and Feet On The Street operatives at tobacco raIIies, recruit individual tobacco growers to join NSA. This has three purposes: NSA membership numbers, reinforcement of political ally bases and demonstration of NSA as an important new voice in the fight. Test, through highly selective use of advertising, phones, mail, catalogs, the ability to recruit a desirable, upper-middle-class membership base from the customer lists of Retail Tobacco Dealers of America. Test ability to recruit through cooperation with organized groups of sportsmen, which have higher than average smoker demographics. Test member-get-a-member approaches. Seek access to vendor companies' employees for membership (e.g. Kimberly Clark) • Develop point of purchase program

Educate, Inoculate and Mobilize Membership • Go from bi-monthly to monthly newsletter schedule, with possible expansion from four to six pages. • Produce issue-specific brochures • Develop variety of"Do You Know" handouts for Feet On The Street program. • Selectively combine Feet On The Street recruitment with mobilization (as in Maryland, with letters to Labor Commissioner). • Analyze voter registration percentages and carefully test voter registration drives. • Develop turnkey kits for activists. • Develop Spanish language versions of basic materials.

Establish Media A~vareness • Mail tailored press kits to all radio talk shows. • Op-ed distributions. • Letters to the Editor. • Mail tailored press kits to major television news and public affairs show producers. • Make selective editorial board visits, where NSA membership strength and/or issue provides reasonable access. • Continue Althaus, Humber media interviews.

Educate and activate Board of Advisors • Expand flow of informational materials (articles, testimony, issues analysis, etc.). • Conduct (with scientific support) ETS briefing for selected members. • Schedule 4-6 regional media trainings. • Selectively initiate board members into media activity. • Encourage board member op-ed placement program with staff support. • Seek media profiles of prominent board members.

Build Ally Communications • Tom Humber to personally visit with organized grower organizations and speak at major tobacco functions. • As appropriate, visit or write congressional and legislative supporters, providing information on NSA. • Test a variety of communications to foundations, think tanks, political institutions and other "rights" organizations. • Establish regular communications program to inform allies of NSA activity. • Encourage allies, particularly political officials, to call on NSA when smoking issues arise.

Expand Contributor Base Tom Humber to visit all cigarette manufacturer CEOs/public affairs executives. • Tom Humber and/or Bill Althaus to write, call, and, when appropriate, visit major industry suppliers. • Establish regular communications program to inform contributors of NSA activity (particularly nominal successes).