TSRT CON=TrVE COhMENTS
FEBRUARY 1"2
DOMESTIC
P" TP MORRIS V--End
199, Woo It 0,
Operating a-:
Doinestic lobacco 11.589
In't.-tionot (E-n-i )
Total Tobacco 23-.Uf-
Total operating k_W_ 56.4sa
Cq-i- Income:
ic Tobacco
0 A'aw
1.t.rmtioral 1.712
Total Tb- 6.520
Total operating In.- 10,051
Not Incoma froo Operations 4,291
Share E.-igs froa Op ... 1- 4.61
10,370 1
ILM
Z1.090 -13.0
51,169 -10.3
4.206
_L19-1, .14.3
r _ 2250
S.600
5,730 -15.1
3.W -21.2
3.a3 -21.1
-Ported -1 net Income for 1991 fail Ignifi.-L-,
despite PHI. substantial gain. in po,sting Inc-
due to h.rg..
rotated to on accounting change for -tiree
bonefits (ft% after tax charge of I&I bittion) and
The cozy. of r-amping It.
wo,towico food por.tions (S275 itLi- net .4,.r
t-). Craft General Foods fared the p-t of its
owrating companies.
W,iawid. cigarette volume in- 9 640 billim units
for the veer. for Philip Harris U.S.A., cigarette
~t~ rose
-!are... aort.- r. to 43.3%, up 1.1 share point. -
th. prior year. M,Lbml.
-11PILY to 220.7 billion -it., .
-r. it share was 25.8% for the year down 1---
26.0% in 1990 with Marlboro Medium achio~inq a
full year share of 1.1%. Its
1-,, q-,,*r *I,,,* ... 1.111. . ..hl,,,. . 29.!'-
nor* of 'the diLsfilmaL ..V-t up froa 26.1% in
1990. Phi Lip N ... is
InternationaLls cigarette Unit volume, including
U.S. e-orts, in odj~. 1.17.3 billion -its 1,,
1991, due p,i-riiy to
hi r ~iuao, in the Europeart Coo-nity. Eastom
Europe. I., is, Th. Middle East. JAW, Argentina "
Bro.R. Exports froa In.
Umitso States increased to 107 bittim Units, up
93% fzr the year.
N7 m%%t:rr, PH',s Exeuti- VP ,d financi.t Officer.
romerted to anatysts that estimated copit&L
spencling over tne 1991-1995 tim
I i S9 bi li m with 34% for tobacco. Growth in
)".ernotionet cigarette voluse wilt r.Wire adding
capacity in the U.S. and
Ir aid-February. PR wilt unveil Merit Uttim
notionativ, a now, tow-tar, Low nicotine
cigarette. P'. =.&r. te be aiming wit
each. D-io Do
Ut iss jWging fr- its W-tisiriq .is - ft.- and use
of -k tipping. Senior V1 N
. ..... Comes fr
- a V that an or.. t~- 09 ........ orit
U!,`.. comes in onty and be _-itbL- re ~-r .4
IPOO'-W
FJR NABISCO
Ove-ling R-
Tot.L Tobacco
Total Cipr.ting It-
Operstirig Companies, Inc-:1
Taut Tobacco
Total Oper.ting Incona
W Inc- (Loss)
Sh... E.-ing. (Loss)
y--Erd
199i IWO %
8.540 8,053 -6.0
14,989 13.879 -8.0
2,726 2.729 -0.1
3.543 3,426 .3.4
3" (429)
0.22 (1.11)
-80- -Htiz.lion of ,-rk and goodwill.
F.r 1991, RJR's int.-lionat -it ft~799'_' Qunit
-rib~,iom i,.,,.s,d 2", pri-,it,
riesuit of continued ~[-o 9sift In Europe. the
Miw:e East Johnston. 1h.i- -d CEO of 14. Totc ...
..... d
growth oppar-ities wo, Asia, E-qe, Eastern Eu-
(Poland, Hungary and Cl,chosLovskis), the former
USSR, Tyrk", ft.-.
or,. ...i-
Ur
BATCo document for Province of British Columbia 26
October 1999


Net Sales in the cl-tic tobacco unit for the full
year war. 111,W94 h.. he year before,
5-ic tobacco results reflected fawreole pricing
and raw material costs that were more then offset
by lower
'I use a, .' increased marketing expenditures. For
the fourth quarter, total interest apw%e fell to
%471 milijon from $676
million and S2.1 billion for the year -p-d 1. S3.0
billion in 1990. ouring the year, RJR paid off or
converted S4.3 billion
of debt. leaving . clebt of S14.4 bitLlon.
RJR als .itinjout -,i,-Lty,. short.' , fatter
Camel cigarette - made with . bland said to give .
--,her
smok .* Came I idea ~i I be sa d In box and be
available " full fl.vor ond Light.. Appeal Is said
to be to - over 30. Ads
will feature a pair of camets, similar to &the
Illues lllro~ crossed with thick n-kcl Movie
gangters," and are like those
used for Camel (Just . little latter).
LkMFRICAN BRANDS - American Tobacco reported
achieving Its first U.S. domestic unit volume I-
in ever . quarter
tentury. Its 1% Increase reauitd in . market share
Inc:resse to over 7% for the year compared with
6.3Z In 1990. U.S. t C.
r- and operating income rose 8% and 7%,
respectively. for the year.
P=NAnONAL
PFITT TP MORRIS
JIM - PH dwved Merit's advertising campaign to
image-lossad -Discover N*rit,O featuring
acti-riented sailing visuals and
has supported it heavily. PH has built several -
cv-door boards featuring a Ocut owt* Marlboro
cowboy rajoty three stories
high. They are ruviored to be La-hing Alpine
(~thot) in early 19`92 which would further
heighten an already wry competitive
Menthol segment. Noteworthy is the maintenance
level of pjpoort for Lark, whose sales were
relatively dull in 1"l due to be
first quarter price Inc ......
PH is rvoortedly having diffic,ulty hiring sales
repre-tives with total remaining at 4pproximsteLy
1,M. SCAT reports that
ON he$ stopped expanding their cclu~n contract
program mid con,tracted columns apparently will
stabilize at over one million,
;eprmm:irV r-Ahty 130,D00 stores under contract.
=7 also reports that PH's vending machine progrw
is budgeted to grow by
,000 mewnines in 1992 from 30,000 in 1991. tess
than a-icipxed. It -, this wilt allow BW to obtain
mwi,inat machines
and column contracts in quality locations, enh~ing
c-sil vending distributim.
Novemc,er year-to-date measured media spending
suggest. net PH'. spend! in measured media
declined 9% versus 1990 levels,
primarily due to lower reguLated advertising (GRP)
limits. However. measured media faits to measure
local TV advertising, many
radio -,ions and *specialty OON, where PH appears
to be investing heavily. Considering increased
00H, P-tion am
distrioxion costs, total PH's spending grew
signific-Ly in 1991.
Eurove and Rittmia - The It.Liw Ministry of Fi-
barred domestic sales of PH's Marlboro. Merit and
Muratri AffWss.dor frw
isid-Decemoer until mid-january as a sanctions for
ex-ive contraband sales of these brand.. PH is
estimated to have Lost
slop-i-ty $40 Million as -it as trade gcodwilL.
The brands which have benefited most from the
situation are principally
Camet, Marlboro Lights and, to a lesser degree,
Chesterfield and Lucky trike.
The tswrc~ of Marlboro Medim is -ed in Hot land
for the second half of 1992.
PH cLosac . deal with loshvinestorl; in December
1991 for the supply of il biltim cigarettes to the
former USSR. The deal
consists of I billion MarLborm at w estimated
price of Sig per thouLard " 10 billion Apolka/Sora
Ex-Nexico. Averag* price
of the tctsl deal is S9 per thousand and 9-12
Months crsdit terms. In addition, PH has agreed to
build production departnients in
Russian cigarette factories for the m-facturing of
various 69-tt. Label.. PH ffi.i.t. indicated at .
New T.rk analysis
meeting --.t they had shipped it 21 billion units
for 1991 and had been paid for half. No-ver, the
form of pay- ... no,
.1.-
T.ti. Aej,
Colortibia - Th. official cli-ibtcr for PH is
Aties Camercial. The original prices registered by
PV1 for imports are S170 for
Maribor. los OW S151.40 for Partim%ent and Merit.
The finat price to the constsher was, originally,
800 pesos a pack which was
reduce 1wo Months later to 620 pesos. Wly Maribor.
and Marlboro Lights were isported during the
quarter. PM is e"cted to
open a fuLLy-staffed office in Rog.t. in -Ly 1992.
pueno Rica - PH launched the 14s version of
Marlboro tights and provided heavy advertising
support at $1.10 per peck.
Ln
CD
GO
BATCo document for Province of British Columbia 25
October 1999


-3-
Middle Ea" - A recent --I by the Ch.i- of Eastern
Tobacco referred to the fact that in an attempt to
fulfill
supply of 11 DIM- ti.k. to the former USSR, Pm It
Isoping alternative sourcing. Eastern will benefit
by increasing
production of P14 brmnas from the current I.&
billion par year to double or triple that
quantity.
E TR NABISCO
JAM - RJR repoi-tecIty has been granted profit
relief in 1992 to be - aggreasive in marketing In
Japan. According to
-mm. they anticipate no profit for AJR 1,, 1992 In
Japan.
Salem continues to be RJR's key brand and I.
November ad . revised advertising uquign featuring
similar visual, but more
relaxing music wd the neit wAtmays you . . . ,
copy them. Seim was promoted heavily through
sponsorship of 6S.tm Sound
ExPress" conce"s, which rimceived strong TV
support outside of cigarette regulation limits.
This aggressive strategy is likely
to continue In 1992. RJR supported S&Lae Trim
Lights 100s and I-ched $atsm Lights 100s Box in
tat. 1991. Salm Trim Lights
1002 appeared to be tactically attacking Virginia
Slim. b.-. secii. support was rather ti.itd ~4 .1.
have been weak.
Smism Lights 100s tax appears to hsw been Launched
Into timited distribution solely to mintain TV
ach~rtising. Ain announced
plans to launch Satam Parent XS 9- 03.0) in
February 1992.
Camet has begun a new campaign featuring the aim
Sisixtho (also known as NOLd im,O 8Smoky JW)
character in & Leather jacket
and blue is- familiar in the U.S. Th. opy tat.
*Let's Be Caami.n The cammign, supporting Camel
Lights Box. has recently
been observed In magazines, PM and in ODII as
wall. Use of TV in support of C-at Lfghts Box 1.
very -likely b..-. it. three
year television ~wind-6 expired this month. Unless
a new C~aecl style is launched, expectations sr.
for C-L to chiev. Tv
media exposure via - orship activity. With Camel.
competition, Is anticipated to significantly
increase for young adult mie
mocker..
Based On Havemorr year-to-date masured media
reports, RJR's soording increased 5% in 1991.
excluding OD. and the additional
significant mdfa support for $aimii spormorship
activity. liassured mecli. support was primarily
focused m Sales and Vantage.
However, Vantage soond was reduced significantly
in the sec-d half of 1991, due to poor sales
perf-e.
,Eurove and Middle ri" - Tabsc.lgra is in
discussioris with RJR with the reported intent to
form . joint
RJR received appr-at for a ei-dacturing venture in
Turkey csimitar to the one receritty annour,ced by
Pil). Construction should
be cawieTed in 18 months. Hatufacturing of
cigarettes itL begin 1. tat. 1993, with producti-
eventually re..hi~g 10 billi-
-t(Y. RJR indicated plans to invest over SIDO
million ill Turke, over the next 10 ". -
Latin Amerim - During [he last quarter of 1991
there have been two mjor activities in Puerto
Ric.: 1) the L.unc~ of 11
-ISi- Of Wirst-, Winlt.~ Lights, Winst- Ultra
Lights, Sales Lights, Camel and Camet Lights, and
2) heavy support for the
14's at 31.25 per pack.
JAPAN TOBACCO INC.
JARAn - JTI's new product activity slowed down if%
the fourth quarter of 1991. with the addition Of
-ftSfUt Bo. and Low Tar
styles, JTI was able to achieve in-market volume
growth in 1991 versus 1990. This is noteworthy in
light of their Box pricing,
which is T a pramium C240 Yen) ratativir to the
aminstream domestic price segment C220 Yen). As
JTI attains more Box capacity
they will artimat to Imp"k the growth of imports,
especialty if they Introduce more Box styte,s at
the mainstream price. JTJ
continues to sumoort its key brands, at coqwtftiw
Levels (NiLd Seven, Seve,t Stars, Caster, Cbin,
Sometime). u.-Ce, 1991
y,.r-t.-d.,. --ad media spend ... up 1Z -,a- 1990,
with increased me of radio, newspapers and
magazines offsetting the
regulated decline of television usage.
Thailand - The intrcdi~ctiori of Japan Tobacco
Inc.'s Cabin 85 and Mild Seven Lights raised JT111
share of imported brand sales
from 3.4% in N- to 5.7% in December in Thai Land.
/v,jt.rt-92..p
un
BATCo document for Province of British Columbia 25
October 1999