1987 Annual Report
rQ
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C-11,
BAT lHatsmin P.LC. MINNESOTA Dvasffm Copy - PwwcED PUr=ANT To VILD. OF
CONSENT JUDGMENT DATED S/M IN SrATE OF UNNEsam, Er AL v. Pmxv Nbaga Er CASE No. CI-94-OUS
FIQ
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1-4
B.A.T lNousTREs mr. - MmmmA DEposrroRv Copy - PROOLIcED PURSUANT To I VILD. oF
CONSENT JUDGMENT DATED 54196 IN STATE OF ANAMSOTA, ET AL v. PHxp Akgmm ET CAsE No. CI-944MS
84 TUS /tic. Financial Highlights
%fitt-
For the Year
lqu
1964
1995
M6
1987
% Chan@,
CGR%l
sah. from
OmmOnvin: 01@rvtim-
.414.11413
*417.6
F53*7
14SAW
MAU
hl,
Set
Olwrmtioz Inootor fr4an
C.Atiouing
4,22
4 676
t 702
9"
S Bob
51,
917C
Pr@tax lon-me fr--m
C@Nlioulft; 01-rati.-n.
4-14
$ 544t
I.L 36'
Ima-mma, (f.m
Continuing Oltermtkon*
z .13:1
8 2W
S 329
6 364
$ 4"
Nq
19%
Net Inn.m,
.4 239
F 314
S 164
$ 394
$ 466
181,
16%
C@nlinuinc (11wratin,
;W-f
Nq
.1yrr
33%
43cc
30`1,
10%
capital EX;Wndilurv,
S ISK)
f -494
* 294
f 231
8 248
7%
QC,omj%suxd Growth Rate
Lf
Sohn/ft. Ll
Opremaillf
@4LS
COW-W
laremeftmm
Operations
comamebw
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laftow/rom,
coatimulair
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BJLT IMJMIES P.LC. MMEWA DOMffORY COPY PWWCrcD PUMWAKT To VILD. OF
Comm JuDotam Dan 516M Im SrATE oF Afimmsom ET AL v. Pmxp Atagm, CAsE No. CI-944M5
Chief Executive Officer's Statement
While Brown & Williamson
B& W had an outil2nding 1987.
Tobacco Corporation IM11) hail
Although the domestic cigarette
an outstanding year with operatin;
market continued to decline. 1113`9
income advancing 14f/'e. retail and
wai@ able to achieve revord s*lr* an4;
paper both regiotrred drelinei for
operating income of @2.5 billion and
the year. Thi@ performance is
S613 million. respecti%ely. A key
disappointing. lout it also highliphii;
contributor to growth in 1987. we,
a key oirrngth of BATUS: diver-
the lons-awitited liberalization of
sity. BATUS conAists of major
import; in the Japancor market.
compunir
in the tobacro. paper
B&IR'wei. prepared for the change
and retailing industries. and this
sind aggressively marketed its
diversity continues to provide hal-
brandio. giving M; products a head-
ance and strady earnings growth.
start. Bv she end of 1987. B&W
hail achi eved a 23t/-c share of the
uring 1987. BATUS once
Riflifights of Operatiom
import f egment in Japan.
again achieved record
In many respects. 1987. was a
Total rigarette volume in-
financial results while
Year of positioning for the future.
errs" 1147c. due to increased
p sipificant progress in
Substantial investments were made
international sales. offset by a
positioning our existing businesses
in each of our businesses and a
decline in domestic market share.
for future Frowth and develop-
renewed emphasit, was placed an
C-4PRI. a unique ultro-slim.
ment. Investments made during
being a leader in terms of quality
women's-oriented cigarette. was
the your will build on current
and service. Along with theme
succesisfully introduced with volume
strengths. making BATUS compa-
progroins. which were designed to
in 1987 reaching one billion units.
nies more productive. giving them
build a competitive edge. we were
a competitive edge.
also able to improve our capital
Quality Issues
Consollidated sales from cost-
structure. Cash flow, including
A@pleton Papers Inc. faced a
tinuing operations wen $5.8
dw sale of certain accounts rfteiv-
difficult and challenging year. The
billion in 1987. rising approxi-
able. rose to 8745 million and
growth rate of carbonlas paper in
mately 6% from 1986. Operating
BATVF overall delim"uity
the Visited States slowed and coin-
income grew by 5% to $886 miJ-
ratio was subptantially reduce@.
cided with renewed efforo bv coin-
%on. anotkwr record. More im-
This financial position enables as
petitors to expand sales. In ihil
-pressively. net income from con.
to move forward with the acquisi-
extremely competitive environment.
tinuing operations rose 28v,-v to
tion of a fourth business leg.
Appleton*s sales rose 8% above
S466 million. benefiting from lower
financial services. In that vein. it
1986. but operating income declined
income tax rates and higher inter-
is important so point out that aince
6%. Mestowhile.Appleton remains
est income resulting from Signifi-
the beginning of 1988, B.ALTUS he%
the world's largest producer of car-
cantly higher cash flow. Income
been actively engaged in the
bonless paper and has adopted
from continuing operations hai,
proposed acquisition of farmers
strategic* addressing quality.
grown by 19'o-t per year since 1983.
Group. Inc.. one of the largest
customer service and low-cost
a performance in which we take
property and casualty insurance
production designed to insure
great pride.
groupi in the United States. We
continued growth and sucens.
However. we are not as
believe further diversification is an
The BATUS Retail Division
gratifird with the breadth of
important step in our continued
wap affected by the poor domestic
performance among our various
growth. We wiR keep you in.
consumer economy. which worsened
operating businesses for 1987.
formed ai, events unfold.
following the Octolwr stock market
B.A.T INDUSTRIES P.L.C. MONOWA DEpoUrM Copy pM)M=o Pw=ANT To VILD. OF
CommT itioaWNT DATED SIM INSTATE OF ANAMSOTA, ETAL V. FIN@P AkRiM, ETA CAM140-C1'94*M5
BATE S Inc.
dreliter. Di"Ivlwiintingpslr@ and
marlirt, in which it participate..
Carl J. Hrpr. E%Peuti%e Vice
intensified eumlortiti%e preempurri.
Briouner-' 198'. retult. %err noot
Preeident of Bropun & Willism.,oon
particularly during the Christrun-
- nil to enpertatiuns. lout u numlorr
TiAoscro Corpioratiton us,, alo-
mawon. orroulted in increased
of otel), hvvr lore" taken to im-
pointed April 1. 1988. Senior Vire
markdown, and lotoorr marpow.
prove proAprorip for thit buAn"s.
President and Chief Financial
Sak, Fifth Avenue and
Thimhlr,* loorrformatirr Wa,
Offirer and a member of the
Mar-hall Firld'o *al" perform-
d6slolmintirt.,
BATUS Board anti Executive
once during 1987. remained in the
Committee.
topp quartile *of major competitors
Economic Outlook
Arthur C. Martinez. oo list
with sale- rising by. 5"t and 9%.
Thr United Stalep economy
joined BATU5 in January 1987.
mpertively. lvey*s and Brr-
continurt to groot in what it, now
st@ Senior Vice President and a
une"* sales fell otbars of 1986
the longest peacetime expansion in
memloorr of the Executive Commit-
lerelo. Total BATUS retail sales
this century. but the rate of
ter unit Board of Directors u as. in
inerraved 41% but operating profit
growth haf diminished. Thr
March of 1988. Oven responsibility
fell -.12h million belou 1986 levelo.
husin", environment is likely too
for all BATUS Re-tail companies.
reflecting door generally soft retail
hr diffkult in 1998 Wcause con-
John MrDunough. Senior Vice
market. While 1987 was a disap-
sumer #pending it expected to
President of BATUS has been
painting year for retailing in
remain soft and may not be offset
named Executive Vice President of
general. we have taken strategic
by increased industrial activity.
Brown & Williamson Tobacco
ottepo to improve the position of
We have planned each of our
Corporation and a member of the
our retail companies.
businesses on the basis of a slow-
Board and Executive Committee.
growth economy in 1988. We
Donald R. Nlidkiff. President
Ro" Expansion
believe " is the most prudent
of Ivey's. was appointed Cldef
Saks Flfth Avenue announced
course of action. enabling us to
Executive Officer of the 24-itore
a plan of strategic development
continue our record of strong
BATUS unit as port of a manage-
including inverunerst. spending of
financial performance.
ment transition occasioned by the
SM million over the next five
We plan to further our diver-
planned retirement of Joint# H.
years for new units and renova-
sification by entering the financial
Shaw.
tionso(exisdrigotom. Marshall
services industry through a major
Finally. and most impor-
Field'# abo announced major
acquisition. We see this industry
tantly. I would like to thank the
irestment plans. focusing on
as a major growth vehicle for us
40.000 emplovers, of the BATUS
existing store locations. The
over the long tem.
companies who have contributed
Width toftheplanisthe$110
to our succe s. The coming year
million State Street flairship store
Mansipment Chatip"
will be challenging. but I am
renovation which urill he the single
Barry D. Bromley. Senior
confident it can lie rewarding. I
largest in the history of U.S.
Vice President and a member of
am sure I speak for all BAMS
retailing.
the Executive Committer and
employ"s when I say we are up to
lvev*t experienced an ex.
Board of Directors. was appointed
the challenge.
trouroely tough year as the convoli-
Chairman of British-American
dadon of the Florida and Carohno
divisionp proved to be a greater
Tobarru Cie.. the B.A.T operating
group respinisiblor for tobarru
disruption to the business than
intereso in over 40 countrirz. In
planned. The consolidation iii, now
connection with that appointment.
Henry F. Fr4on
completed. and Ivory*o, should lw
Mr. Bromley hap relinquished hip
Preoncloont &
able to take advantage of the
BATUS responsibiliti".
Chief Executive Officer
B.&T INDUMIES P.LC. MINNESOTA DVIOSITORY COPY P"OWCO PU"WAuT To VIIA OF
CONSENT JUDOWN'T oaw swu im STATE OF AWKSOTA ET AL V. PmLr AJORRM ET A CASE NO. C14M'M5
BA TL I W;.- Bts,ine.- Rej icir
roar" & Williatinson
To6wileco Corporation
B
set" ro@r Sq, to $2.3
billion and operatin; income
int-reaswd 14% to a new high of
merM00million. 8&-'K-rr-
mair"41 in the numlwr three
,Q@K
position in the U.S. cipt-t-Ite
induan. Domeo,tirmorketAire
v
fell v* en tenth# of a 1wreentag
point to 11%. while total indu*tr%
sk.
ciprettr volume in the U.S. in
1987 woo dowrl L%. B&11**s
internationid volume more than
doubled.
The join in opersting profit
woo due to higher domestic
cigarette price# and the silmifi-
candy improved international
)t
contribution. reduced by hither
I
marketing investments and lower
domestic unit volume.
Major investments in key
components of its business helped
Brown & Willismson Tobacco
Corporation maintain its profit-
able and competitive positions in
the domestic and internstionall
marketplaces. During 1987.
B&I'increased its investmento in
technology necessary for the
development and introduction of
nrw products, and gove particu-
ter emphasis to quality in all its
A KEATrioaronvo
operations. The company bol-
.4joy. hie
oterrd marketing and sales efforts
)ape. h,- 11-ri
in support of strategic established
& wa--es-M
brands. and applied additional
So fak.-W-r., W
r"Sureft to the expansion of
Shp hotog..
ovrrWe&* "Ira.
C:
4
B.A.T INDLOWMIES P.LC. MWNUWA DEP=TORY COPY PROD=D PURWMT To VILD. OF
CoNsENT Juclatzmr DATEo 5I&W iN STATE oF AfmwsoTA4 Er AL V. PHLP MORRO, ErA CASENO.C14M4=5
V Brown & Williamson Tobacco Corporatio"
Established Brands
Conpumrr preferenrei, for
Tw.,..,.
Sustaining the poLitiosn@ of io
prioilucto offering hoth quality anti
yol"
"tabliohed lorand, were among
value have created additional
1 U
MA"i, top prWritirv in 198 --
oplinrtuniti" fior B& W*s@ eistah-
U
intenoifird marketing ant] i6airs,
lished brando group.
pr4agranso %pre introducril its key
In 1987. B&W launched a
murketsi throughout the vo)tjntrv
lbilot program to gouge consumer
that rmphaAzrtl the quality and
respowe to offeringf of additional
value that B&U' lorandi offer.
value on the BELAIR. RALEIGH
Amon; the ramjwizn@ for
and VICEROY brandi. Price
e4tublished bran(b wa@ a program
discount# at the point of purchaor
J4
for KOOL. MU"s flagihip
%pre particularly well received by
83
hrand. and the fourth bem-setling
purchaservi of BELUR and
brand in the U
RALEIGH. who also receive park
To--
With menthol brand con
and carton gift coupons redeem-
3
sumers showing increased prefer-
able for quality merchandisse.
lot
ence for Issuer -tar - product%,.
WK, also focused on revital.
B&Ill'introduced the -KOOL and
izing the internationally popular
Mild Toda@ - campaign for its
BARCLAY brand and unveiled an
KOOL Mild# styles. This high-
-ultra-alim- style in the fall of
%ifibility campaign. focused in
1987. BARCUY Lights Men
regions; with stronF concentra-
Thins are available in a ilip-open
tions of menthol iunaker*. consists
box in both menthol and non-
of advertising u4n; a wide
menthol styles.
variety of media. The campaign
83
is supported by unique promo-
tion* designed to communicate
robwro
directly with consumers at the
op"vt-f
ussint. a( purchasoe.
As
Based an consumer rr*ponsr
its the IKOOL and Mild Today-
campaign. B&Wcontinues to
expand the program. along with
marketing and sales atupport for
the KOOL parent brand.
5
PQ
UM
r@-j
B.A.T IMSTRIES P.LC. MMEWA DEPOSITORY COPY - PMMM NIMANT TO VILD- OF
CONSENT JUDQWNT DATED SIM *4 STATE OF A*WZSOTA, ET AL. V. PHLIP MOW& ET CASE No. Cl-944MG
BATUS 1987 Business Review
New Products
WRNE"o commitment ti.4.
fering von@umrro quality and in-
novative prioducts Ir4l to ex-
panded marketing of the ultra.
stint CAPRI cigarettes during
IM. Consumer troted in
Louisiana rarlv in 1987. bv vear-
end CAPRI WsA available in
KOM @07D@t
areas of the countr% containing
approximately 45% of cigarette
share potential and attained an
average market share of .731NY in
those markets.
Innovative in both design
and packaging. and menufac-
"u"t
tured to the highest degree of
i. kiw
quality. CAPRI offers H&W a
mpp.md.iih -
viable entry into growing se;-
ments of the market. and re-
spondit to the preferences of
adult female smokers for box-
style and ultra-length products.
The slims segment represents
about 6% of total retail cigarette
sales in the U.S.
Es:panded domestic distri-
bution or CAPRI is planned for
1988. and B&W is positioning
CAPRI in select international
markets.
V SUL 102
B.A.T IMKWMS P.LC. MWNESOTA DEPOSITORY COPY PRODUCED PURWMT TO V11.1). OF
CoNsENT JummPer DATED SINN w SrATE OF Aftwsom Er AL v. Pmxp Akgw, ET CASE NO. C14M-M5
Brown & 1; illiamson Tobacco Corporation
Value Brands
late in 198'. began test market-
B& It' remained strongly pa-
ing an extension of RICHL46"ID
sitioned in the fast-growing value-
as a 20's offering at a generic
for-monry segment with a 22.5%
price. RICHLO"D 420*j are
market share - a category which
being marketed in four styles -
gained 1.3 percentage points in
Kings. Light Kings. 100's and
market share in 198T. and repre-
Light 1OVS.
sented 10.2% of total cigarette
in4lu.try sales,
Internalional
B&A, competes in the
B&W*s international busi-
generic category through sales of
ness grew drams fically in 198 4'
MM-branded black and whites
- more than doubling in unit
and the -GPC-Approved- brand.
volume - and produced a
The company also markets
silmilicant increase in operating
FALCON for consumers who
income. despite major marketing
prefer -branded- products at a
investments.
generic price. and RICHL ND in
Growth in international
a 25-for-dw-price-of-20 pack.
business was largely the residt of
F
Levels of product shipments
B&W*s efforts to increase
remained high in the value cate-
market share where the com-
gory. although 1987. sales of ge-
pony already had a presence.
nerics declined slightly. Industry
and the seizing of opportunities
shipments of 25's indicate that
in new markets. particularly in
segment may be nearing its peak.
'
Asia and the 36ddle East.
In contrast.
industry shipments
The liberalization of to.
of braniled products selling at
bacco trade policies in Japan
generic prices grew by nearly two
and Taiwan was smosif those op-
percentage points in 198'..
portunifin. MW anticipated
With an eve on increasing its
participation in the market for
branded-valur. products. R&W.
Z
4 1b:
I C ;17 1 LIO Z
B.A.T IMUSM19S P.L.C. MINNEWTA Dposffm Copy pRmcEo Puimmr To VILD. OF
CO"Kw iuoQmNr DAYaD SAWN IN SrATE OF &ONNIESOrA, Er AL._V. pHxAp Afogm& Er AL, CAsE No. C14"U5
HAT[ S 198-. Business Re rivir
he 1, S, isu-
parts to thar cauntrie6 and.
after expanding its distribution
17
channels. quickly emshliolied its
roducts amon
th
l
adi
.
r
e
ng
p
g
imporsed brands.
q
In the second quarter isf
7
198-.. KENT Milds wa@ intro-
need in Japan. jnining the
:
]ready familiar KENT brand
the". KENT Mildt soon 6-came
the fattest-growing U. 1. import in
Japan - so popular that B&NI,
had to initially airlift site product
to Japan in order to meet con-
A
sumrr demand.
B&V* had positioned
I---", wosqf, .."i
LUCKY STRIKE Charcoal in
@Irwp@ionqs,di*v.
Japan a year earlier. and that
9'. od@
product continued to show good
G-ro..
growth in 1987.
P"i-fanar@.
Additonall market expansion
in Germany. Switzerland. Bel-
opportunities in the For East are
tium and Holland. World tra%el-
expected as trade discussions
er, al,s- roulil lju% CAPRI at
continue with the government of
dut%-frew ehoop,
Korea.
BAU A-r-r--.-ntinu-l
Marketing and inks strate-
From Ih its the issl@rujtinnssl
Oita paid dividends in other parts
mark@i. and hu. tuappoil -trvi-
of the world as well. including
gir. a) III---
Europe and the Middle East.
tuniti-
where BARCLkY and VICEROY
showed significant volume pins.
CAPRI made fts debut in the
international marketplace. *riling
@A
gi.& T IMXWrRMS p.LC. MONOWA DV*8ffORy Copy PWMED ftMANT To VILEL OF
CO"Kw Juawamr DATSO MW IN STATE OF A(IMNSOTA, ET AL. V. PHX1P MORROX, Er CASE No. CI-944MB
,4 ffi.,@h -Aw,
iW1.6.1FA. .bw.t
8-4 C'Uh-'.
H"I.. r_h@j
9-Q,
introduction of the uniquely
stylet CAPRI brand. At the
7
same time. attention to quality
led to investment in a new cold
storage facility at the company'i
cigarette manufacturing plant in
Macon. Georgia.
Employ througliout the
fts
00-1
company at B&W headquar-
ttrs in Louisville. Kentucky. at
facilities in Wilson and Winston-
Emphasis on Quality
Salem. North Carolina. and
B&W*s emphasis on quality
Macon. Georgia. and in sales as-
extended beyond its products to
signmento in the United States
a 4-1ra-adt
include administration and
and abroad - remIptize the
operation* compeny-wide. From
importance of quality to O&W's
leaf buying to data proceti,ing.
success and p-owth.
B&W channeled retources to
create rVater employ" Swart-
nefi# of the Agnificance nf quality
rjl,.
to the roviol total consumer
wiffeetion with its products.
The qualio. improvement
pnwroo pia.#41 a key role in the
suver-4fid &velopment and
c::
Brown Williamson Tobacco Corporation
BAT INMOMIE11 P.LC. MINNESOTA DONWITORY COPY PRMCED PUMANT TO V"'D' OF
Comm JucamEmr DATEo 54ft IN STATE OF UNAIESOTA, ET AL V. PHLV UORRS IT CAsE No. C14M4M5
BATIS 11OV.- Hit-itse- Rvrwi4
Ppleta" Papers letc.
A
o-ontinned it4 leadership
l,-1tiw3 in ths- rarloonle.-
pwjwr market in IU3-. T.. main-
d
tain the rontloan@ *@ current
,
po,,ititm and a.,ure it@ future
lvadrr4iils. Appleton made @uls.
ittantial effoort@ its improve quality
at uU Irt el. 4the "ranization.
Z;Aa
Slorrifiv ottrair-pi" fsecu.-ed on im.
pro%ed rctrarrh eifi,rts. #-one-
a puter capabilhi". cunnnerr
service and manufacturina
I
'2alro inerra,tA in 1997 for
the 1011i consecutive %o-&r to S779
million. Price inert a*@6" and
moderate- unit volume growth
contributed to the increase in
tiales.
Appleton'* operating income
of Q126 million decLined 6% com-
pared to 1986. This decLize
Mawed five conetecutive years of
AN,
increased operating income.
whichhad averapd approxi-
enstely 20% per year. A number
of factors estontributed to lower
profito. Pulp coAtt rose substan-
tialk anti competitive presoures
ineremord. inhilkitine the ability to)
7
1
d,, -i-q-,
-4 Voossostolwyaom.,
lei
-4
-J
LAJ IMUMES P.LC. MWMWA OMWORY COPY - PRMCED PURSUANT To VILD. OF
CONSENT JUOQWNT DATIED 5/8M IN STATE OF MMMSOTA, Er AL v. Pwp MORRIS;, Er CASE NO. C14W4M5
c_ Applefoll
rai- jarive-. Its wl,liti.on. 4,ne.
ami rplata-d
V-
Unit . ..... t. a.."vialed %illi vapat.-
e-Impnwol %oa- -turil-11 JUHH; V187
rn
it.% r%pan.i"n and pf-4,411JI-1 ins-
at tit,- Apph,wn. 11
723
insiput-trel
i-atinz- plum. Th,- new .-,,jter. -vi
6.39
-urning-
bw in 1988. %.ill nmrv
than tit tupan!'- ther-
inal paper I-r-horti,m cupavit
Tit,- qualit% -of tit,- NC R
Tit,- equippin;
Pip--r brand
Ile-eirrh Center %aa.
pularr. the vftnsjoan@ % prineur%
r-nupleted during 11087. In addi-
1-r-luet. ti-k a 4--nificant iiiep
titan t-- the baAv and
C.-mard. E-tabli-Iihig
applied re-vurrh fttnvti#,n-. the
-in-lo higher -tandard, (air raj-
renter 11.0111- a #be- air-
umter.. Appletton Palwr-* rr-
%astral gas pullo anti pulter re-rart-h.
-a-wro-bef-A detr6jord metimil, is,
Thu.. th, favilit % pnoviole. the
11111111`-V%@ the lormitirt', -hoert
rapabili1% it. 111jrur all a,pect. of
A 134
aplorarance. v,tjo! inuaspr anti
pajorr re-varch in@itrin; that
printin; prr@p 1,erformuncr.
Appleton rensain, a
Thoo-te impni,ormento. combined
leader.
with enhativral vu,,tonst-r so-g-vi"
Further Inviorrin; the
anti the rarpooitiussin; of carlion-
compan! 'o re-rurrh anti develcap-
levao jor(Niurt, through jorowfut-
Meng V11116gircring effort,o during
differentiati.on otragivi:irii. srv
1987 %a, the adslition of a new Dr-
117
ri
orpnigthening the romisony':,
avelcipment Scrvif-P4 Center. ThiA
U
19
W
popAtitan in the marlirtIslare.
new tud-ility will vontain pilot sarrv.
_
4
p V
Appleton matir airgunisfir
it". whivis istrindr- e%javorimental
.
nrid" in inerruatin; 05- asharr of
runterA anti capouir Manufacturing
the thermal palser market during
equipment: graphjco grvid produri
1987. Growth fear Appleton
evoluation: oirvelitioment rigazinerr.
1@ . .......
--i1irrivaul Paper"! wm@ stioursrd Iq
ing: anti prmiuct afri%.
,he ri.mjsan@ *p ar,oiPpmrn, or
new probtlum.. fnr ugr in favoirfaile
muchine- anti InIsarl printerr. To,
-ervict- thi. groming market.
c-noatruptioln off a thermal pularr
44
N@
Q\
co
B.A.T IWUWRIES P.LC- - MMEWA DEIMITORY COPY PWWCED PURWANT To VILD. OF
CoNsENT JuoomEwr DATED 5/8W IN STATE OF UIANESOTAis ET AL V. PONLIP AOORRM CASE NO. C14M-MS
BATUS 1987 k1winess Review
Pulp and paper rr@rarrh
activities have alrrad %. 1wen
instrumental in improving the
base paper fon which man% of
A llaprr@ are
ppletoa*s specialty
made. And. the quality of thu"
71P.
base papers directly contributei
to the quality of end prtw(urtf.
Another important str2tecic
Investment in 1987. %a- develop-
LA
ment of ApIalrinn% compuier
AIQ
capabilities through an upgraded
Information Services Depart-
ment. The department is de.
voted to supporting the
A Appl- P-yw-*
company's continuing efforts
mpt.- -p--Wd
toward enhancing pruduct
P-w-w@ le-p-
quahty. customer service and
.,d, vp-r-
production efficiencies.
i"kfWf4 in M, m
Replacement of outdated and
jwri@"q.w,
undersized computer equipment
was completed during the year.
rendi. vwrr than half of all,u,-
greatly increasing computing
1omrr,.r4lrr, ar,- 1--m; plo-d
speed. reliability and capacity.
thr..u;lt -,ne,.( I- -i@,tn@xu.
The strengthening of total com-
order @wr% -trw.
puter capacity boosted the
Pr...11,
wtom, j:--m- -@rr
overall efficiency of the orpni-
sicnirwand, uj@z-rd-:-l 'Writt.. dw
Itation and. specifica0y. lint-
vear. k @= milli.-r. r-lurk-h-
proved customer service. Cur-
ma,lmw At 0w A arr.-Li-n.
ON- 111ill
lor ... ho, i w. : r-lis.
6 1 SUL?
B.A.T INDUSTRIES P.LM MMNESOTA DEPOWORY COPY PRODU= PURSUANT TO I VILD. OF
CONSENT JUDGMENT DATED MSG IN MATE OF ARNWSOTA, ET AL V. PMLP AIM11110, Er CASE No. CI-944=5
4& Appleton Papers Inc.
machin- at that mill have been
7
rreonstrurted sinct- it wam ac-
quirril in 1984. and thr mill is
nOW t114211% 461fiCtited to the pro-
durtion of carbortirso paper.
7
Appleton is aho adding to its
;
Coating capacity with the con-
.0
Z@@
struction of a fourth high-ipeed
custer at 44 Harrisburg, Peemsyl-
vanis plant. Completion of the
$28 million coater is fchedultd
for earl% 1989.
De velopment of a new
A .4@ A f
meibod of packaging paper ralls.
which utilixes interleaved foam
and *trrtch film. was developed
Pm
and implemented. The higWy
dnvipdb *, Appks@
protective package provides
pe
product quality assurance and
enhane" customer satisfaction.
In order to maintain
a C*40.4" pop-
Appleton*s position as the market
pw1wWR rM.,*Y
leader. the company continues to
W
prepare itself for what will be a
AA.f 1":, do Ae
challenging future. Appleton
I"# C.P"A.4 "dt
Papers is resolved to maintain its
11w
1k.."A th. A.:
market leadership and its highly
.0- P.F,,
profitable growth. Every aerate-
&.4i.
Fie move. every capital expm&-
ture. is aimed at Improving one or
more of what Appleton sces as its
kryi for future success: quality.
cuptomer service and production
efficiency.
FAA
1!
r_@\
13.A.T INDUSTRIES P.L.O-' MINNESOTA DEPOSITORY COPY PRODUCED PURSUANT To VILD. OF
CoNsEwr JuoGmENT DATED SON IN SrATE OF MINNESOTA, ET AL V. PNLOP MORRIS, IT CASE NO. C1 94 0605
114TE 5 1987 84mirs- Rvvit-u
in ill.- L.S. in 191:7 isue
difficult. Con-unier
-Im-ndin, 1wranor %,-r%
Urtail uJr- -,rl,wth s1w."d
i-rubli diroughoul the yt-ur.
4.111111inating. ill a 1).H.r fourth
quartri- follmAing Ih, -t.wk
market vra*h in Ovwb,r. %- a
r-ult. rouilwlifi%o, jkrt--.tkr,--
inti-n.ifird and prion.161,1141 A4--
li%iii,- inerva,rol. tirgati%r1i
aflrcting profit mar;ill'.
Cou-ilurnil.%. 4-on-4slidateJ
"It, offlir BATUS rutailing rwit-
louni.-P greu onl% 4"Ir Io S2.6
billi.m. and olorraling iumme
lim-lins-41 13"@c lei $171 milli,-n.
While 1987 wasi disalolowintiou in
trrm@ of financial liserformance.
rach buoineAs made major inverl-
morewtv, that will imisrosve volviloorti-
ti% r lKOAtioning and future, profit
powerntial.
Each company deve-lolwil a
ro-novation or expansion plan
designed tow capture hi;hrr Ptorr-
for-storr ltrowth. Tlw mo,t
Agnificant announvemrnt@ mad,-
luot year were tlw fivr-% par t3fml
million nationwide P%punii-on and
A )fvk.("h#m
modprnization program loor Folk.
i. .
Fifth A% enter and thr .11 Ito million
Sork. rifih Irvis-
rorno,sation of thr Marithall Firld'i.
lki,
flag,hilo otorr ton Stats- Strtwt in
Chiraw..
1% rk *- romi'let"t
elation is( lvrv*,,-CariPlina- &nil
inlo mw or;uniza-
tion. Although Ili#- -hort-irrin
inspavt how, inivrrulsts-4 lvp%'-
r rd if lwrq.fit growth. a
14
BAT NXISTRISS P.LC. MOINNOTA, DvvsffoRy CoPY - PmwcED PURNJMT To VILD. OF
COMUNT JUDOMPIT DATED SMW IN SrATE OF A*NWSOTA, ET AL. V. PNXV MORK IT CASE NO. C14M-M5
HATUS Retail Group of Companies
Ar-olorr cmnpun@ hi. niergrfl.
24
Bro-tairr. -.1-ned a n111111- Ls
molli--n oh.1lar rewriliz,d %are-
hms@,. % hirli %ill impr-@%r oprrat- 22
ing, effiriem-A and r@dure imen- 10
wri n-quirrowni-
-a, oldr-I at
.-j,h rt-tail vwnpjn@ and criteria
;V
Uidt. %;srirt% n(vu- 97
tonler relation. prorratn@ were r-
dek.-II'lortl i., nwniow 1.@rform-
BATV4 lus@ made a Acnifi-
cant rontmitsurnt w trehniolm:%
ft--*-. of
with a goal of arhie% in-- a 4-oni-
IOR."$F4 1 M
JWtitivr advantage in rai'll Jit,
retail louAnr,-- -4ak, Fifth
fifih
A%"nur and Nlar,hAll Field'@
announced program# dr4ped to,
enhance management information
SakA Fifth Avenue hav grown
toolls that will impnive nwrchan-
to an extentive network of 44
di4ing drcivionA and productivity.
sliecialtv storev in 30 major
completrd the purrham of
market# in 18 stairt. making it
advanced lmint-of-,oale terminal:-
more convenient to a larger base
W af
for it* Florida ottarrs. Rreunrr@
of aMaent. fashitan-minded cuf-
at
Strengthened itm, data pror"sing.
lumem.
and Thimble, innalled 4yotem4
Through Folio, catalogs. Sakp
designed f1wrifirall for ilsecial1%
hao increased it, reach and
.4torr olwraticsn*.
created a truly national clientele.
informint it% rum.mers of mer-
1.8
handiw *r1retiono ovailahle at
e
1.6
ak@ Atorr@ scroooo the ro)untr%.
S
Sakt. Fifth Avenue. the
while building a moil order louti-
nation's premier high-fsohion
at-- that hao Frown in exc"o or
41wrialty retailer. offering suloe-
Me a v ar since 1982.
riur quathy apparel. aerroourie-
To, further enhance W,
mail Arrvirr. again had reroord
leaderohip loooilit.n during 19117.
*air- with an incrrar of -wnw
Sak, announced a rtsr.%'#-Mr 43104
5t,-t. Ho%evrr.&-arq-uhofthr
millioin nationiA ide r%lsanion and
4-nijoetilb. e retail en% minment.
moolernizution program that
Sak,* pro-fit- %err lwhn- boil
yrar*s record level.
15
BAT INIXIMNS P.LC- UWASOTA DpasffM COPY PWNCED Pw=ANT To VILD. OF
CoNuNT JummEwT DATEo 519M im SrATE oF Aemwsom ET AL v. PHxip Akwgm Er At- CASE No. C14M4=5
I BM 5 1987 Busines.@ Reriew
-
-- -- -
7
- ie- 4 all Im-ation, to, a-ure
highl% 4itrresoful at mottil ating
i
14@j
the% rriore,ent the qualit% image
Sak, empl.,%oor- and enhancing
anti ihut the .";uk@ ru-
rulumer ser% ice.
tomer ha, lvarnril tit expect. The
The mainAta% a.' !;aks'
. . . . . .
rip. M
Calif,ornia. more soil
merchandising nrate--% remain,;
the @'-jsrinoqield. Neu JerAr%. unito
the -litinc and fore-entaliun of
%t-rr renmated in 1937. Similar
internationally-rem-u-ned
toork -a, startr4lon store, in
drPigner rlnth,@ and acer,sories.
G2rdrn City. New York. anti Bul
In addition. --;ak4 ha@ inerra,ed.
Harlu,r. Floirida. In 1988. the
the penetration of im.prietam
Chrv.% Chase. Maryland. Trny.
brands in its merchandise si,,o ort-
Michizan. anti Brrwen Camnly.
mrnt@ in order to proi, ide custom-
am
Neu Jrr-r@. unn@ are undergtiing
vr@ with e%elusi% h%. quality. style
modernization.
and value. Real Clothes. a hichl%
Plans were slAn announced in
surr"iful pri%air label brand of
198-. it- rrhocate anti expand the-
ladir, acti%e sportswear and
A Sooks A
.AA A I on-
downtown Chirac. Saki Fifth
casual apparel. iA nou in itc third
ms@ owfit* hwAti,
A%enur unit. The new store will
year and has been extended to
spot,taks.4 --., th,
21mitiot double existing selling
Real Clothn for Men. The
F(fih 4-, 6.b
qswe and is scheduled it) open in
Works. a private brand collection
jittikow, tit
1990.
of ready-to-wear for executive
Meanwhile. construction
women. was introduced in 1987.
continued on the tower expansion
Passport is a collection of Euro-
includ" rive new stom. expon-
of thr.Nrw York Saks Fifth
pean styled nwn** clothing and
sison of the New York store and
Avenue flaphip store. The first
dress furnishings sold at more
rrnu%ation of2l other units.
nine fluors, of the new 36-floor
moderate price levels than de-
New 4tore, are hoeing added in
tower will connect to the corre.
signer merchandise.
otsburban Washington. D.C.. at
sloonding Rqx)rji of Saks' existing
T%-nn@ Corner. Virginia. in Min-
landmark louilding and will add
nealmli,. Minneo6ota. Denver.
Mile more PrIling oltare when
Culuradi,. Portland. Oregon. and
4-I)mpleted.
Nivroh Palm Beach. Florida. The
Saks embarked on a redevel-
Marshall Firld*t. the domi-
Tyson, Corner mare will open in
Opment of ito, business ityAtionts. a
nant. full-linr qualiti, department
[he fall of 1988 and will lor the
two-year investment that %ill add
store in Chicago. ha; achieved
seriond SAA unit in the Waphinz-
it, the remlesny*o productiviity and
recard performance in salef each
ton. D.C. arra.
service capability starting in M9.
year Fiore loeramin; a member of
The 21 unito selected for
Emphasi, ton achieving anti
the BATUS Gresult in 1982.
niquiernizatii.n are a rrult of a
maintainino, a tulorrisor let el of
Morin; 1987. Palt-A rqoe 91/-t. ultile
ru,timser m-rvivr continued during
olorratin.: profilA drerraiwil 6ri.
the vrar and will be a krv part dir
Firlil't o1wrat" 15 sine" in the
Sak@* future lilan@ lose drveloilt.
Chicago metropolitan area. six in
ment. Thi, effort rontinuro its lir
Wi@rtono,in and hour in Texa,.
B.A.T INMIMIES P.LC. - MMWWA DEPOSffM COPY PRMCED PURSUAMr TO VIIA OF
CONSF?frJUDOWNTOATr;05/8/98INSrATEOFAONNEsoTA,ETA,Lv.Pmxv-Uongs.ErA CmHo.C`114441015
6.1, Tt Remil Grnup c!f Canytinists
V 41 .:-.-
A.4d
sequilsiti-m. B M*-@ ha- in% eol-41
Jar strium tt- be
liver i I is' niiHi--n in .-allital P.%-
1,-att-sl in tht- --i-wer 4 the 11--re.
pentliture-. in0whilt: ill-- .1.14li-
Is %ill 1,,- nankml It% JV@. el@vsi-
tiom lif -i% owu t..r- anti ri-twi a-
t.w. anti -,-mtrjIiz.-.l -culat-w-.
--f -v--r -4-t- unil-,
li-si-irswww. i, v%p-iv4 1,@ 1@
Th, highis;;h: w' lslur-haf!
1 1.1%
-ill
lwrin: 11w mw% ati--n
Iw if%-- @iaw -ir--: 11.1;.4111.
ill.- Lak.- F-w-t. Illim-6. -t-irs-
Anist-ton.-ml iji-- ii-i -or. thi- %ill
an-I ili, Ifill,lair in Nid.h.
I... th,- I.m.-I ronotmi,m irt
...fk. 'A i-- --n-m. %a-
t1w w L .,@ r@ijiliu;.. Th..
Is; Ili;*.':. dw
i. pr,-J--t--,i s.. I I it
I A;--ria -i-w- mad ill,- v
milli--n and -all Ili- -fat-
wt-1 M if,-r T,-%,-r -i-we- in
-itri-l-t unti t.. it.
hwav. %ill I,--
uran.i.-ij, ni.
IsLir-iisil i- al-
m.skim. a nw-w --mliviinu-n: u-
1 1: Im. .-npI,jrk-I as a
sr_w, pr.-_-rjm it. 411 ii-
Lr\
B.A.T INKMMS P.LC. - MMESOTA DEPourm COPY - PRODI)CED PWtSUANT TO VILD. OF
CONSENT jUDQMKr DATED SM" IN STATE OF AftgwSOTA, ET AL. V. PMLP UORRX. Er CASE No. C14M4=5
B. I T1 S 194.7 Rit,inesx 1serien-
Mar-liall Firl.1% al ... . ..
Sala.
inslor..% r it- 1-r-,grain 4 rit-imurr
s,-.-
Mar-hall Field% ha@ 1-n a
ilvpartuient,i.-rem in N,-rih
leader in niarket -gin,nlsitimi. It
CarMina. South Can-linu ind
lost. e%eral -o,-rr--ful
ri..riola.
within it. i,,r,- to, rra-,Ii a
or two. -ii% is, a
pr@vi.e ijr::@l Th.-de-
r"ult ofthev..n...liditins:
velopnw-ut 41-ri%ute label, loss,
vxjwrirnv@d a .1-lin,
al... I.evit a Le% element if
in -operating prolit@;
sno-niati.-o -trate-.,. in jiblitwn.
1% e% ', no,% 6 in a @Ironcvr 1--i.
'ar4iall Fwld'- Ila. eniloha@ized
tion it, take ad%antitz- -if ripidly
-1irt-ial arrastronient. with -Irct
growing marlirt,, in the 44suthraot.
%endow. whirli differrnsiatr@ it-elf
The ron,--iidution %a- a
front itr #-4oniIootit.-r-.
major undertaking bezuto in lite
Mirohioll Firld'. Expre-rd'.
1986 and e.impIrtrd i3;thr third
a mail -rdrr ratahm. %so@ mnvvv@-
quarter of 19117.
fui in 148'.. growing 211t1r.
1%-e% 'A mission it, to, I)rc.jme a
Marshall Firld'e will expand
true specialt% .department store
into Ohio in 1989 with a new
with merchandising sossortmenti@
200.0011 square-foot store that will
emphasixin; upper-moderate
anehor thr newly planned Colum-
thruough lietter apparel and
bus City Center Mall.
fashion arcessil,ories for own.
wonwn and children. Significant
prostre.-ing t4luiliment anil
P.
changes in lvev*o merchandi-e
tsov@ -err ak.i intr-6-1.
strAtegy were implemented during
A mialti-inillimi -1-41jr ren-
consolidation. nwrehand6e
vatimi and e%loun.i..n 4 1%et'.
as-ortmento, were narrowed.
nm-l 1-r-liss-tive imi-, -.ia@ nu-_,.i,il.
arhirving a more focused foohion
Smithl'irk Mall -t--r- in Char-
statement. sonil thr lortio-r4o ir coon.
lotle. %a- W-gion in ?";:7 and will
tinuing during the current year.
IP- NoRkIll.-I-I in Am.1j.:
Majoir investments matle
Thi- asnit will I- 11w .4
during 1987. should Isegin in earn
ille rhain all- I I.-
A
& return in 1988. The distribu-
fosr fillisr-- jw*
dwril,ort--dad-
tion center in Charb-tte % 94
sownt.
expanolrd hi U1.114H, -ijuarr-fret
11141p.l.
in order too 4upim-ri the roon-li-
ol
dated rompan@ and is. lirmitir
pr-n-vini in III!!_ in, - 'A in:
for future gn.wth. Ault-onated
Q15
"%4
B.A.T IMLMTMS P-LC. MMESMA DOWIDIFrif COPY PMWCED PURSUAW TO VILD. OF
CoNsEwtiluoGwiscr DATED SAM IN SrATE oFAlimsiEsom ErAL v. PwrAkmar. ErA CmNo.C1444=5
A
H I Tt Ro,iil
winrc -rrvivr and surr,-handimn.: V
infownisitimi thrau;h rxsrnPi%r
ralittare ioF tran@urih,n daia. .......
I%e% *, alpto rimitilett-cl a
snaj.ir rll@loioinrr relaticir. lim-
grant its 19K. r4inthining wro, i, r.
ash-ri-ii-ing unit nianup-Ine"I
It Awu.r@ fill
iliiulit@. @rrvir,-. training. and ha,
a fursual ferillissek oyotrin that
nvra,ure@ -tosittlards. giving Ivr%'t
nit im1wriant -Irategy to, 41iolin-
gu6h it,rlf trims rtimlsortitiiin.
1%r% *- viontirsu" to) luq)k f4or
%olilmriussitieA too r%joand in With
tmi,itiug unit new murket#. -N,
Breuners
Breunerso. the W"t C.iot'j,
largeot home furniture retailer
%ith 57 units - 17 retail and 40
the Fallery rionvelit di#ruptrd the
rental - throughout California.
lsimin"- lout the Fallerief give
Arizoinot and Nevada. underwent
Bretint-r- new -plmrtunitir- fur
oulittantiall rhangr during 1987.
*step gn)wtli lov further fioru,,ing
I
The Aotsijeii were designed to
the lou,inrm- a
n qualit, heimi, fur-
so- fk.
improve isalro, and profits. The
ni'lling'.
Is-'. N.:%P4,L
hisAn"s, e%perienced some dip-
The gullerie- I.rt,% idir it tirar-
.. (.*h.,i"::. ..4
ruption, and combined sale.- fro-sn
th e A..% ruAtir. a I- level of in-
retail and rental were dnwn (rcsm
%"tawni. ivsunisfarsiir@r-' quirk-
a @ ear ago. The total huxin-
obil. pi,mrant- an-1 nutit-nut1%
we. unI% .marginalli- proofitaldr in
ktu-wn ad1%,-orti-ifou. Thr looolitilar
I. ..i F.-,dao.
1987.
Thisma-vitir gulirriep ha%#- lwrn
TaIdelop and dormorotir mrr-
in-tallml in 15 ro-tail -t-rr, and
ovr-o--n to. is.-% harolkan- an-?
chandi" eliminated during 1986
%ill he in nil 17 -i--rp, I, mid-
pur.-ha.-A j-int-f-sl- wraiiiial-
t all retail storw has loren re-
a
%ear P11W.- th-sir--d-al
th.- li, Fl.-ri,la iinji- emispil-
mared with furniture manufar-
ar,. I.-ing all.64 it tu., if 16
1W.. %.1111 u.-A in th'. 14
iurr"* gallerief.. rrintiorring
larcer isnil--
i.ar..hnu -im-- Tlw 1,-rininal.
HrruneW lorimary orrnph a- a
AWu u.
olualit%. uprair furniture- rr-
iii.- -t--it% that
sailer. 11w changeover fripm
talolo-14)p and Jum"tiv Ft"od. Us
-4
ANT TO VII.D. OF
B.A.T JNDuSTRIES P.LC. MINNEWA DEPOWORY Copy PROG=D PWtSU CASE NO, C11-94-MIS
Col,=Nr JUDGMENr DATrco S/SM IN STATE OF A"NEIRTAI IT AL V, PH&P MORRAL ET AL_
BAR S 1987 Business Re"iPIC
44
P-.. P.A. No.
j... y. Th-hi., ..",
Breunert* up% central distri-
ThImbLes
To nisnaze thif traneition.
bution center. containing a
The financial performance of
new merchandising Wderthip
miHion 6quare-foot computerized
Thimbles. the BATUS entrv in
was installed and the implemen-
rack storage system. was coal-
the women** apparel spircia*itv
tation of the more upscale
pleted in September. This center
store seltment. was below expect&-
concept began in 1937. Thimbles
consoLidatef 11 reFiatial ware-
tiont in 1987. and the company
developed & store prototype with
hou*" and wiU allo- Oreunerp to
operated at a loss.
a new interior design and layout.
improve customer service vis a
Sales incres"d due to the
and two stores were adapted to
company-wide. centralized
addition of 11 new starts. but
the design during the fourth
inventorv control and distribu-
customer acceptance of the mer-
quarter. During IM. Thimbles
tion system.
chandising concept in the I,'.-unit
W-01 direct its energ:irs to refining
The 4ts-unit rental business
chain wait disappointing. The
its new concept and improving
adopted a more agMisive mar-
company is in a transitional
existing slope sales.
keting effort during 1987. The
period as management is refocus-
.al" f4rep ws.4 restructured an4l
in, the Thimbles concept. The
@hr lmk and qualit% of the priml-
new theme involv" a higher
uct wap up;raded.
fashion profile. with merchandise
designed for the more fashion-
orientril carper woman with
higher quality wardrolw needs.
B.A.T INMTRIM P.LC. MWESOTA ClEposffORY COPY - PROIXIMD PURWMT To VIIA OF
CoNsENT Juow*NT DATEo 5/$W iN STArE oF Aftwsom ET AL v. Pimup MoRm ET CAsE No. CI-944M5
BATUS Inc. 1987 Financial Revietc
Alanagement's Responsibilitv for Financial Reportingg
A-."W AMW
The following consolidated financial statements of BATUS Inc. were
CQwd Fi .. rWS@,:
prepared by management which is responsible for their integrity and
slas__g.#fIWOW
objectivity. The financial statements have been prepared in conformity
W Itnei"d
with generally accepted accounting principles and necessarily include
MdA@ SAW$
amounts which represent the best estimates and judgment* of manage-
SISSO.OMS of Cho"
ment.
i. fl@iw 0-06W" 26
Manatement is further responale for maintaining a system of
Me-410"MIS Oanwsies& ArAiYM;
internal accounting controls. designed to provide reasonable assurance
SeSSOM.Mu ff 1"MW :3
that assets are safeguarded. established policies and procedures are
Futamist ConAWes :S
followed and transactions are properly executed and reported. The
S--- q/A--AV P4e-
-tem is continuallv reviewed for its effectiveness and is augmented by
V.M to CAVOW&W
wntten policies and guidelines. the careful selection and training of
FISOM" sesIMMUO
qualified personnel. and a strong program of internal audit.
re
Deloitte Haskins & Sells. eertified public accountants. a engaged
AqW14 34
to exantine the consolidated financial statements of BATUS Inc. and
issue a report thereon. Their examination is conducted in accordance
with generally accepted auditing standards and includes an objective
review and evaluation of internal accounting controls to the extent
deemed necessary by them.
The Board of Directors. through the Audit Comnsitt" of the Board,
is responsible for- (1) assurinj that management fulfills its responsibili-
ties in the preparation of the financial statments; and (2) engaging; the
certified public accountants with whom the Coaunittee reviews the
mope of the audit& and the accounting principles to be applied in
finaneW reParting. The Audit Continittee meas replarly (separately
and jointly) with the certified! public accountants. representatives of
usanageasent. and their internal auditon to review the activities of each
. A to emure that each is properly discharging its responsibilities. To
ftdure complete independence. Deloitte Haskins & Sdh has full and
five access to meet with the Audit Contmittee, without management
representatives present. to diwuss the results of their examination and
their opinions on the adequacy of internal accounting controls and the
quality of financial reporting.
/147
4e-.j 4,1 - IZ
Henry F. Fripa
Leonard W. Arentsen
President &
Executive Vice President
Chief Executive Officer
21
C__
B.A.T Musmas P.1-C. - MMSEMA DUKOTORY COPY - PRMCEO PUMUANT To VILD. oF
CoNsEw Juoomw DATEo 5AM iN SrArE OF UNNESOTA, Er AL V. PMLP MOROW Er CASE NO. CI-944US
BA TUS Inc. Consolidated Statements of Income and Retained Earnings
go" 0-4- 31. it. rA..*" qff).U.., i"T 1986
Net SAO# ............................................. SS.834.501 S 5.499AS2 SS.086.902
Comb and expraocs:
Cost of.ale ..........................................
3.17.1.475
2.901-394
2.69-4.671
Federal exci@ tz%es ...................................
494.668
S36.750
561.44S
Selling. general and administrative e%penoes .................
1.263.701
1.11-.80S
Interest expv*@. net at interest income:
1987- SMSP: 19M - $14.5M. 1983 - $8.900 ..............
88.194
132.468
147.666
Total costs and expenses ...........................
5.018.038
4.7%.8113
4.519.58M,
iome from continuinp operadons
before provision for income tax" .......................
816.463
-.02-569
S67.31S
provision for income taxes ...............................
350.260
339.906
2M.400
Income from continuim operations .........................
4".203
363.663
328.915
Income (lo") from discontinued operations.
not of income taxes ..................................
-
-
f. 15.393 1
Provision (credit) for retail restructuring,
net of bwomw taxes ..................................
-
(30.0001
150.000
Not' .. . ...........................................
4".203
393.663
1L63M2
Retained, earalop. beplaning e(year .......................
1,525.829
IJ2.J66
1.313AS4
Dividends declared .....................................
(220.000)
(19S.Ml
f160.800i
Retained earnings. end of year ............................
9 1.77.2.032
8 1.52SM9
$ 1.32' .166
See accompanying sumnar@ ofaccountbW policies and notes to consaWatadjimancial statemonu.
1LA.T INDUMIES P.LQ - Mamou DeKwm Copy - PWWCED PUMWMT To VILD. oF
CoNuNT JuDowNT DATEo MW iN SrATE oF AftwEsou, Er AL V. PMLV UORRIS, ET AL. CAsE No. C14M4=5
BA TVS Inc. Management 's Discussion and Analysis
Statemenfs of I.Co'.
The Compso@ maintained its record of increased comparable year ba*6. excluding the extra telling week in
profitability as strategies at its continuing operations were 1986. net sales increased 10%. Net sales for t98. of IT 79
refined to asset changing market conditions. The million benefited from the impact of price increases and
Company's continuous refinement of busissest strategy led
higher volume within the carbonless product lines. Car.
ta the decision. announced in 1986. to restructure its retail bonless sales increaped '..'% in 198' . an a volume increase
operations. As a result of that decision. the statements of of 3%. This follows a carbonless sales increase of 16% in
Income segregate discontinued operations from those that 1986. The increase in carLounless sales for 1987. was limited
are part of the ongoing business activities of the Company. somewhat by market pressures which forced prier dis-
Net "Its from continuing operations increased 6rr in counting. Appleton** operating income declined 6% in
1987. following increase# of $47c in 1986 and 4% in 1985. 198' . following increases of 20% in 1966 and 6% in 1985.
Excluding the impact of the extra week of pale# in 1986. for Operating results for 1987. were negatively impacted by
the Company's retail and paper segments which had a 53 price discounting. changes in product mix. higher pulp
week year in 1986. art salco from continuing operations prices and costs associated with improving customer
ineresped 7rx in 198',. Operating income increased 317,r in service.
'4W million in 1987 compared to increases of 20% in 1986 The Company*s retail operations achieved modest sales
__sd 4% in 1985. Operating gains at the Company's growth in 1987 in the face of uncertain market conditions.
tobacco segment during 198' %erv partially offset by lower Not salts Frew to $2.6 billion. an increase of 4% for 19117.
performances at the Company*s retail and paper Mqmtnts. following increases of 14% in 1986 and 7% in IM. On a
which operated in difficult markets for most of the year. comparable year basis. excluding the extra selling week in
Net income from continuing operations rose 28% to 1986. met sales increased 617c. Saks at Saks Fdth Avenue
$466 millicas in 1987. following increases of 11% in 19M increased 5% in 1987. while Wes at Marshall Firld's
and 10% in IM. The improvement in 1987s income from incressed 9%. Sales at lvey*s and Brenner* declined as a
continuing operations resulted from higher operating result of restructuring. Operating income of like retail
income. lower not interest expense and a lower effective tax segatent declined 13% in 1987. as competitive pressures re-
rate due to slat provision of the 1966 Tax Reform Act. Set strained mar& rates.
income was SW million in 1987. $394 million in 1966 and The Company's cost of asks percentage was 54.41M in
III&I million in IM. Not income for IM included a 1907, compared with 52.8% in 1956 and 52.9% in 1985.
charge o($156 million for the retail restructudq. Net The increase in the cast of ud" percentage is due primarily
income for 19116 inchicled a credit of'1130 million due to the to higher pulp prim at Appleton and increased mareban-
favorable mahs of the retail mtracturing. dim cuts In mug operations. due in port to higher Import
Not sales of the Company's tobacco segment. Brown & prim. The Company's LIFO provision was Sm mill"M in
Williamson (111M. increased 8% to 02.3 billion in IW. 1907 compared to LIFO credits of $20 million in 19116 and
compared to an increase of 1% in 1996 and nominal $3 million in 19111S. The 155 xaMoss increase Ja the UFO
pvwth in IM. The grow-th In 198". sales if attributable to provision (IN7 vs. 1986) resulted primarily from higher in-
dr
. tcantly Moor international sales. which increased fiction. particularly in the retail segment where the "a of
T22M in 1987. primarily as a result of the elimination of imported pods was she affected by currency fluctuations.
the Import duty In Japan. B&W achieved a 23% share of Selling. general and administrative (SG&A) expenses
the Japanese import market. which now commands 8.4* were 21.7% of min in 1"'. compared to 22.2% in 1966
of the total Japanese market. B&W*s domestic volume and 2!% in IM. The drop in the *Wnw rate is due pri-
declined in 19117. resulting in a domestic market share of marily to the absence of charges related to the early exdn-
IM compared toll.'* in 1986. R&-W*s operating guishment of slebt which inflated SG&A expenses in 1986.
income increased 14% to $613 millilon in 198' following Iss- Not interest espesme dectined $44 million in 19117 as lower
cream of 21* in 1966 and 4% in 1985. ffigher selling debt levels and sWicantly higher cash flow combined to
prim mid Increased internations! volume were the main reduce overall financing costs.
contributors to the improvement in 1987*t results. The Company's effective tax role was 42.9% in 1987
The Compauy*p paper segment. Appleton Papers (Ap- compared to 49.2% in 1986 and 42% in 1985. The drop in
pletan). experienced 0 salep increase of 8ve in 1987. com- the effective tax rate is primarily attributable to the rate
pared to isscream of 13% in 1986 and IM r in 1985. On a reduction enacted as part of the 1936 Tax Reform Act.
B.A.T INUMMIES P.LQ - MMEMA DEPOSITM COPY - PMMCED PURWANT TO I VILD- OF
COMENT JUMVENT DATED SAM M SrATE OF AMM8016, ET AL K PHLIP MORMAT CAsE No. Cl-94-MS
1 8.4 TL'S Inc. Consolidated Balance Sheets
Pecomb- 31. 1 M 7h*.on& o,'Dodisno
1987
1996
Assets
Current sooew
Cash ........................................................
8
15.985
Shan-term investments ..........................................
1.188,538
43S.071
Accounts receivable. less allowance:
1987 - 8.09.' .89. 1986 - S37.001 ...................................
323,975
M" .096
Inventories ...................................................
787.571
J94XW
Other .......................................................
111.811
71.413
Current asset& .............................................
2.419.021
2.138.415
Propenty. plant and equipment. at costs
Land and improvements .........................................
53.664
53.72S
Buddinp and improvements ......................................
701,126
684.404
Store fixtures. machiner-! and equipment .............................
1.3".021
1.246.016
Construction in propvso .........................................
124.27.3
58.479
Ieased property under capital team ................................
42.409
42.362
2.281.492
2.084."6
Less accumulated depreciation and amortization ........................
T71.841
654.911.
1,309.631
1.430.069
Insamplbik unto .................................................
239.0"
234.9.2
Other SNOW ....................................................
470.498
43B.C.2
$4.638,176
14.24.0.128
Uabilitles a" Sharebalsfer's EqWty
Currom 11,111111111214103
Sbormerm borrosefalls ...........................................
3 -
3 5.000
Lamg,term debt duewithist one year .................................
6,577
liju
Accounts payable ...............................................
S47,701
3221.1195
Accrued liabilities ..............................................
41".6"
SSS.40'.
Due to offiliated companies .......................................
"1035
14-W
Income taxes payable ............................................
269.2%
11.5.9S2
Current liabilities ..........................................
1,136,"-.
1.154.068
-la"no debt:
Affiliated company. subordinated ...................................
7", 1 -4 4
Other .......................................................
126.3$5
133.117
910.3"
910.224
Other 10084ents litibilld" ..........................................
745.4-15
548,134
SharebadWe equity:
Comments shares. $1 par value;
1.000 shares authorized. kwacl and outstanding ......................
I
I
Paid-in c*W ................................................
73,252
3 -U2"
Retain" earninp ..............................................
1. -17 2.032
I-9-95M9
1.6".286
1.5".08:
I 4,63L 1 '76
8 42422. 128
Sea accompanying summary ofaceoustsing policies end som to costsolidatedfmancial wasentents.
24
BAT INDusmas P.LC, - MmEwrA Dotoslrony Copy - Pnmao PuRsuur To I VILD. oF
CoNsENT JuDamm DATED 54M iN SrATE oF MNNEsou, Er AL V. PNXP UDRRM, ET A CASE NO. CI-94-MS
BATUS Inc. Monagemeng *s Discussion and Analysis
Financial Condition
The Compw *s financial condition at year-end 1987 funding of certain employer benefits. Current liabilities
reflects the successful implementation of strategies to decreased $17 million due to a decline in accrued fiabili.
impro%r liquidity and financial flexibility by optinasing ties and the current portion of long-term debt. offset
the intestment in and return on net operating assets. partially by an increase in taxes psychic.
The Company's return on net assets (operstin; income Th; Compan@ * I investment in fixed assets increased
as a percentaire of act operating assets) was 43% in 1987 6% to $1.5 billion. Fixed asset additions were V248
compared to 33q in 1986 and 219% in 1985. The signihs. million in 1987. compared to $231 million in 1986 and JIM
cant increase in return on net assets is due primariJ! to s"on in 1985. Capital spending for the retail segment
improved preferment* at B&W and a decrease in net totaled 1103 million in 1987. and was primarily used to
operating "#cu primarily resulting from the sole of fund the custoruction of new stures and the renovation of
certain accounts receivable. Accounts receivable have existing atom. Capital spending at the paper and tobacco
been sold to certain financial institutions under agree. segments totaled 890 million and $55 million. respectively.
-cuts whereby the Company may sell. with limited and focused primarily an increasing operating efficiencies
- -ourte. certain designated accounts receivable on an and capacity.
ongoing basis. At December 31. 1987. and 1986. accounts Total capitalization (equitv Flu$ debt) increased to
receivable *old pursuant to these agreements totaled $714 82.8 billion at year-end 198' , compared to $2.6 billion at
million and$ 160 million. respectively. Not operating year-*ad 1986. Equity increased $246 volition reflecting
assets were $2.1 billion in 1987. compared to $2.6 billion in net Income of M" million less divisloods paid of SM
1986 and $2.5 billion in 19115. million. Dividends paid in 1986 and 19U were 8195
Working capital increased 30% to $1.3 billion as the million and 1160 million. respectively. ToW debt as a
ratio of current assets to cu. a t liabilities Improved to 2.1 percentage of capitalization was 33% at yea"aid 1961
to I at year-end I"T. compared to 1.9 to I at year-end compared to 38% at vear-said 1986 and 4' . % at year-ond
1986. The improvet in working capital and the IM. Total debt outstanding at year4ond 1987 was $91" ,
current ratio is due paiissarilly to an Increase in the million compared to 11997. millien at year-end 1986. Total
Company's short-4cron investments which graw to 11.2 debt includes 11134 million of subordinated debt payable to
hiWou at year-end 1987. compared to 111W million at year. B.A.T Issfustries. Excluding subordinated debt. %be dobat-
and 1986. The Company's strong cash flow was aug. to-capitalization percentage was 5% at year-end 1W.
mented by the sale of accounts receivable which generated compared to 9% at year-and 1966.
an additional $554 saillian of cash in 198'. compared to To supplement its financial position and cash flow
$160 atiMov, in 1986. from "Mrsuo". the Company hats bank liness of ersolit
The Company*# Investment in inventories mood at and agreements with B.A.T Industries and affillates
- A million at year-end 1967, compared to $795 million at whereby additional borrowings way be secured iffe
year-cad 1986. The slot decline in inventories primarily footnote to financial statements). The Company also has
reflects efforts to minimize inventories. particulairk at the agreements with financial Institutions slust &Uo% the
Company's retail operations. and the impact or higher Company to oil. with Waited recourse. accounts ecolo-
inflation which increased the UFO reserve. Other current able Isest footnote to financial staternents).
assets increased SW mOon primarily due to the pre.
25
-4
rQ
B.A.T INDumiss P.Lc. - MwavwA DEpoeffoRy COPY - PR=cED PuMANT To VILD. OF
COMENTJUDGWNT DATED 51$1981N SrATE0FA*NMSOrA, ETAL V. PHXPAkRRI& ETA CASE No. CI-94-6565
BATUS Inc. Consolidated Statements of Changes in Financial Position
1"n Th--g..f Dona-
198-
1996
1995
Cash provided by operations.-
Income from condnaing operations .......................
8 466.203
S 363."3
S 328.915
Itemp not offftning working capisal2
Depreciation and amortization ........................
I T .5.622
161.919
14S.579
Deferred income taxes ..............................
95.422
125.633
123.381
Other ..........................................
1-..441
12.613
19.446
Working: capital provided by continuing operations .......
754.698
663.8218
61-..321-
Income (19991 from discontinued operations
including provision for retail restructuri4 ...............
-
30.000
1 16S.393)
Items not affectingworking capitol:
Depreciation and smortizotion ........................
-
-
31.492
Deferred income taxes ..............................
-
(926)
Other ..........................................
-
-
r 50.067)
Retail restructuring reserve. net of income taxes ...........
-
430.0001
IU.1100
-
-
3.916
Changes in components of operating working capital:
Accounts receivable ................................
497.121
37.6911
1,27.6U)
Inventories on first-in. first-out basis ...................
(27.866)
(51-2481
(ILS38)
Lost-in. first-out inventory reserve .....................
35.145
(20,168)
(2.964)
Other current "sets ...............................
(40.398)
(35.812)
(Imu)
Accounts payable. accrued liabilities and
due to affiliated companies .........................
(30.618)
PS-11")
87.662
Income tam pay able ...............................
93.342
U.S-40
39.9W
S06.726
(69,' MO)
(202.748)
CALsh provided by operations .......................
1.261.414
594,078
3".4"
Cub =" for bw I
Additions to propomr. plant and equipmeni ................
(248.420)
(230AS)
(421114.21S)
Acquisitiom of leveraged lesses. net ......................
(34.905)
Investment in lamace Limited ...........................
(3.816)
(132.149)
Other ............................................
57.205
(14.155)
(193.031)
(37.139)
(37.4.11M),
--%;mob provided by a" of businesses .......................
6".049
Cook provided by suJim or invootmenas ......................
-
Cash mead for dirldlesuls ................................
(220.000)
4195A00)
4160.000)
Cook provided (and) by fistanclaig eadvitleas
Addidow to long-term debt ............................
2.319
SJI2
34.7.84
Payment ciflow-astrus debt .............................
(83.8$6)
(21#81 "s)
(39.60)
payment of obligations under tratilemork and
trade name acquisitioss apTements .....................
(113=111)
(14=3)
(18.0?9)
loscrease (decrease) in short-term borrowissigiv ...............
(S.000)
(".7W)
(297.8%)
1 W A")
Increase, (docrease) in cash and shormerns invesursemas ........
8 744.608
S 3711.07.2
8 31.619
See occa""ing summary of accounting polliciet; and mom to comeaUdacedfln--Ci-l statements.
fSj
Z
26
B.A.T IHMSMES P.I-C. - MINNEWTA DuawORY COPY - PRMcEo PuRmAmr To VILD. oF
CoNsEw JuoGmEw DATED WN IN SrATE OF A*MVEWTA, Er AL. V. PNXV NORM ET A CASE NO. C1 94 6 5
8.4 TUS Inc. Summary ofAccounting Policies
Basis OflOmsentation
IntanobleAssets
BATUS tote.. through atiether company. is a wholly-
Intangible assets are being amortited art a straight-line
owned subsidiary ofB.A.T Industries p.l.c. iR.A.T
basis as follows: trademarks end trade names. aver 2S
Industriest. a company incorporated in England. The
years: patents. over their remaining useful lives %vith a
accompanying consolidated financial statements include
maximum lift of 13 vears: excess of cost ever fair value of
the accounts of BATUS Inc. and all significant subsidiar-
not assets of acquired businesses. a% er periods ranging
ies. the total of which is defined as the -Company- for
from IT to 40 years.
purposes of these statements,
B.A.T Industries holds a 40% interest in Imatco
Income Taxes
Limited. including the Contpany*& interest. As a result.
Investment tax credits reduce the provision for income
the Company's investment in Imesco is accounted for
taxes in the year the related ans"s are placed into service.
using the equk method.
Paserr"mens R#naftta
on-term Istrosomenst
Effective January 1. 1986. the Company adopted
Short-orminvitstmeats consist primarily ofcommer.
Financial Accounting Standards Board Statement No. 87.
cisl paper. back term deposits. money market preferred
-Employers' Accounting for Pensions- (FAS 87). The
stocks and tax exempt bonds. The invaunents are stated
provisions were adopted prospectively. and accordinoy.
at cost which approximates market.
income for 1985 has not been restated.
Substantially all employees are covered by pension
Accounts Xecokable
plans. The Company funds the plans based an the
Retail deferred payment accounts due after one year
requirements of the Employee Retirement Income Soon-
are classified as current assets in accordance with trade
rity Act (ERISA) plus additional amounts which may be
practice. Sales and related can of saki for customer
approved by the Company as data" appropriate.
purchases made an deferred payment amounts are
The Cosopany provides health and lift insurance
recorded in fall at the doe of the sale.
benefits (;er certain retired employees. During 1986, the
Finance charges on customer accounts arr recorded as
Company began to seem* the actuatially, determined
income when tamed and reported as, a reduction of
liability for redrea' health and life insurance costs.
seRiW guarral and administrative expenses.
Current annual payments toward redraft* health and life
insurance costs will continue to be expensed when paid
IMMM,Wks
until the actuarial liability has bects fully seemed.
Inventories are stated at the lower of cost or market
.b con. for substantially all inventories. determined by
Follerld Eirciff 74=8
'Me last4u. first-out (UFO) method. [As( tobacco
Excise taxes billed to customers on tobacco products
inventories which are not used within me year. due to the
are included in not mks and deducted separately as part
duration of the aging presses, am classified as current
of total costs and expenses.
assets in accordance with trade practice.
Buying and Occupancy Costs
Depreciation and Amordsotion
Boying and occupancy costs incurred by retall
. . plant and equipment is poorally
The cam of property
operations are classified as cam of val",
depreciated on a straight-line basis over the estimated
useful lim of the aftets. Property rights under capital
Sao" P'"Possisw Costs
keen and improvements to lefted property arc amortized
Expenses associated with the opening of new meres, am
On a susion-liae basis ever the term of the lease or useful
deferred and charged to income in the year of the store
lift of the amt. whichever Is shoner.
opening.
C:
27 %_j
-4
X,
BAT IMXMTM P-LC. - MM40MA 00,=ffORY COPY - PROMMD PURSUAW TO I VILO. OF
comsEmT JuDowNr DATEi) &ON IN STATE OF MMmsOTA, IT AL V- PFKV MORIL IT AL CAsfi "0' Cl-944M
I BA TUS Inc. Notes to Consolidated Financial Statements
Rvind RestraesurueIr (Discontinued Operations) Transactions wids ABiliesed Companies
In January 1996. the Compsn@ announced a plan to In I"t) the Company entered into agreements with an
restructure its retail operations and provided affiliate to acquire certain trademarks and trade names
E273.000.M (S 150.000.000 after income taxes i in its related to cigarettes sold outside the United Rates.
1985 financial statements to cover the estimated costs of Ile agreements provide for psymenti through 1988.
implementing the plan. The restructuring included the which ore contingent upon the sales volume of cigarettes
sale of certain of the Company** retail units. bearin; the trademarks and trade names. It is estimated
The restructuring was completed in 1986 and at a that the final contingent payment. which is included in
result of favorable settlements. the prot ision for rettruc. -Current liabilities.- will be 834.766.000.
turial us* reduced by 130.000.000 1 after income taxtm I in B.A.T. International Finance p.l.c. (HATIFi. a finance
1986. The results of operations, of the businesses that subsidimr% of B.A.T Industries. is the principal source of
.ere sold. which have beta classified as discontinued short-ttrm financing for the Company. As discussed in
operations in the accompanying consolidated financial the long-term debt note. the Company also hat long-term
statements. are as follows: borro-ingo due to BATIF.
4. thmo..&, M During 1986. the Company entered into a definitive
. .................... agreement with an affiliate whereliv the affiliate assumed.
in exchange for payment. certain of the Company's
locout rietot We" actoir ta@ .................. I 31.65M obligation# under a letter of credit agreement which arose
... ...................... , W-1691 in connection with the purchase of a paper mill in 1984.
Net owsawdim ............................... . @ -15-us, Although a subsidiary of the Company remains obligated
under the debt agreement which wasturn in MO. by
virtue of this assumption. the Company is contingently
The Company also #old its 50% equity interest in the liable for the ultimate liquidation of the debt: manage I-
Water Tower Place real estate joint venture in 1983 as went believes that the risk of default is remote and so ad.
part of the restructuring. Water Tower Place is an urban ditional Liabilities will secrue.
center in Chicago. Minois consisting of rated facilities. The Company Incurred interest axpew of
offices and coodontiniumt. The sale resulted in an after- $102.66 7-000. 8104.AM.OOD and 3107.7. 80.000 in IM.
rais pin of 832.00D.000. which was included in the 1986 and 199S. respectively. an shon-seran end long-term
MtSuct ringprovision. borrowings from affilisited .companies.
Investment in Inessece, Limited Sol* OfAcces"M Aactio"It
The Company has an equity interest in losses Lian. The Company has agreements with finsocial imdtu-
ised. a Canadian company with operations in the tobacco. tiom whereby the Company has the right to sell. with
restounat. retailing and fissasselial services industries. limited recount. certain designated accounts receivable
Due* 1987, and 1966. the Company bought additional an an ongoing basis. At Dam 1 31. 198' and 1966.
sham of Inseam which isicreased its equity interest by
accounts receivable, as reflected in the accompanying
13.816.ODDuWS13-".149.000.reopmiwely. The consolidated balesice sheitts. were net of$' . ISAM.006
Company's investment in Imascii at December 31. 1987. and $160.000.000. respectively. reprimmit* interest in
was $285.103.000: the Company now holds a 10.3rre receivables sold to the financial institutions. Under the
interest in Imasco. The isivestment in Imseco is included term of the agreement. the Company Is contingently
in 'Other assets." hable. subject to certain limitations, for the ultimate
The sham are not registered under Canadian enuti- collection of these receivables. 'This ap at eat maybe
6" laws. as a result. the Company is restricted as to the terminated by either party upon appropriate notice.
way is which it may sell the *hat".
NJ
B.A.T INDUSTRIn P.LC_ - FARMESOTA DEPOSITORY COPY - PRl)DUMO PURSUANT To I VILO. OF
CoNsEw JuDomEwr DATED SAM IN STATE oF Aftmasom ET AL. v. Pmxp MoRow Er CASE NO. C11-9441565
BA TUS Inc. Notes to Consolidated Financial Statements
Inventories
Intat*ble Assets
Inventories at December 31 consist of the follouing:
Intangible asseu at December 31 consist of the fol-
46.6'
19117 IV"
lowing:
Rrtlil UMM%dw .................. 6 312.439 8 492.1"
6. ih.@ftsk' 199, Ila
stsods"."d Ps WM ..
Trarlevark..W 2*4.402 1356,064
WOW"$ @ew to% . ......
....... 347.213 109.815
Psiquip ........... ................ 113.363 H2.5-3
I.artebseft ...............
....... 32.-
...33 5".039
0." -t- d
Manalstowtax wat,nai.
f 6- 42.364 37.7"
and "Ptsair .............
.. JW97 119.341
430.13" 4%.403
T*W e FIFO -t ......
....... 1.333.900 1XS.9U
Lo- wtuvdatd -nintmA ........... 191.063 M.431
E@ f FIFO mi -r
-
8239.006 1:54.972
M.958
Short-term Borrosciap
Short-term borrowinp consist of borrowinp from
- The efleft on income of utinF the LIFO method is
banks and an affiliated company (see transactiom with
sominarized as follows:
affiliated companies note). A summary of certain data
(i.
199-1 046 Ins
related to short-term litirrowinp f*Uows-.
iWMW late"WI:
riftsh4w"s6s 1111117 19611
Referefipidssine(mrian
A,nato d6fily bstrowmps ................ 8 :.641 1 &W
Efls@4 of bqWdatiis d wnw;o
Maxisewe is-r-top "I.M06"m
LEFOix"ats""nWis
IS.76,11 UJIM in
my wAmth -d Auring %6 "or .......... S t6.9% I It."t
Wviottssl overop iswevo we
goal as isesw Ifts
ds dapy bonvings 0"ussedin;
sooda"We 0 "
slodsw use ?. ..................... 7 ra 7.11%
I ; astowsaw ........
(U.443) 30.161 .In
Was so * fross
rJamsed LL", of crea
&MOM"ved op"Wis"
At December 31. 19r.. the Company bas 11139.000-000
tow ........
-
of unused lisms of credit for Shen-low financial with
36.161 1
banks. Fee sted eampausatinS balance requirements at*
not &*nificaut and balances are not restricted as to
withdrawal. In addition. the Company IM an informal
agreement with B.A.T Industries under which It way
borrow up to 8350.000.000 from RATIF: all of Ws
amount is unund and avagAlst at Devember 31. 198'..
The Company also, has a U0.800.000 revolviar credit
Wessment with an affiliate for long-term financial. ';%a
borrowinp won outstanding under this agreement at
December 31, 198'..
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29
LA.'T IHMMMIES RLCL MllMMESOTA Domffm Copy pWWCED PuFmAxT To VILD. OF
CONSENT JUDGMENT DATED SAW IN STATE OF AbMSOTA, IT AL V. PMtP_AkRPM CASE NO. CI-94-MS
I BATUS Inc. Notes to Consolidated Financial Statements
"V40sm Debt
The approximate amounts of payments on long-term
Long-term debt at December 3 1. exclusive of amounts
debt. excludin; obligations under capital leases and
due within one year. consists or the following:
affiliated debt. for the next rove years are at follows:
(i.thows&P 19117 ins
fin rhoweastal
Afr&.wd vmipsay@
low ........................... .......... 1 4-M
Solm,dussord mor. 16%. doe IW2 isi ... 8 31SJ40 8318.240
IM9 ...................................... $5.135.
So6wAi-ted sow. 13%. do, 1"' it.. . . 200.000 W0.0110
1990 ...................................... S 4AN
Sabo-dis.W4 soo. dw IW. I&, 1h4 .... 1-20.000 t2QAOO
I"I s L-411
SWWWd"saw mse. 9 114%.
IW ................ ....... ............. 13.03.
dw IV" 401 ............ P...... 25A00 25.000
SolsortiisaW sets. d- IW- ir ........ 120AU 113JV
Approximately S$84.1'.4.000 of the subordinated
.414.17.4 77 7.10".
affiliated company debt is scheduled to mature in 1992.
Otter.
MsMsV terso lox. Ao, IWS - d ....... 30-000 38.01W
Income Taxes
Xwtpv mw joysbu.
Income taxes payable. included in current liabilities at
.Owd M."W sparest. 12.1%
December 31. consist of the following:
4eas L by * ith a
6. dwspoods, 110117 1106
am 6A volov of "3414,000
at Dreimber $1. M I ........... 32.93S S5469
Cormt ........................... It 2b-1.131 S 1612JID
O"Poom MAW Capitol
Correst de(rrrvd .................... *.163- 1-3.63:
kom wrwlbw
2 2&9-"4 $ 175.95.1
interest. IG.S46 .... ........ -- 28437 slim
06". Primipay mdustrial
rrvmw beawks. W
The components of the provision for income taxes on
&.4"r IMWML M* ............ 34j" SGAIG
continuing operations are as follows:
L26JU ULUT I
(to shomande) 1967 1016 INS
0 1110j" J1 910JU
Carom .................. $300.818 1163."t 1113409
Ddersed .................. 49.442 I.-3NI 143.911
113SOJO 4 338."S S ZIL400
(a) These now are subordinate in payment to all
external ask up to a madmum of $1 billion.
(b) Is' Is okerpd at Uld% over aftUigtt*s
The table below monciles the provision for income
interest raw 11.119b at December 31. 198'. -
taxes computed at the U.S. statutory income tax rate to
(a) Internet is charged at variable rat"; 7.8% at
the Company's provision for ineom; taxes:
December 31. W. Tblo note is subordinate in payment
-0 all existing and future external debt haw* a WAted
fin &snoods 1 1*17 11416 IM
maturity is extent of 000 Year.
provioloo at Out"Ory Us rote:
(d) Interest is charged at the London Interbank
lor. .40%
offered rate plus 0.65% as determined annually at the
ION not IOU - 46% ...... 8326JU 1 MM 126MU
begimainj of each interest period; 8.8* at December 31,
laves"W" "A edw as
I.M. Tbe ken is collateralized by assets with a net book
(esedits) ""nue ........ 996 14JW t15.7961
value of $31.703.000.
so* md Isol I fisms
(M offederld to booliel ... 32.142 :32" &W
04M.Im ................. 194") (5.0411 118.1.40)
0 33*J" 13111.111106 12111,
zRoad" WA raw ............ 4L9% 48.2% 4140%
30
N:
B.A.T INDWMIES P.LC. MMMWA DEPOSffM COPY - PRMCED PURUJANT TO I VILO- OF
CoNsEw juDemEwr oATED sma iN SrATE oF UNNEsom, Er AL v. PmLP AfmRAL ET CASE NO. Cl-94-GM
BA TUS Inc. Notes to Consolidated Financial Statements
Components of the provision for cipferred income taxes Future minimum lease payments at December 3L. 199' .
are as Wows: under leases that have initial or remaining noncancel.lable
terms in excess of one year are as follows:
6. dwoo*.&) I"T 11166 I"s
U. dia"Mumotal stribW for Capitol oper"
dff.,.d 9@1 .01#@ .... - 64SOJIll 1 6SA31 1 84% L#*@ EA%-
Ewm of to. @ I"t .............................. s 3.4" 1 2S."I
ots'INW0641, , U" 10 . .............................. CIS., 29.311
&ad soo-mast . .......... 31.331 S%111 41.151. IV . .............................. 4.130 17.093
E ... o of sax - finamnal I"I .......................... ... 3.9" 14.971
Kstv@t MIA IW-.. I ..... ---- ... -- ... 3.1116 ISAR
tvitt"nonso: Provision ..... 21.879 L.61. - Ijt- @vsrv ......................... .3.- 112.113"
E-. ofetterm 4as avata- 1 60.381 12DS.266
.-vAs4MtW.tMw@t
t(Im of Los troad" Future capital lease payments include executery costs
sol Irverstird Ies . ........ 47-424 S1.639 0.3.19 of IIA56.000. Interest of 112..541.000 and princip'sl pay.
--sionsaw
Advered estepro"Li oa ...... 112.7.63) 416.7ab- 41.779. agents o($31.191.000. including 32.JS4,000 due In 1988.
Some and Inca waft .......... q9.1107 1 4.01 @ 6.Wh, Rent expense was 350.1101.000 in 1987. LL41.325.000 in
% Wswory Emple? - 1996 and 337.647.000 in 1985. including contingent rental
DaWk psymems *16CW.000, $6.0SL000 and 35.17.0.000,
Otitor. mot .................. (AJ241 :.-$6 8.3" respectively. Contingent rental payments art based
49.442 8 13.241 s 103. 9ti primarily upon sales at various retail store locations.
Other LoV4*rm LJobitides
Other long-term lishiLitles at Decemober 11 consist of the
The Company lemon land. retail atoms. store fixtures foliowing:
:nd other fedWas and aqWpt. Kany of the looses
b*se the Company to pay real estate taxes. insurance (is Avassmlet 1997 19"
and asaintansaft cow and contain multiple renewal befirrod insist tamos, a. .............. $ 44%AW
options. whieb cover periods rought from out to eighty- pitanses mod Amirr"d sompos"d so ....... ST.2111 UAGI
"won Years. Up-stepom I pd . ............ 19.924 12.01-2
Leand property under capital loans at December 3 1. OW4alsomandettradt rkand
1987. smad 19116 consists primmoogy of Isati. badlings and troils Now agqmw*m appoestams ...... - r, ASO
improvements. Accumulated capW low amortization Other ............................. 76.199 14ASI
was 81" J31,000 and $14.90-9.000 at December 31. 198- 0 ?43=11 I M-154
and 1986. rempee"y.
Obligations under trademark and trade name acqulai-
Uon agreements are payable to an aftUated company.
r"i
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if
M:
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B.A.T Immmmas MLCL - MINNESOTA Mpowm CoPY - PRMcED PURSUANT To I V11.1). OF
CoNsENT.JuDamENr 0ATEo5/8MiN SrArgoicAftowsom, ETAL. V. PMXPUORMM ETA CAsENo.041441565
BA TUS Inc. Notes to Consolidated Financial Statements
postretirrene"I Bestoftes
The Compan@ adopted the provisions of Financial A--t. E%mJ 4,uauWd
Accounting Standards Statement 'No. 11'.. -Employers* Arevoulso.1 Bmwat'
Accounting for Ptnsilens- il'Af 8% during 1966. pen. 0-d-seh. brortits E%m@d A#@.
ition tspense for 1985 of F33.' MAN was determined in Ms. ..M. .. fair -11. ............. 1 mg.731 813.343
0
ecardance with Accounting Principles Board Opinion Actuarislpmow.sluea -
Z. S. bruent -64.@;
The component* of net periodic pension expenoe for V.AM ................... 639.7,4 33.n:
19S' and IM are as follows: Nso-ird ................. S.M
(i. thamissub, 1991. IM Armowlaird brorni oblicau . ...... "I IY.b69 39.44'
Servire mat ....... ................. 111 3 I-M I ' .1.6" Effm of pft)"Ind
In torm voo so pftjm@f insAi oblipiwo 64.1162 60.659 (Sturesdan increaft . .......... W.&" 11.168
Return - plan .u ................. 1".9241 MASS, Pftjmrd b-to .1ttiptine ......... 56.1.033 MAIS
Not swertissues sun Merest ........... -j,40.2131-9-.69 plan ".40 in "to% of.k" than,
t r "'k P"nue ... -'-- 5 13.031 3 Mr.3 bliqx1i
The significant assumptions used to develop act Varreogou" ort ow.t. Uabilit@ ..... ITS.". I M193
perio&e pension expinme for 1"T and l"6 were; t:omvWuxM art 1paint lovs ......... 91.9.16 5=4
199.1 ... 1 29.7" 1M_ LU i
Dousent ewe ........................ &.%% "AM
Loosp-wrox row (muro so earts ......... 8.10% 8.17* In addition to providing pension benefit*. the
Compsiostiou FM.Lh no . .............. 6.90% 6.24% Company provides himith and Life insurance benefits for
certain retired emplovers.
The Company maintains funded and unfunded During 1986. the Company began to accrue the
plam. Assets of the funded plan primarily consist of actuarially determined Holdlity for r*drm* health and
markst" equirr and fixed income socurides, insurance life insurance cats over a ten vow period. The cost of
annuity coatraet;. and real mate. The following tables redrims' health and life istsuraner benefits was
detail the funded status of the plans and amounts recog. $16.M.000. $14.911.000 and SM4.000 for 1987. 1906
mined in this flonsocial statements at December 31: and IM, respectively. Health and life insurance costs
11117 shown above for 198' and 1986 include. in each year.
AnintiLowed Accumulated SOA66.000 related to dur accrual of a portion of the
actuarial babilitv.
Aagwwalwd awmeau
(in shOMMI&O ISMIVAS 1110red Alma Finance Ckew Income
Plan earn at . . . ............ S 111111.3go S14.10' . Finance charge income an retall customer accounts.
NWW Proven -ak* of which reduced sellisig. gonstral and administrative
bards obusad-0: expenses in the accompanying consolidated staterments, of
vow ed ................... SMI" "J" income. was $67.928.000. $69.%5.000 and S62."S.0DO
WM"NW ................ "1"1 6.600 in 1987, 1986 and 1985. respectively.
Armoodead ba"t obligation ...... "6A97 4IJ60
gairaterprow"
him salary kinors"s .......... 132.400 9.3"
rmionw bomwk emwtim ......... SOJ24
rim assess Looses" d4m; deal
prooned km& obwed se ......
L%resopened set isim. K"iy ..... (76.139t join
ussampniord prine, Win" row ...... 1006 so
Ummoopwwdattlpw.lw ......... 7.7" (468)
34.7 .33 04164441
B.A.T IMMMIES p.I_C. - mm"=A opourm Copy - PRMCED PURSUANT To I VILD. oF
coNsENT JummEper DATEo SMW iN SrAyE OF Alkwason, Er AL v. PNxiP NORM Er CASE No. C14M41565
BATE'S Inc. Notes to Consolidated Financial Statements
Industry Sf#Wftf Information
(is rhouse.A.,
I", Ism IM
The Company hat operations in three principal
N.t.86r.:
industry segments; Tobacco. Retail and Paper. Tobacco
T.4@ .............
92.406-M n-*T:Jff
operatiorti consist of the production and marketinj of
MetaJ ...............
2.5"AM .1X1.280 2.1'4.934
cigarettes and other tobacco product* and the processing
NP ...............
' -.9.312 7.3.:Il 619.139
le f tobacco. Retail operations consist of department
,
:
:
CwmalWateil ........
83.934.501 $3.4-0.4321 IS-06.902-
pecialt*% store retail merchandising. As discussed in
ad
the retail rettructuring note. the Company said certain
01watial wsruar:
retail businesses in 1986. Accordingly. the discontinued
Tob@ ..............
8 613.3S6 1&U.4M 14U.-.OO
operations have been excluded from the Retail segment.
Frt
U
371
213 1%
5
165
101
Paper operations, consist primarily of the manufacture
s
................
.
.
43
.
7
and tale of carbortles
s and other specialty papers.
Pop . ...............
126.31
, 134.34- 112.144
.
Net sales hy industr% segment include sales to B.A.T
Tout rpw&u .......
910.11414 36730
Industries affiliate, and interiegment tales. both of which
Goveral-porso,-pease,...
(24.5971 119.0381
are immaterial.
Opradaii i . . ..........
111116.2117 11".= -.01.90,
Operating income is defined as met sales less operating
1111.37.0 1434, 13.014
-pentes. General corporate expanses. act interest
NN untren vapam ........
(88.194) 0MAW 114'.6"'o
expense. nonoperating expenses and income taxes have
lacsou, frow cossinvial
not been deducted in determining operating income by
operadvas ber-
industry segment.
proAimseforistonstuize,
S $16.463 S '0230 S ULM
Total assets are those asset* used in the operations of
the respective industry sepainsts. Total assets as of vear-
Tsud sswu:
end 198. have been reduced to reflect the tale of
Taber" ..............
a 981.109 $1.0:1.4" S1.051-102
Tobacco. Paper and Retail accounts receivable of
It . ................
1.311441111 1.1.79.M. IA10.775
M41.5M.000. $36.900.000. and 1145.400,001). retpec-
Paper ................
OW301 MASS SUA16
dweiv. Tool assets for the Tobacco and Paper seinsenu.
Total ostionsto .......
2."9.7" 3.Ul.131 SJUJ"
" oi year-end 1986. have been reduced to reflect the sale
Diessadwoodepration
- - 11412.1"
of amounts receivable of 11100.000.000 and $60.000.000,
Ceeperaw ............
1.70"78
respectively. Corporate assets consist primarily of cash.
short-term investmots. equity investments and invest.
Ces"Milawd ........
"AMI-76 0424-2t3l 04.317.4st
issents in tax transfer and leveraged lasses. The Company
has me alipme"t foreign Opel doms.
C&OW -p-dk-:
Financial information for the Company's continuing
Tobsew ..............
8 ".594 852A1.2 S SJ."',
operatioas by industry segment for 19r. 1986 and 1985
RMB ................
203.1" 11GA" 161.430
fouttwo:
p. Or ...............
".1." 60.678 IZA"
ToWaviessaw ......
247-M 237.760
Dissandswed I. .
- - ".1216
CGCF . ............
538 3.456 M
Comselidsted ........
0 249.420 82141.855 S2114=3
Dspinciad" sad i
Telisew ..............
6AL9112 I
SOA16 A
SUN
a. ................
Mill
U.721.
1123"
pop ", ...............
46.1"
41.181
Towasianiss" ......
10.40
MASS
Dwmmdmwopwaoau
IIA"
Calmrsut ............
901.
late
W.
Caswelidand ........
6 1 TL622 S
161.919 S
MX t
NJ
is
CD
BAT INDUSTRWS P.LC. MmawA Doiosffm COPY - PmwmD ftmmT TO I VILD. OF
CONSENT JUDWANT DATSO "M IN SrATE OF MkNWSOTA, ET AL V. PNLJP UORRM ET CASE No. CI-944US
I BA TE'S Inc. Notes to Consolidated Financial Statements
"figration
Subsequent Event
Or,,wn & Williamson Tobacco Corporation. a
On March 3.19M. the Company made a tender
subsidiary of the Company. and the other trading cip-
offer. at $63 per share. for sit or the outstanding common
refit manufacturers are defendants in actions seeking
sham of Farmers Group. Inc., an insurance company
damages for cancer and other diseases claimed to have
headquartered in lAn Angeles. California. The cost of
resulted from ciprette smoking. All similar litigation in
the acquisition. based on the $63 per share tender offer.
the post had been successfully defended by the cigarette
would be approximately 64.5 billion and would be fi-
manufacturers. and no payment. in settlement have v%er
nanced from internally generated funds and a $3.2 billion
been made. While it is not postibb, to predict the outcome
Imr-ro-ing from B.A.T Industries and affiliates. The
of the pending litigation. management does not believe the
proposed acquisition is subject to regulatory approvals
pending actions will ha@r a materially adverse effect upon
and other conditions as contained in the Company.s
the financial condition of the Company. -4,11 such costs
-Offer to Purchase.-
%-it be vigorously defended.
Report of Certified Public Accountants
The Board of Directors and Sharoholder
B,LTVS Inc.
We have examined the consolidated balance sheet of BATUS Inc. and
subsidiaries as of December 31,11"T and the related consolidated ou enu
of income and retained earnings and of changes in financial position for the
. car then ended. Our examination was mode in accordance with generally
v
accepted auditing standards and. accordingly. included such tests of the ac-
counting records and such other auditing procedures as we considered
necessary in the circumstances. The consolidated financial statements of
BATUS Inc. and subsidiaries as of December 31. 1986 and for each of the
two years in the period then ended were examined by other auditors whose
report doted %larch 16. 1987, expressed an unquallfied opinion on these
financial statements.
In our opinion. the 1"" financial statements refiarred to above appear-
ing herein on pages 20- 24, 26 and 2. -34 present fairly the financial position
of BATLIS Inc. and subsidiaries at December 31. 1"', and the results of
their operations and the changes in their financial position for the year then
ended. in conformity with generally accepted accounting principles applied
on a basis consistent with that of the preceding year.
Louisville. Kentucky
March 14. 1988
34
NJ
BAT INDUSTRIES P.LC. - MINNESOTA DEPOSITORY COPY - PRODUCED PURSUANT TO I VILD. OF
CONSENT JUDOWNT DATED $/&I* IN STATE OF UAINESOTA, ET AL V. PNXV "1110. ET CASE NO. C14M-MS
The BA TUS Group of Companies: Senior Management
Brown & ItIffinnison
Roy-mead J, Pritchard
Jerr@ R. Axuier@
John A. 11,101owulth
Robert H. Sachs
Tobacco CopporatioA
Chaim%ri &
John H. Built-
Michatij.McGraw
Can-a H. Tropic. Jr.
Chief Exrrufi%e Officer
Lanny W. Butler
Ernest C. Peppin
Chark. D. White
Thomso E. Sandellow. Jr.
J"h S. Hele-jes
Harry A. Roeder
Thons- E.'Whitelsair. Jr.
Prnideat &
William 8. Knsble
Chief 4.4@roiinj Ofrk,,r
4pplelon poison Im.
John W. Turner
Lawrence J. Cat-j-
Danivi'g*. Mclatomh
Paul G. Mner
Chairman &
Rirb&M Cur-en
E. Frank McKinn-
John L. Tucker
Chief Exerutnt Offirer
Romalif C. Jeterr
Dole H. Schumaker
President &
Chieroperiiiin; Omerr
-eks FOAArrutur
Nelvin J-ob*
W"" M. Brrta
jivansw T. Jacks.n
Sidowl A. Mayer
Chairman &
James R. Clifford
Paul Liblang
Joseph E. McEvoy
Chief Executs-P Officer
Jack G. DeLer;%-
Charlie, J. Ue,n
Home. A. Rosenbloom
Urion M. Tanok@
J"h R. Grarack
BUt L. Lucas
Ellin i. Saltzman
Prnidont
Also N. Grominon
Anne H. Maddott
Timothy J. Tobin
Marpret C. Haves
Gerald J.Mathe.t,
Naro J. Urshol
Lawrence C. B. HiU
morshou riou'r
Phillip B. Miller
Walter G. Brown
Michael A. MacDonald
Sanford T. Sacks
Chairman &
Robert R. Cappem
Tedford 0. Made-
Kathy E. WIckstrow
ChW Executive Officer
Siltrid Dywk
Kmuw& I. Monroe
Gar, M. I-fthin
Burness W. Domoloss
Christina Johnson-Weliff
Melanins E. Rom"a
Michael B. Zeman
President d;
Phillip K. Johnson
W111111mot W. Rush
Chief operating Orr"r
Ivey-*
Jan" H. Show
John A. Foripiton
Unda McFarland
John E. Wavelets. Jr.
chairman
J. NgvW Fl"urkk
John H. Patio"
Alan E. Wiley
Domild L XWW
Ronald J. McE@oy
Richard L. Schwab
President &
Chief Executive Offieer
-krnrj Them" G. Grim" Gone L Simpson lack S. Vinton Arembew C. muclaumn
Chairman & Vicaris IF. Bradshaw Laurence H. Gnal Thomas W. Seoti
CbW Executive Otrwair Return A. Bunors
Thixw" jeo"It S. Comatilly Carolyn L Suestrinatidin Rielsord J. Mascara Grqer7i T. Moothim
Clashmon, & President
Child Eitreati'v Officer
C,
35
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LA.'T INDUSmES P.L.C. - U111111141EMA DEPOSITIM COPY PWWCED PURSUmT To I VILD. OF
COMEW JUDOMENT DATED 500 IN STATE OF AMMSOTA, ET AL V. PNLIP WROW, ET CASE 140. C14M-MS
BATUS Board of Directors and Corporate Officers
B4"vd of Dievelor, Corpownte offli-em
Patrick shroh.
Renr.% r. Fripon*
Chairman
Proidrni & Chief Executive Officer
B.A.T Indavirie, p Le.
Leonard W. A"attem
BATUS Inc.
Excruti, r Vice Presidrim
Hoary F. Friton"
Carl J. Herr-
President & Chief E%wmtiit Officer
coniur Vier President &
L*onwd W. Arootten
chier Finstimal Officer
Executive Vice President
Arthur C. Martinez
Carl J. Moves*
Senior Vier President
Senior Vive President
Ton@ G. Holl
Chief Financial Officer
Vire President of Human Resource&
Arthur C. Mwdwz
Earl E. Koludiont
S.niw Vim Pretwent
Vice President of Planninit
Raymmand J. Pritchard
Unused L Lylve
chitirms a Cider Executive Officer of
Vice President of Minority Affairs
Brinva, & Wigismon Tobacco Corpmetion
Not! H. Roe
John W. Tomm
Vice President & Treasurer
Chairman & Chief Executh r Officer of
David A. Sthethaor
Applown Papers Inc.
Vice President & Gem a] Counsel
Richmed W. Ty6r
Vice President A Comitraller
WWOR W. Wyatt. Jr.
Vi" President of Corporate Affairs
Goveromment Relations
F. Anthony Burke
Sntkw Counsel
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The SATUS Group of Companies
Corporate Headquarter*
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Lmisvilk. Keniurky 4"W2
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Brown & Williamson
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P.O. Box 33M
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I.mi- WeC&Urria
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Appleton Papers Inc.
World*s leading producer of carbou"
P.O. Box 3$9
paper and colored ensearl.. and the leading
82S East Wisconsin Avenue
U.S. producer of thermal paper
Appleton. Wisconsin $491:
APPLETON PAPERS INC.
Bass Flfth Avenue
44 fashion specialty seer" in Arisana.
611 Fifth Avenue
cavarnix. coattectieut. nsews. cftvrw.
Ne- York. N" York 100=
Illinolb. Louisiana. Maryland. Xmacbu.
setts. Michigan. Missouri, Nevada. New
Jersey. New York. Ok1*. Oklaboses.
Pennsylvania assd Texas
NNW" Flow'*
:5 department seem in 111hossis. Texas
I I I North State Street
and Wisconsin
ch"P.11irmip 60M
24 departstarat stores a North Cara".
12' . North Trvea Stem sooth carolias saw norids
Charlotte. North Carolina 211202
1'. base* flarainh* Kom and
U01 Fostoria Way 40 furaduarr rental Mean in kriaossa.
Brouners Son Reason. California 941111113 CaMinge and Nevada
I%kauw V. stem he Co"Fewst. Georght.
1001 Avenue of else Ajorricas Illinois. Kamm. Maryland. Massesebu.
New York. New York 10018 sob. Michip". Ximwma. Missouri.
Tbinibles New Jersey. New Tork. Ohio. pentstylva.
0". Virginia a" Wisconsin
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s, Priampall Dowwou Branth:
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e ManufaeturmF Faciliars:
BARCL&Y. BELkIR. C,%PRI. rUCON,
BARCLAY. BEILUR. CAPRI. KENT.
M.run. Cearlis and
K00L. RALEIGH. RIC4L%ND.
KOUL. LUCKY STRIKE. NE11 PoRT.
191noisn -Sidem. North Carolina
VICER01. -Pn, aw Lai-,; Brand----
PAILLMALL. ILALEWH. VICERUI
* "f Tsebarro Prisev,soing Farility:
IL il,nn. Nstrth Carolina
Product Arsut@ C;srb-@nies- C-r@ Paper
Manufarturing Far&ws&@
C-atin; and Fintking Plants, in Harrisburg.
(N'CR Pal,,rl brands; Gr4plu,- Arti,
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P@nn,% Ivanut. Appkt.n. It isconssus.
Prodocts, ipalser and nvnp&Fwr%
SFaring. Pennsyl,aniss. Combined Lsis,L..
and Peirrbsrssulth. Ontario. Canada---
Nuninspart Printing Patter, , Applewn"'
711,6cunain. an@ S "t Carrollton. Ohio-
- Cap-sidar Plants in Portage. It itransin.
Aermal Papers: Con,tri-ter Gradft
and Harrisburg. PennsAssmia
fasprewty Mated Patters and n..npslwb I
C"irad Plant in Musketon. Morkipan."",
The BATUS Group of Companies Locations
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Lauist-iffir. KY 40202
502-531-81m)
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