BROWN A WILLIANSM TOBACCO C98FORATION
FORK 1-1 SUPPLEMENTAL SCHXDUW
ANAMZS OF TURNOVER
ketual 12 pfpntha to Dec-ember 31. 1979 vs. 12 months to December 31, 1978
U.S. 8 In Thousands
CIGARETTES & OTHER TMCCQ PRODUCTS TMUNMR CHANGE
Domestic -Turnover
1. Unfavorable.volume and mix effect due to a 3.802 million
unit decrease in domestic cigarette sales - 54,792
2. Price increases on cigarettes generated additional sales
revenue of:
A. June 12, 1978 price increase of $.85 par thousand., + 35,542
B. December 28, 1978 price increase of $.55 per-thousand + 44,522
C. July 20, 1979 price increase of $.SS per thousand + 20,631
3. All other Factors 746
Total Domestic Turnover + 45,lS7
Intornational Turnover
1. Favorable volume and mix effect due to a 112 million
unit increase in BW and B.-A.T. brands cigarette sales + 974
2. Favorable volume and six effect due to a 1,097 million
unit increase in Hoorgato brands cigarette *aloe + 10,182
3. All other factors primarily attributable to price
increases on cigarettes of $1.10 per thousand in
March, 1979 and $.85 per thousand in August, 1978 + 17,930
Total International Turnover ijI&M
TOTAL CIGARETTES AND OTHER TOBACCO PRODUCTS TURNOVER + 71LL@l
LEAF TOBACCO TURNOVER
Total Leaf Tobacco Turnover decreased mainly duo to
reductions in S.-A.T. stockpile and U.K. requirements vK Z__ISL)27
GRAND TOTAL TURNOVER &.JJ&0.76
CD
CI%
LA-T k=$TMS P.Lc. - MownwA Doveffm Copy - Pftxm Purmwr To WD. OF
COWNT JUDOMW DAM 5MM W SM790FAWSOWA, STAL, V. PMPMWWM EF CAMNO.Cl-944M
p,BM jjg,xLLZkNSO-N TOBACCO CORROMIZON
FORM 2-1 - SUPPLENWAL SGWGM
ApaLysrs or TWIM 190FIT - NMMMNT AMOVINTS MiN
jkctual 12 Menths to Deggaer 31, 1979 vs. 12 Moths to December 31, 1978.
U.S. in Thousands
pgOWW Wn.LyMow ZMCCO ZXCUMXUG MMORT
I. Domes&ic ZMfit Contribution
1. Domestic variable margin increased $62,286 primarily
due to the following factorat
A. unfavorable volume and mix effect due to a
3,802 million unit decrease in domestic
cigarette sales quantities - 22,200
B. Favorable effect of the June, 1976, December 28,
1978, and July. 1979 cigarette.selling price
increases (see comments an turnover) + 100,695
C. Unfavorable effect of increases in freight and
handling charges on movement of finished pro-
duct. - 2,085
D. Domestic variable mkaufacturing cost increased
$13,520 primarily due to the followingt
1. Higher leaf purchase prices and the cost
of leaf usinqs - 9,498
2. increased hourly workers' wages and cost of
living allowances offset in part by higher
levels of production at the Macon plant - 2,092
3. All other manufacturing cost factors - 1,940
N. All Other factors affecting Variable Margin - 5%
2. Marketing expenses increased $66,389 primarily due
to the following factors; %k14
A. Specific brand expenses increased $57,051 due to
(1) $42.000 increase attributable to ARCTIC UGHTS
which was introduced in March, 1979, (2) $19,000
increase attributable to VZCZR0r RICH LWM which
was introduced in October, L978, (3) $6,000
increase in KOOL established brands primarily
attributable to the introduction of KOOL MILDS NJ
100's, (4) $4,000 reduction in KOOL SUpERLinvil 1@q
spending, and (5) $4,000 reduction in RAwlas J@lb
spending. - 5 7, 801. N)
J:bl
LAJ Mmm" p_LA WW*WA W=My Copy _ pWW= Pur
AUMT To I VLID. OF
COMBE"T J1W*1 DATO "N N SWW OF 00AWA, ET U. V. PWP MWW ET CAU No. C1444M
2
j,
AN&U
M DIP TRAV=G PROFIT CONT==
B. Decreased levels of returned goods from the trade
accounted for a $2,485 reduction in cost. This
decrease in returns was primarily due to higher
levels of returns in the 12 months ended
December 31, 1978 relative to the cancellation
of FACT in Karch, 1978 and VICZROY EXTRA KILDS
in S*pteabor, 1978
+ 2,485
C. increased Selling Field expenses attributable
primarily to normal salary increases and incro-
mental cost associated with field sales
personnel additions
- 5,693
D. Increases in cigarette coupon promotional
expenses
- 1,557
E. increased spending for non-specific brand
prosotional cost primarily attributable to re-
visions.to carton display controls and incre-
mental spending on merchandising materials and
handling
4,573
3.
General and Administrative expenses increased $6"
primarily due to (1) increase in bad Debt expense
$1,731 mainly attributable to the write-off of the
Eli Witt Cowimny accounts receivable, (2) increased
sal:ry expense $1,447,(3) decrease in Professional
Fee and services spending $1,105, and (4) Decrease
in all other factors $1,427.
646
Total Domestic Profit Contribution
"79
11. In
ternational PXofit Contributio
1.
Favorable volume and mix affect at variable margin
due to sales quantities increases of 1,209 million
units
+ 3,739
2.
increased sales revenue attributable primarily to
the March, 1979 and August, 1979 cigarette price
increases (see comments on turnover)
+ 17,938
3.
Decreases in variable margin attributable to
increased Royalty and Manufacturing cost
- 9,930
4.
increased spending due primarily to advertising,
promotion and brand support cost
- 6,938
S.
All other factors
- 1152
Total International Profit Contribution
+ 3,281
StqzVLzOz
B.A.'T INXWrMS PX-C- - MWMWA OPONU)" COPY - panum Pumma To I VILD. cW
CoWWr JUWWW DAM IMM 00 -STA71 OF.4#*WWrA, Sr AL V, PmLr 4000M ET At- CAN No. C14M40"
7- 3 -
ASALYSIS OF TRACM PIRFIT COVT==
III. Undistributed Envellses
1. Increased Manufacturing Overhead expenses due
primarily to (1) increased cost at the Macon and
Petersburg plants $1,789, (2) Reductions in
finished goods inventories from December 31, 1978
to December 31, 1972 and the resulting increase
in Overhead expense $4,918, (3) partially offset
by reductions in Louisville plant overhead cost due
to reduced production $3,S23 2,893
2. Reductions in manufacturing cost variances due
primarily to (1) nor* favorable loaf, Aabor and 4
material variances than that experienced in the I
previous year $2,448 and (2) favorable effect of
finished goods inventory adjustments $3,600 + 6,048
3. Increased Research and Development ftponsos - 1,494
4. Increase in Trading Profit due to cost associated
with the Production Realignment Plan recognized
for the 12 months ended December 31, 1978 + 7;,249
S. All Other Undistributed Expenses 112 4J77
I 11L
Total Undistributed Expenses + 72@U3
Total Brown & Williamson Tobacco Excluding Export Leaf -'flf4
Tobacco Trading Profit Stated an Management Accounts Basis ±--L9AM
1DCPORT LEAF
Decrease in Trading Profit due.-primarily to
higher loaf cost of sales - 8.758
GRUM TOTAL TRADING PROFIT STATED ON A
MANAGEMENT ACCOUM BASIS + 60.307
rNJ
CD
cr%
GLA..T Is=X"M P.LJ-_ - MMMMA ogoeffony Copy pflo== PUM&Aff TO I VILLIL OF
CoNamTjuoowwDATW$4fto$rA?EOFWMWA&TALoVPMWMMMAT CAUNOCl-944M
BROWN to NnLLANSON TOahCCO COMM
EM L-1 SUPPIAMux, SCMMULp-
blunis OF TRADIM PROFIT - CTS NMW=TS
Actual 12 Months to Rgaember 31, 1979 Y& 12 MontbA to December 31, 1978
U.S. -3 In Thaveogfig
CHME
1. Cost associated with the Production
Realignment Plan - 73,249
2. All otber CTB adjuxtments + 638
Total CTB Adjustments 72,41-1
-4
ILA-T Imsymn P.Lc. - MmmumA DwKwmw Copy p"WUCM pUMMT -ro I VLID. OF
CONKW JUOMW OAM SOM 0 STAIN OF NMAWA, IT AL V. PWV UMM Er CAN NO. C1444MI