Dear Valued D&R Customers:
Contribution requirements to the Master Settlement Agreement increased effective January 1, 2003. The impact on the cost of our tobacco has been a 23% increase in the MSA component (to $3.75/lb). We have absorbed the last two MSA increases, but regret that we have to pass some of the third MSA increase along to our customers. Effective February 1, 2003 the price of our Premium Tobacco Pouches will increase $1.00 (except for Ramback which is unchanged). The price of Premium Pouches has also increased for our distributors. There are no price increases on our Ten Slash Two pack 3.5 ounce cans.
The next scheduled increase to the MSA base payment amount will be in 2008 (based on 2007 sales, therefore, tobacco prices may increase again in January 1, 2007). The table below summarizes base payments made by MSA Participating Manufacturers on April 15 of each year (based upon prior year's sales).
| Payment Year(s) | Base Amount |
| 2000 | $4,500,000,000 |
| 2001 | $5,000,000,000 |
| 2002-2003 | $6,500,000,000 |
| 2004-2007 | $8,000,000,000 |
| 2008-2017 | $8,139,000,000 |
| 2018-beyond | $9,000,000,000 |
You can learn more about the MSA by visiting the web page of the National Association of Attorney's Generals at www.naag.org. You will find D&R Tobacco listed under our corporate identity as Daughters & Ryan, Inc.
We appreciate your continued support of our premium products and hope that you understand our responsibility to MSA compliance..
Sincerely,
D&R Tobacco