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TOBACCOOUTLETBUSINESSJANUARYFEBRUARY2011SFNTCemployeesholdupthecompanysEarthFriendlyTobaccosigntobedisplayedonthecompanysPRCfarms.AeldoftobaccobeinggrownaccordingtoSFNTCsPRCstandards.havent.Wehaventchangedourfocusonthemostimportantaspectsofourbusinessthequalityofourproductsandourcommitmenttoourconsumersandourtradepartners.WecontinuetooperateoutofSantaFeNewMexicoasanindependentsubsidiary.Wehavethesamededicationthesamemissionandthesamehigh-qualitytobaccoproductsbeingmadeandmarketedbymanyofthesameemployees.Westilladdnothingbutwaterandcaretotheselecttobaccoleavesthatmakethegradeandwearourwrapper.Ourmissionistomakethebestall-natural100percentadditive-freetobaccoproductsavailableanywherebecausewebelievethatsmokersdeserveabetteralternativetothehighlyprocessedchemicallyalteredproductsofothertobaccocompanies.Wealsobelieveindevelopingandsustainingrelationshipswithourconsumersandourcustomers.AsaresultNASsmokersareamongthemostloyalofanyinthecigarettecategory.InadditionwecontinuetohaveastrongcommitmenttoenvironmentalsustainabilityandweareoneofonlyeightconsumerproductscompaniesintheUnitedStatesthathasearnedtheEnvironmentalProtectionAgencysGreenPowerLeadershipawardbasedonthefactthatweusewindpowerforallofouroperations.Andourtrademarketingteamisrapidlymovingtowardusingaeetcomposedentirelyofhybridvehicleswhichproducesignicantlyfeweremissions.OurearlygrowthwasinsmokeshopsbutasourcompanyhasgrownandanincreasingnumberofadultsmokershavelearnedaboutthefeaturesandqualityofNaturalAmericanSpirittobaccoproductswehaveexpandedintotheconveniencesegment.Teyarenowresponsibleforamajorityofourretailsalesvolume.Weprovidepoint-of-salematerialsincludingourfamouslitsigns.Wedonotdopromotionshoweverwestandbehindourproducts.NaturalAmericanSpirittobaccoproductsare100percentguaranteedbySantaFeNaturalobaccoCo.Non-sellableNaturalAmericanSpiritproductsmaybereturnedtotheretailersdistributororreturnedtousatourexpenseforproductreplacementorrefund.Inadditionweoeragiftcerticateprogramtoadultsmokersandwedirectconsumerstothoseretailerswhoacceptourgiftcerticatesforredemptionsoitisabenettoastoresbusinesstosellourproductsandredeemourgiftcerticates.AnyretailerwhodoesntcurrentlystockNaturalAmericanSpiritcancallhisorherdistributortobeginsellingNASandbuildingrelationshipswithourcompanyandourconsumers.Federalstateandlocaltaxesmakeuptheoverwhelmingmajorityofthecostofapackofcigarettes.SFNCdoesnotsupporttaxincreasesastheyunfairlyincreasethecosttoourconsumersanddisproportionatelyincreasethetaxburdenonadultsmokers.HoweverdespitetherisingcostoftobaccoproductsweveseenanincreaseinthegrowthrateofNAScigarettesalesoverthepasttwoyears.Tatsbecauseasthepriceofcigarettesincreasesagreaternumberofadultsmokerswanttobuythebestproductavailablefromacompanywithvaluesthatalignwiththeirsevenifitcostsalittlemore.AndNaturalAmericanSpiritistheclearchoiceforthoseconsumers.Tetobaccoindustryisamongthemostheavilyregulatedthatwillcontinuetobeanongoingchallenge.Newregulationsaddcostandcomplexitytothebusinessthechallengeistocomplyinascost-eectiveandecientamanneraspossible.Highertaxeswhichaectthepriceofcigarettesplusfewerplaceswhereadultsmokerscansmokeputanadditionalburdenonouradultconsumersandonusasamanufacturerhoweverwemakesureourproductsarethebestwecanmakethem.Ourgoalsaretocontinueour28yearsofuninterruptedgrowth.Wewilldothatbymaintainingourintensefocusonmanufacturingandmarketingthebesttobaccoproductsavailableandbuildingandsustainingtransparentrelationshipswithourconsumersandourpartnersinthetrade.Wearehappytopartnerwiththeminsuccessfullysellingagrowingbrand.AndiftheyrenotalreadycarryingNaturalAmericanSpiritandcateringtoourconsumerstheresnobettertimetostartthanrightnow.WhatdoyoufeelmostdistinguishesSantaFeTobaccointhemarketplacetodayWhatdistinguishesyourcustomerbaseWhatchannelsofretailaremostimportanttoyourbusinesstodayWhichofyourproductssellbestinthosechannelsHowdoyouworkwithretailerstopromoteyourproductspoint-of-saledisplayspromotionsHowhaverecentlegislativechangessuchasSCHIPlegislationandFDAregulationimpactedyourbusinessHaveyoumadeanychangestoadapttothelegislationWhatdoyouseeasthebiggestchallengesaheadforyourcompanyandtheindustryasawholeWhatareyourgoalsforthebusinessin2011IsthereanythingelseyouwouldlikeretailerstoknowaboutSantaFeNaturalTobacco74SunowersgrowingontheborderoanSFNTCtobaccofeld.TOB