Philip Morris -- Altria Group, Inc. Annual Shareholders' Meeting, held in East Hanover, New Jersey, April 29, 2004

Philip Morris/Altria Group thus far does not provide a transcript nor a video of the entire meeting to shareholders.  Therefore, the information provided below is primarily from notes taken at the meeting, with the exception of the excerpts from the print media, and the text of the health resolutions.

Philip Morris sets the stage
    How much has changed at Philip Morris/Altria in the last four years or so?  You can read the entries for April 27, 2000.  You will see that back then, as now, Philip Morris was still talking about reducing the harm their products cause -- not eliminating the harm -- sort of like planning to run you down with a sleek limosine instead of a two ton truck.  And they were still bemoaning the fact that they had not been able to write federal regulations for the Food and Drug Administration, which figures into many of their stated reasons for not passing the health resolutions proposed then and now.

What about the "armed camp" mentality of the Philip Morris meetings versus the atmosphere at other corporation meetings?
    You can read the entry for April, 1999 to learn some reasons why health activists go to these meetings, what the armed camp atmosphere is like, and so on.

How was it different in 2004?
    It was held in New Jersey at a Kraft plant, and not in Richmond, Virginia at the Philip Morris manufacturing plant.  Some media writers speculated that Philip Morris was trying to show that they are not a tobacco company, but good guys.

    The main auditorium in New Jersey was NO SMOKING.  A tent was placed next to the building with a large sign "SMOKING" in front of it.

 In Richmond, after Virginia GASP had written a letter to management about having no smoking at the Richmond meetings, pointing out that many children attend these meetings as well as adults, Philip Morris arranged to have an auxiliary auditorium as a No Smoking auditorium, while allowing smoking in the main auditorium and in two tent auxiliary auditoriums.

    Seats were reserved, but no employees were sitting in them waiting for the activists assigned to particular seats as in Richmond.

    The media were allowed in the main auditorium and were permitted to approach speakers freely.
 

QUESTIONS

    Edward L. Sweda, Jr.
    Anne Morrow Donley
    Ruth Malone
    Michael Crosby
    Catherine Rowan
 

HEALTH RESOLUTIONS

    PROPOSAL -- PHILIP MORRIS AND WAYS OF MORE ADEQUATELY WARNING PREGNANT WOMEN
           Sister Maureen Sullivan presenting the resolution on Ways of More Adequately Warning Pregnant Women

    PROPOSAL -- REPORT ON HEALTH RISKS ASSOCIATED WITH FILTERS
         Catherine Rowan speaking in favor of the Proposal on Health Risks Associated with Filters

   PROPOSAL -- CEASE PROMOTING LIGHT AND ULTRALIGHT BRANDS
           Edward L. Sweda, Jr., speaking in favor of the Proposal to Cease Promoting Light and Ultralight Brands

    PROPOSAL -- VOLUNTARILY PLACE CANADIAN-TYPE WARNINGS ON ALL ITS CIGARETTE PACKS WORLDWIDE
            Carol Southard speaking in favor of the Proposal for Canadian-Style Package Warnings.
 

ARTICLES in the MEDIA, Excerpts

OVERVIEW
    Each person who wishes to speak at the Question and Answer session, as well as in support of resolutions, has two minutes to speak.
Only the proponent of the resolution is permitted four minutes to speak.

    Of the health activists present, there were several groups represented, among them:
    Interfaith Center on Corporate Responsibility (ICCR) which is composed of many of the religious groups and individuals who filed the health resolutions.
    Licensed to Kill, [http://www.licensedtokill.biz/] a Virginia corporation, composed of young people who are revealing the tobacco executives to be drug pushers, and had over 150 youth from California,, Hawaii, New Hampshire, New Mexico, New York, and Wisconsin, as well as from Colombia, Senegal, Thailand, and Ukraine, many of them holding an out of doors protest while some joined other activists inside the meeting.
    Nightingales, Nurses In Groups Highlighting Tobacco Industry Nastiness, Greed And Lies (to) End Suffering, a group of nurses came to speak about caring for patients who are suffering and dying from using Philip Morris tobacco products.
        INFACT, a Boston based organization fighting corporate evils.
 

Some of the Questions Asked at the meeting

Edward L. Sweda, Jr., Question:

    Good Morning, Mr. Camilleri.  I am Edward L. Sweda, Jr., a Massachusetts shareholder.  At last April's annual shareholders' meeting in Richmond, Virginia, you said that, regarding tobacco litigation, "the worst is behind us."  You also painted a rosy picture of the company's financial situation for the audience of shareholders, business reporters, and Wall Street investors.

    Also last spring, after Philip Morris lost the Price case in illinois, the light cigarette case in which Judge Nicolas Byron rendered a verdict of $10.1 billion against the company, Philip Morris' lobbyists urged the Illinois legislature to enact special interest legislation to put an artificial cap on appeal bonds.

    Former Illinois Governor Jim Thompson, lobbying for Philip Morris, was quoted in the March 26, 2003 Chicago Sun-Times as saying that if legislators didn't act to cap appeal bonds, the company couldn't afford the bond and could file for bankruptcy.

    So, last spring there were Philip Morris statements to Wall Street investors that the company was in great shape financially and also Philip Morris statements to legislators that the company was on the verge of bankruptcy.

    Which statement was true, and which statement was false?
 

Anne Morrow Donley, Question:

    Mr. Chairman and fellow shareholders:
    My name is Anne Morrow Donley, a Virginia shareholder.

    This morning in the opening film remarks, it was stated that this company "aims to be the most responsible company in the world."

    In a February 10th, 2004 article in Virginia's Richmond Times-Dispatch, this company's spokeswoman, Tamara Moore, stated:
    "PM USA is a significant contributor to the Altria family of companies, and we are committed to continuing to grow that business in a responsible manner."

    In an Associated Press article printed in Virginia's The Daily Press, November 26th, 2003, Mark Berlind, legislative counsel for Altria Group, Inc., said:
"Our philosophy is that because tobacco products are addictive and cause serious disease, part of the responsibility of our company is to be at the forefront and reduce harm that products cause."

    It seems to me that it is irresponsible to addict and kill 50% of your consumers.  Perhaps the plan is to reduce the harm so that only 25% will die.   The fact is that more people die each year from using Philip Morris tobacco products than have been killed by terrorist organizations.

    Richard Clarke (Against All Enemies) captured the admiration of the nation when he apologized for the 9-11 tragedy.  What would it take for Philip Morris to apologize for the decades that you hid the information that you knew that smoking is addictive and causes death?

Camilleri's Answer:
    Society makes choices.  I know you find that hard to believe, but it is true .... ...

Donley, responding, with microphone conveniently turned off:
    This isn't about society's choices.  This is about the company's choices.

Camilleri's Answer:
    People are going to continue to smoke. .... ...

Donley, responding:
    So, this company chooses to continue to addict and kill.  Thank you.

Ruth Malone, RN, PhD, Associate Professor of Nursing, University of California, San Francisco, Question:

    I am one of a group of nurse shareholders with a two-part question about letters sent to you by customers and their families.

    For example, this response to a promotion:
"Do not send any more of your promotions to our house.     Because of Marlboro cigarettes we have lost our beloved brother, son and father at 41 years of age.     He suffered for 11 months with head and neck cancer.     He smoked more because of your promotions; we have everything he ordered, and it was a lot.  He left behind 2 children.  He will never see his son graduate from high school. Because of your tobacco company we no longer have our Dan and the children no longer have a father."

    Another:
"My mother may have been nothing but a customer to you, but she was a large part of my life.  Have the decency to stop forcing me to remember that she died for a profit for your company."

    Written on a "Birthday Greetings from Marlboro Country"  mailing:
"My father died last October at 50 from lung cancer.  Now I and my 16 year old sister are fatherless.  The only thing I have to say is that smoking does kill and destroy families.  You don't need to be a scientist to figure that out.  Just visit my dad's grave if you want proof."

    Finally:
"My mother died from lung cancer.  I know we all have to work to put food on the table and pay bills.  But, are there no other choices?"

    I want to ask how our company responds to letters like these.

    First, do we have a board of ethics committee that actually reads them and discusses social responsibility regarding promotion of products that cause such harm with ordinary use?

    And second, what ethical criteria do you use in deciding whether to promote a product, and can you share those criteria with those of us who care for the people who suffer because they responded to your promotions?

Camilleri tossed off the reference as immaterial.

Camilleri's Answer:
It is there.  I saw it there today.  [No URL was given.]

These resolutions must be presented before the Securities and Exchange Commission and be defended before the attorneys from Philip Morris/Altria.

Below are the 2004 resolutions, with some of the speeches presented in favor of them.  Again, Philip Morris/Altria does not provide a transcript, so this is written from notes taken at the meeting, with the exception of the text of the resolutions.  Proponents of the resolution are permitted four minutes to speak; everyone else has two minutes to speak.

Philip Morris/Altria recommended a vote against each of these proposals. The majority of the shareholders, most of whom had cast their votes before the meeting, and many of whom do not attend the meeting, voted against the resolutions.  A certain percentage of votes for the resolutions allows the proponents to return with the resolution the following year.

PROPOSAL -- PHILIP MORRIS AND WAYS OF MORE ADEQUATELY WARNING PREGNANT WOMEN
The proposal printed in the Philip Morris/Altria shareholder booklet:  This is followed by some of the speeches made on April 29th, 2004, in favor of the proposal.

WHEREAS:  former Chairman and CEO Geoffrey C. Bible has said:  "I think it would be sensible for pregnant women not to smoke"  (Annual Meeting, 04/27/95).  In this Mr. Bible explicitly acknowledged the harm cigarettes cause the fetus when he indicated his comments paralleled the Surgeon General's warning that states:   "smoking by Pregnant Women May Result in Fetal Injury, Premature Birth, and Low Birth Weight."

Cigarettes cause up to 141,000 abortions, 61,000 cases of low birth weight, 4,800 perinatal deaths, and 2,200 deaths from the Sudden Infant Death Syndrome (SIDS) each year in this country.

A 1996 Emory University study showed that pregnant women smokers are 50% more likely to have mentally retarded children, and those smoking a pack a day were 85% more likely to give birth to a retarded child.

Our company has spent millions of dollars in ad campaigns and merchant education programs to prevent youth from illegally purchasing our company's cigarettes and preventing them from smoking but has no similar program aimed at pregnant women, especially that higher percent of pregnant women who are less educated and, consequently, less aware of the dangers connected to smoking while pregnant.

Our merchant education program called Action Against Access (AAA) penalizes merchants who have been found to sell tobacco products to minors.

When pregnant women smoke they are exposed to toxic chemicals that can cause death and disease for herself as well as her fetus.

Our company has been sued by individuals, classes of smokers, and the states for the harm our products have caused them, and we have paid billions of dollars to settle the state claims.

In issuing the recall of 8 billion cigarettes in May, 1995 because of suspected contamination, Philip Morris expressed particular concern that pregnant women avoid the undesired toxin the Company had identified in its cigarette filters.

Concerned about protecting the unborn from harm, the manufacturer of Accutane, another product known to be toxic to the fetus, has conducted an extensive educational campaign designed to inform both physicians and potential consumers about the importance of women not using Accutane if they are or might become pregnant.

Failure to adequately warn pregnant women about the dangers of smoking to themselves and the fetus not only could increase our liability risk; it would be seriously immoral and violate this Company's stated desire to be forthcoming about the dangers inherent in using our tobacco products.

RESOLVED:  shareholders request management to prepare a report outlining the steps the company will take to more adequately warn women of childbearing age of the harm caused by tobacco use to them and their baby before and after birth.  We suggest that such include a program similar to AAA in which merchants would ask women of child bearing age if they are pregnant and provide pregnant women with educational materials on the harm smoking causes the fetus any time a pregnant woman purchases cigarettes.  We also suggest the steps the Company will take to penalize merchants who fail to comply with the program.

Sister Maureen Sullivan, SC, introducing the Proposal on Philip Morris and Ways of More Adequately Warning Pregnant Women

Mr. Chairman and fellow shareholders:

The 2004 resolutions for Altria address health issues associated with smoking cigarettes and means of communicating these risks to users of its brands as well as others who are affected by such exposure.

In the past, Altria - Philip Morris has been challenged fro our failure to disclose all we knew about smoking and diseases and the effects of smoking on minors.  We have worked to change that.

Let us take a proactive stance now that medical research is showing our company the serious effects of smoking on pregnant women and the unborn child.  Medical studies have repeatedly shown that smoking during pregnancy can cause a host of health problems for the newborn child -- from low birth weight to irreversible risk of retardation, and even SIDS (sudden infant death syndrome).  Other serious complications to pregnancy which smoking can cause for the mother are bleeding, spontaneous miscarriage, premature labor, and still birth.

Three major elements of the chemicals related to smoking -- namely carbon monoxide, nicotine, and cadmium -- will drastically slow the growth of the unborn baby.

In addition to the statements of our company starting in 1969 that smoking causes diseases, is addictive, and is dangerous for pregnant women, we have to be more public in our stance.  We feel that more proactive action needs to be taken to inform pregnant women, as well as women who may become pregnant, of the health risks of smoking to their unborn child as well as to themselves.

We are aware of our companies effort on the Internet web site to advise smokers about potential risks of using its products, and we appreciate the new statement on pregnancy and smoking added in 2004.  However, poor women, minority women, and many women internationally do not search the Internet.  They probably don't even have access to the Internet.  And is the information available on the web in another language other than English????  Is it in a variety of languages, such as those spoken in China, Burma, Brazil, and Mexico where we are promoting our products?

We appreciate the information on the web site, but do not feel it adequately reaches the needs of the majority of those pregnant women who need the information.  We also know that general warnings do not work as well as specific warnings.  What we do know is that clear, targeted warnings do cause the incidences of smoking to decline.

Our company responded to advertising needs to discourage young people from smoking.

We believe that we as a company have the talent and resources to convene the right people to develop a campaign with a comprehensive and diverse delivery system to more adequately inform pregnant women and women in general and world wide of the health risks of smoking to the pregnant women and the unborn children.

The benefit to our company will be a higher moral stance; the benefit to women will be healthier babies; and the benefit to the babies will be a healthier and stronger start to life.

Thank you.

PROPOSAL -- REPORT ON HEALTH RISKS ASSOCIATED WITH FILTERS
The proposal printed in the Philip Morris/Altria shareholder booklet:  This is followed by some of the speeches made on April 29th, 2004, in favor of the proposal.

WHEREAS, a 2002 publication disclosed that Philip Morris has documented the "fall-out" of cellulose acetate fibers from filter cigarettes during normal smoking.  Philip Morris also demonstrated that carbon particles "fall-out" of cigarettes with charcoal filters during smoking.  Philip Morris, however, has not published the results of its numerous studies that have been conducted routinely for more than 40 years in its analytical laboratories.  (Tobacco Control 2002; 11[Suppl 1] :  i51-i61).

A 2002 publication by the Eastman Chemical Company, a major supplier of filter materials to Philip Morris, has documented that cellulose acetate fibers are released from the filters of all commercial cigarettes (Inhalation Toxicology, 14:247-262, 2002).   Thus, all smokers of filter cigarettes are exposed to the inhalation and/or ingestion of the plastic like fibers used in 95% of the filters of cigarettes sold presently.

A 2003 report of the Brown and Williamson Tobacco Company has shown that diverse materials are puffed from the filter of Advance cigarettes.  The substances identified included particles of charcoal, shards of cellulose acetate, resin, and metal like objects (aluminum, copper, and zinc).  (2003 Tobacco Science Research Conference, Norfolk, VA).

Independent investigators have demonstrated that filter fibers and carbon particles are released from the filters of popular brand cigarettes.  The researchers also identified tar-coated cigarette filter fibers in human lung specimens (Cancer Research 55:  253-258, 1995).

Patents awarded to different companies of the tobacco industry (e.g., United States patent #6, 133, 439, Eastman), a case report of a granuloma that developed in the lung of a smoker who inhaled a cigarette filter (NY State Journal of Medicine 85:  389-390, 1985) and research scientists (e.g., Lorillard Tobacco Co., 1993, Tobacco Documents Online [TDO] #87243731 and Cancer Research 55:  253-258, 1995) have shown that cellulose acetate filter fibers resist biodegradation and that these foreign bodies are probably retained in the human for a prolonged time, possibly for life.

Published surveys have shown that smokers are unaware of the release of fibers and particles from cigarette filters.  Greater than 95% of current smokers and former smokers queried believe that tobacco companies should disclose this information (Tobacco Control 10:  84-86, 2001).

As a matter of product stewardship, our company is obligated to test cigarette filters for material released into mainstream smoke and to disclose this information to investors and uninformed smokers if there is reason to believe such poses heretofore unreported health risks by the Company;

RESOLVED:  Shareholders request our Company to create an independent panel of outside experts to issue a report addressing:  (a) previous test results, by cigarette brand, of any and all materials released from cigarette filters, (b) the toxicological test results of filter materials performed by Philip Morris or subcontractors; and (c) results of studies undertaken to measure the human health risks of all filter materials in mainstream smoke.  The report shall include the tests identified previously by Philip Morris and INBIFO ("Assays for Product Integrity Testing,"  TDO #2505161388-1392).  The findings should be prepared at a reasonable cost and made available in an appropriate manner before the Company's 2005 Annual Meeting.

    My name is Catherine Rowan.  I speak on behalf of the proponents of this shareholder proposal who are members of the Interfaith Center on Corporate Responsibility.

    The proposal requests that our company create an independent panel of outside experts to report on test results, by cigarette brand, of any and all materials released from cigarette filters, and to report on the results of toxicological texts Philip Morris has done over the years of these filtered materials, and the results of its studies on the human health risks of all filter materials in mainstream smoke.

    A study sponsored by the Eastman Chemical Company showed that fibers are released from the filters of all cigarettes, exposing all smokers who smoke filter cigarettes to these fibers.  The fibers are coated with tobacco tar containing carcinogens and diverse toxins, and the fibers have been found in human lungs.

    Smokers have selected filter cigarettes for perceived health protection.  We are very concerned that these smokers have not been made aware of the filter defect confirmed in the Eastman investigations.

    A study of tobacco company documents published by the Roswell Park Cancer Institute last year shows that Philip Morris has known for over 40 years that fibers and particles "fall-out" of the filter of cigarettes during smoking.  At a time when investors are demanding greater transparency and disclosure from companies, we do not understand why our company will not disclose to the public the results of tests that it has performed.

    We believe our company, as a principle of product stewardship, needs to communicate with consumers about potential health risks associated with the release of cigarette filter fibers.  We are encouraged to learn that scientists from Altria will meet with scientists from Roswell Park to discuss the issue.

    I ask fellow shareholders who share these concerns to vote in favor of this proposal.
 

PROPOSAL -- CEASE PROMOTING LIGHT AND ULTRALIGHT BRANDS
The proposal printed in the Philip Morris/Altria shareholder booklet:  This is followed by some of the speeches made on April 29th, 2004, in favor of the proposal.

WHEREAS:  The National Cancer Institute has concluded that the "resultant absence of meaningful differences in risk (from smoking light versus regular cigarettes) makes the marketing of these cigarettes as lower-delivery and lower-risk products deceptive for the smoker" (Monograph 13:  "Risks Associated with Smoking Cigarettes with Low Machine-Measured Yields of Tar and Nicotine").  This study involved different brands of cigarettes, including those labeled "light," "ultralight," or "mild."

The same study concluded that, "many smokers chose these products as an alternative to cessation -- a change that would produce real reduction i disease risks -- making this deception an urgent public health issue."

Commenting on this study, the Editor of a well known magazine covering the tobacco industry, Tobacco Reporter, wrote:  "The report is likely to embolden those looking to ban product descriptors such as 'light' and 'mild.'  It also has provided a boon to trial lawyers -- the study has already made its way into at least one court case as 'evidence' of deceptive industry practices."  The Editor also opined that, given the problem, tobacco companies "better not to make any health claims at all."

Our Company has been sued in the State of Illinois by a class of smokers of Marlboro Lights.  The court has found that Philip Morris unfairly and deceptively marketed Marlboro Lights as "safer" than regular cigarettes.  In this case, the Court found such Marlboro Lights and Cambridge Lights to be just as harmful as regular Marlboro and regular Cambridge for all members of the Class (Illinois).

Consequently, the Court ordered this Company to pay more that $12 billion in punitive and other damages to the Class of those who smoked our Company's Light and Ultralight brands.  In response, Philip Morris has publicly declared that the payment of this $12 billion in damages could bankrupt the Company.

Philip Morris is named in lawsuits in other states claiming it unfairly and deceptively markets light and ultralight cigarettes as "safer" than regular cigarettes.

The Canadian government has concluded the terms "low tar", "light", and "ultralight" are deceptive to the consumer.  The European Union and Brazil have banned their terms.  The World Health Organization recommends banning the terms "light" and "ultralight" as misleading.

Most smokers believe "Lights" and "Ultra Lights" are less harsh and deliver less tar and nicotine.  On average, smokers believe that Lights afford 25% reduction in risk, and Ultra Lights a 33% reduction in risk (Tobacco Control 10 [2001], i17).

RESOLVED, that Philip Morris Companies, Inc. stop all advertising, marketing and sale of cigarettes using the terms "light," "ultralight." "mild," and similar words and/or colors and images until shareholders can be assured through independent research that light and ultralight brands actually do reduce the risk of smoking related diseases, including cancer and heart disease.

Supporting Statement
For every light and ultralight cigarette we advertise and sell today, there is a very high probability that Philip Morris may be incurring future liability which could adversely affect the value of stock held by shareholders.  We therefore ask shareholders to vote for this resolution.

    There are lawsuits in at least 19 states where plaintiffs allege that they were deceived by the company's light cigarette scam.  The only one of these cases to go to trial resulted in a huge verdict against this company of $10.1 billion.

    In March, 2003, Judge Nicholas G. Byron ruled that:
"the course of conduct by Philip Morris related to its fraud in this case is outrageous, both because Philip Morris' motive was evil and the acts showed a reckless disregard for the consumers' rights.  As a consequence, punitive damages are appropriate in this case."

    Management hopes -- but cannot  assure -- that Judge Byron's ruling will be overturned on appeal.

    In the meantime, rejection of this modest resolution will be cited by attorneys for the plaintiffs in these light cigarette cases as further evidence of the company's bad faith in this matter.

    It's time for the company to do the right thing at long last regarding so-called light cigarettes and to establish escrow accounts to pay judgments won by plaintiffs.

    I urge shareholders to support this proposal.  Thank you.

WHEREAS Philip Morris now recognizes and admits on its website and elsewhere that its cigarettes can cause a wide range of serious and sometimes fatal illnesses;

Philip Morris also has launched a multi-million dollar effort in print and the electronic media to warn people about the heath hazards of using our tobacco products.  However, it has done nothing to effectively and pictorially dramatize on the cigarette packs themselves the dangers to using the product inside;

Results of independent testing on the efficacy of this multi-million dollar effort by surveys made independent of the company have not been publicized indicating whether the Company's multi-million dollar effort, indeed, is dissuading people, especially young people from (taking up) smoking;

It has been demonstrated that Canadian-style warnings in the form of pictures and text, on the front and back of the package and on inserts have been more effective in communicating the danger of tobacco use and in dissuading people from smoking;

The warnings Philip Morris currently places on its cigarette packages in the United States and some other countries do not effectively communicate to our customers in those countries the full range and extent of the dangers associated with using our tobacco products;

The failure of our company to communicate the dangers of its products as effectively to its United States consumers as well as elsewhere as is done in Canada with its Canadian affiliate appears to the proponents of this resolution as both morally wrong and potentially dangerous to our company regarding unnecessary future litigation;

RESOLVED:  that Philip Morris voluntarily place Canadian-style warnings on all cigarettes it sells in the United States and, subject to applicable laws, in those countries where Canadian-style warnings are not yet required.
 

    My name is Carol Southard.  I am a nurse, and I am an Altria shareholder.  I have specialized in smoking cessation for 19 years.  In that time, I have assisted over 1,000 smokers to successfully quit.  While I realize that is a drop in the bucket, I will continue forward and work with as many smokers as possible.

    I am speaking in favor of the resolution to add Canadian type warnings on your cigarette packages.  While it is true little is known of the far-reaching implications of such scare tactics, preliminary studies have indicated that there has been a reduction of smoking in Canada since the inception of such labels.

    Mr. Camilleri, you stated in response to a question this morning that while we may not like to hear it, smokers like to smoke -- as if that is a justification for continuing to manufacture this most deadly of all products.  What you didn't say, and what I have observed in my 19 years of helping people quit smoking, is that even smokers who LOVE to smoke wish they could stop, but they have no clue how to do that.

    In my opinion, the most important warning label should read, "Nicotine is the most addictive substance known to humankind.  It is harder to break the addiction of nicotine than it is to stop using heroin, cocaine, or alcohol."

    If you were truly the most responsible company you claim to be, you would include the warning that might have the most impact on current and future smokers.

Updated  May 7, 2004